World economy talk

[tidus1203]

Given the speed at which the federal government is throwing money at the financial crisis, the average taxpayer, never mind member of Congress, might not be faulted for losing track.

CNBC, however, has been paying very close attention and keeping a running tally of actual spending as well as the commitments involved. And there's been quite a jump since we last tabulated things two weeks ago.
Try $7.36 trillion dollars. That's more than double what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources.

Not only is it an astronomical amount of money, it's a complicated cocktail of budgeted dollars, actual spending, guarantees, loans, swaps and other market mechanisms by the Federal Reserve, the Treasury and other offices of government taken over roughly the last year, based on government data and news releases. Strictly speaking, not every cent is a direct result of what's called the financial crisis, but they're all arguably related to it.
The bulk of the sum falls under the Federal Reserve's umbrella, while another good chunk ($700 billion) is the under the Troubled Asset Relief Program (TARP) as defined under the Emergency Economic Stabilization Act, signed into law in early October.

The total figure is a combination of what's been committed (where it is defined) and what has actually been spent or lent (where a given program has started. )

So, for example, we counted the full $800 billion committed Tuesday in the form of measures directed at supporting consumer loan and mortgage-backed securities, even though none has yet been allocated. We counted the full TARP, even though only $320 billion has been spoken for.
But we're using specific numbers where available. Some $900 billion, for instance, has been allocated to the Term Auction Credit Facility, known as TAF. Another $1.8 trillion has been set aside for the commercial paper funding facility.
Individual firms such as Bear Stearns, AIG and Citigroup, to name a few, have also received billions of dollars in government aid, in some cases through a variety of means.

http://www.cnbc.com/id/27719011


Now this thing is actually twice more costly than the greatest war in history World War II and that is already inflation adjusted. The printing presses are running at Mach 3 speeds faster than the speed of sound churning money And people say I am too pessimistic, maybe the other are too optimistic. In just a span of a year, the US has effectively doubled its deficit.

[uls]

hey Tidus, i'm even more pessimistic than you

there's gonna be global commodities price inflation in 2010.

maybe even earlier

[tidus1203]

I am not sure about the timing but I do agree with you that INFLATION rather than DEFLATION will be the problem in the future as I have expressed over and over again due to the excess increase in money supply that is transpiring as we speak.

[uls]

Right now, there's still deleveraging

Selling off of stocks and commodities to raise cash

but as trillions of dollars flood into the economy, things will change.

The US government, in trying to revive consumption, will increase money supply like never before in history

this massive dilution of the USD will end the status of the USD as the world's reserve currency

you cannot create and spend trillions of dollars without consequences

[tidus1203]

[ame="http://www.youtube.com/watch?v=Hxx6gbnV7-0"]YouTube - Jollibee Apat Na Sikat Tipid Meals with Aga![/ame]

You want inflation? Check this out! MMMMmmm... Chickenjoy for P39! I hope someone makes a time traveling machine so I can bring my current money in the past and retire

[uls]

hahaha

----

Just stumbled upon this from Standard Chartered

…demand for rice will increase as the global recession forces lower-income households to eat more rice in place of more expensive protein, and this could squeeze prices higher. This is supported by USDA data, which shows rice demand growing by 5mt this season, much higher than the 4mt increase in supply.

Price of rice hasnt been falling much unlike other commodities

The trend in CBOT rice prices since June is notable. The market staged a V-shaped rally between August and September, as other soft commodity prices plummeted. In fact, RR futures dropped only 5% q/q in Q3-08, at the height of the commodity downturn, even as soft commodities (measured by the DJ Agricultural index) fell over 35% q/q.

we could see another repeat of early 2008

There are increasing signs that the credit crunch could affect agricultural supplies next season (2009/10), with milling capacity, pre-season financing and poor profit margins likely to affect planting intentions in Asia, particularly for smaller holdings and independent farmers. Should supply drop without an accompanying fall in demand, the effect would be bullish for prices over the next crop cycle.

[tidus1203]

By the way today is the so-called "Black Friday" in the US. The Friday after Thanksgiving where retailers give out great deals. The interesting bit is the US consumer capable of still spending? Or will the retailers have to sell at fire sale prices just to get people to spend? Abangan!

[uls]

will the retailers end up in black territory on Black Friday?

or will it be Red Friday?

hehe

they can give big discounts, but they will sacrifice their bottom line

but if they don't, they lose sales

either way, the retailers are screwed

---

http://www.nytimes.com/2008/11/28/bu...orbusters.html

The Toys “R” Us chain is planning the deepest discounts in its history on Friday, with 50 percent more doorbusters than last year. Other retailers are promising that their deals will be even more striking than the sales they have already unveiled — with Wal-Mart, for instance, promising large flat-panel televisions for less than $400.

Such bargains are likely to set the tone for the shopping season to come.

“There’s no reason to suspect this will end,” said Dan de Grandpre, editor in chief of Dealnews.com, which has been tracking Black Friday deals for about a decade. “This kind of heavy discounting will continue until we see some retailers start to fail, until they start to go out of business.”

Indeed, the intense competition could erode profits at many chains. Some retailing analysts even fear it could condition consumers to shop only when merchandise is deeply discounted.

[tidus1203]

I think they will lower their prices just to increase traffic, its good publicity you know! So if you're going for a red might as well go for it with style Sadly Circuit City won't be joining them as they are in bankruptcy protection I doubt if they can lower prices to low when they are trying to restructure... But as a consumer (at least those who have been saving) there are a lot of killers that can be have. $500 LCD TV's wow!

[uls]

it's a good thing Citibank was saved (for now)

otherwise, we would have to call it Circuit Citibank

[Monseratto]

Peter Schiff sees More Pain Ahead


[ame=http://www.youtube.com/watch?v=jmFvnAqweyI]Schiff has Last Laugh 11/24/2008[/ame]

[tidus1203]

Hehehehe the difference was those other experts that were laughing at Schiff were taught Keynesian economics (fraudulent economics ). Peter Schiff learned the Austrian way of economics (honest economics). I hope our schools teach Asutrian economics rather than Keynesian, but I doubt that will happen

[uls]

unfortunately, economic policy is based on Keynesian economics.

Politicians listen to their advisors who follow Keynesian theory.

We are witnessing Keynesian theory at work...

Zero interest rates (ZIRP) and quantitative easing.

[Galactus]

Hehehehe the difference was those other experts that were laughing at Schiff were taught Keynesian economics (fraudulent economics ). Peter Schiff learned the Austrian way of economics (honest economics). I hope our schools teach Asutrian economics rather than Keynesian, but I doubt that will happen

^^^ Comments like these never fail me to crack me up! :lol:

Crackpot economics may soon be known as ulsian or tidusian economics, hehehe

Re: Peter Schiff, his Eurocapital fund is down 50% and early this year, AFAIK, he predicted that oil will peak at 200/barrel, and I think he's still stubbornly holding on to that view. So much for Nostradamus.

[uls]

yep they better follow ulsian economics or it's the end of the world

[tidus1203]

Makes me shiver what Galactusian economics will be like?? Bailouts left and right and dole outs to the masses

[tidus1203]

Re: Peter Schiff, his Eurocapital fund is down 50% and early this year, AFAIK, he predicted that oil will peak at 200/barrel, and I think he's still stubbornly holding on to that view. So much for Nostradamus.

And so am I that is though until this deleveraging is over. Oil will never go up as long as there is delevraging. I am sure those other guys are also down since they are such stock bulls. As long as you are holding assets that are not cash you are down.

[tidus1203]

unfortunately, economic policy is based on Keynesian economics.

Politicians listen to their advisors who follow Keynesian theory.

We are witnessing Keynesian theory at work...

Zero interest rates (ZIRP) and quantitative easing.

Keynesians believe in SPEND SPEND SPEND, Lets get into debt so we can revive the economy.

The Austrians believed in sound money, and prosperity through balance of trade. Its not as fun as Keynesian, but its better!

[Monseratto]

Next Mortgage Victims: Shopping Malls

Meltdown far from over, new mortgage crisis looms

WASHINGTON – Black Friday's retail shoppers hunting for holiday bargains won't be enough to stave off what's likely to become the next economic crisis. Malls from Michigan to Georgia are entering foreclosure, commercial victims of the same events poisoning the housing market.

Hotels in Tucson, Ariz., and Hilton Head, S.C., also are about to default on their mortgages.

That pace is expected to quicken. The number of late payments and defaults will double, if not triple, by the end of next year, according to analysts from Fitch Ratings Ltd., which evaluates companies' credit.

"We're probably in the first inning of the commercial mortgage problem," said Scott Tross, a real estate lawyer with Herrick Feinstein in New Jersey.

That's bad news for more than just property owners. When businesses go dark, employees lose jobs. Towns lose tax revenue. School budgets and social services feel the pinch.

Companies have survived plenty of downturns, but economists see this one playing out like never before. In the past, when businesses hit rough patches, owners negotiated with banks or refinanced their loans.

But many banks no longer hold the loans they made. Over the past decade, banks have increasingly bundled mortgages and sold them to investors. Pension funds, insurance companies, and hedge funds bought the seemingly safe securities and are now bracing for losses that could ripple through the financial system.

Unlike home mortgages, businesses don't pay their loans over 30 years. Commercial mortgages are usually written for five, seven or 10 years with big payments due at the end. About $20 billion will be due next year, covering everything from office and condo complexes to hotels and malls.

The retail outlook is particularly bad. Circuit City and Linens 'n Things have sought bankruptcy protection. Home Depot, Sears, Ann Taylor and Foot Locker are closing stores.

http://news.yahoo.com/s/ap/20081128/...kYlae6BEKyBhIF

[tidus1203]

Looks like Peter's prediction is just like a storybook turning page per page. So what next after that? Credit card meltdown?