Perspectives on the global economic meltdown (Jan 26 2010)

Ameet · Post by **Ameet** » 23 Feb 2010 22:37

Banks at risk of going bust tops 700

http://money.cnn.com/2010/02/23/news/co ... htm?hpt=T1

More than 700 banks, or nearly one out of every 11, are at risk of going under, according to a government report published Tuesday.

The Federal Deposit Insurance Corp. said that the number of banks on its so-called "problem list" climbed to 702, its highest level since June 1993.

Banks that end up on the problem list are considered the most likely to fail because of difficulties with their finances, operations or management.

Still, few of the lenders that are on the list actually reach the point of failure. In fact, just 13% of banks on the list have been seized and shuttered by regulators.

The names of the banks on the list are never made available to the general public by regulators out of fear that depositors at those institutions may prompt a so-called "run on the bank." That's some consumer protection service they got going on

shravan · Post by **shravan** » 23 Feb 2010 22:59

Ferguson: We're One Downgrade Away From The End Of American Empire

ramana · Post by **ramana** » 23 Feb 2010 23:35

Kgoan posted this in teh TSP thread.

.......

Timelines are being forced to be compressed by situations outside the usual boxes, what happens in Greece, will the German banks have cardiacs because of E. Europe, how will the Sino-US thing play out - which way will Obama jump once he feels his oats and *becomes* the POTUS rather than simply filling the *office* of the POTUS. (A curious American evolution observed in every POTUS, over the last few decades.)

.....

....

I would like a discussion on this part here....

SwamyG · Post by **SwamyG** » 24 Feb 2010 03:42

Ameet wrote:Goldman Sachs Says Greek Swaps Not ‘Inappropriate’

Someone needs to pass on the news to GS that it has become a joke.

As there are talks of Empires collapsing, elsewhere Wall Street Bonuses Rise 17%

manju · Post by **manju** » 24 Feb 2010 06:20

singha bhai that is a musth read!

Hari Seldon · Post by **Hari Seldon** » 24 Feb 2010 09:58

A wag on the web (at Zerohedge to be more precise) spilled 'em pearls only...

If we officially get a depression Obama, can we call it O'ppression?

Hari Seldon · Post by **Hari Seldon** » 24 Feb 2010 11:28

Roundup of TAE tweets, always good, concise reading.
http://twitter.com/AutomaticEarth

On eurostani travails:

Euro's future in question even if Greece rescued: Soros, http://bit.ly/aLIc74
{Must Sri Soros also speak up at this point? Wonder abt his views on the UKstani pound-ing... He's been there done it before in the early 90s after all}

European #banks face showdown over #Euro 1 Trillion of debt, http://bit.ly/bHnreP (Banks must compete with EU States for funds!)
{Yup, so banks need to compete with gubmints for funds. Funny how they never heard of 'crowding out' only. Expect corp bond yields top soar only. And gubmints anyway to come under pressure. Raising $1Trill ain't a joke even in a good year. And this certainly ain't a good year.}

UK Lending fell by £4.3 billion, pushing the annual decline to 8.1% — the biggest drop since records began in 1999, http://bit.ly/boexhQ
{UKstani economy is a dead duck, IMHO. Run by buffoons for the benefit of assorted turd world insurgents and terrorists, global bankers, planespotters, welfare moochers and of course packees.}

On the khanate:

Greenspan Calls Crisis ‘By Far’ Worst Ever, Recovery Uneven, http://bit.ly/cBbSLj (I wonder what he'll say by the end of the year?)

Almost 10% of FDIC-insured banks called "troubled",Agency's DIF had a $20.9 billion loss as of Dec. 31 2009, http://bit.ly/cNoXLv

Courtesy US taxpayer,Treasury to expand Supplementary Financing program to $200 Bn from $5Bn.To help manage Federal Reserve's balance sheet

NY says Wall St bonuses up 17 percent to $20.3 billion, http://bit.ly/b8DOFj (Thanks to US taxpayers, I.bankers won't be going hungry)

20% of US workers underemployed -poll, 30 Million Americans were underemployed in January,spend 36% less than employed,http://bit.ly/cuXR5f
One would be lucky to be under-employed in this ekhanomy. underemployed implies being employed at least.

National Governors Association: Bad economies in states to worsen, http://bit.ly/bLbnbv (Funding shortfalls)

And so on.

shyam · Post by **shyam** » 24 Feb 2010 13:41

Not sure if this was posted here before.

Harvard Prof. Niall Ferguson on Decline of America and Rise of a New Global Economic Order 1/3

SK Mody · Post by **SK Mody** » 24 Feb 2010 14:32

Over 15,000 NRI resumes lying with Indian HR firms

Hari Seldon · Post by **Hari Seldon** » 24 Feb 2010 19:52

Usual load of D&G from UKstan...
Deathbed of Keynesian Economics Will Be in U.K.

The U.K. has produced notable economists over the years, but John Maynard Keynes, the guru of government intervention, was one of truly global significance.

So it may be fitting that the U.K. will also become the deathbed of Keynesian economics.

Britain has been following the mainstream prescriptions of his followers more than any developed nation. It has cut interest rates, pumped up government spending, printed money like crazy, and nationalized almost half the banking industry.

Short of digging Karl Marx out of his London grave, and putting him in charge, it is hard to see how the state could get more involved in the economy.

The results will be dire. The economy is flat on its back, unemployment is rising, the pound is sinking, and the bond markets are bracketing the country with Greece and Portugal in the category marked “bankruptcy imminent.” At some point soon, even the most loyal disciples of Keynes will have to admit defeat, and accept that a radical change of direction is needed.

The U.K. has been in Keynes overdrive for the past 18 months. The budget deficit is already more than 12 percent of gross domestic product, on a par with Greece. And while the Greeks are cutting spending, the British deficit is widening. Figures for January showed another fiscal blowout. At the same time, interest rates have been slashed to 0.5 percent. And the pound has slumped in value, which is supposed to boost demand for British goods, and help close the trade gap.

Just about everything possible has been done to encourage consumption. The results have been miserable.

Retail sales excluding gasoline in January fell 1.2 percent from the previous month, twice as much as economists forecast. The number of people receiving unemployment benefits jumped to 1.64 million in January, the highest level since April 1997. The yield on U.K. government debt is now higher than on Spanish or Italian bonds, a sure sign that investors are losing faith in the country’s ability to pay its debts. The inflation rate has also accelerated to 3.5 percent.

Triple Whammy

In reality, Britain has the worst of all possible worlds: a stagnant economy, a crippling budget deficit and rising prices.

{Here, moi disagrees. Worst of *all* possible worlds? Not quite. UKstan, thx to rampant packee importation and pampering doesn't have japanese style death-spiral demographics at least.}

The Keynesian consensus is that things would have been far worse without the stimulus provided by government. And if the economy isn’t pumped up with inflated demand, it will collapse back into recession. If it’s not working, that just proves the stimulus should be even larger.

It is the argument quacks always push: If the medicine isn’t working, increase the dosage.

Poetry, D&G style (from a wag on the web)

You call that note the "Pound"?
Well, I have been around;
I tell you it's a sham;
it should be called the "Gram".

Hari Seldon · Post by **Hari Seldon** » 24 Feb 2010 20:05

Ramana garu,

You may perhaps like this analysis: very macro, generational and high level view of historic flows of events.

http://theburningplatform.com/economy/2 ... -breakdown

Read it all and lemme know your thoughts.

Neshant · Post by **Neshant** » 24 Feb 2010 20:16

Harvard Prof. Niall Ferguson on Decline of America and Rise of a New Global Economic Order

Niall Ferguson is just a hack who's looking to sell books, tv documentaries and keep his name in the press as a man of wisdom when he's anything but that.

A while back he was pumping banks and the Federal Reserve till the bottom fell out. Now he sees things go downhill and he's decided to hedge his bets by putting out some doom & gloom predictions. Just to keep both bases covered.

That way if things get worse, he can claim he was right and if it gets better he can also claim he predicted it.

Pay no attention to this guy. He's either angling for a job in the govt or at some big bank or to sell his material. 99% of these guys never saw the crisis coming - why would anyone listen to their predictions now.

Neshant · Post by **Neshant** » 24 Feb 2010 20:19

Heard an interesting quote :

"Despite being in the biggest depression since the 30s, its amazing how food, utility, medical expenses and various taxes and other fees continue to rise or at the very least do not fall".

SwamyG · Post by **SwamyG** » 24 Feb 2010 20:25

My favorite Jim Jubak of MSN Money writes: 8 reasons for investors to worry
1. "Fixing" Greece, whatever that means, will still leave the European Union with a list of problems that starts with Portugal and doesn't end with Spain. But unless the Germans do something that is currently unimaginable -- pull out of the euro -- this is a European crisis that in economic terms is limited to countries on the periphery of the European Union. In currency terms, a continuing euro crisis will lead to a stronger U.S. dollar.

2.The next session of China's National People's Congress begins March 5. If China is going to officially change monetary policy or shift more spending to domestic consumption, it's likely that the policy change will be announced as a result of this meeting. The big policy issues for China's stock market this year all concern cheap money. March could see the government announce that it will raise interest rates. That would push down stock prices in general and push down the share prices of real-estate developers and many industrial companies especially hard.

3. Near the end of April, investors will get the first official numbers on how fast the U.S. and Chinese economies grew in the first three months of the year. For the U.S., the worry is that the data will show growth slowing significantly from the 5.7% recorded (according to first estimates) in the fourth quarter of 2009.

4.By the time the Federal Reserve's Open Market Committee meets April 27-28, its members will know what the GDP numbers say about the first quarter, even if the public doesn't. The April 28 second-day policy statement might then include language that could indicate an interest-rate increase sooner rather than later.

5.Central banks from India to Brazil are clearly thinking about raising interest rates this year. The Reserve Bank of India, for example, has done all the preparation for a rate increase. But these increases play out differently than in the U.S. These increases, when they come, will be in economies that are growing so fast that inflation has become a real danger -- and not, as in the U.S., in an economy growing so slowly that a tiny increase in interest rates could put the recovery at risk.

6.The U.S. banking system still isn't out of the woods and in fact faces a need to raise new capital in the second half of 2010. Last month's mortgage foreclosure filings were up 15% from January 2009. And bank seizures of homes could rise to a record 3 million in 2010.

7.Earnings growth could be less than now expected. I think this is a danger more for the second half of 2010 than the first.

8.Slowing economic growth remains the big worry in 2010. It's the one worry that, if turned into reality, could make all of the seven other worries in this list much, much worse. And it's the only one that could work to combine some of these discrete worries into a much bigger crisis -- again.

Unfortunately, I can't discount the possibility that the world's developed economies, including the U.S., will lead the globe back into a painful slowdown at the end of 2010 and into early 2011. The European Union could very well still be wallowing in crisis then. The effects of the U.S. stimulus package will be wearing off, and, with the U.S. Senate seemingly unable to pass any legislation, the U.S. could go into the second half of 2010 without a budget for fiscal 2011, let alone a second jobs bill. (The United Kingdom could still be trying to cobble together a government after a dead-heat election in May.) Doesn't have to happen, mind you. But the possibility is real.

Summary

* That 2010 is going to be one tough year for investors to make a buck. Volatility will be high. Trends won't last long. Emotions will drive the crowd from euphoria to panic in a matter of days. It will be a time to take profits when you have them, to control losses and to not fall in love with any stock or sector.

* That developing markets look like a better bet for 2010 than do the developed markets of Europe, Japan and the U.S. Economic growth will be higher. Debt overhangs are lower. And political problems seem more manageable. Developing economies won't grow like gangbusters if developed economies falter, but they will do better by investors, especially if they buy in on a dip at relatively reasonable valuations.

* That the weeks from now through April will be incredibly volatile as investors pingpong from one crisis and uncertainty to another. But the real danger in this period is relatively low. China isn't going to kill its economic growth. The Federal Reserve isn't going to raise interest rates by 2 percentage points. The real danger remains in the second half of the year, when developed economies stand a real chance at slipping back toward, if not into, recession.

svinayak · Post by **svinayak** » 24 Feb 2010 21:45

TO ALL THE HOTEL OWNERS IN RIVERSIDE
The City of Riverside is talking about raising Bed Tax (TRANSIENT OCCUPANCY TAX) to 13%
make an appointment with your City Council and talk to him or her in a group
city council link: http://www.riversideca.gov/council/
we must do it today before the council meets in the chamber
we must not let this pass
Dear hotel owners I always said to everyone we must know are politicains
because today we need them to listen to us
thanks for your HELP!
If all the hotel owners talks to the council it can work
please take the email seriously and pass it on
D***** Patel
Budget Inn of Riverside
951-555-5555

svinayak · Post by **svinayak** » 24 Feb 2010 21:54

Hari Seldon wrote:Ramana garu,

You may perhaps like this analysis: very macro, generational and high level view of historic flows of events.

http://theburningplatform.com/economy/2 ... -breakdown

Read it all and lemme know your thoughts.

Very good one. Thx for posting.

Consciousness Revolution (1964–1984) - India was a target during this period.

Culture Wars (1984–2005?) - Indian generation - DIE was created during this period.

ramana · Post by **ramana** » 24 Feb 2010 23:38

Hari, We are witnessing timescale compression. Historians are evaluating events as they happen. In earlier times stuff happens and then we know about it say 20-30 years later even though we are living thru the events.
For BR, we should map similar generations to see how it will project. Unlike the Western economies in decline India is a growing economy and has +ve demographics which has its oqn dynamics.
Lets not focus on past and commiserate.

*BTW, we see the passing of generations on this very forum. We have old time babbling while others are moving on.
Check out sudhanshu's posts in Mil Scenario thread. Thats a sign of new generations. And this very thread.

svinayak · Post by **svinayak** » 25 Feb 2010 00:59

Reports from numerous sources all tell a similar story — the economic downturn has affected thousands of companies with millions of workers laid off. one trend we noticed was there were beneficiaries of these large-scale upheavals. In particular, we saw substantial spikes in user activity for the following 5 companies during major financial events:

Barclays
Credit Suisse
Citigroup
Bank Of America
JP Morgan Chase
http://blog.linkedin.com/

ramana · Post by **ramana** » 25 Feb 2010 01:23

So Bear Stearns should have affected more players? Then why is Lehman collapse being bemoaned as the event that changed Wall Street?

Barclays got double whammy if the breadth of the linkage is an indicator of toxicity?

shravan · Post by **shravan** » 25 Feb 2010 01:45

Freddie Mac Releases Fourth Quarter and Full-Year 2009 Financial Results
February 24, 2010
http://www.freddiemac.com/news/archives ... -4q09.html

"We start 2010 with some early signs of stabilization in the housing market, with house prices and home sales likely nearing the bottom sometime in 2010. We expect that low mortgage rates, relatively high affordability and the homebuyer tax credit will help continue to fuel the recovery. Still, the housing recovery remains fragile, with significant downside risk posed by high unemployment and a potential large wave of foreclosures."
Freddie Mac Chief Executive Officer Charles E. Haldeman, Jr.

Q4 earnings release:

Freddie Mac Releases Fourth Quarter and Full-Year 2009 Financial Results Fourth quarter 2009 net loss was $6.5 billion. After the dividend payment of $1.3 billion to the U.S. Department of the Treasury (Treasury) on the senior preferred stock, net loss attributable to common stockholders was $7.8 billion ... for the fourth quarter of 2009.
...
Full-year 2009 net loss was $21.6 billion. After dividend payments of $4.1 billion during the year to Treasury on the senior preferred stock, net loss attributable to common stockholders was $25.7 billion ... for the full-year 2009.

Another $7.8 billion in losses ...

Neshant · Post by **Neshant** » 25 Feb 2010 06:30

Germany has projected Greece in front of the world as a lazy country which mooches off hardworking Germans in the EU and refuses to pay its debt. Now the Greeks are angry that they have been insulted...

-----

Greece wants Nazi gold returned as 50,000 strikers take to streets

GREECE has touched Germany's rawest nerve by accusing the EU powerhouse of not fully compensating it for gold stolen by the Nazis during the Second World War.

"They took away the Greek gold that was at the Bank of Greece, they took away the Greek money and they never gave it back. This is an issue that has to be faced sometime in the future," he said.

The German foreign ministry dismissed the remarks and said bringing up the past would not help Greece solve its problems.

http://news.scotsman.com/world/Greece-w ... 6102255.jp

Neshant · Post by **Neshant** » 25 Feb 2010 06:40

I'm shocked at the guy being so blatant. You'd think he'd at least try to disguise the fact he's dipping into other people's pocket - most of whom don't even have a pension themselves. The guy is making over $100K a year.

Either the guy did not know he was being recorded or the unions have grown so brazen in their demands that they don't care what the public thinks. They'll just demand from the govt money or else they will strike.

------------------
http://globaleconomicanalysis.blogspot. ... -mobs.html

Today’s NY Post reveals a moment of honesty from a NY union official.

Albany Police Officers Union President Chris Mesley says that, regardless of the faltering economy, a no-raise new contract is unacceptable.

And to hell with the public.

"I'm not running a popularity contest here," Mesley said. "If I'm the bad guy to the average citizen . . . and their taxes have go up to cover my raise, I'm very sorry about that, but I have to look out for myself and my membership."

Mesley added: "As the president of the local, I will not accept 'zeroes.' If that means . . . ticking off some taxpayers, then so be it."

ramana · Post by **ramana** » 25 Feb 2010 08:08

Well you have Wall Street bankers holding up the country for bail out money. He has seen the precedent and is following it.

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

Niall Fergusson types are worried that US to whom they handed the keys to the West is faltering and dragging itself and them down. Never before has Western image taken such a shock since the Nazi atrocities in WWII have ripped the mask of Western civilization.

vera_k · Post by **vera_k** » 25 Feb 2010 10:02

GOP betting America fails

I talked on Monday with Lakshman Achuthan, the managing director of the Economic Cycle Research Institute, which has a long history of correctly forecasting major economic turns based on his idea that the great battleship of the American economy moves upward and downward in powerful waves based on turns in the economic cycle.

Achuthan told me “we are now in the strongest economic recovery since the early 1980s that will continue through 2010.” He calls this “the Rodney Dangerfield recovery” that he first predicted last spring and now believes is strongly underestimated. Achuthan believes the jobless numbers already peaked last October and will improve further before Election Day. The February jobless numbers will be distorted by the weather, but the March numbers, to be reported in early April, could show a significant jobs surge and begin a period of job growth that continues through Election Day.

Hari Seldon · Post by **Hari Seldon** » 25 Feb 2010 10:04

From the folks over at TAE, aaj ka breakjam article....

Bumping along the bottom of the credit cycle

TAE essentially lays bare the secret fear we all had but maybe couldn't articulate very well - what if the powers that be don;t know what they're doing? What if they're making things as they go along risking all we have on a massive gamble that doesn't payoff?

"Without growth, we cannot begin the process of restoring fiscal responsibility,"
said Treasury Secretary Tim Geithner today to the House Budget Committee. And "....
before the federal government can begin attacking soaring deficits and a massive national debt, it needs to increase jobs and ensure economic growth."
That’s just about all you need to know, isn't it? It's the my way or the highway idea, put everything on red and pray for a miracle. There is no way Geithner can be sure that more spending of public funds will actually produce growth, but it's all he can think of (or at least all he talks about). And it’s also of course mighty easy to focus on spending if and when it’s not your own money you’re throwing at the proverbial black hole in the wall.

Sheila Bair’s report on the banks is abysmal, lending in the private sector is falling off a cliff while public lending is running up that same cliff, and in that quote above Geithner just told us that there are no plans to quit adding to the debt before spending gives birth to growth in some fictional fairy tale of immaculate financial conception. But it’s beyond foolish not to ask what happens if no such fairy tale ending exists, if only simply because the risk that pervades the entire endeavor is as palpable as it is terrifying.

Of course, the fault lies in all of us. Human nature inherently places hajaar value on the dope of hope over the reality of experience.

Still, I dare you to elect the politician who says he'll raise your taxes and start you off on a program of austerity rather than vote for his opponent who promises growth and prosperity if only you let him spend your future tax revenues now. Tim Geithner is a doofus, and Ben Bernanke is a douchebag, but they wouldn’t be where they are if you wouldn't let them.

And none of that means that they can deliver anything they promise; it just and only means that you like one prospect better than the other. Well, dream on if you must, but I solemnly promise that you have a whole bunch of nasty surprises coming. And when these surprises arrive, Geithner, Bernanke and Obama will have either entirely vanished from view, or perhaps even step up their public persona a notch to loudly and proudly proclaim that things happened that no-one could have foreseen. And at least if you read this, you know that will be a blatant lie.

Read it all. Only.

Hari Seldon · Post by **Hari Seldon** » 25 Feb 2010 10:11

Not sure if posted already but Bob Prechter on why deflationistas were right all along...must watch vid clip

Deflation Is Coming and There's Nothing Bernanke Can Do About It

Hari Seldon · Post by **Hari Seldon** » 25 Feb 2010 16:07

Ambrose E Pritchard at it again. The Telegraf columist has repeatedly railed against the EU and the euro, ostensibly to make the pound sterling look better in comparison.

Now he's off onto a new tangent. Ensoi the ride.

Concerns grow over China's sale of US bonds

Evidence is mounting that Chinese sales of US Treasury bonds over recent months are intended as a warning shot to Washington over escalating political disputes rather than being part of a routine portfolio shift as thought at first. A front-page story in the state’s China Information News said the record $34bn sale of US bonds in December was a "commendable" move. The article was republished by the National Bureau of Statistics, giving it a stronger imprimatur.

It follows a piece last week in China Daily, the Politburo’s voice, citing an official from the Chinese Academy of Sciences praising the move to "slash" holdings of US debt. This was published on the same day that US President Barack Obama received the Dalai Lama at the White House, defying protests from Beijing. "There are ongoing spats between the US and China on so many fronts so you have to assume that this is some sort of implicit threat," said Neil Mellor, a currency expert at the Bank of New York Mellon, who cautioned that it can be hard to read the complex signals from China.

How complex and how hard? Try this for instance:

"We still think China will have to continue buying US Treasuries by the bucket load. Where else can they invest in a liquid market. The euro has become a tarnished currency," he said.

Stephen Jen from BlueGold Capital said Chine is probably moving out of bonds from many countries as it prepares for a likely 5pc revaluation of its currency in coming weeks. Other assets might prove better protection against an immediate loss on holdings Use of China’s $2.4 trillion reserves to challenge US foreign policy is fraught with problems, not least because any damage to America will recoils immediately against China – which depends on the US market for its mercantilist growth strategy.

Meanwhile, cheena certainly talks a good game, one has to admit.

China’s power is growing so fast that it now feels confident enough to raise the stakes on a string of festering conflicts with the US. It has threatened to impose sanctions on any US firm that takes part in a $6.4bn arms deal for Taiwan agreed by the White House. This is a tougher response that on any previous occasion and raises the spectre of a trade war over Boeing, the key supplier. "Chinese leaders are deploying their reserves to try and pressure the US to stop haranguing China about its currency and trade policies, and to back off from interference in its domestic issues," said professor Eswar Prasad, ex-head of the IMF’s China division.

Bottomline?

Beijing cannot stop accumulating dollars unless it is willing to let the yuan ride, eroding the margins of its export industry. Some reserves can be parked in gold or even copper, but liquid commodity markets are not big enough to absorb the scale of Chinese surpluses.

Aha. I see. Was starting to wonder why cheena hadn't already bought out half of afreeka, central asia, ozzieland and the russian far east only....

China and America are locked together by fate. Any petulant action by either side involves a degree of `mutual assured destruction’. But sometimes in politics – as in life – emotion flies out of control.

Jai Ho, in that case I guess. Coz this delicate dance can't continue for even half of forever. Global imbalances+ western unemployment+western trade deficits+western debt levels+western deflationasty + cheeni weight all will spin far outta equilibrium.

Hari Seldon · Post by **Hari Seldon** » 25 Feb 2010 19:24

Greece moves to win friends and influence people

Theodoros Pangalos, deputy prime minister, said Germany had no right to reproach Greece for anything after it devastated the country under the Nazi occupation, which left 300,000 dead. "They took away the gold that was in the Bank of Greece, and they never gave it back. They shouldn't complain so much about stealing and not being very specific about economic dealings," he told the BBC.

Twisting the knife further, he said the current crop of EU leaders were of "very poor quality" and had botched this month's crisis summit in Brussels. "The people who are managing the fortunes of Europe were not up to the task," he said.

Well well....Like Karl Denninger says:

Nothing like calling the Germans a bunch of Nazis to make 'em decide to give you some money, eh?

Meanwhile Greek debt is rated BBB+, 2 notches down they hit BBB- below which their debt is no longer investment grade. Once greece falls, the domino machine might just get kick-started. I'll keep the beer, lungi and popcorn ready for UKstan's return to superpowerdom only.

Singha · Post by **Singha** » 25 Feb 2010 19:36

I forsee a N-S split of EU with the relatively better solvent "old europe" of france, germany and scandinavia
unwilling to part with their hard earned shekels to bail out the likes of UPIGS (uk, portugal,iceland,greece,spain)
and the eastern european economies.

all it takes is a hostile govt and popular resentment in germany to start the rip in the fabric...

shravan · Post by **shravan** » 25 Feb 2010 20:59

Greece to Issue Bond Next Week

ATHENS—Greece now plans to issue a 10-year bond next week, after the government announces a new austerity package of between €2 billion and €2.5 billion (between $2.71 billion and $3.38 billion), people familiar with the situation said.

Hari Seldon · Post by **Hari Seldon** » 25 Feb 2010 21:44

How do you know if things have really gone to the dogs? When you hear that Cash-strapped LA going after unlicensed dogs...

Jai ho only.

Meanwhile, I hear increasing clamor that the Dems will rahm through their signature healthcare bill.

More power to them I say. They'll add trillions more in systemic trouble only. Accelarate the decline yet further. Force a choice between keeping troops in faraway shores like Afgn or cough up monies for granny's hip replacement surgery.

SwamyG · Post by **SwamyG** » 25 Feb 2010 22:12

ramana wrote:Never before has Western image taken such a shock since the Nazi atrocities in WWII have ripped the mask of Western civilization.

That is simply the best summary of the situation.

The famous lyrics of the hindi song

Sheesha ho ya dil ho
Aakhir toot jaata hai

should be changed to

Suraj ho ya Empire ho
Aakhir doob jaata hai

SwamyG · Post by **SwamyG** » 25 Feb 2010 22:34

Greek tragedy is just the first act
The author of the above article, Jon Markman of MSN Money, asks international-finance expert Satyajit Das, based in Australia about the Greek tragedy. Some choice nuggets from the above article.

first that the entire world has indulged in an economic experiment over the past decade, in which rising levels of debt have been used to promote high growth. The policy, a change from the old-fashioned capitalist virtue of earning the money used to expand, had the unintended consequence of vastly increasing risk in ways that were not fully understood by bankers, companies or regulators until it was too late. We are now witnessing this experiment come to an end.

Das says, is that despite higher debt levels built up over the past decade to create affluence through borrowing, real economic growth has virtually ground to a halt in developed countries, and recent improvements in employment, income and wealth have all slowed dramatically.

The lesson is so clear now, even more so than at this time last year: Using new cash to pay off old debt on low-value assets leads families and countries alike into poverty.

Das sees the European Union's tentative and hugely unpopular effort to guarantee Greek debts as the first phase of the next stage of the global financial crisis. Now that once-private debts are on public balance sheets, the next step is to shift one country's debts to a coalition of countries. In the case of the EU, that means Germany, because it is the only nation on the continent with net savings.

{Read what our Singha ji says above}

"It's a case of pass the baton, and the problem is that unless Martians show up with money, you are going to run out of people to pass the baton to," Das says.

{

Well it is actually sad, because it is going to drag many people and countries down}

"Governments are in a terrible, terrible bind, particularly in Europe, and no one, including me, knows how to unravel their debts without creating complete disorder in markets," Das says. "One by one the dominoes will fall, interrupted by brief periods of calm."

The meaning of Greece, in short, is that its troubles show that unwinding sovereign debts will be an order of magnitude harder than unwinding mortgage debts, because the scale is so much larger. And it gets deep into the marrow of the nature of nationhood because belief in sovereign debt demands belief in the sovereign.

{now ponder what Ramanji is talking about the Western civilization}

SwamyG · Post by **SwamyG** » 25 Feb 2010 22:39

Source: Sovereign Risk Chart - Where Would the US Fit in, on Europe's Scale?
Read the above link to get the context of the chart.

shravan · Post by **shravan** » 26 Feb 2010 00:31

Fed to Examine If Wall Street Is Betting On Default by Greece

Ashwin B · Post by **Ashwin B** » 26 Feb 2010 01:51

prad wrote:not to sound like a hawk, but seriously, America needs to put China in its place. if PRC is so deluded by its apparent grandeur that it actually decides to do something like mass dumping of US bonds, the President should just sign an executive order and void the entire packet of bonds that PRC owns. it will be amusing to watch the CPC with its jaw hanging open, wondering how the US had the guts to do something like that.

and then of course, everything will go to hell and shit hits the fan in a big way. the entire globalization era will come to a definitive demise.

I was thinking exactly the same thing. Given the fact that China has been manipulating its currency all along, what is to stop US from announcing the real value of Yuan and saying we only owe you so much?
Also what's to stop the US from not recognizing the bonds/USTs that China has?

Has any country done this in the past? What transpired after such a move?

I'm still learning the basic foundations of economics, so pardon the naive question and kindly enlighten.

Thanks in advance!
Ashwin.

Ameet · Post by **Ameet** » 26 Feb 2010 06:54

Obama May Prohibit Home-Loan Foreclosures Without HAMP Review

http://www.bloomberg.com/apps/news?pid= ... KYq8&pos=1#

The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program.

The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.

vera_k · Post by **vera_k** » 26 Feb 2010 07:05

What possible benefit can there be from the government getting into a pump and dump scam wrt housing? Obama seems intent on making the same mistakes the Japanese did in avoiding writedowns.

Hari Seldon · Post by **Hari Seldon** » 26 Feb 2010 09:51

^^Am reminded of MKG's brilliant answer to the question "What do you think about western civilization?". He is said to have replied "It is a nice idea."

Anyway, aaj ka TAE tweet roundup.
http://twitter.com/AutomaticEarth

TAE Today: Greece’s debt is $405Bn. More than 5 times what Russia owed when it defaulted in 98 & Argentina when it missed payments in 01

Uh-oh. Is it just me or is that really the eerie sound of inevitability....??

Banks Bet Greece Defaults on Debt They Helped Hide (a classic Wall St. hustle), http://nyti.ms/aJyLeV

The American eagle nowadays flies with a bevy of banking vultures in tow.... of both Amru and Euro pedigree.
Pretty much how big banking in wall street operates, eh? Hide debt for A, then bet against A because the bigbank has inside info about the true state of A's finances. A is not just Greece but a whole host of corporations, investors, pension funds, local gubmints like municipalities and counties and so on. The bigbanks here aren't just GS or JPM but UBS, citi, rbs, and the whole lot.

Pound Could Collapse Within Weeks, Predicts Billionaire Financier Jim Rogers, http://bit.ly/bwALNt

Karma's calling card.
The beer, popcorn and lungi are all ready and waiting. Yaaaawhoooooo

"How can they call the Germans incompetent Nazis and still expect a bail-out?" http://bit.ly/cexjZ9 (The Greek tragedy unfolds)

Greece is doing eggsactly what the packees are doing in 'em FS level talks. Acting obnoxious hoping the other side will walk off in a huff. Jai ho.

Iceland Walks Out of Icesave Talks With U.K., Dutch, http://bit.ly/cLu5sI (Iceland showing some guts!)

Iceland is even more tfta than UKstan. And let's not forget how UKstan teated the Icelandics. Ukstan actually invoked anti-terror laws to seize Iceland's Uk assets to force a repayment of loans Iceland's people did not borrow or guarantee. And Uk acts surprised when unkil refuses to recognise Ukstani sovirginity over the falklands now, eh? One bad deed in bad faith will beget what else, may I know?

Oh, there's more. Posted w/o kament only. COmments welcome from thread regulars, pls, on the tweets below:

US-Sino tensions "dangerous game," U.S. panel told, http://bit.ly/bIIXiZ (Lots of interesting opinions on this poker game)

TAE Today: World trade contracted 12 percent in 2009 according to the WTO.
{So it begins....?}

This year the OECD forecasts $16 Trillion will be raised in government bonds among its 30 member countries, http://bit.ly/aNx9tz
{And what'll that do to yields, eh? The weakest/slowest etc fall first to the market monster. PIIGS, UKstan are already trailing the runaway herd...}

TAE Today: $100 Trillion is the present value of what Americans will have to pay, unless they default on their obligations to citizens.
{Would love to see how that number was arrived at. But even giving it an exagerration factor of 2, its game over for the entitlement society in the western world. Expect defaults, writedowns, escapes, pitchforks - fast and furious.}

Neshant · Post by **Neshant** » 26 Feb 2010 10:42

Fed to Examine If Wall Street (Goldman Sachs) Is Betting On Default by Greece

Federal Reserve? Not the FBI or SEC?

Lets see now. Goldman Sachs is a major shareholder of the Federal Reserve. And the Federal Reserve is suppose to investigate their major shareholder and find them guilty?

Who are they kidding. This is a pre-emptive strike by the federal reserve to PRETEND there is an investigation underway before someone suggests the FBI or SEC gets involved. These Goldman goons are all over the world creating conditions for catastrophy and then betting on the outcome.