Perspectives on the global economic meltdown (Jan 26 2010)

[RamaY]

No love lost between Dubai World, bankers on deal talk

According to the report, Dubai World will offer creditors either 60 percent repayment over seven years and a government guarantee, or full repayment with a debt for equity swap for property assets of Nakheel and no guarantee.

Neither option is palatable to bankers and the government was quick to distance itself from the report by Dow Jones. "If anything is a surprise, it's in the figures," said a banker at a large international bank. "I thought they would have proposed a little better than 60 percent. This doesn't look promising." Aside from the steep 40 percent haircut, creditors are unlikely to welcome getting assets in Nakheel, the developer behind man-made islands shaped like palms and a map of the world.

Still intrigues me. Why can’t GOI spend few tens of millions to buy a couple of sq. kms of land and build living apartments for low/middle-income NRIs. India and Indians have benefitted enormously from their remittances in the past two decades. We should start showing some gratitude to these skilled/non-skilled workers who faced unmentionable troubles to uplift their families back home.

[SwamyG]

^^^^^
I am all for buying something like Louisiana Purchase Some of the former European powers namely France & UK have some islands far down in the Southern Hemisphere; surely they would be willing to give us few of the islands for a decent price.

[Neshant]

The Beach Boys song Kokomo is going on in my head reading the above.

Sadly it has a verse in there :

Port-au-prince, i wanna catch a glimpse!

[Neshant]

Greece loses EU voting power in blow to sovereignty

The European Union has shown its righteous wrath by stripping Greece of its vote at a crucial meeting next month, the worst humiliation ever suffered by an EU member state.

http://www.telegraph.co.uk/finance/fina ... ignty.html

"We certainly won't let them off the hook," said Austria's finance minister, Josef Proll, echoing views shared by colleagues in Northern Europe. Some German officials have called for Greece to be denied a vote in all EU matter until it emerges from "receivership".

The EU has still refused to reveal details of how it might help Greece raise €30bn (£26bn) from global debt markets by the end of June. Investors are unsure whether this is part of Kabuki play of "constructive ambiguity" to pressure Greece and keep markets guessing, or reflects the deep reluctance by Germany to be drawn deeper in an EU fiscal union. Greek bonds sold off as ten-year yields jumped to 6.42pc, but the euro rallied to $1.3765 against the dollar as broader issues resurfaced in currency markets.

[ArmenT]

Move Over China: Beijing Sells Whopping $34.2 Billion Treasuries In December As Japan Becomes Largest Official Holder Of US Debt

[Ameet]

JPMorgan Bombing: Bomb Explodes At Bank Offices In Athens - thankfully no one hurt.

http://www.huffingtonpost.com/2010/02/1 ... 64128.html

[Neshant]

a few more years of belt tightning, budget cuts and taxes and they will be well on their way to turning into a pakistan.

they have got used to the high quality european lifestyle. they will refuse to downgrade voluntarily.

[Hari Seldon]

Striking critique of the state of affairs in the khanate. And I don't mean that lightly. Striking is right. Subversive in its clarity.

Eleven Principles of Financial Reform

Here's a magical excerpt:

The major media in the States are owned by a few corporations. The Congress listens to its large contributors and ignores the public except at election time, when it inundates them with expensive media campaigns, political spin, false promises, and propaganda. And then it is back to business as usual.

"When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it." Frederic Bastiat

That bolded part did it for me. Sooo many things fell into place suddenly. That head-smacking moment of "Of course, but it was obvious at the outset onlee" happened.

Read it all, goes w/o saying.

[Chinmayanand]

The UK mustn't be STUPID

The PIGS (Portugal, Italy, Greece and Spain) are old hat. The new acronym on trading floors for possible dominoes if Greece should fall is STUPID (Spain, Turkey, UK, Portugal, Italy, Dubai).

[Chinmayanand]

New dangers for the world economy

[SwamyG]

The UK mustn't be STUPID

The PIGS (Portugal, Italy, Greece and Spain) are old hat. The new acronym on trading floors for possible dominoes if Greece should fall is STUPID (Spain, Turkey, UK, Portugal, Italy, Dubai).

That is one more H&D blow to UKstan.

[ramana]

Any update on the billionaire ponzi scheme crook Alan Stanford? Apparently he was quite even handed in his political contributions to Republicans and Democrats.

[sanjaykumar]

"When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it." Frederic Bastiat



That bolded part did it for me. Sooo many things fell into place suddenly. That head-smacking moment of "Of course, but it was obvious at the outset onlee" happened.



That is what the White Man's burden was all about.

[SwamyG]

"When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it." Frederic Bastiat

That is why I say, what is called bribe in desh is called fees out in videsh.

[Neshant]

By dumping gold on the market, the decline in the dollar's value can be masked against the one asset that exposes its real value. Its awfully suspicious that US urges IMF to sell gold at a time its economy is going down hill. Looks like debts are about to be inflated away behind the scenes and they don't want nobody to clue in.

Compared to the blizzard of currency floating out there, 6 billion is pocket change.
------------

IMF to sell 191.3 tonnes of gold on market 'shortly'

http://uk.biz.yahoo.com/17022010/323/im ... ortly.html

"In accordance with the priority of avoiding disruption of the gold market, the on-market sales will be conducted in a phased manner over time," in line with an approach used by central banks to avoid market disruptions, the IMF said.

[Neshant]

Property Values Projected To Fall 12 Percent In 2010
By Michael David White

NewObservations.net projects residential real estate prices will fall 12 percent nationwide in 2010.

Our average of four major indexes predicts a total fall in prices of 34% from peak to stable trend. The total fall of 34% is based upon a current loss across four number sets of 19%.

The timing and the total fall vary widely among the data. The most conservative picture of our total fall is a 20% loss. The most radical prediction is that values will fall 51% from peak to stable trend

http://www.europac.net/externalframeset.asp?id=18171

[Singha]

are increasing number of underwater people 'walking away' from high mortgages and settling for cheaper rentals?

my friend, who is going back to settle in US after trying to settle here for 3 yrs was saying 'US will end up being more like europe in living stds when the dust settles' and 'people will have to go back to frugality and work ethics of an earlier generation'

but how will the high cost of medicare, pensions, social security and higher EDUCATION be brought down? can they setup a canada or UK like system where
higher edu even in the best colleges is a pittance compared to ivy league? those
who are already rich from decades of loot will strongly oppose any move that
threatens their elite enclaves of power and priviledge.

sounds like days of large/supersize-everything are pulling to dusk. smart folks like japanese automakers are probably putting into action planB to design cheaper, more fuel sipping and smaller cars (the S-word is allergic to khanate). I hear after
years of growing in size gen after gen, the 2011 civic is expected to be smaller . in HP it had climbed from 90 in early 90's to 108 in late 90's to 140 today. this is more than the camry's and accords of late 90s.

[ramana]

Hari, I dont know if you have seen this video

Are Math models the cause of Financial Crisis in Global Economy? Dr. Andrew Lo.

Very good exposition. He is Prof of Financial Engg at MIT,

[Singha]

U.S. state pension funds have $1 trillion shortfall: Pew
WASHINGTON
Thu Feb 18, 2010 12:15am EST

WASHINGTON (Reuters) - U.S. states face a total shortfall of at least $1 trillion in their funds for employees' pensions and retirement benefits, and their financial problems are quickly mounting, according to a report released by the Pew Center on the States on Thursday.

Illinois is in the worst shape, with only 54 percent of its pension obligations funded, according to the report, which looked at fiscal year 2008.

Because the analysis did not encompass the final six months of calendar year 2008 -- most states' fiscal year's end during the summer -- it does not include the market downturn that devastated many funds' investment portfolios.

"The funding gap will likely increase when the more than 25 percent loss states took in calendar year 2008 is factored in," the report said.

Regardless of stock market fluctuations, pension funds were destined to fall down a budget hole, the non-profit research center found.

"Over the last 10 years, many states have shortchanged pension plans in good times and bad," said Susan Urahn, the center's managing director, who called the beginning of the century a "decade of irresponsibility."

States did not save for the future and manage costs well, said Urahn. She also cautioned that the 8 percent return on investments most states typically expect may need to be lowered.

Still, the dwindling value of the funds' investments from stock market problems has forced states to deposit more money into their accounts.

In 2000, they were only required to pay $27 billion total into their funds. By fiscal 2008 that amount had more than doubled to a $64 billion deposit. This comes at a time when a long and deep economic recession has devastated states' revenues and made it nearly impossible for many to pay for basic costs such as salaries.

Describing state pension funds as operating similarly to credit card holders who make minimal monthly payments on their debt but continue to charge, Urahn said the funds were making their problems worse by not preparing for impending retirements.

"The growing bill coming due to states could have significant consequences for taxpayers -- higher taxes, less money for public services and lower state bond ratings," she said.

A pension fund is considered healthy if it has a funding level equal to at least 80 percent of its liability. In fiscal 2008, 21 states were below that mark, compared to only 19 states in fiscal 2006.

The rate of decline has been rapid, the center said. In fiscal 2000 half of the 50 states had fully funded their pension systems but by fiscal 2008 only four -- Florida, New York, Washington and Wisconsin -- could boast being able to cover their costs.

Public employees often receive other retirement benefits such as health care, and states are struggling even more to meet those spending needs. Only 5 percent of the $587 billion total liability they have is funded, the center said.

Alaska and Arizona are the sole states that have more than 50 percent of the assets needed to pay for other post-employment benefits, Pew said.

(Reporting by Lisa Lambert; Editing by Leslie Adler)

[Neshant]

Mish Shedlock on the public sector unions ripping off private sector worker with big salary demands, pensions, benefits, back stopped investment losses, inflation protection...etc.

The public sector has become a major parasite on the real economy.

http://www.youtube.com/watch?v=VNZn8OXR0Fo

[Neshant]

“I think the public unions are going to take the country and the Democratic party down the tubes,” Caddell said. “They’re in the business of taking care of — of asking taxpayers, asking ordinary people, to pay for people who make twice as much as they make, with benefit packages they will never see, and they’re told, you may not cut those.”

He pointed to health-care negotiations, where the SEIU has preserved health-care benefits from cuts, and to the $787 billion stimulus, which has benefited mostly state government employees so far. He said public sector employee unions in California have contributed to the state’s fiscal crisis by demanding that taxpayers subsidize their job status and guaranteed salaries and benefits.

“How are you going to tell a person who makes $40,000 that they must pay money to make sure that people keep jobs who make $80,000, roughly, and who have defined pensions that they will never see?” Caddell said. “You cannot ask ordinary Americans who have no jobs, whose pensions have been ransacked, and whose pay has been stagnant, to keep rewarding people who don’t face the same kind of conditions and risk.”

http://globaleconomicanalysis.blogspot.com/

[vera_k]

but how will the high cost of medicare, pensions, social security and higher EDUCATION be brought down?

They seem to be upgrading community colleges to take care of the cost of education. Someone I know went to a $50,000/yr college for a week, then dropped back to a $5,000/yr local college because a) the fancy college had huge class sizes and b) the community college dropped the "community" prefix and started offering the same 4 yr degree as the more expensive option.

[Hari Seldon]

Hari, I dont know if you have seen this video

Are Math models the cause of Financial Crisis in Global Economy? Dr. Andrew Lo.

Very good exposition. He is Prof of Financial Engg at MIT,

Hadn't seen that particular video before, Ramana garu.

Taleb and party have been hammering at precisely this blind reliance on modeling in the social sciences that cannot comprehend black swans only.

[Singha]

BW

Goldman Sachs, Greece Didn’t Disclose Swap Contract (Update1)
February 17, 2010, 01:34 PM EST

By Elisa Martinuzzi

Feb. 17 (Bloomberg) -- Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit.

No mention was made of the swap in sales documents for the securities in at least six of the 10 sales the bank arranged for Greece since the transaction, according to a review of the prospectuses by Bloomberg. The New York-based firm helped Greece raise $1 billion of off-balance-sheet funding in 2002 through the swap, which European Union regulators said they knew nothing about until recent days.

Failing to disclose the swap may have allowed Goldman, a co-lead manager on many of the sales, other underwriters and Greece to get a better price for the securities, said Bill Blain, co-head of fixed income at Matrix Corporate Capital LLP, a London-based broker and fund manager.

“The price of bonds should reflect the reality of Greece’s finances,” Blain said. “If a bank was selling them to investors on the basis of publicly available information, and they were aware that information was incorrect, then investors have been fooled.”

Michael DuVally, a spokesman at Goldman Sachs in New York, declined to comment.

Legal ‘At the Time’

Goldman Sachs, Wall Street’s most profitable securities firm, is being criticized by European politicians including Germany’s ruling Christian Democrats, who have questioned whether the firm helped Greece hide its deficit to comply with the currency’s membership criteria. Greece is also being faulted by fellow euro-region countries for failing to disclose the swaps to EU regulators.

German Chancellor Angela Merkel said today it’s a “scandal” if banks are found to have helped Greece conceal its budget deficit. The country “falsified statistics for years,” she said in her speech to a party rally. (not a good sign if they paymaster is unhappy)

The swaps used by Greece to manage debt were “at the time legal,” Greek Finance Minister George Papaconstantinou said on Feb. 15. The government doesn’t use the swaps now, he said.

Eurostat, the EU’s statistics office, this week ordered Greece to hand over information on the swaps transactions by the end of this week in an investigation that may extend to other EU countries.

Goldman Sachs earned about $24 million underwriting Greek government bonds since 2002, data compiled by Bloomberg show. Goldman Sachs underwrote 10 bond sales. Prospectuses for six of them, obtained by Bloomberg, contain no mention of the swaps. The other four couldn’t be obtained.

‘Fear the Worst’

Freshfields was the legal adviser to the managers of the six bond sales. Spokesman Christian Marroni didn’t have an immediate comment.

The yield on Greek 10-year government bonds jumped to as much as 7.2 percent on Jan. 28 amid the worst crisis in the euro’s 11-year history. The premium, or spread, investors demand to hold Greek 10-year notes instead of German bunds, Europe’s benchmark government securities, widened yesterday by 18 basis points to 323 basis points.

The spread reached 396 basis points last month, the most since the year before the euro’s debut in 1999, compared with an average of 57 basis points in the past decade. A basis point is 0.01 percentage point.

“When people start to fear that the numbers aren’t accurate, they fear the worst,” said Simon Johnson, a former International Monetary Fund chief economist who is now a professor at the Massachusetts Institute of Technology’s Sloan School of Management in Cambridge, Massachusetts.

No ‘Smoking Gun’

Goldman could face legal liability “if it could be established that they were knowingly hiding risk, and therefore knew or had reason to know that the bond disclosure documents were misleading,” said Thomas Hazen, a law professor at the University of North Carolina at Chapel Hill. “But that would be a tough hill to climb, in terms of burden of proof. There’d have to be some sort of smoking-gun memo.”

The swap enabled Greece to improve its budget and deficit and meet a target needed to remain within the region’s single currency. Knowledge of their existence may have changed investors’ perception of the risk associated with Greece, and the price they may have been willing to pay for the country’s securities.

“From what we know, this is an egregious example of a conflict of interest” for Goldman Sachs, MIT’s Johnson said. “Even if the deal had been authorized, it doesn’t let them off the hook.”

‘Long-Term Damage’

A Greek government inquiry this month identified a series of swaps agreements with securities firms that allowed the country to hide its mounting deficit. Greece used the swaps to defer interest payments, causing “long-term damage” to the Greek state, according to the Feb. 1 document, commissioned by the Finance Ministry.

European Union officials said this week they only recently became aware of the transaction with Goldman. The swaps don’t necessarily break EU rules, European Commission spokesman Amadeu Altafaj told reporters in Brussels on Feb. 15.

The transaction with Goldman consisted of a cross-currency swap of about $10 billion of debt issued by Greece in dollars and yen, according to Christoforos Sardelis, head of Greece’s Public Debt Management Agency at the time.

That was swapped into euros using a historical exchange rate, a mechanism that implied a reduction in debt and generated about $1 billion in an up-front payment from Goldman to Greece, Sardelis said. He declined to give specifics on how the swap affected the country’s deficit or debt.

‘Wider Collusion’

European politicians such as Luxembourg Treasury Minister Jean-Claude Juncker this week criticized Goldman Sachs for arranging the Greek swap and are pressing the firm and Greece for more disclosure. Merkel’s Christian Democrats aim to push for new rules that will force euro-region nations and banks to disclose bond swaps that have an impact on public finances, financial affairs spokesman Michael Meister said.

“Investment banks are guilty of being part of a wider collusion that fudged the numbers to make the euro look like a working currency union,” said Matrix’s Blain. “The bottom line is foreign exchange and bond investors bought something sellers knew not to be the case.”

--With assistance from Maria Petrakis in Athens, Aaron Kirchfeld in Frankfurt, Ilias Antoniou in London and David Scheer in New York. Editors: Edward Evans, Steve Bailey, Alec McCabe.

[Hari Seldon]

but how will the high cost of medicare, pensions, social security and higher EDUCATION be brought down?

All are artificially inflated in the khanate. No secret that.

No way med costs in massaland can be brought down witout first bringing down the vice-like grip and monopoly of the AMA - amriki med association - that has constrained supply and inflated prices beyond reach only. And of course the HMOs and insurers have to be brought down as well.

These are entrenched special interests and they ain;t leaving w/o a fight. And what a fight it promises to be. When the monies run out, things happen. Butts move. Voices get raised. Window panes get broken and riots start. Watch it unfold first in Greece. It'll happen eventually, no way unkil can pay for the liabilities it has taken on.

As for edu, it'll crash bigtime, IMO. Its a bubble on top of a bubble. When there's no jobs around, there's no need for $150,000 student loaned degrees either. No? It'll take a while but it'll get there.

Social security and pensions are sitting time bums. Dunno why massa will handle these issues. No reason why any khani in his 20s should pay into SS now. He won't see a dime of it in his 60s, you can bet.

[Singha]

studying or immigrating into a more 'solvent' country like canada might be a good options for students. they have some good univs and costs are low vs ivy league.

[amit]

studying or immigrating into a more 'solvent' country like canada might be a good options for students. they have some good univs and costs are low vs ivy league.

Singha, OT here but Canadian Univs are lower cost than Ivy League but in terms of academic record are no patch to the latter. Only a few departments at various Univs can compete - for example the Maths Dept in Waterloo. Other than that?

However, it should be pointed out that the Canadian Univs are streets ahead of the Aussie ones which seem to attract so many Indian students.

[Chinmayanand]

Why Casinos Deserve Our Trust More Than Banks

[Neshant]

No way med costs in massaland can be brought down witout first bringing down the vice-like grip and monopoly of the AMA - amriki med association - that has constrained supply and inflated prices beyond reach only.

they got a good racket going to keep the shortage to the max, make foreign doctors run around in circles doing exams and still not accept the results.

[shyam]

Looks like Wall Street always has the last laugh

Spitzer Says Insurer Fees Fueled ‘Improper Practices’

Feb. 18 (Bloomberg) -- Eliot Spitzer, the former New York attorney general whose 2005 curbs on insurance-broker compensation were reversed by regulators this week, said the fees that he banned “created inherent conflicts.”

[Hari Seldon]

From yves smith
Violent Backlash Starting?

[Hari Seldon]

Heh.

ATHENS, Feb 18 (Reuters) - Greek opposition lawmakers said on Thursday that Germans should pay reparations for their World War Two occupation of Greece before criticising the country over its yawning fiscal deficits.
...
"How does Germany have the cheek to denounce us over our finances when it has still not paid compensation for Greece's war victims?" Margaritis Tzimas, of the main opposition New Democracy party, told parliament.

link

OT
No honor among thieves these days, eh? talking of reparations does excite though? For the oily oiropeans singing peans to some 'green taxes', 'labor standards' and other such crock. Heck, how about paying basic reparations for colonial plunder, Mr/senor/Monsieur/Herr hotshot??

[Singha]

and afaik the german occupation of greece wasnt too brutal an affair as occupations go. the russians had it far far rougher because of hitlers hatred of the slavs.

Russia should demand reparations and they have the topol-M's for street muscle.

[Hari Seldon]

Opinions once considered outright ridiculous are slowly becoming less laughable only.

Sample this from a UKstani ekhanomist in Gloomberg:

UK Should Mull Plea to IMF, Economist Stelzer Says

Conservative leader David Cameron should consider a “profoundly unpopular” move such as calling for aid from the International Monetary Fund if his party wins this year’s U.K. election, economist Irwin Stelzer said. “What would I do if I were David Cameron? I would look at the books” and “I would say: ‘Shock, horror, I’ve found it’s much worse than I thought and so Gordon Brown has forced me to call in the IMF,’” Stelzer said, speaking at an event in London late yesterday.

UKstan going to the IMF hat in hand ain't unprecedented in the postmodern (i.e. post WWII) era either:

Such a move would be reminiscent of 1976 when then- Chancellor of the Exchequer Denis Healey sought an emergency loan from the IMF.

See? Precedent also exists only. Full steam ahead, fellas. Despite my limitless reverence for all things Bshitish, even moi must confess that UK-stan hasn't experienced labor pains in anywhere near glorious levels yet. That will take the thundering re-election of Sri Gordon Brown, riding the paki vote.

Under Prime Minister Gordon Brown, the U.K. is now running the largest budget deficit since at least World War II, prompting Standard & Poor’s to lower its outlook on Britain’s AAA rating to negative from stable in May. “You need to do something profoundly unpopular,” said Stelzer, who is director of the economic policy studies group at the Washington-based Hudson Institute and an adviser to Rupert Murdoch. “If it takes undemocratic means, I would say you have no choice but to call in the IMF.”

And we boor middle class shmucks well know what goping to the IMF means. The IMF, like central banks everywhere is a tool to protect elite class interests first and foremost. No wonder IMF prescriptions under the 'Washington consensus' shaft the middle and below classes the worst. Ask Thailand, Soko and Indonesia.

Unleashing the IMF onto UKstan is likely to happen regardless anyhow.

For too long has UKstan enjoyed low interest rates; sheltered, nourished and funded terror against faraway lands; fooled its colonies into believing its benign intentions all along; and gotten away with punching well above its weight only. That may soon end. Or not. Time will tell.

The British economy is in a “terrible shape” and has “a serious structural deficit,” Stelzer said. Neither Brown’s Labour Party nor Cameron’s Conservatives has set out a credible plan to reduce the budget shortfall, he said. “When the rating agencies say they’re looking at your AAA rating, the markets are warning you that now is the time to have a credible plan to reduce the deficit,” Stelzer said, speaking at an event hosted by Politeia, a London-based research group. “The markets are saying: ‘This is it, fellas.’”

Yawn. have heard that before. Wake up up when UKstani interest rates on 14 yr gilts rise by over 400 basis points.

Stelzer said Brown might not be the best candidate to lead Britain out of its predicament.

“Gordon got it right, I think, on fiscal stimulus. He got it right on saving the banks, whereas Cameron got it wrong on a lot of these issues,” Stelzer said. “But we are where we are right now, and the question is: Who do you trust to go on from here?” “I love Gordon, but I wouldn’t trust him to go on from the situation with this level of deficit,” Stelzer said. “His every instinct is to spend more because he believes in social justice” and “he wants the state to do nice things for people and that’s the wrong mindset for right now.”

Read it all.

[SwamyG]

From yves smith
Violent Backlash Starting?

The nasty rightwing radio talk show hosts plus the Faux News is as much to blame for inciting the violence. If this was done by BJP in desh, the media would have blamed BJP as regressive, communal, inciting violence itiyadi. America is (was ?)great because of the healthy debates it encouraged among its citizens; these morons have taken it past unhealthy levels. The country and the World will pay the price as usual.

[Neshant]

for every bailout/handout, some person who has been responsible with his money has to be ripped off by the government and his efforts transferred to a bunch of incompetents.

vast majority of voters are too dim witted to vote for anything other than what the media projects are the candidates.

its easy to get cynical and frustrated with the process.

e.g. you are working in the private sector making a low income, no pension, no union. You got to pay the salary of some guy working in the public sector with a bloated income, lavish fully back stopped and inflation protected pension, benefits, unions, job security.. etc. You will never see anywhere near the amount of money the govt is taking from you and giving to him. Yet you are supposed to quietly accept this injustice? Its a fraud of politicians voting more and more to a group of people from your pocket to get themselves elected.

I can already see the weak point of democracy. When one group manages to vote itself entitlements from the treasury and puts it on the backs of another group, that's when democracy will collapse. You can already see this happening in India with reservations..etc.

[abhischekcc]

UK going to IMF for help and India providing money to IMF - times have indeed changed.

---------

About 1 to 1.5 years ago, I made a prediction that globalisation is not in danger because of the crisis, because countries need each other way beyond healthy nowadays.

While I still believe that inter dependency exists, I am no longer sure that is enough to stop trade wars, and shooting wars. Because the social contract in the west is breaking down - and it may lead to revolution and all the chaos it entails - including breaking down of the global trade order that the international elite spent last 70 years in defending and building against fascism and communism.

Its ironic that what Hitler and Stalin failed, the Wall Street MBAs have succeeded. Truly, half knowledge is a dangerous thing.

[krisna]

Because the social contract in the west is breaking down - and it may lead to revolution and all the chaos it entails

is it the breakdown in family structure --- the mother of all social contracts in a nutshell.
More individual liberty at the cost of family relations-- money being the sole motive and not relations going the absurd way to dangerous proportions.
Eg- married couples dont trust each other- stay together for sometime, realtions break down, children are not with them for long- go away from parents during/after teens, go with peers, experiment and breakdown a lot( internal and external relations).There is minimum/inadequate help from elders. scars are formed in youngsters which carries into their lives.

This was the summary I received while talking to an elderly person well settled in massaland.

[SwamyG]

Its ironic that what Hitler and Stalin failed, the Wall Street MBAs have succeeded. Truly, half knowledge is a dangerous thing.

I don't think it is a case of half knowledge. And neither can we blame the MBAs. They were doing their job. Just like the designer of the "luge" track in Vancouver. The designer has claimed that it was the "marketing" types who pushed it. Now the marketing types were doing their job. So who is to be held accountable? Sadly it is the society. The change in priorities and values are reflection of the times we live in the 21st century; and these priorities and values have been evolving based on the vehicle of prosperity in the Western countries. A state of being in the high that pushes all our animal instincts and wisdom out the window.

[SwamyG]

Insight is sometimes found when we are not looking for one and probably from unexpected people and places. I was reading the Kaui monastery daily blog and two items caught my eye.

In the West, a project the size of Iraivan, would need a large construction yard surrounded by a chain link fence and thousands of dollars worth of the latest high tech power tools.

When we show the guests our “construction yard” the sheer artful simplicity is hard for them to wrap their mind around.