Perspectives on the global economic meltdown (Jan 26 2010)

Neshant · Post by **Neshant** » 02 Jun 2010 08:59

Its turned into a joke.

Deadbeats who stop paying their mortgage are living well while people playing by the rules and paying their mortgage on time are suffering. Worse yet, people paying their mortgages have the loss of dead beats (living for free in their unforeclosed house) passed onto them through inflation/taxation..etc by the crooks at the federal reserve.

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Owners Stop Paying Mortgages, And Stop Fretting
http://www.nytimes.com/2010/06/01/business/01nopay.html

For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.

Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”

A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.

derkonig · Post by **derkonig** » 02 Jun 2010 11:14

The worldwide rout of socialists continues. Brown got the boot, Hatoyama has fallen, Hussain "clueless" Obama will soon be a lameduck, Zapatero & Papandreou will also go. Ah, if only our sekoolaars too could lose office (preferably forever), this world would be a paradise.

svinayak · Post by **svinayak** » 02 Jun 2010 22:52

http://news.google.com/news/more?pz=1&c ... Vl5w3XfKMM

Moody's 'Gave Up Its Analytical Distinctiveness,' Ex-Employee Says
Wall Street Journal - Aaron Lucchetti - ‎14 minutes ago‎
A former Moody's Corp. lawyer who worked in the ratings firm's structured-finance group for a decade planned to tell a congressional panel that the company "gave up its analytical distinctiveness," partly by intimidating analysts

ramana · Post by **ramana** » 02 Jun 2010 23:25

Warren Buffet says don't blame Moody's etc.

ramana · Post by **ramana** » 03 Jun 2010 05:43

Graphic in NYT on the magnitude of losses in the Financial Sector in 2008

http://www.nytimes.com/interactive/2008 ... aphic.html

Neshant · Post by **Neshant** » 03 Jun 2010 07:53

ramana wrote:Warren Buffet says don't blame Moody's etc.

That's probably because he's looking to dump his remaining 31.8 million shares of Moodys on some suckers at a good price.

This is the same guy who bought Goldman Sachs preferential shares during the 2008 crash and then started hollering for a government bailout. After the first attempt to pass the bailout bill was rejected due to public objections, he started hollering even more to have the bill pass as his shares tanked.

Watch out for guys who claim to be legends. They turn out to be fraudsters.

abhischekcc · Post by **abhischekcc** » 03 Jun 2010 09:10

>>The worldwide rout of socialists continues. Brown got the boot, Hatoyama has fallen, Hussain "clueless" Obama will soon be a lameduck, Zapatero & Papandreou will also go. Ah, if only our sekoolaars too could lose office (preferably forever), this world would be a paradise.

The Indian public is itching to throw out the congress govt. If only BJP can get its act together, they will win in a walk.

Modi for PM. <<flag waving>>

Carl_T · Post by **Carl_T** » 03 Jun 2010 09:22

Neshant Ji. don't buy stocks of big firms that are in the news, unless you're sure you can examine and understand the fundamentals of the business better than all the zillions of people following it.

Furthermore, psychologically it also helps if you stop following the stock price after buying it.

Your idea of buying at the bottom seems solid, but such positions can take months to recover. Dividends may be cut, the firm has ridiculous liabilities to pay. It is better to buy debt maybe.

Has anyone done an analysis of Satyam? Their revised financial statements should be out soon I think.

shyam · Post by **shyam** » 03 Jun 2010 09:41

shyam · Post by **shyam** » 03 Jun 2010 09:47

BP OIL DISASTER SINKS ~~OUR~~BRITISH PENSIONS
BILLIONS of pounds were wiped off the value of pension funds yesterday as shares in BP slumped dramatically because of the Gulf of Mexico oil spill.

Neshant · Post by **Neshant** » 03 Jun 2010 10:10

Carl_T wrote:Neshant Ji. don't buy stocks of big firms that are in the news, unless you're sure you can examine and understand the fundamentals of the business better than all the zillions of people following it.

I rather not follow the zillions of people. Most of these people were buying real estate at the top back in 2006. And lets not forget the hundreds of professional analysts following Enron with not one having sounded the alarm and most giving strong buy reccommendations right upto the crash.

I'm betting that BP won't cut their dividends. I'm also betting the US govt will not come down hard on them. The last thing the US will want is to put a business based on the real economy under financial stress. Its not some Goldman Sachs type company which is based on shuffling paper while producing nothing of value.

My call options on BP are showing profit and I'm thinking of exercising them if they manage to solve this leak problem. I'll give them a month.

Their discovery in the gulf is a very large oil field from the looks of it. I suspect their relief well is actually a second attempt at getting at that oil and if they do, the payout from that will boost their financial position. I do not think the US is going to let a major oil field sitting off its shores just go like that. Its worth at least a couple hundred billion if not more.

I'm more afraid of a all round crash in the stock market over the next 6 months since the recovery is fake than I am of BP's stock coming back.

Carl_T · Post by **Carl_T** » 03 Jun 2010 10:17

That is an interesting point, never thought from that perspective.

Anyone looking to hedge future war in mideast by buying options on oil or grains?

shyam · Post by **shyam** » 03 Jun 2010 10:19

When war starts, oil price will go down.

kittoo · Post by **kittoo** » 03 Jun 2010 10:40

abhischekcc wrote:Modi for PM. <<flag waving>>

Now here is something I whole-heartedly support, though its OT here.

vina · Post by **vina** » 03 Jun 2010 10:46

The Indian public is itching to throw out the congress govt. If only BJP can get its act together, they will win in a walk.

Deleted.. OT. Not really intended to discuss this here.

Carl_T · Post by **Carl_T** » 03 Jun 2010 10:50

I don't know how serious Anil Kumble is about this whole politics thing. But I see potential there for PM. Let's see if the BJP has the imagination. Young, charistmatic, respected and with pan-Indian appeal....a possible rival to Prince.

Dileep · Post by **Dileep** » 03 Jun 2010 10:53

OT, but BJP is now under the mullahs who scream "what you need is more yindoo onlee". Lost case!

shyam · Post by **shyam** » 03 Jun 2010 11:32

vina wrote:Modi is tainted. Making him as the PM candidate will be like the Congress putting up Sajjan Kumar, HKL Bhagat at all as the PM candidate.

This is sheer pro-congress political rhetoric that I didn't expect from Vina. Get the facts right, Sajjan Kumar and HKL Bhagat personally led mobs in their attacks against Sikhs. But the smear campaign against Modi is that he didn't take action at the time of riots. The victim numbers were inflated, and many riot victims were bribed. Every crooked method in a crook's dictionary were used in this anti-Modi campaign.

There was a joint panel discussion where Modi, Digvijay Singh and Farooq Abdulla were participants. And as usual, Diggy Raja brought in Gujarat riots. Response from Modi went like this - "I don't want to talk about this. When this is unnecessarily drawn in, I have to state the facts. When Godhra riots happened, I immediately sent fax to three neighboring states of Maharashtra, MP and Rajasthan to send security forces. All of them were ruled by Congress and all of them refused to send forces. Digvijay Singh was the CM of MP that time". The Diggy Raja just sat silently like a joker. You have to admire that he managed well with the resource he had.

True Modi's image was tranished in a wrong way. If he has not done any mistake, he should become the PM because that is the only way you can take revenge against the crooks.

Sorry for the OT.

Suraj · Post by **Suraj** » 03 Jun 2010 11:34

Folks, no more Indian politics on this thread, please.

geeth · Post by **geeth** » 03 Jun 2010 19:24

Deleted.

Sanjay M · Post by **Sanjay M** » 04 Jun 2010 08:01

Japan May Spark Next Sovereign Debt Crisis, Kusano Global Says

Neshant · Post by **Neshant** » 04 Jun 2010 08:45

Bill Black Interview :

[youtube]<object width="640" height="385"><param name="movie" value="http://www.youtube.com/v/UhO--P_tVBQ&co ... ram><param name="allowFullScreen" value="true"></param><param name="allowScriptAccess" value="always"></param><embed src="http://www.youtube.com/v/UhO--P_tVBQ&co ... edded&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" allowScriptAccess="always" width="640" height="385"></embed></object>[/youtube]

vina · Post by **vina** » 04 Jun 2010 09:49

Dunno whether it belongs here in Nukkad or both. So anyway will post here.

SHQ got a "Payment Demand" for Assessment Year 08-09 from the "Central Processing Center" of the Income Tax dept. It came by courier, and unlike the usual "Govt" mails with the cheapest coarse paper, this was pretty IT/Vity level nice envelope and a good printed letter and demand.

For AY 08-09 , we had filed a paper return and for some reason, SHQ's TDS from the employer had got fallen through some cracks (in the electronic versions, you are required to type in the details of the TDS and when you generate the XML and upload, all that goes automatically) and had not registered in the IT depts systems.

So the demand came, pay Rs xx lakhs including interest!. I responded to the notice (I do all the "finance" work and secretarial typing (even for SHQ's business), SHQ being the high flying Karporate Boss, just signed the letter with a flourish) , explaining that the TDS was paid by the employer and was deducted to the Govt account in the bank and that no taxes were due and sent it by registered post to the "Central Processing Center" .

I was dreading going to some dreary govt office and do the usual run around and waiting that the "Grievance Cell " between 3:00 to 4:00 on Tuesdays onree kind of thing and running after some random babus and clerks. After some 10 days or so I asked SHQ to follow up on the reply at the phone number that was there in the demand letter expecting a paan chewing govt operator at the other end.

What she got was shocking.A clipped BPO/ITvity voice on the other end . "Good morning maam, my name is XXXX, how can I help you"?. SHQ talked about the demand, our response to it and everything , they respond , yes, we have received the letter and that it is under processing and we will get back to you within 10 days!.

At the end of the conversation, the person from the CPC asks, Is there anything else that I can help you with today ?. How was the service we provided ?. Is there anything we could have done better to help you ?.

When SHQ recounted this to me, I was simply gob smacked. This sure as hell wasn't the Indian govt. I digged around and found that the IT Dept centralized all the IT processing in "Central Processing Center" and that entire thing is basically outsourced to Infosys BPO!.

My word. What a world of difference. If only the govt could simply outsource the new service functions, especially customer facing and with frequent touch points to the BPO/KPO/IT vity guys, there will be an immediate and sea change in a lot of things and not to mention, the govt bureaucracy wont need to grow in size at the same rate at which new services are added!.

Singha · Post by **Singha** » 04 Jun 2010 10:11

infy bpo (which is called progeon?) is quite good. netz has outsourced all HRD case handling to them and response is very fast and precise. once I even got a mail from case person that she was going on emergency leave and giving alternate contacts and methods.

mnag · Post by **mnag** » 04 Jun 2010 20:52

Similar article had appeared earlier at http://seekingalpha.com/article/177471- ... an-default

But i believe the japanes debt is held domestically unlike the debt of other countries. In addition, cant they print their way out of default?

Sanjay M wrote:Japan May Spark Next Sovereign Debt Crisis, Kusano Global Says

wig · Post by **wig** » 04 Jun 2010 21:09

[quote="vina"]Dunno whether it belongs here in Nukkad or both. So anyway will post here.

moderators, my apologies this is OT
vina ji,
as a standard operating procedure, i opine that you should go to the site incometaxindia.gov.in and clikk view your tax credit on the left side.
register yourself (form AS 26) and then take the print out. deliver this with a copy of PAN card to any nearby TIN facilitation center. the list is on this site or tin-nsdl.com
the carges are Rs 20/=
after about three days or so you can view your income tax credits. it is very useful in that you can check the credits made to your acctount. TDS particulary has a pernicious way of not reflecting in your accounts, there are a variety of reasons for that -i am sure!
discrepancies can be rectified or you can request who so ever deducts your tds to recheck the filing

Singha · Post by **Singha** » 04 Jun 2010 21:51

I havent registered there but used my pan and year to check.
on may12th my refund status said "Sent to SBI for ecs refund". I had put my icici a/c , MICR properly on return.
no sign of money
today I check it gave status of "may 26 - sent by speed post with a tracking num"
feeding that into tracking site, I learn it left mumbai on 3rd and arrived today in BLR "bag arrived"

now I am sh*tting bricks hoping it reaches me intact and all details are correct. the FAQ contains
discouraging items like what to do if someone else's cheque reaches you? another scam I have
heard is what to do if the cheque date is expired? WTF.

due to a serious miscalculation of my chankian ability to milk the stock market of 2007, I overpaid
lots of advance tax that year. since then I swore will pay some penalty but not one paisa of advance
tax until july of filing year. with hdfc and other banks one can pay it online now, so no more hunting
for "challans" and dealing with scowling SBI tellers.

2007 was the glorious year of DLF IPO , Reliance energy IPO and L&T at PE=75

Ameet · Post by **Ameet** » 05 Jun 2010 01:34

Hungary in ‘Grave’ State, Official Says

http://www.bloomberg.com/apps/news?pid= ... DPM6F7K89Q

Hungary’s economy is in a “very grave situation,” a government official said, adding to concern about Europe’s sovereign debt crisis, weakening the euro and pushing the forint to a 12-month low.

“It’s clear that the economy is in a very grave situation,” Peter Szijjarto, spokesman for Prime Minister Viktor Orban, said today in Budapest. “I don’t think it’s an exaggeration at all” to talk about a default.

Sanjay M · Post by **Sanjay M** » 05 Jun 2010 05:57

When it rains, it pours

US jobs numbers are a big letdown

Are the storm clouds of double-dip looming on the horizon?

In which case, will the US have to print its way out of recession, at the cost of major inflation?

Muppalla · Post by **Muppalla** » 05 Jun 2010 07:47

Hari - Where are you and how long are you going to be in tora bora (mountains with not access to BR)? We need your expert opinion and without you this thread is drifting its direction once in a while.

svinayak · Post by **svinayak** » 05 Jun 2010 20:06

How Fragile is the Structure of Euroland's Economy?

http://www.ontonix.com/index.php?page=3 ... &IDDOC=488

The current economic crisis has exposed the need to take a close look at systemic and holistic properties of markets and economies. A complexity-based systems approach exposes properties of the dynamics of an economy that conventional techniques cannot. In fact, the meltdown of the economy on a global scale is proof of the limitations of contemporary econometrics.

Structural fragility of an economy is stratified into five levels:

(1) Very High: The economy has a weak structure. Exposure is very high. It is very difficult to make forecasts and define realistic goals.

(2) High: The structure of the economy is fragile and difficult to steer. Exposure is high. It is difficult to make forecasts.

(3) Medium: The economy has a moderately resilient structure. Exposure is limited and forecasts may be attempted.

(4) Low: The structure of the economy is robust. Exposure is low and it is possible to make realistic forecasts.

(5) Very Low: The structure of the economy is resilient and controllable. Exposure is low.

The evolution of complexity of the combined 27 EU economies over the mentioned five-year period is illustrated below:

The constant rise of complexity since Q1 2005 indicates that from a global perspective the crisis in the EU has been maturing at a sustained rate. Complexity has peaked in Q4 2007 (see arrow) one quarter after the subprime bubble. In Q1 2009 a sustained reduction in complexity commences, leading to pre-crisis levels in Q4 of 2009. In Q4 2009, the structural fragility of the system of 27 countries is 49% (0% means a resilient system, a 100% implies a system on the verge of collapse). This is equivalent to a medium fragility as illustrated below.

Even though complexity has reached pre-crisis levels, the structure of the combined economy is moderately resilient. Because of a globally turbulent economy, this fragility increases substantially the risk of financial contagion, domino effects and fast shock propagation.

Sanjay M · Post by **Sanjay M** » 05 Jun 2010 21:38

Hmm, so what if we BRF jingoes hire some cyber-coolies like Elon Musk did and come up with GoldPal?

"send gold to anybody - by email! start a return to the gold standard with your friends!"

Just spread your GoldPal icon around the internet, and voila, byebye fiat currency.

Liberal printing-press economics suddenly goes down the drain, as more people make gold their transactional choice for monetary exchange

People put their savings in that which is trustworthy and credible - and populist-minded politicians aren't, nor are the fiat currencies under the control of their whims.

Instead of people having to struggle for change through the ballot-box to get their concerns addressed, why not just give them an option to opt out of untrustworthy institutions on their own?

By creating a transactional network based on a trustworthy (read: non-fiat) valuation standard, then people could conveniently migrate their savings into it, as it grows to meet their transactional needs.

Maybe one could make an iPhone or Android app for it, to make it as mobile as cash is.

Given these times of worry and turmoil, wouldn't this be the opportune moment for a disruptive entry into the marketplace?

ramana · Post by **ramana** » 05 Jun 2010 22:04

A prof of Uty of Maryland was on radio fuming about how the $1.6T stimulus was wasted by Ombaba Admin. The radio anchor tried to pin it on Bush and the prof fired back most of TARP has been returned and that his fury was at the wasted effort that produces"spit on a gnat's wing"

Neshant · Post by **Neshant** » 06 Jun 2010 02:26

he has a negative outlook on what's about to happen in the next few years.

he mentions that of the countries in Asia, only India has managed to grow its economy on domestic consumption.

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Leigh Skene Interview

http://www.financialsensenewshour.com/b ... 0526-1.mp3

Neshant · Post by **Neshant** » 06 Jun 2010 11:43

don't know if this is good news or bad news.

whenever banks show up, money from the real economy gets skimmed away.

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Foreign banks keen to strengthen foothold in India

MUMBAI (AFP) - Foreign banks have been in India for more than 150 years but more overseas lenders are now queuing up to set up operations, amid signs that tough restrictions on entry may be eased.

Five to eight foreign banks are seeking to come to India, a source familiar with the industry said, with the country viewed as as attractive because of gaps in the market and a buoyant economy that has created wealthier clients. (they won't be so wealthy once banks are through with them)

"India is in focus. It is a high-growth market," added Abizer Diwanji, head of financial services at consultancy KPMG India. "Foreign banks are building their base here, focusing on high-net-worth clients".

Last week Britain's Standard Chartered Bank raised 530 million dollars in a novel share sale through Indian Depository Receipts, which gives Indians an opportunity to get a global exposure to banking.

The London-based lender, which as The Chartered Bank opened its first overseas bank in the eastern city of Calcutta in 1858, called the fund-raising issue -- which was oversubscribed by more than double -- a "homecoming."

Australia's third-largest bank, ANZ, has been given the go-ahead for retail and wholesale banking operations. Credit Suisse, which already has an Indian investment banking, wealth management and mutual fund arm, is following suit.

Embattled bank Goldman Sachs is also keen to enter India. (good lord!)

http://ca.news.yahoo.com/s/afp/100606/w ... nomy_banks

abhishek_sharma · Post by **abhishek_sharma** » 06 Jun 2010 14:22

Lost Decade, Here We Come
Paul Krugman

http://krugman.blogs.nytimes.com/2010/0 ... e-we-come/

Chinmayanand · Post by **Chinmayanand** » 06 Jun 2010 16:13

Downgrade the Ratings Agencies

Ameet · Post by **Ameet** » 07 Jun 2010 00:40

Debtors’ Prism: Who Has Europe’s Loans?

http://www.nytimes.com/2010/06/06/busin ... f=business

IT’S a $2.6 trillion mystery.

That’s the amount that foreign banks and other financial companies have lent to public and private institutions in Greece, Spain and Portugal, three countries so mired in economic troubles that analysts and investors assume that a significant portion of that mountain of debt may never be repaid.

The problem is, alas, that no one — not investors, not regulators, not even bankers themselves — knows exactly which banks are sitting on the biggest stockpiles of rotting loans within that pile. And doubt, as it always does during economic crises, has made Europe’s already vulnerable financial system occasionally appear to seize up. Early last month, in an indication of just how dangerous the situation had become, European banks — which appear to hold more than half of that $2.6 trillion in debt — nearly stopped lending money to one another.

Sanjay M · Post by **Sanjay M** » 07 Jun 2010 00:53

I'm still wondering why people should wait for the politicians to secure their economic future for them. Why wouldn't it be possible in the meantime to create a "GoldPal" (GPal?) type of payment system?

Like I said, creating a parallel system of monetary exchange should be simple in today's world of digital money. The proliferation of credit cards, debit cards, online payment, and other forms of virtual money have then paved the way for the possibility of creating digital gold.

The whole point of gold is that it's not fiat, and therefore its intrinsic value cannot be deflated by printing off more of it on a whim. Because it's largely finite, then such monetary games are not possible.

And yet of course paper money overtook it due to its convenience and ease of use. But today's era of e-transactions has made paper money redundant. So why not try to directly couple the stability of gold with the convenience of electronic transactions, to obtain the best of both worlds?

There is inherently greater complementarity between gold and digital cash, as compared to paper currency and digital cash. Gold offers stability, while digital offers convenience - put the two together and you can have both.

What's necessary is to spread your transaction system around and hook up enough merchants and providers of goods & services to it. Gradually, you then build up your parallel transaction system, just as credit card companies, debit cards, PayPal, etc did during their rise.

Naturally those who are most mistrustful of politicians and their monetary gamesmanship would be the earliest and most enthusiastic adopters. Embracing this kind of system would allow them the safety of securitization along with the convenience of electronic ubiquity - since electronic ubiquity would be the means of liquidity.

The two fundamental assumptions are:

1) that the value of gold is inherently protected against monetarist-style printing-press games
2) that secure digital networks will always be available and ubiquitous for convenient ease of electronic transactions

I think that those 2 assumptions are pretty reasonable and safe assumptions because:

We're not suddenly going to go back to a non-networked world.
We're not suddenly going to discover massive new supplies of gold, or a solid gold asteroid, to suddenly flood the market with gold and reduce its value.

As long as those 2 assumptions remain solid, then the GoldPal/GPal idea could work.
It would be a new way of "Going Gault" - ie. opting out of increasingly untrustworthy decaying institutions.
This would of course cause a lot of heartburn to the state-clinging free-riding left-wing redistributionists, who rely primarily upon unbridled state borrowing, state spending, and money-printing to make their living.

What are the drawbacks/downsides to this idea? Comments? Critiques?

Prem · Post by **Prem** » 07 Jun 2010 00:55

G20 shifts from stimulus to austerity in final communiqué
http://business.timesonline.co.uk/tol/b ... 144663.ece

A meeting of G20 finance ministers ended in South Korea today with a clear call on governments around the world to put their fiscal houses in order as the global economy remains in the grip of deepening market turmoil and uneven growth. Although the meeting’s final communiqué said that the global economy was recovering faster than anticipated, the event was overshadowed by unresolved sovereign debt problems in Europe, warnings of worldwide “fragility” and frenetic attempts to play down suggestions that Hungary could be poised for a Greek-style crisis. The G20’s final communiqué introduced a surprise change of tone from the document produced by G20 finance ministers just six weeks ago — a shift for which Britain’s new Chancellor of the Exchequer, George Osborne, was keen to claim credit as he made his debut on the international summit circuit.