Global Economy - Printable Version

Global Economy - Printable Version

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Global Economy - acharya - 07-06-2008

AP
Foreclosures to rise, whomever wins White House

Global Economy - acharya - 07-06-2008

China and India knock on G8's door
QUOTEPut to a Canadian, such talk may elicit reminders of that country's pivotal influence as a potash, tar sands and uranium producer. But to many neutral observers, a club of the world's leading nations is starting to look hollow without China - the fourth-largest economy in dollar terms, according to the World Bank. (By pure gross domestic product reckonings, India would be included only in a G12.)

Global Economy - acharya - 07-06-2008

The buck doesn't stop here; it just keeps falling
QUOTE
"Instead of the traditional `flight to the dollar' during a time of instability, there has been a `flight to commodities' in search of stability during a time of currency instability and a falling dollar," Yergin said. "There's a painful irony here: The crisis that started in the subprime market in the United States has traveled around the world and, through the medium of a weaker dollar, has come back home to Americans in terms of higher prices at the pump."

Global Economy - acharya - 07-06-2008

It's a circus out there
Unexpected twists, turns leave even the experts wondering about the next act for the U.S. stock market and economy, and they're walking a tightrope when it comes to advice
QUOTEDespite the slowdown globally, countries such as China, India, Russia and Brazil are likely to continue to grow significantly more than the U.S. economy. China's real gross domestic product growth in 2009 should be about 10 percent, while the U.S. will grow at 1.1 percent, Kostin said.

Global Economy - acharya - 07-08-2008

VentureSource did a study last year showing that more than 1,400 companies funded during the hectic years of 1999 and 2000 still existed in venture firm's portfolios. A majority of these companies -- which received a total of about $50 billion in venture capital and employ more than 150,000 thousand people -- will have to shut down or sell on the cheap. Venture capitalists can't hold onto them forever. Read related column.
The crisis isn't here yet. But it's coming. End of Story

LINK
THE FED
Yellen warns U.S. could hit another rough patch
S.F. Fed president says central bank on watch for 'wage-price spiral'
By Laura Mandaro, MarketWatch

SAN FRANCISCO (MarketWatch) -- The fragility of the U.S. housing and bank system could further throw a kink into financial markets before an anticipated recovery in 2009, said San Francisco Federal Reserve President Janet Yellen on Monday, with commodities presenting their own set of troubles.
Though Yellen anticipates "market functioning" to greatly improve by next year, balance-sheet pressures on financial institutions and other problems dogging the financial system could stick around "for some time."
"Things could get worse before they get better," Yellen said in remarks prepared for delivery to University of California, San Diego's Economics Roundtable.

Yellen, who is not a voting member of the Federal Open Market Committee this year, is seen as one of the Fed policymakers who is more likely to advocate measures to stimulate growth rather than beat down inflation.
For that reason, her concerns on inflation, articulated in May before the last FOMC meeting, contributed to market sentiment that the Fed was likely to start raising interest rates in the second half of this year. See earlier story.
"Yellen seems to have competition at the dovish extreme of the FOMC spectrum only from Boston Fed President [Eric] Rosengren, but she is a long-time Fed team player who refrains from bombastic comments," said analysts at Decision Economics Inc., in a note before the speech.
Yellen said she anticipated overall inflation is likely to remain much higher than she would like over the next few quarters until commodities prices level off, a forecast on commodities she called her "best guess."
[ADDs this graf:] On Monday, oil prices plunged nearly $6 a barrel, leading a broad retreat in commodities. Despite the day's sell-off, near-term oil futures have nearly doubled to about $140 a barrel in the past year. See Futures Movers.
Inflation excluding food and energy is also likely to run "modestly higher" before moderating early next year, she predicted.
"I still see inflation expectations as reasonably well anchored and I anticipate that consumer survey measures will come down once oil and food prices stop rising," she said.
Still, she said the Fed is doing its utmost to prevent the same kind of spiraling wages and broader price acceleration that followed a jump in oil prices in the 1970s.
"The risks to inflation ... have definitely increased," she said. "We cannot and will not allow a wage-price spiral to develop."
[ADDS next 5 grafs] Yields on Treasury bonds, which often respond to Fed policymakers' comments, barely budged after the speech released mid-morning, New York time. Yields on the 10-year Treasury note (UST10Y:
UST10Y 3.98, 0.00, 0.0%) tumbled later Monday after falling stock indexes sent investors into safe-haven Treasurys. See Bond Report.
Analysts saw little new in Yellen's outlook.
"The generally dovish Yellen did not deviate from the [Federal Open Market] Committee's description of economic risks," noted J.P. Morgan economist Michael Feroli, in emailed comments.
Traders in the futures market are now projecting a 14% chance the Fed will start raising rates in early August, to 2.25%. By November, futures traders have priced in a 46% likelihood the central bank will increase rates to 2.5%.
Since last September, the Fed has cut its benchmark lending rate 7 times to the current 2%.
Double, double, toil and trouble
Comparing the situation in housing, financial markets and commodity prices to the three witches that set the stage for subsequent mayhem in Shakespeare's "MacBeth," Yellen said it "seems likely" that housing prices and construction prices will continue to fall well into next year.
Plus, financial markets remain very fragile, a variety of indicators show. She noted spreads on credit default swaps, a type of insurance against a company defaulting on its debt, are rising -- a sign of more perceived risk that companies will renege on their creditors. It's tough to sell even high-quality mortgages in the secondary market, she said. And stock prices for financial institutions have plummeted.
And there is little monetary policy can do about rising commodities prices, she said.
"If rising commodity prices reflect supply and demand fundamentals, then the situation is not likely to turn around any time soon," she said.
Despite the risk that businesses, faced with higher energy costs, will try to raise prices and prompt workers to ask for raises, she said anecdotes and forecasting surveys show the market still believes the Fed can prevent spiraling wages and prices.
"My contacts uniformly report that they see no signs of general wage pressures," she said. End of Story
Laura Mandaro is a reporter for MarketWatch in San Francisco.

Global Economy - acharya - 07-08-2008

Over 59% per cent stocks are illiquid on BSE

Global Economy - acharya - 07-09-2008

http://www.cnbc.com/id/25588738/site/14081...text|&par=yahoo

Global Economy - acharya - 07-14-2008

Inflation to touch 17 pc by Sept.: Barclays

Global Economy - acharya - 07-14-2008

ECONOMIC PREVIEW
Bernanke walking on eggshells
On the Hill, Fed chief can't be too complacent or too concerned
By Rex Nutting, MarketWatch

Global Economy - acharya - 07-15-2008

US banks suffer as bail-out fails to calm nerves

Global Economy - Guest - 07-15-2008

IndyMac is gone, more will follow.
Just a reminder to all in US, distribute your money in multiple banks, only $100K is insured per bank rest you will lose. Do same with 401K.

Global Economy - Guest - 07-16-2008

Ecuador, Venezuela build oil refinery on PacificQUOTEEL AROMO, Ecuador (AFP) - Venezuela and Ecuador plan to build the biggest oil refinery on South America's Pacific Coast, to wean Venezuelan crude away from US refineries, Venezuelan President Hugo Chavez announced here Tuesday.

"Instead of having refineries in the United States, we decided to keep them here in our geopolitical context," Chavez said as he launched the project together with Ecuadoran President Rafael Correa.

The joint 6.6 billion dollar project by state-run oil firms PDVSA, of Venezuela, and Petroecuador, of Ecuador, will refine 300,000 barrels of crude a day, saving Ecuador 3.0 billion dollars in oil imports a year, Correa said.

The refinery will go up in El Aromo, in Ecuador's coastal province of Manabi, and should be ready in 2013.

Chavez said he plans to build other refineries in Brazil and Nicaragua -- Venezuela's leftist allies in the region -- to keep Venezuela's oil wealth away from the United States, where Venezuela currently runs seven refineries.

"Everything ended up in the United States; that's what the empire and colonialism are all about," Chavez said.

Global Economy - Guest - 07-24-2008

QUOTEBP Losing 23% of Production Looms as Russians Assail Investment 
By Stephanie Baker-Said and Torrey Clark
July 24 (Bloomberg) -- The dispute that has come to symbolize the challenges of producing oil in an era of high prices and short supplies boiled over in May. That's when BP Plc, the world's third-largest oil company by sales, faced off in a private meeting with its billionaire partners in a 50-50 Russian joint venture called TNK-BP Ltd. at the beachfront Four Seasons Hotel near Limassol, Cyprus.

The Russian side had a demand: The ouster of Robert Dudley, the American oil executive who had been running the venture since it was formed in 2003. They held Dudley responsible for crippling profits at TNK-BP, Russia's third-largest oil producer.

In the room were some of Russia's richest men, including Mikhail Fridman, one of the original oligarchs who made their fortunes as President Boris Yeltsin sold state enterprises. Also there were Viktor Vekselberg, who built his wealth trading metals and computers, and his business partner and friend from their student days in Moscow in the 1970s, Len Blavatnik. 

BP Chief Executive Officer Tony Hayward had arrived from London to subdue the rebellion by the billionaires who hold half of the venture's shares. His company, beset by project delays, safety failures and a falling share price, can't afford to lose sway over its Russian assets. BP depends on TNK-BP for 23 percent of the oil and gas it produces, according to company filings.

Dudley chose not to attend. He stayed in Moscow because of concerns he might not be allowed back into Russia if he traveled abroad, say two people familiar with the matter. 

Neither side got its way. Hayward refused to discuss removing Dudley, says Vekselberg, 51, who in 2004 paid more than $100 million for a collection of Faberge eggs. The Russian shareholders told Hayward there was nothing else to talk about.

8.2 Million Barrels

``It made no sense to continue the discussions when Bob Dudley is running the company in the interests of one shareholder,'' Vekselberg says. ``From the first day, BP regarded TNK-BP as a subsidiary.'' The three billionaires, who have seats on TNK-BP's board, bowed out of the directors meeting scheduled for the same day.

..........

The billionaires have zeroed in on costs, especially for the BP engineers and managers who were hired under contract to offer technical expertise on squeezing more oil out of mature fields. They say these people cost the company about $120 million a year and freeze out promising Russian talent.

``There is a good English word: arrogance,'' Fridman told reporters in June. ``We have felt a kind of condescension for a long time.'' Vekselberg, in an interview in his office down the hall from Dudley's in TNK-BP's headquarters in Moscow, says the BP contractors cost TNK-BP three times more than equivalent Russian employees. He's particularly upset by perks the company subsidizes for non-Russian staff, such as private school for their children.

``The industry is short of specialist staff,'' Graham counters. ``You have to pay people a lot of money to come and work in Moscow. That's the market.'' The average BP contractor costs the joint venture $685,000 a year, including salary, housing, travel and schooling costs, according to Vladimir Buyanov, a BP spokesman in Moscow

Global Economy - Shambhu - 07-24-2008

Little snipet: Hummer sales are way down in the, but they are up 21% in Russia (NPR).

Global Economy - acharya - 07-29-2008

Two more banks fail; FDIC sells deposits

Global Economy - acharya - 07-29-2008

11 reasons America's a new socialist economy
How free market ideology backfired, sabotaging capitalistic democracy
By Paul B. Farrell, MarketWatch
Last update: 11:47 a.m. EDT July 22, 2008

ARROYO GRANDE, Calif. (MarketWatch) -- Welcome to the conservative's worst nightmare: The law of unintended consequences. Why? Nobody wants to admit it, folks, but the conservatives' grand ideology is backfiring, actually turning the world's greatest capitalistic democracy into the world's newest socialist economy.
A little history: The core principles of conservative economic ideology are grounded in Nobel economist Milton Friedman's 1962 classic "Capitalism and Freedom." Too late to stop President Lyndon Johnson's Great Society, those principles became the battle cries energizing conservatives since Reagan: Unrestricted free markets, free enterprise and free trade; deregulation, privatization and globalization; trickle-down economics and trickle-up wealth to an elite plutocracy destined to rule the new American capitalist utopia.

So what happened? Are you guys nuts? Hey, I'm talking to all you blind Beltway politicians (in both parties) ... plus the Old Boys Club running Wall Street (into the ground) ... plus all you fat-cat CEOs (with megamillion parachutes) ... and all your buddies scamming everybody else to get on the Forbes 400. You are proof of Lord Acton's warning: "Power corrupts and absolute power corrupts absolutely."
It's backfiring! You folks turned our America from a great capitalistic democracy into a meddling socialist economy. Still you don't get it. You're acting like teen addicts tripping on an overdose of "greed-is-good" testosterone while your caricature of conservative economics would at best make a one-line joke on Jay Leno.
Here are 11 reasons your manipulations are sabotaging the great principles of leaders like Friedman and Reagan:

1. Dumber than a fifth grader with cognitive dissonance
Kids know what it means. They know most adults today can't see past the end of their noses. Liberals tune out candidate McBush for being lost in the past. Conservatives can't hear Obama without seeing that turban.
Cognitive dissonance simply means most brains cannot see past their own narrow ideologies. They dismiss any data that contradicts their old ideologies. Whether you're a conservative Republican or liberal Democrat, you only hear what you already know is "true." All else is tuned out.

2. Where did all the leaders go with their moral character?
Friedman's economics requires leaders of moral character. Did it run into Lord Acton's warning: "Power corrupts, absolute power corrupts absolutely?" Former Ford and Chrysler CEO Lee Iacocca said yes in "Where Have All the Leaders Gone?"
Friedman's great conservative principles have been commandeered by myopic ideologues whose idea of leadership is balancing the demands of self-interest lobbyists with the need for campaign donations. Unfortunately, a new "change" president won't be enough; there are 537 elected officials in Washington controlled by 42,000 special interest lobbyists.

3. Fed and U.S. Treasury adopted Enron accounting tricks
Bad news: Enron failed several years ago because of its off-balance-sheet accounting scam. The Fed's doing the same thing: Dumping Bear's $30 billion liabilities onto the taxpayer's "balance sheet." Next Treasury proposes adding $5.3 trillion more from Fannie Mae and Freddie Mac.
Unfortunately clever accounting tricks by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke aren't going to fool foreign lenders analyzing America's creditworthiness. Worse-case scenario: U.S. Treasury bills with less than a triple-A rating.
With 90 banks on the brink and already too many bail-outs, our so-called leaders are running out of magic bullets. So now the taxpayer's "balance sheet" has become the all-purpose "dumping ground" and it's overcrowding fast as our leaders raise the white flag of socialism.

4. Deregulation creating new socialist housing system
Back in 1999 a Democratic president and Republican Congress were in love with a fantasy called the "new economics." Enthusiastic lobbyists invented the brilliant idea of dismantling the wall between commercial and investment banking: They killed the Glass-Steagall Act that was keeping the sleazy hands of short-term hustlers out of the pockets of long-term lenders.
Flash forward: We lost 85-year-old Bear Sterns and $32 billion IndyMac. Lehman's iffy. And 90 banks. With the virtual takeover of Freddie and Fanny, Wall Street's grand experiment with free-market ideology is backfiring, having socialized the housing market. They have nobody to blame but their self-centered greed.


5. Trade deficits outsourced more of America's wealth than jobs
One look at Forbes lists of fat cats and you know the 21st Century doesn't just belong to Asia, it belongs to everyone but America. Why? Once again, remember Warren Buffett's famous "Farmer's Story" in Fortune: "We were taught in Economics 101 that countries could not for long sustain large, ever-growing trade deficits ... our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than they produce -- that's the trade deficit -- we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own."
Friedman was right: Congressional spending is the biggest cause of inflation, and, wow, those conservatives sure did love blank-check deficit spending the past eight years!


6. Banking system in meltdown, minting penny stocks
The Friedman conservatives apparently understand Joseph Schumpeter's "creative destruction." Yet, our free-market ideologues can't seem to accept that America is now on the "destructive" downside leg of the cycle, in the economy, markets, trade, politics and, yes, sadly, even with their conservative ideology.
You don't have to be smarter than a fifth grader to figure out that our leaders are clueless about the reality of our crumbling banking system, with many banks trading as penny stocks, while the Fed still panders to conservative pre-election politics rather than getting serious about inflation.

7. Ideologues preach savings, but still push spending
A core principle of conservatism is frugality, saving for the future. Grandparents raised me, struggled during the Depression, passed on strong ideals.
Somewhere over the past generation conservatives forget frugality. This distortion peaked in 2003 when consumers were told to spend, not sacrifice, and fuel the economy even as government spent excessively on war. That was a clear breach of every conservative leader's position in earlier wars.
As a result, in one brief generation, as the power of conservative ideologues grew, America's savings rate dropped precipitously from 11% in 1980 to less than zero today.

8. Warning, the market's under 2000 peak, losing money
Imagine you're on Jeff Foxworthy's fabulous show competing to see if you really are smarter than a fifth grader. Question: "If you put $10,000 in the market in March of 2000 when the Dow peaked at 11,722, how much money would you have today if the market's 10% under 11,722?" So you guess $9,000.
But then two fifth graders raise their hands: One asks if the CPI inflation rate should be considered? If so, maybe $5,000 is closer to the right answer. The other kid wants to know if you're buying stuff in Chicago or Singapore.
The truth is, the best answer for most adults is: "You've lost a hell of a lot of money in the market under the grand conservative ideology the past eight years."

9. Inflation and dollars: Is Zimbabwe the new model for the U.S.?
The Los Angeles Times ran a photo of a Zimbabwe $500 million bank note, worth $20 at noon, less at dinner. Why? Inflation's there is running 32 million (yes million!) percent annually. The German company printing their banknotes finally cut them off.
Things may be worse in America, psychologically. Our ideological obsession with "growth" is not working because there is too much collateral damage, namely inflation. Our dollar has lost substantial value to the euro because our dysfunctional leaders are convinced that a trade policy funded by debt makes sense.
Now we owe China $1.3 trillion, sovereign funds want equity not cheap dollar IOUs, and still our clueless Treasury and the Fed continue debasing our currency, printing money like Zimbabwe.

10. Free-market health care failing 47,000,000 Americans
Big Pharma loves free-market conservatism and no-compete Medicare drug programs. Nobody else is happy. Taxpayers get stuck with the bill.
"The Coming Generational Storm" tells us that without massive reforms and big lifestyle changes for taxpayers (especially retirees), within a couple short decades America's entitlement programs will eat up the entire federal budget. Medicare is the biggest cost item in your future, over $50 trillion in unfunded liabilities.
Conservative ideologues naively believe the answer is more pay-out-of-pocket insurance plans, even with 47 million already uninsured because they can't pay. Here as in so many areas of our economy, free-market junkies really are suffering a severe case of cognitive dissonance, as blind to the facts about the uninsured as they are to their outdated free-market fantasies.

11. Conservative free-market policies inflated oil 300%!
Yep, oil inflated 300% in eight short years under the "leadership of two oil men." But, you can't blame them. We put the foxes in the henhouse, knowing full well "real" oil men love digging holes on the supply side, supporting ethanol subsidies and blaming speculators -- it's in their genes! Talk about cognitive dissonance; real oil men thrive on cowboy images of Marlboro Men in Hummers, Navigators and F-150 trucks.
Net result? Another perfect example of "creative destruction" in action as conservative ideology meets "law of unintended consequences," driving GM, the symbol of America capitalism, closer to bankruptcy ... while turning America into a socialist economy. End of Story

Global Economy - acharya - 07-29-2008

Dog meat might become an American staple similar to some Asian countries. The housing crisis has led to a record number of dislocated pets at animal control kennels in our area.

Amen brother! Especially when you stop buying pre-made, cardboard tasting products and just buy the staples. There isn't any difference in "quality" between name and store brands when it comes to the basics. I've read that a lot of this stuff comes from the same factories too. There's not generally a ton of difference with oatmeal, flour, sugar, frozen veggies, ect. Not much a corporation can do to "improve" these staples, which are still relatively cheap. Let's all stop buying the junk that corporate America feeds to us like so much Soylent Green. Rediscover the joy of cooking healthy, delicious meals from scratch, plan your menus carefully to eliminate food wastage and recognize what soda has become...chemical sewage that is slowly poisoning us all with High Frustose Corn Syrup or Aspertame. I've adopted these stratagies and we're eating better than ever before and our grocery bills have gone down saving us over $100 per month. In addition we've almost completely eliminated eating out, saving even more.

Live Simple, Live Free!

--
More pain in store at the cash register

Global Economy - acharya - 07-30-2008

 Marathon WTO talks collapse in U.S.-India farm row

Tourism rises globally, but not to U.S.

Inflation inches closer to 12%

Global Economy - acharya - 08-24-2008

Exports represent the key to U.S. economic recovery

Morris Beschloss â¢ Special to The Desert Sun â¢ August 21, 2008

http://news.google.com/nwshp?tab=wn&ned=us...3&hl=en&topic=b

Global Economy - acharya - 08-26-2008

S&P launches index of Indian equities for world investors