Perspectives on the global economic meltdown

[Hari Seldon]

^^ Am not sure how that works against an armed populace. At the very least, the takeover or next civil war will be bloody if nothing.

[Hari Seldon]

Responsibility and int'l obligations are growing suddenly like tumors inside the pristine body-politic of PRCheena, seems like.
China sets first targets to curb world's largest carbon footprint

The Chinese prime minister, Wen Jiabao, will attend the Copenhagen climate talks next month, the government said today, as it unveiled firm targets for curbing the world's biggest carbon footprint for the first time.

A day after the US president, Barack Obama, confirmed he would attend the early stages of the conference, the Chinese foreign ministry spokesman, Qin Gang, said Wen would join the gathering, which aims to set a global strategy for reducing emissions.

China announced that it would cut emissions of carbon relative to economic growth by 40% to 45% by 2020 compared with 2005 levels.

"This is a voluntary action taken by the Chinese government based on its own national conditions and is a major contribution to the global effort in tackling climate change," the state council was quoted as saying by the Xinhua news agency.

If you, like me, are going WTF at the news, hold on and your skepticism gets confirms....Sample this:

BEIJING (Reuters) - A top Chinese climate envoy said Friday only emissions curbs carried out under its newly announced carbon intensity targets that have international financial support will be open to outside scrutiny.
...
Yu Qingtai, China's climate change ambassador, added that most of the country's emissions-curbing plans would likely not fall into the category of "measurable, reportable and verifiable."

What does that mean? IMO, Karl Denninger says it best:

In other words they will lie. Just as they do about virtually everything else. And they're telling us they're going to lie.

And thats not all...seems cheena in fits of forgetfulness ignores its tallel than moantain fliend TSP and instead latches onto yindia when in a corner onlee...

Beijing insists that rich, industrialized countries should continue bearing most of the burden in reducing greenhouse gases and that developing nations like China and India must not be subject to mandatory emission reduction targets in any new deal.

Our venerable Jai Jawan, Jai Kisan slogan has also been usurped by the sly cheenis, NSN reports...... Jai Han, Jai Yuan is the new skid on the block.

[Neshant]

by next year, there will be so much turmoil in the markets that nobody will give a toss about fake climate change theories or protectionist rackets.

Meanwhile, on the eastern front :

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Dubai's threat to U.S. banks

http://money.cnn.com/2009/11/27/news/co ... /index.htm

[Philip]

The Party might have been over some time ago,but the author says that Dubai is as bad or good as elsewhere! However,from the reoport,like the Titanic,the party aboard SS Dubai goes on regardless of the fact that it is sinking fast into the sand!

http://www.independent.co.uk/news/world ... 29865.html

Dubai: The party in the desert ended months ago

There was no escaping the news that the emirate was in trouble. But in the eye of the storm, writes resident Conor Purcell, nobody noticed.
Saturday, 28 November 2009

It was all supposed to be so different. Next week, on UAE National Day, the Burj Dubai was set to open. The 818-metre tower was to be a testament to everything the emirate has achieved.

That opening was postponed a few weeks ago and the Burj will open in January instead. That now looks like a good move. As the world's media speculate on what effect Dubai's latest crisis will have on the global economy, the last thing anyone needed was a party celebrating the world's tallest white elephant.

But there is no sense of panic on the streets of Dubai. Many people are unaware of what is going on, others either don't understand – or don't care. Many people have used the holiday weekend to take a break in Beirut or Oman, to go to beach parties or relax in the sun. Global financial turmoil is just not on their radar.

This is partly due to the local media who have played down the crisis – focusing on the government's restructuring or ignoring the issue altogether. The front page of the biggest-selling newspaper in the country, Gulf News, today mentioned nothing of the issue, focusing on the Haj pilgrimage to Mecca and the Eid holiday. Ignorance, it seems, is bliss.

This carefully contrived atmosphere of nonchalance was reflected in the statement issued by the chairman of Dubai's Supreme Fiscal Committee, Sheikh Ahmed bin Saeed al-Maktoum, as he attempted to reassure markets that all was well and fundamentals were sound.

The appeal to delay repayments to creditors, which left global financial markets reeling on Thursday, was no accident, he said, and its consequences had been anticipated.

"Our intervention in Dubai World was carefully planned," Sheikh Ahmed said. "The government is spearheading the restructuring of this commercial operation in the full knowledge of how the markets would react. We understand the concerns of the market and creditors in particular." He described Dubai World's request for a freeze as "a sensible business decision".

I first came to Dubai in 2005. The expatriates I met (mostly British) were similar to expatriates the world over. They moaned about the weather (too hot), the traffic (too heavy) and the rents (too expensive). Most openly admitted to being in Dubai solely for the tax-free pay. They would complain about the city's lack of "culture" while downing £6 pints of Stella. Yet they would never dream of setting foot inside an art gallery in London or Manchester.

The bigger Dubai got, the louder the moans became, yet almost those expats stayed on. Then, earlier this year, a funny thing happened. The foreign media started attacking Dubai, and the same residents that had once derided the city started defending it. Many of them were glad the bubble had burst. Rents returned to normal, traffic got lighter, the schemers and chancers here to make a quick buck left. Unless you had been affected by the downturn, things were better than ever. Not that you would know it from reading the foreign media.

Emiratis and expats alike were shocked at the vitriol in the coverage. Was it not better for Dubai to aspire to something more than the rest of the region? Was it not better for the Middle East to be talked about outside of the frame of violence? Dubai, for all its problems, is peaceful, safe and has provided a template for other Gulf States to follow.

It may be a cliché but Dubai is also multicultural. I have met a Swiss-Egyptian airhostess, a Filipino-Swedish entrepreneur and countless other people who have dual nationalities but choose to make Dubai their home. There is a vibrant art scene in the industrial Al Quoz area of the city, entrepreneurs are being encouraged with government schemes – and if you have the drive and ambition, making money in Dubai is not difficult. Wander around the The Walk, a strip of coffee shops and restaurants that face the Gulf, and you won't see much evidence of a downturn. Maseratis and Ferraris cruise past and the restaurants are packed almost every night.

Yet scratch the First World surface and a little of the Third World pokes through. The Walk's restaurants may look wonderful, but try getting the bill or even the right order on a busy night. Taxi drivers routinely get lost. It is hard to blame the drivers, they are overworked and underpaid, but the companies that hire them don't train them properly.

As Dubai's star has fallen, Abu Dhabi's has risen. Once seen as a place to go only when absolutely necessary – in my first three years in the UAE I went only once, to get a Russian visa – the UAE capital is slowly becoming as talked-about as Dubai. Witness the recent Grand Prix and the £16bn Saadiyat Island development that will house Louvre and Guggenheim museums.

More importantly, Abu Dhabi has capital and, increasingly, jobs. Increasing numbers of Dubai residents are making the 90-minute commute to Abu Dhabi because they lost their jobs in Dubai. Some have gone to Doha, another city slowly becoming a regional player. One friend is leaving after nearly five years in Dubai; not for financial reasons, but because he is sick of the heat, the bureaucracy and the woeful service industry. He has no interest in going to Abu Dhabi or Doha; he just wants to go home.

Most people, though, are staying; the economies in the rest of the world are hardly any better and no one I have met believes the sky will fall in on Dubai. It is not in anyone's interest for that to happen: not Britain's, not America's and certainly not Abu Dhabi's.

PS:Will the SS Abu Dhabi rescue the passengers aboard the SS Dubai?

[kmkraoind]

[Bade]

On the flow of remittances, Mukherjee admitted that the current crisis might fuel joblessness and flow of foreign exchange. He added, “ 42.3 per cent of the total population in UAE are Indians.”

No affect on Indian economy, only remittances will be affected: Pranab
That is almost a million+ Indians in Dubai alone from wiki and a good part of certain districts in Kerala can feel the heat if Dubai sinks further.

[shyam]

CNN Poll:
http://money.cnn.com/POLLSERVER/results/49372.html

1. What are you doing this Thanksgiving weekend?
Staying home and doing little 70%
Shopping for holiday bargains 6%
Traveling 9%
Working 16%

[RamaY]

reading a single page of posts on this thread, anybody would think the world is coming to an end...

regarding Indians mass-escaping to India, i expect that in a worst case scenario, a lot of Indians will just pack up and go back to where they came from. though, in the case of family-wallahs, especially teenagers in the house who've been in US almost all their lives, it will be tough to do. but there will also be a considerable proportion who will stay and wither the storm. at the expense of sounding idealistic, i'd even say that those who stay have become Americanized in their thinking and associate themselves more with US than India. if worse comes to worse, and if there is another World War and a military draft, imvho, i wouldn't be surprised if a good number of Indians (those who have become Americanized; or those who are American--teenagers, young people) willingly join the military. i know that i fit that category. recently met a high school junior in NJ who's trying to get into the Air Force Academy, and his parents actually are happy for him (which was a shock).

of course, the above is just my experience and obviously my own views/bias.

Humans are capable of adjusting to reality better than any other species, so they will do just fine.

On the other hand Indian industry can use the returning working population from Dubai and replace all the PRC work visas to start with.

[Kakkaji]

Swapan dasgupta's take on the Dubai situation. Posting in full:

India must think big, stand by Dubai

Swapan Dasgupta

It’s always amusing to hear those who acquire wisdom in hindsight. “When you start building a third island shaped like a palm tree, intending it to be as big and crowded as Manhattan,” wrote Jim Krane, the author of the evocatively titled “Dubai: The Story of the World’s Fastest City” in Saturday’s Financial Times, “you are crying out for a sober voice to bark: Stop!”

Like the Emperor’s new clothes, there were remarkably few “sober” voices that were sceptical of the prolonged celebration of bling in the Arabian desert. From clever bankers in London and New York who have a slightly disdainful attitude to those who don’t earn million dollar bonuses to the peddlers of exorbitantly-priced “luxury goods”, Dubai was always a shorthand for quick bucks. Unlike Singapore, where opportunity mingles with hard realism, Dubai had transformed into a fantasy land.

When an English friend with an impish sense of humour once hosted me for a drink at a top-floor bar in the dhow-sail shaped hotel that was being flaunted as a monument to opulent living, I recall repeating John McEnroe’s immortal outburst: “You can’t be serious!” In the gilt-plated lift, we encountered a short, podgy Russian with an unlit cigar in his mouth, with his arm firmly clutching the posterior of a giggling, well-endowed blonde — a caricature of the gangster’s moll from a B-grade film. Predictably, the Russian was also accompanied by a fearful looking bodyguard.

The bar itself was something straight out of a 1960s film centred on some Dr No or Goldfinger out to take over the world. It was embellished with strobe lights, featuring multi-coloured stars and objects that defy coherent definition. Like Andy Warhol, it seemed that the interior designer had had a great laugh at someone’s expense, and profited handsomely from it.

To me, that seemed the central problem with Dubai: The belief that capitalism worked best in a gigantic amusement park. Of course, it was not very funny for the thousands of construction labour who lived dreary lives and sent home every last coin they saved through self-deprivation; nor was it very funny for the sad-looking maids who silently endured the travails of restricted employment. But for European bankers whose bonuses depended on underwriting fantasies, Indian and Pakistani dons who frolicked beyond the long arm of the law, spoilt Arab kids who imagined that life was one big fast car ride down a new motorway and Western businessmen who sold rich Arabs the modern equivalents of beads and trinkets, Dubai was the Xanadu of capitalism.

The tragedy of Dubai was that its whacko priorities subsumed its other achievements. For a place that wasn’t even in a position to issue its own postage stamps till the early-1950s — it used Indian stamps and even the Indian currency — Sheikh Mohammed bin Rashid al-Maktoum used the oil revenues to make Dubai a worthwhile offshore hub for both South Asia and the troubled West Asia. Dubai, unlike Saudi Arabia, wasn’t an enclave of medievalism. Leaving aside politics which was always a big No-No, Dubai was socially liberal — almost permissive — and financially unregulated. The Sheikh’s thrust towards making Dubai a hub for the electronic media, education, tourism and finance was worthwhile and remains as valid today as when it was initially conceived.

What isn’t valid is the assumption that these goals would be enhanced by pouring money into projects such as the Snowdome and purchasing casinos in the US. “Don’t sell things you will buy” is a principle that many prudent shopkeepers follow. Dubai erred in pouring money into projects that tickled the skewed aesthetics of an aristocracy that lived off rentier income. Dubai had a lot of indigenous money but precious little indigenous entrepreneurship. It mortgaged decision-making to carpetbaggers who have made quick bucks and won’t be around to commiserate with the Sheikh.

For India, the misfortunes of Dubai present unconventional opportunities. Going by present indications, Indian companies are not going to be hugely affected by Dubai’s inability to honour its debts. However, the slowdown and the end of the construction boom are likely to lessen the quantum of remittances from Indian workers located there. There may be at best adverse short-term consequences for States such as Kerala which export labour to the Emirates. Does this mean that India should breathe a sigh of relief and look down disdainfully on those who lacked the wisdom to manage prosperity with a cool head?

Such a response would be myopic. For all its profligacy, Dubai remains a place with world-class infrastructure and world-class facilities at knock-down prices. Should these be left to others to mop up and use as a base for a more enlightened approach in future? India has an old, historical relationship with the Gulf and we cannot forget that till 1947 the region was more or less regarded as an extension of India, both politically and economically. We may have frittered away those advantages by narrowing our vision but there is no earthly reason why that short-sightedness should persist in this century. India should use its political and economic clout to, first, be supportive of Dubai and, subsequently, to try and fill the void left by the West’s loss of confidence in the Emirates.

How this should be done and what should be the nature of Government assistance to businesses willing to repose their confidence in Dubai is something that has to be worked out, fast. The Dubai crisis presents a golden chance for India to re-establish its role in the region. We shouldn’t let the opportunity slip away by refusing to think big.

[Hari Seldon]

Watching the following 2hr web-documentary currently. IMO, I'll take jesse's comment about it at face value:

A bit overstated and at times over the top, at least to my tastes.

However, it is important to hear the issues raised here, and to be aware of them. The documentary settles down after the first ten minutes and presents several thought-provoking ideas and observations.

Obviously one may likely not agree with them all, but again, listening to different perspectives helps us to calibrate where we are in troubled and confusing times.

[youtube]<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/F8LPNRI_6T8&co ... ram><param name="allowFullScreen" value="true"></param><param name="allowScriptAccess" value="always"></param><embed src="http://www.youtube.com/v/F8LPNRI_6T8&co ... edded&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" allowScriptAccess="always" width="425" height="344"></embed></object>[/youtube]

[Neshant]

The Dubai crisis presents a golden chance for India to re-establish its role in the region. We shouldn’t let the opportunity slip away by refusing to think big.

Hopefully the big he's talking about does not refer to money. In addition to harboring terrorists, they have also been handing out money to pakistan as aid. So there's lots of pork to cut from their govt budget.

The truth is they got taken for a ride by the foreign construction firms telling them to build more sky scrapers, more roads, more projects... etc just pissing away their wealth. An economy cannot be created just by putting up tall buildings and calling yourself the hub of the region. Its got to be producing something or pulling a jolly good scam via printed currency like the US.

[Hari Seldon]

To anyone missing the dissing by the ekhanomissed rag on Yindia's ekhanomic actions, chances, potential, polity, society and now, even geography ..... despair no more! Its in full free flow again - tfta advice phree of cost to the sdre natives waiting to be civilized but who just didn't know it yet.....

[Why] India's membership of Asia remains primarily cartographic

Brits still thinking they alone get to decide cartography - drawing lines on maps like they once did in what is now the commonwealth?

AN EASY but instructive way to bait an Indian economist is to credit the Chinese economy with coming to Asia’s rescue and arguably the world’s. It is, claims the economist, an example of anti-India bias. Why does India not get equal credit for robust growth? In all the frothy coverage about Asia’s amazing rebound, including in The Economist, where is India?“You’d think”, the economist complains, “that India isn’t even part of Asia.”
...
There is something to the economist’s complaints. For all the credit that it gets for its recovery, China’s near double-digit show this year is mainly a command-economy extravaganza involving massive state-directed spending. When that show is over, the skew in China’s economy—an undervalued currency, a mercantilist bias in favour of manufactured exports and an obsession with accumulating foreign reserves—remains less the solution to global imbalances than one of the fundamental causes.

OK, on second reading, not too unbalanced an article for the ekhanomist rag.

[Don't] Read it all.

[bart]

On the other hand Indian industry can use the returning working population from Dubai and replace all the PRC work visas to start with.

Very good point, currently the Indian construction industry has a big-time shortage of skilled workers, mainly because most of them go overseas. If the govt gives a boost to infrastructure development, it could be a win-win.

[AnimeshP]

Swapan dasgupta's take on the Dubai situation. Posting in full:

India must think big, stand by Dubai

Swapan Dasgupta

I have the highest regard for Swapan Dasgupta .... but I would not be so quick to help Dubai .... Dubai is a place where a lot of our netas (from all parties) have stashed their kaala dhan ... So I hope the Indian tax-payer does not end up bailing out these guys ....

[Neshant]

A case of the pot calling the kettle black. In the US/UK, how is printing money out of thin air, devaluing the currency, doing currency swaps to create a smoke screen and selling crap securities with fake rating from moody's and S&P ...making the so called "rules" clear.

All the financial centers of the world are running ponzi schemes - that's the only rule.


------------------------
Dubai as finance hub faces first test

http://ca.news.yahoo.com/s/afp/091129/b ... nds_emerge

NICOSIA (AFP) - Dubai's ambitions to become an international financial centre are in doubt after the shock announcement that its main state-owned firm wants to suspend debt payments, analysts said on Sunday.

"What happens next and, more pertinently, how critical decisions are disclosed will cement its continuing credibility and its place as a financial centre," said Cubillas Ding, senior analyst at Celent research and consultancy group.

"Dubai's untested financial legal system is now facing its first real test in relation to how it deals with the international community. No one wants to play in a playground where the rules are unclear," he said.

[Hari Seldon]

^^^The advantages of leaving rules unclear is that they bend to whichever way one wants, I guess. Lez hope soon the emerging turd world will have enough wherewithal to make its own ruules and payback in kind.

Right now desi pharma products are barred from the EU (on a variety of non-tariff excuses whilst apeparing carefully neutral and non-discriminatory on the outside) and from Japan (via an openly discriminatory non-tariff regime). The less said about how free our banks are to open and operate in the emerged mkts, the better. Cheena is sticking it to these pretenders and free market tom-tommers very good and that much I appluad the cheenese.

[Hari Seldon]

Across U.S., Food Stamp Use Soars and Stigma Fades

MARTINSVILLE, Ohio — With food stamp use at record highs and climbing every month, a program once scorned as a failed welfare scheme now helps feed one in eight Americans and one in four children.
...
From the ailing resorts of the Florida Keys to Alaskan villages along the Bering Sea, the program is now expanding at a pace of about 20,000 people a day.

Ok. Digest that first. So roughly 7 mill join the BPL ranks in the last year. And as the fed stimulus loses steam going fwd, the pernicious effects on demand, consumption, employment and other nice stuff that drives the US ekhanomy fwd become harder to pretend jolly about (now you know the CNBS anchors earn their bread by doing a difficult job indeed).

It has grown so rapidly in places so diverse that it is becoming nearly as ordinary as the groceries it buys. More than 36 million people use inconspicuous plastic cards for staples like milk, bread and cheese, swiping them at counters in blighted cities and in suburbs pocked with foreclosure signs.

Virtually all have incomes near or below the federal poverty line, but their eclectic ranks testify to the range of people struggling with basic needs. They include single mothers and married couples, the newly jobless and the chronically poor, longtime recipients of welfare checks and workers whose reduced hours or slender wages leave pantries bare.

While the numbers have soared during the recession, the path was cleared in better times when the Bush administration led a campaign to erase the program’s stigma, calling food stamps “nutritional aid” instead of welfare, and made it easier to apply. That bipartisan effort capped an extraordinary reversal from the 1990s, when some conservatives tried to abolish the program, Congress enacted large cuts and bureaucratic hurdles chased many needy people away.

Our own NREGA too was lunched in better times and despite the admin and corruption issues involved, am told is making a difference and a social safety net of sorts in at least half the districts covered. Good to see god things come out of actions take in good times.

OK, how about some more detail on the dispersion and depth of the food stamps program?

There are 239 counties in the United States where at least a quarter of the population receives food stamps, according to an analysis of local data collected by The New York Times.

The counties are as big as the Bronx and Philadelphia and as small as Owsley County in Kentucky, a patch of Appalachian distress where half of the 4,600 residents receive food stamps.

In more than 750 counties, the program helps feed one in three blacks. In more than 800 counties, it helps feed one in three children. In the Mississippi River cities of St. Louis, Memphis and New Orleans, half of the children or more receive food stamps. Even in Peoria, Ill. — Everytown, U.S.A. — nearly 40 percent of children receive aid.

Although the program is growing at a record rate, the federal official who oversees it would like it to grow even faster.

“I think the response of the program has been tremendous,” said Kevin Concannon, an under secretary of agriculture, “but we’re mindful that there are another 15, 16 million who could benefit.”

Nationwide, food stamps reach about two-thirds of those eligible, with rates ranging from an estimated 50 percent in California to 98 percent in Missouri. Mr. Concannon urged lagging states to do more to enroll the needy, citing a recent government report that found a sharp rise in Americans with inconsistent access to adequate food.

One simply has to admire the fact that the khans systematically and seriously tackle domestic social issues. No hangups in admitting things are bad when they are --> great inputs to subsequent policy responses also.

“This is the most urgent time for our feeding programs in our lifetime, with the exception of the Depression,” he said. “It’s time for us to face up to the fact that in this country of plenty, there are hungry people.”

[Hari Seldon]

Just when moi was veering round to thinking that the UK-stani NHS model was a better bet than the current dysfunctional one for the khanate, turns out the Uk-stanis are grumbling about the NHS and want privatization in.... Maybe the canadian model is best, eh?

Want to fix the NHS? Go private

One of Labour's great triumphs with the National Health Service is that people now go into hospital to die rather than to be cured. It seems to render the whole debate about assisted suicide utterly pointless. Who needs a Dignitas clinic when you can check into a hospital in Basildon and be relatively certain to be taken out in a box?

It is a further achievement of our monitoring, regulating culture that even the monitors and the regulators don't seem to have a clue how bad things are – or they certainly didn't in Basildon. This exposes one of the great pretences of the NHS: that it is there first and foremost for the benefit of patients. It isn't. It exists these days mostly for the benefit of various trade unionists who are fully paid-up members of the Brown clientele, and who earn good money as petty bureaucrats trying to "manage" things that, if they need to be managed at all, could be far better done by fewer people in much more efficient systems.

Set aside the masaledaar exaggerations and rhetoric and the point comes through anyway - that the NHS has become, like all gubmint projects - a den of sloth, nepotism, corruption, inefficiency and incompetence on a grand scale.

[shravan]

Interesting E-mail between National Real Estate Market Financiers/Investors (Gloomy)

[sanjaykumar]

One simply has to admire the fact that the khans systematically and seriously tackle domestic social issues. No hangups in admitting things are bad when they are --> great inputs to subsequent policy responses also.



Most of these people are non-people-blacks with natives and hispanics.

[KarthikSan]

One simply has to admire the fact that the khans systematically and seriously tackle domestic social issues. No hangups in admitting things are bad when they are --> great inputs to subsequent policy responses also.



Most of these people are non-people-blacks with natives and hispanics.

I believe you haven't come across white trash in the trailer parks! Food stamps are used by all skin colors equally. No TFTA Aryan supremacy there!

[pgbhat]

I believe you haven't come across white trash in the trailer parks! Food stamps are used by all skin colors equally. No TFTA Aryan supremacy there!

Well it is common for college students to get food stamps too. One khan undergrad wimmens, I know, saves all her food stamps and buys food for the poor.

[Neshant]

From what i have read, only france is keen on this. Germany is not for their fear their exports will be blocked as well.

France looks desparate to force India & the developing world into some kind of binding agreement to halt their upward march. This only implies that they see themselves sliding downhill due to their inability to compete. All their social programs and standard of liviing are about to evaporate due to government overspending and this new gig of protectionism is needed to create jobs.

----
France wants a 'carbon tax' on EU imports

NEW DELHI/PARIS: In a dampener for India, the French government is set to insist that the European Union impose a carbon tax on imports from countries such as India which are supposed to have ``low environmental standards''.

EU is India's single-largest trading partner, accounting for over 20% of its exports, and New Delhi has already made it clear that any such measure would be another form of protectionism, something India has been actively campaigning against ahead of climate talks in Copenhagen.

A highly-placed official of the French government told TOI in Paris that there was a consensus emerging in EU for such a tax even though he hastened to add that the move was not directed at India. ``India is doing its bit and it is represented by tough negotiators who have sounded convincing in explaining India's stand,'' the official said.

However, the fact is that France and EU want carbon tax as a punitive and fallback option for countries which show no concern for the climate change issue, said the official who is also associated with the functioning of the French mission in Brussels.

While the official sought to allay India's fears over such a move, the fact is that French President Nicolas Sarkozy has been insisting domestically that countries have to respect the "rules of carbon emission reduction to be able to export to France", the driving force behind EU. He has found powerful supporters in Germany and Italy.

http://timesofindia.indiatimes.com/indi ... 282146.cms

[sanjaykumar]

Perhaps India should have a surtax on people who eat too much beef.

[Neshant]

And those who are not vegetarians.

Methane pollution from cows, the consumption of vast amount of agricultural resources by cattle at the expense of the poor in this world..etc.

[Neshant]

if you paid your morgarge on time and you sacrificed your lifestyle to do so.... guess what, you are an idiot.

Professor advises underwater homeowners to walk away from mortgages

http://www.latimes.com/classified/reale ... 1270.story

[Hari Seldon]

Seems even the cheenese can run into ekhanomic trouble. I know, am shocked, shocked I tell you at the mere existence of such a sacrilegious possibility.

China's record debt has economists worried

Now the economystics have got it wrong so often and so much in the past few yrs that I'd not be overly worried about their pet worries. Having said that, the article still merits a read.

A lot of global CEOs, of course, are on the thank-God-for-China bandwagon, and it might seem a little churlish to question one of the world's few good-news economic stories. Yet a growing number of observers believe that China is creating its own bubble economy. And they have a case to make.

...

In the first nine months of the year, Beijing has shoveled $1.27 trillion in new loans into the economy, up 136% from the same period last year. That money has gone to three main areas: infrastructure, manufacturing, and real estate.

Now now, admittedly I too have dared think perhaps, maybe, possibly cheena is floating atop an asset bubble fuelled by directed loans to favored sectors and firms from a captive banking sector that gets more deposits from an alternatives-starved cheeni population than it knows what to do with. The bloated assets are across all assyet classes - stocks, realty, manuf capacity, bridges to nowhere, commodity stockpiles....you name it - they got it.

But Sri Prashant's persuasive hectoring brought out my inner jernail and I merrily downhill skiied away from voicing these notions too strongly. Now I think, WTH, might as well...

According to a recent analysis by Monaco-based hedge fund Pivot Capital Management, China's total lending reached 140% of GDP at midyear. That kind of lending makes China an "outlier" compared with other BRIC (Brazil, Russia, India, and China) countries -- and is already well beyond the levels that "have led to sharp and brief credit crises in the past," the Pivot Capital report contends.

{Outlier is an understatement, seems like. Bubbles inflate until they burst. And such reckless lending is asking for a pinprick on the bloat. Will happen and sooner rather than later IMHO. I'd wager a year max before the bust overrides all pretensions at sustainable prosperity.}

Moreover, an increasing number of Chinese loans are being funneled into projects unlikely to generate an attractive economic return. From 2000 to 2008 it took just $1.50 in new credit to generate $1 of GDP growth. Now that ratio is 7 to 1. (In the U.S., just before the financial crisis hit, the ratio was only 4 to 1.)

That last bolded part ought to be a clincher but ain't. LAw ofdiminishing returns at work, some may say but IMO iots more than that at work here - that kind of obscene ratio represents wanton resource misallocation that borders on criminal incompetence if not deliberate fraud.

IMHO, Cheena's mercantilism isn't about raising its own living standards as much as it is about grabbing mkt power to shoot down that of others. IMO, its imperative, WTO or not, for other nations to do the right thing and call cheena's bluff out before cheena's rampant deflation-export forces unemployment led social unrest into a nightmare scenario unfolding.

Over the past decade China has spent massively on roads, bridges, and other infrastructure. Some economists believe China's infrastructure, already superior to that of many other developing economies, has now passed the point where more investment can contribute much to growth. China, in other words -- despite the rosy, headline GDP numbers -- might be stuck.

Those bullish on China say the government will keep spending no matter what to keep the economy humming, given its relatively healthy domestic balance sheet compared with that of the U.S. Skeptics reply that if the debt taken on by provincial governments is taken into account, China's fiscal health begins to look questionable.

Well, we are all in trouble alrite. Just that some are more in trouble than others. Heck, I too could max my credit cards out and live it up giving neighbors the impression that I'm o-so-wealthy indeed. Doesn't mean that my apparent wealth is real or that my (communist) party will last forever. Heck, even west bengal couldn't keep up a charade forever.

[Hari Seldon]

Aha.

Regulators list systemic risk institutions: report

LONDON (Reuters) - Thirty global financial institutions have been selected for cross-border supervision exercises by regulators, the Financial Times reported on Monday.

Compiled under the guidance of the Financial Stability Board (FSB), an international body of regulators and central bankers, the list is part of an effort to pre-empt the spread of systemic risks in the event of a future financial crisis.

Those featuring in the list will also be asked to write so-called "living wills" that outline plans to wind up banks in the aftermath of a crisis.

The FSB was established in the summer of 2009 to address the dangers posed by systemically-important, cross-border financial institutions through better supervision and co-ordination.

The list in full, as cited by the FT:

North American banks:

Goldman Sachs (GS.N), JP Morgan Chase (JPM.N), Morgan Stanley (MS.N), Bank of America-Merrill Lynch (BAC.N), Royal Bank of Canada (RY.TO)

UK banks:

HSBC (HSBA.L), Barclays (BARC.L), Royal Bank of Scotland (RBS.L), Standard Chartered (STAN.L)

European banks:

UBS (UBSN.VX), Credit Suisse (CSGN.VX), Societe General (SOGN.PA), BNP Paribas (BNPP.PA), Santander (SAN.MC), BBVA (BBVA.MC), Unicredit (CRDI.MI), Banca Intesa, Deutsche Bank (DBKGn.DE), ING (ING.AS)

Japanese banks:

Mizuho (8411.T), Sumitomo Mitsui (8316.T), Nomura (8604.T), Mitsubishi UFJ (8306.T)

Insurers:

AXA AXA.PA, Aegon (AEGN.AS), Allianz (ALVG.DE), Aviva AV.l, Zurich (ZURN.VX) and Swiss Re (RUKN.VX)

Karl Denninger calls this well. This is the "official" list of banks and FIs that are "too big to fail". And notice the one HUGE omission from the list? Yup Citibank onlee. So what, have the powers that be decided that citi is dispensable and disposable? Yup, thats what it looks like, alrite.

[Neshant]

perhaps all the bad loans from the other banks are being offloaded into citibank and then they blow it up.

[abhischekcc]

More likely that they don;t want the world to know about the dirt in Shitybank's closet.

[Hari Seldon]

U.A.E. Removes Sunday London Times From Newsstands

DUBAI -- The Sunday London Times newspaper was removed by authorities from shelves in the United Arab Emirates on Sunday amid intensive reporting of Dubai's debt problems, an executive at the paper said.

The National Media Council ordered the paper blocked by distributors without providing a reason, an executive at the paper in Dubai told Zawya Dow Jones.

The Sunday Times edition available in the U.A.E. on Nov. 29 featured a double-page spread graphic illustrating Dubai's ruler Sheik Mohammed bin Rashid Al Maktoum sinking in a sea of debt. The Times wasn't given a reason for the block, or a timeframe when it will be lifted, the executive said.

As if blocking newspaper distribution would prevent the news from reaching the moneyed ears or what?

Merely confirms that TSP has indeed inherited its H&D anxieties from its putative Arabic ancestors, seems like.

[abhischekcc]

Dubai is not doing itself any favors by such actions. This, and announcing the default just before the holidays, do not enhance any credibility to the government.

Markets hate uncertainty. By creating uncertainty, all that the government is ensuring is that the markets will not forgive it for a long time to come.

Sad. Because Dubai does have great potential and energy as a trading hub. It does not need the bad image its authorities seem unmindful of creating.

[Hari Seldon]

Ilargi and VK at the automatic earth serve up an interesting hypothesis - that deflation serves the eliotes' interests better than the hyperinflationary scenario would.

Here is the leading context:

Even if you "believe" in a recovery, don’t you think the people who presently hold the power would prepare for the unfortunate eventuality that maybe that recovery will not succeed? What do you think they would do to keep their hands on the wheel regardless? Bob Chapman thinks he knows what the next steps will be, and claims to have insider information to support his assertions. Cut commercial lending, abolish both the FDIC and the US dollar in a years' time, and leave no government guarantees in place other than bonds. Chapman is a bit strange perhaps, but he's also a lifelong broker and trader and not a complete fool. Chapman advises to get out of life insurance policies and annuities, since they are invested 80% in stocks and 20% in bonds. And I agree there. Your fund managers expect to turn profits in the stock markets? Supported by what? Yes, there's the herding instinct that's kept them in until now. But that same instinct can drive them out real fast too. As in any day now.

And here's a neatly articulated step by step disaster recount:

1. Easy credit money leads to speculative boom.

2. Excess overcapacity is built, asset prices soar, general feeling of goodwill and trust. People more willing to go into debt as future looks all rosy.

3. Cash flow problems occur, as credit growth far outstrips wage growth.

4. Minsky moment reached and the greatest fool is left holding the bag, asset prices plunge due to declining liquidity as borrowers refuse to borrow due to exorbitant costs of servicing the interest.

5. Banks reduce lending sharply as asset price decline leads to a balance sheet recession and lots and lots of losses. Further liquidity drained from the system.

6. Now Government steps in to fill in the gap caused by massive deleveraging. It's sole goal is to reflate, reflate, reflate.

7. If the gap between debt to income is sufficiently small, the Government can kick the can down the road but once it grows larger, they can no longer do so.

8. Wage price deflation takes hold as the economy simply can't handle the debt. Wages fall, asset prices fall, debt burden soars as money goes down the proverbial black hole, banks collapse as does government revenue and the cost of servicing debt soars. Unemployment shoots up thus removing any wage pressures.

9. The Government has two options at this point, one is to print its way out, thus destroying its currency and isolating itself from the broader international community or it can allow massive deflation to occur through which it is not isolated and the value of its currency rises. In both scenarios the middle class is F***ED but in the deflation scenario the elites are saved.

10. The elites would prefer an outcome whereby there is massive deflation; as Ilargi once mentioned, if you lose 50% of your net worth but asset prices fall 80%, you're up 30%! Buying back the country for cents on the dollar is a delicious outcome and lets the game be carried on for a little while longer.



Hyperinflation carries more risk then deflation for the elite. Both pose risks to social stability and the possible collapse of society but in a deflationary collapse the elite would have more of an advantage.

Of course, TIFWIW onlee.

Added later;
This is the Bob Chapman interview mentioned at the beginning of the post.
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[shravan]

Investors face huge losses as Dubai abandons debt company

The Government of Dubai said today that it will not stand behind its wholly-owned subsidiary Dubai World, prompting fears that the company’s creditors could lose billions of dollars.

Today's comment, from Abdulrahman al-Saleh, the director general of Dubai’s Department of Finance, effectively confirms that country does not have enough money to repay Dubai World’s $60 billion of liabilities. ...

[Hari Seldon]

In case you're wondering abt the balance sheet impact of all that bailout largesse.... how 'bout some hard no.s, eh??

Global sovereign debt to hit $49.5 trillion

Global sovereign debt is expected to hit $49.5 trillion by year end, a 45 percent climb since 2007 as the credit crisis takes a toll, Moody's Investors Service said on Tuesday. The expected $15.3 trillion increase in worldwide government debt is more than 100 times the inflation-adjusted cost of the Marshall plan, Moody's said in a report.

The Marshall Plan, a U.S. effort to rebuild Western Europe after World War II, cost an estimated $13 billion in unadjusted dollars. Sovereign debt ballooned during the global credit crisis as countries funded massive bailouts, shifting risk from corporate to government balance sheets. "Not surprisingly, the G7 countries account for 78 percent of the increase, as their fiscal accounts have been hit hardest by the crisis," Jaime Reusche, associate analyst in Moody's sovereign risk group, said in the report. The G7 or group of seven major industrial nations are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

Moody's said it expects global government debt to total 80 percent gross domestic product in 2010, up from a 10-year low of 63 percent in 2008. Debt will also be less affordable, as measured in terms of interest payments relative to revenue, Reusche said. For advanced industrial countries, interest payments are expected to total 6.1 percent of revenues in 2010, up from 4.3 percent in 2007. "As growth turns negative in 2009 for most countries, the relative debt load becomes harder to bear," Moody's said. In the United States, government debt is expected to rise to $14.48 trillion in 2010 from $12.29 trillion in 2009 and $10.27 trillion in 2008, the Moody's report said.

[Hari Seldon]

OMG, when it rains it pours, eh?

Now sri sri Niall 'Knowall' Ferguson is spinning yarns of what the rise and fall of empires portend for the current fiscal crisis afflicting the khanate.

An Empire at Risk

But if the United States succumbs to a fiscal crisis, as an increasing number of economic experts fear it may, then the entire balance of global economic power could shift. Military experts talk as if the president's decision about whether to send an additional 40,000 troops to Afghanistan is a make-or-break moment. In reality, his indecision about the deficit could matter much more for the country's long-term national security. Call the United States what you like—superpower, hegemon, or empire—but its ability to manage its finances is closely tied to its ability to remain the predominant global military power. Here's why.

Read it all, keep salt and hankies handy, put popcorn in the microwave n beer in the freezer... ensoi.

Aaah, what the heck, might as well choice-excerpt anyway...heh heh heh

OK, first off, here's unkil's grand scheme of reducing deficit and getting back on the straight and narrow road to sustainable prosperity.

And that $1.4 trillion is just for starters. According to the CBO's most recent projections, the federal deficit will decline from 11.2 percent of GDP this year to 9.6 percent in 2010, 6.1 percent in 2011, and 3.7 percent in 2012. After that it will stay above 3 percent for the foreseeable future. Meanwhile, in dollar terms, the total debt held by the public (excluding government agencies, but including foreigners) rises from $5.8 trillion in 2008 to $14.3 trillion in 2019—from 41 percent of GDP to 68 percent.

Well, dass not so bad, you say? Hey, so does Sri Paul Krugman!

Seems pretty reasonable to me. The surprising thing is that this was none other than Paul Krugman, the high priest of Keynesianism, writing back in March 2003. A year and a half later he was comparing the U.S. deficit with Argentina's (at a time when it was 4.5 percent of GDP). Has the economic situation really changed so drastically that now the same Krugman believes it was "deficits that saved us," and wants to see an even larger deficit next year? Perhaps. But it might just be that the party in power has changed.

OK, but whats with this empire-vamp[ire, you ask impatiently....hang on buddy!

History strongly supports the proposition that major financial crises are followed by major fiscal crises. "On average," write Carmen Reinhart and Kenneth Rogoff in their new book, This Time Is Different, "government debt rises by 86 percent during the three years following a banking crisis." In the wake of these debt explosions, one of two things can happen: either a default, usually when the debt is in a foreign currency, or a bout of high inflation that catches the creditors out. The history of all the great European empires is replete with such episodes. Indeed, serial default and high inflation have tended to be the surest symptoms of imperial decline.

Well, but unkil is not == eurostani. Unkil is khan, not Han!

As the U.S. is unlikely to default on its debt, since it's all in dollars, the key question, therefore, is whether we are going to see the Fed "printing money"—buying newly minted Treasuries in exchange for even more newly minted greenbacks—followed by the familiar story of rising prices and declining real-debt burdens. It's a scenario many investors around the world fear. That is why they are selling dollars. That is why they are buying gold.

Now here's the POV I agree with - that deflation threatens the current social order much more than hyperinflation could.

Why should we fear rising real interest rates ahead of inflation? The answer is that for a heavily indebted government and an even more heavily indebted public, they mean an increasingly heavy debt-service burden. The relatively short duration (maturity) of most of these debts means that a large share has to be rolled over each year. That means any rise in rates would feed through the system scarily fast.

Already, the federal government's interest payments are forecast by the CBO to rise from 8 percent of revenues in 2009 to 17 percent by 2019, even if rates stay low and growth resumes. If rates rise even slightly and the economy flatlines, we'll get to 20 percent much sooner. And history suggests that once you are spending as much as a fifth of your revenues on debt service, you have a problem. It's all too easy to find yourself in a vicious circle of diminishing credibility. The investors don't believe you can afford your debts, so they charge higher interest, which makes your position even worse.

This matters more for a superpower than for a small Atlantic island for one very simple reason. As interest payments eat into the budget, something has to give—and that something is nearly always defense expenditure. According to the CBO, a significant decline in the relative share of national security in the federal budget is already baked into the cake. On the Pentagon's present plan, defense spending is set to fall from above 4 percent now to 3.2 percent of GDP in 2015 and to 2.6 percent of GDP by 2028.

OK. So what, you ask?

This is how empires decline. It begins with a debt explosion. It ends with an inexorable reduction in the resources available for the Army, Navy, and Air Force. Which is why voters are right to worry about America's debt crisis. According to a recent Rasmussen report, 42 percent of Americans now say that cutting the deficit in half by the end of the president's first term should be the administration's most important task—significantly more than the 24 percent who see health-care reform as the No. 1 priority. But cutting the deficit in half is simply not enough. If the United States doesn't come up soon with a credible plan to restore the federal budget to balance over the next five to 10 years, the danger is very real that a debt crisis could lead to a major weakening of American power.

The precedents are certainly there. Habsburg Spain defaulted on all or part of its debt 14 times between 1557 and 1696 and also succumbed to inflation due to a surfeit of New World silver. Prerevolutionary France was spending 62 percent of royal revenue on debt service by 1788. The Ottoman Empire went the same way: interest payments and amortization rose from 15 percent of the budget in 1860 to 50 percent in 1875. And don't forget the last great English-speaking empire. By the interwar years, interest payments were consuming 44 percent of the British budget, making it intensely difficult to rearm in the face of a new German threat.

Call it the fatal arithmetic of imperial decline. Without radical fiscal reform, it could apply to America next.

Goes w/0 saying...read it all!

[Philip]

The end of the "World"!
Now watch the fat cats,rats and vermin of the west,fleeing the sinking SS Dubai.Forget about 2012,Dubai 2009 is just as fearful for many!

http://business.timesonline.co.uk/tol/b ... 937612.ece

Investors face huge losses as Dubai abandons debt company
David Robertson

The Government of Dubai said today that it will not stand behind its wholly-owned subsidiary Dubai World, prompting fears that the company’s creditors could lose billions of dollars.

Today's comment, from Abdulrahman al-Saleh, the director general of Dubai’s Department of Finance, effectively confirms that country does not have enough money to repay Dubai World’s $60 billion of liabilities. Deloitte, the accountancy firm, has been called in to restructure the giant business.

Last week, the state-owned conglomerate sought a six-month standstill on repaying its debts.

Dubai World's borrowings include a $3.5 billion Islamic bond that was due to be repaid by Nakheel, the property developer behind the Palm Jumeriah islands, in two weeks.

Related Links
Enough debt: time for regime change
Dubai silence on debt reignites market fears
UAE central bank takes hard line on Dubai

Many creditors had assumed that the structure of Islamic bonds implied there was state backing for this type of financing and Dubai’s failure to support the Nakheel debt could have damaging implications for the wider Islamic market.

UK banks are among 70 institutions to have loaned Dubai World money in recent years as the company grew rapidly and bought foreign assets such as the Turnberry golf course in Scotland and P&O ports. Dubai's Department of Finance said creditors will be affected in “the short term” by the Dubai World's restructuring.

Royal Bank of Scotland (RBS) has arranged $2.3 billion of loans for Dubai World since 2007, although it is not known how much the bank could lose if the company defaults.

The Financial Services Authority, the City watchdog, is understood to be discussing possible exposure to Dubai World losses with the UK banks.

There had been hopes the Dubai government would issue a statement on Dubai World earlier this morning.

Markets across Europe and Asia had rallied this morning after this weekend’s intervention by the Central Bank of the United Arab Emirates, which will provide an emergency liquidity facility for local lenders.

Abu Dhabi, Dubai's rich sister nation, also said it would provide support on a “case-by-case” basis.

However, hours of silence from the Dubai government knocked investors' confidence and the FTSE fell 47.72 points to 5,198.96 in early afternoon trading. US shares opened lower, down 21.09 points, 10, 285.49.

Dubai’s main stock exchange slid more than 7 per cent and Abu Dhabi markets fell more than 8 per cent. Today is the first time UAE investors have had the chance to react to last week’s announcement following the four-day religious holiday for Eid al-Adha.

It has also emerged today that Nakheel has requested that all three of its sukuks (Islamic bonds) traded on the Dubai stock exchange be suspended. This includes the $4 billion sukuk due to mature on December 14, which triggered the current crisis.

The group’s statement said the three sukuks would remain suspended “until it is in a position to fully inform the market”.

Jebel Ali Free Zone, a division of Dubai World, made an interest coupon payment on its 7.5 billion Dirham (£1.24 billion) sukuk, which matures in 2012. The payment, believed to be around 130 million Dirhams, was confirmed by banking sources in Dubai.

[sanjaykumar]

That's too bad. Now we will have to deal with the idle marginally employables in the West. How can we provide them with sex, drugs and free money? How will we provide them with fawning arabs?

[RamaY]

Just a crazy thought!

What if India offers say $10B AID and $30B loan to Dubai so that

- 25% of Dubai land+real-estate becomes Indian territory (towards the $10B AID)
- GOI will own 30% stake in Dubai Ports and Dubai/Emirates airlines (~$10B Loan amount)
- Annual payment of $5B for 5 years towards the remaining loan ($20B loan + interest)

[ramana]

Just a crazy thought!

What if India offers say $10B AID and $30B loan to Dubai so that

- 25% of Dubai land+real-estate becomes Indian territory (towards the $10B AID)
- GOI will own 30% stake in Dubai Ports and Dubai/Emirates airlines (~$10B Loan amount)
- Annual payment of $5B for 5 years towards the remaining loan ($20B loan + interest)

PVNR would have done that.