Global Economy

[Neshant]

get rid of a few useless ceos at the top.

that will cure Sun's problems.

[Kakkaji]

Yes thats the one.

Meanwhile GOI says Developed world must shield countries like India-FM

I guess he doesn't get why India was invited to the meeting huh? Another midget casting a giant shadow?

It may be reflex action.

Many of our leaders (politicians/ bureaucrats) who started their careers in 50's and 60's have deep memories of an India that was dependent on foreign aid. They show it reflexively in their attitudes and statements.

The "leader of third world/ spokesman for non-aligned nations" syndrome also resurfaces during multilateral meets.

The obsequiousness will probably take another generation to dissipate.

[Rahul M]

Acharya ji, your first post on this page has been reported against with the following paragraph:

What is the point of posting such snippets without providing link to the articles? Either post the entire article so forum members can read it here, or provide a link for forum members to complete their reading. Please make this kind of posting stop. This is nothing more than 'information' spamming.

I think it has a point, kindly provide the links to go along with the snippets.
Thank you.

[svinayak]

Headlines are enough to convey the information. For futher information
they should do the google. Google is free and is a wonderful tool.

Too much information and links will kill the flow of the information.

If the person cannot understand economy and finance they can take classes.

[svinayak]

Paulson Credibility Takes Hit With Rescue-Plan Shift (Update2)
http://www.bloomberg.com/apps/news?pid= ... refer=news

By Rebecca Christie and Matthew Benjamin
Enlarge Image/Details

Nov. 13 (Bloomberg) -- Henry Paulson became Treasury secretary 28 months ago, when he was at the top of the financial world: Wall Street's best-paid chief executive officer, capping his career with a high-profile sojourn in public service.

Today, two months before he leaves office, some say Paulson is a reduced figure, damaged by the financial-market meltdown that happened on his watch and by the government's struggles to respond to it.

Like many others who have served in President George W. Bush's administration -- among them former Secretary of State Colin Powell and former Treasury chief Paul O'Neill -- Paulson, 62, will leave office casting a smaller shadow than when he arrived.

``Paulson's credibility has certainly been substantially diminished,'' said Peter Wallison, who was general counsel at the Treasury under former President Ronald Reagan and is now a fellow at the American Enterprise Institute in Washington. ``There has been a lot of shifting back and forth and he clearly hasn't thought through much of these policies. He has lost a lot of confidence from the market from all of this.''

The latest blow was his announcement yesterday that the Treasury is abandoning his plan to buy devalued mortgage assets -- the one he unveiled dramatically just eight weeks ago, and defended against congressional and market skeptics.

`A Flip-Flop'

``This is a flip-flop, but on the other hand, when they first proposed the thing, they didn't really know what they were doing,'' said Bill Fleckenstein, president of Fleckenstein Capital Inc. in Seattle and author of the book ``Greenspan's Bubbles.'' Paulson has pushed some ``cockamamie schemes,'' he said. ``So one has to ask, does he have any clue?''

``This is not something he's going to be proud to put on his resume,'' said James Cox, a law professor at Duke University in Durham, North Carolina, who has testified on securities regulation before Congress and served on legal advisory panels for the New York Stock Exchange and National Association of Securities Dealers. ``It does tarnish Paulson's image, because it shows that a lot of political capital was spent on something that most of us thought was not a good idea to begin with.''

Only history will render a final verdict on Paulson's handling of this year's cascading economic crises. But he surely couldn't have wanted to spend his final days in office this way: spearheading the massive government intervention in the banking, insurance and mortgage industries; fielding requests to bail out automakers General Motors Corp., Ford Motor Co., and Chrysler LLC, and even heating-oil retailers.

No Sunset Ride-off

``He's ended up really in kind of a hair-on-fire thing,'' said Stephen Stanley, chief economist at RBS Greenwich Capital. ``Particularly in his position, of somebody who was going to be a government official for a very short time and then ride off into the sunset, it's been very different from what he had in mind.''

The Treasury chief yesterday said he had no regrets over reversing his plans for the bailout program. ``I will never apologize for changing a strategy or an approach if the facts change,'' Paulson said at a press briefing in Washington.

In an interview with Bloomberg Television today, he said ``the original plan was a good plan. What changed was our understanding of the magnitude of the problem.''

When Paulson took office in July 2006, the Dow Jones Industrial Average was near a six-year high and Goldman was selling at $149 a share, making the former CEO's stake worth about $485 million. Today the Dow is down by more than a third for the year. Goldman, which weathered the crisis far better than Lehman Brothers Holdings Inc., Merrill Lynch & Co., and Bear Stearns Cos., trades more than 70 percent below its October 2007 peak of $250.70.

Original Goals

Paulson came into office determined to use his credibility and reputation to advance an agenda that included easing regulation of Wall Street -- citing concern that too-stringent oversight would drive investors to other markets like London and Hong Kong -- and an overhaul of Social Security to allow for taxpayer-funded private accounts.

But Bush's falling political fortunes -- anger over the botched response to Hurricane Katrina, voter weariness over the Iraq War, the Republicans' loss of congressional control -- stymied much of that agenda. Then came the credit crisis of summer 2007 -- and the subsequent market and economic meltdown that have overtaken the Bush presidency.

Paulson's defenders say he's the victim of the worst financial crisis in seven decades, and has helped prevent a deeper collapse by using his knowledge and contacts on Wall Street.

History to Judge

``He's been in a trial by fire,'' said Allan Hubbard, former director of Bush's White House National Economic Council. ``History, looking back'' will say Paulson ``responded as well as one could hope'' under the circumstances, he said.

When Paulson in mid-September unveiled plans for a broad market rescue that went beyond ad-hoc interventions in troubled companies, he was hailed by some, including Democrats, for willingness to take bold action. Former Federal Reserve Vice Chairman Alan Blinder called it a ``giant step toward a cure'' for the crisis. Paulson's expertise in finance also distinguished him from his Bush administration predecessors, who had headed industrial companies.

Paulson proposed an unprecedented $700 billion package to purchase distressed mortgage assets, aiming to unfreeze credit markets hobbled by losses stemming from record foreclosures. The Dow soared 7.3 percent in two days as officials prepared their plan Sept. 18-19.

Paulson's star waned again when he shifted the bailout program's focus in a matter of weeks.

Debating Lawmakers

At first, Paulson rebuffed calls from some lawmakers to buy stakes in financial companies as a more direct way of getting capital to lenders. He told lawmakers at a Sept. 23 Senate Banking Committee hearing ``that's what you do when you have failures, you know?'' Instead, it was better to rely on ``market mechanisms,'' holding auctions for devalued assets, he said.

Less than a month after his initial plan, he agreed to use the first $250 billion of bailout funds for capital injections. Yesterday he officially abandoned any intention of holding auctions for distressed investments.

The Dow fell as investor confidence weakened. The average yesterday closed 27 percent lower than on Sept. 19, when Paulson unveiled his plan.

``Paulson's very public and frantic panic of a few short weeks ago, along with his current state of bewilderment and indecisiveness, is most likely the single greatest explanation for the persistent doldrums in the markets,'' said Richard Armey, 60, the former House Republican leader who is now a senior policy adviser at the DLA Piper law firm in Washington.

New Focus

Now, the Treasury plans to aid the markets for automobile purchases, student loans and credit-card debt. Consumer financing has been throttled by the crisis, with issuance of student-loan and car-loan securities drying up in October.

The U-turn on the Troubled Asset Relief Program isn't Paulson's first. In July, he asked Congress for authority to provide a federal backstop for mortgage financers Fannie Mae and Freddie Mac, saying that granting the power would shore up investor confidence and that he didn't plan to use it. Less than two months later, he engineered the government seizure of the two companies.

Paulson has also been criticized for ruling out a government rescue of Lehman in September, when he argued that the industry was long aware of the investment bank's problems and should have been prepared. Lehman's downfall precipitated a worsening in the credit crisis and contributed to the near- collapse of American International Group Inc. that month.

`Decisive Mistake'

``That was the worst and, in fact, the decisive mistake on the part of the administration,'' Mortimer Zuckerman, billionaire chairman of Boston Properties Inc., said in an interview earlier this month, referring to letting Lehman go. ``When financial historians write about this, they are going to say that was the disaster.''

So far, taxpayers have provided about $1 trillion for rescues of private companies, which Paulson has called ``terribly objectionable'' to his belief in free markets.

``The Treasury is advocating things in the name of damage control that one would never have thought a Republican administration, or any administration, would have been actively seeking,'' said Alice Rivlin, former vice chairman of the Federal Reserve and former budget director under President Bill Clinton.

New measures are likely under incoming President Barack Obama, who with other Democrats have called for action to stem foreclosures and ease falling home prices.

``If you want to stop this next year of rather terrible pressure on the housing market, you have to intervene in some way,'' said Thomas Zimmerman, a UBS AG mortgage market analyst in New York.

To contact the reporters on this story: Rebecca Christie in Washington at [email protected]; Matthew Benjamin in Washington at [email protected]
Last Updated: November 13, 2008 17:48 EST

[Rahul M]

Headlines are enough to convey the information. For futher information
they should do the google. Google is free and is a wonderful tool.

Too much information and links will kill the flow of the information.

If the person cannot understand economy and finance they can take classes.

it's up to the readers to decide if they want information overload or not. we have no job deciding it.
and BR readers do know of google without you or me mentioning it.
kindly do provide the links. otherwise the snippets serve no purpose and will have to be removed.
thanks.

[Singha]

indeed, sometimes posting entire article is too long but just posting the link is too brief.
I sometimes just post an excerpt or the link & a excerpt.

[Rahul M]

mayurav, kindly don't shoot off comments without having any understanding of the issue.

singha ji, you are talking of an entirely different case. please read the first post of this page to understand what my original point was about.

[rsingh]

About G 20 meet. First thing they have to change is the Bap ka Raj of oieropeans to head IMF and American to head WTO. This has to change.

[Suraj]

I would agree with the other moderator. Please post links when excerpts are posted here.

Why are people making a big deal of it ? Links to source are something users are asked to provide as a matter of routine, and this applies to everyone. Acharya has been reminded about this by multiple moderators in the past, and is this is hardly a new request to him.

Moderation though, has to be moderate as well, so unless the topic is important, we just let it go when people sometimes neglect to do so. While I appreciate the attempt to provide a big picture, when explicitly asked to post links, please do so. Responding with 'go use google' is rude.

If you can post an excerpt you very well can and should post a link too, unless you received it indirectly without attribution (which you should mention). It is for the reader to decide whether to click a link or not.

I will be deleting all the offtrack conversation above.

[vsudhir]

Citigroup to cut 10 percent of jobs: source

[Singha]

GM goes into a paki "too big to be allowed to fail" mode:

WSJ

GM Blitzes Washington in Attempt to Win Aid
By JEFFREY MCCRACKEN and JOHN D. STOLL

General Motors Corp., hoping to sway the battle in Washington over an auto-industry bailout, has begun telling federal officials that a bankruptcy filing by the car maker would set off a chain reaction hammering hundreds of suppliers and dealers -- and in turn the company's Detroit rivals.

GM is attempting to set the terms for what looks to be a showdown among the lame-duck U.S. Congress, President Bush and the incoming Obama administration. On Friday, Senate Majority Leader Harry Reid signaled he will move forward on Monday with a bill giving the industry access to the $700 billion Troubled Asset Relief Program. That entity, known as TARP, was set up by the government in October to help ailing banks and other financial firms.


See what Ford, GM have been up to in recent years as their stock price and sales declined.

The Bush administration and many Senate Republicans oppose giving auto makers access to TARP. Instead, President Bush on Friday urged Congress to speed up the release of $25 billion in already-approved loans to the auto industry. He asked Congress to drop requirements that those loans be used to help the industry retool to meet higher fuel-economy standards, a step many Democrats oppose. The Republicans have enough votes to block a deal in the Senate.

Amid the political horse trading, GM is holding meetings this weekend with U.S. Congressional leaders, the Bush White House and members of the Obama transition team, according to people familiar with the situation. The efforts are an attempt to show policy makers how a GM bankruptcy filing would unleash unintended consequences that could cripple the country's industrial base.

GM's board is composed of several people considered influential in Washington circles, and some of them are pitching in on the lobbying effort, say people familiar with the process. Among these directors are Erskine Bowles, Bill Clinton's former chief of staff; Phil Laskawy, recently named as the non-executive chairman of Fannie May; John Bryant, a key Obama fundraiser; and Armando Codina, who is a close personal friend of President Bush. Through a spokesman, Mr. Codina declined comment. The other directors could not be reached.
video


Warning of systemic risk may seem like a self-serving step for a company seeking a government bailout. But GM's new lobbying nonetheless raises the political stakes for Congress and president-elect Barack Obama.

A bailout would be a boon both to the companies and, by saving jobs, to organized labor, a major supporter of Mr. Obama in the election. Auto-related industries employ 3.1 million people around the country, encompassing everything from car-seat makers to auto dealers to auto-parts stores. GM itself employs 123,000 in North America and does business with thousands of North America suppliers.

Part of GM's premise is that a bankruptcy would threaten both jobs and the health of the government's pension-benefit insurance arm, which covers millions of workers not in the auto industry. A GM bankruptcy would swamp the fund, the argument goes, placing another burden on the strained federal budget.

"There is no Plan B being discussed beyond a government bailout," said one top GM adviser said Friday. Another person close to GM said executives recently told GM's board they are "increasingly optimistic" that GM will receive a liquidity injection before the end of the month.

To whip up support for a bailout, GM has been sending letters to tens of thousands of dealers, supplier executives, employees and union members. The letters have encouraged them to call and write Congress, and to contact local media with various "talking points" about the effects of a GM bankruptcy.

Detroit's three auto makers -- GM, Chrysler LLC and Ford Motor Co. -- share many of the same suppliers for such parts as instrument panels, wheels and electronics. A recent analysis by Chrysler LLC found that 96% of its largest suppliers also do business with GM, Ford or both.

Advocates of a bailout point to the complexity and impact of a GM bankruptcy. But New York University business professor Edward Altman, a long-time analyst of corporate bankruptcies, says the federal government should only put money into GM through a pre-planned bankruptcy process that knocks out GM shareholders, rolls bondholders into equity and renegotiates union labor contracts.

Mr. Altman recommends the government provide financing to help GM only after it files for protection from creditors.

"I do not think putting more money into the failed business strategy there makes sense," said Mr. Altman. "The government should help, but it should use bankruptcy as part of the more-efficient process that also limits exposure to taxpayers." Such an approach, says Mr. Altman, would also avoid risk to the broader industry, because GM could use the process to keep paying its most critical vendors.

A GM bankruptcy could create a cascading set of bankruptcies among these part suppliers, other auto makers and suppliers. That's because a bankrupt company could take months, if ever, to pay its pre-bankruptcy bills. Such delays would put stress on suppliers that already run on thin working capital and that feed just a few end auto makers, they argue.

This spillover would most directly hit Chrysler and Ford, who have greater GM overlaps. GM officials are telling lawmakers that the failures at the parts makers would bring them down, too.

The failures could also hit Asian car makers like Toyota and Honda, say automotive experts, who estimate 20% to 25% of suppliers are shared by those two auto makers and Detroit's Big Three.

In all, as many as 5,000 parts suppliers dot North America, with combined annual sales around $150 billion to $200 billion, according to Craig Fitzgerald, a partner at accounting firm Plante & Moran, which advises parts makers.

In addition, the parts business has three times as many workers as the auto makers. There were approximately 489,500 auto-parts production workers at the end of last year, a figure which fell to 415,700 at the end of September, according to the Department of Labor. There were approximately 151,000 auto-assembly workers in the U.S. at the start of 2008, a number that slid to 127,300 at the end of September.
[On the Job]

Beyond suppliers, a collapse at GM also carries a risk to thousands of auto dealerships and to the government's pension-benefit insurance arm.

On average, auto dealerships employ 7.3% of a typical state's payroll, and 740,000 dealership jobs nationwide come from the Big Three makers. GM's 6,000-plus dealers employ about 325,000 of those people, according to estimates from the National Automotive Dealer Association.

One of the biggest fears in Washington is how a bankruptcy filing by one or all of the auto makers would affect the federal agency that insures the retirement savings of almost 44 million Americans. The Pension Benefit Guaranty Corp. ended 2007 with a $14 billion deficit, though that shortfall was expected to shrink to about $11 billion. Were GM to place its pension burden on PBGC, it would more than double the agency's current shortfall.

"GM has not been able to give us a straight answer about the funded status of their pension plan," said PBGC Director Charles Millard. "We can't successfully monitor the situation if they are not responsive."

Detroit's pension funds have also been hit hard as stocks -- in which they are heavily invested -- have declined. GM's own pension fund has enough money to meet obligations now, but a Deutsche Bank report estimates that given the market's recent performance, it could be under-funded by $18 billion at the end of 2008.

[Neshant]

Even if they get a big bailout as I'm sure they will, is there any hope of them turning around their situation. If the answer is no, then its just prolonging the inevitable. When factory auto workers are making ridiculous salaries for turning a screwdriver, you just know their finances will be back to square one 6 months after a bailout.

What they need is an IMF type loan with stringent conditions attached. Here is a plan of action :

Start the cutting at the top. 90% of the ceos have got to go. Salaries of factory workers have to be halved from ridiculous 70K or whatever it is. The whole workforce should be downsized to its core personelle only. Finally, some amount of that money should be spent on new prototypes worthy of mass production within 3 years.

[geeth]

>>>Even if they get a big bailout as I'm sure they will, is there any hope of them turning around their situation. If the answer is no, then its just prolonging the inevitable. When factory auto workers are making ridiculous salaries for turning a screwdriver, you just know their finances will be back to square one 6 months after a bailout.

I was resisting so far from making such a comment ...It is not just with auto industry, but almost all other manufacturing / service sectors are like that onlee.

An example in point is the merchant fleet under US flag. How many ships are there under US flag? and the crew wage scales under US flag ? some of the Captains must be drawing more than the Vice President of the US of A and junior most crew mustl be drawing more than that of an Indian captain. On top of it, they don't do any maintenance work, (no 'third world' type work, if I may quote Mathew Hayden), draw extra allowances and what not. The ships get corroded fast...and all these charges are added to the charter rate - no wonder only US mmilitary can afford to hire these ships.

How long they can live like this, asking the rest of the world to work, while they are born to enjoy life. I wish they fall with a loud thud.

[kshirin]

kshirin: why don't you post the articles you're talking about, that indicate the plan to join with the Chinese during the Nov 20 summit ? That might give us something to start with.

Sorry for this late response, posting a similar article as I had not saved the original - point is - why should China, which was the US' better half in contributing to the present crisis with its manipulated exchange rates leading to huge US current account deficit etc. be considered a responsible member of the global financial community at par with India? Just a thought...

http://timesofindia.indiatimes.com/Indi ... 701893.cms

India, China likely to seek bigger say during G-20 summit12 Nov 2008, 0241 hrs IST, Indrani Bagchi,TNN

NEW DELHI: As PM Manmohan Singh prepares to travel to Washington for the G-20 summit, the aim will be to lay the ground for a comprehensive overhauling of the global financial system. But whether the world is changed after the meeting or not, India will hope to achieve a few significant successes.

First, India will be looking to stake out its position as a responsible member in the international financial system. This will be primarily through the statement that the PM will make at the meeting.

The UPA government is looking at this summit as a huge diplomatic opportunity for India to be able to push the envelope. And who better to do it than Singh, whose economic acumen is rivalled only by UK's Gordon Brown. Also, given the fact that Singh actually appears to have a plan will give him a great deal of space.

The PM will, like others leaders, focus on a couple of things: first, the current crisis has a "made in the USA" label, and developing economies like India should not be burdened with its resolution in a way that affects its own economy more than it already has. The west should not turn protectionist at this point as they try to fix their own homes.

The globalisation of the financial system means that countries like India hurt when the bigger economies flout the rules. To fix this, economies like India and China need to have a bigger say in the running of the global financial system. This will be the major thrust of the PM's argument, where he will have a lot of support from the other BRIC countries — Russia, China and Brazil.

Most importantly, the forum will give an opportunity for India and China to show a degree of coordination and cooperation that could work to mutual advantage. China has the heft and India the voice to be able to chip away at a global system that has so far excluded them.

The IMF is enjoying a resurrection that it had not expected and though India has never been a great votary of the Bretton Woods sisters, a new generation of these organisations, India hopes, will put India and China at the high table. The IMF is too small a body to take on the crises that are hitting the world right now. Besides, the voting system is unlikely to be changed without a fight and that is what makes the IMF what it is and any change will need the signature of 180 countries.

India is not a member of the Financial Stability Forum that was set up after the 1990s Asian financial crisis. That body has tiny European countries like Netherlands in it, but not economic giants like India and China. The Basel committee, which decides banking standards and has failed miserably in the current crisis, has left out India and China and there is no chance of a rework there yet. So where will India and China put themselves in the new financial system? Nobody is quite clear, except for the fact that both countries desire a change.

Ultimately, the G-20 is too large a grouping to be able to take any strong decision. At the most the summit is likely to endorse the communique issued by the finance ministers and central bankers in Sao Paulo, Brazil, over the weekend. But apart from the fact that Manmohan Singh will firmly position India as a leading participant of the `change', the meeting is expected to end in a decision to meet again.

The incoming US president, Barack Obama, will not be present at the summit, sensibly enough. There is only one president of the US at any given time and there is no need for Obama to be "contaminated" with any decision during a Bush presidency, according to reports from the US.

[Raj]

acharya ji, why are you hell bent on confusing issues ?

you call this a condensed digest ?

Bretton Woods gold/dollar peg unlikely at G20
Reuters - 1 hour ago
By Frank Tang-Analysis NEW YORK (Reuters) - Gold surged on Friday as world leaders gathered to battle the economic crisis, amid talk of a new Bretton Woods ...


Relaunching Capitalism
Newsweek - 49 minutes ago
Don't expect the G-20 summit to be a new Bretton Woods, but it might still do some good. A look at how an American made crisis has shaken economies the ...

I think I know how this "condensed digest" was created.
Go to news.google.com
Type in a subject area say: Bretton Woods , and click search
For the "News results" category, click "Text Version"
Click the "Sorted by date"
Viola , you are ready for copy and paste from google to bharat-rakshak.

[Singha]

GM+Chrysler is akin to West+East pakistan coming together as a new success story.

imo it doesnt matter when Dem or Republicans rule, the US std of
living is in process of a 30-50% haircut depending on where on is on
the income scale and nothing is going to slow or stop this process.

any attempt to stop this process will probably just create more
trouble.

the days of kingsize living for everyone in US are over...those who
made their money and got out of the games are ok, those who are
young will not see the kingsize days.

[Singha]

Fidelity is the latest in the line 1300+ 1700 next qtr.

some of their MFs have been underperforming for a long time now,
even before this - like magellan.

they sure lost a lot of mojo when peter lynch retired.

[mayurav]

Yes, the US std of living has to come down. The only question is at what rate? Can the US gov manage to do it over a generation by graduated inflation? Or will it come down with a big thud over 5-10 years? I am afraid it might be the latter.

[vsudhir]

The party's beginning

Chan Akya in Asia Times on what should ideally happen at the G20 conference and why.

Very good, perspicacious, layman-level writing and exposition. And awesome analogies and examples too. Good read, IMHO.

[vsudhir]

'Balance of economic power is shifting to emerging nations':PM

[Ameet]

UAW leader says no more concessions...............must have received word that they will receive the bailout

http://www.google.com/hostednews/ap/art ... wD94FH2IO0

COLUMBUS, Ohio (AP) — Even as Detroit's Big Three teeter on collapse, United Auto Workers President Ron Gettelfinger says workers will not make any more concessions and that getting the automakers back on their feet means figuring out a way to turn around the slumping economy.

Gettelfinger also on Saturday called on Congress to act quickly on a bailout plan for the auto industry. He says something needs to be done before President-elect Obama takes office in January.

Gettelfinger says it is unfair to call on workers to make more sacrifices, noting that previous cuts workers have agreed to have helped steady the automakers.

[Neshant]

A clue to where the GM bailout money will go. They will lay off the union workers of North America. They will build factories and hire drones in China. Then import the finished product into America.


Troubled GM says it is profitable in China, will continue to invest

http://news.yahoo.com/s/afp/20081112/ts ... 1112143110

BEIJING (AFP) – Troubled General Motors said Wednesday that it was making money in China and was continuing its investments in the large Asian market.

He told AFP that various investment projects GM had committed itself to in the past were "all on target and on track."

These included expansion projects for existing plants in the cities of Qingdao and Yantai, both in east China's Shandong province, he said.

"We are not withdrawing or holding back any investment in China," he said.

He declined to comment on reports in the local media that it planned to increase its 34-percent stake in SAIC-GM-Wuling, a joint venture that produces commercial vehicles.

"I will not speculate on where money will come from for future investment of speculative nature. Right now it's too early to talk about that," he said.

[svinayak]

Economy | 16.11.2008
Emerging Economies Gain Unprecedented Clout on Global Stage
http://www.dw-world.de/dw/article/0,214 ... 11,00.html

A farmer works in a rice field in China
Großansicht des Bildes mit der Bildunterschrift: The emerging countries didn't start the finance crisis, but are strongly affected by it

The world's emerging economic powers came out of the historic financial summit in Washington emboldened by their new role in fixing the global economy.

The Washington summit marked the first-ever meeting of leaders from the Group of 20 (G20) nations, a bloc that brings together the world's leading industrial nations and some of the top developing economies including China, India and Brazil.

The gathering's final declaration made clear that the wider bloc will be central to reforming the global financial system over the coming years and made no mention of a role for the smaller G7 or G8 -- a sign that emerging economies will keep their seat at the policy table for the foreseeable future.

Many leaders spoke of the arrival of new world order, all the more momentous because it happened at a gathering in the United States.

Outgoing US President George W. Bush, criticized for failing to reach out to the international community for much of his administration, played host to the emergency summit.

Brazilian President Luiz Inacio Lula Da Silva Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Brazil's Lula called the summit a "historic day"

"This is a historic day. I leave with the certainty that the political geography of the world has been given a new dimension," Brazilian President Luiz Inacio Lula da Silva said after the meeting.

G20 agrees on action plan

World leaders on Saturday agreed on the principles for major reforms of how financial institutions are regulated. The G20's finance ministers are instructed to hammer out the specifics in the coming months, followed by another summit in April.

Many developing countries have some reason to gloat. The financial crisis that has threatened the global economy was not of their making. Instead, it was the result of financial firms in wealthy nations taking unnecessary risks in the US mortgage market.

The International Monetary Fund has forecast a recession in most advanced economies in 2009. The 15 countries in the euro zone this week officially slipped into recession, and the United States is likely to follow suit.

That means powerhouse emerging economies in Asia, the Middle East and Latin America are likely to be the key pillars of economic growth next year. China's economy, though slowing, is still forecast to grow at an 8.5-percent clip next year. India will grow between 7 and 7.5 percent.

"Today's summit was significant because of the people present. A new world economic order is developing that is more dynamic and more inclusive than any we have yet seen," said Dominique Strauss-Kahn, managing director of the International Monetary Fund.

But while the G20 represents a broader array of interests than in past crises, aid groups lamented that it still failed to capture the views of the world's poorest nations.

Critics: poor not included

The economic summit produced an action plan, but the agreement only includes 20 countries. Many of the poorest and most vulnerable countries were not included in this summit, yet they may suffer the most from the economic downturn," said Gawain Kripke of Oxfam International.

A young boy in a trash heap eats rice from a boyBildunterschrift: Großansicht des Bildes mit der Bildunterschrift: A two-tier world is not acceptable, said Zoellick from the World Bank

The World Bank has warned that hundreds of millions could be plunged back into poverty as developing nations, especially in Africa, face a triple threat to their economies from the credit crisis as well as higher food and energy costs.

"The poorest developing countries must not be left out in the cold," said World Bank President Robert Zoellick. "We will not solve this crisis, or put in place sustainable long-term solutions by accepting a two-tier world."

The G20 leaders pledged to keep their aid commitments to world's poor and resolved not to open up new barriers to trade in response to the economic downturn.

But one of the keys for the developing world -- representation in global financial institutions -- will take much longer to solve. The G20 resolved to give emerging countries a greater voice in the IMF, World Bank and Financial Stability Forum, which are largely controlled by the US and Europe.

The pace of those reforms will answer whether this new world order is here to stay.

[svinayak]

http://www.dailyreckoning.com.au/hell-m ... 008/11/13/

Hell, Meet Handbasket, Part I
By Doug Hornig • November 13th, 2008 •

Until recently, average Americans were only dimly aware that there were two types of banks - the commercial banks nearby and the major investment banks located in faraway New York. Understanding the bank where they conducted business, with people they knew, was enough. The big, impersonal Wall Street banks - which dealt in higher-risk investments with potentially higher rewards - were for companies and the very rich.
While ordinary citizens thought little about the distinctions among banks, the government did. Seventy-five years ago, as the Depression deepened, lawmakers were desperately trying to determine the causes of the crisis (read, looking for scapegoats). Some of the things they found were conflicts of interest and opportunities for fraud linked to the mixing of commercial and investment banking.
Congress decided to erect a "wall" between commercial and investment banking, and so passed the Banking Act of 1933, usually referred to as the Glass-Steagall Act. Glass-Steagall created the Federal Deposit Insurance Corporation (FDIC) to protect depositors in commercial banks, and it forbade commercial banks to underwrite securities or act as stockbrokers or dealers.
Glass-Steagall remained in force for six and a half decades, although various deregulatory measures and changes in exchange rules chipped away at it. Notably, in 1970 a rule excluding public companies from membership in the New York Stock Exchange was dropped. The last major private institution, Goldman Sachs, went public in 1999. This allowed investment banks to sell stock to any potential investor and greatly expand their capital base.
Over the last two decades of the 20th century, the financial industry lobbied vigorously for the repeal of Glass-Steagall and, in 1999, they got their way with the enactment of the Financial Services Modernization Act. The door was opened to consolidation in the banking industry.
With one stroke of a pen, commercial bankers could begin turning their loans into investment products. (Glass-Steagall had prevented them from selling debt-backed securities for which they were the underwriters.) And Wall Street investment banks were suddenly in the mortgage business. It would prove to be a marriage made somewhere significantly south of heaven.
We're not fans of government regulation, but a deregulated marketplace carries with it certain imperatives. It functions as it should only in the absence of both criminal and boneheaded behavior. We can erect oversights meant to prevent the former and laws to punish it after the fact. But all the regulation in the world won't do much about the latter, since both market traders and the regulation itself may be boneheaded.
The biggest factor here was the removal of Glass-Steagall prohibitions, but there were two other important tweakings.
The Commodities Futures Modernization Act of 2000 transformed the new mortgage-backed securities into a commodity, enabling them to be traded on futures exchanges with little oversight by any federal or state regulatory body.
Completing the trifecta, the Securities and Exchange Commission in 2004 waived its leverage rules. Previously, broker/dealer net-capital rules limited firms to a maximum debt-to-net-capital ratio of 12 to 1. But under the new regulations, five companies - Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns, and Morgan Stanley - were granted an exemption, which they promptly used to lever up 20, 30, even 40 to 1.
Just as Congress was repealing Glass-Steagall, the tech stock bubble was inflating beyond sustainability. It would soon be pricked, ushering in a brief recession during which investors began the hunt for the next big thing.
Well, how about housing?
Back in 1977, Congress passed the Community Reinvestment Act, which had the goal of extending homeownership to the largest possible pool of Americans. Over the next 25 years, legislative supplements, a robust housing market, and aggressive government enforcement of "fairness in lending" combined to weaken bank standards of who did or didn't qualify for a loan.
But that was just the beginning. In an effort to end a recession in the new century's first years, the Greenspan Fed reduced interest rates to near nothing and poured liquidity into the financial markets. At the same time, capital that had fled the stock market was looking for action.
The commercial banks - and independent mortgagors like Countrywide Credit - were awash in cash. They started lending it, and every borrower's credentials were deemed excellent, even those with low income, bad credit, and no money for a down payment.
The perfect storm was building. But at first, boy, did things ever look rosy. The country's homeownership rate - 62.1% in 1960, rising to only 64.1% in 1994 - shot up to 68.9% by 2006.
As homeowner mania seized hold of the public imagination, people began treating their homes as ATMs. If they needed cash, they borrowed against their growing equity. Real estate speculators flipped houses like crazy. Why not, when there's no risk? Housing prices only head in one direction, up, up, up, right?
It sure looked that way. The yearly average median price of an existing home went from $23,000 in 1970, to $62,200 in 1980, to $97,300 in 1990, to $147,300 in 2000 and crested at $221,900 in 2006. Astonishingly, despite recessions in the early '80s and early '00s, there wasn't a single down year for housing in all that time.
However, in 2007 housing became the latest bubble to burst, pricked by unrealistic prices, overbuilding, and the retreat from ultra-low interest rates. Concurrently, as house prices finally began to drop, a whole bunch of those no- or low-interest loans began to reset.
Despite the well-earned reputation of some Wall Street high rollers, bankers tend not to be a reckless lot, nor financial dunces. In general, they would rather deploy a large amount of capital into a safe, low-yield investment than put a small amount of capital into something with very high risk.
With the new environment, however, the game changed. Commercial bankers found themselves making loans to shakier and shakier recipients, while at the same time, the investment banks and their clients were clamoring for new investment products.
So bankers did what any conservative person would do. They hedged their bets. They bundled up their loans and sold the packages to the investment banks. The outcome was essentially the mortgage business being uprooted from the commercial banks and transplanted into the investment houses, which have far less restrictive requirements about reserve capital, far fewer limits on the buying and selling of securities, and far less regulatory oversight.
The investment banks did not set out, of course, to become landlords. They just wanted some product to sell for which there was a ready market. As capitalist ingenuity collided with profit motive, they found there was no shortage of products that could be created; the mortgage bundles were sliced, diced, and repackaged into a bewildering array of securities, like structured investment vehicles (SIVs), collateralized debt obligations (CDOs), mortgage-backed securities (MBSs), and on and on.
The extent of the slicing and dicing into what financial chefs refer to as tranches was such that the original mortgage might be tossed from buyer to buyer, or even itself split into parts. Each time a package was put together and sold, the seller stretched to get top dollar for each tranche, requiring the underlying assets to be risk-rated and then assigned real-world value. In the end, rating services had little idea what they were rating (we're being charitable here), and buyers had no idea what their purchase was really worth.
And always lurking in the background was the possibility that defaults on the mortgages supporting the entire process could have a profound ripple effect, given that these products became increasingly leveraged. Knowing this, traders invented credit default swaps (CDSs), those gnarly little creatures that morphed into Godzilla after 2004.
CDSs are an insurance policy, a way of dealing with fear, and a device for attenuating the risk inherent in trading products one may not fully understand. Those buying the protection pay an upfront amount and yearly premiums to the protection sellers, who agree in return to cover any loss to the face value of the security. The result is a private, two-party contract, devoid of regulatory oversight.
There are a bunch of nasty horseflies in this particular ointment. For one, the holder of that security (who is now "protected" by a CDS) might turn around and sell it to a third party, who might himself insure and resell it, and so on, creating an impossibly complex chain of ownership and obligation. Additionally, the CDS itself can be traded over the counter. Furthermore, any of the underlying assets might also get partitioned into different tranches, adding to the confusion. And finally, short sellers can work on just about any joint in the structure.
And here's the really big rub. Suppose the party providing the initial insurance protection - having already collected its upfront payment and premiums - doesn't have the money to pay the insured buyer when a default occurs. Or suppose the "insurer" goes bankrupt. In either instance, the buyer who thought he was protected finds himself left naked and alone.
However, that possibility seems not to have been considered as the financial world created an interlocking system of derivatives that not even a Cray supercomputer could sort out. The only certainty: it was an arrangement that depended on a robust economy and rising house prices.
Except, of course, things didn't work out that way.
When the housing slump hit, defaults in the relatively small subprime sector (less than 20% of mortgages) started a chain reaction that raced through the derivatives market, the effects compounding geometrically, until finally the world financial structure was facing collapse.
To be continued, tomorrow...
Doug Hornig
for The Daily Reckoning Australia

Hell, Meet Handbasket, Part II
By Doug Hornig • November 14th, 2008 •

When capital is allocated in a free market, it moves toward the productive, and the economy tends to prosper. By the same token, when it is misallocated, an economy can hit the skids.
We've had decades of misallocated capital in the U.S. Instead of saving, we've been spending... way beyond our means. Rather than investing in something productive, we've been gambling, taking on ever greater risks in the hope of the big payoff. Instead of creating the clean balance sheets that support stability - at all levels, personal, corporate, and governmental - we've piled up mountains of unsustainable debt.
The tragedy is that the prudent will suffer right along with the reckless. Misallocations of capital must be unwound, one way or another, before an economy can get back on its feet. It will be no simple task, and it's made even more difficult by those who put themselves in charge of the clean-up: certain residents of Washington, D.C.
At the center of the storm are two men who propose to save the nation, and they could hardly be more different.
Secretary of the Treasury Henry Paulson is the Street's guy. The former CEO of Goldman Sachs, the most powerful and successful investment bank, he brings a Wall Street insider's perspective to the table. However committed to public service he may be, he cannot be expected to act against the interests of his friends in the banking community.
And then there's Fed Chairman Ben Bernanke, a pure academician. For better or worse, Bernanke's specialty is America's Great Depression, and he considers himself an expert on the subject. Above all else, he wants to be remembered as the guy who understood how to steer the country away from the shoals of a Second Great Depression.
There is no question that Big Ben and Hammerin' Hank are trying to navigate in unfamiliar waters. Today's economy hardly mirrors that of a decade ago, much less the conditions of the 1930s.
Back in the spring of 2007, as the initial cracks in the structure began to appear, few were expecting the broken-levee crisis that has since unfolded. Savants such as our own Doug Casey and Bud Conrad saw it coming and said so, but no one in the mainstream was listening.
What was actually happening was that the first dominoes - subprime borrowers who should never have been approved - had begun to fall. In and of themselves, they would have been little more than straws in the wind. But because of the multiplier effect of the derivatives market, their influence reached far beyond a few blown mortgages. As more and more debtors were unable to pay, mortgage-backed securities lost value. And then the securities based on the MBSs lost value. And then...
Here's where CDSs were supposed to ride to the rescue. They didn't, for the simple reason that they had long since strayed far from their original insurance intent and become primarily an instrument that gave derivatives market players access to an asset class (mortgages) without having to actually own the asset.
As MBS values were hammered by defaults on the underlying loans, buyers of CDS protection began trying to collect. That hit CDS sellers, who were being drained of cash. Further out, derivatives speculators who had bet the wrong way defaulted or went bankrupt, sending shockwaves back down the line. Slowly at first, and then with increasing speed, the capital necessary to keep the system alive started drying up.
Everyone is familiar by now with the institutions that have collapsed or been bought out or taken over by the government. The list of names is stunning: Bear Stearns, Countrywide Credit, MBIA, Fannie Mae, Freddie Mac, AIG, Lehman Brothers, Washington Mutual, Merrill Lynch, Wachovia. Wall Street has undergone a transformation unimaginable a year ago. The big investment banks are gone - bankrupted or swallowed up by someone else. Even the two that remain standing, Goldman and JP Morgan, have had to reinvent themselves as bank holding companies to save their own hides.
The movement of capital among financial institutions is based not only on integrity but on confidence. Right now, that confidence has evaporated. Banks are carrying so much paper of indeterminate value that it's impossible to price in the risk of making a loan. So they aren't lending to each other, out of fear that they'll never get their money back.
The credit market, upon which our economy depends, has seized up.
When the government finally got around to admitting that there was a problem, it was already too late for any simple fix. So Washington had only two options: stand back and let the market sort things out or take drastic, emergency action.
No one knows quite what to make of Washington's response to the credit crisis. Some are howling that it's socialism, others that it's fascism or, at best, corporatism, an unholy alliance of private enterprise and the state.
Whatever the name, there is no question that the government is boldly going where none has gone before, helping to bail out some financial institutions and seizing control of others.
The Treasury Department now has $700 billion - albeit with some strings attached - with which it can buy up toxic waste paper through the Troubled Asset Relief Program (TARP). Taking this direction, instead of making direct loans, allows the "assets" they buy to be resold somewhere down the road. And perhaps, the plan's defenders say, even at a profit. Like that's gonna happen.
Proceeding in ways never before tried, in early October the Fed announced it was opening the Commercial Paper Funding Facility. For the first time, it will buy unsecured paper. To facilitate this and to cover potential losses, the Treasury will deposit an unspecified amount at the Fed. This is in addition to the Treasury's own buying spree, and the Fannie Freddie conservatorship, and the expansion of the FDIC to cover deposits up to $250,000, a move likely to send that agency back to the Treasury for another fill-up.
All the government's actions to date have accomplished... well, precious little. For the time being, credit remains frozen. Banks are still making overnight loans to other banks, but only very selectively. The stock market, despite coming off its lows, is extremely volatile after enduring its worst crash ever. Commodities have sold off. States and municipalities are facing severe budget cuts and, in some cases, bankruptcy. Money markets are in trouble. Pensions and retirement funds are at risk. And recession, or worse, looms increasingly large on the horizon.
Nor is the crisis purely an American problem. Much of the U.S. bad paper was sold to gullible Europeans, and world economies and markets are so interconnected that if one sneezes, someone else catches a cold. Already there have been big bailouts in Germany and England. The Irish government recently announced it was guaranteeing all bank deposits, which attracted a flood of money from elsewhere in the European Union, enraged other members of the EU, and raised questions of how long that shaky confederation can endure as each country charts its own path through the economic minefield.
This is a once-in-a-lifetime event, a train to nowhere, and it will cause no end of suffering.
Since we can't stop it, we'll do the next best thing, which is to protect ourselves. That means assessing the likely fallout from the government's meddling in the market, and developing guidelines for the best way to ride out the hurricane.

Some consequences are already baked in the cake. Casey Research Chief Economist Bud Conrad has been studying the unfolding crisis for years. Based on his work, this is what we foresee:
• More financial institutions will collapse. So will many hedge funds. Money market funds are also shaky; although the government will do all it can to keep them solvent, those that invest in anything but Treasury bills are at risk.
• The economy will fall into recession. By most lights, it's already here. It won't be brief, and there is even a chance that despite all the Fed's pump priming, we could drop into a depression. For however long credit remains tight, business will be unable to function normally, and the consumer-driven economy will grind to a halt.
• The whole structured finance model under which we've been operating is broken. The packaging of mortgages and other forms of consumer debt is impossible when no one will buy the packages. The trillions of dollars of outstanding mortgage derivatives will have to be unwound somehow.
• Without debt leverage, private equity financing is dead. Raising money for business start-ups or expansion will be extremely challenging. IPOs will be few and far between. Leveraged buyouts are gone. Mergers and acquisitions will mostly be limited to distress sales.
• At best, the government will succeed at what it's trying to do, i.e., stave off a depression, by sacrificing the dollar and allowing a fairly high level of inflation. If we're lucky, it won't turn into hyperinflation.
• Interest rates are going up. On the day of the coordinated, worldwide rate cut, the Fed lowered its discount rate by 50 basis points, yet the yield on the 10-year Treasuries rose from 3.5 to 3.7%. The Fed's credibility is about shot, as it has debased its own balance sheet by swapping good debt for bad. With more than half of its reserves gone, it could itself become the subject of a Treasury Department bailout.
• It is highly likely that the era of U.S. economic dominance, when the almighty dollar served as the reserve currency of the world, is drawing to a close.

But on the bright side... Well, there is no bright side. The hole that we've dug for ourselves will take a while to climb out of, and it won't be easy. But at least you can protect yourself.

[Nayak]

This should warm the hearts of fellow jingo-abduls -

No Bonuses for 7 Senior Executives at Goldman

http://www.nytimes.com/2008/11/17/busin ... f=business

Article Tools Sponsored By
By BEN WHITE
Published: November 16, 2008

As public scrutiny of Wall Street pay intensifies, one bank has already decided what it will award in bonuses to its top seven executives this year: nothing.

Top executives at Goldman Sachs sent a request to the company’s directors on Sunday asking that they receive no bonus pay for their work in 2008, and the directors agreed, a company spokesman said.

The decision is likely to put heavy pressure on Goldman Sachs’s competitors, including Morgan Stanley, to take similar action as they decide on year-end bonus figures in the coming weeks.

The move could also ease political pressure on Goldman Sachs and reduce negative reaction to what is expected to be a bleak fourth-quarter earnings report from the bank in December, including perhaps its first loss of the credit crisis.

It comes after the nation’s largest banks, buckling under bad mortgage debts and sinking share prices, won approval for a $700 billion bailout from the federal government, including $300 billion in direct equity investments. Goldman and Morgan each received $10 billion. The bailout package includes some strictures on executive pay, but the industry does not view them as especially strong.

Public officials including the New York attorney general, Andrew M. Cuomo, and Representative Henry A. Waxman, Democrat of California, have been warning banks not to use any taxpayer money to award bonuses to executives. Industry lobbyists and interest groups have also warned executives at the banks that any big pay numbers this year could generate a significant public backlash.

Both Mr. Waxman and Mr. Cuomo have requested detailed information from the nation’s largest banks on what they intend to pay this year and how they structured pay in previous years.

There is a widespread belief that the way Wall Street awarded bonuses in recent years helped feed the risky behavior that eventually created big losses on exotic debt securities and helped create the current crisis.

In a statement Sunday, Mr. Cuomo said, “This gesture by Goldman Sachs is appropriate and prudent and hopefully will help bring Wall Street to its senses. We strongly encourage other banks to follow Goldman Sachs’s step.”

Morgan Stanley and other banks are still formulating bonus figures. Morgan Stanley’s chief executive, John J. Mack, took no bonus last year. Morgan Stanley, which took a loss in the fourth quarter last year but has been profitable all of this year, declined to comment Sunday. Morgan Stanley posted better results in the third quarter than Goldman Sachs.

In September, Goldman Sachs and Morgan Stanley transformed themselves into bank holding companies that take deposits, take less risk and are subject to more government oversight. That new structure may limit their ability to generate big profits, because they cannot use as much borrowed money to make big investment bets.

In the last several years, Goldman Sachs has posted some of the biggest profits and paid out some of the biggest bonuses in Wall Street history. The company’s chief executive, Lloyd C. Blankfein, received a salary and bonus package last year worth $68.5 million. Goldman Sachs paid its two co-presidents, Gary D. Cohn and Jon Winkelried, around $67.5 million each last year, more than most chief executives. All three will receive no bonuses this year.

Others forgoing bonuses at Goldman Sachs will include the chief financial officer, David A. Viniar, and the vice chairmen, J. Michael Evans, Michael S. Sherwood and John S. Weinberg.

All seven executives told the bank’s compensation committee on Sunday that they did not want to receive bonuses this year. The committee accepted their request, said Lucas van Praag, a Goldman Sachs spokesman.

“They believe it’s the right thing to do,” Mr. van Praag said. “We can’t ignore the fact that we are part of an industry that’s associated with ongoing economic distress.”

While Goldman Sachs has not posted a loss, its shares have been in free fall all year. They rallied slightly in September after the investor Warren E. Buffett helped shore up fading confidence in the bank with a $5 billion investment.

But the shares quickly resumed their decline. They are off 69 percent this year, at $66.73.

Louise Story contributed reporting.

[Neshant]

their bonus may be 0 but their salary (for doing nothing) more than makes up for it. what are they earning?

[Singha]

at that level - in the millions. its hard to feel any sympathy for such people

[shyam]

Economy | 16.11.2008
Emerging Economies Gain Unprecedented Clout on Global Stage
http://www.dw-world.de/dw/article/0,214 ... 11,00.html

I think uncle is just letting little guys inflate their ego.
When it is time to act, Obama will negate every proposal made by Bush

[Singha]

depends on how much co-op he needs from rest of world to set his house in order.

[ArmenT]

Japanese economy now in recession

[Singha]

JP Morgan could axe 3,000 jobs worlwide: Report

Mon, Nov 17 10:06 AM

JP Morgan, the US investment bank, is drawing up plans to axe thousands of jobs across its worldwide operations, reports 'The Sunday Telegraph'.

The paper cites people close to the company, who say that it has started consulting on job cuts and they were likely to be on a comparable scale to those of rivals.

It points out that both Citigroup and Goldman Sachs are letting about 10 per cent of their workforces go, which if applied to JP Morgan would mean more than 3,000 jobs being slashed across the world.

A spokesman for the bank refused to comment.

JPMorgan said in July it planned to cut as much as 10 per cent of its European investment banking jobs.

[Nayak]

Traders, support staff to the useless VPs and above will be facing the axe.

Expect more stuff to get outsourced to India. I am sure they will come up with some other sophisticated scam to cinch the moolah of unsuspecting public. Duh!!!

[Singha]

incredibly such discredited folks are still making the slot0 rounds
of the IIMs and handing out offers.

shows that the mystique of wall street is far from being punctured.

[Nayak]

I hope these IIM-mooks join such institutions. I am never going to invest in stock market, don't see the reason why I should trust these wet-behind-the-ears, jargon-dropping 28 years old and are fit to handle my hard-earned money.

Desi public banks backed by sarkaar will provide ashraaya to my poor rupiahs.

[Singha]

Citibank is culling 50,000 of the herd. apparently HP = 24000 announced which had
been predicted because their EDS purchase has far lower /employee topline than the
old HP.

news from my woodpatch is the expenses are being cut to the bone and 'bottom 5%'
identification parade is on .... in preparation for culling. their is an air of
disquiet on the steppe....monkeys on trees have gone silent and flashes of yellow
tawny lionskin seen amidst the tall grass. the smarter animals have decamped for
deeper cover or atleast trying to stay in middle core of herd.

marketwatch.com

Citigroup plans to cut about 50,000 jobs

By Greg Morcroft, MarketWatch
Last update: 10:03 a.m. EST Nov. 17, 2008

NEW YORK (MarketWatch) -- In the most dramatic round of layoffs seen to date in the battered U.S. financial sector, Citigroup Inc. said Monday that it plans to cut about 50,000 additional jobs in an effort to cut costs and stem huge losses sparked by bad investment and lending decisions.

Management also plans to reduce costs across the company by 20% in the near term and will continue to sell off troubled assets
In the early going on Wall Street, shares of Citigroup were off 24 cents at $9.28.
Combined with earlier cuts of more than 20,000 positions, the latest job cuts will equal a 20 percent reduction in the bank's workforce from peak levels reached in the fourth quarter of 2007.

[Singha]

RIF tracker with dates and numbers.

http://blog.wired.com/business/2008/10/ ... om-te.html

[SwamyG]

Stock markets have their own benefits. One does not have to park the money in sarkari banks. One does not have to earn an MBA degree to understand that one's pie needs to be split and diversified in such a manner that a loss of a single slice would not bring you to the streets.

[svinayak]

If you had purchased $1,000 of shares in Delta Airlines one year ago, you would have $49.00 today.

If you had purchased $1,000 of shares in AIG one year ago, you would have $3.00 today.

If you had purchased $1,000 of shares in Lehman Brothers one year ago, you would have $0.00 today.

But, if you had purchased $1,000 worth of beer one year ago, ... drank all the beer, then turned in the aluminum cans for a recycling refund, you would have $114.00. Based on this information, the best current investment plan is to drink heavily & recycle.

[SwamyG]

And one would probably he paying his doctors too for the pear-shaped body owing to beer-belly.