Global Economy

[Vipul]

It has already started advertising 4% on year + duration CD's.

[KarthikSan]

Obama sketches out recovery plan

President-elect says he wants to double renewable energy production, rebuild roads and schools and cut taxes. Next step: Consulting with Congress.

NEW YORK (CNNMoney.com) -- President-elect Barack Obama on Saturday offered the most detailed statement yet of his economic recovery plan, sketching out broad-based spending proposals and tax incentives aimed at reviving an economy mired in recession.

In his weekly radio and video address describing what he called the American Recovery and Reinvestment Plan, Obama spelled out five main goals. He said his plan proposes to:

* double renewable energy production and make public buildings more energy efficient;
* rebuild crumbling roads, bridges and schools;
* computerize the health care system
* modernize classrooms, labs and libraries; --> I don't know what else their classrooms need except for students!
* and provide tax breaks to American workers. --> And raise corporate taxes. Typical commie attitude!

"Economists from across the political spectrum agree that if we don't act swiftly and boldly, we could see a much deeper economic downturn," Obama said. "That's why we need an American Recovery and Reinvestment Plan that not only creates jobs in the short-term but spurs economic growth and competitiveness in the long-term."

The main goal of his plan: to create 3 million new jobs. Most would come from the private sector, he said.

As Obama prepares to take office on Jan. 20, the country faces a series of severe economic and political challenges.

Nearly 2 million jobs were lost in the first 11 months of 2008 - the final government reading on the employment picture will be released on Friday - and the economy has stagnated. Investors suffered the worst year in stocks since the Great Depression, and foreclosures are rising while housing values are declining at record paces.

Virtually every state is facing a budget shortfall, forcing many to make plans to cut back on critical services and raise taxes.

To that end, Obama's advisers and lawmakers have said they expect his legislation to provide increased aid to states to pay for Medicaid, as well as a boost to unemployment benefits and food stamps. However, he didn't mention it in his address on Saturday.

Welcome to the Socialist States of America

Obama's video address did not attach an estimated price tag to his proposal, but his advisers have said publicly they expect the size of the spending package to range between $675 billion and $775 billion.

Many economists have called for stimulus spending to approach or even exceed $1 trillion if the government expects to successfully beat back one of the deepest downturns in more than two generations.


I don't see where they are going to get the money other than raising corporate taxes again. His more taxes for the upper 5% is BS and the Chinese are not buying any more T-Bills in the near future

Next step: Making the pitch to Congress

On Saturday, the president-elect confirmed that he will meet with Democratic and Republican congressional leaders next week to sell them on the plan.

While his aides have been in talks with Capitol Hill staffers, Democratic and Republican lawmakers have been calling on him to present details for what could be the most expensive spending bill in U.S. history.

Some Democrats and Republicans have already raised red flags about the proposed plan's potential scope and the prospect of a rushed attempt to pass the bill in time for Obama to take office on Jan. 20.

A sharp debate is likely over several crucial questions. Will the proposed measures in fact boost the economy? What's the right balance between seeding short-term stimulus versus funding long-term projects? Will money intended to yield long-term dividends for the economy as a whole end up merely serving politically motivated agendas or pet projects?

Obama attempted to assuage some of those concerns on Saturday when he called for "vigorous oversight and strict accountability for achieving results." He stressed that his plan is not an attempt to "throw money" at the economy's problems.

"I am optimistic that if we come together to seek solutions that advance not the interests of any party, or the agenda of any one group, but the aspirations of all Americans, then we will meet the challenges of our time just as previous generations have met the challenges of theirs," Obama said.

[Singha]

* modernize classrooms, labs and libraries; --> I don't know what else their classrooms need except for students!

this is a kind of fetish with the goras. there are schools in rich towns which are
better equipped than state run univs on certain indicators yet there is always
anxiety to invest even more in physical infra.

what they need is social engineering to make the students as dedicated and hard working _on average_ as the yindu, yahudi, korean, taiwanese, japanese, chinese.

unless that happens, giving everyone a $100K SUNW wkstation to surf the web and play online games is useless.

[vsudhir]

44 US states face huge budget shortfalls

Also, interestingly, the bigger (popn wise) the state, the bigger the shortfall. And in the biggest state of all, thngs have gotten so rotten that relations between that sacred CPIM cow, proletariat backbone, class warfare colonels - unionized govt workers - turned nasty too.

California Employees fight each other as budget crisis deepens

State workers donned their rhetorical boxing gloves in 2008 and slugged it out – with each other.

Online, state workers defended themselves from attacks by private-sector workers and jabbed the governor (not so affectionately referred to as GAS) for wanting to furlough or lay off workers. And they attacked each other. ....

You'd think that state workers would pull together in tough times. Strength in numbers and all that.

But the opposite almost always happens when members of a large bureaucracy, be it public or private, feel threatened, said Todd Dewett, a group behavior expert at Wright State University in Dayton, Ohio.

"The notion of what constitutes productive behavior gets shaken," Dewett said. "So as California's financial pie shrinks, rivalries among state workers become more fierce."

Weakened leadership widens those divisions. Disenchanted members will freelance to protect their interests, Dewett said. And many public employees feel as if their team is losing right now.

Legislators and the governor agree that state education funding will have to be cut as part of any budget fix, something the teachers' lobby would have blocked in years past. The once-feared correctional officers union has gone two years without a negotiated contract. Negotiators haven't made much progress in labor talks covering another 170,000 unionized state workers. Most contracts expired last June.

And true to human nature, state workers fought with each other. Sound the bell for another round in 2009.

Click on the link to see the amount of bickering. It's quite interesting.

Meanwhile, those who would put pandit sukh ram and gwala laloo yadav to eternal shame brazenly defend their actions in that putative 'world's greatest deliberative body' - the US senate.

Treasury Defends Its Actions to an Oversight Panel

Responding to a congressional panel's attack, the Treasury Dept. says it's responded effectively to the financial crisis. That won't be the last word.

Early on the afternoon of Dec. 31, just as many Americans were beginning to tune out and focus on New Year's Eve celebrations, the Treasury Dept. issued its response to a blistering Dec. 10 report from the congressional panel established to oversee the agency's actions.

The 13-page Treasury report broke no new ground, strongly echoing recent comments and testimony from Treasury Secretary Henry Paulson and Neel Kashkari, his deputy managing the crisis response. At the same time, it sidestepped some of the most pointed questions and observations raised by the Congressional Oversight Panel in its initial report. In that report, the COP criticized the Treasury for failing to monitor what the banks and others actually did with billions of dollars in federal funds they had received, and questioned whether the Treasury had an overarching strategy or could show concrete results.

In its response, the Treasury effectively responded that it knows what it's doing, things could have been a lot worse, its efforts should improve matters in time, and the programs are working even if results are difficult to measure. ...

Central to many of the agency's answers in the report—and echoing Paulson and Kashkari in recent weeks—is the argument that, without Treasury's actions, worse could have happened: "The most important evidence that our strategy is working is that Treasury's actions, in combination with other actions, stemmed a series of financial institution failures," the report says. In other words, Treasury seems to be saying, Citigroup (C) teetered on the brink even after receiving an initial $25 billion capital infusion from the Treasury; but after a second bailout, it survived.

Oho, by the way, the land of the phree and home of the bravo now dazzles the world with a whole new era in the phreedom of the press....

Govt aid to save US newspapers

Whew. Enough for now.

Schadenfreude apart, the disorderly untangling of the financial mess in the phirst world could have disastrous consequences for emerging world's savers and hard-workers for a decade or more to come. And unlike the fat kitties in the west, these souls never got to see a comfortable life for the most part.

Things are changing far faster than anyone, certainly govts, could've anticipated. Like Rhett Butler says, there's fortunes to be made when civilizations rise and when civilizations fall. I just hope the savers and hard-workers in the third world get to taste a piece of that fortune.

[Najunamar]

* modernize classrooms, labs and libraries; --> I don't know what else their classrooms need except for students!

this is a kind of fetish with the goras. there are schools in rich towns which are
better equipped than state run univs on certain indicators yet there is always
anxiety to invest even more in physical infra.

Singhaji,
I do not disagree with your recipe; but, there is a common notion that all schools in the US/West are similar - may be true of other western countries but the same variations in Indian schools can be seen here. The bulk of Yindiyamrikhaans go to the few rich school districts and thus have little idea about a lot of poor schools that are no different from yindian schools. Bulk of the money though is misallocated repeatedly to those same rich schools in true yindian shtyle!

OT - will post in Educashun thread from now.

[markos]

* modernize classrooms, labs and libraries; --> I don't know what else their classrooms need except for students!
* and provide tax breaks to American workers. --> And raise corporate taxes. Typical commie attitude!

So when these same (failing) corporations were given trillions of tax-payer money, wasn't that "typical commie attitude" ?

To that end, Obama's advisers and lawmakers have said they expect his legislation to provide increased aid to states to pay for Medicaid, as well as a boost to unemployment benefits and food stamps. However, he didn't mention it in his address on Saturday.

Welcome to the Socialist States of America

Obama's video address did not attach an estimated price tag to his proposal, but his advisers have said publicly they expect the size of the spending package to range between $675 billion and $775 billion.

Many economists have called for stimulus spending to approach or even exceed $1 trillion if the government expects to successfully beat back one of the deepest downturns in more than two generations.

Wasn't US "Socialist states" when they effectively bailed out idiotic corporations with trillions of tax-payer money ?(largest recepient of tax-payer bailout, Citigroup, had more than 50% of their revenues from overseas operations) Or you prefer those corporations because some of those corporations like Citioffshore with thieving indian corporations like Satyam ?

I don't see where they are going to get the money other than raising corporate taxes again. His more taxes for the upper 5% is BS and the Chinese are not buying any more T-Bills in the near future

Are the chinese going to invest that money in indian rupee instead ?

Americans voted for Obama overwhelmingly, becuase they agreed with his policies. Most of them care little if taxes go up on crooked corporations (which seems to be your core concern in this post). At this stage average american would rather see the tax money going to help his laid-off neighbor than Citigroup or Chase that will offshore his neighbors job to some other country, with his tax money used as bailout for that corporation.

[markos]

* modernize classrooms, labs and libraries; --> I don't know what else their classrooms need except for students!

what they need is social engineering to make the students as dedicated and hard working _on average_ as the yindu, yahudi, korean, taiwanese, japanese, chinese.
.

typical racist stereotyping with little understanding of the US educational system

As someone else mentioned below, all US schools are not equal. Inner city schools are in the worst shape. Most of the immigrant children go to schools in good neighborhoods and thus oblvious to the ailing schools in US that lack good teachers and equipment in classrooms

At least in US, public schools are still viable. Can we say the same about Indian where public school system, which has become the last resort for the poorest children ?

In US, at least middle-class and even the upper middle-class still send their kids to public schools. Now there is a vast difference in the quality of those schools, because most schools are funded using local taxes thus rich school districts providing superior facilities compared to poorer ones. If Obama is going to use federal funding to remove some of the inequalities that will be a much better long-term step to the country than bailing out the rich bankers.

[KarthikSan]

Americans voted for Obama overwhelmingly, becuase they agreed with his policies. Most of them care little if taxes go up on crooked corporations (which seems to be your core concern in this post). At this stage average american would rather see the tax money going to help his laid-off neighbor than Citigroup or Chase that will offshore his neighbors job to some other country, with his tax money used as bailout for that corporation.

Your garden variety average American will still need to have a job to pay tax to get a tax break. The corporations have to be bailed out at least for that so that they don't lay off more people. Raise corporate taxes and the first thing the geniuses at any company will basically let go off more people to cut costs. Obama is only letting people pay a lower tax and not giving a bailout to all the laid off Abduls! I'd rather pay more taxes and keep my job than be laid off and wait in the line for food stamps and unemployment checks. I call this commie attitude because this is what they have been doing to India. Don't let any industry grow and keep everyone poor. They'll announce one free scheme after another for the people and glorify themselves for the successes!

[KarthikSan]

* modernize classrooms, labs and libraries; --> I don't know what else their classrooms need except for students!

what they need is social engineering to make the students as dedicated and hard working _on average_ as the yindu, yahudi, korean, taiwanese, japanese, chinese.
.

typical racist stereotyping with little understanding of the US educational system

As someone else mentioned below, all US schools are not equal. Inner city schools are in the worst shape. Most of the immigrant children go to schools in good neighborhoods and thus oblvious to the ailing schools in US that lack good teachers and equipment in classrooms

At least in US, public schools are still viable. Can we say the same about Indian where public school system, which has become the last resort for the poorest children ?

In US, at least middle-class and even the upper middle-class still send their kids to public schools. Now there is a vast difference in the quality of those schools, because most schools are funded using local taxes thus rich school districts providing superior facilities compared to poorer ones. If Obama is going to use federal funding to remove some of the inequalities that will be a much better long-term step to the country than bailing out the rich bankers.

The worst inner city schools are still better equipped than the best Indian public schools. Kids don't sit out in the open under a tree for fear of their school collapsing on them. There might be a difference in the amount of money allocated to schools in the inner city and good neighborhoods. The inner city schools don't get the same allocation because they don't produce the results or do not have enough students. It's a shame that a few good ones lose out because of that. I don't see how throwing money at schools is wise when kids don't go to said schools for whatever reason.

I do a bit of volunteer work and a few months ago we helped out a school in a Hispanic neighborhood. We built them a viewing gallery for their football field! This is no rich school I'm talking about. They were complaining about the city will not give them enough money to buy the best football gear. Go figure!!!

Here is a complete list of federal allocations by state and program for 2001-2009 from the DoEd.

http://www.ed.gov/about/overview/budget ... rogram.pdf

[KarthikSan]

So when these same (failing) corporations were given trillions of tax-payer money, wasn't that "typical commie attitude" ?

Wasn't US "Socialist states" when they effectively bailed out idiotic corporations with trillions of tax-payer money ?(largest recepient of tax-payer bailout, Citigroup, had more than 50% of their revenues from overseas operations) Or you prefer those corporations because some of those corporations like Citioffshore with thieving indian corporations like Satyam ?

The banks that have been bailed out are US registered corporations. Even though they earn half their money overseas the ultimate profit goes to Americans. So you did not figure out the 50% overseas income when they were making money off of other countries and now that you have to bail them out you are suddenly concerned! Plus, last I checked it was your so called laid off neighbor that lived like a Saudi prince in a half million dollar house, with his 100K RV, 40K pick up and a million other useless gadgets and gizmos not to forget the few thousands invested in guns and other toys. All this crap paid for with 2 mortgages and 15 credit cards while he did not have a job. The US created the sub-prime mess and all the beneficiaries of the sub-prime loans are in the US. So you figure them out son!

Are the chinese going to invest that money in indian rupee instead ?

The Chinese have more pressing concerns at home like saving their collective rear ends from an angry public. The crooks at Moody's, Fitch and S&P might give US treasury securities a AAA rating but any economist worth his salt would know that is 400% pure Eyetalian baloney! The way things are playing out the Chinese will not have surplus cash to buy treasury securities. Even if they did I don't think with the current credit situation and the negative returns they are investing in the US.

[markos]

Instead of reasoned arguments, we get more anecdotes and stereotypes from Karthiksan. I am not surprised.

Following link provides the testimony from Sheila Bair, a republican. She dispels the myths that the banks were trying to propagate - i.e. they made all these subprime loans because they were forced by CRA and Fannie and Freddie and people who took subprime loans were living a royal life

http://www.usnews.com/blogs/the-home-fr ... stment-act

Point of fact: Only about one-in-four higher-priced first mortgage loans were made by CRA-covered banks during the hey-day years of subprime mortgage lending (2004-2006). The rest were made by private independent mortgage companies and large bank affiliates not covered by CRA rules.

You've heard the line of attack: The government told banks they had to make loans to people who were bad credit risks, and who could not afford to repay, just to prove that they were making loans to low- and moderate-income people.

Let me ask you: where in the CRA does it say: make loans to people who can't afford to repay? No-where! And the fact is, the lending practices that are causing problems today were driven by a desire for market share and revenue growth ... pure and simple.

.....
For subprime loans, there is a stark difference in the type of loan. The rate of seriously delinquent subprime fixed rate loans is a little more than one-third the rate for subprime adjustable rate mortgages

Every house that is foreclosed on is not because the borrowers spent lavishly, but mostly because of the higher cost of loans after the initial teaser period. Banks pushed these loans in an irresponsible fashion to borrowers aided by regulators who were asleep at the wheel (I remember Greenspan recommending ARMs during '04-'05 time period).

If you are trying to place the blame on the sub-prime borrowers most of whom with below average education who could barely understand all the complex mortgage documentation instead of the banks full of quants that are supposed to measure the risk and act accordingly, I would say that you are just trying to close your eyes to reality to feed your misconceptions.

One of the main reasons for people defaulting on their loans or going to bankruptcy is health issues. So Obama is correct in strengthening the safety nets like medicaid ahead of any corporate welfare.

For more on Citi's sub-prime empire, read the following (including "certified forger" at their sub-prime unit). This will give some idea of the customers of Citi who live like "Saudi princes" (in your own words)
http://www.cjr.org/the_audit/tale_of_two_citis.php

Now on banks like Citi that were bailed out at US tax payer expense:
Citi was/is one of the largest sub-prime lenders in US. For most of the last decade, Citi didn't make any investments in US. Most of the capital was deployed overseas (testament to this is the fact that Citi has fewer than 1000 branches in US and had half the deposits of Wachovia in US - if I recall right, Citi had around 200 billion+ deposits while wachovia had $400 billion+ deposits and 3000+ branches). So there is little logic to the argument that institutions like Citi should be bailed out by US tax-payer. As a principal culprit for the sub-prime mess, they should have been allowed to fail like WaMu or Lehman or Countrywide.

http://www.financial-planning.com/asset ... tions.html

A Citi insider said last week that without Wachovia - which would have tripled Citi's U.S. deposit base - the company might need to pursue another deal this year to bolster its funding and to stay in the same league as retail giants Wells, Bank of America Corp., and JPMorgan Chase & Co

Also if I recall right, only a quarter to third of its deposit base is from US (I think only $200+ billion out of the total $800 billion deposits for Citi)

Chase and BOA are primarily american banks, but the same can no be said about Citi, yet it received the largest bailout. Had Citi failed, it would have impacted many other countries where Citi had operations as much as US. Yet US taxpayer is paying for the largest bailout in history for Citi, which could as well be considered a non-US bank for all practical purpose and the bailout money put in line - $45 billion - exceeds the market capitalization of citi - $39 billion as of today, half of that amount when it was bailed out.

Also, since 1950, the share of taxes paid by corporations have steadily declined. So after such gigantic bailouts, they can start paying more taxes because it is the US taxpayers that bailed these crooked institutions out while they were chasing/speculating profits in overseas markets, not tax-payers in India or China or Russia or Latin america. Some like Citi benefitted tremedously because of the fact that they were registered as an american corporation though their CEO Vikram Pandit kept crowing about the "globality" until c**p hit the fan (these days I hear him talking about how Citi is america'a bank ).

[Singha]

I need to step in and clarify that I am not involved in the debate whether or not to bail out corporations. I dont vote or live there so its no skin off my nose.

and my reference to foreign people was in foreign lands i.e. indians in india, koreans in korea not children of immigrants.

our schools are able to produce reasonable students with far less investment that the american inner city schools which cannot be fixed until the lower income families are stabilized and "brought mainstream". with probably a high % of black families being single mothers (Fathers ran off, in jail etc) black kids are not getting the father figure thing. taking their guidance from rap groups
and more senior street level goons is not a good thing.

throwing money at inner city schools will not fix the problems of black society.

Obama can pretend to be the messiah and chosen one for a few months, but will soon fall on his face and be "just one of the presidents"....

[markos]

Your garden variety average American will still need to have a job to pay tax to get a tax break. The corporations have to be bailed out at least for that so that they don't lay off more people. Raise corporate taxes and the first thing the geniuses at any company will basically let go off more people to cut costs. Obama is only letting people pay a lower tax and not giving a bailout to all the laid off Abduls! I'd rather pay more taxes and keep my job than be laid off and wait in the line for food stamps and unemployment checks. I call this commie attitude because this is what they have been doing to India. Don't let any industry grow and keep everyone poor. They'll announce one free scheme after another for the people and glorify themselves for the successes!

This is one of the most foolish arguments that I have ever heard. Just because the banks were bailed out doesn't mean that they are going to keep you employed (as a matter of fact, bailed out banks are announcing staff cuts). The reason for banks were bailed out to free up the frozen credit lines which has not yet happened (i.e. reduce the counterparty risk). Credit is the life-blood of capitalism and it is not just the overleveraged home-owners that are suffering as a result of banks not trusting each other. Consumer spending is what drives american economy and whether you like it or not that requires people to have jobs and consumers and businesses having access to credit.

Since consumer spending is not happening and credit is not available, the only option available is for govt to start spending the money and that is the purpose of the stimulus proposed by Obama administration. All economists, irrespective of their political beliefs, agree on that much.

If you are unable to understand this rather simple fact, and equate it to some "commie conspiracy" based on what you saw in India under a totally different context, I am not sure how to reason with you....

[Singha]

you might want to tone down your arrogant & dismissive tone here - if you want a longer stay.

friendly advice.

[markos]

our schools are able to produce reasonable students with far less investment that the american inner city schools which cannot be fixed until the lower income families are stabilized and "brought mainstream". with probably a high % of black families being single mothers (Fathers ran off, in jail etc) black kids are not getting the father figure thing.

As usual, you are spouting some racial stereotypes here. Single families are not limited to blacks. I have seen plenty of white families on welfare or with single/teen parents (you don't have to look beyond Bristol palin as an example of white teenage pregnancy)

I think when you claim "our schools are able to produce reasonable students", you are talking about private schools in India, not the public schools. I have some relatives in India too and I am not aware of a single person sending their kids to govt schools (equivalent of public schools in US). Govt schools in India are in a worse shape than most public schools in US.

So start comparing apples to apples, unless you are trying to stereo-type something based on your prejudices.

[Singha]

you know nothing of India. if you did, have you heard of kendriya vidyalayas? and there are plenty of govt funded schools which are quite decent. how many years have you lived in india and when?

what difference does it make if the broken inner city pop is black/white/hispanic? you are missing the message - broken societies and families are not
going to be fixed by the Messiah's white boy fetish of "we need to fund our schools" - thats a motherhood and apple pie statement for political brownie points only.

I have reported your post to the admins because you repeatedly ascribe prejudices and biases in a insolent way to several posters here instead of discussing about the matter.

we have seen enough know-it-alls of your ilk here in the past.

[markos]

Plus, last I checked it was your so called laid off neighbor that lived like a Saudi prince in a half million dollar house, with his 100K RV, 40K pick up and a million other useless gadgets and gizmos not to forget the few thousands invested in guns and other toys. All this crap paid for with 2 mortgages and 15 credit cards while he did not have a job

If a bank lent to a customer fitting the profile that you described, I would say the bank should lose on that loan. Banks are supposed to perform due diligence before they make the loans (i.e. verify income, employment, repayment history, debt burden etc.) In US, it is very easy to perform those type of verification and if the banks didn't do that it is either laziness (as with the kids that you described as not learning) or greed. As Sheila Bair stated in her testimony, nobody was forcing these banks to make loans to the consumers that you described. they came up with innovative loan products where income can be merely stated by the consumer, it was not mandated by govt or regulators. Govt monitors only compliance trying to ensure there is no discrimination is lending and scoring loan applications.

Truth is banks found a lucrative niche in subprime because they could lend to a whole new set of customers at a higher interest rate with more fee and insurance all bringing tons of profits. Banks employ a lot of Ph Ds who do quantitative analysis on their portfolios. With raising home-values, they figured there is very little risk with this type of lending (flawed assumption). Even in 2004, it was obvious to me that real estate in US was overpriced compared to the average income of the household. But the boom kept going because banks were ready to finance it as they were reaping profits from that.

The real example of socialism is banks privatizing their profits (and giving hefty bonuses to CEOs and executives) but socializing their losses in the form of bailouts. Profits from top 5 banks would have been over $50 billion in '06, yet they never felt responsible to reseve more money against these very risky loans on their books. Many banks chose to release money from reserves to show even more profits. But when losses started piling up, they needed a socialist bailout from US tax-payers. That is the real socialism, not Obama spending money to spur economic activity in the country

Interesting (imaginary) conversation between Karl Marx and a captalist - "Das Bailout"

http://www.huffingtonpost.com/james-pin ... 55014.html

KM: "Yes. Paulson has done wonders for us. And he's a Republican, right?"

I nodded ruefully.

KM: "Then Paulson is a great example of what my disciple V.I. Lenin called 'a useful idiot.' You know, somebody who does your work for you, out of ignorance, not intention. And we communists look forward to Paulson's replacement at Treasury, Herr Geithner. He seems loyal to Paulsonite policies.
.......
And so I might put the question back to you, Herr Pinkerton: How's free-market capitalism working out? If the laissez-faire economic model is so wonderful, why has a Republican President put it on the ash heap of history? Why did he wish feel the need to dish out $8.5 trillion in bailouts and subsidies of various kinds? That's more than half your gross domestic product. And this is your idea of a conservative Republican?"
.....
Blowing another big blast of cigar smoke my way, Marx answered eagerly: "If we give money to the rich, the middle and the lower classes will be jealous--they will want money, too! But once the bailout process is established, it will take on a permanent logic of its own. Everybody will have their hand out. And at that point, if the rich object to such further income distribution, well, their hypocrisy will be so obvious that they will have no politically acceptable principle on which to stand in opposition."

[Singha]

44 states have budget deficits this year and afaik by law the states need to run balanced budgets while DC can print all the notes it needs to.

good luck with the Messiah's social spending plan. states are cutting back on all types of services to balance their budgets I think.

[KarthikSan]

Instead of reasoned arguments, we get more anecdotes and stereotypes from Karthiksan. I am not surprised.

I apologize for that comment. It was meant to be a metaphor for all the mistakes people did but it came off wrong.

I understand that sub-prime loans were made to people with less than average education etc. But don't tell me that they were naive enough to believe they could afford a 400K+ house on a 15K yearly salary. That is biggest lie I've ever heard. They all knew what they were getting into. They were just hoping the credit fairy would come and make all their loans disappear.

Your entire argument seems to revolve around Citi. You definitely seem to have an agenda here or is that a hint of racism I see since Citi has an Indian born CEO? So Citi should not have been bailed out because they earn half their money overseas and they outsourced some jobs. OK! Since these corporations were bailed out with tax payer money they should be taxed more. OK! What about the other non-finance corporations who were not bailed out? Should they also pay more taxes for being responsible?

I don't have anything to lose buddy! I'm an Indian working in the US and if the new government wants to reduce taxes, it's good for me. Thanks!

[KarthikSan]

This is one of the most foolish arguments that I have ever heard. Just because the banks were bailed out doesn't mean that they are going to keep you employed (as a matter of fact, bailed out banks are announcing staff cuts). The reason for banks were bailed out to free up the frozen credit lines which has not yet happened (i.e. reduce the counterparty risk). Credit is the life-blood of capitalism and it is not just the overleveraged home-owners that are suffering as a result of banks not trusting each other. Consumer spending is what drives american economy and whether you like it or not that requires people to have jobs and consumers and businesses having access to credit.

Since consumer spending is not happening and credit is not available, the only option available is for govt to start spending the money and that is the purpose of the stimulus proposed by Obama administration. All economists, irrespective of their political beliefs, agree on that much.

If you are unable to understand this rather simple fact, and equate it to some "commie conspiracy" based on what you saw in India under a totally different context, I am not sure how to reason with you....

Can you show any proof that credit is not available to the credit worthy? Even if that is true, what Obama is proposing is not a one time stimulus plan like Bush did. He is talking about permanent tax cuts or at least for the next 4 years. I don't see how companies are going to compete and grow with higher taxes, non-availability of credit (as per you) etc. We all know how the Bush tax stimulus worked in boosting consumer spending!

My last post on this topic since this is not the forum for this debate. We can keep going back and forth about this for days. You win!!!

[Nayak]

YO GD-San/Vina-gaaru, I always had a suspicion on Moodys and other rating agencies, this article has exposed them down to the shining family jewels.......

The End of the Financial World as We Know It - NYTimes

http://www.nytimes.com/2009/01/04/opini ... wanted=all

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By MICHAEL LEWIS and DAVID EINHORN
Published: January 3, 2009

AMERICANS enter the New Year in a strange new role: financial lunatics. We’ve been viewed by the wider world with mistrust and suspicion on other matters, but on the subject of money even our harshest critics have been inclined to believe that we knew what we were doing. They watched our investment bankers and emulated them: for a long time now half the planet’s college graduates seemed to want nothing more out of life than a job on Wall Street.
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Op-Ed Contributors: How to Repair a Broken Financial World (January 4, 2009)

This is one reason the collapse of our financial system has inspired not merely a national but a global crisis of confidence. Good God, the world seems to be saying, if they don’t know what they are doing with money, who does?

Incredibly, intelligent people the world over remain willing to lend us money and even listen to our advice; they appear not to have realized the full extent of our madness. We have at least a brief chance to cure ourselves. But first we need to ask: of what?

To that end consider the strange story of Harry Markopolos. Mr. Markopolos is the former investment officer with Rampart Investment Management in Boston who, for nine years, tried to explain to the Securities and Exchange Commission that Bernard L. Madoff couldn’t be anything other than a fraud. Mr. Madoff’s investment performance, given his stated strategy, was not merely improbable but mathematically impossible. And so, Mr. Markopolos reasoned, Bernard Madoff must be doing something other than what he said he was doing.

In his devastatingly persuasive 17-page letter to the S.E.C., Mr. Markopolos saw two possible scenarios. In the “Unlikely” scenario: Mr. Madoff, who acted as a broker as well as an investor, was “front-running” his brokerage customers. A customer might submit an order to Madoff Securities to buy shares in I.B.M. at a certain price, for example, and Madoff Securities instantly would buy I.B.M. shares for its own portfolio ahead of the customer order. If I.B.M.’s shares rose, Mr. Madoff kept them; if they fell he fobbed them off onto the poor customer.

In the “Highly Likely” scenario, wrote Mr. Markopolos, “Madoff Securities is the world’s largest Ponzi Scheme.” Which, as we now know, it was.

Harry Markopolos sent his report to the S.E.C. on Nov. 7, 2005 — more than three years before Mr. Madoff was finally exposed — but he had been trying to explain the fraud to them since 1999. He had no direct financial interest in exposing Mr. Madoff — he wasn’t an unhappy investor or a disgruntled employee. There was no way to short shares in Madoff Securities, and so Mr. Markopolos could not have made money directly from Mr. Madoff’s failure. To judge from his letter, Harry Markopolos anticipated mainly downsides for himself: he declined to put his name on it for fear of what might happen to him and his family if anyone found out he had written it. And yet the S.E.C.’s cursory investigation of Mr. Madoff pronounced him free of fraud.

What’s interesting about the Madoff scandal, in retrospect, is how little interest anyone inside the financial system had in exposing it. It wasn’t just Harry Markopolos who smelled a rat. As Mr. Markopolos explained in his letter, Goldman Sachs was refusing to do business with Mr. Madoff; many others doubted Mr. Madoff’s profits or assumed he was front-running his customers and steered clear of him. Between the lines, Mr. Markopolos hinted that even some of Mr. Madoff’s investors may have suspected that they were the beneficiaries of a scam. After all, it wasn’t all that hard to see that the profits were too good to be true. Some of Mr. Madoff’s investors may have reasoned that the worst that could happen to them, if the authorities put a stop to the front-running, was that a good thing would come to an end.

The Madoff scandal echoes a deeper absence inside our financial system, which has been undermined not merely by bad behavior but by the lack of checks and balances to discourage it. “Greed” doesn’t cut it as a satisfying explanation for the current financial crisis. Greed was necessary but insufficient; in any case, we are as likely to eliminate greed from our national character as we are lust and envy. The fixable problem isn’t the greed of the few but the misaligned interests of the many.

A lot has been said and written, for instance, about the corrupting effects on Wall Street of gigantic bonuses. What happened inside the major Wall Street firms, though, was more deeply unsettling than greedy people lusting for big checks: leaders of public corporations, especially financial corporations, are as good as required to lead for the short term.

Richard Fuld, the former chief executive of Lehman Brothers, E. Stanley O’Neal, the former chief executive of Merrill Lynch, and Charles O. Prince III, Citigroup’s chief executive, may have paid themselves humongous sums of money at the end of each year, as a result of the bond market bonanza. But if any one of them had set himself up as a whistleblower — had stood up and said “this business is irresponsible and we are not going to participate in it” — he would probably have been fired. Not immediately, perhaps. But a few quarters of earnings that lagged behind those of every other Wall Street firm would invite outrage from subordinates, who would flee for other, less responsible firms, and from shareholders, who would call for his resignation. Eventually he’d be replaced by someone willing to make money from the credit bubble.

OUR financial catastrophe, like Bernard Madoff’s pyramid scheme, required all sorts of important, plugged-in people to sacrifice our collective long-term interests for short-term gain. The pressure to do this in today’s financial markets is immense. Obviously the greater the market pressure to excel in the short term, the greater the need for pressure from outside the market to consider the longer term. But that’s the problem: there is no longer any serious pressure from outside the market. The tyranny of the short term has extended itself with frightening ease into the entities that were meant to, one way or another, discipline Wall Street, and force it to consider its enlightened self-interest.

The credit-rating agencies, for instance.

Everyone now knows that Moody’s and Standard & Poor’s botched their analyses of bonds backed by home mortgages. But their most costly mistake — one that deserves a lot more attention than it has received — lies in their area of putative expertise: measuring corporate risk.

Over the last 20 years American financial institutions have taken on more and more risk, with the blessing of regulators, with hardly a word from the rating agencies, which, incidentally, are paid by the issuers of the bonds they rate. Seldom if ever did Moody’s or Standard & Poor’s say, “If you put one more risky asset on your balance sheet, you will face a serious downgrade.”

The American International Group, Fannie Mae, Freddie Mac, General Electric and the municipal bond guarantors Ambac Financial and MBIA all had triple-A ratings. (G.E. still does!) Large investment banks like Lehman and Merrill Lynch all had solid investment grade ratings. It’s almost as if the higher the rating of a financial institution, the more likely it was to contribute to financial catastrophe. But of course all these big financial companies fueled the creation of the credit products that in turn fueled the revenues of Moody’s and Standard & Poor’s.

These oligopolies, which are actually sanctioned by the S.E.C., didn’t merely do their jobs badly. They didn’t simply miss a few calls here and there. In pursuit of their own short-term earnings, they did exactly the opposite of what they were meant to do: rather than expose financial risk they systematically disguised it.

This is a subject that might be profitably explored in Washington. There are many questions an enterprising United States senator might want to ask the credit-rating agencies. Here is one: Why did you allow MBIA to keep its triple-A rating for so long? In 1990 MBIA was in the relatively simple business of insuring municipal bonds. It had $931 million in equity and only $200 million of debt — and a plausible triple-A rating.

By 2006 MBIA had plunged into the much riskier business of guaranteeing collateralized debt obligations, or C.D.O.’s. But by then it had $7.2 billion in equity against an astounding $26.2 billion in debt. That is, even as it insured ever-greater risks in its business, it also took greater risks on its balance sheet.

Yet the rating agencies didn’t so much as blink. On Wall Street the problem was hardly a secret: many people understood that MBIA didn’t deserve to be rated triple-A. As far back as 2002, a hedge fund called Gotham Partners published a persuasive report, widely circulated, entitled: “Is MBIA Triple A?” (The answer was obviously no.)

At the same time, almost everyone believed that the rating agencies would never downgrade MBIA, because doing so was not in their short-term financial interest. A downgrade of MBIA would force the rating agencies to go through the costly and cumbersome process of re-rating tens of thousands of credits that bore triple-A ratings simply by virtue of MBIA’s guarantee. It would stick a wrench in the machine that enriched them. (In June, finally, the rating agencies downgraded MBIA, after MBIA’s failure became such an open secret that nobody any longer cared about its formal credit rating.)

The S.E.C. now promises modest new measures to contain the damage that the rating agencies can do — measures that fail to address the central problem: that the raters are paid by the issuers.

But this should come as no surprise, for the S.E.C. itself is plagued by similarly wacky incentives. Indeed, one of the great social benefits of the Madoff scandal may be to finally reveal the S.E.C. for what it has become.

Created to protect investors from financial predators, the commission has somehow evolved into a mechanism for protecting financial predators with political clout from investors. (The task it has performed most diligently during this crisis has been to question, intimidate and impose rules on short-sellers — the only market players who have a financial incentive to expose fraud and abuse.)

The instinct to avoid short-term political heat is part of the problem; anything the S.E.C. does to roil the markets, or reduce the share price of any given company, also roils the careers of the people who run the S.E.C. Thus it seldom penalizes serious corporate and management malfeasance — out of some misguided notion that to do so would cause stock prices to fall, shareholders to suffer and confidence to be undermined. Preserving confidence, even when that confidence is false, has been near the top of the S.E.C.’s agenda.

IT’S not hard to see why the S.E.C. behaves as it does. If you work for the enforcement division of the S.E.C. you probably know in the back of your mind, and in the front too, that if you maintain good relations with Wall Street you might soon be paid huge sums of money to be employed by it.

The commission’s most recent director of enforcement is the general counsel at JPMorgan Chase; the enforcement chief before him became general counsel at Deutsche Bank; and one of his predecessors became a managing director for Credit Suisse before moving on to Morgan Stanley. A casual observer could be forgiven for thinking that the whole point of landing the job as the S.E.C.’s director of enforcement is to position oneself for the better paying one on Wall Street.

At the back of the version of Harry Markopolos’s brave paper currently making the rounds is a copy of an e-mail message, dated April 2, 2008, from Mr. Markopolos to Jonathan S. Sokobin. Mr. Sokobin was then the new head of the commission’s office of risk assessment, a job that had been vacant for more than a year after its previous occupant had left to — you guessed it — take a higher-paying job on Wall Street.

At any rate, Mr. Markopolos clearly hoped that a new face might mean a new ear — one that might be receptive to the truth. He phoned Mr. Sokobin and then sent him his paper. “Attached is a submission I’ve made to the S.E.C. three times in Boston,” he wrote. “Each time Boston sent this to New York. Meagan Cheung, branch chief, in New York actually investigated this but with no result that I am aware of. In my conversations with her, I did not believe that she had the derivatives or mathematical background to understand the violations.”

How does this happen? How can the person in charge of assessing Wall Street firms not have the tools to understand them? Is the S.E.C. that inept? Perhaps, but the problem inside the commission is far worse — because inept people can be replaced. The problem is systemic. The new director of risk assessment was no more likely to grasp the risk of Bernard Madoff than the old director of risk assessment because the new guy’s thoughts and beliefs were guided by the same incentives: the need to curry favor with the politically influential and the desire to keep sweet the Wall Street elite.

And here’s the most incredible thing of all: 18 months into the most spectacular man-made financial calamity in modern experience, nothing has been done to change that, or any of the other bad incentives that led us here in the first place.

SAY what you will about our government’s approach to the financial crisis, you cannot accuse it of wasting its energy being consistent or trying to win over the masses. In the past year there have been at least seven different bailouts, and six different strategies. And none of them seem to have pleased anyone except a handful of financiers.

When Bear Stearns failed, the government induced JPMorgan Chase to buy it by offering a knockdown price and guaranteeing Bear Stearns’s shakiest assets. Bear Stearns bondholders were made whole and its stockholders lost most of their money.

Then came the collapse of the government-sponsored entities, Fannie Mae and Freddie Mac, both promptly nationalized. Management was replaced, shareholders badly diluted, creditors left intact but with some uncertainty. Next came Lehman Brothers, which was, of course, allowed to go bankrupt. At first, the Treasury and the Federal Reserve claimed they had allowed Lehman to fail in order to signal that recklessly managed Wall Street firms did not all come with government guarantees; but then, when chaos ensued, and people started saying that letting Lehman fail was a dumb thing to have done, they changed their story and claimed they lacked the legal authority to rescue the firm.

But then a few days later A.I.G. failed, or tried to, yet was given the gift of life with enormous government loans. Washington Mutual and Wachovia promptly followed: the first was unceremoniously seized by the Treasury, wiping out both its creditors and shareholders; the second was batted around for a bit. Initially, the Treasury tried to persuade Citigroup to buy it — again at a knockdown price and with a guarantee of the bad assets. (The Bear Stearns model.) Eventually, Wachovia went to Wells Fargo, after the Internal Revenue Service jumped in and sweetened the pot with a tax subsidy.

In the middle of all this, Treasury Secretary Henry M. Paulson Jr. persuaded Congress that he needed $700 billion to buy distressed assets from banks — telling the senators and representatives that if they didn’t give him the money the stock market would collapse. Once handed the money, he abandoned his promised strategy, and instead of buying assets at market prices, began to overpay for preferred stocks in the banks themselves. Which is to say that he essentially began giving away billions of dollars to Citigroup, Morgan Stanley, Goldman Sachs and a few others unnaturally selected for survival. The stock market fell anyway.

It’s hard to know what Mr. Paulson was thinking as he never really had to explain himself, at least not in public. But the general idea appears to be that if you give the banks capital they will in turn use it to make loans in order to stimulate the economy. Never mind that if you want banks to make smart, prudent loans, you probably shouldn’t give money to bankers who sunk themselves by making a lot of stupid, imprudent ones. If you want banks to re-lend the money, you need to provide them not with preferred stock, which is essentially a loan, but with tangible common equity — so that they might write off their losses, resolve their troubled assets and then begin to make new loans, something they won’t be able to do until they’re confident in their own balance sheets. But as it happened, the banks took the taxpayer money and just sat on it.

Continued at "How to Repair a Broken Financial World."

Michael Lewis, a contributing editor at Vanity Fair and the author of “Liar’s Poker,” is writing a book about the collapse of Wall Street. David Einhorn is the president of Greenlight Capital, a hedge fund, and the author of “Fooling Some of the People All of the Time.” Investment accounts managed by Greenlight may have a position (long or short) in the securities discussed in this article.

[markos]

you know nothing of India. if you did, have you heard of kendriya vidyalayas? and there are plenty of govt funded schools which are quite decent. how many years have you lived in india and when?

Most of the kids go to state govt schools. As far as I know, there may be a handful of so-called "kendriya vidyalayas "usually associated with central govt institutions like army, navy etc. Usually the kids of govt servants working in those institutions go into those schools. So profile of a student in such schools is not necessarily same as state run govt schools where every kid is admitted. Please don't bring up a few exceptions to prove the rule.

what difference does it make if the broken inner city pop is black/white/hispanic? you are missing the message - broken societies and families are not
going to be fixed by the Messiah's white boy fetish of "we need to fund our schools" - thats a motherhood and apple pie statement for political brownie points only.

Obama has spoken about the need for black fathers to be more involved in the life of their kids (I think during last MLK day, almosy a year ago), not just about more money for education. However, that is not something that he can legislate.

Just because most of the immigrant parents are in a higher strata of society from emploment/education perspective doesn't mean that you can look down on other ethnic minorities in different circumstances. If you use that excuse, that is nothing other than veiled racism.

I have reported your post to the admins because you repeatedly ascribe prejudices and biases in a insolent way to several posters here instead of discussing about the matter.

we have seen enough know-it-alls of your ilk here in the past.

You are welcome to do whatever you think is necessary. Probably this forum may be more of an echo-chamber where opposition to perceived notions /prejudices are not welcomed and such opinions alarm people and they start crying for moderation. I hope to find that out soon.

I can say the same(arrogant/prejudicial etc.) about many of the opinions expressed in this thread.

[Dileep]

States and cities can be pretty ruthless when faced with the need to cut spending. When CA had the budget crisis in 2005, and the city I lived in had the share of that, I know what they did. Closed fire stations and laid off cops etc.

The mayor challenged anyone to propose alternates. Apart from tamasha on local cable 27, none came out.

[Suraj]

Folks, please keep the debate civil. Ascribing personal prejudices to one another is just a form of personal attacks, and will lead to post deletions and member warnings. Please take a moment to clean up your existing posts.

markos: Contrarian opinions are not an issue - personal attacks, specifically unfounded accusations of racism against others, does not work here. I won't apply a formal warning, in the hope that you'll temper your language in future.

Thanks

[KarthikSan]

Most of the kids go to state govt schools. As far as I know, there may be a handful of so-called "kendriya vidyalayas "usually associated with central govt institutions like army, navy etc. Usually the kids of govt servants working in those institutions go into those schools. So profile of a student in such schools is not necessarily same as state run govt schools where every kid is admitted. Please don't bring up a few exceptions to prove the rule.

If you know anything about India you would already know that thousands of rural kids who have no choice but state govt. schools enter college and get into the workforce and perform as well as any private school graduate. This is not just today but it has been the case since 1947. Personally, my dad studied in a vernacular medium school in a little village in Tamilnadu, finished his engineering and went on to be a successful business owner. I can cite a million other examples if you want. Ever heard about A.P.J. Abdul Kalam? Can you say that about any inner city in the US even though they are much better equipped? Singha was right in saying that the problems with inner city schools is more social than infrastructural. Don't make arguments if you don't know what you are talking about. You are just making a fool of yourself.

[Singha]

Nayak, dont worry. you are safe now where you are...ragi balls and
sambar rather than organic wheat bread, kobe beef slices and tall starbucks. let the fat cats suffer.

imagine Obama messiahs headache - fix a broken economic system + 'manage' pakistan

the usual US approach of "throwing money at the problem" wont work
this time.

[markos]

karthiksan,
Looks like you are recycling some fairy tales that you heard via grape-wine.

My question is why would any bank lend $400k to someone making $15k ? There are ways to verify income, assets, credit etc. in US. It doesn't cost a lot nor does it take a lot of time for these banks. If a bank loaned money for such a borrower without due diligence, they deserve to lose. Banks employ tons of quants whose sole job is to formulate credit policies at these bank (i.e. determine who is credit worthy and who is not)

On Citi - if you are not aware, Citi was the recepient of the largest bailout in history. They received 13% of TARP(bailout) money dispensed so far, yet they have barely 3% of US deposit share. On top of the bailout, US taxpayer is at risk for $300 billion+ potentialy bad loan portfolio of Citi. So I did more digging on this bank to see where they were making the money from. It has nothing todo with Indian-born CEO (except in your paranoia). As a matter of fact, Vikram Pandit became CEO only a year ago and what I wrote about Citi is for the last decade (since the merger of Citicorp and Travelers). Another reason to choose Citi is because formation of Citi caused blurring the line between commercial and investment banks which means such mega banks would take more leverage (than a pure commercial bank like US Bank or Wells Fargo), putting the shareholders and system itself at risk. Citi has been involved in almost every financial scandal since then (look at Enro, sub-prime etc.)

On which credit-worthy customers are not receiving credit: there are many small businesses forced to layoff employees as they are not getting credit. Just look around the strip malls and see how many of those are closing. You need consumer demand which means consumers should have more money. For that either their income should go up or taxes should go down to increase disposable income. The slack has to be probably made up using deficit spending or increased taxes in future. Personally, I prefer more infrastructure spending than tax-cut, as a lot of tax-cut might end up paying down the debt or transferring money to china

BTW, combined cost of Bush tax-cut in '01 and '03 was over $1 trillion, a lot more than what Obama proposed now. Even sending the one-time rebate check cost around $150 billion (which was a waste of money IMHO)

[markos]

This is not just today but it has been the case since 1947. Personally, my dad studied in a vernacular medium school in a little village in Tamilnadu, finished his engineering and went on to be a successful business owner. I can cite a million other examples if you want. Ever heard about A.P.J. Abdul Kalam

Okay, now your examples are from an india 30-50 years ago. I am talking about the current situation (as of six months back when I visited India). When I told my relatives that my kids were going to a public/govt school in US, they looked at me in disbelief because according to them no responsible parent with sufficient means will send their kids to govt schools. According to them even daily wage earners over there are trying to send their kids to private schools, when they can.

yes, I know IITs and IIMs are run by govt., but I am talking about elementary education here.

[KarthikSan]

Okay, now your examples are from an india 30-50 years ago. I am talking about the current situation (as of six months back when I visited India). When I told my relatives that my kids were going to a public/govt school in US, they looked at me in disbelief because according to them no responsible parent with sufficient means will send their kids to govt schools. According to them even daily wage earners over there are trying to send their kids to private schools, when they can.

yes, I know IITs and IIMs are run by govt., but I am talking about elementary education here.

What part of "This is not just today but it has been the case since 1947" did you not understand? Is it my English?

[vina]

On Citi - if you are not aware, Citi was the recepient of the largest bailout in history.

Hmm. I thought that distinction went to a particular company called AIG!. , the AAA rated pillar of the establishment! .

[markos]

What part of "This is not just today but it has been the case since 1947" did you not understand? Is it my English?

Let me ask you a simple question - how many of your relatives in India send their kids to govt. run schools TODAY which doesn't have any criteria for admitting students (i.e. no tests, no monetary means checking)?

What is the average passing results of such govt. run schools in India (at 12th grade) ? What % of students from these schools get admitted to universities

You will get a reality check of today's govt schools by reading the following articles and can see that whatever I stated here is closer to truth than what you are trying to make-believe

http://query.nytimes.com/gst/fullpage.h ... A9659C8B63

To some, such expenditures by the poor represent a disgraceful abdication by the state, one that creates a class system segregating those with private, English-language education from those without.
.....
''In big cities, it's more or less over,'' an economist, Jean Drèze, who helped write a national assessment of education in 1999, said of government primary education, although rural students depend heavily on government schooling. ''Within 10 to 15 years, government schools will be almost wiped out.''

http://www.indiauncut.com/iublog/articl ... t-schools/

A 2005 study of government schools by Pratham, an NGO, found that 35% of schoolkids surveyed between the ages of seven and 14 failed a reading test involving a simple paragraph, and 41% of them could not subtract or divide. A 2006 study found that half the children who enrol in the first standard drop out before reaching the eighth. A 1999 government report stated that just 53% of the accredited public schools in rural North India were engaged in teaching during surprise visits on school days.

The problem here is not one of funding. The government has thrown enormous amounts of money into education, and continues to do so. The problem here is of choice. Most poor parents across the country have no option but to send their kids to government schools, which, because of the way the incentives are aligned, are often dysfunctional

[markos]

On Citi - if you are not aware, Citi was the recepient of the largest bailout in history.

Hmm. I thought that distinction went to a particular company called AIG!. , the AAA rated pillar of the establishment! .

I am talking about TARP money, $700 billion allocated to bail out financial institutions of which $350 billion was dispensed and out of that $45 billion went to Citi.

AIG was practically nationalized where the govt took a majority stake(80%?) and was bailed out before TARP went into effect. I think there is a difference between cash infusions (bailouts) to banks and the bailout of AIG/Fannie/Freddie. In the latter cases, govt. took control of those institutions like changing CEOs, changing BOD which didn't happen for TARP recepients. If AIG/Fannie standards were applied Vikram Pandit should have lost his job, as was the case with AIG CEO Willumstad.

[vina]

Okay, now your examples are from an india 30-50 years ago. I am talking about the current situation (as of six months back when I visited India). When I told my relatives that my kids were going to a public/govt school in US, they looked at me in disbelief because according to them no responsible parent with sufficient means will send their kids to govt schools. According to them even daily wage earners over there are trying to send their kids to private schools, when they can..

Markos, sorry, but that is rich!. Incredibly so. Just read what you wrote again. Yeah. Try telling that bull s**t to folks who dont know better. Yes, on an average, schools in the US are better funded and better to a great extent than in India. And yes, nearly all (except a very very minuscule percent) of US primary education is "Public" (ie publicly funded) , while in India a very significant percentage is "Private" (ie privately funded) . But that is about where the similarities end. In the US too, there are massive disparities in education access and quality. Yup and that is the "zip code" segregation of the US. The schools in the poor , distressed and minority dominated areas of the US suck , and suck hard (and no that is not just "facilities" , which is the easier part, but more scholastic achievement, peer group , "atmosphere" and the focus on learning and education , rather than football, drugs, sex, guns and general low achievement) , while the "rich areas" schools are vastly better. Everyone , knows the zip code segregation. Every desi knows that. Tell all the desis who congregate to Santa Clara county .. I personally know of one family that moved from the Almeida island waterfront with nice views of the Bay and down town SF to Dublin /Pleasanton , solely for the school district. Yeah. they were being responsible parents . The question of "private" vs "public" is superfluous and misses the wood for the trees.

Now "public" education in India has a vast spectrum in terms of quality, ranging from abysmal to excellent! The ones in the bottom tend to be the "local govt / "city corporation" / "village panchayat" funded schools and that is what is the common perception of "govt schools" and that is where your relatives were coming from. Just like you will not send your kid to a school in Harlem or South Chicago , even if you happen to live closeby in say Washington Heights or Hyde Park, the Indian parents dont send their kids to the "govt school" (and I dare say they wont, even if you bring the physical infrastructure upto the same level of the best anywhere in the world.. go figure why). Now the 'top end" of "public schools" tend to be "aided schools" (govt helps out in funding but run independently) and KVs , which in many ways are comparable to the top private schools (which too vary greatly in quality).

The "problem" is multi dimensional and multi faceted, and complex. It is ridiculous to reduce it to a unidimensional "private vs public" or worse, extend it to "Indian Parents are Racist" because they dont send their kids to school with significant /majority Hispanic and /or Black populations .

[vina]

I am talking about TARP money, $700 billion allocated to bail out financial institutions of which $350 billion was dispensed and out of that $45 billion went to Citi.

Money is money. Doesn't matter if it is TARP or C*AP or any such Wampum. Fact is AIG took in more money than Citi. Last I checked, AIG too was just as private as Citi was ,before the bailout

AIG was practically nationalized where the govt took a majority stake(80%?) and was bailed out before TARP went into effect. I think there is a difference between cash infusions (bailouts) to banks and the bailout of AIG/Fannie/Freddie.

Hello.. All the big banks in Wall St , including Citi are "practically" nationalized . So how is it very different from AIG? . Freddie and Fannie were a travesty. At least the banks being private had the excuse of the "conflict" in incentives alignment , profits and motives, short term vs long term etc between the "owners" and 'management' . Fannie and Freddie, dont even have that fig leaf!.

[KarthikSan]

markos --> Roughly 90% of my relatives live in a small town in TN. About 70% of their kids go to the local government school and IMO they are as good as anybody else. They don't speak English very well because their medium of instruction is Tamil. Other people send their kids to private school only for the English and may be a little H&D onlee! It is considered a status symbol, a sign that you have arrived if you send your kids to private school. My niece goes to one of the most exclusive private schools. She won't go to any other school because her circle of friends study in that particular school. Is that sample enough?

[vsudhir]

I'm bith Imelda jee on this one. BR has to go beyond its brown-rakshak secret mandate and prove (yet again) that it is not racist in sputter n spirit onlee.....

/Sarc off

Racism in panchayat schools aside, I'd seriously like to see a home-schooling like option take root and flower in amchi yindia. Then phynally, each gali and mohalla can have its own home-school, collecting kids from the neighborhood, to study the local state board syllabi (or perhaps even CBSE/ ICSE) for the common class VIII, X, XII board exams.

That home-schooling idea is revolutionary. As revoltionary as the voucher program proposed to get over the school-distt/zipcode racism in extant unkilian schooling.....

[Singha]

anyone know how the TOIs Teach India initiative is panning out? they did sign up a lot of volunteers when launched a few months ago.

[Singha]

a long article on how hispanics got hit more by subprime
http://online.wsj.com/article/SB123111072368352309.html

[vipu]

I did.. but TOI is focussing on select cities and moi got listed to H'bad. had to politely decline since this is a 'social' commitment and no Hardship allowance.

Although this does not have both the fad factor that Lead India did or the prize money.. some of the associates involved are credible. Longer run expect this to trickle to Tier 2 Cities and more visibility.

[Singha]

well this is great. "Macheads" a film on apple fanboys and fangirls.

the poster itself is priceless. I need a hi-res version to print in colour _tomorrow_ for the office.
let not good things be delayed.

here: http://www.cnet.co.uk/i/c/blg/cat/gadge ... review.jpg

and story:
The history of Apple fans: A MacHeads review

By Nate Lanxon on 05 January 2009, 11:34am
Desktops

Prominent sex blogger and renowned Apple fangirl Violet Blue declares passionately that she'd never sleep with a Windows user. Dozens of Mac fanboys and girls drink and dance together at an Apple-centric party, jubilant that, for another year, Apple still exists. Girls hug their iMacs before tentatively handing them over to be repaired, while another caresses her Cinema Display, gently offering up a kiss to her Mac Pro's tower.

Apple fans are passionate people, both with each other and with the company's products. MacHeads, a new Chimp 65 Productions documentary from writer/director Kobi Shely and producer Ron Shely, documents the history of these Apple-lovers, looking at what underpins their fanatical obsessions.

At just under an hour in length, this unbiased, unnarrated documentary takes a balanced approach to peeling the onion of Apple fanboyism. With insightful commentary from the likes of Apple Inc employee number one Daniel Kottke and ex-Apple employee and Mac evangelist Guy Kawasaki, some of the compulsive fanboyism on display is mellowed by observations of what made an Apple fan an Apple fan in the first place.

It's the story of how a community of devoted tech fans banded together in the early days. How Macintosh user groups were formed, why they were formed, and what took place at their meetings. Interspersed with heaps of classic footage of the earliest MacWorld Expos, vintage Apple ads, trips to Macintosh museums and collectors' houses, and clips from classic computer TV shows, MacHeads provides a detailed and entertaining look not just at the fanboys themselves, but at why such groups exist at all.

Yet, although it's packed with comments from Apple fans such as, "Steve knows what people need before they know they need it," and how seeing Steve Jobs "live" has always been a dream, MacHeads could well sober up your average fanboy. Is Apple alienating its user groups? Is it becoming "another Microsoft" as it moves into new marketplaces, building on its past successes?

And of critical importance, can the Apple fanworld pull together like it did in 1996 as Apple was failing, when the company they idolise becomes less like a friend, more like a faceless business?

MacHeads is a superb film that will give Apple haters a few cheap laughs, and Apple fans a few cheap thrills. But it'll entertain both equally, while educating everybody else. It'll premiere this week at MacWorld -- the last ever Apple will appear at -- and you can order the movie later this year from macheadsthemovie.com.