World economy talk

[tidus1203]

And with the rhetoric that China has been throwing these days about finding another reserve currency who's left to buy those?

[uls]

yep

USD index (1 month)

[tidus1203]

Awesome Peter Schiff video. Finally my man is getting some recognition after being laughed out by so-called "experts". I also like how he jabs Keynes

[ame="http://www.youtube.com/watch?v=3AlD6U7O1pE"]YouTube - Peter Schiff: They're Gonna Change This Into An Inflationary Depression![/ame]

[uls]

Now that the USG already has a plan to buy (OVERPAY) the toxic assets from the banks

all of a sudden, Citi and BofA are buying mortgage-backed securities

http://www.nypost.com/seven/03252009...ers_161157.htm

As Treasury Secretary Tim Geithner orchestrated a plan to help the nation's largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market, sources told The Post.

and they are paying above market price

One Wall Street trader told The Post that what's been most puzzling about the purchases is how aggressive both banks have been in their buying, sometimes paying higher prices than competing bidders are willing to pay.

Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids.

amazing

meron na kasi bibili (USG)

so bili sila para ibenta sa gobyerno nang mas mataas

but BofA has an explanation:

BofA said its purchases of secondary-mortgage paper are part of its plans to breathe life back into the moribund securitization market.

hahaha

ya right

how about profiteering

[uls]

hey check this out

Member of European Parliament (MEP) Dan Hannan devalues Gordon Brown

hehe

[ame="http://www.youtube.com/watch?v=94lW6Y4tBXs"]YouTube - Daniel Hannan MEP: The devalued Prime Minister of a devalued Government[/ame]

[badsekktor]

quick question lang about china buying more US debts. What if US failed to save its economy? I dont see any solution to the problem that they have other than change the american lifestyle and it seems that USG is doing everything to maintain that lifestyle.

[tidus1203]

If the stimulus fails despite all their attempts to reflate the bubble then we are going to have a stagflation. Bad economy, coupled with high prices. Its an economists worst nightmare...

[tidus1203]

Remember yesterday's failure by the UK to find enough bids for its auction. Ngayon mabenta na auction nila, kaso nga lang puro "INFLATION PROTECTED" bonds ang mabenta The UK is leading the money printing brigade, so no brainer there...

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

[uls]

stocks are up again last night

the US Treasury's auction of 7 year notes was successful

everyone was nervous about the treasury auction...

seeing what happened in the UK the other day, and the disappointing auction of the 5 year notes yesterday night

---

Japan is in deep sh*t

Japan's consumer price inflation has stalled... what will follow is negative inflation... DEFLATION

UPDATE: Japan Feb Core CPI Flat; Deflation Still Expected
http://online.wsj.com/article/BT-CO-...26-719091.html

TOKYO (Dow Jones)--Japan's core consumer price index was flat on year in February, but analysts say that weakening private demand means it's just a matter of time before deflation revisits the world's second largest economy.

That was the second straight month of a flat reading in the core CPI, which excludes volatile fresh food prices, according to government data released Friday. Private economists had forecast a 0.1% drop. Core CPI was flat in January after rising 0.2% in December.

Still, many analysts say that prices will very likely start falling in the near term because both overseas and domestic demand for Japanese goods is quickly decreasing due to a global economic downturn.

Indeed, other data released during the day showed that Japan's overall retail sales dropped 5.8% on year in February.

[tidus1203]

Yehey! Deflation! For some reason I like deflation makes you much richer hehehehe...

What's new anyway? Japan hasn't had inflation (of meaningful proportions) for almost 2 decades now...

[uls]

Southpark explains how bailouts are decided

hehe

[ame="http://www.youtube.com/watch?v=Geb6po7Z0PQ"]YouTube - How a bailout really happens[/ame]

this one is better:

[ame="http://www.youtube.com/watch?v=boK7PpWGI50"]YouTube - South Park Says It Best... Money The Great Big Joke[/ame]

[tidus1203]

Ang cool ng 2nd video! hahahaha

[uls]

hehe

--

trillions of dollars of credit has vanished from the global economy

someone has to create equal or greater amount of credit to replace what's vanished

we can't count on the commercial banks... they have problems, they aren't lending much

so there's no money multiplier

who can create trillions of dollars?

Fed needs to double balance sheet: PIMCO
http://www.reuters.com/article/newsO...52P1H920090326

TAIPEI (Reuters) - Bond giant Pacific Investment Management Co said the Federal Reserve needs to double its balance sheet up to $6 trillion to replace the amount of wealth destroyed in the United States, an executive said on Thursday.

Liabilities on the Fed's balance sheet should rise to between $5 trillion and $6 trillion later this year amid the financial crisis that roiled global markets, said Brian Baker, chief executive Pimco Asia Ltd.

"Right now, the Fed has spent about $3 trillion. We believe there has to be further stimulus policies put in place," Baker told Reuters.

The central bank's aggressive unconventional policy measures to revive dormant credit markets have pushed its balance sheet above $2 trillion in mid-March, according to data released by the Federal Reserve.

hey Ben

kulang pa

[tidus1203]

Also why can't the world accept a lower standard of living??? Right wealth got destroyed and we assume by printing money we are creating NEW WEALTH? Its not new wealth, it just steals wealth from the existing money and credit!

[uls]

Tent cities

[ame="http://www.youtube.com/watch?v=_F94f_Ycsjs"]YouTube - NBC Nightly News (03-09-09) Tent Cities of Homeless Springing Up In Bad Times[/ame]


oprah: tent cities

[ame="http://www.youtube.com/watch?v=HVwG01-bogE"]YouTube - Tent Cities[/ame]

[uls]

this is why China needs the US

China Industrial Profits Fall First Time on Record
http://www.bloomberg.com/apps/news?p...plE&refer=home

March 27 (Bloomberg) -- Chinese industrial companies’ profits dropped for the first time on record as the global recession cut demand for exports from the world’s third-largest economy.

Net income sank 37.3 percent in the first two months of 2009 from a year earlier to 219.1 billion yuan ($32 billion), the statistics bureau said today. Profits expanded 16.5 percent in the same period last year. Records began in February 2007.

China’s economy grew at the weakest pace in seven years in the fourth quarter, industrial output growth slowed in the first two months of this year and overseas sales plunged by a record. Central bank governor Zhou Xiaochuan said yesterday the government’s “prompt and decisive” move to roll out a stimulus package has curbed a rapid economic slide and leading indicators are pointing to a recovery.

Japan needs the US too

Japan Exports Drop Record 49% as Global Slump Deepens
http://www.bloomberg.com/apps/news?p...d=a5ElP4y2JoH8

March 25 (Bloomberg) -- Japan’s exports plunged a record 49.4 percent in February as deepening recessions in the U.S. and Europe sapped demand for the country’s cars and electronics.

Shipments to the U.S., the country’s biggest market, tumbled an unprecedented 58.4 percent from a year earlier, the Finance Ministry said today in Tokyo. Automobile exports slid 70.9 percent.

The collapse signals gross domestic product may shrink this quarter at a similar pace to the annualized 12.1 percent contraction posted in the previous three months, the sharpest since 1974. Prime Minister Taro Aso is compiling his third stimulus package as companies from Toyota Motor Corp. to Panasonic Corp. fire thousands of workers.

“There’s a still of lot of weakness out there; that’s going to be a big drag on production and most people are looking for the first-quarter GDP to be as bad as the previous quarter,” said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. “Japan is as dependent on exports as anybody."

heck the whole freaking whole needs the US

the US is the world's demand

the rest of the world is the supply

[tidus1203]

But it was phony demand ala Peter Schiff. Demand based on credit and not demand based on actual increase in income and productivity. Maybe the world needs a rebalance of some sort away from the US. These exporters have relied on them too much...

[uls]

yep

the US was able to buy the world's goods coz the US financial system created trillions of dollars of credit for its consumers (or the consumers were the ones who requested the trillions of dollars of credit from their banks)

and the rest of the world was all too happy to earn the credit that was created

---

that's your advantage when you own the reserve currency

everyone will accept it

so you can create as much of it as you want and exchange it for the world's goods

you take the world's goods (which are created by hard work) and you give the world dollars (which you create from nothing with no effort)

and the world is happy earning your dollars

instead of using the dollars to buy goods from the US, the dollar earners save the dollars

then the US borrows the dollar savings of the world and in exchange gave the world USG debt paper

the savers are happy coz they think USG debt paper is the safest place they can put their savings

and aside from USG debt paper, the savers also bought other US paper assets (stocks, corporate bonds, derivatives etc)

excellent

the world sells the US hard assets

the US sells the world paper assets

Hey world, you just got screwed

hehe

[Gumusut_Amige]

this is why China needs the US

China Industrial Profits Fall First Time on Record
http://www.bloomberg.com/apps/news?p...plE&refer=home


Japan needs the US too

Japan Exports Drop Record 49% as Global Slump Deepens
http://www.bloomberg.com/apps/news?p...d=a5ElP4y2JoH8


heck the whole freaking whole needs the US

the US is the world's demand

the rest of the world is the supply

just received an email related to this.

Saving is sin, and spending is virtue...

Interesting article written by an Indian Economist

Japanese save a lot. They do not spend much. Also Japan exports far more
than it imports. Has an annual trade surplus of over 100 billions. Yet
Japanese economy is considered weak, even collapsing.

Americans spend, save little. Also US imports more than it exports. Has
an annual trade deficit of over $400 billion. Yet, the American economy
is considered strong and trusted to get stronger.

But where from do Americans get money to spend?
They borrow from Japan, China and even India.
Virtually others save for the US to spend. Global savings are mostly
invested in US, in dollars.

India itself keeps its foreign currency assets of over $50 billions in US
securities. China has sunk over $160 billion in US securities. Japan's
stakes in US securities is in trillions.

Result:

The US has taken over $5 trillion from the world. So, as the world saves
for the US, Americans spend freely. Today, to keep the US consumption
going, that is for the US economy to work, other countries have to remit
$180 billion every quarter, which is $2 billion a day, to the US!

A Chinese economist asked a neat question. Who has invested more, US in
China, or China in US? The US has invested in China less than half of
what China has invested in US.

The same is the case with India. We have invested in US over $50 billion.
But the US has invested less than $20 billion in India.

Why the world is after US?

The secret lies in the American spending, that they hardly save. In fact
they use their credit cards to spend their future income. That the US
spends is what makes it attractive to export to the US. So US imports
more than what it exports year after year.

The result:

The world is dependent on US consumption for its growth. By its deepening
culture of consumption, the US has habituated the world to feed on US
consumption. But as the US needs money to finance its consumption, the
world provides the money.

It's like a shopkeeper providing the money to a customer so that the
customer keeps buying from the shop. If the customer will not buy, the
shop won't have business, unless the shopkeeper funds him. The US is like
the lucky customer. And the world is like the helpless shopkeeper
financier..

Who is America's biggest shopkeeper financier? Japan of course. Yet it's
Japan which is regarded as weak. Modern economists complain that Japanese
do not spend, so they do not grow. To force the Japanese to spend, the
Japanese government exerted itself, reduced the savings rates, even
charged the savers.
Even then the Japanese did not spend (habits don't change, even with
taxes, do they?). Their traditional postal savings alone is over $1.2
trillions, about three times the Indian GDP. Thus, savings, far from
being the strength of Japan, has become its pain.

Hence, what is the lesson?

That is, a nation cannot grow unless the people spend, not save. Not just
spend, but borrow and spend.
Dr. Jagdish Bhagwati, the famous Indian-born economist in the US, told
Manmohan Singh that Indians wastefully save. Ask them to spend, on
imported cars and, seriously, even on cosmetics! This will put India on a
growth curve. This is one of the reason for MNC's coming down to India,
seeing the consumer spending.

'Saving is sin, and spending is virtue.'

But before you follow this neo economics, get some fools to save so that
you can borrow from them and spend!!!

[uls]

pero i think the US got away with borrowing and spending like crazy coz they own the reserve currency

the world financed US spending

the world earns and saves USD coz the USD is the reserve currency

that allowed the US to borrow the USD earned and saved by the world

i don't think you can apply the American way to other countries

like dito sa Pinas

mag borrow and spend tayo like the Americans do?

but we need dollars to import goods

we need to convert pesos to dollars para may pambayad tayo sa mga imported cars and LCD TVs and Ipods and laptops

it's not like the peso is the reserve currency

we can't borrow pesos from the rest of the world like the US can borrow dollars from the rest of the world

who is earning and saving pesos?

tayo lang

the world doesnt have Peso reserves (haha that sounds funny -- peso reserves)