Posts Tagged ‘World reacts to Bail Out 2008’
>>Dubai request for debt ‘standstill’ raises fear. Is this a first shot? w/UPDATES
Posted on: November 26, 2009
Dubai request for debt ‘standstill’ raises fear – Yahoo! News
UPDATES below
This story may or may not have large consequences for the United States. I don’t know, but it was a large red flag when I read it so I am passing it on to you for what you may make of it. US firms are very much involved in the stupendous build up of Dubai with everything from the actual building to the technology installed in these buildings and business interests. Our economy can’t stand too many more knocks and bumps without crumbling totally.
We have seen oil prices rising in recent weeks. Remember this is a ready method of raising money in this oil rich portion of the world. Higher energy prices at this point would be very hurtful and surely cause more lost jobs. On the other hand, rising oil prices may force congress to do what it should have done the last time oil prices went up, and that is open up our own energy industry by lifting drilling bands in Alaska and off shore. Even tho this will not bring immediate oil to our reserves because development takes up to 10 years it will bring on almost immediate jobs since the energy producing companies are the only ones who appear to have weather this down turn still standing firm.
My concern is more for what will happen if things become much worst because in bad times people tend to look to the government to “DO SOMETHING”. And people who are out of work and seeing themselves homeless or possibly homeless will give up liberties for a bit of what they think is security. I hope and pray that if this is the first whisper opf another woprldwide blow to our economy that We the People remember that only in ourselves will we find the way back and never in a bigger and bigger and more dominating government. Remember always that “Power corrupts, and absolute power corrupts absolutely”!
DUBAI, United Arab Emirates – Just a year after the global downturn derailed Dubai’s explosive growth, the city is now so swamped in debt that it’s asking for a six-month reprieve on paying its bills — causing a drop on world markets Thursday and raising questions about Dubai’s reputation as a magnet for international investment.
The fallout came swiftly and was felt globally after Wednesday statement that Dubai’s main development engine, Dubai World, would ask creditors for a “standstill” on paying back its $60 billion debt until at least May.
Markets took the news badly — with the Dubai woes and the continued fall of the U.S. dollar giving investors twin worries. Dubai’s move raised concerns about debt across the Gulf Region. Prices to insure debt from Abu Dhabi, Qatar, Saudi Arabia and Bahrain all rose by double-digit percentages Thursday, according to data from CMA DataVision.
In Europe, the FTSE 100, Germany’s DAX and the CAC-40 in France opened sharply lower. Earlier in Asia, the Shanghai index sank 119.19 points, or 3.6 percent, in the biggest one-day fall since Aug. 31. Hong Kong’s Hang Seng shed 1.8 percent to 22,210.41.
Wall Street was closed for the Thanksgiving holiday and most markets in the Middle East were silent because of a major Islamic feast.
Asian stocks tumble amid Dubai fears, dollar slump – Yahoo! News
A second day of the Asian and European markets tumbling will mean a bad day Wall Street today. the US market was saved by yesteday being a holiday and thank goodness for the weekend coming up but things look like this is going to be the big bump we in america don’t need.
Any down dive on the market will give the Obamanation crowd the excuse they neeed to throw more money down the drain and set us up to follow Dubai and others that have gone bankrupt. Oil is also down but that is only temporary IMO. the dollar however is down against the Japanese yen. Not knowing where to put their investment funds for safety the European and Asian market chose the yen over the long time king of the mountain U.S. dollar. Is congress listening at all??
Uncertainty over the ripple effects from Dubai World’s financial woes sent European markets plummeting Thursday, with benchmarks in Britain, Germany and France all losing more than 3 percent.
U.S. markets were closed Thursday for the Thanksgiving holiday. But Friday was likely to be a rough session on Wall Stree with futures pointing sharply lower. Dow futures were down 327, or 3.1 percent, to 10,115.
Oil prices retreated in Asian trade, with benchmark crude for January delivery falling $3.87 to $74.06 a barrel.
The dollar was lower at 86.05 yen from 86.54 yen after swooning as low as 84.81. The euro fell to $1.4850 from $1.5021.
December 1, 2009 It seems Dubai’s neighbors have decided they are “too big to fail” and are bailing them out. Has the entire world gone mad?!? It is impossible to spend ones way out of debt! That is an indisputable fact, but it seems to be one not recognized by those in positions of leadership. Could it be because people in positions of leadership are all inter-connected? You know like the Board of Directors of one company being the CEO’s of other companies whose Board of Directors are all inter-related with one another. This is certainly the way it is on Wall Street and even Main-street USA so it isn’t much of a stretch to believe that international companies have the same arrangements only on a larger scale.
At any rate, just as the United States government is going to fail if We the People don’t convince Congress to put the brakes on Obama and spending, then Dubai and other entities using spending as a way out will eventually fail and fail big when they do come tumbling down. BB
Bankers making turkeys out of taxpayers – washingtonpost.com
This time last year We the Tax Payers bailed out the big banks because they were on the brink of going broke due to their playing with unsafe, unsound and almost criminal banking schemes called derivatives. They had a lot of help with these activities from congressmen who chose to close their eyes to what was happening rather than to enforce the regulations already on the books.
Now the two Congressman who were the most egregiously enablers for the financial industry, Rep. Barney Frank Chairman of House Finance Committee and Senator Chris Dodd Chairman Senate Banking Committee are both touting new regulations that will reign in this bad behavior by Wall Street. (see: >>China may well be our Savior from Obamanation About half way thru the post read “Nomi Prins discussing her book It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street” and her explanation of what happened to cause the melt down and financial crisis, whose to blame and what is happening now).
The big banks are right back to their old tricks this year. make no mistake since they didn’t have to pay for their folly last year they see no need to stop their mad dash to make profits out of thin air knowing the tax payer will pick up the tab for them because they “own” those in Congress who can vote to bail them out. They are therefore fighting against any new , or old, regulations on their practices.
American Financial Services Association AFSA’s membership, according to its Web site, includes some of the best-known names of the financial crisis: CIT, CitiFinancial, Countrywide, EquiFirst, HSBC, Morgan Stanley, Wells Fargo Financial and GMAC. The trade group points out that its members did not directly receive bailouts from the Troubled Asset Relief Program (those went to banks, including some of the AFSA members’ parent companies), but it’s a safe bet that many of those firms would have failed if the government hadn’t intervened to prop up the financial markets. Now these same companies, suffering from some combination of amnesia and ingratitude, are determined to fight off regulatory efforts to prevent a repeat of the same cycle of bubble, collapse and bailout. Big firms such as J.P. Morgan Chase, Goldman Sachs, Citigroup and Bank of America — direct or indirect beneficiaries of federal bailouts — are all battling efforts to rein in derivatives. And credit card issuers, facing new regulations scheduled to take effect in February, have responded by increasing their rates and fees.
The ASFA, a trade group of credit card issuers, auto-finance companies, mortgage lenders and others leading the fight against the CFPA, took the unusual approach on Tuesday of publicly celebrating the reform’s fading prospects.
“This was supposed to be a slam-dunk,” crowed Bill Hempler, the group’s top lobbyist. But instead, he said, “Democratic members are increasingly having heartburn over CFPA and maybe second thoughts.”
So who beside the bankers are fighting the passage of tighter reforms and restraints on the banking community?
Now these same companies, suffering from some combination of amnesia and ingratitude, are determined to fight off regulatory efforts to prevent a repeat of the same cycle of bubble, collapse and bailout. Big firms such as J.P. Morgan Chase, Goldman Sachs, Citigroup and Bank of America — direct or indirect beneficiaries of federal bailouts — are all battling efforts to rein in derivatives. And credit card issuers, facing new regulations scheduled to take effect in February, have responded by increasing their rates and fees.
…the argument most likely to prevail for the financial firms on Capitol Hill was offered by Chris Stinebert, the trade group’s chief. “Especially now, when we’re in a very, very sensitive time, when the capital markets are just starting to recover,” he said, “introducing a high level of uncertainty in the marketplace could be very detrimental.”
Or, to put it another way: Don’t regulate us now because the economy is still suffering from the mess we made because we weren’t regulated the last time. Chutzpah, it appears, is recession-proof.
The Banking Industry needn’t worry because they have paid the right congressmen off and the Frank and dodd bills are just face saving gambits to show how tough they are after all they did not to enforce the regulations for several years before the financial melt down in 2008. Congress isn’t about to do anything to reign in these big campaign contributors. BB
JPMorgan Chase Reports $3.6 Billion Profit in Quarter – NYTimes.com
This people is the so-called financial crisis one year later.
I was one who blogged long and hard against TARP and also spent hours emailing Congressmen and the President not to do this and put this horrible tax burden on the American people. Well they did and we tax payers are stuck with a burden our grandchildren will be paying for with the $884 billion TARP.
Now ther is one mand and one man only in total charge of this money, Treasury Secretary Tim Geithner has only spent about 24% of TARP and is now using the money for other little deals for Obamanation. For instance the auto unions bail out. I won’t call the auto industry bail which is our and the government’s ownership of GM because it was done for the benefit of the Auto Workers Union who had backed Obama so much during his campaign. Now in this case it was the Mafia union bosses who gave the union workers money to the Obama campaign whether or not the union workers themselves wanted to contribute. The buying of GM and in effect guaranteeing the GM workers of a job I truly hope the union workers are asking themselves at what price to their family, friends, nation and great grandchildren this rip off of the American tax payer was made.
This tax cheat Sec. of the Treasury Time Geithner has sole control of this money—YOUR money. BB
Give me the right to issue and control a nation’s money and I care not who governs the country.” –Mayer Amschel Rothschild
I truly believe Federal Reserve Chairman Bernanke and Secretary of the Treasury Paulson scammed President Bush into the Bail Out of September and October of 2008. I do not however believe that President Obama was scammed as I believe he was and is part of this ploy to destroy the national banks around the world so as to form a one world monetary system.
Bernanke is at it again because the first Bail Out didn’t go far enough. I guess too many independent little bankers around the world stood up to the movers and shakers in time to save themselves.
Federal Reserve Chairman Ben Bernanke has launched a “more aggressive” campaign to defend the Fed’s efforts to prop up the U.S. economy.
But may members of Congress are not buying what Bernanke is trying to sell. At a recent hearing, Ron Paul absolutely blasted Bernanke and made this stunning statement to him: “The Federal Reserve in collaboration with the giant banks has created the greatest financial crisis the world has ever seen.”
According to a new report, many of the large banks that got federal aid to support increased lending have instead used the money to make investments, repay debts or buy other banks.
Thanks to: The Most Important News Daily
A video you really need to watch. This is what the Federal Reserve can do to you.
>>The End of American Prosperity from An American Idiot
Posted by: Brenda Bowers on: October 9, 2009
I am bringing an entire post over from one of my favorite bloggers. He has said in one post what I have been beating around the bush about in a lot of my posts. We Americans need to understand how we got to where we are and why so the corrections can be made: you can’t fix a problem until you identify it! With many thanks to my friend and fellow blogger an American Idiot (who certainly is not!) An American Idiot
You really might want to put him on your blog roll. BB
The End of American Prosperity?
Friday evening, I had an interesting conversation. I found myself verbalizing a simple fact I have always known, but was never actually taught. It began with a discussion about how many economists are heralding the end of the recession, while others fear the other shoe is about to drop. The conversation wandered into a rehash of the oft repeated argument about what ended the Great Depression. Liberals are fond of crediting Roosevelt’s New Deal, while Conservatives are fond of crediting the war. Either way the argument being made is that government spending stimulated the economy enough to kick start the economy, thus proof of the validity of Keynesian economics.
As a preface, I am not an economist but I have a business degree and a common-sense understanding of economics. I have sat through many economics and history college classes where the merits of the New Deal and Keynes’ mixed economy were touted and in some cases celebrated. Similarly, I have listened to Conservatives argue that the war ended the Depression. (For a detailed review of the arguments refer to this paper, however note this paper does not necessarily reflect my opinion.) The economic conditions that led to the recovery were rather complex and interrelated. To attribute the recovery to any one set of circumstances seems overly simplistic. Market forces during this time were being influenced by government intervention even as market conditions were being influenced by the spreading war in Europe and Asia.
Balance of Exports
Without writing a lengthy 30-50 page paper on the topic, I’ll cut to the point. Perhaps I’m flying in the face of current economic theory but I believe strongly that a nation’s prosperity is related to its industry and a country that is creating exportable goods is creating real wealth rather than consuming it, (the key word is “real”.) Therefore, I am referring to U.S. Dept of Commerce data in the following observations.
World War II created huge demand for military and consumer goods. As tensions built, leading up to the war we see Industrial production and thus exports increasing. By the time America enters the war, the main focus of industry, world-wide, is war-centric. We see America importing more than it exports. To me this demonstrates that the war did not necessarily cure the economy.
Out of the Ashes of War
But wait, look what happened directly following the war. Exports soar and the economy booms. Why? I believe it is because America emerged from the war unscathed. True, much human capital was spent defeating the forces of evil in both Europe and Asia, but our cities had never been bombed, our factories were intact, our infrastructure pristine, and our workforce was energized. Meanwhile, European and Asian cities were largely laid waste, their industry in ruins, their infrastructure fragmented or non-existent, and their workforce either rotting in their graves or reeling from the shock of war.
In 1946, America was robust and healthy while the rest of the world was starting over. They were in need of everything and only capable of providing resources to obtain what they needed. It worked to the American advantage. America helped rebuild the world in exchange for resources. As a result the United States became the wealthiest nation on the planet, while the rest of the world benefited from American investment and imports. We could argue America was already the wealthiest before the war, but I would counter a similar situation followed WWI.
Where did we go wrong then? In large part when we abandoned the gold standard. Under the gold standard trade imbalances corrected themselves. Without the gold standard, trade deficits seem sustainable, although in reality they are not indefinitely sustainable. That brings us back to the recovering world. Once the Asian and European economies recovered they regained their capacity to compete. Flush with cheap labor and given American know-how, they quickly proved their ability to undercut American Industry. With no way to counter this cheap resource American business decided to take advantage of this resource. Essentially they gave up on American labor and outsourced as much labor as possible to sources of cheap Asian labor.
They could not have achieved this without fundamentally changing U.S. trade policy. They did this by convincing both Democrat and Republican politicians that the best way to save the American economy was to adopt a free-trade policy and then use the World Trade Organization (WTO) to convince other nations to do the same. American companies basically moved their industrial production to the lowest bidder, often importing pieces of products from many sources and then assembling them in the target nation. This allowed them to maximize the cheapest methods of doing everything and avoiding any nasty tax penalties.
Notice the Net U.S. Export 1980-2008 graph. Just as the trade deficit was beginning to improve Free Trade policies are adopted. The American balance of trade take a dive and the U.S. economy transforms from industrial to service. The steel industry gone. Textile gone. Electronics gone. Mechanical gone. Auto soon to be gone. Now environmental policy threatens our agricultural industry, one industry where we still have a trade surplus. But that’s another essay.
The Dollar Standard
Thus the global trade imbalance, excessive U.S. national debt (currently at $11.8 trillion, estimated to hit $23.2T by 2019 but I predict the number will be closer to $30T), and irresponsible government money creation, threaten the dollar standard. We are looking at the Euro as the heir apparent. What may follow is hyper-inflation as American banks lose foreign capital, foreign credit is likely to be severely curtained, and interest could sky-rocket.
What role Obama plays in all this is debatable. I’m not blaming him per se. That said, as a Representative voting for and defending the social engineering rules of Freddie and Fannie, he certainly contributed to last year’s financial collapse, but in this he was just one cog in a very big wheel that incriminates a host of elected officials. As President his continual diminution of the importance of the United States, his betrayal of long-standing allies, and his capitulations to U.S. enemies cannot be good for economy in the long-term. However, anything that results toward weakening the American economy can only help bring about economic socialization. If indeed this is the aim.
Meanwhile there are some who believe the global economy can only be restored with the advent of a global currency. A global currency would replace the dollar standard. There are already serious forces at work to make this happen. The WDX Organisation has developed a world currency called the Wocu™ (World Currency Unit). This is being introduced on January 1, 2010 as a commercial exchange product with the hope that it “will be of near universal interest to Individuals, Corporations, Financial Institutions and Governments.” The future of the Wocu is questionable but the instrument is well thought out and shows possibilities. I see the Wocu as a reserve currency rather than something we might someday be placing in our wallets.
Ultimately all this likely means a lower standard of living in the United States, perhaps permanent unemployment around 10%, an expanded government role in the economy, and a greatly devalued dollar. The last thing Asian nations want to see is the return of American manufacturing but long-term (and I’m talking decades away) as American wages continue to decline and the divide between rich and poor widens, (yes in spite of Democrat efforts, punitive taxation against the wealthy will most likely result in the destruction of the middle class - someone has to make up for lost profits,) the result could be an American manufacturing revival. After all, all economics are cyclical. Historically, governments have fought against the economic roller coaster and failed. Geithner too will fail. Even the Soviet empire failed.
I’m interested in your opinions. Especially if you’re macro economically inclined.