Perspectives on the global economic meltdown

Singha · Post by **Singha** » 02 Apr 2009 15:26

WSJ

State Bank of India -- Has Cash, Will Lend

By ERIC BELLMAN

(See Corrections & Amplifications item below.)

MUMBAI -- State-owned State Bank of India is lending like the global credit crisis never happened as it looks for places to park billions of dollars in new deposits.

Consumers have shifted tens of billions of dollars to India's state-run banks amid the bailouts of the world's most sophisticated financial institutions and concerns that global problems could infect India's private-sector banks.
[State Bank of India -- Has Cash, Will Lend ] Eric Bellman for The Wall Street Journal

A poster for State Bank of India touts lending for businesses in a nationwide ad campaign seeking to grab market share from rivals.

State Bank of India has been the biggest beneficiary of that trend. It is India's largest bank by assets, including private-sector lenders, and is 60% owned by the government, but has remained a traditional lender rather than expanding into other financial instruments that sank many international banks. That conservatism saw its deposit base swell by close to 40% in the three months ended Dec. 31.

Now, it is on a lending spree, cutting interest rates on loans, snatching customers from competitors and doing its part to prevent India from getting stuck in the global slowdown.

Subhra Chatterjee, 39 years old and a cellphone company employee in Kolkata, used to have his savings account and his home loan with ICICI Bank Ltd., India's largest private-sector bank. He appreciated ICICI's telephone-banking and online-banking services as well as their bright branches. But in the last six months, his view of private-sector banks has soured as he watched banks elsewhere implode. This month, he flipped his savings and his $40,000 home loan to State Bank of India.

"People are disillusioned with the private-sector banks and all the charisma that was originally coming out of the private sector," he said. "State Bank is extremely cash rich. That is why I changed to them."

V. Vaidyanathan, executive director of ICICI Bank, said in an interview that the rise in deposits at state-run banks has more to do with the higher deposit rates and lower lending rates they are offering than with a flight to quality. He also noted that while liquidity late last year was "tight" for many banks, deposits are increasing again.

While banks in the U.S. and elsewhere are cutting back, State Bank of India is expanding. It hired 25,000 workers in the past year, plans to hire 10,000 in the coming year, and is adding 4,000 ATMs and 2,000 branches to its network of almost 10,000.

The health of State Bank of India and India's other state-controlled banks, plus their willingness to ratchet up lending in tough times are reasons why India's growth is relatively healthy compared with other economies. In the coming year, India's economy is expected to expand at 6%, down from close to 9% a couple of years ago.

Over the weekend Indian Prime Minister Manmohan Singh said the country's needs its banks to lower lending rates further following repeated monetary-easing measures by the central bank.

"With ample liquidity and low inflation, there is scope, perhaps, for a further moderation in interest rates," he told a meeting of Indian business leaders Saturday.

State Bank's history goes back more than 200 years to India's days as a British colony. After independence, the government took it over, and the bank has been expected since then to act in the interest of uplifting the people of India.

That used to mean it had to give loans that it didn't expect to get back or set up branches in sparsely populated rural areas that couldn't support them. In the last 15 years, though, as India reformed its economy, State Bank has received more independence from the government to boost its profits and modernize its branches to compete with private-sector banks.

The bank's cash glut is behind its latest move to cut interest rates and promote home loans, car loans and small-business loans. Its mortgage-loan rates are 8%, more than two percentage points below some of its competitors. It has matched that with a nationwide advertising campaign. "Economy Booming or Slowing, SBI Keeps Your Business Moving," says one of the bank's posters. State Bank said around 60% of its new loans are taken over from competitors.

"The quantum of deposits that flowed in was very large," said Seshadri Sen, banking analyst at Macquarie Research in Mumbai. "Now they are lending reasonably aggressively."

Lending at State Bank and other public-sector banks rose 29% last year, up from 20% in 2007. State Bank plans to use some consumers' yearning for safety to claw back some of the market share it has lost in the last decade. The company is sitting on close to $20 billion in cash above the amount it needs to operate. And if it can take advantage of its strong competitive position now, it could emerge from the downturn far stronger.

The bank also is using the surge in business to upgrade some of its branches. At a branch in the heart of old Mumbai, halfway between the Bombay Stock Exchange and India's central bank, some clerks still sit under electric fans. Long lines of customers wait their turn, and banking hours run from 10:30 a.m. to 4:30 p.m. Just across the street, a brightly lit, air-conditioned ICICI Bank branch is open from 8 a.m. to 8 p.m. On a nearby corner, ABN Amro Bank and HSBC Bank also provide cheerier alternatives.

State Bank is repainting its branches with a uniform color scheme, adding air conditioning, televisions and an electronic token system to move customers faster. "We are asking people to smile more often," said a general manager at State Bank's headquarters in Mumbai. "We want our people to be more customer-friendly."

It is the stability, not the smiles, that is luring customers. Foreign banks said they often can't compete with State Bank of India's rates. Growth in lending by foreign banks slowed to 17% last year from 31% in 2007. State Bank of India shares have shed about 35% of their value over the last 12 months.

vsudhir · Post by **vsudhir** » 02 Apr 2009 20:20

John snow garu,

Heard a variant of the said story onlee....

ee rojulu yemi cheppalemu. I half expect the chini over-reach with a sternw arning to unkil khan onlee saying

"vaddi ee leda muddi ee"

Time will tell where this is going.

vsudhir · Post by **vsudhir** » 02 Apr 2009 20:29

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

FASB Eases Fair-Value Rules Amid Lawmaker Pressure

The changes approved today to fair-value, also known as mark-to-market, allow companies to use “significant” judgment in valuing assetsto reduce writedowns on certain investments, including mortgage-backed securities . Accounting analysts say the measure, which can be applied to first-quarter results, may boost banks’ net income by 20 percent or more. FASB approved the changes during a meeting in Norwalk, Connecticut.

Significant and hugely so. In some ways akin to changing rules midway. The quality and level of bank assets, always difficult to assess will now become ever more embroiiled. Nonperforming Ass-ets marked up to fancy and imagination cannot be ruled out.

Banana accounting, anyone?

vsudhir · Post by **vsudhir** » 02 Apr 2009 23:36

Drudge headlines today....tell their own story.

G20 Superpump: $1 Trillion promised to IMF and World bank

'New world order' emerging from global economic crisis: British PM

Obama hails G20 summit as turning point in Recovery

World mkts surge as US data boost recovery hope

Recession hits Hollywood actors: salaries down

Boats Too Costly to Keep Are Littering Coastlines

Tax dodgers multiply as underground economy cushions job cuts

svinayak · Post by **svinayak** » 03 Apr 2009 07:43

Jobs gloom for 2009
http://www.reuters.com/article/rbssCons ... 7920090402

April 2 (Reuters) - Bombardier Inc (BBDb.TO) said it would
cut about 3,000 or 10 percent of jobs on Thursday as it
downsizes its business and regional jet production.
[ID:nN31440969]

The job cuts, which will result in severance costs of about
$30 million, will take place at the company's facilities in
Canada, the U.S., Mexico and Northern Ireland, by the end of
2009.

The deepening global economic crisis has claimed almost
420,000 jobs in non-financial sectors since the start of the
year. Following are details of announced job cuts of 2,000 or
more, by region and sector, since the beginning of January:

REGION - EUROPE:
COMPANY SECTOR NUMBERS DATE
----------------------------------------------------------
Elcoteq (ELQAV.HE) Electronics 5,000 Jan 15
Metro AG (MEOG.DE) Retail 15,000 Jan 20
Philips Electronics

(PHG.AS)(PHG.N) Electronics 6,000 Jan 26
Corus Steel 3,500 Jan 26
STMicroelectronics

(STM.PA) Chip maker 4,500 Jan 27
SAP (SAPG.DE) Software 3,300 Jan 28
AstraZeneca Plc (AZN.L) Drugmaker 6,000 Jan 29
Atlas Copco (ATCOa.ST) Machinery 3,000 Feb 02
SAS (SAS.ST) Airlines 8,600 Feb 03
Salcomp (SAL1V.HE) Telecom 3,300 Feb 10
GKN Plc (GKN.L) Aerospace 4,364 Jan/Feb
Severstal
(CHMF.MM) (CHMFq.L) Steel 9,000-9,500 Mar 11
Continental (CONG.DE) Tyre 2,000 Mar 11
Leoni (LEOGn.DE) Auto 4,000 Mar 24
Heidelberg (HDDG.DE) Printing 2,500 Mar 26

REGION - NORTH AMERICA:
COMPANY SECTOR NUMBERS DATE
----------------------------------------------------------
Alcoa Inc (AA.N) Aluminum prod 15,000 Jan 06
EMC Corp (EMC.N) IT 2,400 Jan 07
Dell (DELL.O) IT 1,900-3000 Jan 08
Boeing Co (BA.N) Airlines 4,500 Jan 09
Cessna Aircraft Airlines 2,000 Jan 12
Motorola (MOT.N) Mobile phones 4,000 Jan 14
MeadWestvaco

Corp (MWV.N) Packaging 2,278 Jan/Mar
Hertz Global Hldgs

Inc (HTZ.N) Car rental 4,000 Jan 16
Eaton Corp (ETN.N) Manufacturer 5,200 Jan 20
Intel Corp (INTC.O) IT 6,000 Jan 21
Microsoft Corp (MSFT.O) IT 5,000 Jan 22
Texas Instruments

(TXN.N) IT 3,400 Jan 26
Sprint Nextel Corp (S.N)Telecom 8,000 Jan 26
Home Depot Inc (HD.N) Home

Improvement 7,000 Jan 26
General Motors Corp

(GM.N) Auto 2,000 Jan 26
Caterpillar Inc (CAT.N) Earth-Moving

Equipment 26,064 Jan/Feb/Mar
Pfizer Inc (PFE.N) Pharma 19,500 Jan 26
Molex Inc (MOLX.O) Electronics 2,500 Jan 27
Corning Inc (GLW.N) Manufacturer 4,900 Jan 27
Jabil Circuit Inc

(JBL.N) Electronics 3,000 Jan 28
Eastman Kodak Co

(EK.N) Camera, printing 4,500 Jan 29
Macy's Inc (M.N) Retail 7,000 Feb 02
Cisco Systems Inc

(CSCO.O) IT 1,500-2000 Feb 04
Estee Lauder Cos Inc

(EL.N) Cosmetics 2,000 Feb 05
BorgWarner Inc (BWA.N) Auto 4,400 Feb 12
Chrysler LLC Auto 3,000 Feb 17
General Motors Corp

(GM.N) Auto 67,000 Feb 17
Goodyear (GT.N) Tyre 5,000 Feb 18
Delta Air Lines (DAL.N) Airlines 2,100 Feb 19
Visteon Corp VC.N Auto 9,300 Feb 25
Nortel Networks Corp
(NT.TO) Telecom 3,200 Feb 25
United Technologies

Corp (UTX.N) Manufacturing 11,600 Mar 10
PPG Industries

Inc (PPG.N) Paint maker 2,500 Mar 12
Bluegreen Corp (BXG.N), Resorts, sites 3,000 Mar 16
Agilent Technologies

Inc (A.N) Electronics 2,700 Mar 26
Bombardier Inc (BBDb.TO) Train/aircraft 3,000 April 2

REGION - ASIA-PACIFIC:
COMPANY SECTOR NUMBERS DATE
----------------------------------------------------------
TDK Corp (6762.T) Electronics 8,000 Jan 08
Lenovo Group (0992.HK) IT 2,500 Jan 08
BHP Billiton Ltd/Plc

(BHP.AX) Mining 6,000 Jan 21
Panasonic Corp (6752.T) Electronics 15,000 Feb 04
Nissan Motor Co (7201.T)Auto 20,000 Feb 09
Pioneer Corp (6773.T) Electronics 10,000 Feb 12

REGION - AFRICA
COMPANY SECTOR NUMBERS DATE
----------------------------------------------------------
Anglo Platinum (AMSJ.J) Platinum 10,000 Feb 09
Lonmin Plc (LMI.L) Platinum 5,500 Feb 24
----------------------------------------------------------

TOTAL 419,106
----------------------------------------------------------
(Compiled by Jijo Jacob and Carl Bagh, Bangalore Editorial
Reference Unit and David Cutler, London Editorial Reference
Unit; editing by David Cutler and Elaine Hardcastle)

vina · Post by **vina** » 03 Apr 2009 16:03

Yawnn.. BRF ahead of the curve as always. We have always known that China has been shafted (or rather shafted itself) in this economic collapse.

And to borrow a phrase from esteemed right honorable shri shri Rahul Mehta Maharaj ji, AWMTA , this time Paul Krugman writes in NY Times about the same thing in the same language. Expect our Desi Dork Media to print multiple copies of this in tomorrows newspapers in their syndicated columns (smarter folks would have read it in BRF before anyways!)

The New York Times

April 3, 2009
Op-Ed Columnist
China’s Dollar Trap
By PAUL KRUGMAN

Back in the early stages of the financial crisis, wags joked that our trade with China had turned out to be fair and balanced after all: They sold us poison toys and tainted seafood; we sold them fraudulent securities .

But these days, both sides of that deal are breaking down. On one side, the world’s appetite for Chinese goods has fallen off sharply. China’s exports have plunged in recent months and are now down 26 percent from a year ago. On the other side, the Chinese are evidently getting anxious about those securities.

But China still seems to have unrealistic expectations. And that’s a problem for all of us.

The big news last week was a speech by Zhou Xiaochuan, the governor of China’s central bank, calling for a new “super-sovereign reserve currency.”

The paranoid wing of the Republican Party promptly warned of a dastardly plot to make America give up the dollar. But Mr. Zhou’s speech was actually an admission of weakness. In effect, he was saying that China had driven itself into a dollar trap, and that it can neither get itself out nor change the policies that put it in that trap in the first place (where did you read that before ? )

Some background: In the early years of this decade, China began running large trade surpluses and also began attracting substantial inflows of foreign capital. If China had had a floating exchange rate — like, say, Canada — this would have led to a rise in the value of its currency, which, in turn, would have slowed the growth of China’s exports.

But China chose instead to keep the value of the yuan in terms of the dollar more or less fixed. To do this, it had to buy up dollars as they came flooding in. As the years went by, those trade surpluses just kept growing — and so did China’s hoard of foreign assets.

Now the joke about fraudulent securities was actually unfair. Aside from a late, ill-considered plunge into equities (at the very top of the market), the Chinese mainly accumulated very safe assets, with U.S. Treasury bills“; T-bills, for short — making up a large part of the total. But while T-bills are as safe from default as anything on the planet, they yield a very low rate of return.

Was there a deep strategy behind this vast accumulation of low-yielding assets? Probably not. China acquired its $2 trillion stash — turning the People’s Republic into the T-bills Republic — the same way Britain acquired its empire: in a fit of absence of mind.

And just the other day, it seems, China’s leaders woke up and realized that they had a problem.

The low yield doesn’t seem to bother them much, even now. But they are, apparently, worried about the fact that around 70 percent of those assets are dollar-denominated, so any future fall in the dollar would mean a big capital loss for China. Hence Mr. Zhou’s proposal to move to a new reserve currency along the lines of the S.D.R.’s, or special drawing rights, in which the International Monetary Fund keeps its accounts.

But there’s both less and more here than meets the eye. S.D.R.’s aren’t real money. They’re accounting units whose value is set by a basket of dollars, euros, Japanese yen and British pounds (where did you hear the word Wampum to describe exactly this SDR business? ) . And there’s nothing to keep China from diversifying its reserves away from the dollar, indeed from holding a reserve basket matching the composition of the S.D.R.’s — nothing, that is, except for the fact that China now owns so many dollars that it can’t sell them off without driving the dollar down and triggering the very capital loss its leaders fear. (toldja.. 'em Commies hab ein Problem )

So what Mr. Zhou’s proposal actually amounts to is a plea that someone rescue China from the consequences of its own investment mistakes. That’s not going to happen.

And the call for some magical solution to the problem of China’s excess of dollars suggests something else: that China’s leaders haven’t come to grips with the fact that the rules of the game have changed in a fundamental way.
(oh yeah baby, it is just the beginning. Lets see their faces when the music stops and they have to change focus inwards)
Two years ago, we lived in a world in which China could save much more than it invested and dispose of the excess savings in America. That world is gone.

Yet the day after his new-reserve-currency speech, Mr. Zhou gave another speech in which he seemed to assert that China’s extremely high savings rate is immutable, a result of Confucianism, which values “anti-extravagance.” (here we have commie drones in BRF dishing out statistics on washing machines and airconditioners and all those malls in Shanghai and Beijing and the Skyline in Pudong) Meanwhile, “it is not the right time” for the United States to save more. In other words, let’s go on as we were.

That’s also not going to happen.

The bottom line is that China hasn’t yet faced up to the wrenching changes that will be needed to deal with this global crisis. The same could, of course, be said of the Japanese, the Europeans — and us.

And that failure to face up to new realities is the main reason that, despite some glimmers of good news — the G-20 summit accomplished more than I thought it would — this crisis probably still has years to run.

shaardula · Post by **shaardula** » 03 Apr 2009 18:40

vina the other day i heard someone on cnn talk about this, i had my back to the tv. immediately, the word wampum flashed in my mind.

after that didn't bother to look back who it was and continued doing what i was doing.

echandee, raakitmard, adbul, ayesha, wampum

negi · Post by **negi** » 03 Apr 2009 22:26

The Glate Game

John Snow · Post by **John Snow** » 03 Apr 2009 23:37

Now dont forget the gyroscopic effect, If indeed wapum comes into being it will bring immediate sanity in Khan clan and start ways to strengthen Dollar rather than weaken by printing and pumping dollars.

The Iraqi solution of invading PRC wont work to destroy Wapum in the cradle

The choice for PRC is clear cut losses and try and find an exit strategy from the solitary confinement in fort kno(x)cks.

My inside sources tell me that Paul Krugman reads BRF and waits for two week gap and the prints a rehash version of the collective wisdom of BRF where Tomorrow comes Today while other await it to dawn

ramana · Post by **ramana** » 03 Apr 2009 23:41

I had posted the "Dollar auction" game in the Ind-US thread for precisely this reason.

vsudhir · Post by **vsudhir** » 04 Apr 2009 01:51

Recession Puts a Major Strain On Social Security Trust Fund

The U.S. recession is wreaking havoc on yet another front: the Social Security trust fund.

With unemployment rising, the payroll tax revenue that finances Social Security benefits for nearly 51 million retirees and other recipients is falling, according to a report from the Congressional Budget Office. As a result, the trust fund's annual surplus is forecast to all but vanish next year -- nearly a decade ahead of schedule -- and deprive the government of billions of dollars it had been counting on to help balance the nation's books.

The Treasury Department has for decades borrowed money from the Social Security trust fund to finance government operations. If it is no longer able to do so, it could be forced to borrow an additional $700 billion over the next decade from China, Japan and other investors. And at some point, perhaps as early as 2017, according to the CBO, the Treasury would have to start repaying the billions it has borrowed from the trust fund over the past 25 years, driving the nation further into debt or forcing Congress to raise taxes.

Meanwhile...

Obama budget could bring $9.3 trillion in deficits

President Barack Obama's budget would produce $9.3 trillion in deficits over the next decade, more than four times the deficits of Republican George W. Bush's presidency, congressional auditors said Friday.

The new Congressional Budget Office figures offered a far more dire outlook for Obama's budget than the new administration predicted just last month — a deficit $2.3 trillion worse. It's a prospect even the president's own budget director called unsustainable.

The dismal deficit figures, if they prove to be accurate, inevitably raise the prospect that Obama and his Democratic allies controlling Congress would have to consider raising taxes after the recession ends or else pare back his agenda.

By CBO's calculation, Obama's budget would generate deficits averaging almost $1 trillion a year of red ink over 2010-2019.

Worst of all, CBO says the deficit under Obama's policies would never go below 4 percent of the size of the economy, figures that economists agree are unsustainable. By the end of the decade, the deficit would exceed 5 percent of gross domestic product, a dangerously high level.

Most disturbing to Obama allies like Senate Budget Committee Chairman Kent Conrad, D-N.D., are the longer term projections, which climb above $1 trillion again by the end of the next decade and approach 6 percent of GDP by 2019.

The worsening economy is responsible for the even deeper fiscal mess inherited by Obama. As an illustration, CBO says the deficit for the current budget year, which began Oct. 1, will top $1.8 trillion, $93 billion more than foreseen by the White House. That would equal 13 percent of GDP, a level not seen since World War II.

Sanjay M · Post by **Sanjay M** » 04 Apr 2009 03:37

As we all know, Krugman is fanatically adamant that Obama nationalize anything and everything, claiming anything less means armageddon.

He seems to be quite the European stooge - no wonder the Europeans awarded him their Nobel Prize. Now the Atlanticists will use him as their attack dog to shove Obama in a more European direction.

Krugman's latest comments about the Chinese are meant to allay fears that his own advocacy of unrequited spending will not bring the US dollar down. He cockily asserts that the Chinese have no choice but to submit to anything the US chooses to do. Sounds like famous last words to me.

If the Nobel Prize was some unassailable level of parmatman, then the world would have surrendered all debate and decision-making to them long ago. Sorry, but if Amartya Sen can win the Nobel, then it doesn't say much for Krugman's economic sublimeness.

ramana · Post by **ramana** » 04 Apr 2009 03:42

X-posted

Vipul wrote:Motorola's Jha emerges as America's top paid CEO.

Mobile phone maker Motorola's India-born chief Sanjay Jha has emerged America's top paid CEO, while Citigroup's Vikram Pandit tops the league among bailed out banks, a survey said today.

Another Indian on the list is PepsiCo's Indra Nooyi at the 36th slot with a pay package of $13.98 million.

With a total payout of over $104 million in 2008, Jha is the only CEO to get a compensation package exceeding $100 million, with Occidental's Ray Irani at a distant second with $49.9 million.

Irani is followed by Walt Disney's Robert Iger ($49.7 million) at the third slot.

In the overall ranking, compiled by the Wall Street Journal, Citigroup CEO Vikram Pandit comes at the fourth position with a payout of $38.2 million (so much hoopla about the $1 salary).Besides, Pandit is the highest paid CEO for bailed out banks in the US, WSJ said.

The WSJ CEO Compensation Study was conducted by management consulting firm Hay Group and based on an analysis of CEO pay of the first 200 US companies with fiscal year 2008 revenue of at least $5 billion that filed their proxy statements between October 2008 and March 2009. WSJ said the study would be updated as companies file new proxies.

vsudhir does this list follow Zipf's law?

Sanjay M · Post by **Sanjay M** » 04 Apr 2009 03:45

Here are some much wiser words from none other than Pat Buchanan:

http://vdare.com/buchanan/090402_fed.htm

He's advocating that the US take a hard look at its Federal Reserve system, as libertarian Ron Paul has long been urging.

I strongly agree with this. It's the Fed which has caused the whole meltdown, and not globalization or anything else. The Fed is like economic WMD, and should only be used under the most rare and unavoidable circumstances, if at all.
The recent rash of interventionist policies by the Fed have resulted in a charred and irradiated economic landscape.

It's good to see old Reaganites like Pat Buchanan and George Will rallying towards the libertarian viewpoint of laissez-faire, which is something that the deficit-heavy Reagan himself failed to do as promised.

putnanja · Post by **putnanja** » 04 Apr 2009 03:51

India ready with $20 bn for IMF, not for stimulus

Sanjay M · Post by **Sanjay M** » 04 Apr 2009 03:59

Gunman kills 14 at NY Immigration Centre

http://www.twirlit.com/2009/04/03/jiver ... hat-voong/

Jiverly Voong aka Linh Phat Voong
Posted April 3rd, 2009 by Jessica Madison - 1,047 views

42 year-old Jiverly Voong also known as Linh Phat Voong has been identified by authorities as the Binghamton shooter. Killing 13 and injuring many more, Voong who is of Vietnamese descent, was from nearby Johnson City, NY. Reports confrim Voong entered the American Civil Association building from the front after barricading his car against the rear exit doors.

As he entered through the front of the building he brandished 3 weapons, one 9mm pistol, .45 calibur and a hunters knife. He then shot and killed the receptionist as he made his way to the next room, shooting 2 others. After finding out it was her brother responsible for this massacre, Voong’s sister replied “He shot those people? No no.” She then went on to say that he takes classes there and couldn’t have been the killer.

Police found Voong’s body with his hunter’s knife wedged in the side of his waist on the first floor of the American Civil Association. Although no motive has been discovered, Voong was apparently laid off from IBM just a few weeks ago.

Full Story: Binghamton Shooting Leaves 12 Dead

vsudhir · Post by **vsudhir** » 04 Apr 2009 04:59

A noo yorker's personal perspective...

The amount of projects finishing up is astounding. This is especially true in Midtown West (Hell's Kitchen). Who wouldn't want to pay $1 million to be near the Port Authority Bus Station?

I had a dental appointment yesterday. Business is down. They hygienist told me she has a 1 month backlog. It used to be 2. People are coming in, saying they lost their jobs and asking if the dentist can cover their fees. Three years ago these people were all snide and getting rich because of their genius. Today they are begging to get their teeth cleaned. Expect a lot of deferred maintenance on that front. We will look British.

Businesses keep closing down. Hudson Street, near me, is a disaster. If you walk over by NYU there are closed businesses everywhere. Some high-end stuff is still coming online on Bleecker. Good luck! Those places were planned in 2006 & 2007, no doubt. The mood in this City is pure fear. And the wise men and women are planning to soak us with more taxes.

I still laugh when I hear about other parts of the country that think they will just slide through this. If this is happening in NYC it will happen almost everywhere. The sky is gray today. That seems fitting. Have a nice weekend, everybody.

It is indeed gloomy in the mythical land of plenty, of opportunity, of the pursuit of yappiness.

And somebody replied:

NYC may be headed back to the 1970s, when there was serious crime in the streets and the best and the brightest were leaving town during what became NYC's out-migration period. By 1980, the city was pretty much in default. Bloomberg may be able to forestall a NYC default, but he will have his work cut out for him.

Nandu · Post by **Nandu** » 04 Apr 2009 05:07

vdare is a white supremacist org. It is possible to link to Pat Buchanan's articles elsewhere, without providing clicks to vdare from BRF.

JMHO

vsudhir · Post by **vsudhir** » 04 Apr 2009 07:32

vsudhir does this list follow Zipf's law?

Certainly appears to be classic power law pattern onlee. I'm now firmly in the zipf camp. Complex systems have outcomes that contain regularities best described using power laws.

joshvajohn · Post by **joshvajohn** » 04 Apr 2009 22:34

Bank Bailout Could End Poverty for 50 Years
http://www.infozine.com/news/stories/op ... sid/35091/

I do not think the G20 leaders have got the point. It is simple but no one is willing to do positive thinking here.

First it is essential to develop trust of the share buyers. Making the market steady.

For this one has to make sure that the Banking systems are operating a bit reasonably. It means when the money is deposited their money is safe. When the money is invested the dividend or profit is also steady. No one wants to get big profit and then loose everything. This is where a fair game in the Stock market is essential. Not only Banking but also in the Market there should be a bit more fair ways of doing business should be developped rather than trying make people to buy shares and thus increase to a unreachable level where it is certainly expected to fall or burst.

Singha · Post by **Singha** » 05 Apr 2009 00:27

http://www.msnbc.msn.com/id/30040070/

AoA the key inflection point, nuance in this plan to reduce and shift US defence spending is the reduction in the number of CVN from 11 to 10.

never in history of USN except immediately after WW2 have they decided to reduce carrier strike power.

vsudhir · Post by **vsudhir** » 06 Apr 2009 01:07

I am strongly in favor of a Canada, EU style healthcare system in the US. If US taxes can also rise to canuck levels, it will make that much more difficult and unsustainable keeping this vast armada afloat and military-industrial complex humming. Some trimming would provide welcome relief from massa interventions in our backyard propping up TSP and mollycoddling KSA and PRC.

A better use for that money would be taking care of the health needs of the growing ranks of the poor, the bankrupt, the terminally ill etc amongst American citizens.

vsudhir · Post by **vsudhir** » 06 Apr 2009 01:12

Bankrupt Britain: 340 people go bust every day

Begbies Traynor, the insolvency and restructuring group, reckons more than 35,000 firms could go under this year – equivalent to more than 95 a day. The figure would be 18% higher than during the previous peak in the 1990s crash. Nick Hood at Begbies said he would not be surprised if the number rose to 40,000 by the end of the year.

Begbies forecasts that as many as 125,000 people will go bust this year – well above the 107,000 peak in 2006 – equivalent to 342 people a day.
...
In America an average 5,945 bankruptcies were filed each day last month by troubled consumers – the highest level since October 2005.

Singha · Post by **Singha** » 06 Apr 2009 01:41

can anyone explain how a US individual can file for personal bankruptcy? does s/he have to file some affidavit at the local court stating their financial circumstances and obtain a official legal bankruptcy protection?

one often reads of the "chapter 11" ...

vsudhir · Post by **vsudhir** » 06 Apr 2009 04:13

Another perspective, a tad over the top but a persp nonetheless....

Here's a solution to our problems:
Give Alaska (or Taiwan!) to China for the trillion we owe them. Give Hawaii to Japan, along with the promise to keep them under our nuclear umbrella.
Settle all other foreign debts in a similar fashion but smaller scale. That is, selling off chunks of our land and natural resource assets.
By clearing all foreign debt from the books, we'd free up a couple hundred billion a year in interest payments.
Then begin selling protection, Mafia-style, to those countries willing to pay for military protection. That should bring in enough more cash to plug the federal deficit.
In other words, get out of debt first. Proceed from there with the re-design of our economy...

Singha,

This might help throw light on the matter:
Link

ArmenT · Post by **ArmenT** » 06 Apr 2009 05:03

@Singha:

Before I start, I'd like to state that I'm not a lawyer, but I have an Armenian friend who has quite a bit of knowledge in this stuff (and no, he's not a lawyer either, but one of his relatives filed for personal bankruptcy once). Most of the stuff below is gleaned from friendly chats over beers that I've had with the guy. If you know Armenians, they're pretty much like Marwadis and have a pretty keen nose for business and legal stuff:

Individuals generally file for personal bankruptcy under Chapter 13. Chapter 11 is generally used by businesses (including partnerships, corporations or sole proprietorship), although individuals can also file Chapter 11 bankruptcy as well. The reason individuals generally file for chapter 13 is because there's less legal procedures and paperwork involved and thus they don't need to pay lawyers as much. Chapter 11 costs at least 5x more to file than chapter 13. In some cases, costs of filing for Chapter 11 can run in the millions and the only people getting rich off it are the lawyers, whereas Chapter 13 costs about $4000-$5000 to file (at least in Southern California, according to my friend). Also with chapter 13 bankruptcy, creditors don't get much of a say with the proposed reorganization plan, as long as it follows the technical requirements. Chapter 11 allows the creditors more flexibility with what they can do with the debtor's future plans.

vsudhir · Post by **vsudhir** » 06 Apr 2009 06:04

For nnyone looking to understand what depths of deception can be plumbed thx to the FASB's giving in to Congressional arm-twisting (and congress' banking committee was in turn pressured by the bankers) to change accounting standards for distressed assets, William Buiter's excellent FT piece here is a must read.

How the FASB aids and abets obfuscation by wonky zombie banks

The Financial Accounting Standards Board (FASB), at its meeting on April 2, has once again relaxed mark-to-market accounting rules. This occurred after the House Financial Services Committee, a wholly owned subsidiary of the American Bankers Association, had, at hearings on March 12, 2009, effectively ordered the FASB to revise its guidance on fair value in inactive markets. The HFSC used the threat that, if the FASB were not sufficiently accommodating, Congress would legislate on the matter off its own bat to give the zombie banks what they wanted.The FASB blinked and wimped under, as it had before.

Leaving the valuation of illiquid securities to managerial discretion will lead to systematic and systemic overvaluation. Banks with significant amounts of toxic assets and plain bad assets on their balance sheet have lied, lie and continue to lie about what they have on their balance sheets. This has now been made easier. No wonder bank stocks rose and bank credit default swap rates declined. Reported asset values will be boosted.

Analysts estimate that, now that banks can mark toxic assets using their own models (which are private information) rather than what they would fetch on the open market, quarterly profits at some banks could be boosted by up to 20 per cent.

It really is wonderful how the US political and regulatory establishment is riding out in support of its wonky banks. First, the Treasury Secretary Timothy Geithner proposes a toxic and bad assets purchase scheme (the PPIP or Public-Private Investment Program) which subsidizes the private parties in the public-private partnerships bidding for the toxic assets by leveraging the private and public equity involved in the bids through non-recourse loans or guarantees. This permits - indeed encourages - private bidders for toxic assets to make bids far in excess of their estimates of the fair value of these assets. Their rents can then be split between the private bidders for the assets and the banks selling them.

Read it all.

skbanner · Post by **skbanner** » 06 Apr 2009 07:47

ArmenT wrote:@Singha:
Individuals generally file for personal bankruptcy under Chapter 13. Chapter 11 is generally used by businesses (including partnerships, corporations or sole proprietorship), although individuals can also file Chapter 11 bankruptcy as well. The reason individuals generally file for chapter 13 is because there's less legal procedures and paperwork involved and thus they don't need to pay lawyers as much. Chapter 11 costs at least 5x more to file than chapter 13. In some cases, costs of filing for Chapter 11 can run in the millions and the only people getting rich off it are the lawyers, whereas Chapter 13 costs about $4000-$5000 to file (at least in Southern California, according to my friend). Also with chapter 13 bankruptcy, creditors don't get much of a say with the proposed reorganization plan, as long as it follows the technical requirements. Chapter 11 allows the creditors more flexibility with what they can do with the debtor's future plans.

#include <std_disclaimer.h>

Personal bankruptcy has obvious negative consequences. Your credit rating essentially falls through the floor (typically folks who file for personal bankruptcy have high credit card debts). Also, recent changes in law means that creditors may be able to attach liens on the debtor's personal assets like home, car, etc. I am not sure, but Congress may have relaxed some of those provisions recently, or talking about doing so. I don't know a single desi who has filed for chapter 13, probably our frugal habits don't allow us to fall into such situations. OTOH, I have been hearing stories ever since my college days of Pakis running huge credit card debts and then walking away by declaring chapter 7... It used to be much easier to do it until a few years ago.

P.S. Chapter 7 can be filed by individuals, completely liquidating all debt.

Singha · Post by **Singha** » 06 Apr 2009 07:50

but how is a bankrupt guy going to afford the 5K filing fees? I was thinking it
was as simple income tax type self-filing process!

vintage america - bankrupt a guy even more to declare himself bankrupt...

joshvajohn · Post by **joshvajohn** » 06 Apr 2009 07:54

Will a global currency solve the issues? replacing the dollars linking role?

The G20 moves the world a step closer to a global currency
The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.
http://www.telegraph.co.uk/finance/comm ... rency.html

New world currency will take time, so it's time to get started

http://www.shanghaidaily.com/sp/article ... 396679.htm

skbanner · Post by **skbanner** » 06 Apr 2009 07:56

Singha wrote:but how is a bankrupt guy going to afford the 5K filing fees? I was thinking it
was as simple income tax type self-filing process!

vintage america - bankrupt a guy even more to declare himself bankrupt...

I don't think it used to cost that much to file for chapter 7, how else would those Paki student-cum-cabbies have done it? There are hordes of 'value-priced' lawyers who do this type of thing on an assembly line basis (think H&R Block).

ArmenT · Post by **ArmenT** » 06 Apr 2009 09:04

skbanner wrote: #include <std_disclaimer.h>

Personal bankruptcy has obvious negative consequences. Your credit rating essentially falls through the floor (typically folks who file for personal bankruptcy have high credit card debts). Also, recent changes in law means that creditors may be able to attach liens on the debtor's personal assets like home, car, etc. I am not sure, but Congress may have relaxed some of those provisions recently, or talking about doing so. I don't know a single desi who has filed for chapter 13, probably our frugal habits don't allow us to fall into such situations. OTOH, I have been hearing stories ever since my college days of Pakis running huge credit card debts and then walking away by declaring chapter 7... It used to be much easier to do it until a few years ago.

P.S. Chapter 7 can be filed by individuals, completely liquidating all debt.

Credit rating does fall through the roof while filing for bankruptcy no matter which chapter it is filed under, but creditors cannot attach liens to most of the personal assets under Chapter 13. The debtor can keep most of his/her personal assets, while making payments based on his/her disposable income with a Chapter 13 bankruptcy. The bankruptcy filing also stays on record for only 7 years under chapter 13.

Chapter 7 allows the creditors to seize most of the debtor's property as collateral. At one time, they used to allow the debtor to keep a lot more of "their personal property" from being seized e.g. more than one car, electronics etc., but the rules have been tightened up in recent years (because of widespread abuse). They still have to pay back interest on most types of loans, even if the item itself has been seized. If all the assets sold are enough to pay back the creditors, only then is the debtor allowed to keep the rest. The bankruptcy filing stays on record for 10 years (compared to 7 years for chapter 13) and also affects future ability to obtain loans.

So people would usually rather go for chapter 13 than chapter 7 because of its advantages. There is one main reason why people file for chapter 7 though -- that is because they've failed to show the judge that they have disposable income at hand to qualify for a chapter 13! This is probably why those Pakis are filing under chapter 7, not because they want to, but because they've been forced to

By the way, actual cost of filing the bankruptcy application form for both chapter 7 and chapter 13 is around $300 or so. When I said that chapter 13 costs about $4k-$5K, that's because most of that is lawyer fees! Chapter 7 typically costs around $1.5K-2K or so in Southern California, after lawyers are paid, for straightforward cases. If there are more assets and complications involved, lawyer fees go correspondingly higher as well.

shyam · Post by **shyam** » 06 Apr 2009 10:25

Can't they pay lawyer fee in advance using credit card before filing for bankruptcy?

Sanjay M · Post by **Sanjay M** » 06 Apr 2009 11:14

poor li'l Dubai is going down the tubes:

http://www.thestar.com/news/insight/article/613885

Muppalla · Post by **Muppalla** » 06 Apr 2009 19:15

http://online.wsj.com/article/SB123896998996190775.html

svinayak · Post by **svinayak** » 06 Apr 2009 21:33

Muppalla wrote:http://online.wsj.com/article/SB123896998996190775.html

Given the difficulty in finding matches for Indians abroad, some matchmakers are now charging them more. Mr. Dave of Klassic Match charges a minimum fee of $100, versus $50 for candidates living in India. He charges more for specific requirements. For instance, he says some overseas Indians want a bride who is smart, fluent in English, and "simultaneously, docile in the house." He says such women are now harder to find, so he bumps up his fees for some searches.

svinayak · Post by **svinayak** » 06 Apr 2009 23:51

US May Be Up for 2nd Economic Crisis
http://www.koreatimes.co.kr/www/news/bi ... 42613.html

By Kim Tae-gyu
Staff Reporter

Over the past few weeks, the stock markets globally have staged rallies on news that the United States will remove toxic assets from its banks, while some economic indicators have shown signs of improving.

From the perspective of a Korean private think-tank, however, this may be another false dawn instead of a harbinger of sustained recovery from the financial crisis.

The Hyundai Research Institute (HRI) projected Sunday that the U.S. housing market where the sub-prime mortgage turmoil initiated the crisis will continue to suffer a downturn causing a secondary crisis anytime soon.

``Recent upswings in the housing market appear to be temporary and a full-fledged recovery could only be possible this September at the earliest,'' it said in a report.

``In consideration of historic data, the slump in the housing market may extend to early next year. This would weigh on banks, insurers and credit card firms, and generate a second crisis,'' it said.

U.S. housing starts totaled 583,000 in February, up 25.1 percent from the previous month. Building permits also posted an unexpected 3-percent rise in February on a monthly basis.

The figures provided a ray of light to investors, but HRI said they were just technical bounces after tallies hit short-term lows in January.

The institute particularly took issue with the rising unemployment rate, which it feared will reach double figures in the not-so-distant future, as one of the strongest triggers for another financial storm.

According to the U.S. government late last week, employers had shed more than 660,000 jobs in March, sending the jobless rate of the world's largest economy to 8.5 percent from 8.1 percent.

In other words, up to two million jobs have evaporated in 2009 in the U.S. alone and the ranks of the unemployed now amount to 13.2 million there.

``Seoul is required to frontload spending of the supplementary budget as well as nurturing domestic markets to prepare for the worst-case scenario,'' HRI said.

Citigroup economist Oh Suk-tae agrees the economy might face another dip.

``The economy seemingly hit bottom. But nobody knows if this bottom is an absolute or a short-term low. We need to prepare for a possible double or triple dip,'' Oh said.

svinayak · Post by **svinayak** » 07 Apr 2009 01:33

http://globaleconomicanalysis.blogspot. ... lysis.html

vsudhir · Post by **vsudhir** » 07 Apr 2009 04:41

well, well, what do we have here.....

Since PRC wizened up somewhat and started preferring short-term treasuries instead of the long dated ones, the Fed figured it could ride to the rescue and buy a few of the long dated ones thereby sweetening the rest of the stock for the mkt....it thought wrong. (well, so far at least). The market's too big for the fed to influence. Sri Bernanke is way out of his depth here.

Treasurys slide after Fed purchases

Treasury prices slipped lower Monday, with longer-term debt reversing earlier strength, after the Federal Reserve purchased $2.53 billion in Treasurys maturing between 2019 and 2026.

Investors remained wary of buying before the Treasury Department auctions $59 billion in new debt this week.

Fed purchases last week did little to keep Treasury yields down, as equity gains and data revived some optimism among investors. A dismal monthly payrolls report on Friday was better than the even grimmer report some investors had braced for.
Ten-year note yields increased 15 basis points last week, pushing back towards levels last seen before the Fed surprised markets after its last policy meeting by announcing it would purchase $300 billion in Treasurys in the following six months.

"The Fed's problem is that the market realizes that $300 billion in Treasury buybacks is just a drop in the bucket compared to $2.5 trillion in estimated net Treasury issuance this fiscal year," said strategists at UBS Securities.

vsudhir · Post by **vsudhir** » 07 Apr 2009 06:01

Economy Falling Years Behind Full Speed

As the recession grinds on, more and more of the nation’s means of production — its workers, its factories, its retail outlets, its freight lines, its bank lending, even its new inventions — are being mothballed because of sharply lower demand for products and services.

This idled capacity, like baseball players after a winter off, takes time to bring back into robust use. So even if the recession were to end miraculously tomorrow, at least three years would pass before full employment returned and output rose enough for the economy to operate at full throttle, economists estimate.

The mathematics are daunting. The shortfall is running at more than $1 trillion in annual sales and other transactions. Not since the Great Depression has there been such a severe loss of output, although the 1981-82 recession came close — and after that downturn, it was seven years before the economy regained the lost production.

Brace up for a long economic winter in the states, folks. This won't end tomorrow. Boomer retirements are in jeopardy. Wonder where they'll go.