Seriousness of World Economic Recession…

          The list depicted are the countries who are entering into economic recession due to the global crisis…Iceland is first hit…15 membered Euro countries announced on 15th officially with Germany and Italy are first to enter into recession…

Ukraine, Pakistan and Argentina are proving to be almost as vulnerable as Iceland. They borrowed money without real collateral to back those loans. And the industries responsible for making the payments are collapsing…

Emerging Market Opportunities?

Having just accepted aid from the IMF, Hungary barely avoided sliding into national bankruptcy. And only a $15.9 billion IMF rescue package – bolstered by billions more from the European Union and the World Bank - prevented it from happening.

Analysts at Morgan Stanley estimate that capital flows to emerging economies could fall to $550 billion in 2009 from around $750 billion in 2007 and 2008. Such a sharp drop would hit economies that rely heavily on foreign finance: more than 80 developing countries are likely to run current-account deficits of more than 5% of GDP this year.

Countries do go bankrupt. Iceland is not the first (and will not be the last). Russia was declared bankrupt in 1998, Argentina in 2001 and Germany has a history of going more than once…

The problem is national bankruptcy would probably lead to massive inflation. This is demonstrated by the central bank of Iceland, which increased its prime rate by six points to 18 percent last week. Venezuela, where inflation is also high, is now offering 20 percent to stimulate interest in its government bonds.

And Argentina - having seized some US$29 Billion in private pension funds – has bond offerings yielding upwards of 30%! It’s worth noting; however, that the last time bond yields were this big in Argentina was in the aftermath of an epic bond default in 2001.

In the coming months, you’ll see more and more countries offering these huge double-digit bond yields. Most of these bonds will be coming from emerging markets that are already in trouble due to stifled capital flow.

David Newsman, Market Analyst

That’s because these hitherto privately managed companies have suddenly (and dangerously) acquired a major new stockholder – the United States government.

“I’m from the government…and I’m here to help you.”

Understand that when we say “the government” we mean bureaucrats, public employees and political appointees, who for the most part couldn’t make it in the private sector. If you enjoy standing in line at the Department of Motor Vehicles, you’ll love this new fascist business model.

Americans are now being asked to pretend that these political appointees suddenly are endowed with more business acumen and wisdom than the managers of the businesses that they are “bailing out.”

The massive bailouts supposedly justified by the current economic crisis have made them experts. And with the billions in taxpayers’ cash come the strings, if not the chains.

But the real threat to private America enterprise, (aside from the stupidity of some of its own mangers), comes from unprincipled politicians in the U.S. Congress.

As I recently wrote: “The federal government’s plans to spend trillions propping up banks large and small, along with recent bailouts, as well as guarantees, to support the auto industry, business loans, money markets and bank lending, represents the most sweeping government intrusion into the nation’s business and financial markets since the Great Depression (1928-1942) – and perhaps ever in history.”

Political Power Play: One step closer to absolute power

There is every proof that the antics of the likes of Senator Chris (“Sweet Heart Mortgage Deals”) Dodd (D-CT) and Rep. Barney Frank (D-MA) seriously contributed to the housing mortgage collapse, as these worthies led the parade for abundant Freddie Mac and Fannie May backing for billions in questionable mortgages.

Now these same politicians are leading demands in Congress for micro-management and restrictions on the recipients of federal bailout funds. They want to control executive pay at banks, curb meeting expenses considered to be too luxurious, and who knows what else.

Granted, these modest demands are all for the protection of the taxpayer, but where does it end? When will private enterprises no longer be obligated to follow government mandates? At what point does the disastrously inefficient artifice of state yield control back to the market?

David Brooks put his finger squarely on the crux of the matter: “But the larger principle is over the nature of America’s political system. Is this country going to slide into progressive corporatism, a merger of corporate and federal power that will inevitably stifle competition, empower corporate and federal bureaucrats and protect entrenched interests? Or is the U.S. going to stick with its historic model: Helping workers weather the storms of a dynamic economy, but preserving the dynamism that is the core of the country’s success.”

BOB BAUMAN, Legal Counsel

G-20 opens – It’s time to revamp Financial Institutions not tightening regulations…

The decisions of G-20 are  opening markets futher, regulating and evaluating financial institutions, curbing salary packages of the CEOs, review the credibility of credit rating institutions and evaluating the global accounting standards etc…Is it not right time to renovate and revamp the gloabl financial institutions and systems to create a new economic world order…let’s think it over, innumerable solutions awaiting to seize the opportunity of recession…

International Labor Organisation predicting 210 million jobs could be lost next year,

it would further open the global economy to trade, and therefore greater growth and jobs.

The measures included regulating areas of the financial markets that exacerbated the crisis, improving transparency and accountability, evaluating global accounting standards and in-principle support for curbing the vast salary packages of the highest-paid financial executives. Prudently, the leaders agreed to review the credit ratings agencies and the accuracy of their assessments of the reliability of financial institutions.

“intensified international co-operation among regulators, and the strengthening of international standards”.

“regulation is first and foremost the responsibility of national regulators“

“We recognise these reforms will only be successful if grounded in a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems,”

How to Finance Future Highways ?

HW in WI

 To build and Maintain future Highways, the taxes are raised as following…90% from Fuel tax, 1% tire tax, 5% truck sale tax, 4% heavy vehicle use tax together form 10%…State and local fuel taxes together 35%, State and local highway revenues 45%, and the remaining 20% is from tolls and other State Highway use taxes…Property tax revenues from increased property values around highways can be used for construction of highways…Local governments support from property, sales taxes and general funds…Specialized taxes of local governments like local sales tax, special assessments, improvement district fees can help to support building of highways…fees on new development from new town houses near highway improvement provides good revenues…Greater use of direct user charges such as tolls and mileage based charges support well…LOT OF MONEY TO BUILD BEAUTIFUL HIGHWAYS, If insufficient other sources like WB loans and grants

Future train speeds by 700 km/hr connects cities between 1600 kms

 It is the future transportation..What aeroplanes did in 20th century, the maglev (magnetic levitation) trains will do in 21st century..reach speeds upto 500 to 700 km/hr, which is made possible due to repulsive magents underside the train and the side walls and airfloat the train with constantly alternating current supply along the side wall or guideway that pull and push the train..Japan and Germany are already running these trains from 2004…Transrapid International are developing an electromagnetic suspension system (EMI)..the speed can take you from Paris to Rome in just 2 hrs…Switzerland is trying for a technology that can reach the speed upto 700 km/hr..But the cost of producing guideway is quite high, costs $10 million to $ 30 million per mile…

Earth’s image by Chandrayan 1 – wait for more images from 15th Nov

Earth's image

INDIA WON BORDER – GAVASKAR TROPHY AGAINST AUSTRALIA RANKS 2ND IN THE WORLD

Cycle of Credit expansion and Credit bubble burst: How to Profit from Stock market Schizophrenia

Lunacy dominates world stock markets, as a tug of war ensues between fear and greed. For two wildly fluctuating months, stock and real estate markets bounced down the stairway that easy credit built. Then on Tuesday, greed was king for a day. The market exploded into one of its biggest rallies in half a century, with the Dow Jones industrial average closing up 10.9%. Does the rally signal a bottom in this schizophrenic market? Well, unfortunately there’s no way to know except in hindsight.

Sowing the Wind & Reaping the Whirlwind We don’t need hindsight to know that the current meltdown was inevitable. It is the consequence of events that began a century ago with the birth of the engine of 20th century boom and bust: the Federal Reserve. Nor were the effects of the new central bank immediately apparent. The effects of credit expansion didn’t show up the next day or the next month. It took more than a decade for the credit creation to result in the Roaring Twenties and the Crash of 1929. Again, the famous October 29 market selloff didn’t cause an economic catastrophe the next day…or the day after that, or even the year after that. It took three years for the Great Depression to truly grip the nation, triggering more government action - the abandonment of the gold standard and massive federal bailouts. Again, the results weren’t instantaneous. It took decades to inflate another boom, and reach the monetary crises of the 1970s. Economic theory can predict the consequences of credit expansion, but only in hindsight can we see the timing as the consequences unfold. Today’s economic storms are the consequences of seeds first planted a century ago. And once again – as the credit bubble collapses – new seeds are being sown. The official budget deficit for the fiscal year that ended September 30, 2008, was $455 billion, but most private analysts say the current fiscal year will end with a gap of one trillion dollars. How are the presidential contenders planning to deal with rising deficits? Both John McCain and Barak Obama promise tax cuts and increases in government spending. It won’t show up tomorrow, but vast government deficits ahead guarantee that price inflation will demolish the purchasing power of the dollars that fearful investors are so eager to lend to the U.S. government. When will the market bottom, and when will price inflation roar? We won’t know that except in hindsight, but both will happen. Buy When Blood is Running in the Streets But how deep should the blood be? Only value investing can provide the clue. As markets are gripped by fear or euphoria – plunging one day and soaring the next – it’s clear that very few are following the advice of the most successful long-term investors of the past century. Money masters like John Templeton, Benjamin Graham, Peter Lynch and Warren Buffett piled up enormous profits throughout one of the most tumultuous centuries in history, and their advice is there for all to follow. Benjamin Graham, said it clearly in The Intelligent Investor, “Don’t get carried away by enthusiasm. Don’t get carried away by despondency. …Know in advance that you are going to have to live through bear markets.” Let me re-tell Graham’s parable from his book, The Intelligent Investor. Imagine owning shares of a small business that cost $1,000, and every day your partner named Mr. Market knocks at your door and announces what he thinks those shares are worth that day. He offers either to buy your shares or sell you more at that price. Even though the business is trudging along without significant change, each day his opinion is wildly different. Frequently Mr. Market’s enthusiasm or his fear seems completely divorced from anything happening in the business and his valuation seems ridiculous. One day he offers to buy or sell you shares for $2,000 each, and a week later he makes the same offer for $500. Should you let Mr. Market’s wild enthusiasm or shaking fear determine your view of the intrinsic value of the business? That’s obviously irrational. As Graham puts it: The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored. …He would not be far wrong if this motto read more simply: “Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.” Since we can never know in advance whether shares will be higher or lower tomorrow, the only rule to follow is to accumulate them when they are significantly underpriced by value analysis. Mr. Market is definitely letting his fear override his reason, and is making us offers that become increasingly difficult to refuse. As was the case after 1929, there are great opportunities being born out of the chaos. Don’t let Mr. Market’s trembling hands cause you to lose sight of the outstanding values he’s offering. A sound and lasting investment strategy requires searching for assets that have true value and will retain it – those include all types of commodities that will rise in price as money falls in value, currencies that are not being debased, and ownership of profit-making companies that have not fallen into the trap of trying to leverage profits through debt.  by John Pugsley, Chairman and Co-Founder of The Sovereign Society

US vs Iraq – A war waged with borrowings…costs $4.5 trillion by 2017

 

Joseph E. Stiglitz, the nobel prize winner economist in his latest book estimated along with harvard prof. Linda J. Bilmes that the government has borrowed $1 trillion — much of it from overseas lenders — to finance the war. By 2017, he said, the country will have added $2 trillion to the national debt to cover Iraq war expenses. That means additional interest payments for taxpayers…

The war which failed to find Weapons of Mass destruction as claimed by Mr. President, sapping the strength of US economy…taxpayers has already spent $607 billion to pay for the war through next september..The Joint Economic committee of both the houses of Congress estimated that the war would cost Americans between $3.5 to $4.5 trillion ny 2017..it includes disability aid and health care to war veterans..Iraq war raised oil price by $10 a barrel costing Americans $250 million a day…lose-lose war know??? The moral is Never fight a war on wrong claims…It’s not child’s play…Surprisingly India never went out and waged war against any country in its 5000 years of civilization…I recommend you all to read the book