Global Economy

11-12-2008, 12:51 AM

Abu Dhabi Won't Allow Dubai Companies to Default on Their Debts, Knox Says

11-12-2008, 12:56 AM

QUOTEMarc Faber says the growth in China will top 5% at the max.

This is recession for China in a big way 
My forcasting model says, it will be very deep recession.
Currently, villages are not effected, but China had reduced production in every industry more then half. They can't keep workers happy. What they can do? WAR, to keep people busy and kick start econmy.
China's X-mas products had reached US shores and companies are already filing Chapter 11 in US. This is lost money for China, this will hit China very hard, as same happened with Japan.

Even Macau based bussiness is going under. Trillions just evaporated from China's economy.
Betting on foreign currency and they had invested trillions in now defunct enterprises.
Now they will put pressure on US, , EU and to keep re-paying borrowed money.
Think if US default payment ??? <!--emo& Big Grin

--><img src='style_emoticons/<#EMO_DIR#>/biggrin.gif' border='0' style='vertical-align:middle' alt='biggrin.gif' />

11-12-2008, 01:09 AM

QUOTEBank of China to Shift Lending Focus to Railways, Airports, Infrastructure Bank of China Ltd., the nation's fourth largest by assets, will increase lending to railway, airport construction and other infrastructure projects in response to the government's economic stimulus plan.
They are overspending. Will increase inflation.

QUOTEChina's Exports Advance at Slowest Pace Since June as Government Plans Aid China reported the slowest export growth in four months, two days after the government pledged an unprecedented $586 billion of spending to sustain the expansion of the world's fourth-largest economy. 
Whole economy is based on export, now it is slipping down.

QUOTEChina Eastern Grounds 10% of Aircraft as Travel Demand Slows With Economy China Eastern Airlines Corp., the country's third-largest carrier, is taking about a tenth of its fleet out of service as the global economic slowdown crimps travel in the world's most populous nation.

ramana · 11-12-2008, 02:02 AM

So whats PRC GDP after all these hits? And compare to India?

11-12-2008, 03:08 AM

QUOTE(ramana @ Nov 12 2008, 02:02 AM)So whats PRC GDP after all these hits? And compare to India?
[right][snapback]90020[/snapback][/right]
I am working on exact figure. Right number are coming slow.

Indian economy is not export oriented and living standards is very low compare to China. For India, General Election ASAP can slow problem. It itself is stimulus package which helps every class. This also gives oppurtunity to Politicans and industry to convert black money to white which is stored in sacks, swiss banks, Cayman Islands back to Indian economy.

China can go for WAR.

11-12-2008, 04:40 AM

China's Bazooka Beats Henry Paulson's Peashooter: William Pesek QUOTEChina's bazooka is proving to pack more firepower among economists. Yet will spending a fifth of gross domestic product to prop up growth work? Not necessarily. Asia should curb its enthusiasm about China's ability to shield the nation's 1.3 billion people from a global slump.
....

It's far from clear that China has the domestic wherewithal to keep growth as close to 10 percent as Communist Party bigwigs would like. Economists generally see 10 percent as what's needed to produce enough jobs to keep living standards rising and to maintain social stability.
....

External Influences
No one doubts China's financial resources. It has about $2 trillion of currency reserves to lavish on low-rent housing and roads, railways and airports, and tax deductions for purchases of fixed assets such as machinery. It has banks, even the publicly traded ones, at its disposal to plug any economic holes that suddenly appear.

Yet the external picture matters more. China relies heavily on exports to produce growth. Anyone who doubts that need only look at how quickly the government's focus has gone from inflation to deflation.

Data released yesterday show why. China reported the slowest export growth in four months in October, while inflation cooled to the slowest pace in 17 months.

``As the contribution of trade to China's growth dissipates, we expect further measures to be introduced aimed at stimulating consumption and investment in the domestic economy,'' says Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co. in Hong Kong.
...

Collision Course
The trouble is, such plans must be financed. That could prompt China to sell hundreds of billions of dollars of U.S. Treasury and agency securities, or at least slow its purchases. The result would be sharply higher U.S. rates.

``China's need for money will collide with the ramp-up of U.S. borrowing, expected to be between $1.5 trillion and $2 trillion because of the massive U.S. budget deficit,'' Tony Crescenzi, chief bond strategist at Miller Tabak & Co. in New York, wrote in a note to clients.

It raises questions about whether the U.S. can really borrow its way out of this crisis, John Maynard Keynes-style

...........

Bigger Bazooka
The emphasis on boosting growth with new roads, bridges and dams is questionable, too. Such projects didn't enliven growth as much as advertised in the 30 years since China's economic- modernization process began. What propelled growth to recent heights was trade, particularly China's succession into the World Trade Organization in 2001


This is what I am saying for few months.
China collapse may be very dramatic, may be like Argentina. China need US for its product, well US is borrowing like pampered bribe.

11-12-2008, 08:05 AM

QUOTEChina's Retail Sales Rise 22% as Crisis Fails to Damp Spending 
link
By Nipa Piboontanasawat
Nov. 12 (Bloomberg) -- China's retail sales grew at close to the fastest pace in nine years even as the global financial crisis and a property slump knocked confidence.

Sales rose 22 percent in October from a year earlier to 1.008 trillion yuan ($148 billion), the statistics bureau said today, after gaining 23.2 percent in September. That matched the median estimate of 16 economists surveyed by Bloomberg News.

Now this is fake news.

11-12-2008, 10:15 AM

â¢China's Iron Ore Imports May Stall for First Time in 11 Years, Group Says

**shamu** · (This post was last modified: 11-13-2008, 05:32 AM by shamu.)

Why do retailers post deep losses now, without waiting for holiday season to be over?

11-13-2008, 08:11 AM

QUOTE(shamu @ Nov 13 2008, 05:32 AM)Why do retailers post deep losses now, without waiting for holiday season to be over?
[right][snapback]90069[/snapback][/right]
They had bad X-mas- 2007. They are unable to recover during summer. Bush May check did little because of high gas price. As expected coming holiday season will be weakest since 1974, so stores are closing now and filing for chapter 11 to cover themselves. It will help companies to re-negotiate contracts with better deals. Some may recover. Donât forget after 9/11 Middle East, Europe and China heavily invested in US, which triggered housing boom and connected industries e.g furniture store, clothing, electronic etc. There was over expansion. Now they are closing very fast but I think within two years it may come back to middle path, but it depends on Obama policy.
It is a correction but very aggressive.
Just today it cost $18 less to fill my car gas tank. This money will go for eating out or for some pending shopping.
West coast will recover fast, we are already seeing.

11-13-2008, 08:31 AM

China Industrial-Output Growth Is Slowest in 7 Years QUOTENov. 13 (Bloomberg) -- China's industrial production grew at the slowest pace in seven years, adding to evidence that the world's fastest-growing major economy risks a deeper slowdown as exports cool.
.........

11-13-2008, 09:51 PM

China stimulus relies on motivating thrifty publicQUOTEThe package unveiled Sunday promises to inject money into the economy with extra spending over the next two years on airports, highways and other construction, tax cuts and aid to the poor. But it says the real goal is to channel money into shoppers' pockets and encourage them to spend, reducing China's reliance on exports and insulating it from the global downturn.

It is a goal that Beijing has pursued repeatedly over the past decade, with limited success. Analysts say consumer spending is more effective at producing economic activity than any government action. But efforts to raise consumption in China have struggled because many families still have little to spend and most save 20 percent or more of their incomes to pay for health care and retirement.
It is because majority of population is very poor. Lets see how they can keep these poor happy.

11-14-2008, 12:57 AM

QUOTEA look at economic developments around the worldebpageÂ
Thursday November 13, 1:21 pm ET
By The Associated PressÂ
A look at economic developments, activity in stock markets around the world Thursday

A look at economic developments and stock market activity around the world Thursday:
LONDON -- The pound fell to a six-and-a-half year low against the dollar and a record low against the euro amid mounting fears about the length and depth of the British recession and market talk that the Bank of England could cut interest rates to as low as 1 percent over the next few months. Meanwhile, BT Group, the country's largest phone company said would slash 6,000 more jobs by March on top of 4,000 already made. BT also said quarterly earnings rose 18 percent. The FTSE 100 index of leading British shares closed down 12.81 points at 4,169.21.

MOSCOW -- Russia's battered stock markets suffered another chaotic day of trading Thursday, as regulators shut the exchanges in response to falling share prices then reopened them after initial gains on European markets. The MICEX closed 7.6 percent down, at 598.4 points. The other main exchange, RTS, dropped 2.4 percent to 620 points.

BERLIN -- The German economy, Europe's biggest, tipped into recession in the third quarter as weakening exports fueled a bigger-than-expected fall in national output, government figures showed. Gross domestic product contracted by 0.5 percent in the July-September period, following a 0.4 percent fall in GDP in the second quarter, which was the first decline since late 2004. Meanwhile, industrial conglomerate Siemens AG reported a net loss of 2.4 billion euros ($3 billion) for its fiscal fourth quarter, weighed down by large one-time charges that included money set aside for costs related to a bribery investigation. The DAX finished 28.72 points higher at 4,649.52 despite confirmation that Europe's biggest economy is officially in recession.

PARIS -- The Organization for Economic Cooperation and Development said the world's developed economies, hard hit by the financial crisis, have already entered a recession that will last at least through the first half of 2009. Gross domestic product was likely to fall by 0.3 percent in 2009 for its 30 member countries, the OECD said. The U.S. economy would contract next year by 0.9 percent, Japan's by 0.1 percent and the euro area by 0.5 percent. Meanwhile, the International Energy Agency made new cuts to its global oil demand forecasts for this year and next as rich-world economies sink into recession and growth slows in the developing countries. The agency now expects global oil demand to average 86.2 million barrels a day this year, nearly flat compared to 2007, and 86.5 million barrels a day next year. The CAC-40 in France closed up 1.1 percent, or 35.5 points, to 3269.46.

TOKYO -- Japan's benchmark Nikkei 225 stock average fell 456.87 points, or 5.3 percent, to 8,238.64. Elsewhere, South Korea's main Kospi index fell 3.2 percent to close at 1,088.44 after earlier falling as much as 7.4 percent. So far this year, the index has declined 42.6 percent.

BEIJING -- Growth in China's industrial output slowed to 8.2 percent in October, down from 11.4 percent in September and the lowest in seven years, adding to signs an economic downturn is worsening as Beijing rushes to launch a 4 trillion yuan ($586 billion) stimulus package. The Shanghai Composite Index bucked lower Asian equities, jumping 3.7 percent to 1,927.61.

AMSTERDAM, Netherlands -- SNS Reaal NV, a Dutch financial services company will receive a 750 million euro ($934 million) lifeline from the government to shore up its capital position amid the financial crisis. SNS will be the third Dutch company to take government money in a month, following the larger ING Groep NV and Aegon NV. The Netherlands AEX index settled up by less than 1 percent at 249.96.

HONG KONG -- An investigation will be launched into the sale of financial products linked to collapsed U.S. investment bank Lehman Brothers after lawmakers voted overwhelmingly for a probe. Meanwhile, the head of the Carlyle Group, one of the world's largest private investment firms, said Asia has surpassed the U.S. to become the world's most attractive place for investment given its strong economic growth. In other news, Citic Pacific Ltd., the Hong Kong arm of a Chinese government investment company, said it has secured a $1.5 billion bailout from its parent company to cover losses from bad currency bets. Hong Kong's Hang Seng index dived 5.2 percent to 13,221.35.

MEXICO CITY -- Mexico's Congress approved a 3 trillion peso ($231 billion) spending portion in its 2009 budget Wednesday, a bid to jump-start an economy suffering from a global credit crunch and the U.S. economic slowdown. It is an increase of more than 13 percent over last year.

KUWAIT CITY -- Trading on Kuwait's hard-hit stock exchange was halted by court order on Thursday, a move cheered by many traders but criticized by the government and other investors who urged their privileged countrymen to stop acting like a "spoiled baby." The ruling will remain in effect until another court hearing on Monday.

CANBERRA, Australia -- Rewarding senior finance executives with big salaries for taking big risks was "dumb," Australia's prime minister said. Meanwhile, shareholders of St. George Bank Ltd. approved a 16 billion Australian dollar ($10 billion) takeover by bigger rival Westpac Banking Corp., creating the country's second-biggest bank by assets. Australia's benchmark index slid 5.9 percent to a four-year closing low of 3,697.3 as banks tumbled and lower commodity prices hit miners.

MACAU -- Struggling casino operator Las Vegas Sands Corp. will lay off as many as 11,000 workers after a cash crunch forced the company to halt construction on multibillion dollar projects in the Chinese gambling city.

NEW DELHI -- India, Thailand and five other South and Southeast Asian nations urged the G-20 to strengthen the International Monetary Fund, the World Bank and regional banks to help developing countries weather the global economic meltdown. Reluctance by international institutions to lend money to developing countries would make it difficult for some of them to manage their balance of payments positions, said Indian Prime Minister Manmohan Singh. Meanwhile, the wholesale price index, India's most-watched inflation measure, eased to 9 percent for the week ended Nov. 1, down from 10.7 percent for the prior week. Falling commodities prices helped cool India's inflation, which has been running near a 13-year high. Indian financial markets were closed for a national holiday.

GENEVA -- China has agreed to loosen controls on financial news providers in an out-of-court settlement of a dispute with the United State, the European Union and Canada. China, which has since 2006 required foreign news companies to funnel their data through the state's own agency, will set up an independent regulator next year to create a level playing field for financial information providers.

BRUSSELS, Belgium -- The European Union began talks with Libya about a cooperation pact, which could be concluded in 2009. More than 90 percent of Libya's oil exports go to Europe. The agreement would open up trade and increase economic and political cooperation. It would be similar to deals the EU has with other countries in North Africa and the Middle East.

SAO PAULO, Brazil -- Latin American stocks continued to fall after being battered a day earlier over fears that the region is being hit hard by the global economic slowdown. Brazil's Ibovespa index dropped 1.4 percent. Mexico's IPC index slipped less than 1 percent, while Argentina's Merval index fell 2.2 percent.

NEW YORK -- Asserting the global financial crisis is "not a failure of the free market," President George W. Bush called on the world leaders meeting this weekend to agree on a modest set of reforms aimed at preventing future collapses. Bush's main message to the leaders about to converge on Washington: Reforms won't help if they overreach by abandoning the free market and restricting trade.

11-14-2008, 01:48 AM

India loses $63 billion in six months

**shamu** · 11-14-2008, 10:04 AM

US will soon face second "Great Depression"

Mikhail Khazin
13 Nov 2008

Renowned economist Mikhail Khazin predicted the US financial crisis in 2000. He predicted 9/11 on 9/10. Now he says the current economic crisis will have no end. Obama is the sacrificial lamb, in his view, to be blamed for the great collapse. A recent interview:
....

11-14-2008, 09:22 PM

India's Rupee Drops in Week as Stocks Decline on Risk Aversion QUOTEThe rupee has declined 13.4 percent in the past six months, making it the third-worst performer among Asia's 10 most-active currencies, as the global financial crisis caused investors to sell local equities
.....

Funds based abroad sold a record $12.6 billion more Indian equities than they bought this year, data from the Securities and Exchange Board of India show, as the benchmark Bombay Stock Exchange's Sensitive Index slid almost 54 percent.

**acharya** · 11-17-2008, 07:45 AM

Stanford must cut general funds budget in âfinancial shock waveâ
QUOTEÂ âAll of these factors contribute to the tightest financial outlook we have seen in decades,â Hennessy wrote.

Other major private universities are feeling financial pain. Harvard University, in an email to students, staff and alumni, said âwe need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint.â

Harvard said it will assess all of its capital spending plans, including âthe phasing and developmentâ of its massive plan to expand its campus in Bostonâs Allston neighborhood, described by the school as a multibillion-dollar build-out.

eyoung@bizjournals.com / (415) 288-4969

11-17-2008, 09:26 AM

Japan's Economy Slides Into First Recession Since 2001; GDP Shrinks 0.4%

Poverty, Pension Fears Drive Japanese Seniors to Shoplift, Pick Pockets

**acharya** · 11-17-2008, 01:18 PM

Kotak Mahindra, Former Goldman Ally, Seeks Overseas Partners
---------
Credit-Crunch Villains Pass the Buck, Party On: Mark Gilbert
QUOTE``Hey, we warned you there would be times like this,'' said the hedge-fund manager. ``If you want years when we deliver 50 percent, 60 percent returns, you have to expect periods when we will lose 20 or 25 percent of your money. You won't see us lining up with our begging bowls at the government bailout window.'' 

The waiter coughed, proffering a slim leather folder containing the reckoning for the evening's entertainment.

``You are a taxpayer, I take it?'' asked the investment banker. The waiter nodded. ``In which case, we were rather hoping you would foot the bill.''

(Mark Gilbert is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Mark Gilbert in London at magilbert@bloomberg.net

**acharya** · 11-17-2008, 10:15 PM

QUOTEICICI, Bajaj Say India Needs to Reduce Rates, Taxes (Update1)

By Subramaniam Sharma and Cherian Thomas

Nov. 16 (Bloomberg) -- India needs to cut interest rates, lower taxes and draw up a stimulus plan to help shield the economy from a global slowdown, business leaders said.

Rates need to be cut ``by 200 to 300 basis points,'' K.V. Kamath, chief executive officer of ICICI Bank Ltd., the nation's second-biggest, told the World Economic Forum's India Economic Summit in New Delhi today. The government should also cut taxes and pump money into infrastructure projects, said Rahul Bajaj, chairman of Bajaj Auto Ltd., India's No. 2 motorcycle maker. A basis point is 0.01 percentage point.

Indian companies are struggling as the global credit crunch makes it harder for them to borrow and a looming world recession damps exports. Prime Minister Manmohan Singh told the Group of 20 nations meeting in Washington yesterday that India's pace of economic expansion may slow to between 7 percent and 7.5 percent this year, from an average of about 9 percent in the past four.

``Recession will hit the export performance of developing countries and the choking of credit, combined with elevated risk perception, will lead to lower capital flows and reduced levels of foreign direct investment,'' Singh said. ``The combined effect will be to slow down economic growth in developing countries.''

Finance Minister Palaniappan Chidambaram and central bank Governor Duvvuri Subbarao have been loosening fiscal and monetary policy to cope with a liquidity shortage that began in September as the global financial crisis unfolded, putting pressure on India's money and foreign-exchange markets.

Boosting Liquidity

The Reserve Bank of India yesterday announced more measures to boost cash in the financial system after cutting interest rates twice in less than a month to prop up growth.

The central bank has cut its benchmark lending rate to 7.5 percent from a seven-year high of 9 percent. It also pared the amount lenders must set aside as reserves to cover deposits by 3.5 percentage points in a month, freeing up as much as 1.4 trillion rupees ($29.5 billion) in cash to ease lending.

Anilkumar M. Naik, chairman of Larsen & Toubro Ltd., India's biggest engineering company, also called for lower borrowing costs to shore up the economy. ``Development will suffer'' on account of high interest rates that need to be reduced, he said in New Delhi today.

The company has slowed hiring, although it expects industries such as railway and power companies to take up some of the slack. Larsen & Toubro depends on orders to build plants for steel and automobile companies that are delaying or curtailing expansion plans.

Fiscal Stimulus

Bajaj, who wants key rates and the cash reserve ratio cut further, said India needed a fiscal stimulus plan along the lines of China's $586 billion program to bolster growth.

``Growth has to be stimulated by fiscal stimulus,'' Bajaj said. ``My concern is that the efficiency with which we implement these policies leaves something to be desired.''

India, which may not be able to match the China plan, should ensure the prime minister's five-year $500 billion infrastructure spending target is met, Bajaj said.

``The government should follow pro-growth policies,'' Bajaj told the WEF meeting today. ``The government should consider reductions in indirect taxes like excise duties on some products to increase demand.''

He called on the finance minister to help Indian business bring prices down.

ICICI's Kamath said inflation would continue to decline and come within a range of 4 percent to 5 percent in the next three to four months. The decline in crude oil prices would encourage this trend, allowing further cuts in interest rates, he said.

Inflation Slows

India's inflation rate fell the most in at least 18 years in the week to Nov. 1 to 8.98 percent, giving the central bank room to make further unscheduled interest-rate cuts. Inflation has fallen to the lowest level in five months as it dropped from a 16-year high of 12.91 percent in the week to Aug. 2.

Many state-run banks including ICICI's rival State Bank of India were persuaded by Finance Minister Chidambaram to cut lending rates for their best borrowers.

The central bank decided to extend the period for rupee loans to 270 days from 180 days to help exporters fighting the slowdown in demand, as part of yesterday's measures.

India's exports grew 15 percent in September, the slowest pace in 18 months, as the weakening global economy damped demand. Overseas shipments, which account for about 15 percent of the economy, rose 10.4 percent to $13.7 billion from a year earlier, after gaining 27 percent in August.

Rupee, Stocks Drop

The Indian rupee had the biggest weekly drop in a month as of Nov. 14 on concern a recession in the world's industrialized economies will increase risk aversion and erode demand for emerging-market assets.

The rupee has declined 13.4 percent in the past six months, making it the third-worst performer among Asia's 10 most-active currencies, as the global financial crisis caused investors to sell local equities.

The benchmark Bombay Stock Exchange Sensitive Index has dropped 54 percent this year as overseas investors have pulled out $12.7 billion from stocks this year as of Nov. 12, after buying a record $17.2 billion of equities in 2007.

To contact the reporters on this story: Subramaniam Sharma in New Delhi at ssharma@bloomberg.net; Cherian Thomas in New Delhi at cthomas1@bloomberg.net.
Last Updated: November 16, 2008 07:47 EST

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