World economy talk

[Monseratto]

[ame=http://www.youtube.com/watch?v=6erF9byxMLI]Peter Schiff December 8[/ame]

[uls]

Broken global economy indicator:

Ocean shipping:
Baltic Dry Index

http://www.bloomberg.com/apps/quote?...=IND&x=15&y=11

(Wiki: The Baltic Dry Index is a daily average of prices to ship raw materials. It represents the cost paid by an end user to have a shipping company transport raw materials across seas on the Baltic Exchange, the global marketplace for brokering shipping contracts.)

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letters of credit:

Lack of trade finance is having a disastrous effect on shipping. In a report issued on Friday, Maersk Broker, a subsidiary of the Danish shipping group, blamed logjams in the banking system for the slump in the dry bulk cargo market: “Banks’ refusal to offer letters of credit has resulted in very few fresh cargoes reaching the market, which is adding to the owners’ woes.”

A collapse in the trade of raw materials such as grain and iron ore, after years of frantic activity, is causing havoc. The Baltic Exchange Dry Index, which measures the price of voyages and the cost of chartering vessels, has plummeted. Rates for the largest transporters, known as Capesize, peaked in May at $230,000 a day. It is estimated that the daily cost of running the ships, including depreciation, is about $15,000 but at the end of last week, rates had fallen to $5,982 a day.

No credit, no shipping

cause and effect

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TRAINS:

U.S. Rail Carload Traffic Down Sharply in November
http://www.aar.org/Pressroom/PressRe...wnSharply.aspx

U.S. railroads originated 1,189,472 carloads of freight in November 2008, down 133,504 carloads (10.1 percent) from November 2007. U.S. railroads also originated 851,517 intermodal units in November 2008, a decrease of 72,978 trailers and containers (7.9 percent) from November 2007

If the manufacturers don't make stuff

ships don't have stuff to ship

No stuff to put on the trains

[uls]

China to increase supply of money to boost economy
http://finance.yahoo.com/news/China-...-13825807.html

BEIJING (AP) -- China said it plans to increase the amount of money circulating in its economy next year in a new effort to spur consumer spending and shield the country from a global downturn.

the game of Beggar Thy Neighbor is beginning

Beggar Thy Neighbor : http://financial-dictionary.thefreed...r-thy-neighbor

The US wants to devalue the dollar

China wants to devalue the renminbi

[tidus1203]

Read my signature and DO IT! The world governments is already trying monetary easing to no avail the next step is quantitative easing and that my friends is the deliberate debasement of your currency. In other words they will try to lower the value of the money by increasing the supply thus to monetize or increase the nominal value but in essence decreasing the REAL VALUE which is more important. I would rather have P100 that can buy a burger than P150 but it can't even buy a burger. Its the PURCHASING POWER that matters not the NUMBER PRINTED.

[uls]

The US wants to devalue the dollar to boost exports and/or to make consumers spend (punishing savers, making saving money not worth it)

Japan also wants a weak yen. Japan (BOJ) will sell Yen and buy dollars.

The UK wants the value of the Pound to drop.

Now China...

the direction they are going is scary

This just screams GOLD!

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China to Raise Money Supply 17% in 2009, Boost Loans
http://www.bloomberg.com/apps/news?p...Vmk&refer=home

Dec. 14 (Bloomberg) -- China aims to increase its money supply 17 percent in 2009 and encourage lending to boost domestic consumption and buoy growth in the world’s fourth-largest economy.

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UK "stage 2"

Dec. 12 (Bloomberg) -- Prime Minister Gordon Brown said the U.K. government is working on a “second stage” of a rescue program for banks that will prompt lenders to channel more cash to consumers and businesses.

He made the comment after meeting European Union leaders in Brussels.

maybe this is the stage when they FORCE the banks to lend

hehe

[mikey177]

I'm new to the concept of using gold for trade.

Where and how may an individual buy gold in the Philippines?

If all the doom and gloom scenarios do come true, how does a person go about using his gold reserves for buying necessities such as food and fuel?

[Monseratto]

Fed mulls interest rate cut, maybe to all-time low

WASHINGTON – With the country spiraling deeper into recession, the Federal Reserve is ready to slash its key interest rate — perhaps to an all-time low_ in hopes of cushioning some of the economic fallout felt by many struggling Americans.

To battle the worst financial crisis since the 1930s, Fed Chairman Ben Bernanke and his colleagues already have ratcheted down their main lever for influencing the economy — the federal funds rate — to 1 percent, a level seen only once before in the last half-century.

The Fed opens a two-day meeting Monday to assess to economy and decide its next move on rates. Another reduction to the funds rate, the interest banks charge each other on overnight loans, is all but certain to be announced Tuesday.

Many economists predict the Fed will cut its rate in half — to just 0.50 percent. A few think the Fed could opt for an even more forceful action — lowering rates by a whopping three-quarters percentage point or more. If that larger cut occurs, it would be the lowest on records that track the monthly average of the targeted funds rate going back to 1954.

Even an aggressive rate reduction won't turn the economy around, analysts said.

Clobbered by the financial crisis, worried banks have hoarded their cash and been extremely reluctant to lend money to customers. Fearful consumers, watching jobs vanish and their investments tank, have sharply cut back their spending, including big-ticket purchases like homes and cars that typically involve financing.

The negative forces have fed off each other, creating a vicious cycle that Bernanke and Treasury Secretary Henry Paulson have been desperately trying to break.

To unlock lending and get financial markets to operate more normally, the U.S. has resorted to a string of radical actions, including a $700 billion financial bailout where the government is making cash injections in banks in return for partial ownership stakes.

In terms of rate cuts, the Fed is getting ever closer to running out of ammunition.

http://news.yahoo.com/s/ap/20081214/...interest_rates

[tidus1203]

I'm new to the concept of using gold for trade.

Where and how may an individual buy gold in the Philippines?

If all the doom and gloom scenarios do come true, how does a person go about using his gold reserves for buying necessities such as food and fuel?

I am not sure how we can buy here, but as for me I buy abroad. Pwede through the banks they do sell bullion pero may mark up and they control how much they are going to sell to you. Try also www.kitco.com or www.monex.com those guys sell gold coins as well...

I don't know about the doom and gloom. But I am not buying gold really because I forsee that there will be chaos but I am merely buying it to retain my wealth. The US Dollar is a bad place to store wealth. Gold has a better track record.

[tidus1203]

NEW YORK - Americans may be cutting back on holiday shopping, but they are still buying video games — to the tune of nearly $3 billion in November, according to data from market researcher NPD Group.

U.S. retail sales of video game hardware, software and accessories jumped 10 percent last month from the year-ago period to $2.91 billion, boosted by strong sales of Nintendo Co.'s Wii, Microsoft Corp.'s Xbox 360 and the alien shooter game "Gears of War 2."

The availability of a broad range of games is one reason for the industry's ongoing solid performance, said NPD analyst Anita Frazier. Games also provide a relatively cheap form of stay-at-home entertainment.

The industry, Frazier said, is still on track to rack up $22 billion in U.S. sales this year.

November and December are crucial months for video game companies. Many of them make the bulk of their money during the holidays.

This week, Electronic Arts Inc., the publisher of the popular "Madden" football game series, warned that sales have been weak in North America and Europe. Without giving specific guidance, EA said its fiscal 2009 results will fall short of the forecast it gave in October. But EA's warning did not seem to signal a broader downturn for the industry.

Hardware sales, which include gaming consoles like the Wii as well as handheld systems like Sony Corp.'s PSP, jumped 10 percent to $1.21 billion.

Nintendo enjoyed perhaps the greatest success in November, with 2 million Wiis sold — the most yet in a month, according to Denise Kaigler, vice president of corporate affairs. The Japanese company boosted production of the easy-to-master gaming system in July to keep up with seemingly insatiable demand. Nonetheless, on Thursday afternoon, both Best Buy's and Wal-Mart's Web sites were out of stock.

Microsoft's Xbox 360, meanwhile, sold 836,000 units. Spokesman David Dennis said the company's games business had "great momentum" heading into the final stretch of the holiday season. The PlayStation 3, from Sony, sold 378,000 units.

Sales of video game software grew 11 percent to $1.31 billion. Besides "Gears of War 2," which sold 1.6 million copies, "Call of Duty: World at War" by Activision Blizzard Inc. and Nintendo's "Wii Play" and "Wii Fit" also did well. Electronic Arts had just one title, the zombie horror game "Left 4 Dead," in the top 10.- AP

http://www.gmanews.tv/story/139371/N...near-3-billion

If there is one industry that is doing very well in this environment, its the industry that is also close to my heart (other than the car and finance industry) and that is VIDEO GAMES!!!Good place to relieve some stress.

[uls]

haha

well, many Americans lost their jobs

what are they gonna do at home all day?

play video games

hehe

(that is if they havent lost their homes)

[emanzano]

I'm new to the concept of using gold for trade.

Where and how may an individual buy gold in the Philippines?

If all the doom and gloom scenarios do come true, how does a person go about using his gold reserves for buying necessities such as food and fuel?

This really isnt applicable to the individual. The only way i see actual gold being used for trade would be in a holocaust scenario. Have you seen the movie Schindler's List? During WW2, the Jews used pots & pans (literally) as their "cash."

Before the 70's, countries used gold as a standard to "back up" their currencies. Countries have since stopped doing this since it was very inefficient, i.e., gold is expensive to mine and you have to build gargantuan vaults to house them in (again, incredibly expensive, like Fort Knox). Also, i believe there is not enough gold to back up all of the existing currencies circulating in the world today. Hence, they now back it up with a "promise."

In my opinion, if you had spare cash right now, it would be wise to invest it in tangible assets, like LAND. Of course, this all depends on the valuation (and valuation applies to ALL assets, whether tangible or intangible). The only problem i see with this is that it takes time to unload land, so you might have your money tied up for a while.

If you have a good appetite for risk, and IF you have an adequate understanding of the capital markets, then equities (yup, STOCKS) would be a good investment too at this point. But maybe just limit this to 20% of your investment money.

Now if you just want to preserve your capital, then i still think CASH is king. Problem lang is where do you put it? If you keep it under your mattress and your house burns down, then you are screwed. So land is looking good at this point...

[uls]

the top 10% wealthiest people feeds off the bottom 90%

the top 10% rely on the consumprion of the bottom 90%

The top 10% own the corporations that produce things for the bottom 90% to consume,

and they own all the banks...

They own all the LOANS directed at the bottom 90%...

if a large number of the bottom 90% can’t pay their bills,

if a large number of the bottom 90% cut down consumption,

The top 10% has a problem.

This is why we are witnessing all this crazy stuff

the top 10% are moving heaven and earth...

they have a PROBLEM

[uls]

WSJ:
U.S. Aims to Rein In Credit-Card Rates

WASHINGTON -- U.S. federal regulators are poised to adopt tough restrictions to make it harder for credit-card companies to raise interest rates on millions of existing customers, reversing decades of light regulation of the industry.

The new standards, expected to be issued Thursday, would represent the biggest changes to the industry in a generation and will apply to more than 16,000 companies, including major credit-card issuers Citigroup Inc., Bank of America Corp., J.P. Morgan Chase & Co. and Capital One Financial Corp.

Goal: to protect consumers


EFFECT:

FT:

The US banking industry could lose billions of dollars in annual interest payments, according to a study that warns of credit card lenders raising prices after a regulatory overhaul.

These rules would impose strict disclosure standards on credit card lenders and prohibit common pricing practices that have drawn fire for exposing borrowers to unforeseen costs.

This could prompt credit card lenders to raise prices and tighten lending standards, reducing the availability of credit for US consumers.

UNINTENDED CONSEQUENCES

[tidus1203]

Hay nako all the efforts are directed to interfere with the markets to make people spend again. Why won't they let the consumers rest? I know its bad for the economy in the short term but in the long run a consumer with a good balance sheet is healthy for the economy.

[uls]

The US is such a great country

They have social safety nets

like people who lose their jobs...

they can get unemployment benefits from the govt...

Oh, wait...

States’ Funds for Jobless Are Drying Up
http://www.nytimes.com/2008/12/15/us...pagewanted=all

With unemployment claims reaching their highest levels in decades, states are running out of money to pay benefits, and some are turning to the federal government for loans or increasing taxes on businesses to make the payments.

Thirty states are at risk of having the funds that pay out unemployment benefits become insolvent over the next few months, according to the National Association of State Workforce Agencies. Funds in two states, Indiana and Michigan, have already dried up, and both states are borrowing from the federal government to make payments to the unemployed.

Something's broken

[Galactus]

Hay naku, the self-proclaimed "experts" are again preaching their non-sensical views about the economy. My plea to the other forumers would be to discern carefully the posts in this thread. Ask for credentials, if possible. There are some impressionable minds out there, you might start out on the wrong foot and have a wrong notion about the field and science of economics.

Below is Cielito Habito's column from the Inquirer. Look up his creds from the net, and choose who you would rather believe. (It's a no-brainer actually).

http://business.inquirer.net/money/c...-out-of-crisis

No Free Lunch
Spending our way out of crisis


By Cielito Habito
Philippine Daily Inquirer
First Posted 23:40:00 12/14/2008
Filed Under: world financial crisis


AS THE WORLD'S major economies sink even deeper into recession, pulling down with them practically all other economies big and small alike, hardly anyone disagrees that governments must take an active role in trying to arrest the decline.

Not even the most rabid free-enterprise advocates would argue that laissez faire or "hands off" is the way for governments to deal with the economy at this time.

Governments must act one way or another to prevent a free fall, no question about that. The real question is on what exactly they must do, and how they must do it. In influencing the aggregate behavior of the economy, governments have two major instruments at their disposal, namely fiscal policy and monetary policy. Right now, it is fiscal policy that receives the brighter limelight, as easing up on money supplies--which is what monetary policy is all about--has had little impact so far in the major economies.

Spending and taxing
Fiscal policy is exercised through the combination of how government manages its spending and how it raises revenues to fund them. The principles involved are quite simple: Government influences demand for the economy's goods and services by being a direct buyer itself. It also influences everybody else's spending (and, therefore, demand for the same goods and services) by collecting either more or less taxes, thereby leaving more or less of their incomes available for spending. Everything else equal, the more government spends, the stronger the demand for the products of the economy, and the more jobs and incomes are created. And everything else equal, the more the government taxes its people, the less disposable incomes they would have and the less their spending (and, therefore, demand for goods and services) would be. Therefore, the formula for making economy grow, and recover from a slowdown such as we're seeing today, is for the government to spend more, or tax less. Doing both, i.e., spending more while at the same time taxing people less would be most potent. The obvious problem with this is that it leads government into deficit, forcing it to borrow to finance the higher spending. Depending on how much debt the government already has, the tax cutting option may not be such a good idea.

Multiplier process
The key to the impact of government spending is the way a one-off expenditure by the government raises total production and incomes by several times the amount of the original expenditure, or the so-called multiplier effect. If the government spends P100 million to build a new road, that amount turns into P100 million in total incomes received by contractors, engineers, equipment suppliers, construction workers and others. But that's not the end of it. Those various people now have money to spend or save as they choose. Ignoring taxes, if people on average save P20 out of every additional P100 income they receive, then the original P100 million of government spending turns into a new round of P80 million in spending on various things such as food, clothing, appliances, etc. that those construction people normally spend their incomes on. And since someone's spending is someone else's income, that second-round P80 million in incomes turns into a third round of spending amounting to P64 million, which becomes yet another round of incomes spurring yet another round of spending, and so on ad infinitum. In the end, the P100 million originally spent by the government creates five times as much (P500 million) total production and incomes. Mathematically, if the saving rate is 80 percent or 0.8, the multiplier works out to be one divided by that, or 5.

Spending effectively
The above implies that the lower the economy's saving rate, the stronger the multiplier effect of government spending. If people save only 10 percent of their additional incomes, the multiplier would be twice as much, or 10--the P100 million government spending above would generate P1 billion of new incomes! This is not to argue that people should save less, as savings also fuel the market for capital that is the lifeblood of production activities in the economy. But that is the subject of another article.

How can government maximize the efficacy of its spending? First off, it must be spent on things most beneficial to society--more bridges as against new cars for government officials, more hospitals as against fertilizer funds that don't get spent for fertilizers after all. Second, it must be spent on domestically produced goods and services to maximize the multiplier effect. If the money was spent to buy a new presidential jet from Boeing, it's Americans' incomes that would be multiplied, not that of Filipinos. Third, it is best spent on activities with widespread linkages to the rest of the domestic economy. It's for this reason that mass housing is always identified as a good way to spend government money, as the funds would permeate much more widely and more quickly across the various industries and sectors within the Philippines.

Governments all over are now being called upon to provide the needed "fiscal stimulus" to arrest a looming downward economic spiral. Additionally, they are called upon to do it in a coordinated way. If done properly, the multiplier effect from all of this should eventually lift economies back up on their feet again. How long will it take? Don't hold your breath. Right now, no one is betting on a better 2009.

Comments are welcome at chabito*ateneo.edu.

[tidus1203]

Of course they have a printing press as well where they can print the money just in case the reserves dry up. But then again those retirees and jobless benefactors will have to scratch their head on what things they could buy if the printing press is used

[tidus1203]

http://www.reuters.com/article/newsO...4BE02720081215

Hehehe the signs of the times indeed. Now more people both rich and poor are actually pawning their possessions just to make ends meet. Yan kasi, over consumption, over borrowing. I always wonder why these people don't even have some kind of savings as a safety net. Nasanay na sila kasi sa notion na DEBT is good and should be embraced whereas dapat talaga DEBT should be shunned as much as possible. Don't take me wrong debt can be good for example to get into business or other money making activities but to go into debt to buy a TV for me its just plain wrong...

[uls]

RE:

No Free Lunch
Spending our way out of crisis


By Cielito Habito
Philippine Daily Inquirer
First Posted 23:40:00 12/14/2008
Filed Under: world financial crisis

Well, we will be witness to Obama's estimated $1,000,000,000,000 stimulus

China's $586B stimulus

Europe's stimulus

Japan's stimulus

and maybe even our own stimulus

Let's see how all that will play out

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global scale fiat money tsunami approaching

[tidus1203]

What still bothers me until now and what the Keynesians (Bernanke and the pols) keep on ducking is this very simple question. "WHERE IS THE MONEY COMING FROM?".