Global Economy

svinayak · Post by **svinayak** » 23 Oct 2008 02:36

Bush invites global leaders to Nov. 15 summit
By Greg Robb, MarketWatch
Last update: 2:33 p.m. EDT Oct. 22, 2008

WASHINGTON (MarketWatch) -- President Bush is inviting leaders from 20 leading economies to come to Washington on Nov. 15 to discuss a coordinated response for the global financial crisis, the White House said Wednesday.
The formal invitation is for the Group of 20 countries, which includes the G7 richest industrial countries plus major emerging economies such as China, Brazil and Saudi Arabia. Heads of important multilateral bodies, including the United Nations, International Monetary Fund and World Bank will also be invited.
At the top of the agenda are steps to avoid a repetition of the crisis.

andy B · Post by **andy B** » 23 Oct 2008 07:44

Unnecessary post deleted.

andy B · Post by **andy B** » 23 Oct 2008 07:46

Gurus:
Q. In the international arena banks made bad investements (yes i know these were AA credited but please dont tell me that these greedy fat bas$#$#s didnt know). Anyhow the question that arises now is that Govts around the world are pumping money into them to make sure they have enough capital, However what are the banks learning out of all this, and what measures will stop this happening again? Also is this one of the reasons why the US Govt is buying into these banks???

Q). Amidst all this how come the Japanes yen is becoming a safe haven???
- I do have some ideas about this however would love to get some POVs on this.

Raju · Post by **Raju** » 23 Oct 2008 08:30

Investment analyst and entrepreneur Dr. Marc Faber concluded his monthly bulletin (June 2008) with the Following:

''The federal government is sending each of us a $600 rebate. If we spend that money at Wall-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I've been doing my part.'

Singha · Post by **Singha** » 23 Oct 2008 08:56

but the aluminium for the beer cans is most likely from a mittal smelter, the SAP/HR for beer co
run out of india, condoms like durex manufactured in pondicherry and who knows J&J probably
makes its famous KY jelly in some low cost offshore location. the bed would made in china
or malaysia, the mattress in guatemala, the bedsheet in india, pillowcase in bangladesh,
the pillow polyester filling from RIL jamnagara and the kamasutra book authored in India

lacy lingerie in honduras, light bulb in mexico, bathtub in italy and shower head in mexico.
cuffs and blindfold from canada

no peace, no H&D.

abhischekcc · Post by **abhischekcc** » 23 Oct 2008 10:25

Maybe Americans can buy guns. 5 out of 6 dollars in the Amrican manufaturing sector are weapons. Surely that will help the American economy.

Or better yet, all obese Americans can buy anti-tank land mines and sit on them. It will do the world and global warming a big favour.

Singha · Post by **Singha** » 23 Oct 2008 10:30

it seems argentina is on the verge of defaulting on its debt repayment. so GoA seized $29b
in pension fund assets this week to use as the new piggy bank. this last happened in 2001.

Rus is doling out $200b in bailouts. seems 30% of their corporates might default on
corporate bond payments.

andy B · Post by **andy B** » 23 Oct 2008 11:13

^^^
Russia very recently didnt have any money...they are or were getting major revenues from oil and gas. Now that the prices have fallen through the roof compared to what they were 5/6 months back I would imagine that it is affecting their current and projected revenues severely...

Neshant · Post by **Neshant** » 23 Oct 2008 11:15

Spain demands seat at G8 finance crisis summit
22 Oct 2008
Times of India

http://timesofindia.indiatimes.com/Worl ... 625529.cms

MADRID: Spain demanded on Tuesday that it be allowed to take part in the emergency summit to revamp the ailing global financial system as "the eighth economic power in the world."

"Spain, given its economic weight, must be at this great international summit called to reform the international system," Prime Minister Jose Luis Rodriguez Zapatero told a news conference.

"We are the eighth economic power in the world, and when there is a call to deal with the international financial system and as we have a very solid and strong financial system, Spain must be there."

Singha · Post by **Singha** » 23 Oct 2008 15:12

South korea won sank 10% yesterday - worst fall in a decade.

Hungary is being given a EU loan to stay solvent arpind Euro 6b

and Ukraine is also ringing the bell clutching a begging bowl.

nothing for the pakis though

Telegraph.co.uk

Crisis mounts in East Europe after shock 3pc rate rise by Hungary.
Hungary has raised interest rates by three percentage points to 11.5pc in a drastic move to stop the collapse of its currency peg against the euro, raising fears of a crunch across Eastern Europe as a string of states are forced to follow suit to stem capital flight.
.......
There is a risk is that hedge funds will pick off those East European states with big current account deficits that rely on foreign financing, smashing the pegs or 'dirty-floats' one by one. The deficits have reached 23pc of GDP in Bulgaria, 16pc in Estonia, and 16pc in Romania.

Investor flight from stocks, bonds, and currencies across the region has become a stampede. Contagion hit Turkey and South Africa yesterday, while credit default swaps on Russian debt jumped to 817 basis points, signalling extreme fear.

Hungary has already received a €5bn loan from the European Central Bank and is in talks with the International Monetary Fund. Ukraine has requested an IMF bail-out, and Belarus joined the queue yesterday with a plea for a $2bn loan.

Maya Bhandiri, from Lombard Street Research, said Hungary was primed for crisis after letting rip on foreign credit, letting net external debt reach 90pc of GDP.

Some 60pc of all mortgages and car loans are funded in foreign currencies, mostly euros or Swiss francs. Hungary's government is now letting debtors switch franc loans into forints and even forgive debts in what amounts to a bail-out of the most reckless. Unicredit warned that this may cause markets to question the credit-worthiness of the state itself.

The Baltic States, Poland, Croatia, and Romania have also let foreign mortgages proliferate. Mr Christensen says the region is even more overstretched than East Asia on the cusp of the 1998 crisis. "Imbalances have grown to unsustainable levels. The unwinding is likely to be painful and disorderly. There is a clear risk of the situation getting out of hand, with serious implications for Western Europe," he said.

Veterans of the ERM crisis in 1992 say the process could spiral out of control quickly. If hedge funds taste blood knocking out the pegs in Eastern Europe, they may turn their attention to those eurozone states inside that have rely on foreign funding to plug their huge deficits - notably Spain, Portugal, and Greece.

Singha · Post by **Singha** » 23 Oct 2008 15:17

these euros are pathetic, treats blacks and browns badly, claim to be the superior
and artistic tfta culture, claim to be hotspots of every intl trend and squeal and line
up with begging bowls when the music of free credit stops.

Singha · Post by **Singha** » 23 Oct 2008 15:22

Turkey is another one in some trouble.

only one to "manage" such crisis and escape with zero damage seemed to be the
Swiss. but this time UBS has taken a major blow. the more secretive pvt banks
into storing $$ for dictators are probably doing fine.

pradeepe · Post by **pradeepe** » 23 Oct 2008 16:14

Business entities including banks go through M&As and consolidate to stave off tough times. Will be see smaller countries do the same. Eastern oirope seems ready for a strong leader to consolidate under. Thats OK..once the crisis is past..they will go back to slaughtering each other like they have done for ages....

shyamd · Post by **shyamd** » 23 Oct 2008 19:25

UBS sold all its real estate assets to the Govt, so they said they are totally clear of anything to do with Real estate. Brokered some M&A's in Europe and couple of other deals over the past couple of weeks.

--------
Apparently South Korea is looking for capital from the IMF! Thats a $900 bn economy!

Vipul · Post by **Vipul** » 23 Oct 2008 19:46

Its amazing after so many years being an export powerhouse, South Korea still has to approach IMF. Didnt they have the sixth or seventh largest foreign exchange reserves till recently?

svinayak · Post by **svinayak** » 23 Oct 2008 20:08

Greenspan "shocked" at credit system breakdown
Thu Oct 23, 2008 10:29am EDT

WASHINGTON (Reuters) - Former U.S. Federal Reserve Chairman Alan Greenspan told Congress on Thursday he is "shocked" at the breakdown in U.S. credit markets and that he expects the unemployment rate to jump.

Despite concerns he had in 2005 that risks were being underestimated by investors, "this crisis, however, has turned out to be much broader than anything I could have imagined," Greenspan said in remarks prepared for delivery to the House of Representatives Committee on Oversight and Government Reform.

"Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity (myself especially) are in a state of shocked disbelief," he said.

Banks and other financial institutions need public support, such as the recently approved $700 billion bailout package, to avoid serious retrenchment, he said.

Greenspan was hailed as one of the most accomplished central bankers in U.S. history when he retired in January 2006. However, his decision to keep interest rates low during his final years at the Fed has been blamed in part for the housing bubble and crash that has led to the current deep financial crisis.

The former Fed chair said stabilization of U.S. housing markets -- a necessary precondition for the economy to heal -- is "many months in the future."

At the heart of the breakdown of credit markets was the securitization system that stimulated appetite for loans made to borrowers with spotty credit histories, Greenspan said.

"Without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of crisis) would have been far smaller and defaults accordingly far fewer," he said.

"The consequent surge in global demand for U.S. subprime securities by banks, hedge and pension funds supported by unrealistically positive rating designations by credit agencies was, in my judgment, the core of the problem," he added.

(Reporting by Mark Felsenthal; Editing by Tom Hals)

svinayak · Post by **svinayak** » 23 Oct 2008 20:08

Vipul wrote:Its amazing after so many years being an export powerhouse, South Korea still has to approach IMF. Didnt they have the sixth or seventh largest foreign exchange reserves till recently?

Welcome to the world of fake economy

Singha · Post by **Singha** » 23 Oct 2008 20:16

but Soko exports mostly hardcore "real stuff" like machinery, electronics, steel,
ships, cars, optics - similar in profile to germany minus the financial industry.

Soko isnt the UK

vsudhir · Post by **vsudhir** » 23 Oct 2008 20:38

Singha wrote:but Soko exports mostly hardcore "real stuff" like machinery, electronics, steel,
ships, cars, optics - similar in profile to germany minus the financial industry.

Soko isnt the UK

Obviously, what they did with their hard currency reserves - investing it in dubious dollar assets a.k.a. mortgage backed securities has a hand in their current plight.

But even then, hard to believe SoKo is in such dire straits, which gives 'sultans of swing' a whole new meaning.

Luckily for PRC, they're holding up ok for now. Or perhaps, face considerations have prevented such admissions so far. Wonder how much yindia will be affected.

Singha · Post by **Singha** » 23 Oct 2008 20:51

NYT

Investors Flee as Hedge Fund Woes Deepen

By LOUISE STORY
Published: October 22, 2008

The gilded age of hedge funds is losing its luster. The funds, pools of fast money that defined the era of Wall Street hyper-wealth, are in the throes of an unprecedented shakeout. Even some industry stars are falling back to earth.

This unregulated, at times volatile corner of finance — which is supposed to make money in bull and bear markets — lost $180 billion during the last three months. Investors, particularly wealthy individuals, are heading for the exits.

As the stock market plunged again on Wednesday, with the Dow Jones industrial average sinking 514 points, or 5.7 percent, the travails of the $1.7 trillion hedge fund industry loomed large. Some funds dumped stocks in September as their investors fled, and other funds could follow suit, contributing to the market plummet.

No one knows how much more hedge funds might have to sell to meet a rush of redemptions. But as the industry’s woes deepen, money managers fear hundreds or even thousands of funds could be driven out of business.

The implications stretch far beyond Manhattan and Greenwich, Conn., those moneyed redoubts of hedge-fund lords. That is because hedge funds are not just for the rich anymore. In recent years, public pension funds, foundations and endowments poured billions of dollars into these private partnerships. Now, in the midst of one of the deepest bear markets in generations, many of those investments are souring.

Granted, hedge funds are not going to disappear. In fact, some are still thriving. Even many of the ones that have stumbled this year are doing better than the mutual fund industry, which has also been hit with withdrawals that have forced their managers to sell.

But the reversal for the hedge fund industry represents a sea change for Wall Street and its money culture. Since hedge funds burst onto the scene in the 1990s, they have recast not only the rules of finance but also notions of wealth and status. Hedge-fund riches helped inflate the price of everything from modern art to Manhattan real estate. Top managers raked in billions of dollars a year, and managing a fund became the running dream on Wall Street.

Now, for lesser lights, at least, that dream is fading.

“For the past five or six years, it seemed anybody could go to their computer and print up a business card and say they were in the hedge fund business, and raise a pot of money,” said Richard H. Moore, the treasurer of North Carolina, which invests workers’ pension money in hedge funds. “That’s going to be gone forever.”

As are some hedge funds. For the first time, the industry is shrinking. Worldwide, the number of these funds dropped by 217 during the last three months, to 10,016, according to Hedge Fund Research.

Even some of the industry’s most well-regarded managers are starting to retrench. Richard Perry, who until now had not had a down year for his flagship fund in more than a decade, has laid off some employees. Mr. Perry, who began his career at Goldman Sachs, is moving away from stock-picking to focus on the troubled credit markets.

Three other hedge fund highfliers — Kenneth C. Griffin, Daniel S. Loeb and Philip Falcone — have suffered double-digit losses through the end of September.

Steven A. Cohen, the secretive chief of a fund called SAC Capital, has put much of the money in his funds into cash, reducing trading by some of his workers.

Many hedge fund investors, particularly the wealthy individuals, are flabbergasted by their losses this year. The average fund was down 17.6 percent through Tuesday, according to Hedge Fund Research.

“You’re seeing a lot of shock, a lot of inaction, a lot of reassessment of where their allocations are and what to do going forward,” said Patrick Welton, chief executive of the Welton Investment Corporation, whose fund is up double-digits this year.

Many investors, Mr. Welton said, had hoped hedge funds would protect them from a steep decline in the broader market. But in many cases, that has not happened.

Now Wall Street is buzzing about how much money could be pulled out of hedge funds — and which funds might bear the brunt of the redemptions.

Funds have set aside billions of dollars in cash to prepare for withdrawals, and many prominent funds require their investors to leave their money in the funds for years. That could help relieve some of the pressure.

But because hedge funds are largely unregulated, they do not publicly disclose the identity of their investors or whether they have received requests for withdrawals. While it might make sense to pull money out of poorly performing funds, investors might also exit funds that are doing well to offset losses elsewhere.

Institutions — pension funds, endowments and the like — pushed into hedge funds after the Nasdaq stock market bust at the turn of the century. Many hedge funds had prospered as technology stocks crashed, leading these investors to believe they would in the future.

In Massachusetts, for instance, Norfolk County broached the issue with the state’s pension oversight commission, said Robert A. Dennis, the investment director of the commission. Mr. Dennis was impressed that hedge funds had fared so much better than the broader stock market.

Though Mr. Dennis says he recognizes the risks that come with selecting hedge funds, he thinks they remain a good investment. Next week, the state commission will vote on whether to allow some towns with pension funds below $250 million to invest in hedge funds, a move Mr. Dennis supports.

“Hedge funds are having a bad year, absolutely, but they’re still holding up better than stocks,” Mr. Dennis said. “Losing less money than another investment is, while not great, it’s still something to be at least satisfied with.”

But now that the days of easy money are over, some fund managers are throwing in the towel.

One manager, Andrew Lahde, was blunt about his decision.

“I was in this game for the money,” Mr. Lahde wrote to his investors recently. He made a fortune betting against the mortgage markets, calling those on the other side of his trades “idiots.”

“I have enough of my own wealth to manage,” Mr. Lahde wrote. He did not return telephone calls seeking comment.

And what wealth there has been. More than anything else, hedge funds are vehicles for their managers to take a big cut of profits. The lucrative economics of the industry is known as “two and 20.” Managers typically collect annual management fees equal to 2 percent of the assets in their funds, and, on top of that, take a 20 percent cut of any profits. Last year, one manager, John Paulson, reportedly took home $3 billion.

But with the industry under pressure, those fat fees are being questioned. Mr. Moore and other investors are starting to ask whether hedge funds deserve all that money. Mr. Griffin, who runs Citadel Investment Group in Chicago, plans to offer funds with lower fees.

More changes could be coming, including increased regulation. The House Committee on Oversight and Government Reform is scheduled to hold a hearing about regulation next month with five hedge fund managers who reportedly made more than $1 billion last year: Mr. Griffin, Mr. Falcone and Mr. Paulson, as well as George Soros and James Simons.

Singha · Post by **Singha** » 23 Oct 2008 20:53

isnt it stupid and deliberate corruption by the American Govt that the same rules which govern the
regular MFs were not applied to hedge funds? must be a lot of political money deployed down
that channel.

btw SEBI has asked many FIIs today to 'reverse' their short trades or something. I would support
a total ban on short selling in Indian stock market for a while. people are still free to sell off and
leave, but its not ok to incite more panic and then make money off it. thats a recipe to get
attacked by these lawless critters.

svinayak · Post by **svinayak** » 23 Oct 2008 20:56

vsudhir wrote:
Singha wrote:but Soko exports mostly hardcore "real stuff" like machinery, electronics, steel,
ships, cars, optics - similar in profile to germany minus the financial industry.

Soko isnt the UK
Obviously, what they did with their hard currency reserves - investing it in dubious dollar assets a.k.a. mortgage backed securities has a hand in their current plight.

But even then, hard to believe SoKo is in such dire straits, which gives 'sultans of swing' a whole new meaning.

Luckily for PRC, they're holding up ok for now. Or perhaps, face considerations have prevented such admissions so far. Wonder how much yindia will be affected.

If the financing is done with credit obtained from other countries and there is no fiscal discipline then it will create problems during crisis.

The growth is funded from credit

No wonder countries like India could never get enouhg capital to industrialize and grow much in the last 30 years.

Singha · Post by **Singha** » 23 Oct 2008 20:59

NYT -

A recent AARP survey found that the economic slump has been badly squeezing the nation’s 78 million baby boomers, those born between 1946 and 1964. In the survey, 20 percent of boomers said they had stopped contributing to retirement plans, 34 percent said they were thinking of delaying retirement and 27 percent acknowledged problems paying rent and mortgages.

The Congressional Budget Office reported two weeks ago that the nation’s pensions and 401(k) plans had lost around $2 trillion over the last 15 months, with many 401(k)’s dropping by 20 percent or more. And a survey done last year, well before the market turmoil, found that two in five retirees expected to outlive their savings.

milindc · Post by **milindc** » 23 Oct 2008 21:11

Good write up explaining the $ rise . It was in comment section of this article
Gold's recent slump bewilders investors

When the dollar gets stronger, metals slump. I received this yesterday and it's an EXCELLENT explanation on why the dollar is going up.

From yesterday's 'The Daily Pfennig'

The dollar continued to run up vs. most of the currencies yesterday and last night as investors brought money back into the US. We continue to get calls from WorldMarket investors asking us what was pushing this dollar up, as all of the data seems to be negative for the US$. The only explanation which seems to make sense is the global deleveraging of investors.

Here is as good an explanation as I can give. Over the past several years money was extremely cheap and investors took advantage of these cheap loans. Hedge funds, corporate investors, and even some individuals borrowed funds and placed them into higher yielding investments to earn the 'carry'. This occurred not only in the currency markets, but across the entire spectrum of asset classes. These investors were rewarded with incremental yields over 'cash' investors, and banks were more than willing to lend, so the amount of leverage continued to increase to absolutely absurd levels. Everything was fine until the housing market here in the US turned and losses started to show up on the books of some investors.

These investors had to sell some of their higher yielding assets to make up for the losses, and a move toward deleveraging started to emerge. As these first investors sold these assets, their price dropped, forcing still others to sell. The credit crisis, and the lockup of the credit markets was a final straw in the leveraged carry trades. Even investors who wanted to stay in the trades could no longer get the loans to keep these trades alive. They were forced to deleverage, selling their investments to pay back the loans.

So the benefactors of this deleveraging of the financial system? The Japanese yen and the US$, currencies which were used to funds these carry trades. The US and Japan have some of the worlds largest banks, and extremely low interest rates making them the perfect funding currencies for the carry trades. As the deleveraging has occurred, investors have purchased back these currencies to pay back loans. Also, a majority of the investors participating in these trades were based in the US, so the deleveraging meant a move back to the US$. US investors purchased nearly $1 trillion in foreign stocks and bonds since 2003, many of which are now being sold with the proceeds moving back to the US$.

The dollar has also benefited from other factors, including the printing presses at the Treasury which have been running overtime. Bernanke and Paulson have increased the money supply at an incredible pace. Some of these dollars the US treasury department is creating are being used by foreign central banks in 'swaps'. These swap contracts allow the foreign central banks to swap their local currency (a majority are in Euros) into US$ to lend to their institutions who are offsetting losses in their US$ based investments. And even investors who don't have the ability to enter into 'swaps' with the US Fed, still have a need to offset losses which have piled up on mortgages and other US$ based investments. The choice for these investors is to sell these assets which have dropped to fire sale levels, or borrow their home currencies (in this case Euros) to buy dollars (this would be a reverse carry trade).

So the deleveraging of the global financial system certainly seems to me to be one of the primary factors propping up the US$. But where will it end? These are some extraordinary times, and the markets are anything but normal. Anyone who thinks they can tell individuals what is going to happen in the markets over the short term are on something. Ty Keough said it best in responding to a callers request to have him try and predict what was going to occur in the markets over the next few weeks. Ty told the caller, "The only prediction I will make is that the next thing which will happen will be something we have never seen before. Expect the unexpected!" But over time markets will settle back to the underlying fundamentals, and the current fundamentals don't support a stronger dollar.

Singha · Post by **Singha** » 23 Oct 2008 23:27

CNN - NEW YORK (CNN) -- Wall Street giant Goldman Sachs will cut 10 percent of its workforce, or about 3,260 jobs, a source familiar with the investment bank's plans told CNN Thursday.

ET reports that JP morgan and two other intl banks have asked their bankers to travel coach class for
flights upto 3-5 hrs duration. in the old days of Tech this limit used to be 7 hrs.

Satya_anveshi · Post by **Satya_anveshi** » 24 Oct 2008 04:48

milindc wrote:But over time markets will settle back to the underlying fundamentals, and the current fundamentals don't support a stronger dollar.

Any which way one looks at it, $ has to go. Once countries know that US is essentially printing dollars with assumption that it does not come back then US is trading paper for the real goods. Ultimately, countries need to use their dollars so they will head to US. That follish strategy worked for sometime but can't anymore.

Whatever US may work it out in the on-going economic summit, unless reserve currency of the day gives power to countries to do whatever they want with it, any plan they devise will be unsustainable.

svinayak · Post by **svinayak** » 24 Oct 2008 06:24

FBI: Threatening letters say 'It's payback time'

By LARA JAKES JORDAN – 44 minutes ago

WASHINGTON (AP) — Threatening letters sent this week to banks and financial institutions declare "It's payback time" and promise death within 10 days, the FBI said Thursday.

More than 50 letters were mailed to Chase Bank branches and federal regulatory offices in 12 cities this week. Three of them were delivered Thursday at the headquarters of the Federal Deposit Insurance Corp. in Washington.

Most of the letters were in envelopes containing white powder, which so far has tested negative for any dangerous toxins.

But the FBI says the hoax is still a serious crime and it's investigating the letters as a possible extreme backlash to the nation's financial crisis.

"Steal tens of thousands of people's money and not expect reprercussions," says the letter, which is written in all capital letters and includes the misspelling. "It's payback time. What you just breathed in will kill you within 10 days. Thank (name redacted) and the FDIC for your demise."

The FBI would not identify the person whose name was deleted. A U.S. official said the name is a person who may have played a role in the nation's financial crisis, but not a government official. The official spoke on condition of anonymity because he was not authorized to speak publicly.

Authorities said the letters appear to be from the same source, and were focusing on possible suspects near Amarillo, Texas, where the envelopes were postmarked.

The FBI released the text in hopes that the public will help lead investigators to the letter's writer.

Since Monday the letters have been opened in the offices of Chase Bank branches, the FDIC and the U.S. Office of Thrift Supervision, which regulates all federal and many state thrift institutions. They were sent to offices in or near 12 cities: Arlington, Va.; Atlanta; Chicago; Columbus, Ohio; Dallas; Denver; Newark, N.J.; New York City; Oklahoma City; Phoenix; San Francisco and Washington.

An FBI spokesman said letters sent to Oklahoma were filled with harmless calcium.

The U.S. Postal Inspection Service has offered a reward of up to $100,000 for help in arresting the letter mailers.

Authorities "are following several good leads, but we are always looking for more information," said FBI spokesman Rich Kolko. "And we hope that when people see this letter and writing style, it will encourage someone with information to contact the FBI or other authorities."

Singha · Post by **Singha** » 24 Oct 2008 08:25

well there are a lot of gun nuts and shack-in-the-woods hunter-gather types even in NJ (southern part).
heading out west, the resentment of rural whites against big govt, fbi, joos, world council of kabala, taxes
will just be further on the boil as their 401ks and jobs are surely hit.

svinayak · Post by **svinayak** » 24 Oct 2008 10:43

China urged to save world economy
Hu Jintao, right, said the world economy looked "grim and complicated" [AFP]

Leaders from Asia and Europe have opened a summit in Beijing with a call on China to do more to tackle the "unprecedented" challenges posed by the global financial crisis.

Representatives from the 43 countries attending the Asia Europe Meeting (Asem) on Friday were hoping that China can help shape reforms in the world's financial system and address economic imbalances at the core of the meltdown to stave off a possible global recession.

Speaking ahead of the summit, Jose Manuel Barroso, the president of the European Commission, said China, India and Japan need "to be on board" as the world tries to avert a global recession.

"We swim together or we sink together," he said, calling for tighter Asia-Europe co-operation in order to survive the crisis.

"I very much hope that China can make an important contribution to the solution to the financial crisis. It's a great opportunity for China to show a sense of responsibility."

European governments have already committed more than $2 trillion to banks and money markets in efforts to shore up investor confidence.

But unlike Europe's co-ordinated effort, Asian governments have for the most part limited their intervention to cutting interest rates, guaranteeing bank deposits and injecting money into the credit markets.

Barroso said the two regions "face challenges which don't respect any borders".

'No one immune'

"No one in Europe or Asia can seriously pretend to be immune. We are living in unprecedented times, and we need unprecedented levels of global co-ordination."

On Thursday Hu Jintao, the Chinese president, said the world economy looked "grim and complicated".

"The emerging markets and developing countries are confronted with financial risks, weak foreign demand and mounting inflation," he was quoted as saying by China's Xinhua news agency.

Nicolas Sarkozy, the French president, has said he will seek Asian backing for his bid to radically restructure the Western-dominated global financial system.

Sarkozy, who currently holds the rotating European Union (EU) presidency, wants the emerging giant economies of China and India to have a bigger role in the world's economic decision-making.

Liu Jianchao, a Chinese foreign ministry spokesman, agreed that there was a need to "explore the possibilities for reform of the international financial structure" but gave no specifics on how to stabilise the markets.

Meanwhile, a diplomatic spat threatened to derail the summit's main agenda after the European Parliament on Thursday awarded its top human rights Sakharov Prize to Hu Jia, an activist imprisoned by the Chinese government on subversion charges.

In criticising the move, Liu raised China's "strong dissatisfaction at the decision by the European Parliament to give the award to a jailed criminal in China, in disregard of our repeated representations".

The spokesman, however, later tried to downplay any impact the move may have on the two-day biennial summit.

svinayak · Post by **svinayak** » 24 Oct 2008 10:45

Another Bubble Bursts
Subprime mortgages were just the beginning.

http://online.wsj.com/article/SB1224809 ... lenews_wsj

Credit markets have started to thaw, yet stocks and the larger economy keep sliding. What's going on? Among the problems are the reality of recession and the uncertainty over Barack Obama's policies. But the larger story is that the global economy is fast popping its latest monetary bubble, the one over the last 14 months in commodity prices and non-dollar currencies.
[Review & Outlook] AP

The original bubble was in housing prices and mortgage-related assets, which the Federal Reserve helped to create with its negative real interest rates from 2002 into 2005. This was Alan Greenspan's tragic mistake, not that the former Fed chief will acknowledge it. Testifying before Congress yesterday, Mr. Greenspan pinned the crisis on mortgage securitizers, risk modelers and lending institutions, thus contributing to the Washington narrative that government had little to do with it. The Fed's monetary policy apparently gets a pass. The media and Members of Congress will use Mr. Greenspan's testimony to impugn the very free market principles that the former Ayn Rand protégé has spent his life promoting. It was a painful spectacle to watch.

vina · Post by **vina** » 24 Oct 2008 11:48

Well, well.. Eastern Europe including balitc states such as Latvia , Lithuania and Estonia are going to be toast soon. The panic seems to be spread to "emerging" markets now. These countries are going to see their pegs against the Euro knocked down soon.

The New York Times
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October 24, 2008
West Is in Talks on Credit to Aid Poorer Nations
By MARK LANDLER

WASHINGTON — With the financial crisis engulfing developing countries from Latin America to Central Europe, raising the specter of market panic and even social unrest, Western officials are weighing coordinated action to try to stabilize these economies.

The International Monetary Fund, which is in negotiations with several countries to provide emergency loans, is also working to arrange a huge credit line that would allow other countries desperate for foreign capital to borrow dollars, according to several officials.

The list of countries under threat is growing by the day, and now includes such emerging-market stalwarts as Brazil, South Africa and Turkey. They have become collateral damage in a crisis that began in the American subprime housing market.

The fast-growing economies of the developing world depend on money from Western banks to build factories, buy machinery and export goods to the United States and Europe. When those banks stop lending and the money dries up, as it has in recent weeks, investor confidence vanishes and the countries suddenly find themselves in crisis.

Details of the arrangement are still being worked out, but it could be supported by Japan and several oil-producing countries, a fund official said. The fund has not yet approached the Federal Reserve, according to officials, although the Treasury Department has expressed interest.

Two weeks ago, the Fed set up unlimited swap agreements with the European Central Bank, the Bank of England and other central banks to ease the severe credit turmoil in Western Europe.

This time, the focus would be on emerging markets, with good economic records, which are having trouble borrowing dollars.

“There needs to be some action to help these countries,” said Neil Dougall, chief economist for emerging markets at Dresdner Kleinwort in London. “There has been a severe drying up of liquidity there, and it is early days. The tsunami has only just reached their shores.”

The monetary fund has about $250 billion available for all types of loans. That could be supplemented by funds from central banks, officials said, though they dismissed a rumor that circled the globe on Thursday that the fund was arranging a $1 trillion credit line.

Whatever the amount ultimately pledged, it would represent the most concerted international response yet to what economists warn could be a volatile, dangerous new phase in the crisis.

“We view it seriously,” said Clay Lowery, assistant Treasury secretary for international affairs. “There are a lot of emerging markets that have come under increased pressure recently.”

Unlike in the United States and Western Europe, banks in these countries bought few of the mortgage-related securities that undermined the financial system. But as banks stopped lending — either to each other or anyone else — that credit squeeze has hit emerging markets hard.

Stock markets and currencies have plunged, foreign capital has fled, trade flows have slowed, and in an echo of past financial crises, investors have begun to worry about governments’ defaulting. Many have heavy debts in foreign currencies, but the cost of repaying that debt has increased as their home currencies’ values have declined. To compensate, they are seeking dollars to repay the loans.

On the list of endangered countries, economists put: Hungary, Russia, Ukraine, Pakistan, Turkey, South Africa, Argentina, Iceland, Estonia, Latvia, Lithuania, Romania and Bulgaria. (time to tell the Russians about what we think are their actions on AG and now ask to pay in worthless Rubles err Rubbles, now that the dollar has strengthened. Time to kick them in their asses I think.)

The economic woes of these countries could reverberate back to the United States, experts say, because many of them are trading partners, at a time when exports are one of the few bright spots in the American economy.

“Our whole economic prospects are going to turn on whether the emerging markets keep growing,” said C. Fred Bergsten, the director of the Peterson Institute for International Economics. “It could be the difference between a moderate downturn and a deep downturn.”

The crisis has been indiscriminate in its victims. It has worsened the problems in countries like Iceland, Ukraine and Argentina, which had festering economic or political troubles. Argentina, in particular, has drawn criticism from economists for its decision this week to nationalize the country’s private pension funds, worth $30 billion.

But the turmoil also hit South Africa and Turkey, which economists had praised for their sound policies.

Among the earliest victims have been countries, like Hungary, where companies and even individuals borrowed heavily in foreign currencies. As credit dried up and their local currencies plummeted, they have been unable to roll over those loans. In even healthy countries, near panic has ensued — leaving people bewildered by the sudden reversal in their fortunes.

“We were not an obvious target,” said Peter Akos Bod, a former governor of the Hungarian central bank. “I could not see major problems in Hungary’s economic outlook. But there is sort of a panic.”

Economists say the inability to borrow foreign currency is dangerous because it can quickly turn healthy economies into sick ones, as companies and even potentially governments default on loans.

“Right now, it’s a liquidity problem, but if it goes on long enough, it can become a solvency problem,” said Yusuke Horiguchi, the chief economist of the Institute for International Finance.

Mr. Horiguchi said that developed economies bear responsibility for easing this problem, because it stems from the crisis in their banking system.

Indeed, the financial rescue packages announced by the United States and European countries have aggravated the problem. Safeguards like attempts to stabilize their banks and government guarantees behind some bank lending have made banks in developing countries look less secure.

In a gesture to the precarious situation, President Bush made an unscheduled appearance this month at a meeting of finance ministers from the Group of 20 countries, organized by the Treasury secretary, Henry M. Paulson Jr. Mr. Bush also agreed to convene an emergency meeting of the group on Nov. 15 to develop responses to the crisis.

Beyond reassuring words, there is a limit to what the United States can do to solve the problems of these countries. Mr. Paulson is overseeing the largest economic rescue program since the Great Depression. He cannot devote anywhere near the amount of time that a predecessor, Robert E. Rubin, devoted to the Asian and Mexican crises during the Clinton administration.

“The most important thing the United States can do is stabilize its financial system,” Mr. Lowery, of the Treasury, said. “The other thing we can do is to support the actions taken by emerging-market countries.”

On Thursday, the central banks of Brazil and Mexico intervened heavily in the foreign exchange market to support their currencies. Hungary obtained a loan of up to 5 billion euros from the European Central Bank.

And Hungary — along with Iceland, Pakistan, Belarus and Ukraine — has overcome deep reluctance and begun negotiations with the International Monetary Fund for emergency loans. Countries are traditionally averse to such loans because they come with strict conditions.

“I’m totally unhappy about having to borrow from the I.M.F.,” Mr. Akos Bod, the Hungarian central banker, said. “I thought in my lifetime, we would never have to borrow from the I.M.F.”

As the largest shareholder in the fund, the United States can exert influence on its policies. Administration officials said the highest-ranking American at the fund, John Lipsky, the first deputy managing director, would lead the fund’s effort to extend loans to a broader range of countries.

The idea, they said, was proposed at a board meeting on Wednesday by Dominique Strauss-Kahn, the French managing director, who is the subject of an internal investigation into whether he abused his power in conducting a brief affair with a worker at the fund.

Economists praised the idea of giving emerging markets access to dollars. But the key to the effort’s success, they said, is whether the fund can line up support from central banks.

“The I.M.F. has only $200 billion of its own resources, which is not enough collateral,” Simon Johnson, a former chief economist of the fund, said. “It would be spectacular if they could pull this off.”

milindc · Post by **milindc** » 24 Oct 2008 15:06

Roubini says "Don't be surprised if policy makers need to close down markets for a week or two in coming days.''
PC today stated that RBI will take both conventional and unorthodox measures to ride over crisis.
Surijit Bhalla on NDTV is predicting that there is 40% probability of some 'orchestrated effort' within next few weeks from all the major economies to bring some semblance of stability.

Something is cooking across the World Govs.

http://www.bloomberg.com/apps/news?pid= ... refer=home

GLG's Roman, NYU's Roubini Predict Hedge Fund Failures, Panic

By Tom Cahill and Alexis Xydias

Oct. 23 (Bloomberg) -- Hedge funds closures will eliminate about 30 percent of the industry, and policy makers may need to shut markets for a week or more to stem panic, according to presentations at an investor conference today in London.

``In a fairly Darwinian manner, many hedge funds will simply disappear,'' Emmanuel Roman, co-chief executive officer at GLG Partners Inc., told the Hedge 2008 conference in London. U.S. regulators will ``find a way to force regulation,'' said Roman, 45, who runs New York-based GLG with Noam Gottesman, 47. The firm was founded 13 years ago as a unit of Lehman Brothers Holdings Inc. and now manages about $24 billion in assets.

Nouriel Roubini, the New York University Professor who spoke at the same conference, said hundreds of hedge funds will fail as the crisis forces investors to dump assets. ``We've reached a situation of sheer panic,'' said Roubini, who predicted the financial crisis in 2006. ``Don't be surprised if policy makers need to close down markets for a week or two in coming days.''

Many hedge funds have resisted oversight by the U.S. Securities and Exchange Commission, even as policy makers coordinated global interest-rate cuts and bailed out banks this month to try and stem the crisis. The hedge fund industry is stumbling through its worst year in two decades and posted its biggest monthly drop for a decade in September.

``There needs to be some scapegoats, and they are going to go hunt people,'' said Roman, who didn't indicate when new U.S. regulation may take effect. Regulation is ``long overdue,'' he said. In the U.S., ``someone can graduate from college on a Friday and start a hedge fund on a Monday.''

More Difficult

Increased regulation and higher borrowing costs will make the hedge-fund business more difficult, Roman said. Still, financial markets have ``overshot,'' he said.

In some areas of financial markets, including loans, there are ``once-in-a-lifetime opportunities,'' he said. ``At some point, people will say this isn't 1929 to the power of 10.''

Roubini, a former senior adviser to the U.S. Treasury Department, forecast this Feburary a `catastrophic' financial meltdown that central bankers would fail to prevent and that would lead to the bankruptcy of large banks exposed to mortgages and a ``sharp drop'' in equities.

The comments preceded the collapse of Bear Stearns & Cos. and Lehman Brothers Holdings Inc. as well as the government seizure of Freddie Mac and Fannie Mae. The Dow Jones Industrial Average, a benchmark for American equities, has lost 37 percent this year, including its biggest daily drop in more than twenty years on Oct. 15.

He predicted earlier this month that the world's biggest economy will suffer its worst recession in 40 years.

`Worst is Ahead'

``This is the worst financial crisis in the U.S., Europe and now emerging markets that we've seen in a long time,'' Roubini said. ``Things will get much worse before they get better. I fear the worst is ahead of us.''

Developing nations' borrowing costs jumped to the highest in six years today as Belarus joined Hungary, Ukraine and Pakistan in seeking a bailout from the International Monetary Fund to help weather frozen money markets and a slump in commodities. Argentina risks defaulting for the second time this decade.

``There are about a dozen emerging markets that are now in severe financial trouble,'' Roubini said. ``Even a small country can have a systemic effect on the global economy,'' he added. ``There is not going to be enough IMF money to support them.''

Italian Prime Minister Silvio Berlusconi roiled international markets on Oct. 10, first saying world leaders were discussing shutting down global financial exchanges, and then saying he didn't mean it.

Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether the price of assets will rise or fall.

Singha · Post by **Singha** » 24 Oct 2008 15:12

In the U.S., ``someone can graduate from college on a Friday and start a hedge fund on a Monday.''

Stan_Savljevic · Post by **Stan_Savljevic** » 24 Oct 2008 15:18

First declared impacts in the education sector

The heads of Israel's universities have canceled the opening of the academic year, scheduled for November 2, after the government did not restore $125-million in budget cuts. University heads say the continuing crisis over the financing of Israel's public higher-education institutions, now entering its third academic year, threatens the very fabric of the country's university system.

http://chronicle.com/daily/2008/10/5610 ... _medium=en
Already tens of univs across the US are on a across-the-board hiring freeze, declared as well as undeclared. Any sdre on the academic market, try to fish for a 3 yr postdoc asap. And hope against hope that nsf/nih/afosr/onr/darpa etc dont cancel their funding midway through the year. There have been instances when this has happened in the past, I hear. And the education sector lags the economy by six months to a year. The worst is yet to come.... I see 4 relevant ads this year for a tenure track position, last year this time I saw 30 odd. Better yet, RTI. IITs/IISc need you

.

vsudhir · Post by **vsudhir** » 24 Oct 2008 17:01

Stan_Savljevic wrote:First declared impacts in the education sector

The heads of Israel's universities have canceled the opening of the academic year, scheduled for November 2, after the government did not restore $125-million in budget cuts. University heads say the continuing crisis over the financing of Israel's public higher-education institutions, now entering its third academic year, threatens the very fabric of the country's university system.

http://chronicle.com/daily/2008/10/5610 ... _medium=en
Already tens of univs across the US are on a across-the-board hiring freeze, declared as well as undeclared. Any sdre on the academic market, try to fish for a 3 yr postdoc asap. And hope against hope that nsf/nih/afosr/onr/darpa etc dont cancel their funding midway through the year. There have been instances when this has happened in the past, I hear. And the education sector lags the economy by six months to a year. The worst is yet to come.... I see 4 relevant ads this year for a tenure track position, last year this time I saw 30 odd. Better yet, RTI. IITs/IISc need you .

I hear ya bro

. Moi did the next best thing and got myself a job in aamchi yindia. Yup, R2I happening and reeealy looking fwd 2 meeting folks in brf meets back in yindia next yr on.

Singha · Post by **Singha** » 24 Oct 2008 18:14

per ET, sale of anti-depressant medicines has marked a 30% rise in Mumbai this yr vs 8%
on all-India basis.

I feel sorry for the old aged punters who sit on dalal street looking for 'tips' and
playing around with small sums hoping to catch a fish or two each day.

Satya_anveshi · Post by **Satya_anveshi** » 24 Oct 2008 18:31

Singha wrote:In the U.S., ``someone can graduate from college on a Friday and start a hedge fund on a Monday.''

my friend, whos dad runs a popular IBank ($100m$-500m) deals (in my neck of the woods), was pulling into one even before the graduation with "drop out proposal" and manage India investment. Moi being an SDRE, offered a chai-biskoot session

instead and I am sure he is thanking me today

svinayak · Post by **svinayak** » 24 Oct 2008 20:33

milindc wrote:Roubini says "Don't be surprised if policy makers need to close down markets for a week or two in coming days.''
PC today stated that RBI will take both conventional and unorthodox measures to ride over crisis.
Surijit Bhalla on NDTV is predicting that there is 40% probability of some 'orchestrated effort' within next few weeks from all the major economies to bring some semblance of stability.

Something is cooking across the World Govs.

http://www.bloomberg.com/apps/news?pid= ... refer=home

GLG's Roman, NYU's Roubini Predict Hedge Fund Failures, Panic

I was in a conf yesterday. Some people predicted a big crash by the end of the month due to the Hedge Fund.

Singha · Post by **Singha** » 24 Oct 2008 20:59

hedge funds are for the rich -- since everything is going down, no reason not to clap
when these people take the hit.

NYT is still living in its dreamworld..check its travel section..all charming rural americana
with rustic B&B of 150-200$ a night, olde worlde country inns where "reservations are
essential" and dinner with wine costs $200 for two.

I will call a bottom and realize US has woken from its dream when NYT travel section
starts recoing Patel motels, howard johnson and quality inns and embarks on vacations
to the local petting zoo as the ideal weekend getaway.

Singha · Post by **Singha** » 24 Oct 2008 21:07

time.com - chrysler is basically done as a major co. time for M&M / tata to buy up their
R&D arms and certain technologies if found interesting.

Chrysler to Cut 25% of Salaried Work Force
By AP/TOM KRISHER Friday, Oct. 24, 2008

(DETROIT) — Chrysler LLC said Friday it will cut 25 percent of its salaried work force starting next month, and the automaker warned that it will make more restructuring announcements in the near future.

CEO Robert Nardelli said the moves are being made as the company "works to find new ways to operate."

Chrysler, which has about 18,500 white-collar workers, also will cut a quarter of its contract employees — those who work for other companies under contract with the automaker.

About 5,000 workers are likely to lose their jobs, although the company would not say how many contract workers it has.

Vice Chairman and President Tom LaSorda said Friday that sales projections for the rest of this year and in 2009 aren't looking good, and he indicated that more factory closures could be coming.