Global Economy

Sanjay M · Post by **Sanjay M** » 26 Aug 2009 10:15

It will trigger a chain-reaction. Opel's intellectual property/patents would get into Russia's hands, and act as the seed to re-energize its manufacturing industry. There's a reason why GM became the most powerful company in America - transportation is a key manufacturing industry, and blue-collar wage creator. This is just what the Russians need, to re-energize their moribund economy, and build the next tier on top of their natural resource industry, with its strength in steel and oil.

Germany would likewise gain renewed economic clout to fend off the stupid anti-competitive demands of the Eurocrats and the newer poor cousins within EU.

More importantly, the deal would deepen Russo-German economic cooperation, serving as a cornerstone of strong trade relations between the two.

Meanwhile, here's some commentary in favour of a global reserve currency, which would have natural checks and balances against the abuses of one large power centre like the USA and the unconstrained policies of its Fed. To much power in one place leads to abuses, as we have now seen with this economic crisis.

http://feedroom.businessweek.com/index. ... b71f888427

Sanjay M · Post by **Sanjay M** » 26 Aug 2009 11:17

Here's more on Germany, Russia, and Opel:

http://www.wsws.org/articles/2009/aug20 ... -a26.shtml

bart · Post by **bart** » 26 Aug 2009 23:27

Sanjay M wrote:It will trigger a chain-reaction. Opel's intellectual property/patents would get into Russia's hands, and act as the seed to re-energize its manufacturing industry. There's a reason why GM became the most powerful company in America - transportation is a key manufacturing industry, and blue-collar wage creator. This is just what the Russians need, to re-energize their moribund economy, and build the next tier on top of their natural resource industry, with its strength in steel and oil.

Opel is a bit-player, it will more likely be a liability for whoever buys it. For every Lee Iacocca turning around Chrysler, there have been a dozen others that failed.

Also GM wants to retain licensing rights to some of the technology and models.

Buying Opel will not catapult Russian industry into world leaders, Opel doesn't have a great portfolio of models or technology unlike say BMW or Porsche. And whatever advanced technology Opel uses or has will probably not be native to Opel but the real owners will be German companies like Kuka robotics, Robert Bosch and ZF.

Sanjay M · Post by **Sanjay M** » 30 Aug 2009 04:35

Barney Frank: Bill Mandating "Complete Audit" Of The Fed Will Pass House In Fall

If so, then that would be a landmark achievement!

Neshant · Post by **Neshant** » 30 Aug 2009 07:49

it will be a watered down version pre-approved by the federal reserve.

plus the guy is an idiot.

example : clip from 2005. :

http://www.youtube.com/watch?v=iW5qKYfqALE

vishwakarmaa · Post by **vishwakarmaa** » 31 Aug 2009 05:21

vsudhir wrote:I doubt anyone thinks a status quoist power like India is looking to rock the USD boat anytimes soon. And tight now, it is not a smart thing to do, IMHO.

Its never a smart thing to build up yourself as an independent power(Russia, China, USA). It starts with making your own rules and following them, rather than obeying West.

Going step in step with West is a "sweet" trap which ends up in a honeymoon where at the end of road, you realize you lost every little thing you had(independence in technology, economic policy, regional security decisions).

pankajs · Post by **pankajs** » 31 Aug 2009 18:08

UPA needs to look before it leaps

Later this week, India will get active at talks in two multilateral forums, the outcome of which will doubtless be crucial for its future political economy. The actions of the country’s policy wonks will be watched closely, more because it would also underline the new-found zeal of the Congress-led United Progressive Alliance (UPA) to recast the country’s international image from that of a predictable spoiler to a more proactive participant in crucial global negotiations.

However, the advent of the UPA 2.0—with a 200-seat plus Congress victory in the 15th general election, fewer allies and no Left parties—has progressively signalled a radical shift in stance. Most of the efforts have been subtle, but connecting the dots reveal that slowly and steadily India is redrawing its position on the crucial subjects of trade and climate change.

Officially, there is no word from the government about either any change in stance or the underlying reasons if any, even while it is visibly moving the goal post. Informally, though, interlocutors do concede that India is introducing a flexibility in its negotiating position largely to avoid being hemmed in by its rivals, especially on grounds of being a spoiler.

Whatever be the reasons, hopefully the government recognizes the underlying risks of the country’s new negotiating stance. While they may be game changers that would eventually return a greater net benefit to the country, there is also a downside risk of such out-of-the-box thinking going awry. The danger of the latter is that it will nix what may be a game changing idea and set the clock back, maybe even permanently.

SwamyG · Post by **SwamyG** » 02 Sep 2009 01:23

Japan must shake off US-style globalization
by Yukio Hatoyama {the next Japanese PM ?}

The recent worldwide economic crisis resulted from a way of thinking based on the principle that American-style free-market economics represents a universal and ideal economic order – and that all countries should modify the traditions and regulations governing their own economy in order to reform the structure of their economic society in line with global standards (or rather American standards).

Sanjay M · Post by **Sanjay M** » 07 Sep 2009 20:13

High-End Manufacturing Outsourced to US Causes Job Gains

http://video.forbes.com/fvn/notes/prote ... rican-jobs

Chinmayanand · Post by **Chinmayanand** » 10 Sep 2009 00:06

Fed Says Economy Stable or Improving in Most of U.S.

Sept. 9 (Bloomberg) -- The Federal Reserve said 11 of its 12 regional banks reported signs of a stable or improving economy in July and August, adding anecdotal evidence that the worst U.S. recession in seven decades is over.
------------------------------------------------
Hope, Fed doesn't have to chew its words down the road.

AnimeshP · Post by **AnimeshP** » 10 Sep 2009 01:44

durgesh wrote:Fed Says Economy Stable or Improving in Most of U.S.

Sept. 9 (Bloomberg) -- The Federal Reserve said 11 of its 12 regional banks reported signs of a stable or improving economy in July and August, adding anecdotal evidence that the worst U.S. recession in seven decades is over.
------------------------------------------------
Hope, Fed doesn't have to chew its words down the road.

Well .. the facts don't support the intended outcome therefore they had to go for "anecdotal evidence" ...

SwamyG · Post by **SwamyG** » 17 Sep 2009 07:52

I have been impressed with Douglas Rushkoff. His books "Life, Inc." is very good. Here is an essay: Economics is not a natural science Well he takes a swing at one of my favorite authors Malcolm Gladwell.

A giant excerpt:

The economy in which we operate is not a natural system, but a set of rules developed in the Late Middle Ages in order to prevent the unchecked rise of a merchant class that was creating and exchanging value with impunity. This was what we might today call a peer-to-peer economy, and did not depend on central employers or even central currency.

People brought grain in from the fields, had it weighed at a grain store, and left with a receipt — usually stamped into a thin piece of foil. The foil could be torn into smaller pieces and used as currency in town. Each piece represented a specific amount of grain. The money was quite literally earned into existence — and the total amount in circulation reflected the abundance of the crop.

Now the interesting thing about this money is that it lost value over time. The grain store had to be paid, some of the grain was lost to rats and spoilage. So each year, the grain store would reissue the money for any grain that hadn't actually been claimed. This meant that the money was biased towards transactions — towards circulation, rather than hording. People wanted to spend it. And the more money circulates (to a point) the better and more bountiful the economy. Preventative maintenance on machinery, research and development on new windmills and water wheels, was at a high.

Many towns became so prosperous that they invested in long-term projects, like cathedrals. The "Age of Cathedrals" of this pre-Renaissance period was not funded by the Vatican, but by the bottom-up activity of vibrant local economies. The work week got shorter, people got taller, and life expectancy increased. (Were the Late Middle Ages perfect? No — not by any means. I am not in any way calling for a return to the Middle Ages. But an honest appraisal of the economic mechanisms in place before our own is required if we are ever going to contend with the biases of the system we are currently mistaking for the way it has always and must always be.)

Feudal lords, early kings, and the aristocracy were not participating in this wealth creation. Their families hadn't created value in centuries, and they needed a mechanism through which to maintain their own stature in the face of a rising middle class. The two ideas they came up with are still with us today in essentially the same form, and have become so embedded in commerce that we mistake them for pre-existing laws of economic activity.

The first innovation was to centralize currency. What better way for the already rich to maintain their wealth than to make money scarce? Monarchs forcibly made abundant local currencies illegal, and required people to exchange value through artificially scarce central currencies, instead. Not only was centrally issued money easier to tax, but it gave central banks an easy way to extract value through debasement (removing gold content). The bias of scarce currency, however, was towards hording. Those with access to the treasury could accrue wealth by lending or investing passively in value creation by others. Prosperity on the periphery quickly diminished as value was drawn toward the center. Within a few decades of the establishment of central currency in France came local poverty, an end to subsistence farming, and the plague. (The economy we now celebrate as the happy result of these Renaissance innovations only took effect after Europe had lost half of its population.)

As it's currently practiced, the issuance of currency — a public utility, really — is still controlled in much the same manner by central banks. They issue the currency in the form of a loan to a bank, which in turn loans it a business. Each borrower must pay back more then he has acquired, necessitating competition — and more borrowing. An economy with a strictly enforced central currency must expand at the rate of debt; it is no longer ruled principally by the laws of supply and demand, but the debt structures of its lenders and borrowers. Those who can't grow organically must acquire businesses in order to grow artificially. Even though nearly 80% of mergers and acquisitions fail to create value for either party, the rules of a debt-based economy — and the shareholders it was developed to favor — insist on growth at the expense of long-term value.

The second great innovation was the chartered monopoly, through which kings could grant exclusive control over a sector or region to a favored company in return for an investment in the enterprise. This gave rise to monopoly markets, such as the British East India Trading Company's exclusive right to trade in the American Colonies. Colonists who grew cotton were not permitted to sell it to other people or, worse, fabricate clothes. These activities would have generated value from the bottom up, in a way that could not have been extracted by a central authority. Instead, colonists were required to sell cotton to the Company, at fixed prices, who shipped it back to England where it was fabricated into clothes by another chartered monopoly, and then shipped to back to America for sale to the colonists. It was not more efficient; it was simply more extractive.

The resulting economy encouraged — and often forced — people to accept employment from chartered corporations rather than create value for themselves. When natives of the Indies began making rope to sell to the Dutch East India Trading Company, the Company sought and won laws making rope fabrication in the Indies illegal for anyone except the Company itself. Former rope-makers had to close their workshops, and work instead for lower wages as employees of the company.

We ended up with an economy based in scarcity and competition rather than abundance and collaboration; an economy that requires growth and eschews sustainable business models. It may or may not better reflect the laws of nature — and that it is a conversation we really should have — but it is certainly not the result of entirely natural set of principles in action. It is a system designed by certain people at a certain moment in history, with very specific interests.

Like artists of the Renaissance, who were required to find patrons to support their work, most scientists, mathematicians, theorists, and technologists today must find support from either the public or private sectors to carry on their work. This support is not won by calling attention to the Monopoly board most of us mistake for the real economy. It is won by applying insights to the techniques through which their patrons can better play the game.

paramu · Post by **paramu** » 17 Sep 2009 23:38

^^^
The above story doesn't match with what I had heard before. The version I had heard was that people in Europe used to store gold in goldsmiths' vaults. These goldsmiths started issuing paper vauchers for the gold they had. Later when they found out that most of the gold in their vaults were never taken out, they started issuing more vauchers than the amount of gold they have in stock. This is supposed to be the story of big bankers.

The story that people issued their own currency and became very prosperous looks just BS. We know the story of Muhammed-bin-Tuglaq, who issued leather currency instead of gold, and what happened in the end. It was massive inflation.

Basically the article looks like an attempt to divert the attention from old bankers who manipulated the world to the ruling class.

vishwakarmaa · Post by **vishwakarmaa** » 18 Sep 2009 00:00

There is no relation between amount of Gold America has and amount of dollars they print.

They print dollars and buy up resources around world in a non-stop manner, while whole world stands by and bows to american might.

paramu · Post by **paramu** » 18 Sep 2009 00:26

Global debt comparison

vishwakarmaa · Post by **vishwakarmaa** » 18 Sep 2009 01:10

Debt has a twisted meaning in corrupt international finance system.

America can print 'dollars' and pay the debt. Other countries can't do so because they can't print 'dollars' so they depend on western mercy. This has been so since post world war-II era, since Arabs accepted dollar as prime currency of trade in Oil and West forced the same on other regions.

Dollar currency creates a position of 'power' for Americans. While other countries citizens work hard day and night, to "earn" dollars so that their country can buy goods from any other country. On other side, Americans have supreme unique power to 'print' dollars and induce in their banks, corporates so they can use these printed dollars to buy resources worldwide.

Iraq and Afghanistan wars are all about spreading dollar and maintaining this western control on global financial system.

Current International finance system was orchestrated(conceived) by Western strategists and its not fair in any manner. Rather, its a forced system. One of the major reason behind non-western elites(Indians, Africans etc.) not apposing this system, is that they are unable to think intellectually of an alternative solution to 'dollar' and are not united politically enough to stand up against 'dollar' empire.

It is in Western interest to keep India in its bag right now because only India can break Russian-Chinese move to bring alternate to 'dollar' currency.

India is only screwing itself by letting the hot money(dollar printing press) buying into Indian national companies.

Bush didn't attack Arab countries not because Saudis buy US govt. bonds but, because Arab are partners to Americans in keeping Dollars empire alive by forcing every country buy oil in dollars only.

ShyamSP · Post by **ShyamSP** » 18 Sep 2009 04:09

vishwakarmaa wrote:Debt has a twisted meaning in corrupt international finance system.

America can print 'dollars' and pay the debt. Other countries can't do so because they can't print 'dollars' so they depend on western mercy. This has been so since post world war-II era, since Arabs accepted dollar as prime currency of trade in Oil and West forced the same on other regions.

Dollar currency creates a position of 'power' for Americans. While other countries citizens work hard day and night, to "earn" dollars so that their country can buy goods from any other country. On other side, Americans have supreme unique power to 'print' dollars and induce in their banks, corporates so they can use these printed dollars to buy resources worldwide.

Iraq and Afghanistan wars are all about spreading dollar and maintaining this western control on global financial system.

Current International finance system was orchestrated(conceived) by Western strategists and its not fair in any manner. Rather, its a forced system. One of the major reason behind non-western elites(Indians, Africans etc.) not apposing this system, is that they are unable to think intellectually of an alternative solution to 'dollar' and are not united politically enough to stand up against 'dollar' empire.

It is in Western interest to keep India in its bag right now because only India can break Russian-Chinese move to bring alternate to 'dollar' currency.

India is only screwing itself by letting the hot money(dollar printing press) buying into Indian national companies.

Bush didn't attack Arab countries not because Saudis buy US govt. bonds but, because Arab are partners to Americans in keeping Dollars empire alive by forcing every country buy oil in dollars only.

Questions is why not sell dollar immediately. In other words treat it as a short-term currency (transactional currency) and for long-term keep basket of currencies. US then can print only up to what is needed for trade transactions and any excess printing can reduce dollar value.

It is not currency which has short-term in nature that gives power to US, it is dollar-denominated assets that Saudi and China are hoarding. China and US are like siamese twins so Russian-Chinese move is unlikely unless their trade grows substantially. Saudi is UN Munna so can't avoid dollars.

That leaves a lot more other countries to have alternative to dollar.

svinayak · Post by **svinayak** » 19 Sep 2009 00:09

Following is a table ranking 100 global brands from Interbrand’s Best Global Brands 2009 report.
http://www.bloomberg.com/apps/news?pid= ... letCqeLm30

Rankings are based on five criteria and excludes those brands which are privately held.

================================================================================
-----Rank----- Value
2009 2008 Chng. Company Country Industry $ blns
================================================================================
1 1 0 Coca-Cola U.S. Beverages $68.734
2 2 0 IBM U.S. Computer Services $60.200
3 3 0 Microsoft U.S. Computer Software $56.647
4 4 0 GE U.S. Diversified $47.777
5 5 0 Nokia Finland Consumer Electronics $34.864
6 8 2 McDonald’s U.S. Restaurants $32.275
7 10 3 Google U.S. Internet Services $31.980
8 6 -2 Toyota Japan Automotive $31.330
9 7 -2 Intel U.S. Computer Hardware $30.636
10 9 -1 Disney U.S. Media $28.447
================================================================================
-----Rank----- Value
2009 2008 Chng. Company Country Industry $ blns
================================================================================
11 12 1 Hewlett-Packard U.S. Computer Hardware $24.096
12 11 -1 Mercedes-Benz Germany Automotive $23.867
13 14 1 Gillette U.S. Personal Care $22.841
14 17 3 Cisco U.S. Computer Services $22.030
15 13 -2 BMW Germany Automotive $21.671
16 16 0 Louis Vuitton France Luxury $21.120
17 18 1 Marlboro U.S. Tobacco $19.010
18 20 2 Honda Japan Automotive $17.803
19 21 2 Samsung Korea Consumer Electronics $17.518
20 24 4 Apple U.S. Computer Hardware $15.433
21 22 1 H&M Sweden Apparel $15.375
22 15 -7 American Express U.S. Financial Services $14.971
23 26 3 Pepsi U.S. Beverages $13.706
24 23 -1 Oracle U.S. Computer Software $13.699
25 28 3 Nescafe Switzerland Beverages $13.317
26 29 3 Nike U.S. Sporting Goods $13.179
27 31 4 SAP Germany Computer Software $12.106
=========================================================================

Sanjay M · Post by **Sanjay M** » 22 Sep 2009 16:59

Who runs the global economy?

Finance ministers from India, Brazil and China after a meeting in London
India, Brazil and China want a greater say in how the world economy is governed

By Steve Schifferes
Economics reporter, BBC News

Countries contribute funds to the IMF according to the size of their economies, and they then receive voting rights based on their contributions.

But the current voting structure does not reflect the rise of powerful new economies like China and India, which are leading the world out of recession even while growth collapses in Europe and the US.

And a row has broken out between the US and China on the one hand, and Europe on the other, over how much voting rights should be changed.

Although all sides have pledged to come up with solutions by January 2011, there are significant practical problems.

European countries, which make up 25% of the world economy, hold 40% of the votes. The US, which makes up another 25% of the world economy, only holds 17% of the voting rights.

But under IMF rules, all major decisions require a majority of 85%, making the US the only individual country that can block any decision.

The US and China have proposed that European countries give up 5% to 7% of their quota in order to provide more votes to the emerging economies.

But smaller European countries, such as the Netherlands and Sweden, are reluctant to give up their seats on the 24-member IMF board.

Why are we trying to buy into their bankrupt structure? We should instead be joining with other rising economies to make our own new one, instead of rescuing theirs when it permanently enshrines their superiority.

Hari Seldon · Post by **Hari Seldon** » 22 Sep 2009 20:55

Why are we trying to buy into their bankrupt structure? We should instead be joining with other rising economies to make our own new one, instead of rescuing theirs when it permanently enshrines their superiority.

Good point and one so blindingly obvious that I doubt GoI mandarins have missed it at all. I suspect its all play along for now, wait and watch for later.

Sooner or later, and I suspect sooner rather than later, the old edifice will either crumble or evolve. Actually, the jostling for a post breakdown seat at the table is already on. If yindia and PRC can coordinate their moves despite their regional rivalry, the western bloc will have to ultimately yield to the emerging Asian one.

Neshant · Post by **Neshant** » 22 Sep 2009 21:01

if everyone has a seat on the IMF board, there's no country left for the IMF to exploit.

its a case of having too many chiefs and not enough Indians.

AnimeshP · Post by **AnimeshP** » 22 Sep 2009 21:02

Hari Seldon wrote:
Why are we trying to buy into their bankrupt structure? We should instead be joining with other rising economies to make our own new one, instead of rescuing theirs when it permanently enshrines their superiority.
Good point and one so blindingly obvious that I doubt GoI mandarins have missed it at all. I suspect its all play along for now, wait and watch for later.

Sooner or later, and I suspect sooner rather than later, the old edifice will either crumble or evolve. Actually, the jostling for a post breakdown seat at the table is already on. If yindia and PRC can coordinate their moves despite their regional rivalry, the western bloc will have to ultimately yield to the emerging Asian one.

Something like how inspite their rivalray, both US and Soviet Union together came up with a world order where they were the dominant powers? That's a very interesting thought ...

animesharma · Post by **animesharma** » 26 Sep 2009 04:11

Advantage China, India as G-20 replaces G-8

Seems the balance is leaning to east, officially.

shyam · Post by **shyam** » 28 Sep 2009 00:51

Bank of the South Formalized, Aims to Expand to $20 Billion

Neshant · Post by **Neshant** » 28 Sep 2009 06:43

Seems the balance is leaning to east, officially.

I doubt it. The decision making will still be done by a select few somewhere else.

Do you really think they will yield power to others.

There are too many chiefs at the G-20.

Satya_anveshi · Post by **Satya_anveshi** » 29 Sep 2009 06:16

animesharma wrote:Advantage China, India as G-20 replaces G-8
Seems the balance is leaning to east, officially.

actually this is great psyops. Russia, China, France were very vocal to express their reservation (an understatement) with dollar and India had joined them. We know the stand of Germany. Japan with HUGE reserves..you can only imagin which way it goes IF there is a demonstrated viability.

So, besides Italy and UK who the hell was with US. So, G8 got conveniently sidelined and now G20 assumed significance just so US can hedge better. When G20 goes off balance, you can bet your bottom that G47 or G312.4 will assume significance.

Sanjay M · Post by **Sanjay M** » 29 Sep 2009 09:27

Japan Still Experiencing Deflation

Sanjay M · Post by **Sanjay M** » 29 Sep 2009 09:43

Businessweek:

Xerox Moves Into Services

SwamyG · Post by **SwamyG** » 30 Sep 2009 06:58

Why India may get lucky once again

If all this, or at least some of it, were to happen, the balance of economic power will shift first to China and then to India -- about 10 years from now. The US dollar will fall as the world buys more yuan and rupee to reorient itself to changing economic equations. When this trend catches on, the markets will have nowhere to go but up -- at least in China and India.

Apart from big western investors and pensions funds, the petro-plutarchs of West Asia, Russia, Latin America and Asia will also be looking for worthwhile investment opportunities. India is where all the economic forces meet. In addition to providing the opportunity, we have a transparent system unlike China's.
India's position is truly unique. We are one of the economies with steady growth and a good balance between domestic consumption and savings (again, unlike China). We are not excessively dependent on exports, and so the currency can also be relied upon. When (not if) the dollar declines, people holding that currency will have to look for a safe place to put their money. Rupee and rupee assets are good options. China will, of course, grab the lion's share of fleeing money, but India will attract its share and more. Even demographically, India has an advantage with its young population for the next 10-15 years.

Put all these factors together, and what you get is this: rising foreign inflows, cheaper money, easy capital and growth. The downside of allowing large inflows is volatile exchange rates and inflation. The right recipe for success is to allow the rupee to rise, ensure good and cheap supplies of wage-goods like food and daily necessities for the poor, and lots of reforms.

India is on the threshold of unearned economic strength. All we need is a government willing to be proactive on reforms. We have nothing to lose but our poverty. The only thing we have to do is not screw it up.

SwamyG · Post by **SwamyG** » 30 Sep 2009 07:10

World Bank Head Sees Dollar’s Role Diminishing
Global Economic Forum to Expand Permanently

Vipul · Post by **Vipul** » 30 Sep 2009 19:18

Are we getting ready for subprime 2.0?

Old habits are hard to break. When the Nasdaq tech-bubble burst, the US government and the Federal Reserve chairman "Bubbles" Greenspan created an even bigger asset-bubble to replace it (the US housing bubble).It was characterised by a 1% "benchmark" interest rate, ridiculously lax lending standards, rampant fraud -- and non-existent oversight.By refusing to allow its economy to purge itself of bad debt and excessive credit, the US government created a much more damaging bubble -- aggravated by Wall Street's multi-trillion dollar, global Ponzi-scheme.

With the US housing market now experiencing its worst collapse in history as the aftermath of that bubble, and with no "bottom" in sight, the US government is once again trying to take the easy way out -- this time by trying to re-inflate the same bubble which has just burst.

This time, the Fed's benchmark interest rate is at 0%. This time, it's the US government itself which has lowered the bar with its lending standards. This time, there is even more mortgage-fraud (up 23% from last year) -- and there is still no oversight.

Now it is the Federal Housing Administration (FHA), a government agency, which is handing out subprime loans like a financial "Pez-dispenser". An illuminating article by business consultant David DePhillips provides a long list of ugly numbers.
The FHA's market share of the US mortgage market has risen from 2% to 23% in just four years.It already has a 7% delinquency rate on its loan portfolio, despite the fact that most of these are new loans.It has become the new employer for thousands of private sector "mortgage brokers", who were the instigators of most of the mortgage-fraud during the first housing bubble, with the number of "FHA approved" lenders rising by more than 40% since the end of 2007 -- from 9,600 to nearly 14,000.If this was an otherwise-healthy market, then perhaps the FHA's reckless expansion into this sector could be seen as "support" for struggling US homeowners. In fact, nothing could be further from the truth.

US banks are holding millions of already-foreclosed/ repossessed homes off of the market. The most recent statistics show that total foreclosures and repossessions are on pace to go well over 4 million units this year.Meanwhile, sales statistics over the last two months show US "REO" (bank-owned real estate) sales will be less than 2 million units. This adds to the existing glut of 20 million empty homes.

What is worse is that the US housing sector hasn't even gotten to the peak of its mortgage-resets of bad loans from the last bubble. This upcoming spike in resets begins next year and will continue through 2011, before beginning to tail-off in 2012.To make this upcoming "train-wreck" even worse still, the US's spendthrift baby-boomers are starting to retire, and their retirements are grossly under-funded -- even if the US's pension system can remain solvent.

With real estate comprising 75% of the assets for these financial lemmings, and with these boomers needing to come up with trillions of dollars just to come close to maintaining their standard of living, there is no mystery as to what they will be selling -- year after year after year.

Adding "insult to injury", the Obama regime is essentially doing nothing to help out the homeowners themselves -- despite loud and frequent claims to the contrary. With 4 million homeowners potentially eligible for aid in his "housing rescue", less than 5% of that number have received any formal offers of mortgage relief.

Now the FHA is almost broke -- joining other government entities like Fannie Mae, Freddie Mac, and the FDIC. None of the hundreds of billions of dollars which these agencies need to remain solvent has been factored into Obama's fantasy-budget.
Thus, the only real difference between the US housing bubble, "chapter I" and the new "chapter II" is that much of the future trillions in hand-outs, "loans" and other, assorted bail-outs which will be squandered in the next wave of insolvencies will be used to prop-up government entities.

K_Reddy · Post by **K_Reddy** » 01 Oct 2009 10:38

And thats just half the story. Commercial real estates are a time bomb waiting to go off and will be as big as the housing crash.

Sanjay M · Post by **Sanjay M** » 03 Oct 2009 08:51

Vipul wrote:Are we getting ready for subprime 2.0?

Old habits are hard to break. When the Nasdaq tech-bubble burst, the US government and the Federal Reserve chairman "Bubbles" Greenspan created an even bigger asset-bubble to replace it (the US housing bubble).It was characterised by a 1% "benchmark" interest rate, ridiculously lax lending standards, rampant fraud -- and non-existent oversight.By refusing to allow its economy to purge itself of bad debt and excessive credit, the US government created a much more damaging bubble -- aggravated by Wall Street's multi-trillion dollar, global Ponzi-scheme.

With the US housing market now experiencing its worst collapse in history as the aftermath of that bubble, and with no "bottom" in sight, the US government is once again trying to take the easy way out -- this time by trying to re-inflate the same bubble which has just burst.

Does anyone remember this old Star Trek episode?

http://www.youtube.com/watch?v=xzzYWMzLf3g#t=1m2s

"More shields! More shields!"
KABOOM!

Harmonic amplification

Neshant · Post by **Neshant** » 07 Oct 2009 17:16

China, Japan plan group on EU lines

BEIJING: In a move that is considered to send shock waves around the world, Japan and China have proposed a plan to create an “East Asian Community,” similar to the European Union, which could make a fierce force to reckon with and which would also improve economic and political relationships in the region.

The proposal is its initial stages and it could include visa-free travel, public health, energy and the environment. In the later stages of the proposal, it is being said that political issues and common policies on defence and agriculture would also play a major part.

According to reports, Japanese PM Yukio Hatoyama put the proposal to Chinese president Hu Jintao during their first meeting, in New York on September 21. The issue was again discussed during Japanese Foreign Minister Katsuya Okada’s meeting with his Chinese counterpart, Yang Jiechi, in Shanghai last week.

http://timesofindia.indiatimes.com/worl ... 092076.cms

SwamyG · Post by **SwamyG** » 07 Oct 2009 19:26

^^^
So is Japan reconciling to play the second fiddle to China? I see gradual baby steps in that direction.

uddu · Post by **uddu** » 07 Oct 2009 20:53

^^^India must be part of the group and the others (except may be China) will be happy to have India since it will strengthen the group.

Sanjay M · Post by **Sanjay M** » 08 Oct 2009 04:21

We should make sure that we are not left out of the group, like Turkey, forever running after them while being led on with false promises.

Suraj · Post by **Suraj** » 08 Oct 2009 08:03

The EU as a collective economic entity saw it's GDP shrink 0.3% last quarter, while the Euro zone GDP fell 0.2%:
EU GDP shrinks 0.2% in April-June 2009

The GDP in the euro zone — 16 nations which share the common currency euro — was anticipated to contract just 0.1 per cent for the three months ended June.

Further, the European Union economy comprising 27 nations, shrank 0.3 per cent in the second quarter, again more than the earlier estimate of 0.2 per cent.

According to Eurostat, the official statistical agency of the European communities, in the second quarter, euro zone and EU GDP fell 0.2 per cent and 0.3 per cent, respectively.

"Investments fell by 1.5 per cent in the euro area and by 2.3 per cent in the EU. Exports fell by 1.5 per cent in the euro area and by 1.7 per cent in the EU," Eurostat said in a statement today.

In the first quarter of 2009, the euro zone GDP dropped 2.5 per cent, while that of EU fell by 2.4 per cent.

Hari Seldon · Post by **Hari Seldon** » 08 Oct 2009 09:36

^^ Thats where PRC's obstinacy, inscrutability and mistrust-evoking capabilities spoil their party.

The problem for a pan-Asian economic union with PRC at the helm is that nobody (including PRC) genuinely believes that the PRC leadership is in any way willing or able to share power. I mean real power, decision-making variety.

If PRC were even remotely like India in perception terms, much more malleable and easygoing, more countries would be much more comfortable with the idea of ceding some and gaining some in a happy exchange with a willing partner.

IMVVHO, of course.

Neshant · Post by **Neshant** » 08 Oct 2009 14:13

If PRC were even remotely like India in perception terms, much more malleable and easygoing, more countries would be much more comfortable with the idea of ceding some and gaining some in a happy exchange with a willing partner.

The above strategy is employed by India but where has it gotten us?

I'm afraid humans only respects power and single minded ambition. Sharing is a sign of weakness for if you really were strong, you would not have to share with anyone.