Perspectives on the global economic meltdown

ramana
Forum Moderator
Posts: 54513
Joined: 01 Jan 1970 05:30

Re: Perspectives on the global economic meltdown

Postby ramana » 13 Feb 2009 21:02

Makes sense. Lloyd's subsidary lost $12B today and dragged the market down!

ss_roy
BRFite
Posts: 286
Joined: 15 Nov 2008 21:48

Re: Perspectives on the global economic meltdown

Postby ss_roy » 14 Feb 2009 00:50

I have been reading this thread and one recurrent themes continues to bother me.

1. Why do you care about what the "west" thinks of you? They are dying, their lead is gone and even their illusory preeminence is fading.. treat them them as you would treat a dying cantekerous person.. pretend to care. Do you honestly think that the UK and most of continental europe has any real power? Their only source of power is your belief that they posses power!

The US will probably make it through, but as a vastly altered country.Their leaders and think tanks might be full of losers with dreams of supremacy and racial superiority, but the average american is not!

ramana
Forum Moderator
Posts: 54513
Joined: 01 Jan 1970 05:30

Re: Perspectives on the global economic meltdown

Postby ramana » 14 Feb 2009 01:24

ss_roy, Its because we are in uncharted territory and worry about the path. This event has occured ten- twenty years before its time where India would be in top three. And the society is not ready yet. And has to learn fast on the double. the education path has not taught us to think for ourselves. Education path was to follow the trail already blazed. The purpose of the thread is think freely but in a focussed manner.

vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 14 Feb 2009 01:50

ramana wrote:ss_roy, Its because we are in uncharted territory and worry about the path. This event has occured ten- twenty years before its time where India would be in top three. And the society is not ready yet. And has to learn fast on the double.


Ramana garu,

Nicely put. I recall Brihaspati once mentioning (or was it you) that twas usually the phoren returned Indians that the Raj feared the most because they were the elephants without the mental chains. Instead of being Macaulay-putras, they returned as Macaulay-baaps. MKG is a good example.

In our time, with millions of Indians having visited Videsh, changes in perspectives and attitudes have been concomitantly faster.

the education path has not taught us to think for ourselves. Education path was to follow the trail already blazed. The purpose of the thread is think freely but in a focussed manner.


Agree 100% that education has helped us think better within a well-defined framework but hasn't helped us think for ourselves outside that framing box. Hence, this psy-opsing - a jostling to try to define the framework, to define the terms of the coming debate. The info age has made difficult the task of defining the debate but made easier the task of muddling it.

Like Rudradev says in the other thread, calling a spade a spade is an immensely powerful and symbolic move - instead of calling it a wooden handle+metal rake. We're getting there, slowly but surely.Dunno how many of us right now realize we're witnessing history in the making. And history for the taking.

Between an autocratic china, an ageing eurostan and an insolvent america, I'd rather bet outside the box on big, poor bumbling, unstrategic India onlee.
Arise Yindia!

SwamyG
BRF Oldie
Posts: 16144
Joined: 11 Apr 2007 09:22

Re: Perspectives on the global economic meltdown

Postby SwamyG » 14 Feb 2009 02:41

3 countries will always be pushed into limelight because of their sheer geography and population: 1)USA 3) China & 4)India. Each country will handle the problems differently. Each of them has distinct cultural and historical background. Brazil & Russia might occupy the second rung of ladder. Australia & Canada will be the third rung. EU will try to redefine itself continuously to fit itself somewhere up. Finally it all boils down to land and people. Just like gold, these are the age old desired resources. As long as the land is fertile and people are hard working the countries will manage to be the countries in news.

abhischekcc
BRF Oldie
Posts: 4277
Joined: 12 Jul 1999 11:31
Location: If I can’t move the gods, I’ll stir up hell
Contact:

Re: Perspectives on the global economic meltdown

Postby abhischekcc » 14 Feb 2009 09:59

ss_roy wrote:Why do you care about what the "west" thinks of you?


That's because Indian higher education is westoxicated. Most upper class and middle class Indians dream of going to the west, and want to live a western lifestyle, specifically American lifestyle.

It has not occurred to them that the points of reference have changed.




vsudhir,

There is a vast difference between the foreign-returned Indians of pre and post independence generation. Pre-independence R2I were patriotic and the west was the enemy. More importantly, they had Hindu cultural reference - IOW, they had a genuine identity. Post independence foreign educated Indians have lost those cultural reference. They are more comfortable with PG Wodehouse than with Kalidas.
Last edited by abhischekcc on 14 Feb 2009 10:07, edited 1 time in total.

abhischekcc
BRF Oldie
Posts: 4277
Joined: 12 Jul 1999 11:31
Location: If I can’t move the gods, I’ll stir up hell
Contact:

Re: Perspectives on the global economic meltdown

Postby abhischekcc » 14 Feb 2009 10:05

SwamyG wrote:3 countries will always be pushed into limelight because of their sheer geography and population: 1)USA 3) China & 4)India. Each country will handle the problems differently. Each of them has distinct cultural and historical background. Brazil & Russia might occupy the second rung of ladder. Australia & Canada will be the third rung. EU will try to redefine itself continuously to fit itself somewhere up. Finally it all boils down to land and people. Just like gold, these are the age old desired resources. As long as the land is fertile and people are hard working the countries will manage to be the countries in news.


SwamyG,

All the ingredients of a strong power is available locally for these countries. Large resource base, population (market and work force), large military, etc.

However, all 3 countries are facing demographic issues. China and US are aging fast. India has a large unemployed population, so it is the only country with a problem of plenty - but we need right policies to take advantage of that.

EU is more likely to break up - Germany will lead the way. That will be good for Europe because it will allow each country to formulate its methods to deal with the muslim problem. Right now they are too paralyzed.

sanjaykumar
BRF Oldie
Posts: 4473
Joined: 16 Oct 2005 05:51

Re: Perspectives on the global economic meltdown

Postby sanjaykumar » 14 Feb 2009 11:16

Resources and a smallish population are not a qualifier for even third tier status. Argentina was in the top 5 or 6 as a visit to Buenos Aries will support. But rapidly lost out with the onset of technology dominated economies. Japan is a case in point in obverse. A smallish, resource poor country with a first class education system and national drive.

Does India have the national drive evident in China? Have educated Indians surmounted their self-loathing? (Shades of the self-hating Jew?). Perhaps psychological resources are just as important as oil or education. What I see as an improvement in Indians' self-perception is due to, most of all, the spectacular implosion of a racially motivated, culturally exclusivist Pakistan-those natural inheritors of the tormentors of Hindus.

At last Indians see off one peer-competitor (through little of their own doing) and suddenly the rest of the world looks doable. Thank you Pakistan.
Last edited by sanjaykumar on 14 Feb 2009 12:44, edited 1 time in total.

svinayak
BRF Oldie
Posts: 14223
Joined: 09 Feb 1999 12:31

Re: Perspectives on the global economic meltdown

Postby svinayak » 14 Feb 2009 12:35

On a somber note, we had to layoff 6.5% of our workforce this week. It was extremely difficult for me to convey the news to one person my team who was impacted by this action. She was obviously shocked but later recovered a bit. She sent me this piece below... Makes a lot of sense and speaks volumes about Corporate America, USA Inc.

We are reading a lot about job layoffs in the papers these days. Here is a story about how one layoff came about:

Once upon a time the government with Ruling Party XYZ..
had a vast scrap yard in the middle of a desert. Ruling Party XYZ said - "Someone may steal from it at night."

So they created a night watchman position and hired a person for the job. Then Ruling Party XYZ said - "How does the watchman do his job without instruction?"

So they created a planning department and hired two people, one person to write the instructions, and one person to do time studies. Then Ruling Party XYZ Said..
- "How will we know the night watchman is doing the tasks correctly?"
So they created a Quality Control department and hired two people.
One to do the studies and one to write the reports. Then Ruling Party XYZ Said.. ,
- "How are these people going to get paid?"
So they created the following positions, a time keeper, and a payroll officer, then hired two people. Then Ruling Party XYZ Said..,
- "Who will be accountable for all of these people?"

So they created an administrative section and hired three people, an Administrative Officer, Assistant Administrative Officer, and a Legal Secretary. Then Ruling Party XYZ Said..
- "We have had this command in operation for one year and we are $18,000 over budget, we must cutback overall cost."

So they laid off the night watchman...

As you can see the world believes in productivity and efficiency...

vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 14 Feb 2009 17:33

Eurozone slump worst in 50 yrs (Financial Times)

The stresses that eurostan will be subject to in the coming months will be great. I suspect (like abcc mentions above) that the possibilities of eurostan remaining under a common bloc though high, are slimming down.

"We Are Threatened by a Veritable Disaster"

Link from Yves smith's blog.

This recession is different. Balance sheets of consumers, firms, and banks are under strain. The private sector is bent on reducing debt and this offsets Keynesian stimulus more than standard flow calculations would suggest. Bank deleveraging is by far the most dangerous. Fiscal stimulus will not have much effect as long as the financial system is deleveraging.

This is not an ordinary recession that differs from other recent episodes simply by being somewhat more severe. It differs in kind.


This is a 'neti' reaction. We now well know this isn't an ordinary recession. What we're still trying to figure out is how exactly its different. Implications and consequences shall follow in due course.

So the private sector as a whole is bent on reducing debt. Businesses will use depreciation charges and sell off inventories to do so. Households are trying once more to save. Less investment and more saving spell declining incomes. The cash flows supporting the servicing of debts are dwindling. This is a destabilising process but one that works relatively slowly. The efforts by financial firms to deleverage are the more dangerous because they can trigger a rapid avalanche of defaults (Leijonhufvud 2009).


Implication: The overoptimistic predictions of a recovery in 2nd half '09 or 2010 are wishful thinking. This crisis will last a while and when its over, won't feel like the heady Bush yrs or anything close to those excesses seen.

The Swedish policy following the 1992 crisis has been often referred to in recent months. Sweden acted quickly and decisively to close insolvent banks, and to quarantine their bad assets into a special fund.2 Eventually, all the assets, good and bad, ended up in the private banking sector again. The stockholders in the failed banks lost all their equity while the loss to taxpayers of the bad assets was minimal in the end. The operation was necessary to the recovery but what actually got the economy out of a very sharp and deep recession was the 25-30% devaluation of the krona which produced a long period of strong export-led growth. Needless to say, the US is in no position to emulate this aspect of the Swedish success story.


Implications: the incentive to cheapen the dollar for the Fed is very high. Expect action on the front on the sly with full deployment of the weapons of mass distraction, making the process of inflating its way outta the mess look natural, inevitable i.e. market-driven onlee. The losers are gonna be the unwashed savers in the III world left holding IOUs onlee.

Fiscal stimulus + financial deleveraging = zero impact

Fiscal stimulus will not have much effect as long as the financial system is deleveraging. Even if that problem were to be more or less solved, the government deficit would have to offset both the decline in industry investment and the rise in household saving – a gap that is rising as the recession deepens. Here, too, the public is sceptical and prone to conclude that a program that only slows or stops the decline but fails to “jump start” the economy must have been a waste of tax payers’ money. The most effective composition of such a program is also a problem.

US states and local governments undoing the federal spending boost

Almost all American states now suffer under self-imposed constitutional balanced budget requirements and are consequently acting as powerful amplifiers of recession with respect to both income and employment. The states will have a spending propensity of one, as will a great many local governments. Income maintenance for unemployed and other low income households will also be effective.3 Tax cuts will have considerably lower spending propensities. However, the political prospects seem to portend a less than ideal program mix.


Self explanatory I think. No one quite knows the way fwd from here. Everything is guesswork and handwaving onlee. In India the ever important givt jobs sector has always been heavy on employment and had fuelled manadalization of the polity. BUt in massaland, that outcome looks doubtful for jobs below the federal level:

Almost all American states now suffer under self-imposed constitutional balanced budget requirements and are consequently acting as powerful amplifiers of recession with respect to both income and employment. The states will have a spending propensity of one, as will a great many local governments. Income maintenance for unemployed and other low income households will also be effective.3 Tax cuts will have considerably lower spending propensities. However, the political prospects seem to portend a less than ideal program mix.


The money quotes?
The US ratio of federal debt to GNP is not particularly high at this time. But it does not take into account the very large off-balance liabilities of entitlement programs. Since the present crisis began, moreover, the Federal Reserve System and other federal agencies have made bail-out, loan and credit guarantee commitments totalling many trillions of dollars with uncertain eventual implications for the consolidated federal balance sheet.

If the US’s foreign creditors balk, inflation will be hard to contain

Much will depend on the willingness of the nation’s foreign creditors to continue to accumulate or at least to hold dollars at low rates of interest. Should this willingness falter, inflation will be hard to contain.

There is much to fear beyond fear itself.


vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 14 Feb 2009 17:56

AoA, janta.

Paul Volcker is an 'old-style' banker and economist, you know the kind that valued integrity, plainspeak and common sense. Just how old-style becomes clear:

The United States should emerge from the economic crisis with a two-part financial system that places tighter restrictions on banks, says former Federal Reserve chairman Paul Volcker.

To prevent another banking crisis from undermining the economy, the U.S. financial system must turn back the clock to a time when commercial banks were the core of the credit system, said Mr. Volcker...

The system that Mr. Volcker envisions "looks more like the Canadian system than it does like the American system," he told a Toronto audience last night....


Yves adds:
An international survey recently put Canada's banking system as the best in the world. It has five large banks and was never deregulated in a serious way.


Back to this amazing character - Shri Volcker.

Mr. Volcker, an imposing 6-foot 8-inch figure who chaired the Federal Reserve for most of the 1980s under former presidents Jimmy Carter and Ronald Reagan, said the primary characteristic of the new model must be strong commercial banks whose main purpose is to serve consumers and businesses, and provide credit

They would be protected by the government, because their failure would pose a distinct threat to the economy. As a result, they would require closer supervision and regulation than has recently existed in the United States. "Those institutions should not engage in highly risky entrepreneurial activities," Mr. Volcker said.

In that central part of the system, $25-million or $50-million paydays would not be warranted, he added.

The second part of the financial system would involve the capital markets and include hedge funds, private equity funds, traders and other players who provide fluid markets. Those players would not be dealing directly with customers, and would not need to be highly regulated unless they became extremely large, Mr. Volcker said.

Mr. Volcker's vision would mark the end of the so-called supermarket banking model, in which a single financial institution dabbles in a range of services from consumer accounts to investment banking.

Mr. Volcker blamed the current crisis largely on compensation practices that "had gotten totally out of hand," and on "obscure financial engineering."

"The system is broken," he said. Fixing it will take "a lot of money and a lot of losses in the banking system."

The Economic Recovery Advisory Board, modelled on Dwight D. Eisenhower's Foreign Intelligence Advisory Board, will provide an independent opinion on financial issues as Mr. Obama drafts his plans for recovery.


Wow.

Mussay our desi banking sys ain't so different from the canuck model. The abscence of over-securitizations wherein less loans and risk are held with banks, rather they're passed on to gullible buyers of the securitized ass-ets, now in hindsight seems like a (fundamentally?) unsound 'innovation' - one of the many to have emerged outta wall st musharrafs in recent yrs.

Singha
BRF Oldie
Posts: 66601
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Perspectives on the global economic meltdown

Postby Singha » 14 Feb 2009 19:44

afaik, Volcker has a clean reputation. hard to find undamaged people these days.

ss_roy
BRFite
Posts: 286
Joined: 15 Nov 2008 21:48

Re: Perspectives on the global economic meltdown

Postby ss_roy » 14 Feb 2009 22:08

Do you believe that lie? Just because an insignificant country can hide its shit under overt denial does not mean that it is true.

If swiss, german and french banks could not escape losses, why will canadian banks escape them? Remember that as long as you do not accept losses via accounting, there are no losses. Canadian banks have known exposure of over a trillion dollars of CDS. They were also counterparties in canadian ABCP, a product of such low quality that even fitch refused to rate it.

Look.. canadians are dishonest and delusional. Understand the system and mentality, ignore the news releases.

An international survey recently put Canada's banking system as the best in the world. It has five large banks and was never deregulated in a serious way.

vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 14 Feb 2009 22:10

Japan faces ‘unimaginable’ contraction

Japan’s economy faces an “unimaginable” contraction, the chief economist of its central bank warned on Monday, as figures revealed surging bankruptcies and a big fall in machinery orders.

The warning from Kazuo Momma, head of the Bank of Japan’s research and statistics department, underscored the gloom surrounding the world’s second-largest economy as export orders dry up, companies shut down production lines and consumers stop spending.


Austerity likely to land Olympic glory

The four cities bidding to host the 2016 Olympics were on Friday showcasing their cut-price budgets as economic austerity takes grip of the quadrennial parade to win the right to stage sport’s biggest event


Vulnerable IT workers in India find comfort in union

Karthik Shekhar was scoffed at by workers three years ago when he began trying to unionise IT and call-centre employees in Bangalore. His organisation is now flooded with calls from workers as employers seek to make cuts


Huh? IT unions, eh? Dunno how workable the concept is when capital in this sector is extremely mobile. Besides, tighter restrictions on labor mobility can only backfire. Ideal scenario for university educated jobs is hire and fire with some basic safeguards, IMO.

India’s double-digit growth dream fades

The Indian Congress party-led government has revised down its growth estimate for this year to 7.1 per cent, the slowest for six years. Economists, however, are forecasting growth nearer 6 per cent

vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 14 Feb 2009 22:15

Do you believe that lie? Just because an insignificant country can hide its shit under overt denial does not mean that it is true.

If swiss, german and french banks could not escape losses, why will canadian banks escape them? Remember that as long as you do not accept losses via accounting, there are no losses. Canadian banks have known exposure of over a trillion dollars of CDS. They were also counterparties in canadian ABCP, a product of such low quality that even fitch refused to rate it.


Time will tell.

For instance, I didn't know the canucks were that exposed to toxic CDSes onlee.

If this canuck banking==top quality is a lie, then when it is exposed, digging up these shining examples of endorsements by the amrikhan bloggers should be a neat do. heh heh.

And yes, the receding tide will show who's been swimming naked. Until the stuff hits the fan, who knows how bad things are.

vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 15 Feb 2009 02:31

Mark Steyn: So far, it's been Obamateur Hour

Inimitable is the word. Some yummy, gemmy excerpts:

Back last spring, some gloomy reflections of mine on multiculturalism prompted a reader to advise me to lighten up: "We're rich enough that we can afford to be stupid." A mere nine months later, the first part of that equation no longer seems quite so obvious. The market value of the U.S. banking sector is worth barely a quarter of what it was two years ago – from just north of $1.4 trillion in February 2007 to under $400 billion at the beginning of this month, and that only due to the "bailout." The so-called Wall Street "fat cats" are, in fact, emaciated cadavers in the late stages of that feline version of HIV.

On the other hand, U.S. mortgage debt has more than quadrupled since 1990, from $2.5 trillion to over $10 trillion. On the other other hand – you may be running out of fingers by now – the IMF has increased its calculation of potential losses on U.S.-originated credit assets from $1.4 trillion last October to $2.2 trillion today, and they're at the lowball end of estimates (others figure closer to $4 trillion). If you stick the Community-Organizer-in-Chief in a room with Henrietta Hughes, he can play Bob Barker and tell her to "Come on down!" But back in the Oval Office, poring over the smoldering ledgers, it's not obvious that that technique is going to prove quite so effective.

2008: We're rich enough that we can afford to be stupid.

2009: We're not so rich so let's be even more stupid.

The Obama narrative as packaged by the American media (another all-but-bankrupt industry, not coincidentally) is very appealing. Wouldn't it be so much nicer if a benign paternalist sovereign could take care of all the beastly grown-up stuff like mortgages and health care, like he's gonna do for Henrietta Hughes, while simultaneously blowing gazillions on "green" initiatives and other touchyfeely things?


Old rightist theme of how they're the 'daddy party' that takes care of the hardnosed stuff leaving the touchy feely feelgood 'mommy stuff' for the leftists to hank over.

America has a choice: It can reacquaint itself with socioeconomic reality. Or it can buckle its mandatory seat belt for the same decline most of the rest of the West embraced a couple of generations back. In 1897, troops from the greatest empire the world had ever seen marched down London's Mall for Queen Victoria's Diamond Jubilee. Seventy years later, Britain had government health care, a government-owned car industry, massive government housing, and it was a shriveled high-unemployment socialist basket-case living off the dwindling cultural capital of its glorious past. In 1945, America emerged from the Second World War as the preeminent power on Earth. Seventy years later….


A li'l over the top if ya will but gets the message across poignantly IMO....

sanjaykumar
BRF Oldie
Posts: 4473
Joined: 16 Oct 2005 05:51

Re: Perspectives on the global economic meltdown

Postby sanjaykumar » 15 Feb 2009 03:06

"Glorious" empire.

I suppose gouging half-starved Indians, Chinese and Africans for the glory of Mother England qualifies. As does exchanging the North American Indians heathen ways for Jesus (with the small matter of payment due)-yes that indeed is glory. Hallelujah! I want to break into gloria dei patris.

vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 15 Feb 2009 06:08

sanjaykumar wrote:"Glorious" empire.

I suppose gouging half-starved Indians, Chinese and Africans for the glory of Mother England qualifies. As does exchanging the North American Indians heathen ways for Jesus (with the small matter of payment due)-yes that indeed is glory. Hallelujah! I want to break into gloria dei patris.


Good point.

And more such need to be made. Repeatedly and in-your-face questioning the assumptions of past western 'glory'. I'd rather the west own up to its mendacity on its way to glory and stop pretense at some kinda moral superiority over the rest of us. :evil:

vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 15 Feb 2009 07:25

Asia’s Export Economies In Free Fall
Staggering falls in exports across Asia have shocked economic analysts and ended all claims that the global slump may be nearing its bottom. The IMF's growth forecast for Asia this year is just 2.7 percent—less than a third of the 9 percent growth rate of 2007. The prediction is a full percentage point less than during the 1997-98 Asian financial crisis.

IMA Asia analyst Richard Martin commented in the Australian: "It's a bit like watching a train wreck in slow motion. North Asia is suffering the biggest collapse in demand since World War II." Westpac bank's Richard Franulovich said that the "speed of the decline embedded in the latest Asia data is on par with the collapse in the US during the 1930s Depression."


OK.

Asia Export Economy Details

* Japanese exports fell 35 percent in December from a year earlier. Industrial production plunged a record 9.6 percent, month on month, in December.

* Chinese exports declined for the third consecutive month in January, falling 17.5 percent from a year earlier, after a 2.8 percent decline in December. Imports plunged even further—43.1 percent, twice as much as December's 21.3 percent year-on-year drop.

* More than 20 million Chinese migrant workers have lost their jobs so far, with some analysts warning of 50 million more job losses if the economy deteriorates further.

* India exports fell 24 percent in January. According to official data, one million Indian workers in the export sector have lost their jobs since September. Another half a million workers are expected to lose their jobs by March.
* New Delhi's public debt stands at 75 percent of its GDP, compared to just 18.5 percent in China, leaving less room for large stimulus packages.

* South Korea's exports, the main driving force of the economy, plunged 32.8 percent in January. Finance minister Yoon Jeung-hyun warned on Tuesday that the fourth largest economy in Asia would shrink by about 2 percent this year. Credit Suisse has projected as much as a 7 percent contraction.

* Taiwan, the sixth largest Asian economy, saw its exports fall 44.1 percent in January from a year earlier—the biggest fall since records began in 1972. Imports plunged 56.5 percent in the same month. For an economy where exports account for 70 percent of GDP, the impact is devastating.


Hmmm.

Well, firstly ours ain't quite an 'export economy' just yet, though not for lack of trying....

Secondly, does that 75% figure of our public debt include off balance sheet PSU losses as well?

No, we won;t quite be the rock of gibraltar in the coming storm but we stormwatchers have seen enough to know that we won't quite sink in either. So hang on tight and ride out the storm.

ss_roy
BRFite
Posts: 286
Joined: 15 Nov 2008 21:48

Re: Perspectives on the global economic meltdown

Postby ss_roy » 15 Feb 2009 07:30

There is no secret recipe for thinking objectively. Growing up in India is no excuse for not thinking objectively, especially if you live in a reasonably affluent urban environment. There is a difference between fawning over the west and thinking like the smarter ones in the west.

It boils down to a few simple things-

1. Never believe anyone because of their perceived authority. Corollary- never dismiss an objective observation or rational idea because it came from someone you do not like (or respect). No person is worthy of any special consideration, as every human is both mortal and falliable.

2. If you cannot explain something to an interested open-minded person of average intelligence, it is very likely untrue. Either it can be explained (and defended) to such a person or you are making things up.

3. If it cannot be tested in a well designed experiment, it is untrue. Unless you understand the experimental design, the supposed results are based on your faith in the honesty of that person. Make sure that independent verification of any idea is truly independent.

4. If in doubt, look at all available original evidence and dig for more. You will be surprised at what you will find.

5. There is no god, no guru or leader that can lead you to "nyan" (gnosis, knowledge, zen). It comes from within through objectivity and reason. Any leader is a figurehead, at best, and it is the followers belief that give him his power. Stop waiting for a leader.

6. Accepting servility and appeasing aggression is the surest way to defeat. Trying to maintain the status quo is equally futile. Do not look away from large problems.. they do not go away if you ignore them.

7. The universe operates on reality, possibility and probability. There is no 'natural' order or "prefered" way of doing anything.

vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 15 Feb 2009 07:31

Shedlock writes an interesting piece here:

US Pot Calls Chinese Kettle Black

Geithner put his foot in his big mouth in more ways than one. Someone better give him a lesson in diplomacy along with the lesson he needs in economics. Giethner is easily the worst of Obama's cabinet picks.

China is no more manipulating the Renminbi than the US is the dollar. What else do you call micromanaging interest rates, guaranteeing bank debt, engaging is currency swaps with Swiss Banks, and giving trillions of dollars to banks? Everyone of those things impacts the dollar. Moreover, there is no talk from this administration about Japan's open threat to intervene in the Yen, or the Russian intervention in the Rouble.

I am not in favor of any of this of course, I am just pointing out the US pot is calling the Chinese kettle black. And when it comes to free trade, the US and the EU are among the world's biggest hypocrites.

Moreover, Obama and Geithner better be careful of what they ask. China has already lost 20 million jobs, and it may easily lose 50 million more. Currencies of export based economies like Australia and Canada have been smashed. If China floated the Renminbi like we are asking, it could easily follow, and indeed I expect it would.

This is the worst possible time for protectionist policies. That means you can expect to see more of them, especially from free trade hypocrites in the US, UK, and EU.

ss_roy
BRFite
Posts: 286
Joined: 15 Nov 2008 21:48

Re: Perspectives on the global economic meltdown

Postby ss_roy » 15 Feb 2009 07:37

This is a good example of what I was just talking about.

In a fiat currency based world, debt does not matter. What matters is the willingness and ability to consume rather than save money. The willingness and ability to consume is linked to demographic profiles and psychology, not foreign reserves.

Asian (slant eyed) countries never learned capitalism. They just dress and act like the west, not think like them (especially the USA). They are still practicing mercantilism.

New Delhi's public debt stands at 75 percent of its GDP, compared to just 18.5 percent in China, leaving less room for large stimulus packages.


Kindly Don't use vaguely racist terms like slant-eyed.
Rahul.

svinayak
BRF Oldie
Posts: 14223
Joined: 09 Feb 1999 12:31

Re: Perspectives on the global economic meltdown

Postby svinayak » 15 Feb 2009 07:41

Celente Predicts Revolution, Food Riots, Tax Rebellions By 2012

http://www.prisonplanet.com/celente-pre ... -2012.html

Trend forecaster, renowned for being accurate in the past, says that America will cease to be a developed nation within 4 years, crisis will be “worse than the great depression”

Celente Predicts Revolution, Food Riots, Tax Rebellions By 2012

Paul Joseph Watson
Prison Planet.com
Thursday, November 13, 2008

The man who predicted the 1987 stock market crash and the fall of the Soviet Union is now forecasting revolution in America, food riots and tax rebellions - all within four years, while cautioning that putting food on the table will be a more pressing concern than buying Christmas gifts by 2012.

Gerald Celente, the CEO of Trends Research Institute, is renowned for his accuracy in predicting future world and economic events, which will send a chill down your spine considering what he told Fox News this week.

Celente says that by 2012 America will become an undeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining food, not gifts.

(ARTICLE CONTINUES BELOW)

Celente Predicts Revolution, Food Riots, Tax Rebellions By 2012
“We’re going to see the end of the retail Christmas….we’re going to see a fundamental shift take place….putting food on the table is going to be more important that putting gifts under the Christmas tree,” said Celente, adding that the situation would be “worse than the great depression”.

“America’s going to go through a transition the likes of which no one is prepared for,” said Celente, noting that people’s refusal to acknowledge that America was even in a recession highlights how big a problem denial is in being ready for the true scale of the crisis.

Watch the clip.

Celente, who successfully predicted the 1997 Asian Currency Crisis, the subprime mortgage collapse and the massive devaluation of the U.S. dollar, told UPI in November last year that the following year would be known as “The Panic of 2008,” adding that “giants (would) tumble to their deaths,” which is exactly what we have witnessed with the collapse of Lehman Brothers, Bear Stearns and others. He also said that the dollar would eventually be devalued by as much as 90 per cent.

The consequence of what we have seen unfold this year would lead to a lowering in living standards, Celente predicted a year ago, which is also being borne out by plummeting retail sales figures.

The prospect of revolution was a concept echoed by a British Ministry of Defence report last year, which predicted that within 30 years, the growing gap between the super rich and the middle class, along with an urban underclass threatening social order would mean, “The world’s middle classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest,” and that, “The middle classes could become a revolutionary class.”

In a separate recent interview, Celente went further on the subject of revolution in America.

“There will be a revolution in this country,” he said. “It’s not going to come yet, but it’s going to come down the line and we’re going to see a third party and this was the catalyst for it: the takeover of Washington, D. C., in broad daylight by Wall Street in this bloodless coup. And it will happen as conditions continue to worsen.”

“The first thing to do is organize with tax revolts. That’s going to be the big one because people can’t afford to pay more school tax, property tax, any kind of tax. You’re going to start seeing those kinds of protests start to develop.”

“It’s going to be very bleak. Very sad. And there is going to be a lot of homeless, the likes of which we have never seen before. Tent cities are already sprouting up around the country and we’re going to see many more.”

“We’re going to start seeing huge areas of vacant real estate and squatters living in them as well. It’s going to be a picture the likes of which Americans are not going to be used to. It’s going to come as a shock and with it, there’s going to be a lot of crime. And the crime is going to be a lot worse than it was before because in the last 1929 Depression
, people’s minds weren’t wrecked on all these modern drugs – over-the-counter drugs, or crystal meth or whatever it might be. So, you have a huge underclass of very desperate people with their minds chemically blown beyond anybody’s comprehension.”


Greece-Style Riots Coming To U.S.
http://www.prisonplanet.com/greece-styl ... to-us.html

Troops and mercenaries will be used to detain Americans in prison camps, warns deadly accurate trends forecaster

Greece-Style Riots Coming To U.S. 151208top

Paul Joseph Watson
Prison Planet.com
Monday, December 15, 2008

Frighteningly accurate trends forecaster Gerald Celente says that America will see riots similar to those currently ongoing in Greece and that the cause will be a hyper-inflationary depression, leading to the inevitable use of troops and mercenaries to deal with the crisis as Americans are incarcerated in internment camps.

As we have highlighted before, Celente’s accuracy is stunning - he predicted the 1987 crash, the sub-prime mortgage crisis and the “panic of 2008,” and is routinely cited even by mainstream news networks as highly credible.

The cause of the riots would be a hyper-inflationary depression, Celente told interviewer Lew Rockwell, causing Americans to revolt in similar circumstances that we have witnessed recently in Iceland and Greece. The trouble would be sparked off by Obama declaring a “bank holiday” whereby people won’t be able to withdraw their money.

“What’s going on in Greece with these riots has nothing to do with a 15-year-old boy being killed, that was only the spark that ignited the pent up, really hatred and disdain, people have for the scandals and corrupt government and the same thing is going on in this country as well,” said Celente.

Singha
BRF Oldie
Posts: 66601
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Perspectives on the global economic meltdown

Postby Singha » 15 Feb 2009 08:33

if only Telco had some patience in 2007 to wait for low tide, they'd have been able to buy up
lot of japanese tech rich firms in auto industry now. lot of the superb stuff like body panel
moulds are supplied by small specialized firms there. instead they get saddled with jaguar.
imperial overreach I guess, and some hoodwinking by bideshi fund managers and lenders.

theorists are predicting the death of exurbia due to increased cost of transport and of keeping
those big homes running. people would cluster closer to cities in smaller homes & condos and
commute less to work. it effectively would mean the death of the american suburban idyll.

squatters and pot growers are expected to move into these subdivisions of abandoned housing
and ravage the place.

ArmenT
BR Mainsite Crew
Posts: 4239
Joined: 10 Sep 2007 05:57
Location: Loud, Proud, Ugly American

Re: Perspectives on the global economic meltdown

Postby ArmenT » 15 Feb 2009 13:23

Nice graph of what certain things cost (adjusted for inflation) which gives an idea of the size of the bailout.
Image

Liu
BRFite
Posts: 824
Joined: 12 Feb 2009 10:23

Re: Perspectives on the global economic meltdown

Postby Liu » 15 Feb 2009 13:52

Acharya wrote:Cannot be relied on. THere is no information on methodology and it is not in English

well, the quoter said that the data is from world bank

Liu
BRFite
Posts: 824
Joined: 12 Feb 2009 10:23

Re: Perspectives on the global economic meltdown

Postby Liu » 15 Feb 2009 13:59

http://www.freerepublic.com/focus/f-news/2185607/posts

why china's stimulus plan will change the world

.......
The announced stimulus package reverses that. Hundreds of billions of dollars that would have gone to propping up the greenback are now being reinvested in China, helping it to transition from its reliance on exports to a self-sustaining economy. So while China isn't yet decoupled from its export markets, this new spending plan will help it along that path.

What you need to do to survive China's huge currency reserves are about to be put to use, and while there will be some real and perhaps severe bumps along the way, the China that comes out on the other side will be a heck of a lot stronger, more independent, and more decoupled than the one we've seen up to now.
.......

Chinmayanand
BRF Oldie
Posts: 2585
Joined: 05 Oct 2008 16:01
Location: Mansarovar
Contact:

Re: Perspectives on the global economic meltdown

Postby Chinmayanand » 15 Feb 2009 18:33

US Bailout explained by cartoons
Image
Image
Image
Image
Image
Image
Image
Image
Image
Last edited by Chinmayanand on 15 Feb 2009 18:46, edited 1 time in total.

vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 15 Feb 2009 18:43

x-post - richly deserves to be here....

Acharya wrote:
Nouriel Roubini on prospects for 2009

Published: February 3 2009 11:46 | Last updated: February 9 2009 15:42
http://www.ft.com/cms/s/0/89829f7a-f1d1 ... fd2ac.html

Nouriel Roubini Q&A

Economists and politicians hope to identify tentative signs of recovery in leading economies during the second half of 2009, as stimulus measures from governments and action on interest rates by central banks begin to kick in.

But recent data suggest it may take a little longer. Meanwhile, the World Economic Forum’s latest report warns of the risks of a fiscal crisis, created by the very government spending intended to rescue economies from the turmoil in the global financial system.

So, is the worst nearly over? Or is there still a way to go? Recently returned from Davos, Nouriel Roubini, chairman of RGE Monitor and professor of Economics at New York University, will answer readers’ questions on the outlook for the global economy and its impact on markets from 1400 GMT on Monday February 9.

Post a question now to ask@ft.com or use the online submissions form below.

...................................................................................................................................

It is pretty much consensus now that 2009 will be a zero growth year for the world economy (something that you forecast well in advance). It seems that the major risk for the following years is having a lost decade of Japanese-style stagnation but on a worldwide basis. How are the governments in US and Europe faring so far in their effort to avoid that?
Marco, Sao Paulo

Nouriel Roubini: To avoid a Japanese style multi-year L-shaped near-depression or stag-deflation (a deadly combination of stagnation, recession and deflation) the appropriate, coherent and credible combination of monetary easing (traditional and unorthodox), fiscal stimulus, proper clean-up of the financial system and reduction of the debt burden of insolvent private agents (households and non-financial companies) is necessary.

The eurozone is well behind the US in its efforts as: a) the ECB is behind the curve in cutting policy rates and creating non-traditional facilities to deal with the liquidity and credit crunch; b) the fiscal stimulus is too modest as those who can afford it (Germany) are lukewarm about it and those who need it the most (Spain, Portugal, Greece, Italy) can least afford it as they already have large budget deficits; c) there is lack of cross-border burden sharing of the fiscal costs of bailing out financial institutions.

The U.S. has done more (with its aggressive monetary easing and large fiscal stimulus putting it ahead) but two key elements are key to avoid a near-depression and still missing: a proper clean-up of the banking system that may require a proper triage between solvent and insolvent banks and the nationalization of many banks; and a more aggressive and across-the-board solution to the unsustainable debt burden of millions of insolvent households.

Thus, I would say the L-shaped near-depression scenario is possible.

-----------------------------------------------------------------------------------------------------------------

How can Davos, a gathering of the greediest, most avaricious and incompetent people of the planet, ever fix any of the problems they have created in the first place, and hugely benefited from?. Do you agree that when the boom was at its height, you were mistreated there when you tried to draw attention on the looming crisis? Are you now afraid of being now co-opted by the system and losing your independence?
Marcel Knecht, Villa Santiago, Mexico

NR: It is important to keep one’s intellectual rigor and honesty free from any financial conflict of interest (I never trade in markets and so I am never “talk my book” when I present my views).

I have kept my balanced and analytically rigorous but bearish view over time and adjusted my outlook only at the margin in light of the evolving circumstances.

But the basic thrust of my analysis and views about the severity of this financial and economic crisis – the worst since the Great Depression - has not changed.

I don’t think anyone could suggest that I have been co-opted by the system and lost my independence. If anything my concerns that a severe U-shaped global recession may turn into a worse, L-shaped near-depression have somewhat increased over time.

--------------------------------------------------------------------------------------------------------------------

It seems clear that governments will not allow their banking system to fail altogether and that they will intervene to rescue whenever needed. My question is: The governments will save the banks, but who will save the governments? Is it possible that we are about to see countries default? What does that mean for the global economy? Which countries are the ones who pose the greatest risk?
Jonathan Arad

NR: In many countries the banks may be too-big-to-fail but also too- big-to-save, as the fiscal/financial resources of the sovereign may not be large enough to rescue such large insolvencies in the financial system.

Traditionally only emerging markets suffered – and still suffer - from such a problem. But now such sovereign risk – as measured by the sovereign spread - is also rising in many European economies whose banks may be larger than the ability of the sovereign to rescue them: Iceland, Greece, Spain, Italy, Belgium, Switzerland and, some suggest, even the UK.
{Along with gold, gunpowder, and grain, am also keeping a bottle of the finest cognac ready in the basement to celebrate when UKstan nites the dust..... HaHaHAHAAha "eeevil maniacal laughter"}

The process of socializing the private losses from this crisis has already moved many of the liabilities of the private sector onto the books of the sovereign: banks, other financial institutions and, soon enough possibly, households and some important non-financial corporate companies.

At some point a sovereign bank may crack, in which case the ability of governments to credibly commit to act as a backstop for the financial system – including deposit guarantees – could come unglued.

---------------------------------------------------------------------------------------------------------------------

What level of oversight is now appropriate from the financial regulatory authorities? Do they need very large new measures or should they have a light touch?
Ashok Soni

NR: It is clear that the Anglo-Saxon model of supervision and regulation of the financial system has failed.

It relied on self-regulation that, in effect, meant no regulation; on market discipline that does not exist when there is euphoria and irrational exuberance; on internal risk management models that fail because – as a former chief executive of Citi put it – when the music is playing you gotta stand up and dance.

Furthermore, the self-regulation approach created rating agencies that had massive conflicts of interest and a supervisory system dependent on principles rather than rules. This light-touch regulation in effect became regulation of the softest-touch.

Thus, all the pillars of Basel II have already failed even before being implemented.

Since the pendulum had swung too much in the direction of self-regulation and the principles-based approach, we now need more binding rules on liquidity, capital, leverage, transparency, compensation and so on...

But the design of the new system should be robust enough to counter three types of problems with rules:

A tendancy toward ‘regulatory arbitrage’ should be bourne in mind, as bankers can find creative ways to bypass rules faster than regulators can improve them.

Then there is ‘jurisdictional arbitrage’ as financial activity may move to more lax jurisdictions.

And finally, ‘regulatory capture’ as regulators and supervisors are often captured - via revolving doors and other mechanisms - by the financial industry.

So the new rules will have to be incentive compatible, i.e. robust enough to overcome to these regulatory failures.

---------------------------------------------------------------------------------------------------------------------

How long will be before we can tell if the US and UK governments’ plans to rescue the banks prove effective or not? If they don’t when do you think lending will recover to near-normal levels?
Canh Humphries, Beckenham

NR: There are three basic approaches to a clean-up of the banking system: recapitalization together with purchase by a bad bank of toxic assets; recapitalization together with guarantees – after a first loss – of the bad assets; outright government takeover (call it nationalization) of insolvent banks to be cleaned after takeover and then resold to the private sector.

Of the three options the first two have serious flaws: in the bad bank model the government may overpay for the bad assets as the true value of them is uncertain; even in the guarantee model there can be such implicit over-payment (or over-guarantee that is not properly priced).

In the bad bank model the government has the additional problem of having to manage all the bad assets it purchased.

Thus, paradoxically nationalization may be a more market friendly solution: it creates the biggest hit for common and preferred shareholders of clearly insolvent institutions and – possibly – even the unsecured creditors in case the bank insolvency is too large; it provides a fair upside to the tax-payer; it can resolve the problem of government managing the bad assets by reselling most of the assets and liabilities of the bank to new private shareholders after a clean-up of the bank.

This “nationalization” approach was the one successfully taken by Sweden while the current US and UK approach may end up looking like the zombie banks of Japan that were never properly restructured and ended up perpetuating the credit crunch and credit freeze.

---------------------------------------------------------------------------------------------------------------------

To balance the US economy - given the US structural current account deficit - the fiscal deficit needs to baloon. Can the US default on its debt? Alessandro Magnoli Bocchi, Kuwait

And, a related question also addressed in the next answer: What are the possible damaging, unintended consequences of the US stimulus plan?
Alessandro Magnoli Bocchi, Kuwait

NR: While a large fiscal stimulus is necessary to avoid a greater fall of aggregate demand there are also reasons to be skeptical about the effectiveness of such a stimulus:

Most infrastructure spending is not ‘shovel-ready’ and its implementation may take too much time.

The tax stimulus may – like the 2008 rebate – be mostly saved or used to reduce credit card and mortgage debt, since, given the credit crunch, the ability of households to leverage the tax rebate to buy durable goods or homes is massively impaired.

Furthermore, the multipliers of fiscal policy are ambiguous and, more importantly, a tsunami of new public debt issuance may lead by the end of 2009 to a significant increase in long government bond rates as most countries in the world will now run budget deficits and thus the global supply of public savings will shrink.

With US fiscal deficits likely to be about $2 trillion in 2009 and $1.5 trillion in 2010; who, outside the US, as most of the financing of US fiscal deficits is done by non-residents, is going to buy such debt and at what dollar value of and level of interest rates?

Eventually, large and persistent fiscal deficits may even lead to a downgrade – in a few years – of the AAA rating of the US government.

--------------------------------------------------------------------------------------------------------------

Do you think investigations and prosecutions should be conducted by the U.S. Government on the naked short selling of equities in the stock market? Should they be?
Erich Benner, Blythewood, South Carolina

NR: The ban on naked short selling of equities was a mistake.

Short selling did not cause this crisis: it only reflected the concern about the solvency of many firms. And the ban on naked short selling only transferred the speculative pressure from equities to the credit defualt swaps market creating even greater problems in the credit derivative markets.

When equity markets were in a speculative frenzy of an asset bubble no one requested limits to the ability of investors to go long (even if such restrictions in the form of higher margins for leveraged purchases of stocks would have been beneficial).

And when during the same bullish bubble analyst after analyst showed up in the financial media and talked his book up, with no one objecting to this spin cycle. But when investors become bearish and start short selling stocks one hears talk about prosecuting the “evil short sellers”.

This is an outright silly view even if, in the downwards speculative frenzy, market prices can fall below fundamental valuations as cascading effects cause falling prices to lead to margin calls and greater forced selling.

But banning short selling is not the proper way to address this disruptive market dynamic.

Starting with the excesses of the boom period of a bubble is a more appropriate response, and one that would prevent such bubbles from becoming excessive, limiting the damage from the bursting of such massive bubbles.

---------------------------------------------------------------------------------------------------------------------

Has financial globalization come to an end?
Jacques Ergas, Chile

NR: Financial globalization has not come to an end, but there is certainly a backlash against it.

To paraphrase Churchill - capitalist market economies open to trade and financial flows may be the worst economic regime, apart from the alternative, as non-market economy models have failed.

So while this crisis does not imply the end of market economy capitalism it has shown the failure of a particular model of capitalism: the laissez faire unregulated (or aggressively deregulated) wild-west model of free market capitalism with lack of prudential regulation and supervision of financial markets and with the lack of proper provision of public goods by governments.

It is the failures of ideas such as the “efficient market hypothesis” that deluded itself about the absence of market failures such as asset bubbles; the “rational expectations” paradigm that clashes with the insights of behavioral economics and finance; the “self-regulation of markets and institutions” that clashes with the classical agency problems in corporate governance that are thenselves exacerbated in financial companies by the greater degree of asymmetric information -how can a chief executive or a board monitor the risk-taking of thousands of separate profit-and-loss accounts? Then there are the distortions of compensation paid to bankers and traders.
{Hah! So much for the Chicago school and its small but devoted band of followers....admittedly moi was a convert once....now no longer....}

This crisis also shows the failure of ideas such as the one that securitization reduces systemic risk rather than actually increase it; that risk can properly priced when the opacity and lack of transparency of financial firms and new instruments leads to unpriceable uncertainty rather than priceable risk.

------------------------------------------------------------------------------------------------------------------

Will the crisis bring about a permanent, significant shift in the economic power balance of the world?
Giles Chance, China

NR: The Anglo-Saxon economic and financial model is wounded and the role of the US as the leading global economic, financial and even geo-strategic superpower is reduced.

Even without this crisis, the relative and absolute power of the US would have been reduced by the rise of the fast growing economies of Brazil, Russia India and China and by the emergence of the European Union.

But the policy mistakes of the US that perpetuated twin fiscal and current account deficits and triggered the worst financial and economic crisis since the Great Depression has accelerated this shift in the economic and financial power balance of the world.

Economic and financial superpowers or empires tend to be net creditors and net lenders (running current account surpluses) such as the British Empire at its peak. But such empires decline - the British pounds role as the world’s leading reserve currency was lost during World War II when the UK became a large net debtor and net foreign borrower (running current account deficits) and had large domestic fiscal deficits.

The US is now the largest net borrower in the world (running huge current account deficits) and the largest net debtor in the world while its domestic fiscal deficits are surging too.

And unlike the 1980s when the US twin deficits were financed by the its friends and allies (Japan, Germany and the rest of the EU) this time around the largest lenders and creditors of the US are either its strategic rivals (Russia, China, etc.) or a bunch or relatively unstable petro-states.

So this balance of financial terror makes the US vulnerable to the kindness of strangers. This growing weakness of the US suggests a paradigm shift in the economic and financial – and eventually even geostrategic - power balance of the world.

---------------------------------------------------------------------------------------------------------------------

Do you believe in the projections made by the Chinese officials predicting a return to steady growth when all the planned stimulus measures have been implemented? Do you expect a reversal in the decisions taken the last 5 years to outsource a majority of the developed economies production to China?
Fiorini Mauro, Belgium

NR: China is now experiencing a hard landing and I predict that Chinese growth in 2009 may not be higher than 5 per cent.

For a country that needs a growth rate of about 10 per cent to move millions of poor rural farmers to the modern urban industrial sector, a growth rate of 5 per cent would effectively be a hard landing.

Fourth quarter gross domestic product growth in China – measured on a quarter to quarter annualized basis – was closer to 0 per cent than to the 6.8 per cent year-over-year growth reported by the Chinese government.

Other factors also suggest a hard landing: There was a sharp fall in generation of electricity in the fourth quarter. China’s purchasing manager’s index was well below 50 and closer to 40 for six months in a row; there has been a sharp fall in imports, mostly of intermediate inputs and raw materials. And while some of the latest data show a marginal improvement in the second derivative of growth in January, the first derivative still shows contraction. The manufacturing sector is still 40 per cent of GDP and it is clearly shrinking.

Whether the short-run policy stimulus in China will be effective or not is not clear.

Instead, consumption levels are still depressed and private savings too high because of structural reasons that will take time to change. The out-sourcing of production to China and other emerging markets was not a mistake. But a model of growth based on cheap exports given an undervalued currency is now in crisis as the US downward adjustment of consumption requires an increase of domestic private and public demand in the surplus countries.

---------------------------------------------------------------------------------------------------------------------

I have read your grave warning about deflation. But, nevertheless, won’t the enormous increases in money supply (out of thin air largely) eventually give rise to serious inflation, possibly hyperinflation?
George Todd, Benalmadena, Spain

NR: In the short run the greatest risks to the global economy are coming from deflationary pressures: slack in goods markets as aggregate demand falls relative to aggregate supply; slack in labor markets as unemployment rises sharply; slack in commodity markets as commodity prices tumble.

Concerns have been expressed that the massive injections of liquidity will be eventually inflationary.

But with large output gaps and surging unemployment rates, inflationary pressures are unlikely until such gaps are shrinking sharply.

Also, the injections of liquidity are satisfying a surging demand for liquidity so that the absence of such a large supply of money would lead to spikes in money market rates; while base money is sharply rising other measures of money and credit are flat or shrinking as the money multiplier falls. This signals that the extra liquidity is being hoarded rather than spent or lent out.

It is true that eventually there may be a temptation to use permanent – inflationary - monetization of large fiscal deficits to reduce the real value of public and private debts; indeed the inflation tax may become politically the path of least resistance if government would find it hard and unpopular to raise actual taxes.

But even a relatively dovish central bank such as the Federal Reserve under Ben Bernanke cannot afford to let the inflation genie out of the bottle – if inflation expectations were to rise from low single digits to high single digits or even double digits – because such a surge in inflation would - eventually – cause the need for a harsh Volcker-style recessionary disinflationary policy to bring the inflation- expectations-genie back behind glass.

Also, unexpected inflation can reduce the real value of nominal debts at fixed interest rates. But many liabilities are at variable rates: mortgages, bank deposits, short term debts of households, banks, governments, corporations. So a surge in inflation cannot reduce the real value of such debts as the interest rate on them would rapidly be re-priced to include any increase in expected inflation. So the inflation tax may not even be effective in reducing the liabilities of the private and public sector unless it becomes extremely and dangerously large.
{Huh? But this applies to domestic US debt which will be repaid in 'fiat currency' anyway, so no gr8 shakes, I guess.}

---------------------------------------------------------------------------------------------------------------------

You recently mentioned total credit losses of $3.6 trillion compared to current losses of $1.6 trillion. Will the institutional and geographic distribution of the $2 trillion increase match that of the first $1.6 trillion, or will it be new regions and new institutions, that will get sucked in?
Paul Broder

NR: Our RGE Monitor estimates of $3.6 trillion of peak credit losses refer only to loans and securities that were originally generated by US financial institutions. Of these $3.6 trillion $1.8 trillion will be borne by US banks and broker dealers while the rest by other capital market firms and investors. Since the losses coming from securities are estimated to be $2 trillion and about 40 per cent of them (based on IMF and Federal Reserve estimates) are borne by non-US investors we already have $800 billion of losses that will hit foreign investors/financial institutions, mostly in Europe.

But we have not done yet a systematical analysis of the losses that will hit Eurozone and UK banks or banks in other regions of the world. Losses to these institutions include the $800 billion from US securitized products sold abroad as well as the other losses deriving from loan origination and securitization and issuance of other instruments in areas such as Europe and other parts of the world.

A preliminary analysis suggest that, in the aggregate, the US banking system is insolvent as its capital before the crisis was $1.4 trillion and below expected losses of $1.8 trillion; a good part of the UK banking system appears also to be insolvent.

------------------------------------------------------------------------------------------------------------------

Is the solution to just keep re-inflating bubble after bubble to recapitalize our consumer driven economy or is it time for a huge systemic paradigm shift away from consumerism? What type of shift would you envision and would it destroy the economy as we currently know it?
Robert Singer, Oregon, USA

NR: For the last 30 years the US has been growing fast only during periods of asset bubbles that eventually burst with significant economic and financial costs.

The 1980s real estate bubble went bust in the late part of that decade leading to a severe banking crisis for the Savings and Loan banks, a credit crunch and a severe recession in 1990-91; next the 1990s tech/internet bubble went bust in 2000 leading to the 2001 recession; massive monetary and credit easing – as well as lax supervision/regulation of mortgages and credit – led to another housing and credit bubble that has now gone bust creating a severe financial crisis and recession.

The current monetary easing may lead to another bubble but we are somehow running out of bubbles to create.

Housing, credit, equities, commodities, hedge funds, private equity bubbles: they have all gone bust now. We need to create an economic system that is less prone to bubbles and more likely to lead to sustainable stable growth.

For the last few years the US has overinvested in the most unproductive form of capital – residential housing stock that increase utility but not labor productivity – and not enough into physical capital that increases the productivity of labor.

Also we overinvested in the financial sector, a corollary of the housing boom: when the S&P500 market capitalization of financial firms was 25 per cent of the market and when over a third of the profits or earnings of S&P500 constituents came from financial companies, that was an excess of finance.

And having a country where there are more financial engineers than computer engineers or mechanical engineers means a misallocation of human capital as well.

So we need to create a growth model relying less on housing/real estate, less on finance and less on having the brightest minds of the country going into financial services rather than into the production and innovation of new and improved goods and services.

---------------------------------------------------------------------------------------------------------------

Could any of the weak eurozone countries should be forced out of the single currency because of the effects of the crisis, and if that happened, how is the euro likely to behave?
Vincenzo, Italy

NR: There is now a rising – even if still quite low – risk that some countries will eventually be forced out of the eurozone.

The whole idea of a monetary union was that since member countries would not have independent monetary policy, independent fiscal policy and independent exchange rate policy they would be induced to implement more aggressively structural reforms to ensure convergence of productivity growth and prevent divergence of economic performance.

Germany went through a brutal corporate restructuring that led to rising labor productivity growth with modest nominal wage growth that restored the competitiveness of the country.

In Spain, Portugal, Italy and Greece instead such structural reforms lagged and nominal wage growth outstripped productivity growth leading to increases in relative unit labor cost and real appreciation that reduced competitiveness. And now, on top of this loss of competitiveness some eurozone economies suffer also of a too-big-to-be-saved problem as the potential losses of their banks are larger than the national fiscal resources.

And now, on top of this loss of competitiveness some eurozone economies suffer also of a too-big-to-be-saved problem, as the potential losses of their banks are larger than the national fiscal resources.

So the monetary union is under pressure as sovereign spreads are also rising. Two years ago – while still being in the opposition – the current Italian prime minister, Silvio Berlusconi and Mr Tremonti, his exonomic minister, argued that the euro had been a disaster for Italy.

With friends like these who needs enemies in the monetary union?

While the risk of a break-up of the eurozone is still distant this financial and economic crisis is the first real test of the monetary union.

--------------------------------------------------------------------------------------------------------------------

Many analysts are now predicting that the bond market is the last and most serious bubble which will burst shortly. Do you agree?
Mike, Qatar

NR: The current fall in government bond yields is justified by economic fundamentals: a severe recession, risks of deflation, risk aversion and move away from risk assets such as equities.

But certainly, over time, large and unsustainable budget deficits in many emerging and advanced economies, may lead to a rise in sovereign risk and a risk in government bond yields. Also the risk – small but rising – that excessive permanent monetization of such deficits will lead to much higher inflation suggests the existence of a minor bubble in government bond yields.

And indeed, in the last two weeks, the back-up in yield on US inflation-linked bonds and traditional 10 to 30 year bonds suggest the concerns of market participants about the sustainability of large fiscal deficits that – over the long run – may lead to solvency concerns.

svinayak
BRF Oldie
Posts: 14223
Joined: 09 Feb 1999 12:31

Re: Perspectives on the global economic meltdown

Postby svinayak » 16 Feb 2009 03:00

http://www.cnbc.com/id/28984151
Monday, 2 Feb 2009
CNBC ORIGINAL DOCUMENTARY "HOUSE OF CARDS" UNCOVERS THE REASONS BEHIND THE GREATEST FINANCIAL COLLAPSE SINCE THE GREAT DEPRESSION

Posted By: Jennifer Dauble
http://www.youtube.com/watch?v=11li6Iw4TeY


CNBC ORIGINAL DOCUMENTARY "HOUSE OF CARDS" UNCOVERS THE REASONS BEHIND THE GREATEST FINANCIAL COLLAPSE SINCE THE GREAT DEPRESSION

HOW DID IT HAPPEN AND WHY DID THIS HOUSE OF CARDS COME TUMBLING DOWN?

Two-hour Documentary Reported by CNBC's David Faber Premieres on CNBC on Thursday, February 12th at 8PM & 12AM ET

ENGLEWOOD CLIFFS, N.J., January 27, 2009 –

It's the defining story of our time....how the American dream became a nightmare.

On Thursday, February 12th at 8PM & 12AM ET, CNBC presents "House of Cards," an original CNBC documentary reported by award-winning correspondent David Faber. In this two-hour special, CNBC investigates the origins of the global economic collapse. Faber gathers the personal stories of key participants: home buyers, mortgage brokers, iestment bankers and investors – all of whom let greed blind them to marketplace realities. It is their words and experiences – not those of pundits or commentators – ''

Raghav K
BRFite
Posts: 176
Joined: 01 Dec 2008 05:15

Re: Perspectives on the global economic meltdown

Postby Raghav K » 16 Feb 2009 05:05

Europe on the brink.

Failure to save East Europe will lead to worldwide meltdown.

The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point.

If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.

Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.

"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.

The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.

Mr Pröll tried to drum up support for his rescue package from EU finance ministers in Brussels last week. The idea was scotched by Germany's Peer Steinbrück. Not our problem, he said. We'll see about that.

Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region's GDP. Good luck. The credit window has slammed shut.

Not even Russia can easily cover the $500bn dollar debts of its oligarchs while oil remains near $33 a barrel. The budget is based on Urals crude at $95. Russia has bled 36pc of its foreign reserves since August defending the rouble.

"This is the largest run on a currency in history," said Mr Jen.

http://www.telegraph.co.uk/finance/comm ... tdown.html

sanjaykumar
BRF Oldie
Posts: 4473
Joined: 16 Oct 2005 05:51

Re: Perspectives on the global economic meltdown

Postby sanjaykumar » 16 Feb 2009 05:19

If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.


Behanchods, this is a moral failure of the west, start by owning up to it.

And don't forget dammerung can refer to sunset or sunrise. It may be sunrise elsewhere on the globe.

svinayak
BRF Oldie
Posts: 14223
Joined: 09 Feb 1999 12:31

Re: Perspectives on the global economic meltdown

Postby svinayak » 16 Feb 2009 07:58

The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History
by Harry S. Dent (Author)


# Hardcover: 400 pages
# Publisher: Free Press; 1 edition (January 6, 2009)
# Language: English
# ISBN-10: 1416588981
# ISBN-13: 978-1416588986
"While being one of the most bullish and accurate forecasters for 20 years, Dent has always been warning that this great boom would end around 2008-2009. He now sees a bigger crash ahead and a deflationary environment that could ravage your portfolio. His warnings and predictions are well worth reading and taking seriously." -- David Bach, #1 New York Times bestselling author of Start Late, Finish Rich and The Automatic Millionaire

"While many talk of change these days, the real question lies in assessing in what direction things will change. Harry Dent does a masterful job using demographics and other key cycles to lay out where and when changes will come that will have sweeping ramifications for our pocketbooks, our way of life, and our nation. I cannot more highly recommend this book." -- Mark Sanford, governor of South Carolina

"Economists cannot forecast the economy very well, and most would admit it if their jobs didn't depend on the fiction that they can. So most economists become closet extrapolators, with some minor tweaking for visible pending developments and policy changes. Even I can see to the next corner pretty well, but I can't see around the corner.There is one exception, however. Demographics! Demography, as they say, is destiny. The reason is that you can see the future based on the facts of the present and demonstrated behavior. You can see the pig, or the pigs, going through the python.Harry Dent is the reigning expert in applying sophisticated demographic analysis to economic forecasting. His past record of getting it right speaks for itself. I hope he's wrong this time. I hope we don't have a great depression by 2010. But given his track record, I won't be betting against him." -- Robert D. McTeer, Distinguished Fellow, National Center for Policy Analysis, and former president of the Federal Reserve Bank of Dallas

The first and last economic depression that you will experience in your lifetime is just ahead. The year 2009 will be the beginning of the next long-term winter season and the initial end of prosperity in almost every market, ushering in a downturn like most of us have not experienced before. Are you aware that we have seen long-term peaks in our stock market and economy very close to every 40 years due to generational spending trends: as in 1929, 1968, and next around 2009? Are you aware that oil and commodity prices have peaked nearly every 30 years, as in 1920, 1951, 1980 -- and next likely around late 2009 to mid-2010? The three massive bubbles that have been booming for the last few decades -- stocks, real estate, and commodities -- have all reached their peak and are deflating simultaneously.

Bestselling author and renowned economic forecaster Harry S. Dent, Jr., has observed these trends for decades. As he first demonstrated in his bestselling The Great Boom Ahead, he has developed analytical techniques that allow him to predict the impact they will have. The Great Depression Ahead explains "The Perfect Storm" as peak oil prices collide with peaking generational spending trends by 2010, leading to a more severe downtrend for the global economy and individual investors alike.

He predicts the following:

• The economy appears to recover from the subprime crisis and minor recession by mid-2009 -- "the calm before the real storm."

• Stock prices start to crash again between mid- and late 2009 into late 2010, and likely finally bottom around mid-2012 -- between Dow 3,800 and 7,200.

• The economy enters a deeper depression between mid-2010 and early 2011, likely extending off and on into late 2012 or mid-2013.

• Asian markets may bottom by late 2010, along with health care, and be the first great buy opportunities in stocks.

• Gold and precious metals will appear to be a hedge at first, but will ultimately collapse as well after mid- to late 2010.

• A first major stock rally, likely between mid-2012 and mid-2017, will be followed by a final setdback around late 2019/early 2020.

• The next broad-based global bull market will be from 2020-2023 into 2035-2036.

Conventional investment wisdom will no longer apply, and investors on every level -- from billion-dollar firms to the individual trader -- must drastically reevaluate their policies in order to survive. But despite the dire news and dark predictions, there are real opportunities to come from the greatest fire sale on financial assets since the early 1930s. Dent outlines the critical issues that will face our government and other major institutions, offering long- and short-term tactics for weathering the storm. He offers recommendations that will allow families, businesses, investors, and individuals to manage their assets correctly and come out on top. With the right knowledge and preparation, you can take advantage of new wealth opportunities rather than get caught in a downward spiral. Your life is about to change for reasons outside of your control. You can't change the direction of the winds, but you can reset your sails!


No economist is always right. Dent's basic concept of predicting the economy is spot on. It's just the more finer details that get him into trouble. That's what happens when you start writing books instead of just sticking with what you do best. To Dent's credit he has stuck his neck out on some big calls against all other economist and he prevailed. He was actually one of the earliest if not the first to call this coming depression in his first book published in 1993 called "The Great Boom Ahead." Page 16 - "The next great depression will be from 2008 to 2023" "the mother of all depressions" "No amount of government stimulus will prevent it, just as it didn't prevent the Great Depression of the 1930's." Some big words considering he said them 15 years ago. Yah, Harry has called some bad ones over the years but unfortunatly I think he got this one right. I hope he's wrong!

I have been reading about the economy for over 25 years. Harry Dent made 18 controversial predictions in 1990 and I followed as 16 of them happened when and how he predicted. That is way more than luck ~ his process is based on completely objective data (demographics and spending patterns of people in different stages/ages of their lives). Do you spend the same amount of money in the same way on the same things at age 21 as you do at age 55? Harry's brilliance is based on the obvious, but his discovery of these trends has been repeatedly proven: See Japan from 1980 to 1995! BUY THIS BOOK AND DISCOVER FOR YOURSELF THE PROCESS OF DEMOGRAPHICS AND SPENDING PATTERNS!


vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 16 Feb 2009 16:55

Ireland faces risk of debt default

Credit crisis could crunch men's testosterone: doctor
The stress caused by the global economic downturn could reduce men's testosterone levels, a British doctor warned Monday.

Chronic stress caused by redundancy, financial worries or working longer hours could make levels of the hormone drop, said Richard Petty, the medical director of a top London men's health clinic.

Testosterone, the hormone produced by the testicles, triggers the development of male sexual characteristics. It is linked to sexual function, circulation and muscle mass, as well as concentration, mood and memory.


Am sure the UKstanis would know something about credit stress and dropping testesterone.... which is why its now left to 13 yr old boys to take on the mantle of procreating the next generation....

Meanwhile, in the land of the free and the home of the brave....

Federal obligations exceed world GDP
As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world.

The total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account.

The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the "2008 Financial Report of the United States Government" as released by the U.S. Department of Treasury.


Awrite, a tad alarmist there, I suspect.... but hey, makes attn grabbing headline and good copy, eh?

"The Congressional Budget Office estimated the fiscal year 2009 budget deficit as being $1.2 trillion on a cash basis and that was before taking into consideration the full costs of the war in Iraq and Afghanistan, before the cost of the Obama nearly $800 billion economic stimulus plan, or the cost of the second $350 billion in TARP funds, as well as all current bailouts being contemplated by the U.S. Treasury and Federal Reserve," he said.

"The federal government's deficit is hemorrhaging at a pace which threatens the viability of the financial system," Williams added. "The popularly reported 2009 [deficit] will clearly exceed $2 trillion on a cash basis and that full amount has to be funded by Treasury borrowing.

"It's not likely this will happen without the Federal Reserve acting as lender of last resort for the Treasury by buying Treasury debt and monetizing the debt," he said.

"Monetizing the debt" is a term used to signify that the Federal Reserve will be required simply to print cash to meet the Treasury debt obligations, acting in this capacity only because the Treasury cannot sell the huge of amount debt elsewhere.

The Treasury has been largely dependent upon foreign buyers, principally China and Japan and other major holders of U.S. dollar foreign exchange reserves, including OPEC buyers purchasing U.S. debt through London.

"The appetite of foreign buyers to purchase continued trillions of U.S. debt has become more questionable as the world has witnessed the rapid deterioration of the U.S. fiscal condition in the current financial crisis," Williams noted.


Well, well, same story. Again, watch the bond mkts folks - the bond mkts. The last holdout that (imperfectly) voices the will and forbearance of the investors and savers community.....

vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 16 Feb 2009 22:51

Creative taxing on steriods.... in case anybody still suspects this isn't a darn serious meltdownturn....

1900% beer tax hike proposed in Oregon

NY governor wants to tax internet p0rn

Aoa onlee...where is the world heading??

Raghav K
BRFite
Posts: 176
Joined: 01 Dec 2008 05:15

Re: Perspectives on the global economic meltdown

Postby Raghav K » 16 Feb 2009 23:51

vsudhir wrote:Creative taxing on steriods.... in case anybody still suspects this isn't a darn serious meltdownturn....

1900% beer tax hike proposed in Oregon

NY governor wants to tax internet p0rn

Aoa onlee...where is the world heading??


:eek: :eek: :eek:

Div
BRFite
Posts: 327
Joined: 16 Aug 1999 11:31

Re: Perspectives on the global economic meltdown

Postby Div » 17 Feb 2009 03:01

vsudhir wrote:
Do you believe that lie? Just because an insignificant country can hide its shit under overt denial does not mean that it is true.

If swiss, german and french banks could not escape losses, why will canadian banks escape them? Remember that as long as you do not accept losses via accounting, there are no losses. Canadian banks have known exposure of over a trillion dollars of CDS. They were also counterparties in canadian ABCP, a product of such low quality that even fitch refused to rate it.


Time will tell.

For instance, I didn't know the canucks were that exposed to toxic CDSes onlee.

If this canuck banking==top quality is a lie, then when it is exposed, digging up these shining examples of endorsements by the amrikhan bloggers should be a neat do. heh heh.

And yes, the receding tide will show who's been swimming naked. Until the stuff hits the fan, who knows how bad things are.


Canadian banks stuck with more than $800B in credit default swaps
Amid the ongoing credit crisis few investment instruments have fallen out of favour as much as credit default swaps, and that is becoming a problem for Canadian banks that hold them.

In a note put out this morning, RBC Capital Markets analyst Andre-Philippe Hardy estimated that the Big Six hold about $832-billion of credit default swaps.

Hardy said some of those positions may be in trouble because of the collapse of Lehman Brothers and the potential failure of the insurance giant AIG, both significant players in the US$62-trillion global credit default swap market. Dealers in the U.S. and the U.K. have voted to delay rollovers in the market due to the turmoil left by the Lehman collapse.

http://network.nationalpost.com/np/blog ... swaps.aspx

vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Perspectives on the global economic meltdown

Postby vsudhir » 17 Feb 2009 03:35

I often wonder why so many smart people in so many developed countries together committed the kind of financial hara kiri that we saw unfolding. The amount of coordinated insanity it requires was incredibly large. The answer cannot lie in idiosyncrasies and likely lies in systemic forces - the hidden hand of history.

IMHO, the burden of semi-invisible liabilities is what pushed these worthies to the edge and now, finally, off the cliff.

The pension, medical and other liabilities guaranteed by an overgenerous state in the good yrs came back to haunt the rioch world in its middling yrs. (the decline yrs chapter has now started). The drive to get ever higher returns emnated from this well of insecurity - that the liabilities guaranteed are so gargantuan that they engendered the risk of default and all the terrible consequences that came with them.

The demography-based projections some futurologist was reading off from isn't surprising. We've had otherwise intelligent and well-meaning folk on this board pooh-pooh sociology and demography talk as naive or too linearly extrapolated. Well, demography has a momentum of its own and its hurtling towards decline in the rich world. Japan is a cananry in that coal mine and UKstan shall be the canary for the unglisuxon system. The fate of ciceland stares them all in the face and up the base.

Schaudenfraude apart, we SDREs have lots to lose, sure but perhaps, some to gain as well. I expect endgame to be anything but straightfwd as the inevitable decline is sought to be fought with subterfuge, psy-opsing ('G7 is anyday better than the unwashed third world slum even if it no longer is as rich'), genteel pretenses, deceit (of the Madoff variety), thuggery and loot, etc among other things.

Time will tell where this is going.

ramana
Forum Moderator
Posts: 54513
Joined: 01 Jan 1970 05:30

Re: Perspectives on the global economic meltdown

Postby ramana » 17 Feb 2009 04:03

In the early 2000, people used to indulge in day trading to be part of the in crowd. Similarly when one Abdul starts Credit Default Swapt eh others jump in so they are not left behind in the surge for profits. There is a fine book on madness of crowds.



Return to “Strategic & Security Issues Archive”

Who is online

Users browsing this forum: No registered users and 1 guest