Perspectives on the global economic meltdown- (Nov 28 2010)

svinayak · Post by **svinayak** » 11 May 2012 10:23

Poll shows Americans' pessimism on economy growing

abhischekcc · Post by **abhischekcc** » 11 May 2012 10:31

Suraj wrote:More quantitative easing / LRTO coming. The Europeans elections showed that they prefer to kick the can down the road rather than accept Germanic austerity. Even PRC has backed off from funding the Eurozone through bond purchases after losing money there.

So what does that mean for th EU currency and integration project? The present crisis has shown that all countries in Europe are now looking at life away from the Euro and its regulations.

If germany is left alone at the altar, then will they turn towards Russia (for resources, market, manpower, etc)? Interestingly, an alliance between Germany and Russia will be more an alliance of equals, as both are cash surplus countries, but bring different strengths to the table.

shyam · Post by **shyam** » 11 May 2012 10:36

JPMorgan reveals shock $2bn trading loss on investments

The strategy taken at its CIO had been "riskier, more volatile and less effective" than previously believed, Mr Dimon said.

"There were many errors, sloppiness and bad judgement. These were egregious mistakes.

"They were self-inflicted and this is not how we want to run a business."

Something is fishy about the whole incident. When CEO himself admits that the such a huge loss is self inflicted, and no heads are rolling, I suspect that something big is going to happen after this.

Singha · Post by **Singha** » 11 May 2012 11:41

germany and russia already have a alliance of sorts. germany needs russian energy and metals to feed her massive manufacturing machine, and with the turn away from n-power, could use the ukraine and russian coal for clean-coal plants. russia needs german/french/italian technology and political support to become a advanced industrial nation and start exporting more manufactured goods rather than raw materials.

shyam · Post by **shyam** » 12 May 2012 10:27

FITCH DOWNGRADES JPMORGAN AFTER TRADING DISASTER, SAYS LOSS IMPLIES LACK OF LIQUIDITY.

Why did JPM break this news before Facebook IPO?

Singha · Post by **Singha** » 12 May 2012 11:16

most likely because it was hours away from being known to SEC/NYT/WSJ....voluntary disclosure cannot be withheld beyond a point for such mega amts.

the fbook ipo is overvalued per investors, it will likely tank below the opening price within a week of listing.

ramana · Post by **ramana** » 12 May 2012 11:19

Singha wrote:most likely because it was hours away from being known to SEC/NYT/WSJ....voluntary disclosure cannot be withheld beyond a point for such mega amts.

the fbook ipo is overvalued per investors, it will likely tank below the opening price within a week of listing.

This will put a crimp in election plans.

shyam · Post by **shyam** » 12 May 2012 12:02

JPM, GS etc are the banks that are capable of getting the laws changed when they are caught violating.

BTW, Chris Whalen now calls Wells Fargo Corporation as poster child for accounting fraud. It seem their accountings are bit shady like dot.com accounting (include future potential earnings from a mortgage client into the current quarter earnings)

http://www.youtube.com/watch?v=qSTqFbr033g&t=16m10s

vera_k · Post by **vera_k** » 12 May 2012 19:16

Singha wrote:the fbook ipo is overvalued per investors, it will likely tank below the opening price within a week of listing.

Seriously doubt this, given they are selling at a discount to what shares have been going for on sharespost.com.

Satya_anveshi · Post by **Satya_anveshi** » 14 May 2012 09:06

ramana wrote:This will put a crimp in election plans.

On the contrary Ramana garu. JPM event helps Obama and weakens Romney/Republicans, who has/have been increasing pitch against regulations and using that in support of their job's plan or unemployment reduction.

So, this event serves as a shot in the arm for Obama and dampens opposition against him.

Massive J.P. Morgan loss weakens Mitt Romney’s argument

Having said that it could also be the trigger of coming crisis just as we saw during 2008/9

If you remember the Societe General's trading loss (that rogue trader Jeremo Karveil) after which crisis picked up pace

- so we already have the trigger similar to that; MF Global didn't quite create as much ripples or is it just waiting to compund?
- Election year in US
- sluggish growth in China/India and even Brazil; rates were reduced in support of growth
- Europe is still in dumps and tiltling left
- unemployment still above 8.5% trending lower (I believe)
- Housing still in the pits; at or below earlier levels
- Consumer credit still on steroids (housing, student loan, credit card interest rates at record lows); based in my personal poll 0% APR offers with 0% fees are much more common than before now - this is a desparate sign if true on a larger scale

- chances are that there will be another debt ceiling extension fiasco sooner than expected

so, heading into interesting 6-9 months

shyam · Post by **shyam** » 14 May 2012 10:17

Notice that root of $2B JPM loss can be traced to City of London.

JPMorgan Trader’s Positions Said to Distort Credit Indexes

A JPMorgan Chase & Co. (JPM) trader of derivatives linked to the financial health of corporations has amassed positions so large that he’s driving price moves in the $10 trillion market, traders outside the firm said.

The trader is London-based Bruno Iksil, according to five counterparts at hedge funds and rival banks who requested anonymity because they’re not authorized to discuss the transactions. He specializes in credit-derivative indexes, a market that during the past decade has overtaken corporate bonds to become the biggest forum for investors betting on the likelihood of company defaults.

Yogi_G · Post by **Yogi_G** » 14 May 2012 19:48

abhischekcc wrote:
Suraj wrote:More quantitative easing / LRTO coming. The Europeans elections showed that they prefer to kick the can down the road rather than accept Germanic austerity. Even PRC has backed off from funding the Eurozone through bond purchases after losing money there.
So what does that mean for th EU currency and integration project? The present crisis has shown that all countries in Europe are now looking at life away from the Euro and its regulations.

If germany is left alone at the altar, then will they turn towards Russia (for resources, market, manpower, etc)? Interestingly, an alliance between Germany and Russia will be more an alliance of equals, as both are cash surplus countries, but bring different strengths to the table.

The Soviet Era Russian debt to Germany is still an irritant to their relations. Efforts by Putin to somehow get this written off have come a cropper. Given Germany's strained current position it is unlikely they will write off Russia's debts any time soon and the irritant will continue. But their alliance if it fructifies will be a formidable one. Russia already provides Gas to Germany at concession rates with Ukraine as a parasite in this.

svinayak · Post by **svinayak** » 14 May 2012 20:58

Will 'Chindia' rule the world in 2050, or America after all?

For neo-Spenglerites - who believe the West is finished - Citigroup’s Willem Buiter offers some astonishing projections. The Muslim powerhouse of Indonesia will alone match the combined GDP of Germany, France, Italy, and Britain by mid-century.
The economies of China and India will together be four times as large as the United States, restoring the historic order of Asian dominance before Europe’s navies burst on the scene in the 16th Century. Panta Rei, says Dr Buiter: all is in flux; nothing will remain the same.

“Sustained growth prospects in per capita incomes across the world have not been as favourable as they are today for a long time, possibly in human history.” Global growth will quicken. GDP will quadruple again from $73 trillion to $378 trillion by 2050 (constant US dollars).

As for the two scenarios you have left out coming food /water shorages and war.
We are in the first of two sunspot cycles when the sun will be relatively quiet. Countries with excess food output will do relatively well, i.e. the USA.
War, regional or world wide, is inevitable with new economic giants coming forward. To secure it's food requirements China will aggressively "take over" other Asian countries, whilst it will want Siberia for it's energy. How it is contained to prevent implementation of it's plans will determine who is top dog in 2050.
India will continue to do what it has been most successful at, exporting it's people to other countries and move into their finance & trade sectors and work to take control of these sectors in these countries. In the long term a most effective strategy.
You have left out the Muslim world which is unstable and aggressively arrogant to other cultures. The link up between Turkey & Iran, if it develops further, could cause major problems for Europe & Russia.

Yogi_G · Post by **Yogi_G** » 14 May 2012 21:13

Acharya wrote:Will 'Chindia' rule the world in 2050, or America after all?

For neo-Spenglerites - who believe the West is finished - Citigroup’s Willem Buiter offers some astonishing projections. The Muslim powerhouse of Indonesia will alone match the combined GDP of Germany, France, Italy, and Britain by mid-century.
The economies of China and India will together be four times as large as the United States, restoring the historic order of Asian dominance before Europe’s navies burst on the scene in the 16th Century. Panta Rei, says Dr Buiter: all is in flux; nothing will remain the same.

“Sustained growth prospects in per capita incomes across the world have not been as favourable as they are today for a long time, possibly in human history.” Global growth will quicken. GDP will quadruple again from $73 trillion to $378 trillion by 2050 (constant US dollars).

As for the two scenarios you have left out coming food /water shorages and war.
We are in the first of two sunspot cycles when the sun will be relatively quiet. Countries with excess food output will do relatively well, i.e. the USA.
War, regional or world wide, is inevitable with new economic giants coming forward. To secure it's food requirements China will aggressively "take over" other Asian countries, whilst it will want Siberia for it's energy. How it is contained to prevent implementation of it's plans will determine who is top dog in 2050.
India will continue to do what it has been most successful at, exporting it's people to other countries and move into their finance & trade sectors and work to take control of these sectors in these countries. In the long term a most effective strategy.
You have left out the Muslim world which is unstable and aggressively arrogant to other cultures. The link up between Turkey & Iran, if it develops further, could cause major problems for Europe & Russia.

Something tells me that with the steady increase in Hispanic population the white Americans will eventually move in droves to India and China by 2050. Chindia would be the land(s) of opportunity by that time period.

svinayak · Post by **svinayak** » 14 May 2012 21:42

The five largest banks in the United States hold over 75% of all banking assets. This is the highest concentration of banking assets among the top five firms in American history. The concern of banks being too big to fail is worse now than before the financial crisis.

My reaction to the article below !

Excerpts:

-Dimon Learns A Lot About His Firm From Reading The Paper'

The joke going around when these stories initially broke was that a lot of J.P. Morgan’s senior management first learned of the CIO’s activity by reading The Wall Street Journal.

Is JPM Staring At Another $3 Billion Loss?

Dimon also said on the conference call: We are also amending a disclosure in the first quarter press release about CIO’s VaR, value at risk. We’d shown average VaR at 67. It will now be 129 [chart].
-The numbers Dimon cited were averages. The March 30, quarter end VaR was 186. And since much of the loss has occurred since March 30, this VaR could be significantly higher. So yes, their exposure was much higher than they thought.{..}

-How was J.P. Morgan able to amass such a large position? If a mere mortal tried this, he or she would have been required to put up ever-larger amounts of collateral with counter-parties that would have effectively stopped the position from getting this big. Since the Federal Reserve proved in 2008 that they would bail out any bank considered too big to fail, no one worries about details like collateral from one of the big banks.

Counter-parties were only too happy to take the other side of J.P. Morgan with little-to-no collateral. They figure that either Mr. Dimon or Mr. Bernanke will honor their contract. The Federal Reserve already set the precedent for such a bailout when it let Goldman Sachs out of its AIG contracts at par. If the markets become too chaotic for J.P. Morgan to handle, the counter-parties are banking on such a bailout once again.

More details@

http://www.ritholtz.com/blog/2012/05/un ... -be-coming

Christopher Sidor · Post by **Christopher Sidor** » 15 May 2012 23:36

Greek politicians fail to form government. They now go to elections. But the enthusiasm of average Greeks for EURO and the European experiment is unabated.
Europeans finance heads met recently and said that the terms and conditions of the Greek deal could be relaxed. But by how much is not clear. The aim it clearly to keep Greek's in Euro-zone and prevent a cascading effect washing away Spain and Italy.
Germans austerity champions loose in elections. There are rumblings even in Germany about the wisdom of having austerity at the expense of everything.
The new french president, a votary, for growth at the expense of austerity or shall I say the european fiscal compact, is going to meek Merkel.

We are seeing a glimmer of hope, Europe might switch to growth and not austerity. The only question is that will Europe switch fast enough to prevent a Greek exit or worse a Greek default .

ramana · Post by **ramana** » 16 May 2012 05:14

So all those gold bugs must be getting creamed now.

Singha · Post by **Singha** » 16 May 2012 07:22

the kind of things in which america makes a big profit on - media, software, hardware, finance, aerospace, defence, automobiles can be done anywhere if the top20% of americans move to this new location along with the university system that trains each generation of the top 20%.

the left over america would be something like russia - a agricultural, fishing, mining, warmaking resources powerhouse but not much else.

america is in a way two such countries glued together in a 1:4 ratio.

abhischekcc · Post by **abhischekcc** » 16 May 2012 15:15

But the thing is - none of those industries can be protected against piracy and IP theft. Which means that the current global trade regime (with GATS, IP protection agreements, etc) is essential to their economic well being. Which means that they depend on the goodwill of consumer countries to honor their IP. Which means that the pendulum of economic initiative has finally swung our way.

India and China are the largest consumer bases in the world.

China is already mass copying western IP.

What are we doing?

India has a greater right to mass copy US/western IP because it was our gold that actually built their economies. And exploitation of our masses for labour and captive markets that allowed the Anglo Saxons to rise to the top of the worldfor so long.

vishvak · Post by **vishvak** » 16 May 2012 15:28

Not sure if this is relevant. Making medicine is a noble profession.
Yusuf Hamied interview

"MNCs like to operate in areas of monopoly, no two ways about it," Hamied told Business Standard recently. "If they don't get monopoly, they like to delay your process as much as possible," he added. "With 1.3 billion people, we can't afford to play their game. The health of the country is at stake," he says.
..
Soon after, Cipla began selling dirt-cheap antiretroviral AIDS drugs to African countries. Thanks to Hamied, annual medication, that normally costs up to $24,000, began to cost around $350 in many parts of the developing world.

It was nothing short of an epic development in the history of disease and medicine.
..
Not only did he sell the cocktail of drugs that are used for AIDS treatment for a dollar a day, he was also able to combine three of the medicines that go into the AIDS cocktail into one single pill, making it much easier for patients to be regular with their medication regimen.
..
Today, at least 50 per cent of AIDS patients in impoverished countries who consume medications, do so with Cipla's drugs. Many countries have reformulated their public-health systems now that there are cheap drugs available to combat a disease that has ravaged the world in the last two decades.
..
Moreover, for a country like Vietnam, where the virus originated, the medication at $60 for a five-day course was simply too expensive. Hamied stepped in and filled the gap.
..
"If you examine the world's top 50 drugs, seventy per cent of them are marketed by companies that didn't invent them in the first place," says Hamied. "Lipitor, Pfizer's blockbuster drug, was not invented by them. Similarly Roche's Tamiflu was not invented by it," he adds. What MNCs do, says Hamied, is 'evergreen' drugs coming off patent, by tweaking them slightly and extending their lives.

Ultimately, these companies are simply used to making 'obscene profits', says Hamied. And this is something that the country simply cannot afford.

An MNC from a first world country is supposed to have ideal business practices, not push for monopolies, delay others procedures, market drugs by others and then make profits, sell in third world countries with first world greed in profits, tweak and extend life of drugs instead of not disturbing patents coming off per rules, 'obscene profits' and so on and on. What is going on here with MNCs even for patents dropping even after how many decades?

Singha · Post by **Singha** » 16 May 2012 15:51

I have not read early american history much, but its alleged when they were upcoming power in the 1850-1940 timeframe, UK and Germany were the world leaders in science and tech, and US govt tacitly did a wink wink to US cos breaking all manner of european patents to build competiting products and build up scale.

when US became #1 after WW2 , they started expecting everyone to respect their own patents.

abhischekcc · Post by **abhischekcc** » 18 May 2012 10:44

Why just yoonited shtates of yamreecka? All western countries have engaged in wholesale destruction of non-western economies (as well as western economies) in their bid to build their economies.

The only reason the british won this war is because they were protected by the English channel.

The moment the english channel's security was breached (Hitler's air war against Britain), UQ became a has-been power. Moar power to the man.

Sri · Post by **Sri** » 18 May 2012 11:47

Singha wrote:I have not read early american history much, but its alleged when they were upcoming power in the 1850-1940 timeframe, UK and Germany were the world leaders in science and tech, and US govt tacitly did a wink wink to US cos breaking all manner of european patents to build competiting products and build up scale.

when US became #1 after WW2 , they started expecting everyone to respect their own patents.

Singha Ji, talk to any Chinese diplomat on this issue and they will tell you the same and with great details. Personally I am confused on the subject. I agree with the principle of Intellectual property (may be because in such an industry and my lively-hood depends on it). But at the same time I see many countries (east and west) applying these principles selectively, then why should India be the sucker?

shyam · Post by **shyam** » 18 May 2012 11:47

Till yesterday JPM loss was $2B, this morning it was $3B, and now it seems to be $5B

BOMBSHELL REPORT: Jamie Dimon Personally Approved The Concept Of The Disastrous Trade, Losses Could Total $5 Billion

shyam · Post by **shyam** » 18 May 2012 11:49

Beginning of another recession?

25,000 Job Cuts Are Coming To HP

vic · Post by **vic** » 18 May 2012 11:55

I think that there is not going to be "meltdown" but lot of inflation as printing presses go in overdrive

Advait · Post by **Advait** » 18 May 2012 22:09

Sri wrote:
Singha wrote:I have not read early american history much, but its alleged when they were upcoming power in the 1850-1940 timeframe, UK and Germany were the world leaders in science and tech, and US govt tacitly did a wink wink to US cos breaking all manner of european patents to build competiting products and build up scale.

when US became #1 after WW2 , they started expecting everyone to respect their own patents.
Singha Ji, talk to any Chinese diplomat on this issue and they will tell you the same and with great details. Personally I am confused on the subject. I agree with the principle of Intellectual property (may be because in such an industry and my lively-hood depends on it). But at the same time I see many countries (east and west) applying these principles selectively, then why should India be the sucker?

Not to mention that US stole and exploited German tech after WW2.

Geopolitics is no place to play a game of moral superiority. To quote Game of Thrones "In this game you win or you lose"

ramana · Post by **ramana** » 19 May 2012 03:59

shyam wrote:Beginning of another recession?

25,000 Job Cuts Are Coming To HP

Its Meg Whitman completing Carly Fiorina's job of dismantling HP.

RamaY · Post by **RamaY** » 19 May 2012 04:24

Singha wrote:the kind of things in which america makes a big profit on - media, software, hardware, finance, aerospace, defence, automobiles can be done anywhere if the top20% of americans move to this new location along with the university system that trains each generation of the top 20%.

the left over america would be something like russia - a agricultural, fishing, mining, warmaking resources powerhouse but not much else.

america is in a way two such countries glued together in a 1:4 ratio.

Chatur Varnas in different dweepas

Jambu Dweepa - Brahmana, Kshatriya, Vaisya, Sudra
Plaksha Dweepa - Hamsa, Patanga, Urdhwayana, Satyanga
Salmala Dweepa - srutadhara, Veeryadhara, vasundhara, Ishundhara
Kusa Dweepa - Kusala, Kovida, Abhiyukta, Kulaka
Krauncha Dweepa - Purusha, Rushabha, Dravina, Devaka
Saaka Dweepa - Satyavrata, Kratuvrata, danavrata, anuvrata
Pushkara Dweepa -

Singha · Post by **Singha** » 19 May 2012 06:18

I could not understand the post. care to explain?

RamaY · Post by **RamaY** » 19 May 2012 06:28

Was trying to say that the social structure will be same no matter the other conditions like ideology, race, economic system etc. take any country and it's comparative advantage can be attributed to top 20% population.

Christopher Sidor · Post by **Christopher Sidor** » 19 May 2012 19:07

Sri wrote:
Singha wrote:I have not read early american history much, but its alleged when they were upcoming power in the 1850-1940 timeframe, UK and Germany were the world leaders in science and tech, and US govt tacitly did a wink wink to US cos breaking all manner of european patents to build competiting products and build up scale.

when US became #1 after WW2 , they started expecting everyone to respect their own patents.
Singha Ji, talk to any Chinese diplomat on this issue and they will tell you the same and with great details. Personally I am confused on the subject. I agree with the principle of Intellectual property (may be because in such an industry and my lively-hood depends on it). But at the same time I see many countries (east and west) applying these principles selectively, then why should India be the sucker?

Because respecting IP give us the ability to build two things
1) Incentives for Indians to innovate and profit from innovation. This allows us to stay one if not two steps ahead of competition and threats.
2) We start to build our own ideas, instead of being in awe or respecting others.

Cheating on IP is what I would call as "lazy way".

akashganga · Post by **akashganga** » 19 May 2012 21:30

ramana wrote:
shyam wrote:Beginning of another recession?

25,000 Job Cuts Are Coming To HP

Its Meg Whitman completing Carly Fiorina's job of dismantling HP.

Meg Whitman spent 125 million dollars of her own money in 2010 to win governorship of california and lost badly to Jerry Brown. She is trying to recover her personal loss by laying off HP employees. I am amazed how HP hired this out of work CEO/politician to be its CEO. She has no clue how to manage a complex company like HP. My 2 cents.

Singha · Post by **Singha** » 19 May 2012 21:52

what hurd began, whitman aims to complete I suppose. TOI was reporting hurd cut funds to HP R&D labs so bad some scientists were secretly using pirated sw for their work.

Theo_Fidel · Post by **Theo_Fidel** » 20 May 2012 03:01

Singha wrote:what hurd began, whitman aims to complete I suppose. TOI was reporting hurd cut funds to HP R&D labs so bad some scientists were secretly using pirated sw for their work.

Whitman has trouble with mature companies. Once Ebay matured she made some disastrous moves that almost cratered the company. She is known to be fiery and a little psychotic. This works during go-go growth years. At mature HP it is tough to see her personality working.

ldev · Post by **ldev** » 20 May 2012 08:30

If you benchmark HP against IBM and compare Sales, Capital Employed, Net Income, ROE and Number of Employees, IBM is in another dimension. And yes it is services against a very muddled product portfolio for HP. But that does not stop investors from making comparisons. Given the recent history of CEOs at HP, Whitman has to show results and fast...she is aware that the board is looking for a turnaround....the quickest way is to cut headcount. The good news will be if these cuts are the result of a well planned strategy to refocus the company, the bad news will be if she has not even got a handle on the various HP divisions.

Also, compared to E-Bay, HP is a behemoth..so who knows where this will go.

gakakkad · Post by **gakakkad** » 20 May 2012 08:47

one thing I don't understand about these celebrity CEOs is why on earth do people hire them ,in spite of having made disasters in the previous company ?

ArmenT · Post by **ArmenT** » 20 May 2012 23:26

Accidentally Released - and Incredibly Embarrassing - Documents Show How Goldman et al Engaged in 'Naked Short Selling'
Looks like a Goldman Sachs lawyer really screwed up big time, by accidentally filing some interesting documents in a court case. The documents show that these guys were selling stock that they didn't have and the execs were aware of it.

Theo_Fidel · Post by **Theo_Fidel** » 21 May 2012 06:47

Insiders claim JPM losses now approaching $8 Billion. Did they not liquidate their positions?

ramana · Post by **ramana** » 21 May 2012 08:26

Cant the Feds prosecute JPM execs for fraud? There is some violation of some laws going on.