World economy talk

[uls]

the Philippines' richest man (i mean family) is on the list:

http://www.forbes.com/lists/2009/10/...mily_8U2J.html

#234 Henry Sy & family

The richest man in the Philippines arrived there at age 13 from China to help out at father's small convenience store. Saved to start a small shoe store in Manila and built it into one of the country's largest retailers. Now controls the Philippines' largest shopping mall developer, SM Prime Holdings, which opened its 31st mall last year, run by son Hans Sy; country's largest bank, Banco de Oro Unibank, run by daughter Teresita Sy-Coson. Shares fortune, which includes stakes in a dozen companies with wife and children. Last year bought a 60% stake in Manila's National University for an undisclosed sum. In December family's SM Investment Corp. announced plans to start building casinos in Manila.

--

Lucio Tan is also on the list

#522 Lucio Tan & family

http://www.forbes.com/lists/2009/10/...mily_FQVX.html

Former chemical engineer from China mopped floors to pay for school. Now owns the Philippines' largest cigarette maker, Fortune Tobacco; Philippine Airlines; Asia Brewery; mining operations; banks; property developments in Hong Kong. Cigarettes and alcohol continue to do well during the downturn, but his property company, Eton, has been hit by lower property values and rents in Hong Kong and other parts of Asia. Being prosecuted by the Presidential Commission on Good Governance, which claims that much of Tan's wealth belonged to former president Ferdinand Marcos and should be returned to the country. Hobbies include flying helicopters.

[emanzano]

IMHO, the reason why there's almost no inflation is coz money is being destroyed (deleveraging) faster than money is being created

to have inflation, more money has to be created than previous amount created

but instead, money is being destroyed, and not enough money is being created to replace the amount destroyed

that's deflation

that's what they are trying to fight

it seems like their plan's working so far...

[uls]

Sir emanzano,

Before i reply, i'll post excerpts from Pimco's Bill Gross' March 2009 investment outlook

http://www.pimco.com/LeftNav/Feature...Sink+Ships.htm

Here, Bill Gross creates a hypothetical testimony to a congressional committee about the financial crisis:

Question: How did this happen so fast?

Answer: Trillions of dollars of credit have been sucked out of the financial system over the past 12 months. Banks may be lending but the larger shadow banking system is not. All of those SIVs and credit default swaps that once generated credit are now contracting and pulling the real economy down with them. Think of it this way: If you had three or four pints of blood drained from your body you’d be on life support, very quickly. Same thing now. The solution is for government spending to simulate a transfusion of whole blood, plasma, or whatever’s available.

Question: How bad could this get?

Answer: No one knows for sure, but common sense would provide a good guess. If the government cannot substitute credit to the same extent that it is disappearing from the private system, then the U.S. and global economies will retreat. If the economy is viewed as a bathtub filled with water (credit) at two different times with two different levels, then draining it back down to the lower first level might reduce economic activity proportionately. Liquidate debt (credit) to 2003 totals and you just might reduce economic activity (GDP) to 2003 numbers as well. Whoops! That would mean a 10%+ contraction in the economy with unemployment approaching the teens. Keep that bathtub full!

Question: What can be done?

Answer: Keeping the tub sufficiently full means advancing policies in content and magnitude never contemplated since the days of FDR. The U.S. and global financial systems require credit creation and foreclosure prevention, not bank nationalization as currently contemplated by some. Trillions will be required in the U.S. alone and it is critical that there be a high degree of policy coordination among all nations, which avoids protectionist measures reflective of failed policies in the 1930s. To date, PIMCO’s Mohamed El-Erian’s imperative of “shock and awe” has been more like “don’t bother us, we’re working on it.” Get moving. Risk being bold – Washington.

Question: Are there no negative consequences from “shock and awe?” Will these policies destroy capitalism while trying to save it?

Answer: Good question. The substitution of the benevolent fist of government for the invisible hand of Adam Smith involves risk. The private system is the heart of capitalism and generates most of its productivity, so more government usually involves less prosperity and certainly more inflation. PIMCO recommends a 180-degree turn towards government only as a last resort. They have the only credible checkbook in town. Will those checks create inflation? Let’s hope so provided it is low and stable over time. Policymakers are more than vocal about attempting to reflate the economy, which in essence means a hoped for return to nominal GDP growth levels of 5-6%, the majority of which might actually come in the form of higher prices as opposed to increased production. This Faustian bargain would be acceptable if only to stabilize what now appears to be an even more dangerous deflationary debt liquidation.

post ko muna ito

i'll be back for reply

[uls]

i'm back

it's not working

they havent even stabilized the patient yet

They havent even stopped the bleeding yet

the financial system is still on life support

capital is still being destroyed

asset values are still falling. real estate prices are still falling. foreclosures are still rising.

loan defaults are risings

securities backed by real estate and other loans are still falling in value

the trillions of dollars the US govt has thrown at the crisis is just being cancelled out or offset by falling asset prices

capital destruction faster than new capital injection

like i said earlier, it's like trying to fill a drum with water but the drum has holes

they have to plug the holes

or they have create money faster than the amount being lost

but that's not happening

coz there's no inflation yet

we will know it is working when we see inflation

---

Global inflation falling:

http://www.businessweek.com/investor...ge_top+stories

In most regions, inflation has fallen sharply from its 2008 levels, largely on sharp declines in oil prices. Most countries are seeing rapidly falling inflation rates, also known as disinflation. However, several countries are dangerously flirting with deflation—or outright falling prices. On the brighter side, the unexpectedly rapid slowing in total and core consumer prices adds to the already ample leeway the central banks have to keep rates low.

Consumer prices in the U.S. are flat from a year earlier, the first time this has happened since 1955. Moreover, core inflation (excluding food and energy) in the U.S. decelerated to 1.7% in the 12 months ended January 2009, compared with 2.5% last January and well below the Hurricane Katrina-related 2.9% peak in October 2006. The core chain-weighted CPI, which is closer to the core consumer expenditures deflator the Fed tracks, is up 1.2% from a year ago and at the bottom of the Fed's comfort zone of 1.5%-2%. We expect core CPI to moderate to 1.1% in 2009 as slowing growth further eases price pressures. After its Jan. 27-28 meeting, the Federal Open Market Committee (FOMC) for the first time said that "inflation could persist for a time below rates that best foster economic growth and price stability in the longer term." In our view, inflation pressures in the U.S. will likely remain subdued. Deflation is the greater risk right now.

In Japan, the long battle against deflation had appeared to be over. However, commodity price declines brought Japan's CPI down to just 0.4% in December 2008. Given the bleak economic landscape, it's possible that it could return to negative territory in 2009.

Inflation for Continental Europe and Britain also dropped sharply in January on lower energy prices. However, the risk of real deflation still appears small in these regions. More likely, they're experiencing substantial, yet temporary, disinflation. In Canada, we project CPI to decelerate to 1.0% in 2009 from 2.4% in 2008, mostly because of commodity prices.

The direction of inflation is a key issue in other regions as well. For example, high inflation in Korea earlier prevented the Bank of Korea from lowering interest rates even though growth began to moderate. In January, however, CPI slowed to 3.7% over last year and is well below the July 10-year high of 5.9% year over year. This gave the Bank of Korea room to cut its primary interest rate aggressively, even though inflation at 3.7% is substantially higher than the Bank of Korea's 3.0% target inflation rate

In Australia as well, uncomfortably high inflation pressures last year have receded. They're likely to ease further on the back of weaker global growth, slackening domestic demand, moderating wage pressures, and lower food and oil prices. In Australia, we project CPI to decelerate to 2.2% in 2009 from 4.5% in 2008, mostly because of commodity prices.

Inflation happens when more money is created than previous amount created

That clearly is not happening now

[slamtaz]

if i may put my :twocents: in...

going by the analogy of recent posts, i would say that it's too simple to state that what is being done is a matter of whether it's working or not working...

i believe that there is a wide ranging spectrum between "it's working" and "it's not working".... and there will always be supporters in between and on both ends of that spectrum...

but if i were to over-simplify things, i'd be more inclined to say that "it's working", why?

because otherwise, the patient would have been dead by now :rip:

whatever it is that's being done should be considered as the life support in the hypothetical testimony above.

going by the same logic, i would say that keeping the patient on life support is better, because that means that there is still a chance that the patient will recover. as compared to letting the patient die, then there's no recovery to speak of.

[tidus1203]

If the patient you're talking about is AIG. Then there is no chance for recovery at all because AIG is dead and the USG is just bailing them out to protect the counterparties of AIG rather than AIG itself. EVen Broad (a huge AIG investor) has given up on AIG and he now knows he has to take his losses and he has invested on a busted company. http://www.reuters.com/article/ousiv...52914720090310


Baka Citigroup pwede pa pero that's also a long shot daming mga unknown assets ang Citigroup...

[uls]

Yes, what they succeeded so far in doing is they kept the financial system from completely collapsing

it almost collapsed last September

remember Libor-OIS spread?



that spike was when interbank lending stopped

banks stopped trusting each other

they were thinking anyone can go out of business anytime

governments and central banks had to intervene

the patient (the entire financial system) has been on life support ever since.

this is not normal

normal is no life support

yes, we still have a financial system

so what they are doing is working

but if bringing the patient back to normal is the gauge (no life support)

then it's not working yet

it will take time

i don't know how long

nobody knows

[slamtaz]

i agree that things aren't back to normal yet... and to me, that is the goal, or if that's not possible, at least not dependent on life support.

but that's the goal.... and when that is achieved, all the means that were taken before that can be said to... not just to be working... but actually have worked.

since the goal has not been achieved yet, it can be viewed that the totality of everything &/or anything before that, as a work-in-process. ika nga, still working on it...

at the other end of the spectrum, :rip:

and as long as the latter has not happened, i'm inclined to believe that whatever is being done is apparently working towards the goal.

it may be asked, but at what cost will the goal be achieved...

now, that's another chapter of the $tory and as everyone probably already know, the hospital bill is running in the trillion$ and still counting...

:peace:

[tidus1203]

March 13 (Bloomberg) -- China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe, Premier Wen Jiabao said.
“We have lent a huge amount of money to the United States,” Wen said at a press briefing in Beijing today after the annual meeting of the legislature. “Of course we are concerned about the safety of our assets. To be honest, I am a little bit worried. I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”
China should seek to “fend off risks” as it diversifies its $1.95 trillion in foreign-exchange reserves and will safeguard its own interests, Wen said. Chinese investors held $696 billion of U.S. Treasuries as of Dec. 31, an increase of 46 percent from the prior year.
Treasuries have dropped this year as President Barack Obama sells record amounts of debt to fund his $787 billion economic stimulus package. Merrill Lynch & Co.’s U.S. Treasury Master index shows the securities declined 0.5 percent last month, after falling 3.1 percent in January, the most since April 2004. The dollar has dropped 17 percent against the yuan since China ended a fixed exchange rate in July 2005.
Treasuries declined, causing the yield on the 10-year U.S. Treasury note to rise 3 basis points to 2.89 percent at 11:49 a.m. in Hong Kong, according to BGCantor Market Data. The yuan was little changed at 6.8380 per dollar. The Shanghai Composite Index of stocks climbed 0.7 percent.
Stable Yuan
“China is worried that the U.S. may solve its problems with the fiscal deficit and banks by printing money, which will stoke inflation,” said Zhao Qingming, a Beijing-based analyst at China Construction Bank Corp., the country’s second-biggest lender. “If the U.S. can make sure this won’t happen, then China will continue to invest.”
U.S. Secretary of State Hillary Clinton urged China, while visiting officials in Beijing on Feb. 22, to continue buying U.S. debt, which she called a “safe investment.” She didn’t press China on its foreign-exchange policy, backing away from January comments by Treasury Secretary Timothy Geithner that the Chinese government manipulates its currency to boost exports.
China will maintain its policy of seeking a stable yuan, even as gains against the euro and Asian currencies hurt the nation’s exporters, Premier Wen said. People’s Bank of China Governor Zhou Xiaochuan pledged last week to maintain yuan stability as investors pull money out of emerging-market assets because of slowing global economic growth.
Independent Policy
While the yuan has weakened 0.2 percent against the dollar this year, there has been a “drastic depreciation” in the euro and Asian currencies that has put a lot of pressure on Chinese exporters, Wen said. The currency has gained 8.6 percent against the euro this year and 6 percent against the Philippine peso.
“Our goal is to maintain a basically stable yuan at a balanced and reasonable level,” Wen said on the final day of the meeting of the National People’s Congress. “At the end of the day, it is our own decision and any other countries can’t press us to depreciate or appreciate our currency.”
Collapsing exports have dragged the economy to its weakest growth in seven years and eliminated the jobs of millions of migrant workers. Wen reaffirmed China’s target of an 8 percent expansion in 2009 as economies from the U.S. to Japan contract, saying the goal was “difficult but possible” to achieve.
Stimulus Plans
China can add “at any time” to 4 trillion yuan ($585 billion) of stimulus measures to revive the world’s third- biggest economy, Wen said. Gross domestic product expanded 6.8 percent in the fourth quarter, compared with 9 percent for all of last year and 13 percent for 2007.
“We have reserved adequate ammunition,” Wen said, adding that the fiscal deficit is under control and the debt level still safe. “At any time, we can introduce new stimulus.”
Yu Yongding, a former adviser to the central bank, said in an interview on Feb. 10 that China should seek guarantees that its U.S. debt holdings won’t be eroded by “reckless policies.” While Wen used the Chinese word for “guarantee” in his answer, it was translated into English as “ensure.”
Delegates of China’s legislative advisory body suggested that the biggest foreign holder of U.S. debt diversify away from Treasuries into more risky assets at the annual meeting that started on March 3.
Jesse Wang, executive vice president of China Investment Corp., said on March 4 that his $200 billion sovereign wealth fund may invest in “undervalued” commodity assets. Zhang Guobao, head of the National Energy Administration, said China should invest more in commodities instead of hoarding the U.S. dollar, the official Xinhua News Agency reported on March 7.
“We have adopted a principle of diversification with our foreign-exchange investments,” said Wen. “So far, our holdings are generally safe. China will mainly use the reserves for outbound investments and trade.”

http://www.bloomberg.com/apps/news?p...koY&refer=home


The Chinese are also fearing what I have been fearing. Eventually the US might have to print money and create inflation. Its pretty much old news I mean matagal na natin sinasabi yan but I have this sense that they are very scared...

[uls]

From the article posted by Tidus:

“We have lent a huge amount of money to the United States,” Wen said at a press briefing in Beijing today after the annual meeting of the legislature. “Of course we are concerned about the safety of our assets. To be honest, I am a little bit worried. I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”

Now, here is an excerpt from Pimco's Bill Gross' hypothetical testimony (from the same link i posted a few posts earlier)

Here, Bill Gross decribes how the US depends on its number 1 status in the world...

that the US thinks the world will always have full faith in currency and debt backed by the US govt...

but that is slowly changing

Question: Why do we assume that the U.S. can unilaterally do whatever it wants?

Answer: Much like we are the world’s strongest nation militarily, we entered this crisis with certain economic and financial strengths relative to all other nations. Our reserve currency status was the primary one which means that we can write checks in our own currency and they are accepted all over the world – sort of like American Express Travelers Cheques. This privilege, however, can be and is being abused. Travelers Cheques are acceptable only when redeemed at 100 cents on the dollar. Lately, quasi-American dollars in the form of Aaa CDOs, corporate bonds, and even national champion bank stocks have floundered closer to zero than par. There is fear on foreign shores that even U.S. agency debt may not be honored and that U.S. Treasury debt itself, when “repoed” as in prior years, may now suffer from counterparty risk. Global willingness to accept American dollars is being tested. Granted, the U.S. currency has appreciated strongly against its counterparts during most of this crisis, but technical short covering as opposed to a flight to quality may have been the dominant consideration. Watch the dollar. If it falls hard, there may be nothing policymakers can do to restore the ensuing financial chaos.

we can understand why China is worried

China's foreign exchange reserves = $1.95 trillion Dec 2008

2/3 of that is held in US dollar assets, primarily US treasuries

[slamtaz]

++++++++++++++++++++++++++++

weird double posting....

[Negus]

Stewart VS Cramer Feud

http://www.thedailyshow.com/video/in...m-cramer-pt.-1

http://www.thedailyshow.com/video/in...m-cramer-pt.-2

http://www.thedailyshow.com/video/in...m-cramer-pt.-3

both are headcases but it's entertaining to see Cramer cringe on cable TV.

[uls]

haha

Jon Stewart destroyed Jim Cramer

[tidus1203]

Cramer is only as good as the bull market. As they always say even a fool can make money on a bull market and make him look smart. Its in the bear market that separates the men from the boys...

[uls]

Ben Bernanke interview on CBS 60 minutes

http://www.cbsnews.com/stories/2009/...n4862191.shtml

first question:

"Mr. Chairman, I'm gonna start with a question that everyone wants me to ask: when does this end?" 60 Minutes correspondent Scott Pelley asked Bernanke.

"It depends a lot on the financial system," he replied. "The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis. We've seen some progress in the financial markets, absolutely. But until we get that stabilized and working normally, we're not gonna see recovery. But we do have a plan. We're working on it. And I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it will pick up steam over time."

[uls]

AIG just released this yesterday

we know all along where the bailout money is going

now it's official

http://www.scribd.com/doc/13294757/A...Counterparties

[Negus]

Economic Stimulus - Japanese Style

It authorizes a mass payout totaling 2 trillion yen from a special Financial Investment and Loan Program account. Residents will receive a 12,000 yen payout each, with those aged 18 and under, and 65 and over receiving an extra 8,000 yen.

http://mdn.mainichi.jp/mdnnews/news/...na012000c.html

I received free money by mail this morning (roughly 120 dollars). What some of you guys might call "dumb money". Free Money also goes to ALL registered foreign residents. It's a puny amount and most see it as a political move by the ruling party.

They even show guidelines on TV on how to use the money for maximum effect on the economy.

[tidus1203]

That's call a handout and not a stimulus. Why don't they just do what my AVATAR is doing. Go on a helicopter and throw money from the sky. That should get people spending basta make sure out na ako sa currency na yan before they do it...

[uls]

Not really a small amount if you multiply that by how many people received free money

the Japan govt wants everyone who received money to spend it

Negus, help the Japan economy

go out and buy something

[tidus1203]

AIG just released this yesterday

we know all along where the bailout money is going

now it's official

http://www.scribd.com/doc/13294757/A...Counterparties

And what frustrates liberals so much is that AMERICAN taxpayers are bailing out EUROPEAN banks who were stupid enough to deal with AIG...