) and just thought I'd type in something that caught my eye. That is the size of the stimulus packages as a % of GDP.
AoA wonlee.VERO BEACH, Fla. -- Richard and Amanda Peacock spent five years building their dream home, a 10,000-square-foot, orange mansion overlooking the ocean here. They filled it with leopard-skin chairs, pinball machines, antique Coca-Cola signs and six sports cars. It had a room full of 100 hunting trophies -- including a hyena and the head of an elephant -- and an aviary out back housing eight rare parrots.
On a recent Saturday, they held a one-day auction to try to sell it all.
"Four million, do I hear four and a half?" shouted auctioneer Dean Kruse, as he took bids for the mansion. "Come on, people -- the good Lord stopped making oceanfront property a long time ago."
Frank Burden, a local landscaper, picked up Mr. Peacock's Pennzoil sign for $75. Bidding on the scarlet Ferrari, with only 5,000 miles, reached $110,000, a steal compared with its $207,000 purchase price. Marie Davis, a Florida vacationer, picked up several exotic hunting trophies.
"I got a wildebeest for $250!" she said. "What a deal."
Mr. Peacock's auction marked a new moment in the fall of the latest Gilded Age. Fire-sale auctions of mansions, yachts, sports cars and other trappings of wealth have become increasingly common as the rich become less rich. But Mr. Peacock is in the vanguard in attempting to downsize in just one day. The event was less an auction than a lifestyle liquidation, a clearance sale on a decade's worth of conspicuous consumption.
Maybe she went off track there. But there are more people with similar thinking The Economic Collapse. Trade deficit is one of the factors.Nandu wrote:Neither that video nor the blog entry actually has any supporting evidence for the statement that "trade deficits kill empires". All it shows is that US has massive trade deficits. We already knew that.
From Lessons of the British Empire Appear to be Lost on the United States {written in 2004}One of the primary catalysts to the deterioration of the economy was the lack of circulating currency in the Western Empire. Two reasons for the lack of funds are wholesale hoarding of bullion by Roman citizens, and the widespread looting of the Roman treasury by the "barbarians". These two factors, coupled with the massive trade deficit with Eastern Regions of the Empire served to stifle the growth of wealth in the west. This would have far reaching ramifications that permiate the very fabric of Roman society, as we shall soon discuss.
From Selling America for Designer Boots, Top Hats and ThimblesIt was runaway trade deficits than collapsed the pound sterling and made the projection of British power “east of Suez” too expensive to bear. Despite its size, the U.S. economy is not immune to financial folly. This is especially true when the assault on the U.S. industrial base is being led by rivals like China and the French-German axis at the European Union.
Ferguson draws eerie parallels between the lavish lifestyles, profligate spending habits and billowing debts of the Ottoman Turks before they fell, and those of America today. “This is the story of how an over-extended empire sought to cope with an external debt crisis by selling off revenue streams to foreign investors. The empire that suffered these setbacks in the 1870s was the Ottoman Empire. Today it is the U.S.,” he wrote.
Global electricity consumption will fall this year for the first time since 1945, according to the International Energy Agency.
The watchdog for developed energy consuming countries will tell energy ministers from the Group of Eight leading economies on Sunday that electricity demand will fall 3.5 per cent in 2009.
In China, where power use is seen as a more reliable barometer of economic activity than official economic measures, consumption will be more than 2 per cent lower than 2008. Russia will see a fall of almost 10 per cent, while countries in the Organisation for Economic Co-operation and Development will see a fall of almost 5 per cent.
Three-quarters of the global decline in consumption is accounted for by industrial rather than household demand, reflecting the fall in demand from China’s manufacturing-heavy economy. Consumption in India, by contrast, is expected to increase 1 per cent.
“This shows how deep a recession we are in,” said Fatih Birol, IEA chief economist. “Oil demand has declined in the past due to oil price shocks, financial crises – but electricity consumption has never decreased.”
Acharya wrote:All this talk of China being the preeminant economy is nonsense. China is seriously overbuilt for it`s 250 mil middle class now, and is on it`s way to being ludicrously overbuilt in the future. A family becomes middle class in China on an income of about 10k USD. They have one child, and spend most of their energy in assuring that child of education and inheritance. Women retire at 50, men at 60. They save to fund their own retirement or 25-35 years. Chinese social security is a pittance. They will NEVER consume like the 200 mil middle class Americans. Most of the 100k+ USD apartments being built will be selling for 30-40k in a few years. 800 mil chinese live on a pittance, they will never consume much in their or their childrens lives. They are right now building the infrastructure for 400 mil middle class. It won`t happen. China will try to export deflation(overcapacity) for the forseeable future. They have no other choice. That is not the road to prosperity.
The Chinese position is ludicrous
Step 1. Build an economy based on exports
Step 2. Artificially keep the Yuan down to sustain export growth.
Step 3. Balance the books by buying overvalued dollar assets with your undervalued Yuan assets.
Step 4 Express shock and horror at the thought that the dollar might end up falling anyway.
What the Chinese are doing is just as unsustainable as when the Bank of England blew its reserves trying to stay in the ERM, only the other way round (trying to keep its currency down). It will end the same way.
the East has been absorbing the worlds money making activities leaving the west as jobless purchasers, it is not the reason for the crash.
The rise of eastern industrialisation has been over some 4 decades starting in Japan and is now very active in China, Malaya and India.
Of these only Japan has a fully developed home market but even so is dependant on the export business. I believe that the UK under Atlee suffered so much longer than even Germany because this very activity was put into place as the method of recovery but had a debilitating effect on the country -- even to this day!
The savings habit of the countries quoted could well be the cause of the bankers becoming irresposible gamblers but I don't think so. The international communications improvements signalled not only the ability to see and hear what was going on elsewhere but enabled "fiddling" with markets in many ways in order to trigger runs or crashes. It also enabled debt bonds to be dressed up long enough to off load them but that could not be sustainable -- just another asset stripping scam -- the Hanson effect!
While all this simmers, Mr Putin is getting ready to grab back the Russias and is probably just itching to get even for having his sword blunted by what he sees as a US led crash engineered to bring down fuel (his export led riches) prices.
Almost 4 decades ago Galbraith pointed out that the US had such a strong internal market that it could withstand assault from anywhere and allow devaluation of the dollar to a point where only the predaters lost. At that time it was the Arab oil states ( exporters) who were the rogues ripping off the world.
The EC sprang from the same thinking and so far has proved it's robustness despite the many frantic predictions to the contrary. GB has tried to be clever in the game but currently finds itself without either the protection of numbers, common currency or industrial viability whilst "led" by a venal and incompetent government, banking and industrial system.
http://www.drudgereport.com/44 states lost jobs in April, led by California...
Florida's BANKUNITED Goes Bust; Year's Biggest...
Calif. Cities Irked by Borrowing Plan...
Recession Turns Malls Into Ghost Towns...
Fed President Says Inflation to Increase...
GM Bankruptcy: As Early As Next Week...
*Republican lawmakers slam restructuring plan...
DOLLAR PLUNGE; FEAR OVER DEBT
The billions just gushing out and flowing about, eh? Am hard put to explain the seeming reluctance to hand in mere millions in aid(s) to TSP onlee.WASHINGTON - A key US lawmaker said on Thursday he would not support a request for US$108 billion in funding for the International Monetary Fund (IMF) unless Europe steps up its own stimulus spending.
US President Barack Obama has asked Congress for US$100 billion to help support a special IMF lending facility and US$8 billion to expand the US contribution to the fund. The legislation would also include approval for IMF gold sales, in part to support low-cost loans for poor nations.
Yawn. Empty talk onlee.Forty-seven states face budget gaps, according to a study, and there aren't a lot of good solutions
Again, More talk. Lez see the walk first. Meanwhile, anyone know if UKstani babus face any heat at all regarding their cushy, tenured, pension-insured jobs, plz? Any first hand reports, links etc would be most appreciated.That leaves states turning to a mixed bag of revenue hikes and expense cuts. Governors have announced furloughs of state workers, layoffs, fee hikes, and across-the-board spending cuts. Sixteen states are enacting tax hikes and 17 others are considering doing so. "The size of the gap puts everything on the table," says Arturo Perez, a fiscal analyst at the National Conference of State Legislators.
The chinis have been talking up the yuan and beatikng down the USD quite a bit lately. Expect the tempo to only rise here on. The run on the USD cannot be far away, I surmise. Once longer term treasuries surge to break a 4% yield consistently, all bets are off onlee.Yu Qiao, an economics professor at Tsinghua University in Beijing, says the best way for China to rescue itself from a dollar trap is to gradually transform the renminbi into a regional currency on par with the dollar and the euro.
Speaking yesterday at AsianInvestor's fourth annual investment summit in Hong Kong, Yu also called for the creation of a "crisis relief facility" to ease China and America out of the current financial and economic crisis.
Yu says the establishment and then break up of the gold standard taught the world that prosperity is dependent upon global economic integration; that globalisation in turn is dependent upon a universal money; and that such a currency based on sovereign fiat is unstable.
Acharyaji, please can you quote the source of your comments
"I have become death, destroyer of the world"
— Oppenheimer
"I have become debt, destroyer of the world"
— Bernanke
A weak job market has many contemplating PhDs and faculty jobs. Will the business school faculty shortage be a thing of the past?
"MBAs are now persona non grata in many places, and there is a fair amount of animosity being directed at them for living in the fast lane, spending everyone's money, and not being responsible enough," Bar-Or says. "So business leaders, in society's eyes, have been knocked off a pedestal, and that may be causing a lot of people with an interest in business to want to go down a path that is more respected in society."
'Deflation' is misleading because though bubbled asset prices are tumbling, those of essentials and consumables are not - food inflation is a fact of life even in khanland and its happening even as home prices tumble.Singha wrote:as the western media done any surveys to see if standard of living today compares to 60s 70s 80s 90s early2000s ? std of living directly affects the definition of what is a high income, middle income and low income state.
This should make a good companion read to that.John_H wrote:Fascinating read.
http://www.nytimes.com/2009/05/17/magaz ... wanted=all
My Personal Credit Crisis
Article Tools Sponsored By
By EDMUND L. ANDREWS
Published: May 14, 2009
But yup, whyz it in this thread? Well, Greece has amongst the lowest fertility rates in the EU. It *needs* migrant labor. Obviously, islamic labor is not suiting them so well. Will they be the first to take the plunge and call for religious profiling in their immigration program? time will tell. that will be a major turning point, IMO and the day ain't far off.Dozens of cars have been smashed, 14 people injured and 46 arrested in riots by Muslim migrants over the alleged defacing of a Koran by a policeman.
Police fired tear gas and stun grenades at hundreds of protesters outside Parliament in the city centre.
Police said they would investigate the allegation that an officer tore up an Iraqi migrant's Koran while checking his identity papers in Athens last week. "But this isolated incident cannot justify these acts of violence," said Interior Minister Christos Markoyiannakis.
Waves of illegal immigration in recent years have led to an influx of Muslims, mostly from Pakistan and Afghanistan, living in run-down parts of central Athens. Greek rights activist Thanassis Kourkoulas said the protest showed the migrants "have a voice".
You mean a bitch poo(k)vina wrote:I have in front of me a pitch book from one of the Global Inbeshtmet Banks
Hmmm ... They use migrants labor to raise fertility rate?vsudhir wrote:... Well, Greece has amongst the lowest fertility rates in the EU. It *needs* migrant labor.
Well, Rahulk Mehta...now my curiousity is raised way too high ....Plz explain to me why the firstRahul Mehta wrote:Hmmm ... They use migrants labor to raise fertility rate?vsudhir wrote:... Well, Greece has amongst the lowest fertility rates in the EU. It *needs* migrant labor.
When is the first flight to Greece?
, then why the second , then bhy phor the third :rotfl:and finally the Since its construction in 1937 the treasures locked inside Fort Knox have included the US Declaration of Independence, the Gettysburg Address, three volumes of the Gutenberg Bible and Magna Carta.
For several prominent investors and at least one senior US congressman it is not the security of the facility in Kentucky that is a cause of concern: it is the matter of how much gold remains stored there - and who owns it.
They are worried that no independent auditors appear to have had access to the reported $137 billion (£96 billion) stockpile of brick-shaped gold bars in Fort Knox since the era of President Eisenhower. After the risky trading activities at supposedly safe institutions such as AIG they want to be reassured that the gold reserves are still the exclusive property of the US and have not been used to fund risky transactions.
Ron Paul is the man the US and the world needs to urgently take over running congress.“It has been several decades since the gold in Fort Knox was independently audited or properly accounted for,” said Ron Paul, the Texas Congressman and former Republican presidential candidate, in an e-mail interview with The Times. “The American people deserve to know the truth.”
Mr Paul has so far attracted 21 co-sponsors for a Bill to conduct an independent audit of the Federal Reserve System - including its claims to Fort Knox gold
Read it all. The TImes attempts to soften the blow by mixing in entirely OT conspiracy theories.A month after President Nixon resigned over the Watergate affair Congress demanded to inspect the contents of Fort Knox but the trip to Kentucky was dismissed by critics as a photo opportunity. Three years earlier Mr Nixon brought an end to the gold standard when France and Switzerland demanded to redeem their dollar holdings for gold amid the soaring cost of the Vietnam War.
Many gold investors suspect that the US has periodically attempted to flood the market with Fort Knox gold to keep prices low and the dollar high - perhaps through international swap agreements with other central banks - but facts remain scarce and the US Treasury denies that any such meddling has gone on for at least the past decade.
Pressure for more openness is mounting after the collapse of the global banking system and renewed interest in a return to the simpler era of the gold standard - a subject that is likely to be raised at the G20 summit next week. China and Russia are calling for the creation of a new world reserve currency amid fears that the Federal Reserve's quantitative easing policy - essentially printing money - might cause hyperinflation, then collapse.
If the first stage of the crisis was the financial implosion and the second the economic crunch, the third stage – the one heralded by Johnson – is where governments start to topple under the weight of this debt. If 2008 was a year of private sector bankruptcies, 2009 and 2010, it goes, will be the years of government insolvency. {Oh, even a D&G ayatollah like yours truly is not keen on seeing this come about suddenly. Sadly, what is it 'em engineers say about phase transitions...??}
That, at least, is the horror story. It was one underlined by S&P's decision to change the outlook on Britain's debt from "stable" to "negative". While the UK still clings on to its prized AAA rating, it now stands a very real chance of losing it within two years – 37pc if past experience is any guide.
{Huh? Anyway 2 yrs is a longtime. Ensoi maadi.}
Questionable as are the credentials of the agencies following the financial crisis,{heh heh
{What BS. $hitain willy nilly defaulted on its war debt to boor li'l yindia but debts to SDREs don't count perhaps}
If Japan's experience in 2001 is anything to go by, it would also trigger an instant exodus of cash from foreign investors, since many of their reserve managers are obliged to invest the vast bulk of their cash in AAA-rated currencies. And all of this is before one even factors in the humiliation such an experience would be likely to inflict on the Government – whatever hue it is by then.
LinkThe U.S. Treasury’s plan to regulate the over-the-counter derivatives market outlined by Secretary Timothy Geithner on May 13 contains recommendations similar to those made by Goldman Sachs Group Inc., JPMorgan Chase & Co., Credit Suisse Group AG and Barclays Plc three months earlier.
the "Latvia" story tells us quite well what balancing sovereign budgets will mean. People don't know the meaning of the word pain until nations must reign in deficit spending or suffer major currency crisis. The next 12 months as nations try and raise revenue through debt issuance is going to tell the story. The US and Britain lead the pack in borrowing goals. What will we need this year in the USA? 2 trillion or 2.5 trillion who knows!
Pakistan blushesvsudhir wrote:There's honor even among thieves they say, so why not among emerged (from musharraf) world lawmakers, eh?
No IMF money unless Europe steps up: US lawmaker
The billions just gushing out and flowing about, eh? Am hard put to explain the seeming reluctance to hand in mere millions in aid(s) to TSP onlee.WASHINGTON - A key US lawmaker said on Thursday he would not support a request for US$108 billion in funding for the International Monetary Fund (IMF) unless Europe steps up its own stimulus spending.
US President Barack Obama has asked Congress for US$100 billion to help support a special IMF lending facility and US$8 billion to expand the US contribution to the fund. The legislation would also include approval for IMF gold sales, in part to support low-cost loans for poor nations.
Le Monde , France
The End of the Reign
of the Dollar is Inevitable
By Edward Hadas
The idea of a world liberated from the hold of the dollar is gaining momentum.
http://watchingamerica.com/News/27444/t ... nevitable/
Translated By Sandra Smiley
20 May 2009
Edited by Patricia Simoni
France - Le Monde - Original Article (French)
The omnipotence of the dollar continues, but China and Brazil have decided to make the first, small steps to question and conquer it.
Beijing and Brazil have agreed that taxes governing their commercial exchanges be fixed in their respective currencies - the yuan and the real. If this initiative works, it will surely weaken the worldwide supremacy of the American dollar.
True, the United States is the greatest debtor on the planet; its financial practices are far from orthodox, and its commercial deficit has reached unmanageable heights. But it has the great advantage of being able to borrow in its own currency, what economists call an "exorbitant privilege". Its currency is, meanwhile, used as units in myriad other situations, from propping up the price of petrol to comparing gross national products (GNP) among nations.
Attacks on Tradition
Its wide use has contributed to conserving the status of the American dollar. Thirty years ago, the U.S. unquestionably dominated the world on all fronts: economic, political, military and cultural. Though its influence has diminished since, other nations have continued to consider the U.S. as the referential authority and think in terms of dollars. Old habits die hard.
In the case of its success, the Beijing-Brazil accord would go up against this tradition. But as long as the worldwide frame of reference and the most primary materials stay in dollars, no significant change can be expected.
The magnitude of the sums the U.S. owes to the rest of the world permits it to keep a certain influence. The countries that give the U.S. credit have numerous reasons for accommodating to this famous exorbitant privilege, as they profit from what one would call a strange arrangement: In giving the American consumer the means to buy imported goods, they assure benefits and jobs for their own economies. Making the consumer shoulder the risk of exchange would only act to undermine this precious leverage.
The marriage of two factors - the weight of tradition and that of American debt - ensures that the reign of the dollar is not approaching its end, even if the Sino-Brazilian partnership flies.
It must be emphasized that this initiative expresses the annoyance engendered in China by the privileged role of the dollar, a sentiment already manifested on numerous occasions and through more or less official channels. The idea of a world liberated from the hold of the dollar is gaining momentum. Moscow and New Delhi could join the movement and permit the currencies of the BRIC countries (Brazil-Russia-India-China) to form the "4 R" bloc - (Real-Ruble-Rupee-Renminbi). The end of the dollar's reign will perhaps be slow, but it is nonetheless inevitable.
From one of the comments:Nandu wrote:This should make a good companion read to that.John_H wrote: Fascinating read.
My Personal Credit Crisis
http://business.theatlantic.com/2009/05 ... ruptcy.php
. I'm beginning to suspect that the print media have two problems with reporting this recession. First, this is one downturn that's actually decimating the ranks of the commentariat, and many who work in the print media are beginning to suspect that they may not participate in the recovery - this is leading to a sense of panic and hyperbole that's evident in many stories. Second, many who write these stories (excepting the good folks at this blog) seem numerically and economically illiterate, as evidenced, for example, by the failure to calculate the impact of a 30% price rise on an item that has fallen by, say, 40%
With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy.
“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”
....
Each foreclosure costs lenders $50,000, according to data cited in a 2006 study by the Federal Reserve Bank of Chicago, so an additional two million foreclosures could mean $100 billion in lender losses.
The government’s recent stress tests of banks concluded that the nation’s 19 largest could be forced to write off as much as a fresh $600 billion by the end of 2010, bringing their total losses to $1 trillion. The Federal Reserve concluded that these banks needed to raise another $75 billion.
....
Among prime borrowers, foreclosure rates have been growing fastest in states with particularly high unemployment. In California, for example, the unemployment rate rose to 11.2 percent from 6.4 percent for the year that ended in March, while the foreclosure rate for prime mortgages nearly tripled, reaching 1.81 percent.
Even states seemingly removed from the real estate bubble are seeing foreclosures accelerate as the recession grinds on.
Awwwwww....One executive at a top UK bank who didn't want to be named for fear of angering the IRS said: "It's just about manageable under the current system - and that's because we're big. The danger to us is suddenly being hauled over the coals by the IRS for a client that hasn't paid proper taxes. The audit costs will soar. We'll have to pay it but I know plenty of smaller players won't."
The British Bankers Association (BBA) and APCIMS had a meeting with European counterparts 10 days ago to discuss the crisis. A delegation is set to meet the US Treasury's Internal Revenue Service on 16th June to demand they drop the reforms.
Ahead of the meeting APCIMS, whose members manage £400bn of Britain's wealth and employ 25,000 people, has sent a letter to the IRS complaining that the "unfair" proposals represent "no benefit but... significant cost" to its members.
Scary wonlee."A common feature of all these earlier troubles [previous panics] was that having happened they were over. The worst was reasonably recognizable as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune.
The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains.
... The bargains then suffered a ruinous fall. Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or fourth of the purchase price in the next twenty-four months. ... The ruthlessness of [the stock market was] remarkable." (p. 108)
What we know is that inflation is already negative in Ireland (-3.5pc), China (-1.5pc), Thailand (-0.9pc), Korea (-0.5pc), US (-0.7), Japan (-0.3), Switzerland (-0.3, Spain (-0.2pc). The eurozone may be negative by July. Alistair Darling said Britain's retail RPI inflation used to set wage deals will be minus 3pc by September.
Does this constitute deflation in a meaningful sense? Not yet, perhaps. But it is moving too close for comfort in a world stretched by extreme leverage. The economies of the US, Japan, the eurozone, and Britain have been contracting in "nominal" as well as "real" terms – which smacks of the 1930s.
The "yen GDP" of Japan has shrunk by 10pc in one year; the "euro GDP" of Germany has shrunk 6.2pc, and Italy's by 4.7pc ; the "dollar GDP" of the US has shrunk 3.3pc. Debts are not shrinking, however.
GMO's Jeremy Grantham says in his latest note, Last Hurrah And Seven Lean Years, that the market value of equities, houses and commercial property in the US reached $50 trillion in the boom. This "perceived wealth" sustained $25 trillion of debt. The crash has cut this wealth to $30 trillion, but the debts are still there. America's debt-gearing has exploded, as it has in the UK and Europe. This looks awfully like Irving Fisher's "debt deflation" trap of 1933. It will be a long slog for households to bring their debt-to-wealth ratios down to manageable levels.
