Perspectives on the global economic meltdown

Prem · Post by **Prem** » 19 Dec 2009 05:41

astal wrote:
Hari Seldon wrote:Kisine sach hi kaha hai,When it rains, it pours. More telegraf D&G on UK-stani utopia.
. I believe
Finally, India should look for opportunities in this time of crisis. Without gloating, quietly buy out companies with advanced technology and hire the best possible employees to attain India's economic goals. The biggest weakness of modern materialistic western society is "Everyone and everything is for sale. This price just has to be right."

Great words of wisdom, this good oppertunity must be exploited to buy them cheap. Control their economy ,people and destiny. We have duty to Grate Britain.

Hari Seldon · Post by **Hari Seldon** » 19 Dec 2009 06:00

astal wrote: Hari Bhai,

I think they have worked in ways to tailor inflation rates to their liking. Inflation linked bonds IMO are another way to provide poor returns by playing a con game.

No doubt true. What interests me is that even that con game has its limits, apparently. The reason inflation linked bonds/obligations form the clear majority of the country's bond sales itself alludes to the fact that nobody but nobody believes emerged gubmints, their inflation targeting promises or perhaps even their solvency anymore.

In the US, if I am not wrong, (I am sure you are also aware given your Labor Econ background) the Bureau of Labor Statistics is tasked with announcing ex-post official inflation statistics. Inflation adjusted bonds are guaranteed on the basis of their announcements

Oh, the less said about BLS the better. Their unemployment computations are so egregious of late (have posted on multiple occasions about the flaws in the BLS birth-death model) that BLS credibility is already in tatters, IMHO.

The Bureau of Labor Statistics is permitted to change consumption bundles from which it measures inflation, in a fairly opaque exercise. For example since housing ownership costs and fuel are not part of the bundle that they consider for bonds (core inflation) they could maintain a low inflation regime while the property market shot through the roof. I believe that the the UK would have similar provisions, especially since we all know how statistics are susceptible to manipulation.

True. Asset inflation that both the Fed, the banking sector, investors in general and the aam public all ignored. Doesn't mean the problem went away. It came back to bite everybody in the butt rather spectacularly, actually. And its effects have not yet been felt fully. Core inflation isn't a gubmint mandated vaccum that can forever be shielded away from realities in the asset markets. Asset markets have plunged downward sharply (except for equities in the US) to meet nominal core inflation, perhaps. The Fed (and BoE) while keeping fed funds rates low (for itself because it owes so much to so many) has been pumping trillions into bank reserves. Let us await the moment one (fiat creation) catches up with the other (credit contraction). High (and possibly runaway) Inflation cannot be far behind, IMHO.

I feel they will all inflate (euphemism reflate) their way out of this crisis. Retirees will be negatively impacted and everyone will move on.

And I would agree with that assessment except that the rate of growth of sovereign debt (and worse, their obligations+debt) is actually accelerating in these troubled times. At some point, the debt service burden will forc all interest rates up, not just the retiree-impacting ones but also ones that force cuts in current welfare and service levels for the riot-prone hoi-polloi.

Finally, India should look for opportunities in this time of crisis. Without gloating, quietly buy out companies with advanced technology and hire the best possible employees to attain India's economic goals. The biggest weakness of modern materialistic western society is "Everyone and everything is for sale. This price just has to be right."

Call it 'gloating' of you will. I have a different take. Desi diffidence and lack of awareness of historical injustices warp our perspective a bit much, IMHO. In the particular case of UK-stan, I am willing to sound jarring if need be but I absolutely wouldn't want any Indian to feel any misplaced sense of goodwill or sympathy/empathy/ganapathy or warmth for the UK-stani establishment and nation, out of ignorance. None. Period.

Hari Seldon · Post by **Hari Seldon** » 20 Dec 2009 09:38

Alternative currencies rush to fill a vaccum, seems like.
Midnight in the foodstamp Economy

At 11 p.m. on the last day of the month, shoppers flock to the nearest Walmart. They load their carts with food and household items and wait for the midnight hour. That's when food stamp credits are loaded on their electronic benefits transfer cards. "Once the clock strikes midnight and EBT cards are charged, you can see our results start to tick up," says Tom Schoewe, Wal-Mart Stores Inc's chief financial officer.

As food stamps become an increasingly common currency in a struggling U.S. economy, they are dictating changes in how even the biggest retailers do business. From Costco to Wal-Mart, store chains are rethinking years of strategy as they watch prized customers lose jobs and turn to this benefit, the stigma of which is disappearing not just in society, but in corporate America. Besides staffing up for the spike in shoppers on the first day of the month, retailers are adjusting when and what they stock, updating point-of-sale systems to accept food stamps and shifting expansion plans to focus on lower-income shoppers.

Take Costco Wholesale Corp, a warehouse club operator that caters to middle income Americans who must pay $50 a year to shop in its stores. Nudged along by New York Attorney General Andrew Cuomo, who threatened legal action, Costco began accepting food stamps at a few New York stores in May. It now plans to clear the payments in all of its 413 locations in the United States and Puerto Rico. "Our view was ... we would not get a lot of food stamps because our member on average is a little more upscale," Costco Chief Financial Officer Richard Galanti said in October. "Well, I think that was probably a little bit arrogant on our part."

Hopefully our UID system when it goes live will serve as a good device to targettedly empower the most vulnerable in our popn to basic necessities. Can replace ration cards at least.

Hari Seldon · Post by **Hari Seldon** » 20 Dec 2009 09:47

Club Med slipping deeper into crisis.

Moody's 'axe blow' to rating on Spanish debts

The debt crisis sweeping southern Europe has deepened after US credit-rating agency Moody's downgraded €112bn (£100m) of Spanish mortgage debt and slashed the ratings of Catalunia and a raft of regions with ballooning state deficits. Spain's media called the move an "axe blow", fearing a domino effect through the country's debt markets. Credit default swaps measuring the risk on Spanish sovereign bonds jumped 10 basis point to 101 yesterday. Moody's downgraded a third of the entire stock of Spanish mortgage bonds or "cedulas" – covered bonds deemed safer than US sub-prime securities – but also made from debt that is sliced into packages. Most were cut from AAA (Aaa) to Aa1. They are largely owned by German or French banks and pension funds.

The scale of yesterday's action is huge, roughly equal to a trillion-dollar downgrade in US terms. Spanish banks avoided damage from the global credit crunch because they eschewed US toxic debt, but their own internal sub-prime crisis is slowly catching up with them. Professor Luis Garciano from the London School of Economics said Spain's property bubble left an over-supply of 1.5m homes, the most concentrated glut in the world. The country topped Moody's worldwide "misery index" this week as a result of its fiscal deficit and high jobless rate – now 19pc, and 41pc for youth. The IMF expects the country to grind on in near perma-slump next year.

Spain also has no option to devalue its currency at once bringing relief on multiple fronts - local currency debt inflates away, exports becomes cheaper and imports costlier giving a fillip to domestic industry and employment, etc. The euro has sealed that door. Worse, the freedom to go Keynesian and have gubmint-stimulus programs takeup deflationary slack in the ekhanomy is also ruled out by the 3% deficit rule (though to be fair, even Germany is now testing the deficit limits in its latest budgets).

The sole good news for battered countries on the eurozone fringes was that Ireland managed to eke out growth in the third quarter, beating the UK out of recession. The feat is unlikely to last as draconian wage cuts come into force in January. The economy has shrunk 7.4pc over the last year. It is expected to relapse next year in what amounts to a three-year depression.

Richard Bruton, Fine Gael's finance spokesman, said it would be "dangerously complacent" to assume that Ireland had turned the corner. Profits from multinationals based in Ireland inflated the GDP figures. The domestic economy (GNP) contracted by 1.4pc.

I too suspect a lot of GDP growth the green shooters are showing is a flash in the pan and doesn't translate to ground-level ekhanomic activity.

Singha · Post by **Singha** » 20 Dec 2009 13:06

even some cash rich IT cos with a servile mentality would rather wait until Khan and co recovered from the wardrobe malfunction and started barking crisp orders again to the people down in the salt mines. they will not use cash to buy stakes and ownership in strategic small and medium cos with scientific strengths.

followers who cannot dream of being the leader. all they can do is deploy more people.

Hari Seldon · Post by **Hari Seldon** » 20 Dec 2009 13:39

^^ sadly, the few big overseas 'prestige' acquisitions bythe tatas of Brit assets soured rather quickly. Turns out our knights in shining armor out to conquer videsi brands got duped and were led along the garden path. OTOH, small firms have proven to be sensible buys when compared to the big ticket lemons. I wish desi media highlighted more of the small firm acquisition success stories.

Hari Seldon · Post by **Hari Seldon** » 21 Dec 2009 10:14

Trillions Of Troubles Ahead

Not too long ago, a billion dollars in a governmental budget was a lot of money. Then we got into hundreds of billions. People understood that this was a lot, just because of all the zeros. Now, unfortunately, the number has become small: the world "trillion," as in $1.2 trillion for health care reform, seems so tiny. But it has 12 zeroes behind it, which is so easy to forget.

The total public debt is now at 141% of GDP. That puts the United States in some elite company--only Japan, Lebanon and Zimbabwe are higher. That's only the start. Add household debt (highest in the world at 99% of GDP) and corporate debt (highest in the world at 317% of GDP, not even counting off-balance-sheet swaps and derivatives) and our total debt is 557% of GDP. Less than three years ago our total indebtedness crossed 500% of GDP for the first time."

Add the unfunded portion of entitlement programs and we're at 840% of GDP.

All depends on how the debt level is computed. I recall seeing figs that claim US debt is only some 80% odd of GDP. It all hence depends on what components are going into the calculation of debt. Long term debt can be safely pushed back, perhaps. Short term paper, that needs to be rolled over in the near future takes on more urgent avatars, though. And fact is most USTs sold aajkal have been on the shorter endof the spectrum. Almost no phoren buyers for long bonds these days.

But, there are mitigating factors. Almost all of US debt is in USD, that mitigates a lot of what may otherwise have befallen lesser countries with those debt levels.

The world has not seen such debt levels in modern history. This debt is not serviceable. Imagine that total debt is 557% of GDP, without considering entitlements. The interest on the debt will consume all the tax revenues of the country in the not-too-distant future.
Then there will be no way out but to create more debt in order to finance the old debt.

The classic debt trap problem.

It assures a period of economic devastation. In a last, desperate attempt, politicians at the federal and local levels will raise taxes to astronomical heights to raise revenues. And that only assures destruction of the economy. Forget the fable of economic recovery. Unless there is a change in Washington by next year's election, there will be no way to turn back.

Japan's recession is now 19 years old. It has the highest debt-to-GDP level (227%) of any industrialized country. The Fitch rating agency is talking about a potential downgrade of Japan's debt. Japan's stock market is still down 75% from the high in 1990. We predict it will make new bear market lows next year. That will make it a 20-year-long bull market on the way to 25 years. The bulls in the U.S. should consider that possibility in the formerly great United States of America.

I do not believe the bullish theory that the U.S. situation is different than Japan's. Ours is so much worse.

Read it all.

Hari Seldon · Post by **Hari Seldon** » 21 Dec 2009 12:09

Goldman Threatens to “Move” 20% of UK Staff to Spain to Escape Bonus Supertax

Yawn. Gaand mein hanga hai toh kar dikhao. Else STFU. IMO, these cretins will raise high decibel thunder (much like packees) but will downhill ski at the first sign of sovereign steel.

The corporatists and fascisti are nowhere near as powerful as they think they are. End of the day, sovereign gubmints rule the roost. What were to happen, for example, if soveregin states were to withdraw the legal (enforcement) status of the trillions in derivatives these banksters have raked up, eh? That day is not far off at all, IMHO.

Ameet · Post by **Ameet** » 21 Dec 2009 22:42

Harvard swaps are so toxic even Summers won't explain them

http://www.bloomberg.com/apps/news?pid= ... njG1iQHZK0

Ameet · Post by **Ameet** » 21 Dec 2009 22:45

Hari Seldon wrote:Goldman Threatens to “Move” 20% of UK Staff to Spain to Escape Bonus Supertax

Yawn. Gaand mein hanga hai toh kar dikhao. Else STFU. IMO, these cretins will raise high decibel thunder (much like packees) but will downhill ski at the first sign of sovereign steel.

The corporatists and fascisti are nowhere near as powerful as they think they are. End of the day, sovereign gubmints rule the roost. What were to happen, for example, if soveregin states were to withdraw the legal (enforcement) status of the trillions in derivatives these banksters have raked up, eh? That day is not far off at all, IMHO.

London exodus to Geneva runs into housing, school shortage, 44% income tax

http://www.bloomberg.com/apps/news?pid= ... SFY&pos=10

Ameet · Post by **Ameet** » 21 Dec 2009 22:50

Taxpayers help Goldman reach height of profit in new skyscraper

http://www.bloomberg.com/apps/news?pid= ... LwI2SKYQJg

“The issue that people have focused on -- TARP and the payback of TARP money -- is insignificant compared with the way they’ve been able to use federally guaranteed programs and their access to the Fed window,” says Peter Solomon, founder of New York-based investment bank Peter J. Solomon Co.

Those benefits, along with a drop in the Fed’s benchmark borrowing rate to as low as zero, have slashed Goldman Sachs’s interest costs to the lowest this decade, though its debt was higher in the first nine months of 2009 than in any comparable period except the previous two years. For those three quarters, the firm’s interest expense fell to $5.19 billion from $26.1 billion a year earlier.

“You can’t give a small group of firms this privilege, where they get free money from the Fed and a taxpayer guarantee and they can run the biggest hedge fund in the world,” Niall Ferguson, a professor of history at Harvard University and author of “The Ascent of Money: A Financial History of the World,” said at a Nov. 18 panel discussion in New York.

Sanjay M · Post by **Sanjay M** » 22 Dec 2009 04:22

Is India Moving to Purchase More Gold?

http://worldcurrencywatch.com/2009/12/2 ... D-of-2009/

Hari Seldon · Post by **Hari Seldon** » 22 Dec 2009 11:24

Sanjay M wrote:Is India Moving to Purchase More Gold?

http://worldcurrencywatch.com/2009/12/2 ... D-of-2009/

Never a bad time to buy gold, if you're a longterm investor.

Meanwhile, the thoughtful folk over at the automatic earth have a slew of new articles and insights on the current state of global D&G, but focused more on the khanate.

The weakest hands fold first

A short excerpt of the thrust of the article:

The trouble in Denmark on Capitol Hill runs much deeper than a vote or an idea. The country is governed by a few hundred enlightened souls who are all for sale, or they wouldn't be where they are. And if a soul does get lost on the Hill and tries to follow his or her conscience, the rest of them will drown it out.

This is not a new issue, though it has rapidly grown more poignant in the past 3 decades. What is new today is that the dysfunctional system has to deal with a crisis that cannot be dealt with as previous crises were: with more growth.

And without growth, what wealth there is has to be redivided, or society as a whole becomes untenable. And yes, redivided it is, but not in a way that would warrant society's continued viability. On the contrary, those who always had much will have more, while those who had least will now have nothing. And I’ve said it before, it's not a political statement to say that if a society doesn't provide a minimum for its poorest, that society must of necessity fail.

Read all the emails you want, investigate all the crooked deals made in the bail-outs. It won’t matter one iota. Once growth is gone, you need to prevent the rich from lobbying themselves into ever and even more riches. because these will have to come from the mouths of the desolate.

Or you can choose not to, but then your society is over and done with. Now, I don’t really think people will think I’m right. When most read that the noughties were the worst decade for stocks ever, as in since the 1820's, almost 200 years, they’ll think: well, it should go up then, shouldn't it?

Who among them concludes that growth may be gone, even if they know it can’t last forever? It was inevitable that they'd still be expecting -nay, even seeing- growth when the world around them is shrinking.

Needless to say, read it all.

Hari Seldon · Post by **Hari Seldon** » 22 Dec 2009 11:35

Prognosis for 2012 (extreme D&G warning)

Wouldn't count on all of it or even most of it coming true but if even some of it in bits and parts comes about the rest won't be far behind.

Sample some of the more excitable (but sadly, not impossible) predictions bandied about:

* All pension funds, private and public, are done. If you are receiving one, you won’t be. If you think you will in the future, you won’t be. PBGC will fail as well. Pension funds will be forced to start eating their "seed corn" within the next 12 months and once that begins there is no way to recover.

Truly scary and quite realistic, IMHO. May not agree with the next 12 months timeframe but by 2012 the problem can no longer be hidden away using accounting fraud.

* All annuities will be defaulted to the state insurance protection (if any) on them. The state insurance funds will be bankrupted and unable to be replenished. Essentially, all annuities are toast. Expect zero, be ecstatic if you do better. All insurance companies with material exposure to these obligations will go bankrupt, without exception. Some of these firms are dangerously close to this happening right here and now; the rest will die within the next 6-12 months. If you have other insured interests with these firms, be prepared to pay a LOT more with a new company that can’t earn anything off investments, and if you have a claim in process at the time it happens, it won’t get paid. The probability of you getting "boned" on any transaction with an insurance company is extremely high – I rate this risk in excess of 90%.

Don't know enough about the khan insurance industry to comment.

* The FDIC will be unable to cover bank failure obligations. They will attempt to do more of what they’re doing now (raising insurance rates and doing special assessments) but will fail; the current path has no chance of success. Congress will backstop them (because they must lest shotguns come out) with disastrous results. In short, FDIC backstops will take precedence even over Social Security and Medicare.

* Government debt costs will ramp. This warning has already been issued and is being ignored by President Obama. When (not if) it happens debt-based Federal Funding will disappear.

Something I've been yapping about for a while and was watching the bond markets for. Will happen eventually, but not anytime soon I surmise. The show can go on for a few yrs more easily, I reckon.

* Tax receipts are cratering and will continue to. I expect total tax receipts to fall to under $1 trillion within the next 12 months. Combined with the impossibility of continued debt issue (rollover will only remain possible at the short duration Treasury has committed to over the last ten years if they cease new issue) a 66% cut in the Federal Budget will become necessary. This will require a complete repudiation of Social Security, Medicare and Medicaid, a 50% cut in the military budget and a 50% across-the-board cut in all other federal programs. That will likely get close.

If you're by now rolling your head side to side in disbelief, so am I. Can't see this happening anytime soon. 2012 maybe will see the start in gradual cuts in spending levels, I reckon.

* Tax-deferred accounts will be seized to fund rollovers of Treasury debt at essentially zero coupon (interest). If you have a 401k, or what’s left of it, or an IRA, consider it locked up in Treasuries; it’s not yours any more. Count on this happening – it is essentially a certainty.

* The unemployed will have 5-10 million in direct layoffs added within the next 12 months. Collateral damage (suppliers, customers, etc) will add at least another 5-10 million workers to that, perhaps double that many. U-3 (official unemployment rate) will go beyond 15%, U-6 (broad form) will reach 30%.

Have to agree with this one. Quite a distinct possibility this may actually come to pass. And once official U3 unemp rates cross 20% odd, all bets are off. And visions of a madmax world start to surface.

* Civil unrest will break out before the end of the year. The Military and Guard will be called up to try to stop it. They won’t be able to. Big cities are at risk of becoming a free-fire death zone. If you live in one, figure out how you can get out and live somewhere else if you detect signs that yours is starting to go "feral"; witness New Orleans after Katrina for how fast, and how bad, it can get.

Of course, summing it all up (there's good news and then there's bad noose).

The good news is that this process will clear The Bezzle out of the system. The bad news is that you won’t have a job, pension, annuity, Social Security, Medicare, Medicaid and, quite possibly, your life.

It really is that bleak folks, and it all goes back to Washington DC being unwilling to lock up the crooks, putting the market in the role it has always played – that of truth-finder, no matter how destructive that process is.

Only immediate action from Washington DC, taking the market’s place, can stop this, and as I get ready to hit "send" I see the market rolling over again, now down more than 3% and flashing "crash imminent" warnings. You may be reading this too late for it to matter.

Read it all. Keep some salt handy, just in case.

kmkraoind · Post by **kmkraoind** » 22 Dec 2009 14:35

New Jersey Leads Municipal Bond Downgrades as State Aid Shrinks

Chinmayanand · Post by **Chinmayanand** » 22 Dec 2009 16:57

Fake Gold Bars Discovered in HK LBMA Approved Vaults

It is proving quite difficult to find any mainstream information sources able to substantiate the rumors that have been circulating about the widespread distribution of fake tungsten filled gold bars. So the story goes, about 15 years ago between 1.3 and 1.5 million 400oz tungsten bars were allegedly manufactured by a sophisticated refiner in the US. To save you whisking out your calculator that’s more than 16,000 metric tons. Subsequently, some 640,000 of these tungsten blanks were 24kt gold plated and shipped to Fort Knox. Since then these or other bars manufactured by the same company have found their way into sovereign vaults and ETF’s holdings around the world.

First, why would anyone do it? Well gold comes in various forms and sizes. Coins are stamped, smaller bars are stamped or machined, but the largest size, 400 oz “good delivery” bars favored by central banks and major investors are cast – making them easier to hollow out and fill with tungsten. Because it is so hard, tungsten is notoriously difficult to stamp to shape. At $20/lb, tungsten obviously is a whole lot cheaper than gold at $16,000 per pound and with a density of 19.35g/cm3 it is almost a pure match for gold at 19.32g/cm3 – making detection by standard methods impossible. Assayers around the world are reportedly being asked to check reserves but they will have to use more sophisticated methods than simple weight, such as drilling holes into the center of bars or scanning them to see into the core. One wonders what methods the Indians used to check their 200 ton purchase form the IMF last month.

Now these stories would have remained just that, stories, if London Bullion Market Association (LBMA) approved vaults in Hong Kong did not discover 400oz bars of exactly this type last month. The discovery has got people asking what chance is there that the physically backed gold ETF’s are not sitting on some of the same bars? As they are not required to audit their holdings, no one is going to know. Moreover their prospectus purportedly reads, “Gold bars allocated to the Trust in connection with the creation of a Basket may not meet the London Good Delivery Standards and, if a Basket is issued against such gold, the Trust may suffer a loss”. In other words it’s the buyers’ problem, not the fund. A story in Commodity Online that the Central Bank in Ethiopia had discovered some of the same bars in their reserves a few years ago proved to be a red herring. The bars were indeed fakes but they were gilded steel and showed up the moment the bars were shipped to South Africa – the South Africans know a thing or two about gold, they were promptly returned. Interestingly some producers are not so covert about their activities. A Chinese company called Chinatungsten is advertising imitation gold merchandise on its website. The following quote is taken directly from their Tungsten Alloy for Gold Substitution page: “a coin with a tungsten center and gold all around it could not be detected as counterfeit by density measurement alone … We are well accustomed to exploit more innovative applications of tungsten products. Gold-plated tungsten is one of our main products.” One wonders what kind of customer they are selling to!

So not only does there appear to be an element of truth in the long running rumors of these tungsten containing 400oz bars but there also appears to be a current thriving business in such fraudulent activities. The great unknown is how much fake material is really out there and who is going to pick up the tab if its proves to be as widespread as some in the anarchy department would have us believe.
–Stuart Burns

See manufacturer's site here
http://www.tungsten-alloy.com/en/alloy11.htm

Hari Seldon · Post by **Hari Seldon** » 22 Dec 2009 19:38

Collapsed Lehman pays out big bonuses

Nothing really shocks me anymore on the khanomic front, almost. So, well, YAWN only.

Lehman Brothers, the collapsed Wall Street investment bank, is hiring bankers and paying generous bonuses in London to stop employees defecting.

Lehman’s European business is recruiting middle and back office staff to help administrators PwC wade through the millions of transactions that must be reconciled with clients and trading partners to determine what is owed or can be claimed.

A judge overseeing Lehman’s US bankruptcy in New York last week approved an extra $50m (€35m) in bonus pay-outs to some 230 derivatives traders working to unwind the dead bank’s $10bn portfolio. The pay-outs come as bankers in the US and Europe face public anger over probable multimillion-dollar bonuses at the end of this year and, in Britain and France, additional taxes on the pay-outs.

Jai Hor indeed.

Katare · Post by **Katare** » 22 Dec 2009 23:56

It seems initial 3rd quarter growth and other figures were inflated by a good margin. Final figures look too weak for it to be called a decent recovery. Are we looking at a U shape recovery.....

US economy grows 2.2% in Q3; recovery weak

Hari Seldon · Post by **Hari Seldon** » 23 Dec 2009 04:38

Katare wrote:It seems initial 3rd quarter growth and other figures were inflated by a good margin. Final figures look too weak for it to be called a decent recovery. Are we looking at a U shape recovery.....

US economy grows 2.2% in Q3; recovery weak

Recovery based on what? As long as neither demand nor employment pick up, I see no recovery imminent.

IMHO, Demand is down i.e. stagnant at best for the medium term at least because of the credit contraction and rise in savings witnessed everywhere now. The debt fueled demand binge of the 2000s presented misleading estimates about what the 'natural/normal demand level' looks like and also served to artificially prop up GDP, growth estimates and asset prices throughout the decade.

I see few signs of a recovery in 2011. 2012 onwards, perhaps. By then, we may have to bear witness to sovereign defaults from at least a dozen countries around the world, world trade dropping to new lows and general mayhem around (rising unemp and crime, slashed welfare and pensions, etc).

OK, meanwhile from the WSJ, a very useful piece for the brave souls returning to where the opportunity is (relatively) best:
A Primer for the Returning Indian Professional
Recent R2Iers, worthwhile read!

Hari Seldon · Post by **Hari Seldon** » 23 Dec 2009 04:52

Ed Harrison presents an excellent summary of the current options set in a debt-deflationary environment faced by most of the emerged world

You have four options:

1. No stimulus. Let the chips fall where they may. Yves Smith calls this the ‘Mellonite liquidationist mode.’ The thinking here is that trying to avoid the inevitable bust only makes it that much larger. And the economic policies during recessions in 1991 and 2001 seem to bear that out. The Harding Recession of 1921 is commonly seen as gold standard response.

2. Monetary stimulus only. Quantitative easing mania. My understanding is this is what Ambrose Evans-Pritchard has been advocating. The thinking here is that the flood of money and the low rates will eventually jump start the economy. No deficit spending needed.

3. Monetary and fiscal stimulus. Full tilt Keynesian. This is the Krugman view. The thinking here is that one needs to credibly commit to higher inflation and close the output gap to avoid a deflationary spiral. If that is insufficient, then one needs to go full bore on fiscal stimulus aka deficit spending. And if that doesn’t work, subsidize jobs. The New Deal is commonly seen as the gold standard response.

4. Fiscal stimulus only. Deficit spending. I have been talking up this view. The thinking here is that we need to both close the output gap to prevent a deflationary spiral and revive private sector savings in order to promote deleveraging.

The concern about the output gap and the urgent need to fill it is very real. Turns out that a lot of the 'demand' we saw in preceding boom years was fluff - unreal because the ability to pay (or repay the debt in this case) for that consumption level simply didn't exist in the khanomy. And demand is traditionally defined as the willingness+ability to pay for a set of goods/services.

So what happens now is that the khanomy as it currently stands is geared to oversupply - capacity created for a demand level that never really existed in reality. The consequences on output, prices, employment, tax revenue, all the good things is full-scale deflationary only.

There is no magic bullet here. We are living through a situation unique in time with few historical precedents. And there are a lot of competing ideas being tossed about. So policy makers are groping around, desperately seeking the holy grail of depression-busting economic policy. In that regard, I don’t envy them. They are certainly going to make a lot of mistakes. It may seem at times that I don’t realize this given the harshness of my critiques, but I do.

What seems to be winning out currently is the Krugman view. Of course winning out on the policy table in DC is not == winning the real battle on the ground in the real world. So far, actually, it has seemed to be a losing battle only. Actually Ed's thoughts nicely encapsulate this point:

So, how has this worked out in practice? Not so well. From the very start, Obama’s lead by negotiating with oneself approach led to a weak and poorly crafted stimulus package.
...
To make matters worse, his team’s lack of accurate economic forecasting has led to an Armageddon scenario at the state and local level, where even unemployment benefits are not adequately funded. All of this was predictable.{And predicted on this dhaaga among other places...yup, brf ahead of the curve and all that }
...
The President has effectively discredited fiscal stimulus as a policy tool. What’s more is the bailout of the too-big-to-fail institutions without strings, the apparent cronyism in how these bailouts were done, and the gutting of financial reforms by the financial lobby has also discredited government as an agent to level the playing field for struggling households and taxpayers. {Extremely important and poignant observation, IMHO.}
...
I certainly underestimated the degree to which cronyism and special interests ruled the roost in Washington. I no longer believe government can be an effective agent of change in the U.S any more than it has been in Japan.

Read it all.

Hari Seldon · Post by **Hari Seldon** » 23 Dec 2009 08:12

Aaaah.... how could moi miss this..... khanomic guru Sri Marc Faber uvacha on the burning topic of
US vs China: Watch the power game play out

First the big question to the D&G guru. Does he still stand by hos D&G pronouncements? The short answer - 'yes' in the 'long term'.

They will have to print money and the fiscal deficits will go up and the problem will be that one day when interest rates go up for whatever reason and may be next year or in three years time, the interest payments on the government debt will balloon and in say seven years time, the interest payments on the US government debt will be between 35% to 50% of tax revenues and when you are in a huge mess.

And so I believe that to get out of this mess, they will monetise and they will have all kind of stimulus packages and they will lead to high inflation and the standards of living of the typical household will go down and it will enrich a few people the elite essentially on Wall Street. But then to distract the attention, the US will escalate its war efforts and then all thing will collapse. But, you know, it can be in ten years time, could be in five years time, could be in three years time, could be 12 years time, who knows but that is essentially my long term very negative view. Now as an investor, you cannot sit there then I don't do anything at all because by being in cash you have zero interest so you have to do something and so I think that equities are probably a better place to hide than government bonds.

On the US-dlagon dance dynamics.....

I think, the interest of the US and China are further apart than ever before because you have essentially declining superpower the United States and you have a rising superpower China and the current superpower the US will obviously try to contain the rise of China and China will want to have more say in global affairs and you can see their expansion everywhere in Latin America, in the Middle East even in the Indian Ocean, in East Africa and so forth.

On standards of living converging across the world and why thats bad news for TFTA emerged khanomies...

So, in my opinion, US has badly abused its power to borrow money basically and has not saved at all in the last few years and obviously, in the long run, relatively speaking, your standards of living go down compared to countries like China and India where you have a high savings rate and where people then build factories and develop their infrastructure and develop the educational standards and so on. So if you look at 1950, the US is up here and the emerging economies are down here and now the US is still up here but is not up much and emerging economies stay close the gap, there is still a gap between the US and most emerging economies but you look at educational standards in the US, in many states of the US 20% of their people are illiterate you know this I mean horrible.

Re that last bolded part, I'm like - "WHAT?!?!". Its the khanate backwater we are talking about, not Bihar for Chrissakes. Has Sri Faber finally lost it? Or is he spot on yet again?

On the USD and Gold and all that

we have now in the world $7 trillion in foreign exchange reserves up from a trillion in 1996. So we have gone up in the foreign exchange reserves, in international reserves seven times. The price of gold has had gone up seven times over that period of time and in Asia we have essentially central banks that hold including Japan 70% of the $7 trillion and they have by enlarge less than 2% of their reserves in gold. So I think that a lot of central banks will follow the example of the Reserve Bank of India. By the way, the Reserve Bank of India deserves applause they have done a very good job by and large, is very well run central bank.

On opportunities in Amchi Yindia

I am the Chairman of the India Capital Fund and the Manager Johnson is overweight banks. He likes the banking sector and I can see why because in the western world the banks are over leveraged and they have still huge problems coming along as a result of there exposure post residential and commercial real estate but in India the banks are relatively sound. They did not play in the CDO market and mortgage backed securities market and all kinds of speculative activities and so forth. So they are relatively clean and obviously as the population grows and that's we still have in India 700 million people who leave in the countryside most of them probably don't have bank account. They are going to go have bank accounts and they are going to have insurance policies and so for sense or. So for the banks that are well run there is a huge opportunity.
...
Well I like real estate in emerging economies and in particular in Asia and in particular in India because I can see in India urbanisation will accelerate and there will be entirely new cities coming up. So I think there is a big opportunity in Indian real estate in the long run.

Needless to say, read it all.

Sanjay M · Post by **Sanjay M** » 23 Dec 2009 08:20

BBC:

Saab May Close

Chinmayanand · Post by **Chinmayanand** » 23 Dec 2009 16:20

Marc Faber in November issue

Hari Seldon · Post by **Hari Seldon** » 24 Dec 2009 06:58

Time to break open the Champagne barrel. Apparently. Here's why:
Geithner: There Will Be No 'Second Wave' Crisis

Whew! Eh?

"We are not going to have a second wave of financial crisis," Geithner said in an interview with National Public Radio. "We cannot afford to let the country live again with a risk that we are going to have another series of events like we had last year. That is not something that is acceptable."

Geithner, interviewed on NPR's "All Things Considered" program, rejected the idea that a serious new crisis could be triggered by lingering problems with commercial real estate loans or with a sudden weakening in the value of the dollar.

"We will do what is necessary to prevent that and that is completely within our capacity to prevent," he said.

However, in a separate interview he conceded that it would take several months before the economy yields positive job growth. Job losses have been easing in recent weeks but the economy still saw 480,000 new claims for unemployment benefits last week. That number is expected to shrink just a bit this week.

Are the cockles of your heart warmed enough already? Sri Geithner might have gotten alughed at by Beijing Univ students but they're immature bachchas, so they knew not what they did, perhaps. Eh?

Me, I'll go with Mish's deferential assessment:

One sure way we know a second wave to the crisis is likely coming is the preemptive denial of it by those who never saw it coming.

Hari Seldon · Post by **Hari Seldon** » 24 Dec 2009 08:01

The rule of law given further fillip and a moral injection booster dose in its hour of need in the khanate.

Thou Shalt Steal

Tim Jones, parish priest of St Lawrence and St Hilda, told his congregation in York, northern England: "My advice, as a Christian priest, is to shoplift."

Jones, who according to the church Web site previously worked in Corinth, Mississippi, made his comments about what he regarded as acceptable behavior by those in need when they were desperate.

In a transcript of his sermon published in the local newspaper, "The Press," Jones said: "I do not offer such advice because I think that stealing is a good thing, or because I think it is harmless, for it is neither.

"I would ask that they do not steal from small family businesses, but from large national businesses, knowing that the costs are ultimately passed on to the rest of us in the form of higher prices."

Well well, liberation theology returns in glory to emerged tfta markets, seems like. Karl Denninger's take here is worth a look, IMHO.

amol.p · Post by **amol.p** » 24 Dec 2009 10:54

Small-business bankruptcies rise 81% in California

"While bankruptcies are up, overall, small-business closures are up even more,"

http://www.latimes.com/business/la-fi-s ... 5684.story

US home foreclosures top one million mark

The number of US homes in foreclosure topped the one million mark for the first time ever, according to figures released this week by federal agencies. The continued deepening of the housing crisis is being driven by the relentless economic squeeze on working people, confronted with declining wages and persistent and growing mass unemployment

The number of prime-rate mortgage borrowers in default doubled from a year earlier, according to figures released Monday by the Office of Thrift Supervision

http://www.wsws.org/articles/2009/dec20 ... -d23.shtml

amol.p · Post by **amol.p** » 24 Dec 2009 14:46

Recession Slows Population Rise Across Sun Belt

current recession sowing seeds for another recession.....

http://www.nytimes.com/2009/12/24/us/24census.html?hp

Singha · Post by **Singha** » 24 Dec 2009 15:03

BBC

Greece votes for big budget cuts to reduce debt
Greece is trying to reassure markets about its economy

The Greek parliament has voted to adopt big budget cuts designed to lower the country's high levels of debt.

Greece aims to shrink public debt to 9.1% of overall economic output next year, down from 12.7% this year.

To do this, it has outlined measures to cut public spending and boost revenue by cutting back on red tape.

Concerns about Greece's high level of debt have led the three main international credit ratings agencies to downgrade Greek government bonds.

Greece's public debt currently stands at 300bn euros ($428bn; £268bn).

The single-chamber parliament adopted the budget by a large majority, with the 160 Socialist Pasok deputies voting for, and 139 opposition members against.

One opposition member was absent.

Speaking after the vote, Prime Minister George Papandreou said the budget was "a contract to reconquer our credibility".

"We shall prove our capacity and determination to change this country, to ourselves and to any foreigner who puts in doubt our will," he continued.

Spending cuts

Last week, Mr Papandreou warned that the country was at risk of "sinking under its debts", unless it introduced spending cuts.

He outlined a number of measures to reduce debt levels, including a 10% cut in social security spending.

He also announced a 90% tax on the bonuses of senior bank workers. ( london and NYC need to pick up on this)

Other proposals included a cut in defence spending, pay and hiring freezes for public sector workers, and the closure of a third of Greece's overseas tourism offices.

Hari Seldon · Post by **Hari Seldon** » 24 Dec 2009 18:08

Someone was mentioning about how unblucky Olympic hosts typically tend to be soon after hosting the Games.

Greece of course has hit its crisis within 6 yrs of hosting the Games. Cheena hosted in 2008 though something tells me it may not quite take 6 yrs from 2008 for their moment of truth to come about. When is London hosting the games, bhai?

Singha · Post by **Singha** » 24 Dec 2009 18:17

2012

just the security expenses alone will be mind boggling.

Hari Seldon · Post by **Hari Seldon** » 24 Dec 2009 21:52

Its no secret that there's much heartburn around the world w.r.t. the cheeni exchange rate subsidy wrecking havoc in lots of places. But PRC has been shrill+tonedeaf in spitting on all criticism of its policies, due to its own compulsions perhaps.

Here is a rather interesting ekhanomist commentary on the true state of who calls the shots in PRC.

TIFWIW but I found the thesis plausible, at least. Excerpt:

As for what China’s leaders will now do, the signs don’t bode well. The leaders say a stable currency plus the stimulus are the anchors for President Hu Jintao’s trumpeted notions of a “harmonious society” and a “new socialist countryside”. That is, they create jobs. But not enough. Chinese growth is heavily skewed in favour of investment, not employment.
Joblessness in large export sectors (consumer goods, electronics, and so on) does not seem to bother the leaders unduly. When exports collapsed a year ago, migrant workers in the factories melted back into the countryside. Indeed, if the leadership really cared about domestic demand, it would presumably not send quite so much of it abroad in the form of vast current-account surpluses.

No, the leaders are in thrall not to the workers but to vested interests in state-run heavy industry and finance. In turn, the Communist Party guards its power by controlling the taps of a banking system that takes below-market-rate deposits from China’s households and passes them for next to nothing to the country’s corporate borrowers.

This is no people’s republic.

Whatever the economics of the currency regime, the politics of it are clear: the Communist Party is listening to the concerns of state-owned enterprises. And that is why Mr Wen and his colleagues not only decry debate about the exchange rate abroad. They also squelch debate at home.

Read it all.

Hari Seldon · Post by **Hari Seldon** » 24 Dec 2009 22:02

Another khanomist article, another interesting (if cliched) hypothesis:

The greatest strength of America is that people want to live there

Something that is yet to be tested fully in the light of the second debt-deflationary spiral since the great depression. And certainly for skilled migrants.

The stakes are high. Immigration keeps America young, strong and growing. “The populations of Europe, Russia and Japan are declining, and those of China and India are levelling off. The United States alone among great powers will be increasing its share of world population over time,” predicts Michael Lind of the New America Foundation, a think-tank. By 2050, there could be 500m Americans; by 2100, a billion. That means America could remain the pre-eminent nation for longer than many people expect. “Relying on the import of money, workers, and brains,” writes Mr Lind, America is “a Ponzi scheme that works.”

OK. We'll see.

Hari Seldon · Post by **Hari Seldon** » 24 Dec 2009 22:04

Singha wrote:2012

just the security expenses alone will be mind boggling.

Heh. And lawd knows how many headley, afzal, LeT, ISI, Al mujrahijron, hiz-bur-tahrir and other such assorted jihadi spawn of londonistan might choose to make a radical statement during the games.

Katare · Post by **Katare** » 24 Dec 2009 23:05

There you go Hari....
If this job number doesn't get revised downward and sustains at these levels for coming weeks you have an economy that's creating jobs......end of D&G may be nearer than I thought

Stocks rise on upbeat jobs, factory order reports

And new found double-digit savings of Americans are a good thing that Obama is again and again reminding that Americans need to preserve that habit. He doesn't want to go back to borrow and spend economy of Republicans. In a few years US might have good chunk of domestically saved of capital for investment in it's crumbling infra...

USofA would not just disappear in couple of years. It'll take several of these blows and comeback to fight again. Eventually China (or the underdog India) may become the numero uno economic power but it's not happening in our lifetime. Empires are built over decades they rule for centuries and decline over decades........

In the end it's in India and world's interest that USofA's economy doesn't collapse because if it does entire world will suffer unimaginable damages and hardship for years. What is needed or will happen is that China, India etc will walk faster and get ahead of USA. But if USA starts walking backwards it'll force everyone to stall or move backward.

bart · Post by **bart** » 24 Dec 2009 23:14

Hari Seldon wrote:Another khanomist article, another interesting (if cliched) hypothesis:

The greatest strength of America is that people want to live there

Something that is yet to be tested fully in the light of the second debt-deflationary spiral since the great depression. And certainly for skilled migrants.

The stakes are high. Immigration keeps America young, strong and growing. “The populations of Europe, Russia and Japan are declining, and those of China and India are levelling off. The United States alone among great powers will be increasing its share of world population over time,” predicts Michael Lind of the New America Foundation, a think-tank. By 2050, there could be 500m Americans; by 2100, a billion. That means America could remain the pre-eminent nation for longer than many people expect. “Relying on the import of money, workers, and brains,” writes Mr Lind, America is “a Ponzi scheme that works.”
OK. We'll see.

That is a huge assumption, depending on:
1> People from India/China still find America an attractive place as their own countries become developed superpowers
2> America will continue to be 'America' as it's current ruling class and hoi polloi becomes a minority by the influx of immigrants.

Ameet · Post by **Ameet** » 24 Dec 2009 23:46

Banks that bundled bad debt, also bet against it and won

http://www.nytimes.com/2009/12/24/busin ... ng.html?em

In late October 2007, as the financial markets were starting to come unglued, a Goldman Sachs trader, Jonathan M. Egol, received very good news. At 37, he was named a managing director at the firm.

Mr. Egol, a Princeton graduate, had risen to prominence inside the bank by creating mortgage-related securities, named Abacus, that were at first intended to protect Goldman from investment losses if the housing market collapsed. As the market soured, Goldman created even more of these securities, enabling it to pocket huge profits. Goldman’s own clients who bought them, however, were less fortunate.

Hari Seldon · Post by **Hari Seldon** » 25 Dec 2009 12:20

Katare wrote:There you go Hari....
If this job number doesn't get revised downward and sustains at these levels for coming weeks you have an economy that's creating jobs......end of D&G may be nearer than I thought

Sure, katare san.
Let us celebrate together the dodging of a bullet only.

BTW, small nitpick, the jobs number doesn't correspond exactly to the unemployment number because the working popn is still increasing and retirements (subtractions from the labor pool) have lagged estimates because boomer retirements are mostly bust. IN fact, the slide in the unemp rate (U3) by the BLS from 10.2% to 10% shown a moon ago by the GOTUS is sheer chicanery. They did so by deflating the size of the labor pool, with no explanation for why. I fully expect an upward revision at a politically less damaging time.

Stocks rise on upbeat jobs, factory order reports

And new found double-digit savings of Americans are a good thing that Obama is again and again reminding that Americans need to preserve that habit. He doesn't want to go back to borrow and spend economy of Republicans. In a few years US might have good chunk of domestically saved of capital for investment in it's crumbling infra...

Huh? The bad bad Rethuglicans are borrow and spend whereas Sri Obama and the hallowed Dems are lily white only? I mean, seriously?!?

Last I recall, the deficit (which is in effect borrowing by the gubmint from the future only) has ballooned fourfold from the big bad GOP days. Sri Krugman who took serious umbrage at the Dubya deficvit of $400bn now cheerleads the Obama avg deficit of $1.4trillion every year over the next decade. I mean, really.

As for pvt and household sector savings, I wouldn't be surprised one whit. Having saved nothing and becoming so neck-deep in debt that they had no servicing capacity left for additional debt, savings was like the duh option, I would think. Would have happened regardless of which set of partisan jokers ran COTUS or White house, IMO.

USofA would not just disappear in couple of years. It'll take several of these blows and comeback to fight again. Eventually China (or the underdog India) may become the numero uno economic power but it's not happening in our lifetime. Empires are built over decades they rule for centuries and decline over decades........

Multiple strawmen detected only. Dunno what gave you the impression that anyone on this thread has been championing unkil's disappearance, like, tomorrow. 'As for not in our lifetimes', sure I agree if one is 60+. For those in their 20s, the scary spectre of cheena overtaqking the khanate in size terms in this janam remains a distinct possibility. Strictly IMHO.

In the end it's in India and world's interest that USofA's economy doesn't collapse because if it does entire world will suffer unimaginable damages and hardship for years. What is needed or will happen is that China, India etc will walk faster and get ahead of USA. But if USA starts walking backwards it'll force everyone to stall or move backward.

More strawmen jumping on the camel's back. And some of it decidedly unfair, IMHO.

I'd rather sceptics of the thread credit us thread regulars with some basic good sense and decency. We have freinds and families invested in the current economic system powered by the almighty dollah and do *not* want to see ekahnomic armageddon. Repeat, we are not D&G cheerleaders - we are merely D&G ayatollahs. We study and speculate, primarily.

Sure, I'll admit, I won;t mind seeing UK-stan enter rough seas. But the khanate, oh no, better the known globocop than the untested dlagon, I say.

Hari Seldon · Post by **Hari Seldon** » 25 Dec 2009 14:15

well, Merry Xmas to all. First off.

Jesse follows the trail of who exactly it might be who's buying up all the US treasury issue in the past year and comes to some interesting questions.

First, an excerpt from one Sprott Asset mgmt report:

Our concern now is that this is all starting to resemble one giant Ponzi scheme. We all know that the Fed has been active in the market for T-bills. As you can see from Table A, under the auspices of Quantitative Easing, they bought almost 50% of the new Treasury issues in Q2 and almost 30% in Q3. It serves to remember that the whole point of selling new US Treasury bonds is to attract outside capital to finance deficits or to pay off existing debts that are maturing. We are now in a situation, however, where the Fed is printing dollars to buy Treasuries as a means of faking the Treasury’s ability to attract outside capital. If our research proves anything, it’s that the regular buyers of US debt are no longer buying, and it amazes us that the US can successfully issue a record number Treasuries in this environment without the slightest hiccup in the market.

Well, one may or maynot buy the arguments above but intriguing nonetheless, eh?
Jesse then weighs in:

So what does all this mean?

The bottom line is that the data seems to indicate that the foreign sector traditional buyers (at least for the past 20 years or so) of US sovereign debt are walking away from the market as they had said they would do, and are moving their reserves into other instruments.

This may not be such a great problem if the US trade balance continues to narrow, but it certainly is not healthy to see the Fed and the US household sector as the major markets for US sovereign debt.

If 2010 is not a year of recovery for the average American, the ability of the Treasury and Fannie/Freddie to keep expanding their debt offerings is going to become quickly constrained. How can Joe Sixpack keep saving and buying Treasuries, and at the same time consume at a rate sufficient to grow GDP? All on a stagnant median wage and a contracting housing market? Think the rest of the world is suddenly going to grow a taste for US exports? Will the US retreat into isolationism and trade barriers? That might not be Price Index friendly.

Quite obviously, the Fed among others can see what's happening. So what's their game-plan?

I see the problem, but I have to confess that I do not yet see how the Bernanke Fed intends to dodge this collision. And I know that they must see this as well, and have a game plan. Could counting on an exogenous event that would provoke an artificial demand and neo-isolationism (something like a regional war, or at least a trade war) be called a plan? Can they possibly be in denial, and just looting the capital before the Empire falls? It is hard to see how the resolution of this will unfold just yet, but I am pretty sure that many of the simple scenarios that people are laying out so nicely with such fine rhetoric are more fantasy than probable outcomes. This is going to knock our socks off default-wise.

One possibility explicitly mentioned:

The US is marshaling its ratings agencies and multinationals to cast doubt on the European union, their currency, and their solvency, and threaten to take them down first to maintain an equilibrium of failures.

But in fact, the US is much closer to the point of a serious debt crisis than one might imagine from what is being put out by most US based financial analysts. There is a nasty convergence of constraints bearing down on the Fed and the Treasury that look to push the ability to market dollar debt to the breaking point. If a couple big States go under next year, the dominoes may start falling very quickly.

Is it even possible for a UST auction to, like, fail? Bond auctions have failed last year in solidly robust places like Germany, for instance.

If you think that this crisis will be deflationary, then you might be a bit surprised to see what happens if and when a US sovereign debt offering fails in the market. It will not be pretty. And it will not be dollar friendly in the longer term. But who can say what will happen, when there are so many possibilities.

The market may likely reveal to us what is coming, if we are observant, and lucky, and have the willingness to listen to what we may not wish to hear.

Needless to say, read it all.

Sanjay M · Post by **Sanjay M** » 25 Dec 2009 20:30

NYT:

Japan Posts Record Budget, Sparks Debt Worries

So basically the peoples of the world are consolidating under socialist govts (or blocs, in the case of EU and Africa)

This will lead to a tectonic effect, where different respective consolidations bash into each other, like tectonic plates. Each will be pushed along by its own groupthink, with a momentum that may not easily be stopped, resulting in serious collisions with attendant damage.

I think the Japanese may end up bitter isolated losers who then lash out with WW2-style fascism, in order to gain themselves a little more breathing space from their currently compressed state.

Neshant · Post by **Neshant** » 26 Dec 2009 02:38

As the market soured, Goldman created even more of these securities, enabling it to pocket huge profits. Goldman’s own clients who bought them, however, were less fortunate.

Don't the clients have the ability to take these scam artists to court? What of the rating agencies who committed fraud by branding this junk AAA grade investments?

India better start accumulating more gold and keep it under lock and key as scammers are all around. If US companies can do this to their own country and get away with it, just imagine what they would do in India. They might literally instigate a 26/11 type carnage and short the market just before it. In fact I wonder if US did not share intelligence on 26/11 with India for that reason.

How stupid can the government be allowing Goldman Sachs a 10% stake in the Indian stock market. There is only one thing financial bullcrappers are good at and that is gaming and defrauding the system. That is their financial "innovation".