Global Economy

Singha · Post by **Singha** » 17 Mar 2009 09:05

GSG9 and FBI-HRT surely come under home ministry. not sure of GIGN.

Raja Bose · Post by **Raja Bose** » 17 Mar 2009 10:00

vina, Thanks for the info.

I was just curious coz I had an interview call from DE Shaw last year but being a cowering dhoti-clad SDRE I did not follow thru, given how the other Wall street types were being given lamp post treatment and hearing horror stories of friends from TFTA Ivy Leagues flung out on their musharrafs to fend for themselves. They are well known for hiring Putnam fellas, IMO medalist types and other mental cases. Ofcourse being an IMO medalist is no guarantee of mental robustness....one of my Hakimiyat committee members was one but is also the dumbest person I have known in quite some time

.

Raja Bose · Post by **Raja Bose** » 17 Mar 2009 10:02

Satya_anveshi wrote: I know that when DE Shaw started in Hyd, the HR guy and many of the folks were from IIT B. I had a friend who joined there, moved to Khanland became a quant and now cooling heels in BoA as VP for the last few years.

IIRC they had quite a few offices in India...must be rich pickings for them or are they outsourcing quants too?

vina · Post by **vina** » 17 Mar 2009 10:19

DE Shaw has an IT vity outsourcing back end in India in Hyderabad . They were not outsourcing any quant work, only IT work. They dont have any quants in India (atleast when I last spoke with them in 2004) and dont hire here. I do know that they opened a private equity office here in India and yeah, talk of being dumb, they invested in real estate at the height of the bubble and lost their shirts along with others like Och-Ziff and a lot of other PE guys. Their only captive center are in Hyd, probably a suite in "posh" appeessh area for their PE setup which I think will be less than 5 guys max (if I am generous).

DE Shaw and Renaissance Tech and those places, typically dont hire YumBeeYeas for their quant positions and they tend to hire Science/Engg types. Actually in those places YumBeeYeas are actually frowned upon and if one or two actually manage to get it, it is something the cat brought in. And in 1998, many of the Dhoti Clad SDRE science types after the near death, went on to prop trading desks in I-Banks and other hedge funds etc.

Satya_anveshi · Post by **Satya_anveshi** » 17 Mar 2009 10:24

Yes, I mean IT-vity center in Hyd and not core business.

Raja Bose · Post by **Raja Bose** » 17 Mar 2009 13:20

Yeah Shaw birather proudly claims it never hires Yum Bee Ayes and takes in science/math abduls who have little bg in finance. My background in finance is limited to calculating potential gain/loss if I take GHQ to mall as opposed to nice restaurant.

shyamd · Post by **shyamd** » 17 Mar 2009 16:02

Chinese Exports Contract by 26% in February and Trade Surplus Shrinks: How Deep Will the Export Slump Get?

# Chinese exports contracted by 25.7% y/y in February, a near -record drop and the fourth consecutive decline (they fell by 17.5% in January). In a change, Chinese imports contracted less than exports (24.1%) leading to a much smaller trade surplus than the$39b average of November 08-January 09. The $4.84b trade surplus was the smallest since February 2006
# The deep import contraction (43.1% in January) took China's trade surplus to the third highest of all time $39.11b (record $40.09b in November)
# China's trade with the EU dropped 20.2% yoy to $48.78b, with the US 17.4% to $39.43bn and Japan down 25.7% to $28.56bn in the first two months of 2009. The performance with the three biggest trade partners is better than the overall drop.
# there were smaller declines in exports of traditional goods such as footwear (-2.3%y/y), garments (-11%) and toys (-17.1%) as overseas consumers shifted to these low-end products. Exports of electronics & machinery dropped 22% exports of steel fell 34%. Exports of ordinary trade (-32.5% yoy in Feb09) dropped more than that of processing trade exports (-23% yoy in Feb 09)
# February’s trade surplus typically falls because of seasonally strong commodity imports and seasonally weak consumer exports(Simpendorfer (via Pettis))The Import surge may reflect rebuilding of commodity reserves
# China's imports of primary products saw a huge drop of 44.8% in Jan and Feb, signaling that domestic demand remained weak. Only the import of soybeans and iron rose by 15.1% and 6% respectively, despite plummeting global prices for both the commodities. The price reductions of these commodities benefited China, the biggest world's consumer of the two. (EEO)
# Danske: recent turnaround in the new export orders in manufacturing PMI suggests deterioration in exports may be turning around
# UOB: Stripping out Chinese New Year effect, exports fell 6.8% yoy in January.The sharp drop of imports is misleading because of the decline of trade volume is much smaller than the drop of price. Exports could remain weak in coming months due to the sluggish rebound of G3 economies; imports may recover earlier as exporters turn to domestic market and government stimuli.
# Barclays: after taking into account holidays, exports declined by 7% in January and imports by 35.9%. (via FT)
# Via WSJ: collapse in prices of commodities and waning domestic demand of commodities have been falling and domestic demand is waning. Imports linked to domestic demand (excl. purchase of overseas-made components used to manufacture goods for export) fell 40.1% y/y. Import of components for final consumer goods for export fell almost 65%. China is buying fewer components from Taiwan and South Korea to make end products
# The collapse in demand from Chinese key export destinations U.S. and EU (which absorb over 50% of total exports) can not be offset by exports to emerging economies as those in Asia count on final demand in the G3, and emerging economies are also reducing consumption especially those that export commodities. Intra-Asia trade trade has plunged since October. Import slump reflects a reduction in price and volume of commodities as well as lower demand for processing trade inputs - it may also reflect slowing domestic demand. The Lunar new year may have exacerbated the slump in exports as factories shut early.
# Chinese exports declined by 2.8% y/y in December and imports fell 21.3%. Shipments to the EU, China’s biggest export market, fell 3.5% and shipments to the U.S. slipped 4.1% y/y.
# Citi: Container throughput at Shanghai and Shenzhen, the biggest two container ports in China, slumped by 15% and 17% in Jan (YoY), underpinning market expectation that China export/import may have plunged in Jan. As empty boxes released from collapsing global trade continue to flood to Asia, China container throughput is inflated
# contraction now driven by slowdown of higher valued exports such as electronic goods, containers and steel products. Exports of textiles, clothing and footwear, which fell sharply early in 2008 have stabilized.
# Green: Machinery imports continue to be weak indicating a real downturn in domestic investment and manufacturing and evidence of a sharp deceleration of economic growth in the fourth quarter and poor growth momentum in the first quarter (via WSJ)
# Exports and Imports last grew 19.2% and 15.6% in October but growth in volumes slowed sharply. the collapse in exports is consistent with the plunge in new export orders in manufacturing surveys.Overall new orders (and export orders) continue to reflect a contraction but the pace of deterioration has slowed
# The steep contraction in imports suggests further export declines (particularly in the processing trade) in the future as well as slowing domestic demand and indicates that China may roll out further aggressive monetary and fiscal measures from the ones it has already introduced.
# Lack of trade credit may be exacerbating trade slowdown. When global financial system recovers, so might trade. Collapse in imports reflects weakness in processing trade (Merrill)
# Citi: Stripping out prices, import quantity growth already declined considerably beginning in mid 2008 to near zero, reflecting insufficient domestic demand
# Customs bureau reported that about half of China's toy exporters shut down in the first seven months of the year, foreign orders at October Canton trade fair fell sharply
# Holland: declining import growth today may well be a lead indicator of slowing export growth tomorrow. Chinese commodity importers may be asking suppliers to delay shipments or canceling them outright.
# L+F :processing trade has been losing weight in total foreign trade, total exports and total imports. In 1-3Q08, processing trade accounted for only 40.8% of the total trade value, compared with 45.4% in 2007. This trend was in line with the government’s policy direction to discourage processing trade and the exports of products that are energy- and resource-intensive, highly polluting, labor-intensive and low value-added.

Arya Sumantra · Post by **Arya Sumantra** » 18 Mar 2009 06:42

First world is showing signs similar to "Third" world. The world is indeed getting smaller.

Electricity thefts surge in bad times

abhischekcc · Post by **abhischekcc** » 19 Mar 2009 15:12

Raja Bose wrote:Yeah Shaw birather proudly claims it never hires Yum Bee Ayes and takes in science/math abduls who have little bg in finance. My background in finance is limited to calculating potential gain/loss if I take GHQ to mall as opposed to nice restaurant.

One intern we had recently joined DE Shaw. He was an MBA from some college in Gujarat (certainly not IIMA

).

How should I rate his performance?? 40W tubelight in a room of 1000W bulbs.

I have had the punishment of reviewing and editing a research note he wrote - the less said about it the better.

Ameet · Post by **Ameet** » 21 Mar 2009 03:51

AIG sues US for return of $306 million in tax payments

these guys are making Pakis blush.

http://www.nytimes.com/2009/03/20/busin ... ig.html?hp

Raja Bose · Post by **Raja Bose** » 21 Mar 2009 07:02

abhischekcc wrote:
Raja Bose wrote:Yeah Shaw birather proudly claims it never hires Yum Bee Ayes and takes in science/math abduls who have little bg in finance. My background in finance is limited to calculating potential gain/loss if I take GHQ to mall as opposed to nice restaurant.
One intern we had recently joined DE Shaw. He was an MBA from some college in Gujarat (certainly not IIMA ).

How should I rate his performance?? 40W tubelight in a room of 1000W bulbs.

I have had the punishment of reviewing and editing a research note he wrote - the less said about it the better.

It just highlights the fact that getting into a place of high repute might be difficult....performing in such a place and staying on is even more difficult!! ...though in these times I dont know if I should call DE Shaw a place of high repute

However, you will find plenty of idiots from IIMA too I am sure....it is all gauss's maya onlee!

ldev · Post by **ldev** » 21 Mar 2009 08:20

ramana wrote:How does fractal statistics work?

Sorry for the delay.

My understanding after reading Taleb's book the Black Swan is as follows:

The gaussian distribution which gives rise to the bell curve (and which was based on distributions found in the physical world) does not work in the social world i.e. anything that is manmade which includes social and economic issues including the stock markets and prices.

To illustrate he has looked at the deviation from the average for heights of the average person (man and woman) on the one hand and

compared it with

the deviation from average for income/wealth from the average.

Therefore if you assume that the average person is 167 centimeters tall (5ft 7inches) the chances of somebody being taller by:

10 centimeters is 1 in 6.3
20 centimeters is 1 in 44
30 centimeters is 1 in 740
40 centimeters is 1 in 32000
50 centimeters is 1 in 3,500,000
60 centimeters is 1 in 1,000,000,000.
70 centimeters is 1 in 780,000,000,000.

In comparision fractal measurements measuring the odds of increased wealth in Europe have resulted in the following distribution:

Higher than 1 million Euros 1 in 62.5
Higher than 2 million Euros 1 in 250
Higher than 3 million Euros 1 in 1000
Higher than 4 million Euros 1 in 4000
Higher than 8 million Euros 1 in 16,000

What Taleb says is that as can be seen, the speed of decline remains constant in the social/economic world i.e. for ever doubling of millionaries, the odds decline 4 times. In contrast in the physical world, the odds decline far more precipitiously such that 99.86% of all observations are within 3 standard deviations.

But in the financial world far less than 99.86% of all observations are within 3 sigma and hence the glaring mispricing of risk and the consequent losses over the last 18 months.

abhischekcc · Post by **abhischekcc** » 21 Mar 2009 13:39

Raja Bose wrote:It just highlights the fact that getting into a place of high repute might be difficult....performing in such a place and staying on is even more difficult!! ...though in these times I dont know if I should call DE Shaw a place of high repute

However, you will find plenty of idiots from IIMA too I am sure....it is all gauss's maya onlee!

A lot of organizations have been lying for a long time about their HR policies. They will say they do or do not do XYZ thing, or hire from 123 place. But secretly, they indulge in such activities.

One relative, who passed out of a REC some years ago, was asked by Birlasoft (upon joining) to pay 40k for 'training' for four months, after which he would be paid 5k/month for 8 months. Essentially getting the guy for free for an year. A classmate of his got into the fetishly 'ethical' Wipro on the same deal, but the amount was 80k

Now, these guys come and pretend to have the highest standard of corporate behavior and such BS. I was not surprised when World bank accused Wipro of improper practice.

I'm not sure whether announcements from any company can be trusted.

Raja Bose · Post by **Raja Bose** » 21 Mar 2009 13:44

Interesting....so now even companies charge capitation fees!

When I started work my father kept asking me what was the 'cost-to-company' component of my salary. I never realized what he was talking about since I had not heard of any such thing. Then he explained that in India, pvt. companies will add in the 'cost-to-company' amounts to your pay figure during the job offer which would imply that the actual money you get paid would be much less. He said cost-to-company could even include stuff such as the cost of putting you in a cubicle and the cost of electricity/IT etc....so essentially you are paying for the privilege of slaving for a company, out of your own paycheck!

Nayak · Post by **Nayak** » 21 Mar 2009 15:58

http://www.newsweek.com/id/189248?from=rss

Cracking the Vault

With help from a former UBS banker, the Feds are demystifying how the Swiss do business. Inside the tradecraft.

Among the very rich, it's known as "the nut." That's the amount of money they need to salt away for a "rainy day"—for when the bubble bursts or the subpoenas arrive. It's enough money to keep paying for, say, the grandkids' private-school tuitions or the landscape gardener on Martha's Vineyard. ("Every Master of the Universe knows the number," wrote "The Bonfire of the Vanities" author Tom Wolfe.) Usually, the money is invested in something safe, such as T-bills. But sometimes it's sent, as they say, "offshore," stashed away in what one Swiss bank described as a "posterity fund."

Just how many rich people, and how much money? According to a recent U.S. Senate investigation, a single Swiss bank—the biggest, UBS—holds the secret bank accounts of 46,000 Americans, worth an estimated $18 billion. Lately, the Feds have tried to crack down on these rich Americans as tax evaders (generally, the depositors do not pay any taxes on the income from these accounts). The Swiss, not surprisingly, have been resisting. For more than three centuries, Swiss bank secrecy has offered safe haven to the wealthy, some of them unsavory types—Nazis, dictators such as Saddam Hussein and, allegedly, Islamic terrorists. At a time when the rich are coming under close and unsympathetic scrutiny, the details starting to come out about the way the Swiss banking game is played are eye-popping, if not infuriating. Judging from documents and testimony examined by NEWSWEEK, Swiss bankers, like spies, practice what is known in the espionage business as tradecraft—elaborate and often clever steps to evade detection. Last month UBS issued a statement saying, "UBS sincerely regrets the compliance failures in its U.S. cross-border business that have been identified by the various government investigations in Switzerland and the U.S., as well as our own internal review." Translation: the Swiss bank was running a shadowy operation to help rich Americans get their money out of the country, and sometimes back in, without the Feds finding out.

The story is best told through the misadventures of an extremely rich American businessman named Igor Olenicoff and his dealings with an American-born Swiss banker named Bradley Birkenfeld, whose name seems to come from a Hollywood story treatment, along with some of the tales he has been telling, like smuggling diamonds in a tube of toothpaste.

Olenicoff is the 522nd-richest man in the world, according to Forbes magazine. A white-haired, courtly-looking 66-year-old, Olenicoff had a close relative who was a courtier to the last Russian tsar, Nicholas II. His family fled the communists with some help from the daughter of Leo Tolstoy, who used her fortune to aid the tsarist diaspora. Educated at the University of Southern California, Olenicoff worked in the pop-music industry as an executive for Motown Records, then made a bundle—more than a billion dollars—in commercial real estate in Orange County, Calif. and in Florida. In the late 1990s, worried about the stability of American banks, he says, he began moving some of his money offshore, first to Barclays Bank in the Bahamas, then to UBS in Switzerland.

In an interview with NEWSWEEK, Olenicoff told how he was lured to UBS by Birkenfeld, whom he describes as smooth and well-spoken. He says Birkenfeld arranged for him to get the secret tour: the elevator ride into the vault five floors below street level in the elegant UBS bank building in Geneva (impregnable to bombs!), the thumbprint, the facial-image-recognition software. Olenicoff says he was a little skeptical of the high-tech mumbo jumbo, but he was impressed by the UBS officials. Over time, he put into UBS accounts $200 million worth of assets, some of which were held in opaque corporate entities in Liechtenstein. He got the royal treatment there: a stay in the guesthouse of Prince Hans-Adam, at the time the ruler of the tiny principality in the Alps, where he was shown portraits of some of the royal family's most famous friends, including photos autographed by Cary Grant and Doris Day.

Olenicoff says that he was assured the setup was all perfectly legal under U.S. tax law. (This may be, though one wonders if someone as sophisticated as a billionaire with access to the best lawyers and accountants wouldn't have raised a few questions about the tax consequences.) In any case, his suspicions were more than raised when the IRS subjected him to an aggressive audit in 2004—and indicated it had seen copies of his UBS bank statements. Olenicoff immediately questioned how the Feds knew so much about his supposedly secret holdings. He says he suspected that he had been ratted out by the man who had brought him to UBS in the first place.

Bradley Birkenfeld, in his mid-40s, is a mysterious figure. Recent photos are hard to come by. Based on a court appearance last year, Portfolio magazine colorfully described him as "a bloated, tan version of Jim Cramer, if the 'Mad Money' host had lost his manic energy." The son of a successful neurosurgeon in Boston, Birkenfeld was a bit of a bad boy in high school, where he was busted for drugs, Portfolio reported. His parents packed him off to Norwich University, a military school in Vermont, presumably to learn some discipline. He appears to have migrated to a posh and not-too-demanding business school in Switzerland, then into the world of Swiss banks, where he thrived. Before long he had a BMW and a chalet in Zermatt.

Birkenfeld's job, it seems, was to fish for rich American clients. According to testimony he gave to Sen. Carl Levin's permanent subcommittee on investigations, which has been looking into UBS, Birkenfeld was a member of a big team ("around 25 people in Geneva, 50 people in Zurich and five to 10 in Lugano … a formidable force") of wealth prospectors. These "private bankers" would travel to the United States four to six times a year. "You might go to sporting events. You might go to car shows, wine tastings," Birkenfeld told the subcommittee. "You might deal with real-estate agents. You might deal with attorneys … It's really where do rich people hang out, go and talk to them … It wasn't difficult to walk into a party with a … business card, and then someone ask[s] you, 'What do you do?' and you say, 'Well, I work for a bank in Switzerland, and we manage money and open accounts.' And people immediately would recognize, 'Oh, this is someone who could open new business by opening accounts'." UBS did its part to foster such potentially profitable interchanges by sponsoring fancy events such as Art Basel, an annual major art show in Miami; performances in big American cities by the UBS Verbier Festival Orchestra, an ensemble of young Swiss virtuosos; and yachting regattas at which an elite Swiss boating team called Alinghi competed.

But UBS wanted prospectors such as Birkenfeld to be careful—to act, it seems, more like spies than bankers. A September 2006 UBS document cautions its bankers to "always maintain 'clear desk policy' in hotel rooms; use secure infrastructure (travel notebook, PDA); be aware that cell phones are prone to eavesdropping; cross borders without client-related documents." Other documents warn UBS bankers what to do if approached by the FBI: protect bank secrecy.

Birkenfeld told investigators UBS bankers would encourage their clients to misrepresent money transfers they received from UBS as loans, rather than taxable income; to destroy offshore banking records in U.S. files; and to use Swiss bank credit cards that supposedly could not be discovered by U.S. investigators. Birkenfeld took his client service into the realm of James Bond: he says he once transported diamonds, bought with client money abroad, into the United States in a tube of toothpaste.

Somewhere along the way—it's not clear when or how—Birkenfeld turned state's evidence. Documents indicate that he left UBS in 2005; the reason he reportedly gave was that he suspected his employer of illegality. On the bank's internal computer network, he discovered an incriminating document—a set of instructions that U.S. investigators now believe was part of UBS's tradecraft manual for bank representatives serving American clients. Birkenfeld may have already been talking to the authorities by then. In any case, he was caught in a difficult spot. Entering the United States last spring to attend his 25th high-school reunion, he was arrested by the Feds. Later he pleaded guilty to conspiring with Olenicoff to hide millions from the IRS in Switzerland and Liechtenstein. He has been cooperating with investigators in an effort to stay out of jail; he is due to be sentenced next month. Having been outed as a whistle-blower, he is in trouble in Switzerland, too: if he ever sets foot in his adopted country, he would likely face arrest and a lengthy prison term for violating the strict Swiss bank-secrecy laws. (Birkenfeld's lawyers declined to comment.)

The Feds have subpoenaed all of UBS's records on Americans with secret bank accounts. Threatened with criminal charges, UBS has admitted violating U.S. law, paying $780 million in a settlement and offering banking data on about 250 clients. But the bank has said that Swiss law forbids it to turn over information about the thousands of other secret accounts. Nonetheless, UBS told its American clients to close their accounts and take their money elsewhere. Conservative politicians in Switzerland have railed against what they say is a fishing expedition that violates Swiss banking laws and Swiss sovereignty. Bank secrecy is a point of cultural pride for the Swiss, and so the controversy seems unlikely to abate any time soon.

The Swiss government and Switzerland's tiny neighbor Liechtenstein are facing heavy scrutiny. Since 2001 both countries have tried to cooperate with intelligence services tracking terroristfinance networks. As the global economy melts down and public anger rises, the old ways of bank secrecy will become increasingly hard to defend (even as the wealthy look for safe places to hide their money). Last week, the governments of both Switzerland and Liechtenstein announced that they would share more tax-related information with foreign governments, but the Swiss still declared that "Swiss bank secrecy is maintained."

And as for Olenicoff? He had to pay $52 million in back taxes and penalties, but, according to Forbes, he is still worth $1.4 billion—a big enough nut for any Master of the Universe.

© 2009

Nayak · Post by **Nayak** » 21 Mar 2009 16:05

http://tbm.thebigmoney.com/articles/sag ... -starbucks

The State of Starbucks
Inside its existential crisis.
By Dan Mitchell Posted Thursday, March 19, 2009 - 6:26pm

Most years, Howard Schultz, chairman and CEO of Starbucks, uses the annual shareholders meeting to introduce a major new product or a cool new piece of coffee-making equipment. Something buzzworthy.

At this year's meeting, held in Seattle on Wednesday, there was nothing in the way of buzz, and Schultz introduced nothing new, except for a focus on "value" and a fresh effort to squash the "myth" that "there is a $4 cup of coffee at Starbucks."

Problem is, it's not really a myth. Some of Starbucks' coffee drinks do cost $4 and even more. But even when they cost less, they are still an extravagance. And in a recession, extravagances are the first thing to go.

These are tough times for Starbucks. It's been closing stores by the hundreds and laying off workers by the thousands. Fewer people have been going to Starbucks. Same-store sales dropped by 3 percent in 2008. Before that, of course, Starbucks drove its business through expansion. It went way too far, "watering down the Starbucks experience," as Schultz himself once put it, and turning off customers. Now, the recession has thrust Starbucks into an existential crisis—one that is largely of its own making.

But the company can't afford to stay angsty. It has to work hard to stop customers from fleeing, it has to cut costs, and, to placate shareholders, it has to find new areas of growth.

A major problem for Starbucks is that, these days, you can get a good cup of coffee at a Chevron station. Starbucks' astounding growth—it was opening eight new stores a day just a couple of years ago—was possible because of the dearth of good coffee elsewhere.

That's no longer true, and the "Starbucks experience" that Schultz constantly refers to is really all he has to offer. But "experience" (store ambience, personalized service, etc.) is a tough sell during a deep recession, so Schultz is now trying to make the Starbucks experience a "value" proposition. Those two concepts might seem at odds, but so far, anyway, Schultz seems to be pulling it off.

The chain, Schultz promised, will now work to convince people that its coffee drinks aren't so expensive after all. He noted, for example, that half of Starbucks' coffee drinks cost less than $3, and one-third of them cost less than $2. He's right, but that's still a pricey cup of coffee. Still, the mission here is to retain existing customers—and stop them from fleeing to McDonald's McCafe bars—so reminding them that they aren't really spending all that much at Starbucks could be effective.

The recent introduction of a $3.95 breakfast combo—also part of the chain's effort to retain existing customers—doesn't, as some critics have said, put Starbucks at the level of McDonald's. It's the same stuff Starbucks was already selling but for about a buck less. It does nothing to harm the brand.

Similarly, Via, the chain's "breakthrough" instant coffee product, isn't an example of Starbucks going downscale but of making instant coffee seem upscale. The product is just two weeks old, but the consensus seems to be that while it's not as good as the real thing, it's a lot better than most instant coffees. Via is also clearly a major part of Starbucks' international strategy. People around the world don't look down on instant coffee like Americans do. Globally, instant coffee makes up about 40 percent of the coffee market. Starbucks says it intends to take a big chunk of the $17 billion spent on instant coffee every year.

Indeed, the only way for Starbucks to grow is through international expansion. The company says it plans to open 170 stores in foreign markets this year, particularly in China, Brazil, and Russia. Just one-fifth of the chain's sales come from outside the United States, a fraction that should grow quickly over the next few years, assuming the global economy cooperates.

Assuming also that Starbucks can pull it off. Chief Financial Officer Troy Alstead told reporters on Wednesday that the company sees the potential for "much more" growth in China, where it operates 400 stores. But plans to expand into India were dropped, he said, after talks with potential partners and franchisees "didn't come together."

And as much as Alstead talked up international expansion, the chain's plans have been cut back. For instance, it had been planning to open stores in entirely new markets, such as Eastern Europe. Now, it is focusing on markets where it already has stores.

Expansion overseas might be a lot easier if Starbucks were to close more stores in the United States. But here, the company's former strength—growth—is now its greatest weakness. Starbucks is planning to open 140 new stores in the United States (while closing an additional 200). The trouble is, Schultz isn't about closing stores; he's all about opening them. He may have complained about overexpansion a few years ago, but he was, after all, the company chairman, and a very involved one at that. And the company still hasn't backed off its goal of someday operating 40,000 stores worldwide. If the ubiquity of Starbucks' stateside stores is a major cause of the company's problems, it's hard to figure out why Schultz isn't closing a lot more of them.

For Schultz, the next year, at least, will be a balancing act. He needs to recast Starbucks as affordable without harming its brand of "specialness." He needs to cut costs while still investing in growth. He needs to fend off gigantic competitors like McDonald's and Dunkin' Donuts without directly competing on price. And, perhaps most challenging of all, he needs to persuade people to drink instant coffee.

I for one will not grieve over the death-throes of Star-steal-my-bucks brand. My cothas coffee still gives me the caffeine kick in the musharraf every morning without fail.

Singha · Post by **Singha** » 21 Mar 2009 16:26

He said cost-to-company could even include stuff such as the cost of putting you in a cubicle and the cost of electricity/IT etc

some cos added the cost of bus service per capita into CTC (mine charges it separately every month) but nowhere have I heard of facilities or power costs being added to CTC gross.

John Snow · Post by **John Snow** » 21 Mar 2009 19:34

Most reputed independent contractors of AIG.

1) Chris Dod highest recipeint of funds for election

2) Drum roll...... Barak Obama (160,000)

3) Drum Roll Hillary Clinton

4) John MaCain

Obladi oblada life goes on.....

Ameet · Post by **Ameet** » 22 Mar 2009 15:06

Chinese made drywall ruining homes

http://www.cnn.com/2009/US/03/18/chines ... index.html

# Homeowners: Smelly gas from drywall corroding metal, ruining appliances
# CPSC: Florida complaints generally involve homes built during '05, '06 boom
# Homeowners' attorneys: Defective drywall could be in thousands of homes in U.S.
# Class-action lawsuits name Chinese manufacturers as defendants

John Snow · Post by **John Snow** » 22 Mar 2009 18:23

Another pressure tactic accross the bow of Chinpanda to buy more US treasuries, you cant mess with the boss, its big Italian family!

Raja Bose · Post by **Raja Bose** » 22 Mar 2009 22:09

Singha wrote:He said cost-to-company could even include stuff such as the cost of putting you in a cubicle and the cost of electricity/IT etc

some cos added the cost of bus service per capita into CTC (mine charges it separately every month) but nowhere have I heard of facilities or power costs being added to CTC gross.

I guess it might be for some smaller desi cos. ....I have heard it being done for some of these smaller Calcutta trading firms.

SriniY · Post by **SriniY** » 23 Mar 2009 14:22

Can anyone explain what this article is saying.

http://www.contrahour.com/contrahour/fi ... strong.pdf

Singha · Post by **Singha** » 23 Mar 2009 14:54

has anyone noticed a large spike in the crashes of aircraft in the last one year?

are corners being cut by firing repair folks or china made 'reconditioned' spares?

derkonig · Post by **derkonig** » 23 Mar 2009 16:34

^^
The Turkish crash was coz the faithfools believed in flying on "a wing & a prayer".....
Hudson river crash in Khanate was due to geese....
No clue about the reasons behind the other khanate crashes...could be bad weather...
Tokyo crash is being blamed on strong winds...

Btw, howz flying junk (mil/civvie) in panda land doing? Any stuka bombers yet?

girish.r · Post by **girish.r** » 23 Mar 2009 16:43

Singha wrote:has anyone noticed a large spike in the crashes of aircraft in the last one year?

are corners being cut by firing repair folks or china made 'reconditioned' spares?

Hi,

This is due to the following:
1.) Cutting corner's (cost/ quality) with MRO facilities.
2.) Pushing towards quicker turn arounds.
3.) More working hours for crew who are already suffering hefty pay cuts.

All the above are because of hedging going WRONG and less capacity.

Also FAA is very strict with spares and replacements. If not for the dirty folks on the STREET, things would have been still pretty.

Wishing Good Day to all BRFite's. This being my first post.

Regards.

shyamd · Post by **shyamd** » 23 Mar 2009 17:38

We are the monolines now

Robert Peston | 10:28 GMT, Monday, 23 March 2009

Comments (27)

Before the market in collateralised debt obligations (CDOs) started to implode in 2007, many of these securities constructed out of low-quality subprime loans were sold as AAA investments - the highest quality investments, up there with the sovereign debt of the richest nations - partly because some of these bonds were insured against default by so-called monoline insurers.

However, the insurance turned out to be more or less worthless, because these specialist insurers didn't have sufficient capital to absorb the mind-boggling losses on lending to US home owners with poor credit histories.

So the value of CDOs collapsed, generating about $1tn of losses for banks around the world - and hobbling the likes of Merrill Lynch, UBS, Citigroup, Royal Bank of Scotland, and so on.

This subprime/CDO debacle also led to the almost complete disappearance of important wholesale sources of funds for banks.

And the rest, as they say, is financial market meltdown, credit crunch and global recession.

The provision of credit by banks and other financial institutions was squeezed all over the world, prompting a collapse of consumer spending, business investment and trade from which no economy has been insulated.

Which is why so much of the effort of governments - especially ours and that of the US - has been directed towards shoring up the banks and reinvigorating the supply of credit.

There'll be another initiative with that aim today, when the US Treasury Secretary Timothy Geithner announces a so-called Public-Private Investment Program to purchase between $500bn and $1tn of impaired assets - toxic investments such as CDOs and loans - from America's battered banks.

Timothy Geithner, Monday, March 16, 2009, in the East Room of the White House

The US authorities - the Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation - will provide finance to hedge funds and pension funds for the purchase of these assets.

Some of the details can be found in an article by Mr Geithner in this morning's Wall Street Journal, and the minutiae will be disclosed later today.

The aim is to remove as many of these bad assets as possible from banks' balance sheets, so that the banks become less anxious about future write-offs and become more confident that they have the capital resources to restart lending.

It's an alternative approach to that taken by the British Treasury, which has used the public sector's balance sheet to insure Royal Bank of Scotland and Lloyds Banking Group against future losses on some £600bn of poor loans and investments.

But both the UK and the US are trying to avoid more conventional, full nationalisation of the banks.

In the US case, taxpayers will be both providing some of the loan finance to buy the toxic assets and will sharing in the risks of owning them - both losses and profits.

As a public-private solution, it has a snake-eating-its-tail, paradoxical quality to it - since at least some of the finance for the purchase of the impaired assets will presumably come from the very banks that are supposed to be cleansed by the exercise.

It's also important to note - as I've been pointing out for more than a year - that both the US and the UK authorities are simultaneously providing the funds to banks that the banks can no longer obtain in a purely commercial way from wholesale markets.

In America, for example, the Term Asset-Backed Securities Loan Facility (TALF) will lend up to $1tn (£695bn) to private-sector investors to purchase securities manufactured out of new loans to consumers, car buyers, students and small businesses.

Here in the UK, our Treasury is providing hundreds of billions of pounds in guarantees for securities made out of bank debt, mortgage debt, consumer debt and corporate debt. It's providing separating guarantees for bank lending to small business. And, in partnership with the Bank of England, it's purchasing various forms of loans to companies.

The way to see all this is as the public sector - especially in the US and the UK - taking on the risks of lending to the private sector.

And it may have struck you that this is what the monoline insurers were doing on sub-prime lending to US homebuyers with poor credit histories, via their insurance of the securities created out of sub-prime.

Like the monolines, the US and UK authorities are exploiting their AAA ratings.

They are turning risky private-sector loans into the equivalent of sovereign debt, so that private-sector investors will buy these loans.

And the US and UK authorities are also raising money directly from private-sector investors by selling them government bonds which is then recycled into the banking system.

In a classic sense, the British and American governments are exploiting the perceived strength of the public sector to correct the failure of markets to channel finance to where it's needed.

As a strategy, it works for as long as there's a widespread confidence that we as taxpayers have the capacity to make good any potential losses on all this lending.

Or to put it another way, the productive potential of the British and American economies is being mortgaged to prop up the banking system. The banks are being kept alive by our promise to provide an indeterminate proportion of our future economic output to make good the banks' future losses.

How big could the banks' call on us as taxpayers turn out to be?

Support for the UK's banks and for private sector lending in the form of loans, guarantees, insurance and investments is equivalent to just under 100% of GDP, or a bit more than £1.3tn.

And based on out-of-date IMF figures, the equivalent figure for the US is more than 70% of GDP - or not far off $10tn (£6.95tn).

Those are not small numbers. Unfortunately, they don't tell us anything very useful about how much is at risk of being lost, how much could in theory be written off.

That said, even on worst-case projections of the impact of the recession on the ability of borrowers to repay, losses for taxpayers will only be a proportion of the gross sum.

And, everything else being equal, that sum would of course be affordable, even if paying it would be painful for us (in the form of higher taxes or fewer resources for public services).

But everything else is not equal.

The US and UK public finances are in a dreadful state, because of recession-induced collapses in tax revenues and the cost of measures to stimulate our economies.

Which is why there are some economists and analysts who fear that the AAA credit ratings of the US and the UK are not wholly unimpeachable.

It's probably worth remembering that three years ago, no regulator or central bank expressed serious concerns that the monolines could lose their AAA ratings.

What would happen if the AAA rating were lost?

Well, the virtuous interplay of bank bailouts and fiscal stimulus in limiting the severity of the recession could become a vicious simultaneous squeeze on the ability of both the public sector and private sector to obtain credit.

To state the obvious, the US and UK governments have a very delicate balance to strike between supporting the banks and overstretching the public-sector balance sheet.

There's another important implication of the extent to which we've mortgaged our futures to save the banks.

It rationalises the acute anger felt by millions at any bonuses or pay rises going to bankers.

Their argument is that we're all in this together - and that if all taxpayers are making potentially serious financial risks and sacrifices to save the banks, the quid pro quo should probably be profound gratitude on the part of bankers and a joyful willingness to defer any incremental earnings until the foundations of the financial system and the economy have been rebuilt.

Tanaji · Post by **Tanaji** » 25 Mar 2009 21:42

Less demand for the UK government bonds

http://news.bbc.co.uk/1/hi/business/7963815.stm

Singha · Post by **Singha** » 25 Mar 2009 22:53

Tokyo crash is being blamed on strong winds...

must be a real hurricane to flip over a MD-11 widebody. the thing kind of floated
to one side like a paper airplane.

US civil airlines do have a lot of ancient planes .. any many are too broke buy
newer planes.

Singha · Post by **Singha** » 26 Mar 2009 10:31

dont all major airports like narita have wind shear sensors to warn pilots of unpredictable gusts near the ground (when plane is slow and depowered, means its
tough to escape a blast).

sometimes these unattended sensors can subtly go bad while still sending some output...

shyamd · Post by **shyamd** » 26 Mar 2009 19:42

Revised Estimates Show U.S. Economy Contracted 6.3% in Q4 2008

Print

* Real GDP contraction in Q4 2008 was revised from -6.2% to -6.3% (weakest since 1982) led by greater than initially estimated contraction in inventories. Exports, consumer spending and investment had a negative contribution to GDP growth. Economy contracted -0.5% in Q3 2008. Economy grew 1.1% in 2008
* Details of Q4 2008 GDP: Real final sales (GDP - change in private inventories) decreased 6.2%. Private inventories subtracted 0.11% from GDP growth. Real Personal consumption fell 4.3% (most since 1980); non-residential fixed investment fell 21.7% (most since 1975); government expenditure rose 7%; exports fell 23.6% (steepest fall since 1971); imports fell 17.5%. Net exports contribution to GDP growth turned negative: -0.5%
* IMF: Growth forecast revised down further to -3% to 3.5% in 2009 as the financial crisis remains acute and households face depreciating real and financial assets, tighter financial conditions. Economy is expected to grow 0% to 0.5% in 2010
* Forecasts for GDP growth (not online): Morgan Stanley: -5.5 % in Q1 2009 and -3.3% in 2009. Merrill: -6.6% in Q1 2009 and -3.1% in 2009. Goldman: -7% in Q1 2009 and -3.2% in 2009. JP Morgan: -5.5% in Q1 2009 and -1.8% in 2009
* RGE Monitor: Recession will last for two years. GDP will continue to contract throughout all of 2009 leading to an annual contraction of 4%. 2010 will see a slow and sluggish recovery. Personal consumption will continue to contract sharply throughout 2009 due to negative wealth effects from housing and equity market losses, rising job losses, high debt, tight credit conditions), unemployment rate will reach 9% by the end of 2009. capex will contract in the high double-digits throughout 2009. (due to slump in domestic and foreign demand and difficulty in accessing short-term credit, weak corporate earnings); contraction in imports (slump in pvt demand) will exceed contraction in exports (global recession) so that contribution of net exports to GDP will be positive but much smaller compared to 2008
* Nouriel Roubini: we are in a painful U-shaped recession that will last at least until 2009-end, the longest since Great Depression. Even if GDP grows in 2010, it is likely to be no higher than 1% and unemployment rate will be rising towards 10%-> we will still be substantially in a recession. Even if appropriate aggressive policy actions are undertaken — monetary and fiscal stimulus, bank clean-up, credit restoration, mortgage debt reduction, GDP wouldn't rise closer to 2% until 2011. So this recession may last 36 months. We now face a 1 in 3 chance that, if appropriate policies are not put in place, this ugly U-shaped recession may turn into a more virulent L-shaped near-depression or stag-deflation like Japan
* Bernanke: Economy will see a severe contraction in 2009 followed by moderate expansion in 2010 but global nature of downturn and feedback loop b/w economy and financial sector are downside risks. The recovery will be sluggish taking more than 2-3 years, esp. the job market
* Fed: Given continued sharp contraction in real economic activity, 2009 GDP growth forecasts revised down -0.5% to -1.3% from an earlier projection of -0.2% to +1.1% made in Oct 2008. Fed expects 2.5% to 3.3% growth in 2010 and 3.8% to 5% growth in 2011, and 2.5% to 2.7% growth on a longer term basisal manufacturing, consumer confidence, exports, capex, unemployment rate, home starts
* Merrill Lynch (not online):W-shaped recession with economy picking up in H2 2009 due to the fiscal stimulus and slowdown in pace of inventory drawdown, and the economy falling back again in late 2010
* OECD: 2009 growth forecast: -1.2%. Slower pace of recovery compared to past recessions led by negative wealth effects
* NBER: U.S. entered a recession in Dec 2007 ending 73 months expansion from Nov 2001 (expansion of 1990s lasted 120 months). Decline in economic activity in 2008 has met the standard for a recession. The 2.6 mn fall in employment in 2008 was the biggest factor in determining the start of the contraction
* NBER doesn’t require two quarters of successive contraction in GDP to make a recession call as it focuses on month-to-month changes in the economy: peak quarter of economic activity was Q4 2007. Payroll employment peaked in Dec 2007. Real personal income less transfers peaked in Dec 2007. Real manufacturing and wholesale-retail trade sales peaked in June 2008. Industrial production peaked in Jan 2008. The income-side of domestic output peaked in Q3 2007. The product-side reached a temporary peak in Q3 2007 but rose to a higher level in Q2 2008
* Financial turmoil characterized by banking crisis are associated with severe and (2-4 times) longer downturns with (2-3 times) larger impact on growth (IMF study); inadequate policy responses (bank capitalization, fiscal stimulus), policy missteps, debt deflation, low interest rates might pose risk of an L-shaped recession; vicious circle of credit crunch, cntraction in private demand and financial sector losses is a risk. While fiscal stimulus is needed, solvingthe banking crisis is a more necessary condition to alleviate the recession

Vipul · Post by **Vipul** » 27 Mar 2009 00:10

China secretly funding Kevin Rudd's economic rescue plan.

China is reported to be covertly funding Australian Prime Minister Kevin Rudd's economic rescue plan by buying Australian Treasury securities to gain the support of Australian politicians, who have in recent times been vociferously expresing concern over China's increasing financial clout and appetite for acquisitions in the country.

An investigation into Chinese investments in Australia by the Herald Sun has shown that China's investment in Australian government bonds running into billions of dollars is being used by the government for its emergency spending.

The report, quoting market insiders, says that of the $2 billion in Treasury securities issued every week by the Australian government, China is believed to be buying around 15-20 per cent, thereby in all probability, making it the single biggest lender to Australia.

This startling revelation by the Herald Sun, was made after Prime Minister Kevin Rudd secretly met Li Changchun, the head of China's propaganda, media and ideology and ranked as the country's fifth-most powerful member of its nine-person ruling politburo standing committee, last Saturday at The Lodge. Though the Australian media was in the dark about the meting, the paper says the news made headlines in all TV networks across China, since only the Chinese media was allowed into The Lodge.

Barely had the meeting ended, the Chinese media flashed reports, 'Kevin Rudd promotes China's role in the IMF.'

The bond issue would leave Australia with a massive A$200-billion debt, which politicians fear would subordinate Australian national intersts to those of its biggest lender, which is also investing heavily in Australia, mainly in the minerals sector, which has caught the attention of politicians, investors and the public alike.

The recent $19.5-billion investment by China's state-owned Aluminium Corporation of China (Chinalco) in troubled mining giant Rio Tinto, (See: Chinalco invests $19.5 billion in Rio Tinto to raise stake to 18 per cent), Beijing's biggest investment ever in a foreign company, has come in for severe criticism not only from Australians, but also investors of Rio Tinto in the UK.

Many Australians are worried about the Chinese taking control of strategic mining wealth of the country. Some government officials privately confess that the increased Chinese investment is a growing concern for national security.

For instance, the Rudd government, which has banned uranium exports to India on proliferation concerns even after the signing of the Indo-US civillian nuclear cooperation, has no such qualms about supplying the nuclear raw material to China.

Rudd said that the meeting lasted for 30 minutes meeting followed by lunch, where they discussed how to expand and develop the economic, political and broader relationship.

Last night Australian politicians said that the emergence of China as a major lender needed to be weighed against the national interest. Shadow Treasurer Joe Hockey said, was quoted by the Herald Sun, "If it appears that a foreign government is the largest lender to Australia, then ultimately that weighs heavily on the national interest."

By investing heavily into US bonds, China is also trying to leverage influence in Washington, with Chinese President Wen Jiabao rebuking the US for creating the global financial crisis and asked it to put its house in order at the World Economic Forum Meet held in Geneva last month.

Apart from Chinalco's interst in Rio, Australian regulators have to pass the $2.6-billion takeover of OZ Minerals by China's Minmetals. Opposition parties have warned that if China is the country's largest lender, the criteria of being the largest lender should not go against the interest of the country.

Opponent of the Chinalco deal, Nationals Senate leader Barnaby Joyce has demanded that Rudd make the details of the meeting public and clarify whether the meeting was not held by the Chinese to lobby to clear the Chinalco-Rio deal.

China is seeking support of the Australian government to get more voting rights in the IMF, since currently, China, which is the world's third largest economy, has a 3.7 per cent voting stake, while Germany, the fourth largest economy has 6 per cent, Britain 4.9 per cent, the US has 17 per cent and India 1.9 per cent.

Responding to why the Australian media was kept in the dark about such an important meeting, Rudd told The Australian ,"It was a private meeting between the two. It is not the prime minister of Australia's role to put out a press release announcing what every visiting politician is doing."

Often taunted by opposition members for his fluency in Mandarin, Rudd is known more for his fondness of Chinese noodles than the traditional Australian roast turkey.

In another development, the paper also reported defence minister Joel Fitzgibbon's admission in parliament of two trips to China paid for "either personally or through her associated commercial interests,'' by his rich Chinese-born land lady and political benefactor Helen Liu.

He confessed to not declaring the fully funded visits on the MP's gift register of the trips made in 2002 to Beijing and Shanghai and again in 2005 to Shanghai during his term as an opposition front bencher.

Vipul · Post by **Vipul** » 27 Mar 2009 19:12

Top 5 hedge fund bosses earn $1.5 billion each in 2008 .

ramana · Post by **ramana** » 31 Mar 2009 01:48

From an e-mail

HOW TO FIX THE ECONOMY

THIS WOULD WORK AS LONG AS OBAMA DIDN’T TAX IT.
Some solutions are just so obvious!

This was an article from the St. Petersburg Times Newspaper on Sunday. The Business Section asked readers for ideas on "How Would You Fix the Economy?"
I thought this was the BEST idea....
I think this guy nailed it!

Dear Mr. President,

Patriotic retirement:

There are about 40 million people over 50 in the work force -pay them $1 million apiece severance with the following stipulations:

1) They leave their jobs. Forty million job openings - Unemployment fixed.

2) They buy NEW American cars. Forty million cars ordered - Auto Industry fixed.

3) They either buy a house/pay off their mortgage - Housing Crisis fixed.

Can't get any easier than that!

sivab · Post by **sivab** » 31 Mar 2009 01:55

^^^ Who will pay for the 40T required to implement the plan?

SaraLax · Post by **SaraLax** » 31 Mar 2009 18:13

My Manhattan Project-How I helped build the bomb that blew up Wall Street

I have been called the devil by strangers and “the Facilitator” by friends. It’s not uncommon for people, when I tell them what I used to do, to ask if I feel guilty. I do, somewhat, and it nags at me. When I put it out of mind, it inevitably resurfaces, like a shipwreck at low tide. It’s been eight years since I compiled a program, but the last one lived on, becoming the industry standard that seeded itself into every investment bank in the world.

I wrote the software that turned mortgages into bonds.

Singha · Post by **Singha** » 31 Mar 2009 18:41

superb article....a keeper....gritty film noir stuff. nobody can make this up, only a soldier who 'was there in stalingrad' can write it.

the below was worth the reading time alone

Now that I was spending more time on the floor, I wondered why the men’s room always stank. Then one afternoon at three, when I was in there taking a leak, I discovered the hideous truth. Traders had a contest. Coming in at eight, they never left their desks all day, eating and drinking while working. Then, at three o’clock, they marched into the men’s room and stood at the wall opposite the urinals. Dropping their pants, they bet $100 on who could train his stream the longest on the urinals across the lavatory. As their hydraulic pressure waned, the three traders waddled, pants at their ankles, across the floor, desperately trying to keep their pee on target. This is what $2 million of bonus can do to grown men.

Arya Sumantra · Post by **Arya Sumantra** » 01 Apr 2009 02:58

ramana wrote:2) They buy NEW American cars. Forty million cars ordered - Auto Industry fixed.

Lot of sops to push new car sales.
SHQ's uncle plans to sell his car. His Nissan is so old and khataara that if he sells it he would get $150 onlee but his car specifically if he sells to govermund will fetch him $3000 not cash but discount vouchers which he can avail when he buys a brand new car. The difference between the market's valuation and govermund's valuation of the old khataara Nissan was hard to overlook but is nevertheless justified as a form of stimulus.

ramana · Post by **ramana** » 02 Apr 2009 00:26

SaraLax wrote:My Manhattan Project-How I helped build the bomb that blew up Wall Street
I have been called the devil by strangers and “the Facilitator” by friends. It’s not uncommon for people, when I tell them what I used to do, to ask if I feel guilty. I do, somewhat, and it nags at me. When I put it out of mind, it inevitably resurfaces, like a shipwreck at low tide. It’s been eight years since I compiled a program, but the last one lived on, becoming the industry standard that seeded itself into every investment bank in the world.

I wrote the software that turned mortgages into bonds.

I think he is taking too much of the mea culpa route.

Lets use the six whys that vina reminded us as the Toyota method:

1)Why are we in the global financial meltdown?
because global banks are bankrupt and dont have money to lend.
2) Why are the golbal banks bankrupt?
Because they bought CDS and monetized subrpime mortgages which went bust.
3) why did the sub-prime mortgages go bust?
because the owners couldnt afford to make payments anymore.
4) Why couldnt the owners make payments any more?
because the interest rates rose or reset in 2005 -2006 and they were losing jobs.
5) why were the interest rates reset?
because the Feds thought that inflation was going to take over.
6)why did they think that?
The continuing war in Iraq was leading to uncertainity in oil supplies and price of oil went up from $50/barrel to $140/barrel and was affecting all sectors of economy from milk to airlines.

So yes sub-prime were a cause but more importantly the fear of inflation due to high oil prices was the prime cause.

negi · Post by **negi** » 02 Apr 2009 00:36

But gurudev ; don't they say that it was the likes of Chase and GMS who had invested heavily in the OIL futures and were making hay during the BUSH regime.

ramana · Post by **ramana** » 02 Apr 2009 01:00

And took that bought CDS with the monies!

My point is by focussing on the sub-primes its being converted into a bad people who took more thant they can afford sort of stroy. I recall in 2005 there were RE brokers in California who were worried about impending doom and wanted Congress to take action to allow rewriting to 40 years or what ever to enable affordable payments and keep the folks in the homes.

So there was Feds, Congress and Presidential non performance.