Perspectives on the global economic meltdown

Neshant · Post by **Neshant** » 02 Dec 2009 07:58

Can Singapore, Hong Kong or Macau get Dubaied?

Generally small countries are prone to sudden collapse syndrome. Their gurantees of investor protection are worthless. The latter 2 in the list however are backed by China so they are not small countries per say.

Hari Seldon · Post by **Hari Seldon** » 02 Dec 2009 08:01

Hari, Can Singapore, Hong Kong or Macau get Dubaied?

Possible but unlikely. Asset prices and level of debt - whether public or pvt - in these heavily trade-dependent zones is nowhere near bubbly-bubb insane levels, IMHO. What can cause a run is a fin crisis originating in the mainland, where asset bubbles have sprung, cascading to these zones. Alternately, a precipitous, deflationary drop in global trade that sinks ekhanomic activity there and makes current asset price levels look bubbly.

But odds are S'pore should do fine. JMTPs etc.

Hari

Hari Seldon · Post by **Hari Seldon** » 02 Dec 2009 08:18

No secret that Sri Ambrose Evans Prichard is moi favorite alarmist columnist. And that UK-stan commands a lot of luv, respect, loyalty and goodwill in moi boor heart. Here, the two (AEP column and UK-stani sovereign credibility) come together in what will hopefully be an entertaining climax. Let not the world forget how UK-stan treated its TFTA neighbor Iceland recently.

Morgan Stanley Fears UK Default in 2010

Britain risks becoming the first country in the G10 bloc of major economies to risk capital flight and a full-blown debt crisis over coming months, according to a client note by Morgan Stanley.

Hmmm, does it explain why UK-stanis were pouring fire and brimstone against CRAs such as hallowed Moody's in Amit's post above? Nothing like making virtue outta necessity.

The US investment bank said there is a danger Britain’s toxic mix of problems will come to a head as soon as next year, triggered by fears that Westminster may prove unable to restore fiscal credibility.

“Growing fears over a hung parliament would likely weigh on both the currency and gilt yields as it would represent something of a leap into the unknown, and would increase the probability that some of the rating agencies remove the UK's AAA status,” said the report, written by the bank’s European investment team of Ronan Carr, Teun Draaisma, and Graham Secker.

“In an extreme situation a fiscal crisis could lead to some domestic capital flight, severe pound weakness and a sell-off in UK government bonds. The Bank of England may feel forced to hike rates to shore up confidence in monetary policy and stabilize the currency, threatening the fragile economic recovery,” they said.

Morgan Stanley said that such a chain of events could drive up yields on 10-year UK gilts by 150 basis points. This would raise borrowing costs to well over 5pc - the sort of level now confronting Greece, and far higher than costs for Italy, Mexico, or Brazil.

High-grade debt from companies such as BP, GSK, or Tesco might command a lower risk premium than UK sovereign debt, once an unthinkable state of affairs.

A spike in bond yields would greatly complicate the task of funding Britain’s budget deficit, expected to be the worst of the OECD group next year at 13.3pc of GDP.

Investors have been fretting privately for some time that the Bank might have to raise rates before it is ready -- risking a double-dip recession, and an incipient compound-debt spiral – but this the first time a major global investment house has issued such a stark warning.

No G10 country has seen its ability to provide emergency stimulus seriously constrained by outside forces since the credit crisis began. It is unclear how markets would respond if they began to question the efficacy of state power.

Morgan Stanley said sterling may fall a further 10pc in trade-weighted terms. This would complete the steepest slide in the pound since the industrial revolution, exceeding the 30pc drop from peak to trough after Britain was driven off the Gold Standard in cataclysmic circumstances in 1931.

More D&G. usual fare from Sri AEP. TIFWIW. Send for the salt shakers, the hankeys, the beer and the popcorn. And yup, do read it all.

svinayak · Post by **svinayak** » 02 Dec 2009 11:20

Today I got the offer to buy gold bars. This is now the in thing in investment.

Delivered anywhere. 1 Kg bar is approx $23000/-

svinayak · Post by **svinayak** » 02 Dec 2009 11:26

Hari Seldon wrote: Alternately, a precipitous, deflationary drop in global trade that sinks ekhanomic activity there and makes current asset price levels look bubbly.

The global economy which these centers are depndent is slowing down. If 10-20% drop in trade will create bubble in these markets.

also these centers was created after 1950s

Gary Burn examines how in 1950s London, City bankers invented a new form of money and escaped offshore, beyond the jurisdiction of monetary authority. This most momentous financial innovation since the bank note, paved the way for globalization. It was a first shot in the neo-liberal counter-revolution against the Keynesian welfare state. This is the story of the Eurodollar and the re-emergence of global capital. It tells how the City discarded sterling and reclaimed its historic role as the world's foremost financial centre.

This book explores how in 1950s London, City bankers set up an unregulated international financial market unde the nose of the British Government that would undermine Keynesian settlement and herald the rise of global finance.

vera_k · Post by **vera_k** » 02 Dec 2009 11:40

Acharya wrote:Today I got the offer to buy gold bars. This is now the in thing in investment.

Delivered anywhere. 1 Kg bar is approx $23000/-

The best source I can find is ~$40,000. Is this US$, and where can it be bought?

Philip · Post by **Philip** » 02 Dec 2009 13:21

The city states like Dubai and Singapore,are particularly vulnerable to economic swings as we've seen.Singapore is far better managed.Many years ago,the admins of S'pore heavily invested in IT to stay technologicaly ahead.Dubai has been more of an Arabian Nights affair,with no limit to excess other than one's imagination.To fuel this ultimate example of Arab creative expression,it became a Middle Eastern version of a Wild West town during the heady days of the Gold Rush.Slaves from the subcontinent have been the tireless poorly paid workers who actually built it.Greed feasted upon greater greed in the rush to make a golden buck.But it it was in reality "fool's gold".One BBC report had an example of an investor who invested millions into a scheme where there wasn't even a design for his skyscraper drawn up and no record of the investment too! With Dubai being brought down to earth,despite its ruler's ranting and raving at investors,solid businesses there will survive well,as the money obtained from the oil wealth of the region,has to be spent and invested somewhere and a free-wheeling dot on the map like Dubai,is heaven to the latter day pirates of the global economy.

In Dubai's woes,there is a silver lining as far as India is concerned with the return of thousands of workers.As mentioned earlier,the real-estate and construction sector in recent times,has had to fork out heavy wage bills due to an acute shortage of workers.Add to this the GOI's great rural employment scheme,where agricultural workers are doing creative jobs like digging drains just to keep them employed,instead of keeping them working on the land,also leading to these rural folk becoming extremely lazy as all family members can get a share of this dole and do not work for a full month either.It is no secret that working conditions for the lowest category of workers is simply shameful in Dubai and most places in the Gulf.Skilled workers are a bit better off and white collar workers ,as long as they stay out of the loan shark/credit card trap,can save something for their families.With more workers available in India,wage bill s should come down a bit ,bringing down prices too,making real-estate investments more affordable to the middle class.

Dubai ruler lashes out at international investors
Stock markets in the Gulf plunged again on Tuesday despite concerted efforts by the ruler of Dubai to restore confidence in its debt-laden economy.

By Louise Armitstead
01 Dec 2009

Dubai's ruler Sheik Mohammed bin Rashid Al Maktoum, right, tells reporters Dubai's economy is "strong" and "solid" and the world does not understand what is happening in Dubai. Photo: AP

Dubai's bourse closed 5.6pc lower while Abu Dhabi shed 3.5pc on the second day of trading since Dubai World asked to delay the repayment of a $3.5bn (£2.1bn) loan for six months.

Traders said foreign investors were selling stocks after the government said that it would not guarantee the debt of the state-controlled companies. A further statement released late on Monday night in which Dubai World said it was restructuring $26bn of debt but made no mention of its intention to repay the loans due in two weeks' time.

Related Articles
Dubai: 4 in 10 offices empty
Dubai in crisis: the questions and answers
Dubai begins talks on $26bn of debt
A tale of two desert dynasties

Dubai, Abu Dhabi stocks markets slide Humam al-Shamaa, an analyst at Al-Fajr Securities, said: "Foreign portfolios are still pushing to exit the markets... Those who tried to pull out and did not manage to do so are still trying today."

The gloom prompted a furious outburst from Sheikh Mohammed bin Rashid al-Maktoum who criticised the reaction of international investors to the crisis, claiming: "They do not understand anything." He added: "We are strong and persistent. It is the fruit-bearing tree that becomes the target of [stone] throwers."

Sultan bin Saeed al Mansouri, the UAE's minister of economy, issued a long-statement extolling the strengths of the emirates. He said the economy has been built on a diverse mix of tourism, trade and services. He added: "The UAE has already taken [sic] concerted efforts to meet the challenges arising from the financial crisis."

However, the assurances failed to stop a flood of money being pulled from the stockmarkets. Dubai's leading real estate sector fell by 9.2pc, near the one-day maximum allowed drop of 10pc, while the finance and investments sector shed 7.5pc of its value. In Abu Dhabi, the property sector fell 9.8pc, while banking fell 5.6pc.

Moelis & Company, the advisory boutique set up by Ken Moelis, has been appointed to advise on the restructuring of Dubai World. He will help Paul Reynolds of Rothchild who was re-appointed after the company announced its restructuring last week.

Outside the Gulf, markets rebounded on the views that the Dubai crisis was a local problem that could be contained. European stocks notched up their biggest one-day gain in four-and-a-half months. Banks were among the biggest risers, particularly those hit by fears over exposure to Dubai. Mike Lenhoff, at Brewin Dophin said: "It looks like (Dubai's debt) was a storm in a teacup. But it's a reminder that you have these time bombs ticking away. They'll go off from time to time, though this one has not had a major impact."

http://www.telegraph.co.uk/finance/mark ... stors.html

amit · Post by **amit** » 02 Dec 2009 15:16

It seems Robert Frisk saab and before him Swapan Dasgupta may have been pointing in the right direction.

Bank of Baroda extends support to Dubai World

"We bankers have to extend our support to Dubai World in its endeavour to restructure its debt burden and thereby help the company achieve a better financial health at a time when lots of entities are going through tough times," said Gupta.

SBI is joining the party too, it seems:

AJ Vidyasagar, CEO of State Bank of India at DIFC, said: "The problem triggered by Dubai World is more of sentiments. I am sure a group such as Dubai World will tide over the issue provided it is given proper time, which I am sure the banks here will oblige."

(DIFC is the Dubai International Finance Centre - the Emirates wannabe pretension of being an international financial hub)

I would love it if the Indian banks move in while the Western banks are still reeling and before the China banks get into the play. My only worry is that there's a definite lack of experience in top bank managements in these kinds of play. I just hope nobody burns their fingers while dealing with the sweet talking Arabs and their Western lackeys in opulent settings like Burj Al Arab.

amit · Post by **amit** » 02 Dec 2009 15:37

Have you guys noted that the next date to watch out for in the Dubai crisis is Dec 14? That's the day when Nakheel's sukuk (Islamic bonds) is due for payment.

The larger picture is if Nakheel does not pay up the US$3.5 billion sukuk on that date, then the future of Islamic, or Shariah, bonds would be called to question. And this would be a quite a blow to the fast growing Islamic banking in West Asia and most of the South-east Asia region with particular concentration in Indonesia.

Understandably some anxious sound byte are coming out of Indonesia. This Jakarta Globe news report is a good example:

Indonesia Expresses Faith in Shariah Bonds Despite Dubai World Debt Crisis

The Finance Ministry said on Tuesday that it remained upbeat about investor appetite for sukuk , or Shariah bonds, and had not changed its plans to issue more next year, but acknowledged that the Dubai crisis could affect the market.

“[Dubai World subsidiary] Nakheel’s problems will add to the list of corporate Islamic bonds that have defaulted” in the past year, said Rahmat Waluyanto, the ministry’s director general for debt management. However, while some corporate issuers of sukuk had defaulted globally, the Indonesian government Islamic debt was unlikely to be affected, he said.

And

PT Indosat, the nation’s second-largest telecommunication company, announced on Tuesday that it planned to downsize its sukuk issue this month to Rp 200 billion ($21.2 million) from the initially planned Rp 500 billion. “We’re trying to accommodate the demand for Shariah bonds,” said Adita Irawati, a spokeswoman at Indosat, implying that the demand for its sukuk would be lower than expected.

Also this

Although analysts are now saying Dubai’s debt crisis is a test for Islamic finance, Rahmat said there would be no change in the government’s plans for sukuk issues next year.

“There will still be regular auctions for the sale of conventional as well as retail sukuk. There will also be global sukuk issuances, as the government still has a strong commitment to develop the market,” he said.

Here's a few more reports on Shariah bonds

Islamic Bonds Take a Hit From Dubai Woes

Dubai Crash Will Test Murky Sharia Finance

Financial Investment by Unbelievers in Bonds Around the Islamic Realm

The last one is an entertaining read and brings up some good points.

But some unbelievers, expatriates, adventurous financiers and greedy bankers did just that and put up buckets full of money buying some fairly squirly and dubious Dubai bonds that clearly had emphatic warnings in plain English. (Yes, I did read them) What happens is that these gigantic goofy projects in Islamic countries present some unique risk management issues, especially when the underwriting involvement is by East-West dual financial systems with completely different regulatory and transparency requirements. One of these unique problems is that once the money is in Dubai, and the Sharia Board rules that this or that aspect of this islamic financial transaction is not in compliance with Sharia law, the whole falafel may or will be voided. The money goes poof! Obviously there is no appeal from the dictums of God and no cents on the dirham or dollar may be returned at all. The kicker is that any Sharia Board has complete independent control over the interpretation of what is right or wrong in Allah's view with respect to any financial deal. Even over other similar Sharia boards which may rule differently on the same or similar issue. Precedent means nothing to the "judges". (Personal or other relations and ex parte access such as the rulers agents may mean just a bit more). In the end, these are faith based decisions by the religious board.

shravan · Post by **shravan** » 02 Dec 2009 15:38

Gold hits record high in sterling, euro terms

Euro-priced gold hit a high of 805.25 euros an ounce, while bullion priced in sterling reached a peak of 732.38 pounds an ounce, according to Reuters data.

Spot gold earlier touched a record high of $1,215.45 an ounce, against $1,196.00 late in New York on Tuesday.

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shyamd · Post by **shyamd** » 02 Dec 2009 18:08

A bubble, or 'stubble', of our own design

Robert Peston | 09:53 UK time, Wednesday, 2 December 2009

Have we reduced the pain caused by the pricking of the mother of all financial bubbles by creating a new financial bubble?

That is increasingly a fear that stalks markets and haunts policymakers.

A row of terraced housesThe unease stems from the following too-good-to-be-true (perhaps) combination:

• a 50% surge in share prices since they hit bottom at the start of the year;
• yields on US and UK sovereign debt that are close to all-time record lows (the lower the yield, the higher the price);
• a consistent rise in house prices (according to the Nationwide, UK house prices are now not much more than 10% below their bubblicious all time highs);
• and a return by bankers to some of the ostensibly reckless lending practices of two years ago.

OK, I know that if you run a small business, and are having difficulty obtaining credit from the bank, you'll think it laughable or insulting that the economy is awash with too-cheap money.

What's happened is that much of the cheap credit and new money created in the US and the UK has leaked - as it was always going to do - into financial speculation (a big hello to all our friends in the investment banks, whose bonus pools are rising faster than the globally warmed seas).

So we may be suffering from a combination of still sluggish growth (or recession if you happen to be British) and bubble, a mixture of stagnation and bubble. Shall we call it a "stubble"?

It's got to have a name, since it represents a bit of a problem for central bankers and finance ministers - who have somehow got to keep the growth going without pumping up the bubble to really dangerous proportions (or may, at some point, have to try to deflate the incipient bubble without tipping us back into recession).

The stubble is non-trivial for businesses and households too. Should they scrimp and save, and batten down the hatches, or borrow to invest as though there's no tomorrow?

The putative stubble is already causing the chief economist of the Bank of England, Spencer Dale, to scratch. This is what he has said this morning, in explaining why he recently voted against creating another £25bn of new money:

"I was also concerned that further substantial injections of liquidity might result in unwarranted increases in some asset prices. I should stress that I do not think there is any strong evidence to suggest than any of the increases in asset prices seen to date are out of line with the improving economic outlook and the desired impact of our asset purchase programme. Rather I was conscious that the current stance of monetary policy - in which Bank Rate is very low and substantial amounts of liquidity are being injected into the economy - increases the likelihood that asset prices may move out of line with their fundamental values and that this could be costly to rectify were it to occur. It is a risk that we need to be alert to."

That nagging fear that markets may again be overheating lay, I think, behind the somewhat hysterical global reaction to Dubai World's decision to suspend payments on $26bn of its debts - in that the direct economic cost of rescheduling the debt is trivial, in a global context, and certainly did not warrant many tens of billions of dollars being wiped off the value of shares.

The FT pointed to another ill augury overnight ("Fears grow about overheated US debt market"): bankers - especially US bankers - appear once again to have had their common sense removed by the prospect of deal fees.

Some bigger indebted companies are again able to borrow with few strings attached: the cov light loan is back.

There has been a revival of Pik toggle notes, which allow borrowers who suffer from cash-flow hiatuses to pay interest as a promise rather than in cash, by increasing the value of the debt they owe (thank you Father Christmas).

And some businesses are even paying fat dividend out of increased debt rather than profits.

Hooray. The holidays are back.

Or perhaps we should take a deep breath and question whether such deals constructed on dubious risk assessments are healthy.

When bankers start behaving like Santa or the fairy godmother, it's normally a sign that the party has been going on too long.

But perhaps more serious is the heated argument taking place between professional investors on whether two of the great economic and financial shifts of this year are bubbles or represent a rock-solid, newly formed, eternal mountain range.

First there's the row over China.

On one side are Goldman Sachs and Anthony Bolton (the guru of Fidelity), arguing that the astonishing revival of Chinese growth is unstoppable - and that you are ninny if you don't buy into it.

But there's also a lot of smart money, especially from hedge funds, betting against China. They fear that the growth is too dependent on an unsustainable Chinese stimulus programme equivalent to 13% of GDP together with an injection into the economy of bank loans equivalent to almost a third of GDP (see George Magnus of UBS in Monday's Times).

And then of course there's that mountain of new public-sector debt which has been created in the US and the UK.

At the moment, that sovereign debt is priced in the market on the basis that it'll be paid back without any difficulty at all (which is what those record low yields mean).

But I have been struck in the past few days by the number of big City banks agonising in public about whether British government debt, in the form of gilt-edged stock, is too expensive.

There have been notes to that hand-wring effect by Morgan Stanley, by Citigroup's Richard Saunders and by UBS's George Magnus (him again).

Their cue has been the recent opinion polls indicating an increased likelihood of a hung parliament as the result of next year's election: they fear that a minority or coalition government would find it almost impossible to take the tough decisions on public spending or taxation that are widely perceived as necessary to restore the health of Britain's public finances.

To put it mildly, it will be fascinating to see whether the price of gilts starts to rise and fall in the coming weeks with changes in the Tory party's lead over Labour.

Sanjay M · Post by **Sanjay M** » 02 Dec 2009 18:12

Do you guys think gold is still worth it, after all it's climbed already?

I would think that after all gold has climbed so far, that it's headed for a fall.

But do you think the dollar is still going to continue to tumble? From what I see, the Japanese and Chinese won't allow it to go into freefall.

shyamd · Post by **shyamd** » 02 Dec 2009 19:18

Sanjay M, Quick reply...
If there is another crash, Gold will be hit. Strengthening of the dollar would mean a fall in Gold prices. BTW the next crash is predicted to be bigger than earlier this year, and some are predicting a total destruction of demand which will send commodities down... If deflation is going to occur in the short run, then gold price will fall. Some people think Gold is a bubble waiting to burst. Yet, there are views that Gold should be worth $5000 etc.

AnimeshP · Post by **AnimeshP** » 02 Dec 2009 19:19

amit wrote:It seems Robert Frisk saab and before him Swapan Dasgupta may have been pointing in the right direction.

Bank of Baroda extends support to Dubai World

"We bankers have to extend our support to Dubai World in its endeavour to restructure its debt burden and thereby help the company achieve a better financial health at a time when lots of entities are going through tough times," said Gupta.
SBI is joining the party too, it seems:

AJ Vidyasagar, CEO of State Bank of India at DIFC, said: "The problem triggered by Dubai World is more of sentiments. I am sure a group such as Dubai World will tide over the issue provided it is given proper time, which I am sure the banks here will oblige."
(DIFC is the Dubai International Finance Centre - the Emirates wannabe pretension of being an international financial hub)

I would love it if the Indian banks move in while the Western banks are still reeling and before the China banks get into the play. My only worry is that there's a definite lack of experience in top bank managements in these kinds of play. I just hope nobody burns their fingers while dealing with the sweet talking Arabs and their Western lackeys in opulent settings like Burj Al Arab.

Amit ... actually Bank of Baroda has some exposure to Dubai and SBI to UAE ... that is why you are seeing these banks showing faith in the Dubai economy ...

Impact of Dubai crisis on India

Indian banks, that have exposure to the region, are also under the scanner. Banks with presence in the UAE include Bank of Baroda (7-8% of total international loan book or Rs 10,000 cr exposure to UAE and Rs 4,000 cr exposure to Dubai), ICICI Bank (exposure to UAE largely on Bahrain branch), State Bank of India(exposure of roughly Rs 1,500 crore to UAE), Axis Bank (Dubai balance sheet 1.3% of total balance sheet of bank) and Union Bank. However, HDFC Bank has tied-up with local banks to serve Indian expatriates.

shravan · Post by **shravan** » 02 Dec 2009 21:01

North Koreans in shock as cash is 'banned'

svinayak · Post by **svinayak** » 02 Dec 2009 21:26

amit wrote:It seems Robert Frisk saab and before him Swapan Dasgupta may have been pointing in the right direction.

Bank of Baroda extends support to Dubai World

"We bankers have to extend our support to Dubai World in its endeavour to restructure its debt burden and thereby help the company achieve a better financial health at a time when lots of entities are going through tough times," said Gupta.
SBI is joining the party too, it seems:

AJ Vidyasagar, CEO of State Bank of India at DIFC, said: "The problem triggered by Dubai World is more of sentiments. I am sure a group such as Dubai World will tide over the issue provided it is given proper time, which I am sure the banks here will oblige."

First thing First.

Dubai has to control and eliminate all funding and terrorist activity against India. This is the first condition.

Hawala network has to be removed and in the hands of Indians.

ramana · Post by **ramana** » 02 Dec 2009 23:06

Bank of Baroda has always had progessive banking leaders among the nationalised banks. They funded Dhirubhai Ambani first.

svinayak · Post by **svinayak** » 02 Dec 2009 23:26

ramana wrote:Bank of Baroda has always had progessive banking leaders among the nationalised banks. They funded Dhirubhai Ambani first.

Even Syndicate Bank funded Dhirubhai Ambani

Neshant · Post by **Neshant** » 03 Dec 2009 00:00

All the ex-colonialist now fighting among themselves to be financial capital. Financing and high rolling is one of the few "industries" which produces no real product other than paper shuffling and living off fees and scams. Gaming the system to appropriate other people's money to yourself ensures you get paid a high salary for doing jack sh&t. That's why everyone wants a piece of the action. Everybody wants to be a financial center.

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British bankers slam Sarkozy on EU market claims

Sarkozy's comments stoked concerns about a new pan European framework for overseeing regulations, which Britain had been fighting amid fears it would pose undue restrictions on the financial industry here.

"If anyone in the European project thinks for a minute that they are capable of subverting the years of effort it took us to make the UK the world's financial centre, they are sadly mistaken," said Knight.

"At stake here are at least half a million jobs and the tax revenues which will contribute more than anything else to replenishing the Exchequer (the British Treasury) after this recession.

"It also needs to be more widely recognised that the City brings benefits to all of the EU, not just the UK.

Writing in the Times newspaper Wednesday, British Finance Minister Alistair Darling warned the EU's new financial overseer against meddling with London's banking hub.

"London, whether others like it or not, is New York's only rival as a truly global financial centre," he wrote.

http://ca.news.yahoo.com/s/afp/091202/w ... my_banking

svinayak · Post by **svinayak** » 03 Dec 2009 00:07

Neshant wrote:All the ex-colonialist now fighting among themselves to be financial capital. Financing and high rolling is one of the few "industries" which produces no real product other than paper shuffling and living off fees and scams. Gaming the system to appropriate other people's money to yourself ensures you get paid a high salary for doing jack sh&t. That's why everyone wants a piece of the action. Everybody wants to be a financial center.

-----

It is about control. Using finance and money supply and ability to divert it from one region to another colonial countries controlled the people, food and economy.

The East India Company model was the basis on which the global financial market was created.

SwamyG · Post by **SwamyG** » 03 Dec 2009 01:16

http://www.larouchepac.com/node/12587

The "Dubai crisis," as it is being mis-reported, is actually the breakdown of the London-centered global monetary system. Far from being a mere backwater, Dubai occupies a key place in the dope-running, dirty money, criminal organization which is the empire. To view this merely as a "Dubai crisis," is to miss the point entirely about the nature of the period.

"Since January of this year, but most clearly since the beginning of April, the United States and world civilization, but particularly the United States, is in a process of self-destruction," Lyndon LaRouche observed Nov. 24.

The bank debt and the real estate values are trivial, however, compared to the subterranean money flows which form the real economy of Dubai. The tiny emirate is the central black market for the empire's black-market system, the financial capital of the world's dope and hot money trade. Dubai today plays a role similar to that of Hong Kong in the earlier days of the British Empire, its high-rises home to some of Afghanistan's most powerful drug lords, among other narcotrafficking kingpins. This is the real reason for Dubai's emergence as a financial center.

Dubai is run top-down by the British, built largely with British money, and by British-linked construction firms. Most government agencies have a member of the Dubai royal family as the titular head, with a Brit second in command and actually running the operation. It should come as no surprise that Sheikh Mohammed, the ruler of Dubai, went to London to visit Queen Elizabeth, Prime Minister Gordon Brown, and others, in the days immediately preceding the Dubai World announcement. As the Sheikh himself said, the whole thing had been "carefully planned in advance."

Truth or Conspiracy, the World is just Maya!!! Well it appears to be from the extreme right; anyway advisable to have truck load of salt while reading.

ramana · Post by **ramana** » 03 Dec 2009 03:26

the guy is unable to articulate but what he wants to do is reduce London's ability to geenrate capital. Read the book review thread to get idea of what he is talking.

Neshant · Post by **Neshant** » 03 Dec 2009 06:34

India needs to do the same NOW. Not after everyone has already found justice and then the babus wake up and start launching a protest which no swiss bank will give a crap about. Start the lawsuit against the swiss banks for the list or boot UBS and any company financed by them out of the country forever.

------

Canada says could sue UBS over list of clients

http://ca.news.yahoo.com/s/reuters/0912 ... ess_us_ubs

OTTAWA (Reuters) - Canada, which is trying to clamp down on tax evasion, is prepared to take Swiss bank UBS to court if necessary to compel it to hand over details of Canadians who might be account holders, a government minister said on Wednesday.

Ottawa has been pressing UBS since early September for the names, but has had no success.

A UBS spokesman said the bank did not have a comment on the matter.

Neshant · Post by **Neshant** » 03 Dec 2009 08:00

public bailout money going towards a good cause.

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Barclays bankers to get 150pc pay rise

http://www.telegraph.co.uk/finance/news ... -rise.html

Hari Seldon · Post by **Hari Seldon** » 03 Dec 2009 08:21

24 States Borrow Money To Pay Unemployment Benefits

North Carolina's high unemployment rate has stuck the state with $1.4 billion in debt - money that officials don't know how they'll pay back.

It gets worse. The debt is still rising. The problem is that with about 500,000 people out of work, the state has more unemployment claims than it can pay. So it has been borrowing from the federal government since February, sometimes as much as $20 million a day.

The tally will rise to at least $2billion by the end of the year, said David Clegg, deputy chairman and chief operating officer of the N.C. Employment Security Commission. Next year, depending on the economy, could add another $2 billion to the tab, he said.

For purposes of comparison, the state budget for the current fiscal year is $19 billion.

IOW, NC spent over a fifth of its budget to pay stopgap unemp benefits that seem all set to rise in the coming year. Again, what can't go on forever, won't. And the above is clearly unsustainable. But, fear not, the states are if anything, more 'too big to fail' than some wall st ex-i-banks.

Only five states have borrowed more than North Carolina. Altogether, seven states have borrowed more than $1 billion each - more than $15 billion collectively - to shore up their unemployment insurance systems, according to the U.S. Department of Labor. A total of 24 states plus the Virgin Islands have borrowed money from the federal government.

Many states "are in pretty dire straits right now," said Ingrid Evans, unemployment insurance director at the National Association of State Workforce Agencies.

The best hope for North Carolina, said Clegg, is for Congress to forgive a portion of the debt, if not all of it.
{I 400% expect this to happen. Its the right thing to do for the Fed as well, looking to devalue the USD and inflate the national debt away.}

Another solution would be to raise the tax on employers that funds jobless benefits. Indiana, which owes about as much as North Carolina, recently took that move, but North Carolina officials worry it would increase financial pressure on businesses when they can least afford it.

"I would love to hear some U.S. Department of Labor official explain how they expect the states to pay billions of dollars from an employee base which is, at best, 20 percent smaller than it was before the recession started," Clegg said.

Hari Seldon · Post by **Hari Seldon** » 03 Dec 2009 09:18

prad,

Agreed. The worst is both behind us and yet to come. All at the same time. JaiHoA.

Meanwhile, in the uber world of pvt equity and hedge funds, the biggies are getting impatient that only looters registered as bank holding companies are getting a free run to fleece the treasury via the Fed. They also want in on a piece of the action. So, the looting goes on, only the method changes, if we're lucky.

In a dividend recap, companies take on additional debt to pay dividends to their owners.....several dividend-recap attempts have been mounted, including one involving the Booz Allen Hamilton consultancy, which is arranging $350m in loans that is likely to help pay a $550m dividend to Carlyle, its private equity owner.

link

Jai Hor.

amol.p · Post by **amol.p** » 03 Dec 2009 11:39

U.S. credit card defaults seen testing highs: Fitch

U.S. credit card delinquencies rose in October, signaling that defaults may soon test record highs, as debt-burdened consumers keep losing their jobs, Fitch Ratings said on Wednesday.

The rate of credit card payments more than 60 days overdue -- an indicator of future defaults -- rose to 4.41 percent in October from 4.22 percent in September, just below the record high of 4.45 in June, according to Fitch's credit card performance index.

The renewed upward trend in late payments suggests credit card chargeoffs will soon start to rise again.

"Credit card delinquencies are on the rise again and cardholder defaults will re-test recent highs as we head into the new year," Fitch Managing Director Michael Dean said in a statement. "Consumer credit quality remains under significant strain as a result of the persistent weakness in the labor markets."

http://www.reuters.com/article/ousiv/id ... BM20091202

amol.p · Post by **amol.p** » 03 Dec 2009 11:45

House panel backs watershed financial risk bill

Lawmakers in the U.S. House of Representatives' voted on Wednesday to give government regulators the power to break up financial firms that threaten economic stability, and to expose the Federal Reserve to unprecedented congressional scrutiny.....{All tom,dick & harry of financial industry will be engulfed by big sharks by LAW}

In a milestone for the Obama administration's push to tighten bank and capital market oversight, the House Financial Services Committee approved a bill to rein in firms seen as "too big to fail"

and prevent future taxpayer bailouts like last year's rescues.

http://www.reuters.com/article/ousivMol ... NO20091203

amol.p · Post by **amol.p** » 03 Dec 2009 11:47

Monster U.S. online jobs index slips in November

Online job availability has remained "largely flat" for most of 2009, according to Monster.

http://www.reuters.com/article/ousivMol ... OQ20091203

Hari Seldon · Post by **Hari Seldon** » 03 Dec 2009 19:32

Who's afraid of high-frequency trading?

Read it in full... some choice excerpts.

Many of the firm's 30 employees are not yet 25. They were hired straight from college to ensure their thinking and work habits are untainted. Now they're making Wall Street's latest fortune, a fraction of a penny at a time.

So what, I thought - even the goog has these jazzy showpieces.

Tradeworx and other firms like it use such algorithms in the lightning-quick trading approach that is altering the landscape of U.S. markets, driving broker-dealers out of business and changing how money managers invest.

High-frequency trading now accounts for 60 percent of total U.S. equity volume, and is spreading overseas and into other markets. These traders stand ready to buy and sell shares at all times, providing the liquidity that keeps markets moving. As a result, trading is now cheaper and easier than ever.

Wow, eh? Best thing since sliced bread, you say? Say that again, will ya?!

But admist the exu-bear-ance, I have to wonder "whats the catch?"

Yet critics worry fast trading may undermine the integrity of the U.S. equity market, a bastion of capitalism and corporate America, and could even spark another financial crisis.

They also complain about the money high-frequency firms are making -- and how they are making it. During last year's plunge, when volatility rose, many high-frequency traders earned 10 times their usual profits, executives at several of the proprietary firms told Reuters.

Bah! complainers! spoilers! whiny-ninnies! to hell with them onlee.

For their part, the fast traders don't see what all the fuss is about.

"We live in a capitalist society," said Tradeworx Chief Executive Manoj Narang, 40, wearing jeans, runners and a Yankees baseball cap.

"People should expect and be willing to pay a price for the liquidity that they get. No one should expect that a provider of liquidity is just going to stand there while you bulldoze them into submission," Narang said.

Tradeworx started high-frequency trading in January and now accounts for about 3 percent of overall volume in the exchange-traded fund SPDR Trust, which tracks the Standard & Poor's 500 Index and is one of the most heavily traded securities.

High-frequency traders point to last year's steep sell-off as proof of their value in helping the market run smoothly. While over-the-counter and other markets seized up, exacerbating the worst financial crisis since the Great Depression, fast traders continued to buy and sell shares.

Proponents also laud computerized trading for eliminating the shady transactions that often occurred in the past when people were directly involved in trading.

read it all.

Hari Seldon · Post by **Hari Seldon** » 03 Dec 2009 20:12

prad,

indeed Sri Ed harrison of credit writedowns does do a thorough job and I'd kinda agree with him him about the job loss numbers.

Overall, I'll go with Mish shedlock when he says

Structurally, US unemployment will remain high for a decade.

Hari Seldon · Post by **Hari Seldon** » 03 Dec 2009 20:53

Bloody hilarious.....plis to read onlee...

link

vera_k · Post by **vera_k** » 03 Dec 2009 22:36

Fed's Plosser calls for higher interest rates

Estimates US growth around 3% in 2010 and 2011.

SwamyG · Post by **SwamyG** » 03 Dec 2009 23:06

http://www.huffingtonpost.com/elizabeth ... 77829.html

A blog by an importantly positioned woman on the American middle class.

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

Roubini on Lessons of the Dubai World Debt default

Suraj · Post by **Suraj** » 04 Dec 2009 00:07

vera_k wrote:Fed's Plosser calls for higher interest rates
Estimates US growth around 3% in 2010 and 2011.

Plosser said the same thing earlier this year, then two weeks ago said the opposite. Now another change of opinion.

shravan · Post by **shravan** » 04 Dec 2009 00:22

Rumor:Japan Planning US Treasuries Sale
http://www.zerohedge.com/article/japan- ... uries-sale

Katare · Post by **Katare** » 04 Dec 2009 00:50

The economic recovery world over is consolidating......

India China is growing at blistering pace, while almost all of the world has officially came out of recession.

Europe exits recession; EU economy grows 0.3% in Q3

US Jobless claims
US jobless claims drop to 4,57,000

IIRC, once this number comes down to 400,000 and holds there it'll signal job creation in the US economy. With the rate its falling it'll take a few weeks to get there. Inshallah, early next year we may see the turn around at main street after this year's turnaround at wall street.

svinayak · Post by **svinayak** » 04 Dec 2009 04:46

The Greatest Deception in the History of Finance

Excerpt:
"Financial freedom is such an overused and abused term that its meaning is bordering on abstract. As of this posting, a Google Search for “financial freedom” [2]produces more than 33 million results. What is financial freedom anyway? Who decides the meaning? How can one be free if their idea of freedom is defined by someone else, or not defined at all? Does financial freedom even exist?

Common words, phrases and abstract ideas can be practical for use in language and mass communication; but for an individual to spend the predominant amount of financial and non-financial resources of a lifetime for something that has not been clearly defined for the individuals particular life, how can this not be described as anything but aimless, illusory or even the greatest deception in the history of finance?

Link for full article:

http://www.ritholtz.com/blog/2009/12/th ... nce/print/

Hari Seldon · Post by **Hari Seldon** » 04 Dec 2009 05:05

Suraj wrote:
vera_k wrote:Fed's Plosser calls for higher interest rates
Estimates US growth around 3% in 2010 and 2011.
Plosser said the same thing earlier this year, then two weeks ago said the opposite. Now another change of opinion.

Of course the Fed wants to eat its cake and have it too. So it trots out a non-voting member (Sri Plosser) to make these statements that it has no intention of following up on. Meanwhile its voting members like Don Kohn say the opposite. Guess who you would believe.

In any case, rumor is rife that the way the long bond yields are kept so ridiculously low even in times like these is via futures derivatives - market thats potentially entirely rigged, err, managed. Of course, tifwiw only.