Perspectives on the global economic meltdown (Jan 26 2010)

Hari Seldon · Post by **Hari Seldon** » 21 Oct 2010 21:16

Acharya wrote:Yesterday the group I interact got an order to transfer millions maybe potential billions of euro to dollars.
Something is happening now.

Wow. If true, it represents truly demented thinking only. Smoot hawley II is a picnic compared to what is coming. This means the ECB has thrown in the towel and abandoned fiscal constraints.QE II starting off in oirostan to pre-empt the inevitable QE2 in yamrika post nov polls? Look at the evidence only.

The oiros are despo to stave off further rises in the yooro w.r.t the dollah and the yuan. I predict they will soft-peg the yooro with the dollah mighty soon, if not hard-peg it, WTH.

Time will tell where this is going. Jai hu, jai eu. dollahoakbar!

Hari Seldon · Post by **Hari Seldon** » 21 Oct 2010 21:29

Arvind Subramanian in FT makes a good case here:America cannot win the currency wars alone

He says, effectively, the rest of the world should gangup and take on PRC for the yuan hard-peg. Good luck with that, is what I;d say at first glance. But hey, he points to a particular stick (QE2) unkil could use to goad unwilling turd world types to toe its line in the next attempt at Plaza accord II.

until recently, US diplomatic efforts have been insufficient because of over-confidence in its unilateralism. US quantitative easing and the policy problems it creates for emerging markets might be the spark that helps forge a broader coalition.

With Japan and the European Union now more vocal about the renminbi, the US could achieve a critical diplomatic mass if it can persuade, say, Brazil, Mexico, India, South Africa and Korea to form this coalition. Once political agreement is secured at the G20, implementation can be left to the IMF or the WTO or a combination of both as Aaditya Mattoo of the World Bank and I have proposed.

Multilateralism – with a more prominent role for emerging market countries – is essential now to prevent competitive currency debauchery by China and the US from blowing up the system.

Paki style threats, gun-to-own-head nago tactics, could things get more unbearably exciting??!!??

Wow.Lezsee where this goes. jai ho only.

Hari Seldon · Post by **Hari Seldon** » 21 Oct 2010 21:38

Well, here are some jolly good details of UKstani budgetary mor-ass.

Public spending is divided into two: current spending on running costs of government, such as salaries and equipment; and capital spending on new roads, railways, bridges and schools. In the 2010-11 financial year, current spending is expected to be £637bn and capital spending £60bn.

IOW, capital spending cuts won;t do much at this stage anyway. So, cut current spends.

The £637bn bill for current spending is split into two parts: the £343bn that the Treasury allocates to individual ministries such as the Home Office and the Ministry of Defence and the £295bn that goes on annually managed expenditure (AME), which is spent on servicing the national debt and welfare payments including state pensions. There is some discretion for Osborne to cut welfare payments – hence the means testing of child benefit – but not all that much, and debt interest payments have risen rapidly as borrowing has increased over the past three years.
...
That has meant Osborne has had his sights set on Whitehall departments. Here, though, the picture has been complicated by the decision to ringfence NHS spending, which accounts for one-third of all departmental spending.

Local government will suffer cuts of nearly 30 per cent by the end of the parliament, while the home office, justice department and foreign office will see cuts of 24 per cent. Additionally, the police force will see cuts of 16 per cent.

The department for business, innovation and skills will face cuts of 7.1 per cent a year, or nearly 30 per cent over 4 years. But the science budget will be protected at £4.6bn a year. Overseas development spending will reach 0.7 per cent of GDP by 2013, honouring the government’s commitment in the Budget.

The department for energy will see cuts of 20 per cent, but will have money for nuclear decommissioning. Defra [RS: that's our farming/rural agency] will also face cuts of nearly 30 per cent.

The department for culture will see its administration costs cut by 41 per cent. There will be a 15 per cent reduction in spending on museums, arts and sport.

…

The government will introduce additional savings of £1.8bn by £2014-15 from the cost of public sector pensions, in addition to the outstanding plans, acheived by raising contributions.

But infrastructure spending will be £2bn higher, reversing cuts announced in the June emergency Budget, overseas development will rise in real terms, and social care will see extra funds.

Mr Osborne insisted that the government’s levy on banks balance sheets would raise more each year than the bankers’ bonus tax, introduced by Labour, raised last year – £3.5bn in gross terms, or about £2bn net of other lost national insurance and other revenues.

…Social housing will see new tenants pay rents at 80 per cent of market rates, up from 50 per cent previously, and the chancellor promised another 150,000 affordable homes over the next four years.

But social care will receive a boost of £1bn by 2014/15 and a further £1bn through funding via the NHS.

...

Mr Osborne confirmed that about 490,000 jobs will be lost in the public sector by 2014/15. But he said that the job losses were “unavoidable when the government runs out of money.”

link

shyam · Post by **shyam** » 21 Oct 2010 22:02

I suspect that UK is trying make sure that its currency remains very strong. Remember that financial sector contributes a lot to British GDP. If sterling pound gets devalued a lot, UK will lose its previlege as the world financial center and others won't be interested in making financial deals and capital raising in London. This would contribute to loss of income and also the loss of influence UK enjoys among other turd world countries through its financial deal making power. Poverty or unemployment, UK needs to own a strong reserve currency that it can print when it likes.

I don't understand why US doesn't take this into consideration. Strong dollah is essential for long term US success.

ramana · Post by **ramana** » 21 Oct 2010 22:12

The local financial geek in Palo Alto was saying the same that a strong $ is needed as US can never compete price wise with the Asian economies.

Hari you need to start writing stuff in your own blog and detail out the issues. After you write a dozen pieces you will start liking that.

paramu · Post by **paramu** » 22 Oct 2010 02:21

New ad against the so called government waste

Christopher Sidor · Post by **Christopher Sidor** » 22 Oct 2010 11:58

With Japan and the European Union now more vocal about the renminbi, the US could achieve a critical diplomatic mass if it can persuade, say, Brazil, Mexico, India, South Africa and Korea to form this coalition. Once political agreement is secured at the G20, implementation can be left to the IMF or the WTO or a combination of both as Aaditya Mattoo of the World Bank and I have proposed.

What the author is trying to say is, make the entire G-20 gang up on China. The idea is appealing, but unworkable. Countries such as India due to various reason might join up. But will Brazil, Mexico, South Africa join up this gang? Sino-Korean trade is immense. So is the Korean investment in China.

And even if such a gang-up occurs then will the Chinese relent? Chinese PM has gone on record by saying that appreciation of Chinese currency will mean massive unemployment and loss of market share. In the long run, the appreciation of the chinese currency, might make Chinese economy more balanced and more resilient against external shocks. But it is the short-term and medium-term costs that worry the CCP. Maybe CCP is worried that it might have to pay a very heavy price or the ultimate price for this short-term pain. That is why CCP in its recent 5th annual plan has placed so much emphasis on "equitable growth". Or maybe CCP and certain Chinese sees this as a conspiracy against it, to derail its growth. According to them they have an economic model which has worked wonders for the past 2-3 decades.

If China suffers than the entire supply china which has China as the producer, North Atlantic countries and japan as the consumer and certain Asian and African nations as suppliers will be impacted. India is among the suppliers, to China by providing raw materials like Iron-Ore. So this will not have a happy ending any way we look at it. Maybe India will not be that much impacted, just like it was relatively insulated in the late 1990s Asian Financial crisis.

Whereas India is concerned, this might seem a good time to make a move for China's manufacturing ability. To wean away some manufacturing away from China and into India. After all due to the wage hike in China and the Chinese labor demanding more wages, there are some indications that companies are tentatively looking out for alternatives. Vietnam, India, Bangladesh and some have even suggested Africa. But the sticking point is the China Price. We will have to beat the china price and produce goods at a quality comparable if not better than Chinese. Also there is one more problem with this. China could squeeze so much benefits due to low cost for about 2-3 decades, then it hit a wall. This is what happened with Japan also. So taking some manufacturing away from China might help us in the medium run say 2-3 decades, but in the long run it will fail us. What to do after these 2-3 decades? After 2-3 decades the same manufacturing will shift to another low cost region, leaving us, just as there are rumors of it leaving China. So even India will not be able to play the price card for long. And we have seen that happen already in India where IT/ITeS/BPOs are concerned. Philippines, Egypt, etc and other countries have been making a play for our ITeS/BPO Industry and succeeding very nicely to. Our IT industry has been forced to "move up the value chain" so as to speak, because it just cannot squeeze the price factor any more.

Neshant · Post by **Neshant** » 22 Oct 2010 12:59

I'm starting a Hall of Fame from 2005/6 of morons who claimed all was well with the US economy.

The irony with this guy Art Laffer is after the collapse he published a book "The End of Prosperity" - about why the collapse is occuring! How do guys like this get away with bullshitting.

Note how accurately Peter Schiff predicted the collapse and keep in mind, this was 2006 when everyone was laughing at him.

Hari Seldon · Post by **Hari Seldon** » 22 Oct 2010 14:29

Whereas India is concerned, this might seem a good time to make a move for China's manufacturing ability. To wean away some manufacturing away from China and into India. After all due to the wage hike in China and the Chinese labor demanding more wages, there are some indications that companies are tentatively looking out for alternatives. Vietnam, India, Bangladesh and some have even suggested Africa. But the sticking point is the China Price. We will have to beat the china price and produce goods at a quality comparable if not better than Chinese. Also there is one more problem with this. China could squeeze so much benefits due to low cost for about 2-3 decades, then it hit a wall. This is what happened with Japan also. So taking some manufacturing away from China might help us in the medium run say 2-3 decades, but in the long run it will fail us. What to do after these 2-3 decades? After 2-3 decades the same manufacturing will shift to another low cost region, leaving us, just as there are rumors of it leaving China. So even India will not be able to play the price card for long.

The price card is misplaced IMHO. The world is staring deflation in the face - brought about in no small part by excess capacity in virtually any manufacturing sector one cares to name. That kinda excess capacity takes time and trouble to destroy - it won't move away simply because some place far away is a few cents cheaper.

India is better off building up enough capacity to feed its own growing demand and not import much from outside. And that is precisely where zabardasti ke delays in large industrial and infrastructure projects are hitting us in the shin - POSCO is just one example. Building capacity top service foreign demand is fine as long as it is only a small part of the installed base in our own country. in IT/ITES, clearly that is not the case and our vulnerabilities in this prize middle-class chatterati sector are all too well known only.

Hari Seldon · Post by **Hari Seldon** » 22 Oct 2010 16:30

ramana wrote:Hari you need to start writing stuff in your own blog and detail out the issues. After you write a dozen pieces you will start liking that.

There're reasons why I hesitate, Ramana garu. If all goes well, by the end of this year, I should be ready to launch a blog only. Tks for your encouragement and support.

- Hari.

ShivaS · Post by **ShivaS** » 22 Oct 2010 17:51

Its foreign exchange purchases are now so large that it can’t fully sterilize them, so a bigger level of purchases will generate even more inflation. A fixed currency peg with rising prices means higher export prices and thus worse competitiveness.

When I said make dollar couple of pages ago cheaper people like Neshant zand others took umbrage at me/my proposition.

Now well Indian exporters are complaing that due to excess FDI into India INR is gaining against $ and there by hitting their margins... and RBI is likely to buy up dollars with Rs... to stem the.. raise or may be pay uncle for the defence deals...

Keep up the relentless pressure on Yuan to keep inflation allready spiraling up in China....
Uncle should devalue further and further, Manufacturing will return to good Ol USA. Jobs will go up and standards will go up ....

The interinsic value of dollar is probably about Rs 20 and probably about 3 Yuan...

shyam · Post by **shyam** » 22 Oct 2010 21:11

Chris Whalen: FRAUDCLOSURE: "MBS INVESTORS ARE CALLING THEIR LAWYERS" 10-18-2010

shyam · Post by **shyam** » 22 Oct 2010 21:27

Here's Where America's Top 50 Companies Stand In Debt And Cash

It is interesting note the ratios for GE and Berkshire. Buffet's wealth is debt driven.
Of course, banks' debt data must be hiding true debt.

Satya_anveshi · Post by **Satya_anveshi** » 23 Oct 2010 00:13

something referred to earlier in my exchange with ShivaS/Chris_Sidor ji.

This is some gall to ask others to *commit* refrain..as in...we will walk over you, we will screw you and you commit that you will refrain from responding...here is where you sign.

G20 to Tim Geithner: 'You're Joking ... Right?'

Ahead of the confab, Treasury Secretary Tim Geithner sent a letter requesting the G20 "commit refrain from exchange rate policies designed to achieve competitive advantage by either weakening their currency or preventing appreciation of undervalued currency."

Prem · Post by **Prem** » 23 Oct 2010 04:24

Overhaul the G20 for the sake of the G172
http://www.ft.com/cms/s/0/a2ab4716-dd45 ... abdc0.html

When Manmohan Singh appealed this week for a meeting of minds among the Group of 20 leading economies, the Indian prime minister spoke to a growing fear that November’s summit in Seoul will yield little more than a stalemate. Gone is the “fellowship of the lifeboat” we saw during the acute phase of the financial crisis; instead, emerging and developed countries find themselves increasingly at odds, both in their diagnoses of the global recession and in their prescriptions for recovery.Yet behind the friction over currencies and trade, the grouping faces a deeper problem. In the eyes of many of the “G172” – the 172 member states of the UN that are not members of the G20 – it is a self-appointed and barely legitimate body that has no authority to assume its current role. This deeper legitimacy problem amplifies the G20’s current difficulties; but addressing the legitimacy issue directly might help to establish a new body in its place as a viable steering committee for the world economy.
is generally agreed that the expansion of the G7 in 1999 to include 12 new states plus the European Union improved global governance; and that establishing a G20 political leaders’ summit in 2008, on top of the G20 finance ministers’ meetings, further improved it. Then, there was enough shared understanding and determination for the G20 leaders to play a useful role as a crisis committee. Their flexibility as an informal group, having to get things done through other organisations, helped them to do so. However the G20 aspires to bigger things. It claims that its “economic weight and broad membership gives it a high degree of legitimacy and influence over the management of the global economy and financial system”. Its critics reply that its membership meets only one of several criteria of legitimacy, namely that it “represents” the world in the sense that its members account for a high proportion of global population and gross domestic product.

Hari Seldon · Post by **Hari Seldon** » 23 Oct 2010 04:31

http://twitter.com/#!/AutomaticEarth

TAE tweets for the day... .D&G alert

“People will believe a big lie sooner than a little one; and if you repeat it frequently enough people will sooner or later believe it.” {Duh, huh?}

More than one in five Spaniards live in relative poverty (20.8pc) and nearly one-third of households say they struggle to make ends meet
{OMG. Moi knew twas bad but it still manages to startle only, sometimes. We are witnessing the end of an era folks. Dunno how many realize it, though.}

70% Of All Stock Market Trades Are Held for An Average of 11 SECONDS http://bit.ly/91j9VV It's not a place to invest, it's a rigged casino
{Yawn. And where exactly do you see retail investors in US bourses aajkal exactly? The too clever by one banksters have killed the goose that laid 'em golden eggs only.}

"...it is time to place the financial institutions that committed widespread fraud in receivership." William K Black
{Amen. clap-clap. hear-hear!}

Goldman investment to make Buffett $1.5bn – in just two years http://bit.ly/a8iHA2 Wonder where that would be minus taxpayer bailouts?

"Goods producing jobs as a percentage of all jobs have declined from 31.2% in 1970 to 13.8% today." Jim Quinn

Must Read: Foreclose on the Foreclosure Fraudsters, Part 1: Put Bank of America in Receivership http://huff.to/dshGJw by William K. Black

And here's some juicy stuff shown alag se...

TAE 20/10: "The top one-tenth of one percent of Americans now earn as much as the bottom 120 million as us" Robert Reich
{wow , eh? income inequality, anyone? The only other country where this happens that I can think of is TSP.}

TAE 20/10: The typical hedge-fund and private-equity manager paid only 17 percent last year. (Effective tax rate)
{Wow. Its worth becoming a hedge fund manager just for that marginal tax rate to kill for!}

TAE 20/10: Bank of America sold more than $1 trillion in loans (mostly toxic $hit) from 2004 to 2008 to government-sponsored entities.
{The green shoots in the recovery gather irrepairable steam!}

Fannie, Freddie could tap $363 billion from the US taxpayer http://bit.ly/cgyj5c I reckon, it could be a WHOLE lot more.
{yawn. bah. its all papered money only. who cares?}

Well, aaj ke liye itna bas.

svinayak · Post by **svinayak** » 23 Oct 2010 06:21

EDUCATION: THE THORN IN CHINA'S UPSIDE

Both bulls and bears like to compare Japan in the 1960s and China in 2010. Bulls say the comparison offers China a well-trodden path to a modern, high-tech economic future. Bears point to Japan's asset bubbles in the 1980s, the subsequent crash, and the lost decade that followed.

Today a note by MF Global's Nicholas Smith - provocatively entitled 'The Sweatshop that Roared' - came out on the side of the bears, warning that 1960s Japan was in much better shape than today's China, principally because of one thing: education.

While policymakers in the western world fret about the many millions of graduates being churned out of China's universities every year, Smith points not to the number, but to the quality of those graduates. Take engineers:
The educational system produces far too few properly trained engineers. McKinsey did a study of China’s looming talent shortage in a 2005 report, interviewing 83 HR professionals involved in hiring in low-wage countries: it concluded that only 10% of China’s graduate job candidates are suitable for employment by multinationals. Small wonder foreign companies in China complain of a talent shortage.
For those graduates that do find a job, there's another problem.
Pay for recent graduates is below that for unskilled migrant workers and over a million remained unemployed – a sign the education system is tragically failing the parents that saved for it, and the economy generally.
Japan, says Smith, laid the foundations of its high-tech industry with education reforms dating back to the late 19th centry - which helped boost school attendance and literacy rates. China, by comparison, is still suffering from the legacy of the Cultural Revolution:
The effects are felt not only in the thinness of the cream in industry senior management, but also in the quality of leadership and mentoring in universities. A recent study by the Chinese government revealed that a third of the 6,000 scientists at 6 of the country’s top institutions admitted to plagiarism or the outright fabrication of research data.
As Jiang Xueqin wrote on China Power:
as long as the Communist Party controls the universities, they’ll continue to be political bureaucracies where professors care more about serving the agenda of some bureaucrat and fraud and cheating will become even more pervasive ‘non-problems’.
So what is the upshot of all this?

Essentially, Smith says that China will not follow Japan, and that it cannot forever be an export-driven economy. Wages will have to rise, growth will have to slow. The summary of his note presents a gloomy picture:
[China's] growth has come at the expense of wages, and discontent is bubbling to the surface in unseemly riots that make Japanese companies nervous about investing. By chaining its currency to the dollar it has manacled its monetary policy to US monetary policy, which is already resulting in disturbing asset bubbles reminiscent of those that humbled Japan.

Economic growth is likely to slow over the next 2-3 years, dashing the expectations of its citizens, with serious risks to stability at home and relations with its neighbours. China investments are no longer fire-and-forget.

http://blogs.ft.com/beyond-brics/?p=128956

Hari Seldon · Post by **Hari Seldon** » 23 Oct 2010 08:40

Keynes is dead, long live the keynes??

In Britain, Keynesians Fall Out of Favor

In Britain, George Osborne, chancellor of the Exchequer, delivered a speech on Wednesday that would have made Keynes — who himself worked in the British Treasury — blanch. He argued forcefully that Britons, despite stumbling growth and negligible bank lending, must accept a rise in the retirement age to 66 from 65 and $130 billion in spending cuts that would eliminate nearly 500,000 public sector jobs and hit pensioners, the poor, the military and the middle classes because of what he insisted was the overwhelming need to reduce the country’s huge budget deficit.

In Ireland, where the economy is suffering through its third consecutive year of economic slump, Keynes is doing no better. Devastated by a historic property crash and banking bust, the Irish government is preparing another round of spending cuts and tax increases.

Combined with what Dublin has already imposed, the cuts could add up to as much as 14 percent of Ireland’s gross domestic product, an extraordinary amount for a modern industrial country. Ireland’s budget deficit reached 32 percent of total economic output this year.

Indeed, across Europe, where the threat of a double-dip recession remains palpable, what is most surprising is not simply that governments from Germany to Greece are slashing public outlays but that the debate hinges more on how fast to do so rather than whether such substantial cuts are the right thing to do under the current circumstances.

“Everything Keynes established about the primacy of maintaining demand at a steady pace is gone,” Brad DeLong, a liberal economist and blogger at the University of California, Berkeley, said mournfully.

Along with other noted liberal economists like Paul Krugman and Joseph Stiglitz, Mr. DeLong has long argued for more stimulus spending in the United States and abroad to lift growth, even if deficits rise temporarily as a consequence.

Wow. Can someone say 'dire straits' or what?

Can only imagine the scene had sri brown retained power by allying with the libdems or something. Sri miliband-baja would have provided more entertainment in whitehall than outside it.

The tories are the best thing that's happened to UQ this time. They are doing the 'right' things in some sense, and yet they will endup in 1-2 yrs where Ireland is today - with 16% unemployment and recurring slumps only into a long night with no sight of dawn - ask Japan which had it easy, compared to what might have happened.

The new-labor path would have fed the illusion of 'all is well' a few months/1-2 yrs longer but after that led to cardiac arrest for the economy in a sudden flash-crash in the bond mkts. IMVVHO, of course. So UQ has chosen to die in whimpers rather than in a bang. Choose your own poison, I guess.

Neshant · Post by **Neshant** » 23 Oct 2010 08:48

Hari Seldon wrote:In Britain, George Osborne, chancellor of the Exchequer, delivered a speech on Wednesday that would have made Keynes — who himself worked in the British Treasury — blanch. He argued forcefully that Britons, despite stumbling growth and negligible bank lending, must accept a rise in the retirement age to 66 from 65 and $130 billion in spending cuts that would eliminate nearly 500,000 public sector jobs and hit pensioners, the poor, the military and the middle classes because of what he insisted was the overwhelming need to reduce the country’s huge budget deficit.

i see nothing in that statement about banking crooks losing their jobs.

so the problem has not been addressed.

ShivaS · Post by **ShivaS** » 23 Oct 2010 12:09

Since 2001 the value of dollar has been artificially buoyed up. the communists like the Saudi Camel riders have learnt a how to manipulate the dollar either by oil production controls or currency manipulation...
Uncle is losing he battle. Worst of all Unkil is throwing good money at Terrorists in TSP...

Neshant · Post by **Neshant** » 23 Oct 2010 13:00

Neshant wrote:
Neshant wrote:We are moving to an SDR type system as a global currency. Its another worthless paper system which surely won't last more than a few years before it dawns on everyone this is the same wine in a new bottle. Its exactly as Jim Rickards predicted. One of the key signs of this is the rebalancing of voting rights at the IMF for China. US wants China to have a bigger voting share so its willing to come onboard with the idea.

Jim Rickards Interview from June 14th with Eric King
http://www.kingworldnews.com/kingworldn ... 3A2010.mp3
In light of the above a few articles have been posted by members highlighting the US push to increase China's represenation at the IMF (mostly at European country's expense).

I came across an interesting page (the US postal service) which lists SDR to USD exchange rate at the bottom of the page in tables. http://pe.usps.com/text/imm/immc3_007.htm

The rate quoted is :
1 U.S. $ = 0.6576 SDR

A glimpse of the 35% devaluation of the dollar to come?

Jim Rickards predicts the upcoming G-20 meeting in South Korea will be far more important than the one earlier in Toronto this year. It will be where the idea of SDR as a global unit for international trade will be pushed forward. It will be spun as a good thing to 'balance trade' and other BS but really it will be a devaluation of the dollar and savers of western fiat will take it up the a$$.

The prediction is coming true. We are moving towards a worthless IMF created SDR type of system which is an extension of the ponzi scheme which is fiat money. Banking crooks are having a tough time getting bribed politicians to pass on their losses to suckers. A new scam is being setup to move the worthless paper money scam to a higher level where voters have no say.

Savers of fiat beware.

G20 strikes key IMF deal, waters down economic pact

http://ca.news.finance.yahoo.com/s/2310 ... -pact.html

Neshant · Post by **Neshant** » 23 Oct 2010 16:14

If you are a investor who has been ripped off by a banking crook, guess what - even the judge you go before to file a suit is on the payroll of a banking crook. More evidence why a keynesian system only leads to deep rooted corruption and a return to Austrian economics is needed.

The CFTC is supposedly investigating JP Morgan's manipulation of silver prices after ample evidence was presented some time back. In case you confused the glacial pace of their investigation for due dilligence instead of corruption, check out this article :

--------
CFTC judge claims colleague issued biased rulings

Commodity Futures Trading Commission (CFTC) Administrative Law Judge George H. Painter made serious allegations regarding fellow CFTC judge Bruce Levine in announcing his retirement.

In a notice sent to complainants and their attorneys, Judge Painter claims that Levine told him that he had promised former CFTC Chair Wendy Gramm “that he would never rule in a complainants favor”. Painter’s notice goes on to say, “A review of his rulings will confirm that he has fulfilled his vow.”

In the notice Painter recommends the CFTC request the services of an administrative law judge to be detailed to the Commission from another regulatory agency to handle the remain cases on his docket. Painter writes, “If I simply announced my intention to retire, the seven reparation cases on my docket would be reassigned to the only other administrative law judge at the Commission, Judge Levine. This I could not do in good conscience.”

The judge also attached a December 2000 Wall Street Journal story by Michael Schroeder titled, “If you got a beef with a futures broker, This Judge Isn’t for You—In Eight Years at the CFTC, Levine Has Never Ruled In Favor of an Investor” that details Levine’s penchant for favoring brokers over investors seeking reparations.

An attorney who handles futures litigation says that the notice “will freeze [the seven cases currently in Painter’s docket] for a considerable amount of time.

Heres the link for his chilling retirement letter within the article :
http://www.futuresmag.com/News/2010/10/ ... ased-.aspx

Neshant · Post by **Neshant** » 24 Oct 2010 02:55

This is the danger of financial & banking jokers "managing" the economy. Most of these guys doing financing & high rolling were probably selling shoes just a few years back.

Now this guy is going around claiming he predicted the housing bubble. LOL

This guy _continues_ to sit as chairman of the banking committee in Congress.

svinayak · Post by **svinayak** » 24 Oct 2010 08:00

A U.S. proposal to restrict how much countries should be allowed to borrow or export has run into opposition at a G20 meeting in South Korea. Japan, Germany and Russia have criticised the so-called "planned economy" thinking. Investment strategist Peter Schiff told RT that Washington is the one to blame for creating the global imbalances that threaten the world's financial stability.

svinayak · Post by **svinayak** » 24 Oct 2010 08:09

With 40% of the world's population, China and India (Chindia) are steadily rising towards becoming world-leading economic powers. The GDP Of China is already (2010) #2 in the world (after the USA); during the next decade, India will grow to be #3, surpassing Japan and and all European countries. 300 years ago, the two countries represented 50% of the world's wealth. They are rising again to dominate the world's economy.

Hari Seldon · Post by **Hari Seldon** » 24 Oct 2010 10:58

^^ Interesting video. Nothing new said, of course.

I thought the term 'Chindia' had been discredited and all only. I wouldn't use it normally but since I discovered it tends to irritate the CPC and all, well, why not....

But having said that, I must also maintain that Yindia and PRC are probably not in the same league. Not yet. In terms of potential, perhaps. In terms of performance, I doubt it. I think it was Kapil Sibal who once said 'There's no India-china race. We already lost that one' or some such thing. Well, time will tell by how much we have lost it, I guess, in 10-20 yrs perhaps. Jai ho.

Hari Seldon · Post by **Hari Seldon** » 24 Oct 2010 11:04

Here's a wow speech, folks. Recommended read. I too tried to excerpt it but couldn't. I'll let Jesse describe why:

I made several attempts to edit this piece down a bit, but Davies' command of language, anecdote and illustrative reference is so strong that in the end I resisted all but the most cursory deletion.

Listen well to what he says about the markets and how to trade them. I have said this myself many times in different ways, but rarely so concisely and so well.

Link

Just read it all. Only. I'd endup posting the whole thing here, otherwise.

shyam · Post by **shyam** » 24 Oct 2010 12:21

Acharya wrote:youtube:Mc8GWrAw3ME

After watching this video, I felt that many regular BRFites who read/post in this thread has more gyan than this speaker.

Hari Seldon · Post by **Hari Seldon** » 24 Oct 2010 14:09

Germany Says Fed Is Headed ‘Wrong Way’ With Monetary Easing

The Federal Reserve’s push toward easier monetary policy is the “wrong way” to stimulate growth and may amount to a manipulation of the dollar, German Economy Minister Rainer Bruederle said.

Fed Chairman Ben S. Bernanke yesterday gave Group of 20 finance ministers and central bankers meeting in Gyeongju, South Korea an overview of the U.S. central bank’s efforts to jumpstart the world’s largest economy. His strategy, which investors expect will soon include greater asset purchases, drew criticism at the talks, said Bruederle.

“It’s the wrong way to try to prevent or solve problems by adding more liquidity,” Bruederle told reporters yesterday, saying that emerging-market officials were among the critics. Bruederle, a member of the Free Democratic Party, the junior partner in Chancellor Angela Merkel’s government, stepped in for hospitalized Finance Minister Wolfgang Schaeuble at the meeting.

“Excessive, permanent money creation in my opinion is an indirect manipulation of an exchange rate,” Bruederle said. The minister has taken a pro-market stance in his first year in office, criticizing state intervention in cases such as providing aid for General Motors Co.’s German Opel unit.

Am coming to the conclusion that an era has indeed passed in the history of the world. I can almost sense the change in the air, the water and the earth. (snark). Its long been an unquestioned article of faith among the yamrikis that by the dint of their hard work, will and innovation, their next gen will live better lives than they did. That is no longer axiomatically true. In fact, its most likely false going fwd. IMHO, the boomers represent the peak of living standards in anglosaxonia. Period. Even that is doubtful given that most will outlive the state's solvency when it comes to medicare and pensions. We'll see. Gen Y and the millennials will almost certainly have it worse. Much worse. Sans regular employment, raises, timely family formation, social support structure, resource abundance, low interest rates, crispy infrastructure and all those nice things folks have long taken for granted in the sumptuous west. That is over now. Gone.

Again, IMVHO, of course. New Rome has floundered. And how. Sure, unkil can perhaps still miraculuously pull yet another rabbit outta its musharraf with its SDR play. LOL. Let it try. The great Yogi Berra once said, "It ain't over till its over". True. Well, its over now. Almost.

Satya_anveshi · Post by **Satya_anveshi** » 24 Oct 2010 17:56

in more than one occasion I've commented that market movement in the run up to these type of meetings such as G20 had a specific pattern. Market often tanked to scare the shite out of the members, to ready the begging bowl of the US and seek more "stimulus."

I think the dirty word has been discountinued because every other economy responded to stimulus except for US. Now, this Seoul meeting had been planned for a while and I think US did a lot of begging in different forms and the market this time rose BIG time in the run up (because US already took a step to devalue and meeting had only one agenda - *commit refrain* from others). US cleanly wants to cut their debt off without paying dime to others. What a $hitty super power!

Barring shrill noises from germany, it is pathetic to see the lack of resistance displayed by all countries overtly *during* the meeting (unlike as they did before the meeting).Remains to be seen if and how they will they respond by their actions.

Muppalla · Post by **Muppalla** » 24 Oct 2010 18:31

Hari Seldon wrote:Germany Says Fed Is Headed ‘Wrong Way’ With Monetary Easing

Over 180 pages of this thread, we said the same but there are several naysayers who saw only CTs. The reality is dawning and now if the real folks say the say then they become no more CTs.

Currency is not manipulated just by China it is the same done by all powerfuls. Economy and rules are all a midhya. All it needs is more guns and power and influnce to create a gang. US has the abilities where as Russia failed (though it has guns).

US will just keep printing the notes and at a gun point asks everyone to accept the printed notes as Gold. That is how it will comeout of recession/depression.

Hari Seldon · Post by **Hari Seldon** » 24 Oct 2010 19:24

OK, more D&G. TIFWIW, I guess. Myself, am skeptical about grandiose declarations and sensational headlines. Still, the arguments made are worth a shot.

20.10.2010 - The Day The EU Started Dying

20.10.2010. Mark this date red. It will be historically regarded as the day the concept of the European Union (EU) started dying. The old continent gets engulfed in protest waves that span from Portugal to Romania and will soon reach probably every member state with the exception of micro-sized Luxembourg once the public receives more information on austerity cuts in the 2011 budgets.
The situation is now getting hairier with every day and it exceeds this blogger's capacities to list all stumbling blocks on the way to a kind of European Orwellian integration envisioned by its leaders, but increasingly resisted by the sovereigns.

Well, OK. so what exactly happened on 20-oct to warrant such D&G, eh?

Check yourself and remember this is only one day of bad news:

1. The FT has a memo from Trichet’s office, which says Trichet does not like the deal on the stability pact; {yawn. This is news? I mean, really?}
2. leak shows that there a serious differences over policy at the top level of the eurozone;{more yawn}
3. Merkel has obtained an assurance from Sarkozy to support the idea of replacing the EFSF with a tough anti-crisis mechanism (in addition to a treaty change to withdraw voting rights, as already reported); {said ass-urance is worth used toilet paper}
4. vote on French pension reform is delayed, as protests continue; {yup, for once I'm totally supporting the french citizenry here. Retirement @ 60 is a birthright.}
5. in Portugal, uncertainty over the budget continues; {yawn}
6. Commission proposes new EU watchdog to deal with cross-border banks in trouble;
7. Commission also proposes EU-wide taxes to fund EU budget; {Aha. now things are getting interesting. But these 'proposals' have 0.1% chance of making it only.}
8. Berlusconi and Tremonti plan a big reform of Italy’s budget process;
9. James Hamilton considers the arguments against QE, and finds some of them convincing;
10. a Spanish municipality, meanwhile, has become the first to suspend payments to its debtors. {Now now...so it begins. After me, the deluge. ..}

Add in the giant problem of demographics leading to a EU wide pension disaster and a growing feeling that politicians have long ago disconnected from their constituencies and get ready for a bumpy wild ride through this growthless, jobless, creditless "recovery".

Hey, that's my line! Its far worse for EU than for the khanate, btw.

Geopolitical kathak just heated up.....

At the same time trilateral talks between Russia, Germany and France to "anchor" Russia in the Western world must be a field day for the Russians. Gas, oil, commodities anybody? The EU has none of this and all economic development hinges strongly on a reliable supply of resources that is in limbo as Russia is also courted by raw material hungry China.
{Russia's not dumb - won;t put all its eggs in a made in cheena basket; will drive hard bargains both sides only. Still, its demogr problems remain as severe if not more as that of EU's}
Looking into my crystal ball I see an erosion of US-European ties as there is not much the two world regions have to offer to each other anymore. The US is preoccupied with several wars it is losing in the name of petro-theism and Europe will find out quite soon that the pension problem will require very drastic cuts as promises have now exceeded mathematical possibilities.

Jai ho and all that.

svinayak · Post by **svinayak** » 24 Oct 2010 23:20

“Essentially, the banking industry is a WELFARE state within the MARKET economy,”

-Mr. Hoogervorst served as co-chairman of a body that advised the two (FASB and Int'l Accounting Board) accounting boards on the financial crisis.(NY Times). This 'ugly' truth is masked by MSM controlled by Financial Oligarchy!

Neshant · Post by **Neshant** » 24 Oct 2010 23:34

“Essentially, the banking industry is a WELFARE state within the MARKET economy,”

^^ excellent quote

Prem · Post by **Prem** » 25 Oct 2010 03:35

Demographic Time Bombs: U.S. Is Better Off Than You Think
http://seekingalpha.com/article/231844- ... -you-think

Demographic factors can significantly affect economic activity. The following graph from an article by Gregory White and Kamelia Angelova at Business Insider - Clusterstock shows how Japan's aging population has been a detractor from economic growth will be an increasing burden on GDP in coming years.
Germany, and Europe as a whole, are already burdened by aging demographics compared to the U.S. and the difference is projected to increase, especially after 2030. China is projected to surpass the U.S. in old age dependencies in about 25 years.
Not shown in the Aizenman and Sengupta graph is the data for India. India has a much younger demographic profile today, as well as a higher birth rate, which infers that India will have an advantage over many other countries with regard to demographic burdens from an aging population at least until the latter stages of the 21st century. Sanjeev Kulkarni has discussed both the positive and negative aspects of this demographic profile of India.These are not factors that will have a bearing on economic activity in the coming one, three or five years, but the demographic changes will start to have significant effects in 10 and 20 years. As Aizenman and Sengupta point out, today's trade imbalances will eventually be reversed by demographic forces. The U.S. simply has to survive for a couple of decades to have a chance of benefiting.

ShivaS · Post by **ShivaS** » 25 Oct 2010 11:35

[quote] One of them made a bizarre comment:
France is a rich country with a great history. We don’t have to change (as in changing retirement age etc), world will change for us. [\quote]

Hence the quote
“"Qu'ils mangent de la brioche," Marie-Therese, the wife of Louis XIV,"

Neshant · Post by **Neshant** » 25 Oct 2010 11:50

the Fed will need to print $4 trillion in new money to close the Taylor gap.
...
Hatzius pretty much says it all- suddenly the market will be "forced" to price in up to 4 times as much in additional monetary loosening from the "convention wisdom accepted" $1 trillion. We have just one thing do add. If Goldman has underestimated the impact of existing fiscal and monetary intervention, and instead of closing 4% of the Taylor gap, the actual impact has been far less negligible (and if Ferguson is right in assuming that all this excess money has in fact gone to chasing emerging market and commodity bubbles), it means that, assuming 75bps of impact per trillion, the Fed will not stop until it prints nearly ten trillion in incremental money beginning on November 3. That's almost more than M1 and M2 combined.

Is the case for $10,000 gold becoming clearer?

http://www.zerohedge.com/article/goldma ... -new-money

shyam · Post by **shyam** » 25 Oct 2010 12:05

How will G20 nations react if Fed were to print $4 trillion after getting commitments from others not to devalue their currencies?

Christopher Sidor · Post by **Christopher Sidor** » 25 Oct 2010 13:38

^^^^
The question ought to be what can the G20 countries do, if Fed were to inflate its way to growth?

nandakumar · Post by **nandakumar** » 25 Oct 2010 14:32

The link below is an interesting perspective on how the global economy shaped as one dominated by the West as has been generally accepted notion of the last two to three hundred years or so.
http://www.historytoday.com/ian-morris/ ... ns-history
It started out as merely conducive latitudes for growth of agriculture -20 degrees to 35 degrees to the north of the equatorin in Eurasia and a wider band of 15 degrees south of the equator and 20 degrees to the north in America- at the time of the end of the ice age.
The author's principal argument that it is geography that has shaped the humanity's social and more particularly the economic history as we know it, has a broader relevance in the light of the economic crisis facing the globe.
In the beginning it was pretty much even across this band. Then slowly the fulcrum of economic activity shifted to area that was captured as the Greek speaking Eastern Roman empire and later shifted further up north all the way up to the British isles (1800s) and later did a further shift to the United States where it is in a process of transition. The author goes on to speculate that if the past is any guide then perhaps it is due for a further shift to the East (China/ India?). More importantly the speed with which it is shifting has also become increasingly narrower. In the event, the geographical area of new dominance in the East could be as close as the middle of the current century.
Not sure if this is the right thread to discuss it. But still, posting it for what it is worth.