Perspectives on the global economic meltdown

svinayak
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Re: Perspectives on the global economic meltdown

Postby svinayak » 10 Jan 2010 05:24

The Coming Generational Storm: What You Need to Know about America's Economic Future
Watch this video on mitworld.mit.edu
http://video.google.com/videoplay?docid ... 6780034906

1:04:44 - 5 years ago
A word of advice to baby boomers: be very kind to your children. They will quite likely be paying a steep price for your happy golden years. Laurence Kotlikoff says the future is dark indeed for the Social Security system. The fiscal gap between what the federal government expects to take in and what it pays out is so big that the Treasury Department had to censor the number in the federal budget. Kotlikoff's current figure: $51 trillion. Today's payouts to retirees for Social Security and Medicare/Medicaid have already broken the bank, and future expenditures will take us right into an economic catastrophe, says Kotlikoff. Why? Because today there are 33 million people over 65 receiving an average annual Social Security payment of $23k -- but in four years there will be 77 million seniors collecting. The equation involves demographics and money: a predominantly old population with extended lifespan requires benefits that far exceed the capacity of young workers to pay for them....

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 10 Jan 2010 05:26

^^^More on the above, more succinct and to-the-point only.

85,000? We’re Missing a Million of Them!

No, Virginia: There isn’t a Santa Clause, and even if there is, he didn’t bring an employment recovery for Christmas. But the household data in many ways are far more concerning than the establishment data, which show an 85,000 drop in December payrolls.

A far more disturbing number (in Table A-1 of today’s BLS release) shows that "persons not in the labor force" increased by about 840,000 between November and December, from 83,022 to 83,865. That’s seasonally-adjusted; unadjusted, the number is closer to a million. Correspondingly, the total size of the civilian labor force fell from 153,720 to 153,059 between November and December.

What happened to the million Americans who went missing from the BLS definition of the labor force in the single month of December? They are the "long-term discouraged" or whatever, those whose prospects of finding a job are so poor that they have stopped looking.


Says it all. Or does it?

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Re: Perspectives on the global economic meltdown

Postby svinayak » 10 Jan 2010 05:29

http://mitworld.mit.edu/video/705
About the Lecture

People sometimes ask Montek Singh Ahluwalia questions loaded with “aspirational objectives,” such as when India will “get rid of poverty.” Few are as well equipped to respond as Ahluwalia, one of the architects of India’s breathtaking economic transformation.

The current income of an average Indian citizen is about 1/15th that of a U.S. citizen. Ahluwalia envisions increasing India’s per capita income ten fold. He sees this as a matter of “simple arithmetic.” To achieve this advance, India must sustain GDP growth of 9% a year (which corresponds to a 7%/year growth in personal income) -- for 32 years. By 2040, India’s 1.5 billion people could be living more like Americans. “Regrettably, I won’t be around to see it,” says Ahluwalia.

By 2020, though, assuming such sustained economic growth, he would be around to witness “more modest results.” Indians would double their annual income to $6,600, and the nation would be able to “provide a basic level of services to the vast majority of its population,” essentially leaving behind its problems of poverty. This kind of growth, “an extremely worthwhile objective” for India, would also leave its mark on the rest of the world. It would inspire other emerging economies, for one thing. It would also shift the balance of power in global trade, with the combined economies of India and China taking on the U.S.

So can India really achieve this kind of relentless economic progress? Ahluwalia’s not sure, but invokes the successes of Japan, Korea and China, and sees reasons for optimism. Over the past eight years, India’s averaged a 7.2% GDP growth rate, and looks likely to land on its feet after the current worldwide recession. On the other hand, the nation’s vibrant democracy (420 million voted in the most recent elections) can make agreement on economic policy and its implementation difficult. Ahluwalia is “not complaining,” but acknowledges that this kind of participative society “means we’re taking longer to get done what needs to be done.”

He sees institutional strengths that will enable India to push its development agenda forward: a sense of confidence pervades Indian society; past reforms have “unleashed tremendous energy in the private sector;” the economy has opened up to greater domestic and foreign markets; and in spite of changes in government, the general economic policies continue to evolve. Ahluwalia acknowledges that defeating poverty may not address everyone’s goals for success. The true objective for India, he believes, is “inclusive growth,” an equitable and constructive distribution of economic gains via market forces, government and public means

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Re: Perspectives on the global economic meltdown

Postby svinayak » 10 Jan 2010 05:42

http://www.youtube.com/watch?v=eZA0qNsf4m0
The Dollar Bubble starring Peter Schiff, Ron Paul, Marc Faber, Gerald Celente, Jim Rogers, and others. Prepare now for the U.S. dollar collapse.

Become a member of the National Inflation Association for free at http://inflation.us

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Re: Perspectives on the global economic meltdown

Postby svinayak » 10 Jan 2010 07:59

http://www.youtube.com/watch?v=emR7yatrPnU
http://inflation.us/

First hand interview with High School kids turning to panhandling. This is going mainstream America very quick...Within the year "begging" esp. families in the streets will go mainstream

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Re: Perspectives on the global economic meltdown

Postby Singha » 10 Jan 2010 08:50

the US media will carefully not expose it. then some british rag like Guardian will blow the lid off.

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Re: Perspectives on the global economic meltdown

Postby khan » 10 Jan 2010 11:30

Acharya wrote:http://www.youtube.com/watch?v=emR7yatrPnU
http://inflation.us/

First hand interview with High School kids turning to panhandling. This is going mainstream America very quick...Within the year "begging" esp. families in the streets will go mainstream


Dumbass kids. Brunette says parents are laid of in the beginning and at 3:03 says, they are at work...

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Re: Perspectives on the global economic meltdown

Postby Satya_anveshi » 10 Jan 2010 12:28

(thoda OT guys)..

Singha wrote:the US media will carefully not expose it. then some british rag like Guardian will blow the lid off.


This is surreal...Just now I was switching channels on TV and lo behold...one of the HBO was running Real Sex..(believe me I don't generally tune into these :P )..but before I switch channel, I saw wallstreet in the subtitles. I thought...WTF....let's see what this one is about....

The program is about how Wallstreet women have taken to strip clubs after they lost their jobs...These women are intelligent..know how to sell, know how much they can make...the commentator said. After that they showed a women performing who earlier was bond sales person.. :rotfl:

Well..I guess one can say US media is exposing a few things at least. :lol:

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Re: Perspectives on the global economic meltdown

Postby Singha » 10 Jan 2010 13:11

some details here. apparenly on Gsachs is still not explicitly forbidding staffers to use strip clubs to drum some
business up/
http://squawkblog.spaces.live.com/blog/ ... 2673.entry

http://www.tuscaloosanews.com/article/2 ... ub-dancing

Like many working women, 'Charlie' is expected to wear a uniform to work:

Heavy eye shadow? Check.

Micro-miniskirt? Check.

String bikini? Check.

Eight-inch platform heels? Check.

And not much else.

Charlie — who spoke on the condition that only her stage name be used — is among a small but apparently growing number of women who, because of a lousy job market, have turned to stripping to pay the rent, go to school or feed their kids.

No one compiles statistics on exotic dancers, but club managers across the country say more women than ever are seeking economic security by grabbing on to a brass pole.

For some, in places like Fresno County, Calif., where unemployment lingers above 15 percent, desperate times call for desperate measures. Dancers say it's better than no job at all — despite the social disapproval, physical danger and psychological stress.

'Women who are doing this because they're desperate for money, the ones who find it morally repugnant ... will feel the toll immediately,' said Bernadette Barton, a sociology professor and author who has studied the business. 'No one should have to violate their own moral center to make a living.'

Charlie, a 22-year-old petite blonde studying to be a surgical technologist, acknowledges the emotional difficulty of the job. 'I try not to think about it,' she said. 'If I didn't have to be here, I wouldn't be.'

On a recent midweek afternoon at City Lights, a bar near Fresno Yosemite International Airport, Charlie's outfit is a white string bikini and tall white stripper heels.

It's a far cry from the medical scrubs and white sneakers she wore a year ago, before her hours as a medical assistant in a doctor's office were reduced last summer in a cost-cutting move. She said she was affected because she was the most recent hire. Her income shrank to the point where she couldn't keep up with her bills.

Economic necessity

Managers at City Lights say they have a roster of about 70 women dancers, up from about 45 more than a year ago.

Dancing topless on stage for tips and offering lap dances to customers at $20 per song offers not only fast cash but a flexible schedule. That appeals to the college students who fill most of the dancer roster at City Lights, said 'Kitty,' a club manager and veteran stripper.

But female students aren't the only ones seeking work, Kitty said. 'There aren't many jobs out there, so we're getting more girls. We have quite a few single moms.' Kitty, a fit 46-year-old who danced at the Fresno club for 15 years, knows from experience that when a woman comes in, she's in dire straits.

'It's not easy to walk into a strip club to look for work,' she said. 'A lot of women just can't do it. It's hard.'

Club owners nationwide are seeing a surge in new dancers, said Angelina Spencer, executive director of the Association of Club Executives, a trade organization of adult nightclubs.

'Owners are seeing a lot of women who worked for Wall Street companies or in real estate who still have to make the payment on their Mercedes, still have to feed their kids, still have to pay their American Express card bills,' Spencer said.


Strip clubs aren't the only dance employers. Fresno businessman Albert Ellis, owner of Spice 1 Entertainment, said the number of calls from women looking for work has nearly doubled from a year ago — to as many as 30 a week.

'What's surprising me is how many women are coming in not because this is something they want to do, but because it's something they have to do,' Ellis said. 'It's more a sense of desperation over the last year and a half, when the economy started taking a fall.'

An emotional toll

Stripping wears heavily on many dancers, said sociologist Barton, an associate professor at Morehead State University in Kentucky and author of 'Stripped: Inside the Lives of Exotic Dancers,' a 2006 book detailing 10 years of research and interviews with dancers across the U.S.

'They're so stigmatized and treated so disparagingly in media representations,' said Barton.

That's why dancer Charlie conceals what she does for a living from most people, although she said her family knows.

'I never thought I'd be doing this,' she said. 'To be honest with you, I don't enjoy it, but it pays the bills and it pays for my school.'

Fear is another stress. Twenty-year-old stripper 'Dallas' recalled the terror of her first bachelor party show nine months ago.

'I've never been so scared in my life,' she said. 'I don't know what scared me more: getting naked in front of strangers, or worrying about running into someone who could be my cousin, for God's sake.'

Being propositioned is another occupational hazard, although it's uncommon for women who perform in topless or nude clubs to fall into prostitution, Barton said.

The pressure is even more intense for dancers at parties. At least once a night, said Dallas, someone offers her cash for sex.

'It's disgusting,' she said. 'Like I'm going to have sex with some guy for $100. Ughh, no way.'

When a client gets out of hand, Dallas said, the driver/bodyguard who accompanies her to parties can intervene, and the dancer can call off the show and leave.

Diminishing returns

Economic realities that prompt women to become strippers also affect their customers. Men who visit strip clubs don't spend like they used to.

On a recent midweek afternoon at City Lights, bikini- and lingerie-clad dancers mingled with a mere handful of customers as a topless dancer gyrated around a brass pole on stage. All six billiard tables at the other end of the club were vacant.

'This is very unusual compared to six months ago,' dancer Charlie said. 'Six months ago, I'd be really mad if I finished with only $150 after a shift. Now I'm happy to go home with $150.'

Ellis, the owner of Spice 1, said the outcall business also feels the economic pressures of supply and demand. With more women stripping for parties — both for outcall companies and advertising as independents — 'it's pushing prices down. It's not so much that we're losing customers as much as prices are falling so guys can still afford to entertain.'

When he started his business 13 years ago, Ellis said, he charged $100 for a one-hour show. At its peak, his rates went up to $160 an hour. Now, it's fallen back to $120 an hour.

Dallas said she receives $40, plus tips, for each show she performs, and her driver/bodyguard gets $20. When she began dancing last year, she often was booked for five to six shows on the weekend nights she worked. Now that's slipped to perhaps three shows on a Saturday night.

So for all the social stigma, relationship troubles, the occasional unruly drunk who gets a little too 'friendly' — is it worth it?

'I think so,' Dallas said. 'I've had days where I've gone home crying, but then the next day is a good day.'

Club stripper Charlie said she thinks she can stick it out until she finishes her schooling. 'It's worth it to me because it's paying the bills and paying for school — the student loans are ridiculous,' she said.

'I'll be here until I'm done with school, maybe another year after this fall.'

Another dancer at City Lights who also goes by the stage name Dallas said the money's good, 'but I wouldn't be doing it if I had other work.

'This is a fall-back for everybody,' she added. 'I mean, nobody really wants to be doing this.'

Hari Seldon
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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 10 Jan 2010 19:49

The Other Plot to Wreck America (NYT)

Good article. Very nice summary of the major goings on.

Here's the money quote:
As Paul Volcker, the regrettably powerless chairman of Obama’s Economic Recovery Advisory Board, said recently, there is not “one shred of neutral evidence” that any financial innovation of the past 20 years has led to economic growth.


Amen.

Jai Ho.

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Re: Perspectives on the global economic meltdown

Postby shyam » 11 Jan 2010 09:37

I'm not sure if this is the appropriate thread. Interesting arguments though...

Gerald Celente on Coast to Coast AM 01-02-10

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Re: Perspectives on the global economic meltdown

Postby amol.p » 11 Jan 2010 09:52

Global corporate defaults rise to a record in 2009

The number of global corporate bond issuers that defaulted on their debt climbed to a record high in 2009, as companies worldwide struggled in the economic downturn, credit rating agency Standard & Poor’s said on Friday. The agency said in a report that 265 corporate issuers around the world defaulted last year, the most in any one year since S&P began tracking them in 1981.

Issuers in the United States saw the most corporate defaults at 193, followed by 36 in the emerging markets, 19 in Europe and 17 among issuers in Canada, Japan, Australia and New Zealand, the agency said.

http://economictimes.indiatimes.com/new ... 431711.cms

JAL to cut 15,600 jobs, reject cash bids: Reports

Troubled Japan Airlines Corp is set to cut about 15,600 jobs, a third of its work force, and reject billion-dollar cash offers from Delta and American Airlines, as it files for bankruptcy and embarks on a government-led turnaround, reports said on Monday

JAL could file for bankruptcy as early as Jan. 19, with company president Haruka Nishimatsu resigning soon after, reports said.

http://economictimes.indiatimes.com/new ... 432081.cms

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 11 Jan 2010 10:05

The local ET has as its cover story the news item that Japan has finally, reluctantly, agreed to open its vast (~$100bn est) Pharma market to desi generic firms. My stock tip - buy up Desi pharma stocks quick and big.

Reading between the lines, one can glean an underlying trend - market access to emerged mkts will be forced by rising (nay, runaway) costs in the healthcare and other services sectors. Good. The Oiropeans are currently playing cute with our generic exports. Prolly coz oirope is home to some giant pharma firms. How long they'll last, we'll see.

ss_roy long ago mentioned that the emerged world would soon have little choice but to sell us their best tech and other things simply because they're flat broke and their assets will come cheap. I shook my head in disbelief, am now shaking moi head in the opposite direction, slowly. of course, one event doesn;t make a pattern, but lez wait n watch only.

Jai Ho.

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 11 Jan 2010 10:06

China systematically killing Indian manufacturing sector: L&T

Something that I agree with prima facie.

SURAT: Private sector engineering major Larsen & Toubro has said that China is systematically killing Indian manufacturing sector and sought 25 per cent anti-dumping duty on Chinese goods.

"China has a fixed currency. It is not a market economy like ours. China is systematically killing the Indian manufacturing sector," Naik, who was here for foundation stone laying ceremony of a forgings unit at Hazira told reporters here yesterday.

"There are taxes on goods manufactured locally, but none on imported products (from China). This is an unfair situation for Indian goods. This is why there should be 25 per cent anti-dumping duty on Chinese products," Naik said.


Well Sri Naik is right but isn't it also true that BHEL order book is now several yrs long and so is that of L&T. If capacity is constraining the desi majors, then what choice would our utility firms have but to go abroad? Its not like Indian power firms and consumers can wait until desi majors ramp up capacity.

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Re: Perspectives on the global economic meltdown

Postby girish.r » 11 Jan 2010 21:21

Dubai’s First Foreclosure May Open Floodgates in Worst Market

http://www.bloomberg.com/apps/news?pid=20601109&sid=a4TwfiSIfjdM&pos=10

Barclays Plc won the sheikdom’s first foreclosure cases in court, clearing the way for lenders holding about $16 billion of Dubai home loans to take action when borrowers don’t pay. Islamic lender Tamweel PJSC, the emirate’s biggest mortgage bank, has several of its own foreclosure claims pending and estimates about 3 percent of its mortgages are in default.

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Re: Perspectives on the global economic meltdown

Postby AnimeshP » 12 Jan 2010 01:46

Hari Seldon wrote:The Other Plot to Wreck America (NYT)

Good article. Very nice summary of the major goings on.

Here's the money quote:
As Paul Volcker, the regrettably powerless chairman of Obama’s Economic Recovery Advisory Board, said recently, there is not “one shred of neutral evidence” that any financial innovation of the past 20 years has led to economic growth.


Amen.

Jai Ho.


Seldon saar ... looks like your New Years resolution didn't hold for long ... :mrgreen:
Not that I am complaining ... Welcome back ...

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Re: Perspectives on the global economic meltdown

Postby SwamyG » 12 Jan 2010 02:10

Whatever be the case, Hari. In terms of national/economic security no country can allow another country to take over/dominate/eradicate its manufacturing base and expect to be reckoned with on this planet. Hope such noises lead to better & more opportunities for desi firms.

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Re: Perspectives on the global economic meltdown

Postby Chinmayanand » 12 Jan 2010 02:20

America slides deeper into depression as Wall Street revels

December was the worst month for US unemployment since the Great Recession began.

The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.

Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism. The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings. The local sheriff will escort them out of the door, often with some sympathy –– just like the police in 1932, mostly Irish Catholics who tithed 1pc of their pay for soup kitchens.

Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody's Economy.com expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck's Grapes of Wrath.

Judges are finding ways to block evictions. One magistrate in Minnesota halted a case calling the creditor "harsh, repugnant, shocking and repulsive". We are not far from a de facto moratorium in some areas.

This is how it ended between 1932 and 1934, when half the US states declared moratoria or "Farm Holidays". Such flexibility innoculated America's democracy against the appeal of Red Unions and Coughlin Fascists. The home siezures are occurring despite frantic efforts by the Obama administration to delay the process.

This policy is entirely justified given the scale of the social crisis. But it also masks the continued rot in the housing market, allows lenders to hide losses, and stores up an ever larger overhang of unsold properties. It takes heroic naivety to think the US housing market has turned the corner (apologies to Goldman Sachs, as always :lol: ). The fuse has yet to detonate on the next mortgage bomb, $134bn (£83bn) of "option ARM" contracts due to reset violently upwards this year and next.

US house prices have eked out five months of gains on the Case-Shiller index, but momentum stalled in October in half the cities even before the latest surge of 40 basis points in mortgage rates. Karl Case (of the index) says prices may sink another 15pc. "If the 2008 and 2009 loans go bad, then we're back where we were before – in a nightmare."

David Rosenberg from Gluskin Sheff said it is remarkable how little traction has been achieved by zero rates and the greatest fiscal blitz of all time. The US economy grew at a 2.2pc rate in the third quarter (entirely due to Obama stimulus). This compares to an average of 7.3pc in the first quarter of every recovery since the Second World War.

Fed hawks are playing with fire by talking up about exit strategies, not for the first time. This is what they did in June 2008. We know what happened three months later. For the record, manufacturing capacity use at 67.2pc, and "auto-buying intentions" are the lowest ever.

The Fed's own Monetary Multiplier crashed to an all-time low of 0.809 in mid-December. Commercial paper has shrunk by $280bn ($175bn) in since October. Bank credit has been racing down a hair-raising black run since June. It has dropped from $10.844 trillion to $9.013 trillion since November 25. The MZM money supply is contracting at a 3pc annual rate. Broad M3 money is contracting at over 5pc. :eek:

Professor Tim Congdon from International Monetary Research said the Fed is baking deflation into the pie later this year, and perhaps a double-dip recession. Europe is even worse.

This has not stopped an army of commentators is trying to bounce the Fed into early rate rises. They accuse Ben Bernanke of repeating the error of 2004 when the Fed waited too long. Sometimes you just want to scream. In 2004 there was no housing collapse, unemployment was 5.5pc, banks were in rude good health, and the Fed Multiplier was 1.73.

How anybody can see imminent inflation in the dying embers of core PCE, just 0.1pc in November, is beyond me.

Mr Rosenberg is asked by clients why Wall Street does not seem to agree with his grim analysis.

His answer is that this is the same Mr Market that bought stocks in October 1987 when they were 25pc overvalued on Shiller "10-year normalized earnings basis" – exactly as they are today – and bought them at even more overvalued prices in 2007, long after the property crash had begun, Bear Stearns funds had imploded, and credit had its August heart attack. The stock market has become a lagging indicator. Tear up the textbooks. {AoA !!! Find of this economic meltdown.}

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Re: Perspectives on the global economic meltdown

Postby g.sarkar » 12 Jan 2010 03:14


Hari Seldon
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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 12 Jan 2010 08:10

OK, the following is just for laughs, so pls not to go all indignant on this one. /Disclaimer over.

Flashback January 21, 2007: The Washington Times nails it with Collapsing Venezuela.

Mish makes the following spoof of that report by replacing Venezuela with Umrika and Sri Chavez with Sri Obama. Cannot find the strike-through font here, so shall use tiny font for the original.
If Venezuelan President Hugo Chavez President Obama deliberately intended to sabotage his nation's economy, he would be hard-pressed to do anything different from what he is now doing to his country.

It has been widely reported that Mr. Chavez President Obama has been increasingly taking control of the oil, telecommunications and energy housing, banking, auto, and insurance sectors, as well as the media. What has not been reported is the full extent of the corruption in Venezuela the United States and how this ultimately will destroy the economy.

The financial scandal taking place is far bigger than Enron, and may ultimately even exceed the U.N. "oil-for-food" scandal, the biggest financial disgrace of all time.

Since 2004, the Venezuelan Central Bank Fed has transferred about $22.5 billion untold $billions to accounts abroad by the Chavez government held by foreign governments, and about $12 billion all of that remains unaccounted for. It has also been reported that the gold reserves have been removed from the Central Bank.

While the rest of the world has been moving away from socialism for the last quarter-century for good reason, Venezuela the United States is becoming socialist. We know governmental use of central banks to basically print money to cover expenditures results in rising inflation and eventually monetary meltdown.

And, finally, we know that when a state becomes totally corrupt an economic collapse always follows. Mr. Chavez President Obama and his cronies had already been spending far more than they were taking in and you can bet the blood from the innocent Venezuelan people United States citizens will be drained long before those on the take from Mr. Chavez President Obama agree to have their looting stopped.


Again, read the disclaimer above. Tenku tenku.

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Re: Perspectives on the global economic meltdown

Postby RamaY » 12 Jan 2010 08:35

Gurujis,

is this a good time to invest in NYC residential RE? A friend of mine is thinking of buying an apt for investment purpose and planning to hold it for 5 yrs.

Thankyo!

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Re: Perspectives on the global economic meltdown

Postby amol.p » 12 Jan 2010 09:57

Is Greece on the verge of bankruptcy?

The International Monetary Fund said Monday it is sending a mission to Athens this week for talks on helping debt-stricken Greece to overcome its financial crisis.

http://economictimes.indiatimes.com/art ... 434860.cms

Sam's Club closing 10 stores, 1,500 jobs to be lost

Sam's Club, the warehouse club division of Wal-Mart Stores Inc, said on Monday that its is closing 10 money-losing stores and that 1,500 jobs would be lost. "In reviewing our current business performance, we have made the difficult decision to close 10 Clubs," said Sam's Club Chief Executive Officer Brian Cornell in a note to employees.

http://economictimes.indiatimes.com/new ... 434969.cms

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Re: Perspectives on the global economic meltdown

Postby amol.p » 12 Jan 2010 10:01

RamaY wrote:Gurujis,

is this a good time to invest in NYC residential RE? A friend of mine is thinking of buying an apt for investment purpose and planning to hold it for 5 yrs.

Thankyo!



Dont buy any property in US till March-09. As per the news FED is going to stop supporting the banks & companies providing loans & insurance to loans of realty sector after few months. FED wants these companies to stand on there own..the news was in NY times few days back.

I see 10-15% decerease in prices when FED stops supporting them as they will actively go for foreclosures.

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Re: Perspectives on the global economic meltdown

Postby Satya_anveshi » 12 Jan 2010 11:19

The other variable is the home buyer tax credit that is supposed to expire in Nov10. My gut feeling is that it will be extended again for an year at least. But if it were to expire, it has potential to do large scale damage to the demand effectively pushing the prices down as there is excess supply in the market. Unless you are getting a great deal by historic standard in an area you always wanted, I would wait till about the time when home buyer tax credit is about to expire and assess the market conditions.

As it is I am wondering when will the cash for clunkers is going to come back - but for the operational difficulities the program faced during execution. But to my surprise yahoo finance has a positive news item on car sales :eek: I thought across the board, the sales took a beating during the holiday season; not for nothing we are seeing deep discounts being offered on commercial products now.

On one side inflationary pressure calls for the increase in rates but on the other side, two of the biggest drivers of economy (homes, automobiles) will tank further if rates increase. No wonder WS is so loath to rate increase it appears given that all kinds of scary news reports start appearing when central bank is set to meet.


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Re: Perspectives on the global economic meltdown

Postby Chinmayanand » 12 Jan 2010 15:46


Neshant
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Re: Perspectives on the global economic meltdown

Postby Neshant » 12 Jan 2010 21:33

perhaps this is how the federal reserve is monetizing some of the debt? laundering this money into the economy by pumping up the stock market is one way to promote inflation.

supply and demand has been distorted to such an extent that there's no telling what real market prices are.

--------------

TrimTabs CEO: The Government Must Be Buying Shares, Because Private Demand Just Isn't There

http://www.businessinsider.com/trimtabs ... ere-2010-1

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Re: Perspectives on the global economic meltdown

Postby Suraj » 13 Jan 2010 02:20

Obama plans to raise $120 billion from bank fees
President Barack Obama plans to raise as much as $120 billion through a fee on financial institutions to help recoup losses from the Troubled Asset Relief Program and reduce the deficit, according to an administration official.

The plan is to have revenue from the fee dedicated to deficit reduction and to cover the amount that the Treasury Department estimates it will lose from TARP, which is $120 billion. Details will be contained in the fiscal 2011 budget that Obama will submit to Congress next month, the official said.

The government’s $700 billion rescue plan contributed to a record $1.4 trillion deficit last year.

Tax experts, who discussed the possibilities before the president’s plan was disclosed, say all of the administration’s structural options, which include an income surtax, an excise tax, or a fee pegged on the value of assets or some other measure, are likely to be so porous that financial institutions would be able to sidestep most of them.

“Any new tax is always more complicated than the designers anticipated,” said Ed Kleinbard , the former staff director of Congress’ non-partisan Joint Committee on Taxation who is now a law professor at the University of Southern California. “When the numbers involved are this large, it’s very difficult to design on the fly.”

Kleinbard said the United Kingdom is already struggling to make its 50 per cent tax on bank employee bonuses of more than £25,000 ($40,400) stick. Some UK banks are moving to absorb the tax while London Mayor Boris Johnson frets that higher taxes may drive 9,000 bankers out of the country.

“There’s always a substantial risk of unintended consequences and the risk of simple ineffectiveness,” Kleinbard said.

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Re: Perspectives on the global economic meltdown

Postby Satya_anveshi » 13 Jan 2010 06:03

White House changes job-count rule
WASHINGTON – The White House has abandoned its controversial method of counting jobs under President Barack Obama's economic stimulus, making it impossible to track the number of jobs saved or created with the $787 billion in recovery money.

Despite mounting a vigorous defense of its earlier count of more than 640,000 jobs credited to the stimulus, even after numerous errors were identified, the Obama administration now is making it easier to give the stimulus credit for hiring. It's no longer about counting a job as saved or created; now it's a matter of counting jobs funded by the stimulus.
That means that any stimulus money used to cover payroll will be included in the jobs credited to the program, including pay raises for existing employees and pay for people who never were in jeopardy of losing their positions
:rotfl: .

Numbers published last month identified more than 640,000 jobs linked to stimulus projects around the country. The White House said the public could have confidence in those new numbers, which officials argued proved the administration was on track to keep Obama's promise that the stimulus would save or create 3.5 million jobs by the end of this year :roll: .

But the result of the new rules will be that future claims of job creation from the stimulus will be even more misleading, said Rep. Darrell Issa, the ranking Republican on the House Oversight and Government Reform Committee.
"It is troubling that the administration is changing the rules and further inflating the Recovery Act's impact and masking the failure of the stimulus to produce sustainable economic growth or real job creation," Issa said in a letter sent last week to the government board monitoring stimulus spending.
Recipients of recovery money no longer have to show that a job would have been lost without the stimulus help, and they no longer are required to keep an ongoing tally of jobs saved or created. The new rules allow stimulus recipients to limit the job tally to quarterly reports, making it impossible to avoid double-counting a job that was created in one quarter and continued into the next.

I will not be surprised if this issue alone will cost Obama his second term (if he still wants to contend).

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Re: Perspectives on the global economic meltdown

Postby amol.p » 13 Jan 2010 10:14

Satya_anveshi wrote:White House changes job-count rule
Despite mounting a vigorous defense of its earlier count of more than 640,000 jobs credited to the stimulus, even after numerous errors were identified, the Obama administration now is making it easier to give the stimulus credit for hiring. It's no longer about counting a job as saved or created; now it's a matter of counting jobs funded by the stimulus.
That means that any stimulus money used to cover payroll will be included in the jobs credited to the program, including pay raises for existing employees and pay for people who never were in jeopardy of losing their positions
:rotfl: .



I know that there are lot more Raju's out there in US than we had in Satyam who showed 10000 excess employees and shiponed off there salaries in other account......same way people will show fake employees, get tax credit and Obama will rejoice saying stimilus money has added millions of jobs. Mean while I do not beleive any of the US govt job loss reports as they keep on adding or deducting numbers from the past data every month.

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Re: Perspectives on the global economic meltdown

Postby markos » 13 Jan 2010 11:58

a low tax culture in US has vastly helped risktaking by enterpreneurs. it has helped the growth of small businesses (70% of all employment in US is small businesses).

If this is a valid theory, US economic growth should have been anemic during 50s and 60s because of high taxes and innovation should have been stifled (with tax rate hovering around 90% much higher than the 45% tax-rate in Europe today), but to the contrary, US living standards went up at a faster rate during that time compared to Reagan's tax cutting 80s.

See the url below for top marginal tax rates in US from 1913-2003
http://www.truthandpolitics.org/top-rates.php

Contrary to popular misconception, conservatives under Ray-gun didn't actually shrink the government either, he increased the deficits through reckless spending and tax-cuts. See the rant from conservatives on Reagan's policies on how he was just another big spender(if I recall right, Reagan era witnessed increase in corporate taxes, while cutting personal taxes).

80s - Analysis of Reagan
http://mises.org/freemarket_detail.aspx?control=488

US Public Debt - Historical trend
Deficits tripled in the 80s. With the current deficit projections, Obama may double the national deficit.
http://en.wikipedia.org/wiki/United_States_public_debt

So I think there is a lot more to innovation in US other than tax policies.

There is grass-roots level anger against the current team handling nation's economy (Geithner, Summers and Bernanke), from left and right. I hope conservatives and liberals will join hands and sink the nomination of Bernanke in US Senate. That would be a wake up call for this administration.

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Re: Perspectives on the global economic meltdown

Postby Suraj » 13 Jan 2010 12:06

Did US innovation during the 50s and 60s come from small entrepreneural entities, or from large government or corporate ones ? The 50s-70s were the time when a slew of heavily funded goverment-backed organizations like RAND, NSF, DARPA etc were created. It was also the heyday of the powerful autonomous corporate research laboratories, like AT&T Bell Labs, Sarnoff Labs, Xerox PARC, IBM TJ Watson and others. I don't know about the former, but the latter would be anachronistic today, since companies have not shown any dedication towards generous funding of massive research labs anymore.

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Re: Perspectives on the global economic meltdown

Postby vina » 13 Jan 2010 12:20

Did US innovation during the 50s and 60s come from small entrepreneural entities, or from large government or corporate ones ? The 50s-70s


Until the mid 70s, the US was the only game in the world. The rest of the "developed" world (Europe, Japan and Soviet Union) were devastated by WWII and it took them upto that long to get on their feet and become credible competitors.

The US of course emerged from WWII unscathed , with no damage to their physical and industrial infrastructure in mainland US.The US basically was the only one around who could make full use of all the tech and other breakthroughs and stuff that happened during WWII

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Re: Perspectives on the global economic meltdown

Postby markos » 13 Jan 2010 12:51

Case against "Helicopter Ben" Bernanke
http://www.foreignpolicy.com/articles/2 ... ernanke_no

Most fundamentally, now is the time for the Federal Reserve to stop rolling over before Wall Street. Judging from his actions over the past year, I have seen no evidence that Bernanke even understands that his job is to protect the American people.

Bernanke is falling behind central bankers in Britain, who show more appetite for confronting the megabanks. Mervyn King, governor of the Bank of England, has called for separating the utility aspects of banking from riskier activities such as proprietary trading. Andrew Haldane, his deputy in charge of financial stability, has argued that failing to do so creates a "doom loop" that only gets worse over time. Bernanke has also ignored Paul Volcker, the last Fed chair with his reputation intact, who has argued that financial innovation should be severely constrained.


http://baselinescenario.com/2010/01/06/ ... -bernanke/
We’re looking for someone who can clean up and reform the system – not someone to bail it out further

Bernanke will be tough on banks when needed. Again, there is not a shred of evidence that would support such a view – the markets like him because they see him as a soft touch and that’s great, except that it encourages further reckless risktaking by banks considered Too Big To Fail and leads to another financial meltdown.


I think someone like Elizabeth Warren or Sheila Bair or Joe Stiglitz should be tapped to lead Fed, sending a clear signal to bankers. But since Obama tries his best to ensure that he will be a one-term president, Bernanke's appointment may just grant his wish (along with Geithner and Summers).
Last edited by markos on 13 Jan 2010 13:21, edited 1 time in total.

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Re: Perspectives on the global economic meltdown

Postby Neshant » 13 Jan 2010 12:52

yea there's no point comparing totally dissimilar points in history.

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Re: Perspectives on the global economic meltdown

Postby markos » 13 Jan 2010 13:07

Neshant wrote:yea there's no point comparing totally dissimilar points in history.

When something doesn't fit your view (even if it is based on empirical evidence), it is easy to discard that.

During his 2000 presidential campaign, Ralph Nader said that one of the first steps he would do if elected president would be to fire Greenspan because of the lax enforcement of consumer protection laws that encouraged predatory sub-prime lending. At that time, it was inconceivable that "maestro" could do anything wrong. 8 years later, Nader was proven right, in light of the sub-prime debacle which spread to cripple major banks, and Greenspan's tenure and his utterances during 90s start looking more and more like "Chance the gardener". :rotfl:

So just because someone with different political belief proposes something doesn't mean that they are entirely wrong.

Most of the economic policies followed since 80s stand discredited today, whether it is tax cuts for the rich or free-trade. Productivity gains haven't translated to wealth for vast majority of americans. Americans, manipulated by supply-siders for the last 3 decades, provided socialism for the rich in the form of bailouts and tax-cuts while their European counterparts enjoy better quality of life and that is the point, I think, Prof. Krugman is trying to make in the original article.


As Suraj mentioned, Govt had an opportunity to invest in new technologies/further innovation and provide an alternative (as in 50s-70s). But I feel Obama squandered that so far. He is continuing the same wall-street centric policies which is all about coming up with the next financial scam to rob consumers.

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Re: Perspectives on the global economic meltdown

Postby Neshant » 13 Jan 2010 13:21

80s and 90s had the fastest economic growth of all decades mostly on account of technology advances in the private sector.

Govt should not be involved in investing in anything (usually ends up wasting tax money) and neither should some guy sitting in an office like bernanke be fiddling around with interest rates. The market can set interest rates and determine supply & demand on its own quite nicely. It does not need any of the distortion, taxation, market rigging..etc. This invention of fiiddling around with the economy comes from the financial 'industry' which is nothing more than a bunch of useless guys who set themselves up as middle men.

As and when these guys are removed from the picture and government downsized by 10 fold, then prosperity can return to America.

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Re: Perspectives on the global economic meltdown

Postby Chinmayanand » 13 Jan 2010 16:56

The Second Shoe Is About to Drop on the Banks

"I live in luxury and I haven't made a mortgage payment in almost two years," Don bragged. He sipped his chardonnay, leaned against the country club's bar, and shared with me the story of his real estate prowess...

"I paid $3.4 million for the house in 2006, and it was worth every penny at the time. It's 6,700 square feet with a pool and a one- acre lot. I'm on the hill overlooking the fourth fairway, and I can see all the way to [the next city] from my bedroom window," Don continued.

"Wachovia Bank loaned me $3 million, and the developer took a second for $400,000. I don't have any skin in the game – so to speak. I made my mortgage payments for a while, but when prices started to fall, it just didn't make sense anymore. I mean, why should I pay anything when I'm the only one with nothing to lose?{smart guy}"

"But," I asked, "hasn't the bank tried to foreclose or force a sale of the house out from under you?"

"Ha!" He crowed, and his tone emphasized the naiveté of my question. "Why would they do that? The house is worth less than $2 million right now. So if the bank forecloses, it'll have to recognize a $1 million loss. And if it writes my loan down by that much, how many other loans do you suppose it'll have to write down? It can't force a short sale [where the bank sells the house for less than the loan amount] on me either because it'll have to take care of the second note holder by offering him something just to get out of the way. So Wachovia is screwed. It's cheaper for them to let me keep living there for free. And the best thing is, I can more than afford to pay off the entire loan right now." Don let out a sinister kind of chuckle, like a man who just squashed a bug and got some warped sense of delight from doing it.

"Wow," I responded. "There used to be a time when being a deadbeat was frowned upon. But you seem to wear it as a badge of honor."

"Listen," Don turned aggressively and pointed his index finger at me. "You think I'm the only one doing this? You think I'm the only one taking advantage of the situation? I'll bet half the people in this room are doing the exact same thing." He waved his arm across the bar. "And the other half are thinking about doing it."

"Besides," Don continued, "banks have been screwing people like us for so long it's about time they got a taste of their own medicine."

His words hit me like a Louisville Slugger across the forehead.

We no longer live in a time where men are bound by honor to repay their debts. As sad as it is, people feel justified welching on their agreements.

And the banks have played a big role in this transition. They charged 29% interest on credit cards while paying 0% interest on savings. They knowingly lent money to people who could not afford to pay it back. They used taxpayer-funded bailouts to pay million-dollar bonuses to their corporate elite. And they shipped all of their service-center jobs overseas.

Let's face it: The banks most of us do business with today aren't like the Building and Loan George Bailey operated in It's a Wonderful Life. Our banks are faceless, nameless, brown bag institutions whose only concern for the customer is to make sure he pays the $10 monthly account service fee.

It is that business practice that has fostered the resentment of people like Don and made him feel justified breaking his agreement. Like it or not, agree with it or not, Don's opinion is gaining popularity.

And as that sentiment grows, it is likely to provide the weight that pulls the second shoe down onto the industry.

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Re: Perspectives on the global economic meltdown

Postby shyamd » 13 Jan 2010 18:49

Sovereign Debt: The Developed World’s Next Big Problem?
In 2009, downgrades and debt auction failures in countries like the UK, Greece, Ireland and Spain were a stark reminder that unless advanced economies begin to put their fiscal houses in order, investors and rating agencies will likely turn from friends to foes. The severe recession, combined with a financial crisis during 2008-09, worsened the fiscal positions of developed countries due to stimulus spending, lower tax revenues and support to the financial sector. The impact was greater in countries that had a history of structural fiscal problems, maintained loose fiscal policies and ignored fiscal reforms during the boom years. Going forward, a weak economic recovery and an aging population is likely to increase the debt burden of many advanced economies, including the U.S., UK, Japan and several eurozone countries.

In 2008-09, the stance of these governments to do “whatever it takes” to backstop their financial systems and keep their economies afloat soothed investor concerns. But if countries remain biased toward continuing with loose fiscal and monetary policies to support growth rather than focusing on fiscal consolidation, investors will become increasingly concerned about fiscal sustainability and gradually move out of debt markets they have long considered “safe havens.”

Most central banks will withdraw liquidity starting in 2010, but government financing needs will remain high thereafter. Monetization and increased debt issuances by governments in the developed world will raise inflation expectations. These governments will have to offer higher real yields or investors will move to more attractive emerging markets. Some countries will continue to witness increased credit default swaps. Higher yields and interest cost on debt will also hurt economic growth—by crowding out private consumption and investment, and reducing government’s productive spending. Several factors will likely influence investors’ perception about sovereign risk—a country’s debt financing ability, its status as a “safe haven” relative to other developed economies, politicians’ commitment to undertake fiscal reforms, exchange rate movements, and the debt maturity structure.

The UK, Spain, Greece and Ireland will face sovereign risk pressures, especially if their fiscal imbalances are not addressed immediately. Some eurozone members are quickly approaching their debt sustainability limits as deleveraging through devaluation is not an option for these countries. Countries like Germany—whose fiscal imbalances have deteriorated largely due to the economic and financial downturn—might have a greater capacity to stabilize their debt ratio. The U.S. and Japan might be among the last to face investor aversion—the dollar is the global reserve currency and the U.S. has the deepest and most liquid debt markets, while Japan is a net creditor and largely finances its debt domestically. But investors will turn increasingly cautious even about these countries if the necessary fiscal reforms are delayed. The U.S. is a net debtor with an aging population, weaker economic growth and risks of continued monetization of the fiscal deficit. Japan’s aging population and economic stagnation will reduce domestic savings.

Developed economies will therefore need to begin fiscal consolidation as soon as 2011-12 by generating primary surpluses by a combination of gradual tax hikes and spending cuts. However, an aging population, a sluggish economic recovery and higher unemployment will keep governments’ entitlement spending high and revenues subdued. These factors might also make tax hikes politically challenging. Fiscal consolidation efforts might not be strong until the bond vigilantes signal shifting to safer assets. To achieve credibility, governments will need to pass binding legislation enforcing tighter fiscal belts when their economies begin to recover on a sustained basis.

Dollar appreciation is coming me thinks...

when the Fed prints money and buys private mortgage-backed securities rather than Treasuries, it does not affect the total amount of money-plus-credit because new cash is for newly issued Treasuries, whereas the mortgages were already owned by investors. The former is new money; the latter is a swap. Any views?

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Re: Perspectives on the global economic meltdown

Postby Satya_anveshi » 14 Jan 2010 04:44

Bankers apologize for actions that led to crisis
Big bankers apologize for risky behavior that led to financial crisis, say it seemed right

"People are angry," commission Chairman Phil Angelides said. Reports of "record profits and bonuses in the wake of receiving trillions of dollars in government assistance while so many families are struggling to stay afloat has only heightened the sense of confusion," he said.

Lloyd Blankfein, the chief executive of Goldman Sachs, took the brunt of the questions, especially on his firm's practice of selling mortgage-backed securities and then betting against them.

"I'm just going to be blunt with you," Angelides told him. "It sounds to me a little bit like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars." :x

"We understand the anger felt by many citizens," said Brian Moynihan, chief executive and president of Bank of America. "We are grateful for the taxpayer assistance we have received."

"Over the course of the crisis, we as an industry caused a lot of damage," Moynihan said.


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