Perspectives on the global economic meltdown (Jan 26 2010)

[ldev]

ShivaS,

Re corruption, lets not even begin going down that road. Yep scams come and scams go, irrespective of who is governing. Its a discussion without any resolution.

On a related note, you are old enough to remember the inflation in the 1973-74 period, a consequence of the money printing done by RBI for the 1971 war. It does not matter who is incharge of money supply - if there is no integrity, all is lost. Tying a currency to gold is a desperate attempt to impose disclipine on the currency issuers who will be swayed by external events. But the cure can be worse than the disease.

There has been a lot of railing on this thread against the Federal Reserve because of the global impact of its monetary policies. But what is the alternative. I dont know if the link posted below has been posted earlier. It will give you clues about fine tuning an alternative system if there is political will. Its a long video and an alternative to the fractional banking system as we know it.

[ShivaS]

ldev ji>> Agree, but one must remember
1971 War was a foisted war for that matter every war Indian fought was foisted one only...

So printing Money and paying 5 ps Bangaladesh levy postal stamp was atleast legitimate
1973 1974 was very critical year after the Yomkippur war, when OPEC unleashed quotas, all our nascent green revolution was dependent on fertilizer, pesticides etc dependent on oil based stock....

The whole world suffered till Iran Iraq war broke out with oil prices plumeting USD $11 to 16 per barrell.

SO all in all corruption was (like US) was limited to very few in those days, but now its Lisa Fair (ask Madam Radia)

[Christopher Sidor]

A bit of melodrama in the highlighted part, but still one tends to feel sorry for these poor blokes. To put it into perspective, 100 billion euros of debt means a debt of 21739 euros per person in Ireland.

Why don't they just say that they don't have money to pay for it, and let everybody take a loss. Ireland had faced several severe crises before, and this one won't be worse than previous one.

Ireland doesn't have a budget issue due to its government spending. It is due to bank liabilities.

Not that simple. Doing that will throw their entire economy into a tailspin. Ireland has a very high percentage of their economy concentrated on services. Banking/Financial/etc make up a significant portion of their economy. They just cant simply declare, that they will not pay. If their services sector collapses, there will be a very bad ripple effect on their entire economy.

In fact it is this "interconnectedness" of an economy, internal as well as external, which makes the work of economic prediction or forecast so hard. You know like Donald Rumsfeld had said "the unknown unknowns - the ones we don't know we don't know."

[Christopher Sidor]

Is the american dream over

This article was published on the 1-Nov-2010.

Today an American CEO earns about 300 times as much as an ordinary worker. In 1950, that number was only 30. The consequence is "social segregation," says Putnam, by which he means that people go to different schools and parties and live in different neighborhoods, and that there is no longer any overlap between groups.

"The fundamental bargain, the core of America, has always been that we can live with big gaps between rich and poor as long as there is also equality of opportunity," Putnam says. "If that is no longer true, then the core bargain is being violated."

And here I was thinking that the Equitable growth is uniquely a India's problem. It seems like it is one of the fundamental problems facing our kind.

"It was crazy," says Axel Jakobeit, a German by birth and American by choice, a real estate agent and investor in southwest Florida. Everyone was speculating in real estate, including secretaries, office workers and people who, as Jakobeit says, made $50,000 a year and were periodically up to $1 million in debt, because they were buying and selling multiple houses at the same time. When things were going well, that is. But, as always, things went well until they didn't.

This is what is happening currently in Delhi/NCR and other parts of Bombay. It is a property/real-estate market driven mainly by investors and speculators, who are buying houses just for locking them up and appreciation. They are even people who claim "Buy Land. It is finite and no more of it is getting produced."

Robert Reich has dissected the causes of the crash in his book "Aftershock," in which he analyzes an American character trait that seems oddly simplistic: If my neighbor has more, than I want more too. And I get what I want, because I'm an American.
.....
The wind is blowing from three directions. The rich keep getting richer, with the top 0.1 percent of income earners making more money than the 120 million people at the bottom of the income scale. The rich, says Reich, are trying to buy the elections. Meanwhile, the government is not helping the poor, and in fact is telling them: There's no money left for you. It is human nature to want what others have, says Reich, but the real problem is that people aren't making enough money, and that America's wealth is concentrated within the small upper class.

"The US economy has been losing momentum for the last decade," says Edmund Phelps, winner of the 2006 Nobel Prize for economics. According to Phelps, it has been increasingly clear, since the beginning of the millennium, that no new jobs are being created on balance, because the US economy has undergone structural change. Companies are dominated by investors interested only in the kinds of quick and large profits that can be achieved by reducing the workforce. Almost 6 million jobs have been eliminated since 2000.
...
Since World War II, job growth has kept up with population growth [in US], ranging from 10 to 20 percent per decade. The country[i.e. US] was firmly convinced that it could continue to do so. In the last decade, the population grew by 25 million, but there were no new jobs, or at least no net job creation. But a minimum of 100,000 new jobs a month was needed just to serve those who wanted to enter the job market.

When Greenspan cleared out his Washington office on Jan. 31, 2006, he left behind a country deeply in debt. Two wars, one in Iraq and one in Afghanistan, had already cost the country $1 trillion. The government debt continued to grow, from 57 percent of GNP in 2000 to 83 percent when Obama took office in 2009. The current national debt of $13.8 trillion amounts to 94.3 percent of GNP, and in two years it will exceed 100 percent.

It is a well known secret that the growth of 2000-2007 was jobless growth in which no new jobs were created, but the US stock market, NYSE/NASDAQ/etc, touched heights never seen before. This is one of the reason why one should not consider Stock Indices as a barometer for the economic performance of a country.
With its ballooning deficit, there is no way that the current Social Security and Medical entitlements can be paid and would have to be reduced significantly. Oh the Irony of it all, a democratic president, i.e. FDR, was responsible for some of these entitlements that Americans are accustomed to. And another democratic president, i.e. Obama, is trying to restrict these very same entitlements.

The naked fear of the undertow is palpable throughout the entire country, where people who once considered themselves part of the middle class, the solid center of the country, now feel threatened. These are the people who, now that the smoke has cleared, are suddenly realizing that 30 years of economic growth, all the boom years, have virtually passed them by. In 1978, the average income for men in the United States was $45,879. In 2007, it was $45,113, adjusted for inflation.

The mean income of the Americans has stagnated. The fact that the consumer was able to pull the economy along for the past decade, was solely due to unlocking of the value of the american homes. The great piggy bank of the american consumer. But read closely, 30 years. 30 years almost represents a generation. A generation of Americans has not experienced any real growth. Can this be truly called the "lost generation" of Americans.

[svinayak]

Is the american dream over

The naked fear of the undertow is palpable throughout the entire country, where people who once considered themselves part of the middle class, the solid center of the country, now feel threatened. These are the people who, now that the smoke has cleared, are suddenly realizing that 30 years of economic growth, all the boom years, have virtually passed them by. In 1978, the average income for men in the United States was $45,879. In 2007, it was $45,113, adjusted for inflation.

The mean income of the Americans has stagnated. The fact that the consumer was able to pull the economy along for the past decade, was solely due to unlocking of the value of the american homes. The great piggy bank of the american consumer. But read closely, 30 years. 30 years almost represents a generation. A generation of Americans has not experienced any real growth. Can this be truly called the "lost generation" of Americans.

Two things were done in the last 10 years. Keeping the inflation low by using Walmart prices - making PRC buy $1T treasuries and keeping the exchange rate constant.
Second is the keeping the stock market high and building false home equity by creating a RE bubble - by actual promotion of the bubble - low martgage rate and easy credit stds.

[Singha]

http://www.nytimes.com/2010/11/21/world ... =1&_r=1&hp

irish emigrating

[Neshant]

In my opinon, reforming the monetary system such that the individual who earned the wealth gets to control it 100% is a necessity. Doing away with the present system of fiat money which has banking crooks and clueless guys like Bernanke gambling with the casino chips of the people is the root of the problem.

However in returning monetary power to the people, a good number of banking & financing companies (i.e. useless middlemen milking the public) will need to get the axe. You can expect they will fight tooth and nail against it.

Ireland :

[Singha]

not sure who was lying or what happened - ireland was supposed to be miracle economy and north sea 'tiger' - everything from IT jobs to semi fabs to high value electronic assembly....to tourism...to quality alcohol....

NYT

Ireland Will Pursue Aid From Europe, Minister Says
By LANDON THOMAS, Jr.
Published: November 21, 2010

DUBLIN — Ireland has formally applied for a bailout from the European Union and the International Monetary Fund, Brian Lenihan, the country’s finance minister, said Sunday.
Related

Speaking on Ireland’s RTE radio, Mr. Lenihan said the application would be approved at a cabinet meeting later Sunday in Dublin.

The bailout would be in the tens of billions of euros, he said, adding that the final figure was subject to further negotiations.

His announcement ended a feverish bout of speculation on the rescue talks, which took on added urgency this weekend as the depth of the problems in the Irish banking sector became known to I.M.F. and European officials. People briefed on the talks said that the fear had grown that without swift action, a full-fledged banking panic might materialize on Monday.

On Saturday, Prime Minister Brian Cowen insisted that no form of debt restructuring would be on the table, despite a growing cry in Ireland and abroad for the bondholders — who financed the boom that has brought such a painful aftermath in this country — to share some of the pain.

“Under Irish law, senior bondholders rank pari passu with depositors,” Mr. Cowen said, meaning each had equal rights. His government has been roundly criticized for a blanket guarantee of the country’s banks and bondholders in 2008. Irish bank debts are now estimated at €70 billion, or $96 billion, almost one-half the country’s annual economic output.

Mr. Cowen also asserted that the country’s low corporate tax rate and four-year plan to reduce the budget would not be substantially changed.

[SwamyG]

Warren Buffet says trickle-down theory does not work

[SwamyG]

The American Dream was destroyed by the Americans themselves. America gave the reins of the country to the Corporations in the 19th century. Like organized religion has merits and demerits, organized Corporations have their share of merits and demerits. When profit is the only goal of a company it will do anything it can to attain them. If it has to ship jobs outside the country, it will not hesitate to do that. Proponents of free-market are either hypocrites or ill-informed because they do not see the huge subsidies industries in America get from the government routinely. Oil subsidies? Farm subsidies?

[Prem]

Econonmic Warfare It Is
http://seekingalpha.com/article/237978- ... rency-wars

What Lamy and most economists and policymakers neither want to acknowledge nor deal with is that their great paradigm of ‘borrow and spend to prosperity’ is broken. His argument that countries like China want to keep currencies cheap to export is absolutely true. His position that the USFed’s decision to try to keep the Dollar cheap is borne out of a desire to ‘stimulate’ the economy is also spot on. Where he misses the boat are on the causes for the current predicament, the very existence of his employer being front and center as a major contributor.
China is the World’s Biggest Wal-Mart
Not only do the Chinese provide the vast majority of the consumer goods on Wal-Mart’s (WMT) shelves, they’ve stolen a page or two from the mega-retailer’s playbook. Or perhaps Wal-Mart swiped China’s modus operandi, but it really doesn’t matter. China has for years now been flooding the developed world with cheap goods and, with the cooperation of first world politicians, has been driving manufacturing jobs to the Third World. This has been done much in the same way Wal-Mart has destroyed thousands of Mom and Pop stores throughout the nation.
America’s Ridiculous Demand

Perhaps the most ironic occurrence in the early stages of the currency war is the exhortations by American politicians and central bankers. They are demanding that China allow its currency to appreciate, which would in effect make it easier for American companies to export to China. We do export a significant amount of heavy equipment to China, as does Germany. After all, someone needs to provide the Chinese manufacturing machine with capital equipment

[Prem]

http://online.wsj.com/article/SB1000142 ... 70220.html
Japanese Shares Rise as China Falls Back

TOKYO—Japanese stocks are back in vogue, at least for now, despite lingering worries over dismal economic prospects and the strong yen.At least part of that newfound popularity is coming at the expense of Asian neighbors, as global funds look beyond China and other emerging markets. The big question for investors in Japanese stocks is how long the trend will last. Last week, the Nikkei Stock Average climbed above 10,000, capping a 14% climb since the end of August to close Friday at 10022.39.The rally stood out amid flagging shares in most other Asian markets in recent weeks, particularly

[KrishnaMu]

Now its official, after 1 week of denial by Irish govt. (worst PR blunder in any developed economy recent days) http://www.irishtimes.com/newspaper/bre ... ing26.html . Irish are accepting loan from IMF/EU calling it as “contingency fund”(i like the terms of the white people example Printing money in Britain's BBC economists called “Quantitative Easing” yes we know Robert Mugabe did decade ago). IMF head Ireland is Ajaji Chopra. For last two years govt. has no clue how tackle the crisis. The best example of Property crash in the plant Japan property bubble will dwarf coming years. Banks are up for sale coming days may be our HDFC and other can get some pie if you love EURO.

Is any body here from Ireland?

[Neshant]

Even some here on BR who were earlier arguing with me about money printing, bailout hounding, financing & high rolling and other scam artistry have stated singing a different tune. I really feel like dredging up some of their earlier messages and holding their feet to the fire on this one but I'm short on time at the moment.

haha I was thinking the same thing. Reminds me of this video I saw a couple years ago.

Ah its a classic.

What's interesting is the guy runs a company selling his economic forecast reports starting at $15K and up per report. On top of that he wrote a book entitled "The End of Prosperity" after the economic crash of 2008...... as if he predicted the crash.

These guys are frauds. Whenever I hear someone I'm debating start singing a different tune, their credibility goes to zero in my books.

[Neshant]

[SwamyG]

Prad: I usually do not jump to conclusions. One thing I will grant you is my post was simplistic and pointed out a few reasons only. For all my rants against Corporations I do not dislike Corporations per se; they have ushered in all the good things that we continue to enjoy today. I am against the "lack of use of wisdom and experience" when it comes to the way Corporations are regulated and run.

Why stop at 1971; why not move even further into history? Why did America even give Corporations the status of a person in legal terms? In a free market, if corporations go bankrupt newer ones will replace them, no ? US has become the athlete who is on steroids, and seeing the performance of this athlete countries across the globe are also taking steroids. Ultimately the steroids will take its toll on the society.

And even in America, while everybody blames the government and corporations; nobody blames the people who have been spending more than they earn. Because in a democracy blaming the people for their actions does not really work. In tamil there is a nice saying which means "Thieving cannot be abolished, until thieves reform themselves" .

[Christopher Sidor]

Americans have lived way beyond their means. Maybe that is a bad thing. But there is another aspect to this. In the past decade, 2000-2009, American consumers over consumption has led to China and India posting some fantastic growth stories. Our growth slowed from 8% to some 5-6%, post the lehman disaster. In simplistic terms some 2-3% of our growth was being sustained by outsiders.

For every Creditor there is a debtor. For every Germany there is a greece or ireland. For China there is US. One is a creditor the other is a debtor. If there had not been any debtor, where would the money from the creditors go? It would just lie there, getting wasted, while inflation would reduce it to next to nothing. Yet we consider Germany and its type to be virtuous while the american consumer, Greece, Ireland to be reckless and bad.

[wig]

Ireland bail-out: British banks hit as Irish rescue falters

British banks lost billions of pounds in value on Monday after the Irish bail-out was thrown into jeopardy over concerns that the country's government might collapse before a rescue deal can be agreed.The share prices of Royal Bank of Scotland and Lloyds fell sharply as stock markets took fright at the political chaos engulfing Dublin.

It had been hoped that the £70 billion bail-out agreed between Ireland, the European Union and International Monetary Fund would ease investors' fears over the eurozone economies.

The head of the eurozone warned that "crazy" market speculators could turn on Portugal and Spain next.

http://www.telegraph.co.uk/news/worldne ... lters.html

[ShivaS]

Fighting Irish, takes a (w)hole new meaning
these days

[abhischekcc]

You know, if Ireland sinks and takes UK down with it, the Irish would finally have their revenge on England. Ironically, what Irish could not accomplish by their strength, they would achieve with their weakness.

[Prem]

Merkel: Euro Is in Serious Trouble
http://online.wsj.com/article/SB1000142 ... 35340.html
( Euro or Mexican Churo, Uncle is killing many birds with one Stone)

LONDON—The euro is facing "an extraordinarily serious situation" in the wake of Ireland's debt problems, German Chancellor Angela Merkel said Tuesday, sparking an abrupt fall in the shared currency's value on foreign-exchange markets.The euro has been under pressure for several weeks amid concern over economic strains in Ireland. The euro-zone member now looks set for help from the International Monetary Fund and European Union after officially asking for a rescue package over the weekend, but that has failed to prevent the currency's fall.

[Prem]

http://online.wsj.com/article/SB1000142 ... 88042.html
U.S. Bank Profits Climb
( Muft ka Maal Saste me )

WASHINGTON—U.S. banking industry profits jumped again in the third quarter, as banks saw stronger revenue and set aside fewer reserves against bad loans. Net income for the roughly 7,700 U.S. banks and thrifts totaled $14.5 billion for the quarter, up from $2 billion a year earlier, the Federal Deposit Insurance Corp. reported Tuesday. The share of unprofitable banks at the end of the third quarter dropped to the lowest level since June 2008. Fewer than one in five banks, or 18.9%, reported a loss for the third quarter of 2010. A year ago, nearly a third of all U.S. banks ...

[Hari Seldon]

Well, oirostan worries have peaked (yet again, yawn), seems like. But nothing to get overly excited about perhaps, unless....

Anyway, the crux of the problem is that markets ain't generally dumb and they've figured out this time that all this bailout drama does nothing to solve the real, underlying problems that have led to this impasse. Talk about gorillas in the room getting overlooked only.
Ireland’s Woes May Spread on ‘Zero Confidence’

“The markets currently have virtually zero confidence that the bailout in Ireland will solve the European crisis even though fiscal austerity measures in both Portugal and Spain have been severe and prima facie, sufficient to ease market concerns,” Charles Diebel and David Page, fixed-income strategists in London, wrote in an investor note today.

“With markets effectively in a position to dictate policy, the risk is that the credibility crisis shifts to more sizeable European Union countries and thereby poses a greater risk to the system as a whole,” they wrote. That may also raise “valid questions about the prescriptive policy measures being sufficient to deal with issues of such magnitude.”

hint: read between lines only.

Meanwhile, for fin journos with nothing to do, focus on CDS spreads is always a backup story only.
Spain, Portugal Bank Debt Risk Soars as Traders Look South

The cost of insuring Spanish and Portuguese subordinated bank bonds soared as traders of credit-default swaps turned their focus to southern Europe following Ireland’s bailout.
...
Ireland’s rescue “achieves completely the opposite of what it allegedly tries to achieve, namely to calm markets,” Tim Brunne, at UniCredit SpA said in a report.

“Instead, the credit profile of both the sovereign and the impaired financial institutions has been weakened,” the Munich-based strategist wrote. “The disentanglement of the sovereign and the financial sector solvency issue is the pivotal factor to manage the European periphery’s debt problems.”

“Bailouts are nothing but a short-term string-and-sealing- wax fix,” Bill Blain, a strategist at Matrix Corporate Capital LLP in London, wrote in a client note. “We into the next stage of the euro sovereign crisis. It’s now a struggle between the political will of the Brussels elites to maintain the euro as is, versus the markets betting they can’t.”

IMO, Mish writes well on this issue in this blogpost:
Irish PM Dissolves Government; Spanish Banks Face Debt Challenge; Greece May "Shut-Down"; Meaning of "Guarantee"; Should Ireland Ditch the Euro?

Ireland is at a major crossroads. The fact that Irish Prime Minister Brian Cowen is willing to step down helps.

I agree that Ireland certainly needs reforms. Lowering the minimum wage will help create jobs. So will reducing benefits. Both need to happen regardless of what labour parties might think.

However the biggest job creation effort will come from Ireland telling the ECB and IMF to stuff it. There is no reason Irish citizens should have to pay back the foolish guarantees made by Brian Cowen.

Cowen will be gone soon enough, and the next PM can and should have different thoughts about the meaning of "guarantee".

German Chancellor Angela Merkel last month called for bondholders to foot more of the bill of European bailouts. I agree. It's time to hold her to her word.

The really big fear, IMHO, about bondholder haircuts crossing over from imagination to reality is that borrowing costs for all gubmints will soar. Even a few dozen basis points rise will doom the naked swimmers like UKstan, Italy and Spain, IMO. Expect netas and policymakers to resist defaults, loan adjustments and the like with all their force. Ireland going Argentina will usher in a new western order, perhaps.

[Hari Seldon]

The economissed rag went on and on aboutthe 'brutal' cuts sri cameron-osborne plan for the UKstani ekonomy. Brutal, eh? How easily adjectives mold themselves to the target country, eh? Brutal was what the brutish war criminal Churchill did to Bengal. Which, btw, marxist hitorians have successfully wiped off our collective history books and our collective conscience.

‘In the worst case scenario these cuts might actually increase the deficit’ (Guardian)
Yawn. Yeah. whatever.

I suspect we will live to see actual, real poverty strike UKstan. I suspect it will be the elderly and the most vulnerable who will first be thrown under the bus as the pressures mount and the bill starts coming due for past pretenses.

Bernanke hints dollar standard is flawed (FT)

Ah. Even the obvious, when admitted to by the high priest incarnate, becomes profound. Eh?

Surprising how little coverage and outrage this admission has received in the dhimmedia only.

Some States Weigh Unthinkable Option: Ending Medicaid (WSJ)
Unthinkable is right. But they're beyond merely thinking it, seems like. This risks going ugly real fast. Unlikely, but possible. Like I said, the weakest and most vulnerable get shown the bus doors first.
Meanwhile, 6 other states are 'considering' ending defined pension plans and going in for a 401k style retirement a/c for state gubmint employees.... revolutionary or what?

[ShivaS]

Ah Turkey time no not gobble gobble kind but the real Turkey with Ankara must be holding back a Chuckle Chuckle and smug for lectured by France to improve numbers like deficits


Any way now green back. Gets stronger with scramble of flight of capital

jaga may Maya
brathuke Maya
veedalalo saram imthe Maya

song from Devadas (telugu version tragedy, not the comedy version of shah rukh khan)

[SwamyG]

Yet we consider Germany and its type to be virtuous while the american consumer, Greece, Ireland to be reckless and bad.

Who is "we" ?

[SwamyG]

With so many problems in UQstan, probably Prince William will follow Russell Brand's footsteps - go to an Indian ashram and have a quiet wedding.

[wig]

Japan: land of the rising debt is facing tough times ahead

A huge deficit and a falling population threaten to push the country back into the dark days of deflation, and leaders are willing to attempt anything Figures released last week showed that the Japanese economy grew last quarter, albeit by just 0.9pc. But few expect the nascent recovery to last. Most economists expect the economy to contract in the current quarter as the strong yen damages Japan's crucial export sector. Japan's long struggle with deflation continues.

By 2050 the population is forecast to have fallen from 127m to just over 100m
Japan's working population will also have to service (and eventually pay back) government debt that now totals 197.2pc of GDP. The highest level among all of the major world economies.

With a culture of saving, the size of the deficit has caused few problems to date – with domestic savers absorbing 95pc of government debt issues.

But domestic savers will only be able to absorb government debt for another couple of years at most, at which point
Japan will have to look to external investors. A seminal moment for Japan, say economists, who warn Japan's fiscal position will become increasingly unstable at that point.

http://www.telegraph.co.uk/finance/glob ... -debt.html

[Pranav]

Interesting article -

The Fed Is Saying One Thing But Doing Something Very Different -
http://www.washingtonsblog.com/2010/11/ ... goals.html

The Fed is paying banks interest on excess reserves, which gives the banks an incentive to not give out loans. This is preventing the bailout money from making its way to Main Street.

Does anybody want to offer any opinions / explanations? Will give my own humble opinion a little later.

[Rahul Mehta]

The Fed is paying banks interest on excess reserves, which gives the banks an incentive to not give out loans. This is preventing the bailout money from making its way to Main Street. Does anybody want to offer any opinions / explanations? Will give my own humble opinion a little later.

This is old trick. This leaves Main Streets dry and enables Wall Street mafia to buy Main Street plots, goods, services etc for pittance. In 1929, depression occurred because Fed suddenly stopped giving loans and so Main Street started selling everything for pittance. So Bankers grew asset rich overnight.

[vina]

This is old trick. This leaves Main Streets dry and enables Wall Street mafia to buy Main Street plots, goods, services etc for pittance. In 1929, depression occurred because Fed suddenly stopped giving loans and so Main Street started selling everything for pittance. So Bankers grew asset rich overnight

Ah, Dear Shri Shri Rahul Mehta Maharaj Ji : On the contrary, much of Wall St was wiped out in the 1929 crash and many many many bankers simply leapt out of the windows of their highrises in Manhattan and did soo-side.

[Pranav]

The Fed is paying banks interest on excess reserves, which gives the banks an incentive to not give out loans. This is preventing the bailout money from making its way to Main Street. Does anybody want to offer any opinions / explanations? Will give my own humble opinion a little later.

This is old trick. This leaves Main Streets dry and enables Wall Street mafia to buy Main Street plots, goods, services etc for pittance. In 1929, depression occurred because Fed suddenly stopped giving loans and so Main Street started selling everything for pittance. So Bankers grew asset rich overnight.

Yes, that is very true.

But there is also another aspect - the Fed is a private corporation that earns interest on the money it prints. Now, most of those earnings (after deduction of a substantial amount for "expenses") have to be transferred to the US Treasury.

By paying interest to the banks for "excess reserves", the Fed is in effect transferring a chunk of its earnings to the bank owners, and reducing the payments to the US Treasury.

Thus, the banks have got bailouts and are getting paid for parking the money with the Fed. The bank owners are in effect getting their hands on the interest earned by the Fed on the money printed. Which is not a surprising state of affairs, since the Fed is in reality owned by the said banks.

[Pranav]

This is old trick. This leaves Main Streets dry and enables Wall Street mafia to buy Main Street plots, goods, services etc for pittance. In 1929, depression occurred because Fed suddenly stopped giving loans and so Main Street started selling everything for pittance. So Bankers grew asset rich overnight

Ah, Dear Shri Shri Rahul Mehta Maharaj Ji : On the contrary, much of Wall St was wiped out in the 1929 crash and many many many bankers simply leapt out of the windows of their highrises in Manhattan and did soo-side.

In 1929, not all bankers were connected with the syndicate. The crash was caused by the bankers that own the Fed, and they took care of their own.

[Christopher Sidor]

Yet we consider Germany and its type to be virtuous while the american consumer, Greece, Ireland to be reckless and bad.

Who is "we" ?

Sorry a typo from my side, it should not be "we" but rather "some". The sentence should read

"Yet some consider Germany and its type to be virtuous while the american consumer, Greece, Ireland to be reckless and bad. "

[Chinmayanand]

[ShivaS]

vina ji
you are wrongthe correct word is
Suicided like accidentend

[Abhijeet]

That's hilarious. "The Ben Bernank". That's a laugh out loud video.

The text-to-movie technology is pretty interesting too.

[Satya_anveshi]

Folks, have they turned Toyota out of SAP? The manner in which all this was bought and so quickly is similar to the "cars that don't stop" type of thing. The reasons I am asking here is to inquire whether this is an extension of trade war? If so, we will not stop here and should expect future capsules (and see if we can use them).

[Prem]

China widens anti-inflation effort
BEIJING —
WHAT'S HAPPENING: China's government ordered a crackdown on commodity speculators.WHY: The government has an anti-inflation campaign under way and says the speculators are illegally pushing up commodity prices.WHAT'S NEXT: Analysts expect Beijing to hike interest rates in coming months to rein in inflation.

http://seattletimes.nwsource.com/html/b ... rybox.html

[Prem]

X-post
http://www.bloomberg.com/news/2010-04-1 ... tened.html
BRIC Leaders Pledge to Boost Trade in Local Currency as Meeting Shortened

Brazil, Russia, India and China pledged to study ways to use their currencies, instead of the U.S. dollar, in local trade at a heads-of-state summit of the four biggest emerging economies. The so-called BRIC summit taking place in Brasilia ended a day earlier than scheduled after Chinese President Hu Jintao decided to return home early because of an earthquake in the western province of Qinghai that killed at least 760 people and displaced another 100,000. The leaders, who oversee economies estimated to fuel 60 percent of worldwide growth through 2014, said in a statement yesterday they would make efforts to sustain their domestic expansion to aid a global recovery that’s “not yet solid.” Even while vowing to promote cross-border trade and investment, the leaders made no mention of China’s controlled exchange rate, which economists say is a barrier to closer commercial ties. The yuan was not discussed during the meetings, Chinese Foreign Ministry spokesman Ma Zhaoxu told reporters.