Best coverage of global news - March-April: 2008

Wall Street Grain Hoarding Brings Farmers, Consumers Near Ruin : When 50% or more of agri-outputs are speculated by the Wall St., many elite Indians say that futures don't affect grain prices. Remember Schumpeter again on the future of capitalism...and Fed. prints more easy money for the Wall St. to hoard even more!
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Phillips Slams Wall Street, Feckless Politicians in `Bad Money' : This only validates the many posts I have written on GDP, economic growth and productivity growths. If financial services contribute 20% and manufacturing 12%, it merely means a country of traders with borrowed money where agri+ manu contributes only 15% or even less of GDP. And I have often doubted these GDP measures with very high services components, more so from financials.
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Due to following, I have been and probably would stay away from posting articles for few more days to months...
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There's been again some challenging times in my life where the challenges essentially drags one down. My son (6+ years) has been diagonised with Gall Stone and report for Hepatitis is due. This is on top of the benign mesothelioma cyst with which my wife's been suffering. I have rarely talked about my mother, and how little to nothing I could do for her. And now there's another challenge which like the others have also been talked about in my book (Wondering Man, Money & Go(l)d). I really don't know what to do...am I not following what I preach or talk about or write on? Yes...at times I feel I am fighting a losing battle. However then comes some optimist driven by our strong believe in God and the way my father acted against all adversaries. I am sure this cloudy phase would also pass and brighter days would emerge soon.
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Behind the Deal, the Hand of the Fed : Add to that the fact J P Morgan happens to be a shareholder of the Fed. (true?) as we found already in one post. And should one say anything more? And here is the BusineeWeek photo of Bernanke as a communist.
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Forbidden fields: Oil groups circle the prize of Iraq’s vast reserves: In line with one of my earlier posts. Would the big US gamble on Iraq war after five years pay-off? Depends on Iraqis...but interesting to see the gambling point here: 'Although no decision has yet been made in Baghdad over the nature of the development or the eventual exploration contracts that will be on offer, Iraq could prove one of the rare countries in the region where companies will be allowed to claim reserves as their own. “This is the big frontier,” says Raad Alkadiri, a senior director at Washington-based PFC Energy.' At what price...what would the Iraqis gain if companies (that too primarily US, UK and at times from France-based) claim the reserves to be their own. We know how good American back door policies are - however Iran, Russia, China or even India must also get close with Iraq and ensure that Iraq's oils are most used for Iraqis first, and then for the rest of the world, equally.
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Bear Economists Snipe at Bernanke: Can this comment be indeed true - 'The Federal Reserve is there to protect them. What is so well forgotten is that the Federal Reserve is not a part of our Government. Need further insight? JP Morgan is a shareholder in the Federal Reserve, you and I are not. Who benefited from the Bear Stearns bailout?'

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Somewhere else I read that Bear Stearns had derivative position of $13.4 trillion, and its money of $17 billion ran out in 2-days. God save this system. Sooner Fed bail-outs than the 1930s revisited : 'It has $13,400 billion of derivative positions, and has underwritten $491 billion in options contracts. Topple this domino at your peril. It risks a chain of cross-defaults through the entire "shadow banking system", that vast untested nexus of paper commitments.
Bear Stearns had a liquidity cushion of $17 billion early last week. It vanished in two days.' . Also by reading so many comments online, it's clear that 90% or even so people in the US or Europe isn't happy about the practice of this form of capitalism. However the question comes - where are these voices in mainstream media - in CNBC? Probably mainstream business media still favor a lot to the immoral side because of obvious business gains, though these comments would be an indicator that they better change. Otherwise it will be fools (who will burn their fingers at some point of time in future) and immoral investors alone would subscribe to these mainstream business media!
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The Fed Is Too Easy on Wall Street: If these numbers are true, we get around $140 billion of the already booked losses...'Here's a staggering figure to contemplate: New York City securities industry firms paid out a total of $137 billion in employee bonuses from 2002 to 2007, according to figures compiled by the New York State Office of the Comptroller. Let's break that down: Wall Street honchos earned a bonus of $9.8 billion in 2002, $15.8 billion in 2003, $18.6 billion in 2004, $25.7 billion in 2005, $33.9 billion in 2006, and $33.2 billion in 2007.'
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JPMorgan to buy Bear as Fed opens lending to Wall St: At $2 a share, less than its $80 a share book value and much less than its holding of land and buildings? As reported by Bloomberg also, I wonder whether shareholders would approve this deal. Had I been a shareholder of Bear Sterns (and only of Bear Sterns, which traditionally is my style against port-folio investments, and know it's fundamentally wrong), I would have forgone this $2 also and firmly would have said no. Dimon and J P Morgan gains...what a pity!
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Behind the Fed’s Bear Loan: Systemic Risk Fear: The desperation in getting the four votes and the manner in which it was done kills all the faith in Central Banks.
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Bear Stearns Bailout Was `Finger in the Dike,' Historians Say : 'Ever since Treasury Secretary William Gibbs McAdoo shut the New York Stock Exchange for four months in 1914, to prevent foreign investors from cashing out and throwing the U.S. into financial chaos at the outset of World War I, American policy makers routinely have suspended their support for free markets when confronted by economic peril.' History is so important, however unfortunately rest of the world which sort of preaches free market economy never learns from history. 'Morgan, 70 and semi-retired, obtained an emergency pledge of $25 million from the U.S. Treasury. He persuaded New York's leading bankers and trust executives to put up another $25 million, after locking them in his library all night, according to ``The House of Morgan: An American Banking Dynasty and The Rise of Modern Finance,'' by Ron Chernow (Atlantic Monthly Press, 812 pages, $45.95)...Congress authorized $250 million in loan guarantees to rescue Lockheed Aircraft Corp. in August 1971, over the objections of the late Democratic Senator William Proxmire of Wisconsin. By today's standard, the stakes were small: about $1 billion in potential losses and 60,000 jobs.' The scale just gets bigger. 'Representative Ron Paul, a Texas Republican who ran for president this year, told the House Financial Services Committee in February that financial services bailouts would reward bad behavior. Paul doubts the Bear Stearns rescue will prop up the economy, he said March 14. ``It won't work,'' Paul said. ``It's like drug addiction. You feel withdrawal pains, but you save the patient.'' This is the man of whom gold bugs speak highly about...
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The Twittering of Ben Bernanke: I liked this part very much...'But Fake Steve Jobs (aka Forbes editor Daniel Lyons) maintains a blog. That is so old media. This is Twitter, an attention-deficit-disorder medium for an attention-deficit-disordered age.'...I am very much in old media

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Dollar's plunge pushes eurozone past US, Goldman Sachs says: I expected this long back though my fundamental doubt on currency-related fluctuations in GDP is still not answered.
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Bernanke Discards Monetary History With Bear Stearns Bailout : I can be reasonably certain that no one could think about it as forthcoming, that too almost a year back. Now here you have it: Fed. to bail out failed hedge funds of Bear Sterns. The article was written as a spoof (all my spoof articles are like that only!), and true, one needs to go beyond the hedge funds to Bear Sterns itself now.
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‘India has conducive environment for gold mining’ : I don't know on what facts this story is made. China, S. Africa and the US are the three largest producer (I am not very sure...) whereas India is the largest consumer. The only commercial gold mine in India was closed years ago (somewhere in the south). However this must be explored (along with Uranium and other radio-active materials and technologies) as policy-matters.
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LS dismisses US govt’s observations on Nandigram: I saw the news in TV this morning, and thought...here we are...Indians (and many other nationalities are no different!). What are we first, what values do we stand for - no one is perfect. But do we value human rights and dignity first, or do we take empty pride in 'India' sort of being perfect, which all knows no nation is. I don't agree with many US policies, decisions, their double standards (middle-east, Palestine, Lebanon) but in this case, I will appreciate US decision. Yes, there was human rights violation...now whether US government says that or Pakistan or Indian political parties...that's immaterial. What rather is needed (and knowing India well, which is unlikely to happen for sure) is what learning did we have from it...none. Rather the ruling government learned that they can crush any opposition any time whereas Indian democracy would watch it as another piece of fun, and comment as we do on while watching violence on movies, rather than acting meaningfully on it. Shame on you - Indian parliamentarians, once again. '"Anything happening in India is a concern of the people of this country" and the US should have nothing to do with it.' What a joke...I am worried at unnecessary deaths in the Middle-East, and I am even more worried at Nandigram violence also. Being a human being matters first, then comes nationality. These guys can change their colors...and sad thing is 'Anything happening in India is a concern of the people of this country', but the people of the country just saw another violent act whereas the guilty proudly roamed about, even in the same parliament.

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Sab Maya Hai: Mukesh Ambani on Forbes' billionaires list: I like it Mukesh-bhai. You indeed are a genius...lekin desh or dus keliye bhi kuch karo (SEZ serf profit keliye mat karo...)
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Dollar's Clout Sinks Worldwide: 'And in neighboring Brazil, the Confidence Cambio money-changing service was the first to start offering yuan so travelers to China no longer have to change the money into dollars first. The service is already a hit because Brazil does big business with China, and lots of Brazilians are heading to the Olympics this summer.' Makes good sense...


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Iraq, the US trump to avoid a dollar collapse: This is the 1st time I accesses this site from GNews, this stats are intteresting at this hour of global economy: 'Referring to the weakness of the dollar, Ching Siwei, Vice-President of the Permanent Committee of the People's National Congress said last November that China "is going to readjust and diversify its monetary policy in financial and economic transactions around the world because we prefer strong currencies".(2) Putting deeds to words, China is already buying oil in Euros from Iran, which provides 13% of China's energy requirements...Maintaning the alliance with the US is ever more costly in political and economic terms. In Saudi Arabia current inflation rates are the highest since 1980, running currently at 7%. In the United Arab Emirates, inflation is even higher at 9.3%. (3) The reason is none other than the weakness of the dollar in economies completely dollarized as those countries' are. That is what has led the Saudis finally to let their arm get twisted and to accept now a discussion about the dollar in the terms proposed by Venezuela and Iran...And that is what the US is trying to stop, come what may. First, it is bolstering the presence of Iraq's collaborationist Oil Minister, Hussein al-Sharistani, in each and every one of the preparatory meetings for the next OPEC summit meeting. Secondly, it is pressing for final approval of the Iraqi oil law, which would leave that strategic sector in the hands of the US oil multinationals. Thirdly, Bush carried out his recent regional tour - not for peace, as the mass opinion forming media broadcast - to directly threaten the Gulf countries against changing their reserve currency. Fourthly, the US is pressuring these countries not to establish trade links with Iran at a time when that country has just set up its oil exchange to operate in Euros rather than dollars...Despite the fact that the US has literally bought off a large part of the Iraqi insurgency with the creation of the "Awakening" militia - which serves to confront insurgents and as a buffer for the occupying soldiers - it has not managed to pacify the sector controlled by Muqtada al Sadr despite the Mahdi Army's ceasefire holding firm and the one controlled by Sunni guerrillas, who carry on their struggle against collaborationists and occupiers. After almost a year of "normalization" armed attacks still occur throughout almost the whole country, not just against the occupying troops but against mercenaries - those "private security companies" - and collaborators...Nonetheless, if one has to note a credit side to the US strategy, the attacks against oil pipelines have certainly dropped noticeably in the last few months and that has made Iraqi oil production rise to 2.4 million barrels a day, the highest level since the country was invaded five years ago. The US has come very close to completing its energy strategy. It had reckoned on ending 2007 with production at 2.8 million barrels a day in Iraq (4) and made it to 2.4 million. Now it is being more modest and reckons on 2.6 million barrels a day for 2008, although the ultimate target is to reach no less than 6 million barrels a day within the next four years according to what the Iraqi Oil Minister has said in an interview to the British Times newspaper. (5) That would permit the US to break up OPEC from the inside, considerably increasing the number of barrels on the market and bringing down the price of oil to the amount the US considers "fair" : US$30. A figure that leaves out one important fact, namely, that it does not cost the same to extract a barrel of oil in Saudi Arabia or Iraq, to name the cheapest places, as in Venezuela or Iran, to name the dearest places. In Iran, it costs US$15 to extract a barrel of oil. So the proportionate profit of 1 to 6 in the Saudi case (a high quality oil which, from extraction to sale, is easy to find and cheap to produce) drops to 1 to 2 in the Iranian case since its oil is not good, sweet and cheap like that of the Saudis and the Iraqis...On January 24th this year, al-Sharistani met in Amman, Jordan with the leading oil multinationals to discuss "technical assistance contracts", or in other words to share out the oil fields, pending approval of the Iraqi oil law by the Iraqi parliament. Guess who was the first company he met with? Exxon-Mobil, the very same company that is in litigation against Venezuela for the nationalization in 2007 of wells in the Orinoco oil belt. If one believes the newspaper reporting the event, a contract will be signed during this current month of March. And so that the contracts will be profitable and operational the US has to keep a large contingent of troops in Iraq permanently...Even according to polls by the collaborationist local media, 70% of Iraqis are against what they consider the "handover of national sovereignty"...But the country is more divided than ever and that leaves the imperialist strategy a free hand. ' It gave references, which I am not quoting/checking. Indeed, a very interesting story.
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'Helicopter Ben' Bernanke and the 'Bankers' Bailout': So many suspect that beyond what's already overt, a covert bail out plan may already be operational...nothing new. 'Since there is so much opposition here to the idea of using taxpayer money to bail out borrowers and lenders who made bad choices, it's worth facing the facts: a stealth government bailout of the mortgage industry is well underway, and a bigger, more ambitious rescue plan appears more likely every day...Fed Chairman Ben Bernanke's latest dollar-dumping mission (they don't call him "Helicopter Ben" for nothing) is the latest chapter in what Cassidy calls "The Bankers' Bailout." It's too late to write your congressman to protest -- the bailout began last summer: "'It is no exaggeration to say that the mortgage market was effectively nationalized" in the third quarter, BNP Paribas economist Richard Iley wrote.' Watch this comment as people get disillusioned by this capitalism: '...and all of this from a government who decries socialized medicine!!!

We have socialized corporate welfare in this country. We taxpayers get nothing, except rising costs for everything.' or this one: 'This is the American way:

"Privatize the profits, socialize the losses."

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Gold Trades at $1,000 an Ounce in New York on Demand for Haven : As I was reading last article, I myself saw Gold at 997.7, but in between sometime it happened. Sad...this gold bug has no gold!
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Meltdown Looms Larger as Credit Markets Freeze: Watch this here: 'So, why is the Fed issuing loans to foreign banks? Isn't that a tacit admission of its guilt in the trillion dollar subprime swindle? Or is it simply a way of warding off litigation from angry foreign investors who know they were cheated with worthless toxic bonds? In any event, the Fed's largess proves that the G-10 operates as de facto cartel determining monetary policy for much of the world. (The G-10 represents roughly 85% of global GDP)...Wonderful. So now the Fed is planning to expand its mandate and bail out investment banks, hedge funds, brokerage houses and probably every other brandy-swilling Harvard grad who got caught-short in the subprime mousetrap. Ain't the “free market” great?' Echoes what I said in Wondering Man Money & Go(l)d...America is going broke and the rest of the world knows it...UBS puts the banks’ total losses from the subprime fiasco at $600 billion. If that's true, (and we expect it is) then the Fed is out of luck because, at some point, Bernanke will have to throw in the towel and let some of the bigger banks fail. And when that happens, the stock market will start lurching downward in 400 and 500 point increments. But what else can be done? Solvency can only be feigned for so long. Eventually, losses have to be accounted for and businesses have to fail. It's that simple. Looks scary because I still have some small money (whatever I am left with after the riot I had in May'06. Thanks to my wife, she has again doubled that in less than 2 years in-spite of the ongoing turmoil). Excellent article.
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India's Rupee Declines as Asian Stocks Fall, Crude Oil Advances : I am really concerned about this, with existing trade deficits high, exports down and now oil prices shooting new high, dollar rising against rupee but falling against most other currencies (includes BRC of BRIC), and stocks falling - India has all the ingredients right. It will be sell India sell story - FIIs know they can sell India and get it much cheaper later. And oil subsidy never help the needy...
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I also liked this one: On Helicopter Ben becoming Air Marshall from being the Fed. Chairman. Poor guy...I have full empathy for the bookish academician! "The risk of losses on U.S. Treasury notes exceeded German bunds for the first time ever amid investor concern the subprime mortgage crisis is sapping government reserves, credit-default swaps prices show," reports Abigail Moss at Bloomberg.' And I talked about it just minutes ago below: 'U.S Vice President Dick Cheney has been dispatched to the Middle East to try and talk down oil prices from $108. Good luck with that Mr. Cheney. Gulf States are importing inflation through their dollar pegs. Keeping oil prices high by refusing to increase supply may be the Saudi's way of getting back at Bernanke for gutting the dollar.' Even CNN sounded like conspiracy school: '"The Fed's actions are keeping banks from having to write down large losses and quite likely go into bankruptcy," he writes on his blog at the American Prospect. "The result is that the bank executives, whose inept management pushed them into bankruptcy, get to keep their jobs and their salaries, which run into the tens of millions a year." Meanwhile, homeowners facing foreclosure - not to mention ordinary savers who are watching inflation erode the value of their nest eggs - remain quite unbailed-out.'.
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Increasing Systematic Risk Portends Cartel ‘End Game’ Attempt: Reading conspiracy school theories help at times...I also believe that economists not having monetary fundamentals linked with gold as an absolute basis is bound to err. Surprisingly this article of 6th March or so sort of predicted what the Fed. did on 11th March. Would Bernanke succeed in bringing down the dollar, capitalism? I doubt that. Would he succeed in bringing up China, Russia...I would agree more here. 'Not only does the sacrifice of the U.S. Dollar penalize savers, as pointed out in the interview, it also hurts the purchasing power of all Americans and, particularly the middle-class and working poor. Indeed the purchasing power of the Dollar has declined over one-third in the past five years, vis-à-vis other major currencies. That is one reason why everything costs so much more.' . Who will explain that to Bernanke who is hell bent on svaing the Wall Street. 'What was all but explicit was the fact that the dramatic increases in money supply debase the currency. The logical conclusion is that the Fed is knowingly destroying the U.S. Dollar. This conscious destruction of the U.S. Dollar and its systemic implications are key components of the Cartel End Game (which Deepcaster first described in its 8/13/06 Alert, and then elaborated on in its June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations” and most recently in its January, 2008 Letter).' True the words of strong dollar policy and bailing out in different forms contradicts...so is it a deliberate ploy to destroy dollar as they succeeded in destroying the gold window? 'Thus it is understandable that one (of several) key components of The Cartel’s End Game (clear even to some members of Congress) is to eventually replace the U.S. Dollar with the Amero (see Deepcaster’s June, 2007 Letter for details). Needless to say, the Amero would be another Fiat Currency whose issuance is planned to be controlled by the same Central Bank Cartel which now controls the fate of the U.S. Dollar.' Interesting theory...what happens to emerging countries forex reserves? All paper to be thrown to the sea?
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Bernanke Playbook Gives Hints on Fed's Next Moves: Why Bernanke's policy may not work, in the strictest economic sense (and not that the US uses its influence on OPEC or Saudi Arabia to increase production or similarly manipulates gold prices) is Bernanke remains a pure academician. Keynes himself I believe was a trader, and if Bernanke would have traded even for months in equities to the various derivatives of derivatives with leveraged positions, he would have realized the hollowness of the system. Capital (ponzy money) can't create capital by itself, it rather is a tool. And the tool was overly misused. US sort of provided money to all over the world, and capital markets globally are tanking to protect the US economy. Too much of anything is bad...remember Schumpeter...'So what other unconventional measures might we expect from Bernanke's Fed in the coming months, based on the speech that tagged him as ``Helicopter Ben'' because of its reference to Milton Friedman's phrase about helicopters dropping money into the economy?'. I am afraid that the Fed. do not enjoy the luxury of all the policies of his academic paper when the Fed. lives on borrowed money from other nations. 'So, brace yourself for a Fed funds rate close to zero, interest-rate-free loans in exchange for a much wider range of debt collateral, and further dollar weakness. And, if Helicopter Ben sticks to the script, the Fed might even guarantee the value of two-year Treasury notes. Strange days indeed.' I agree.
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Bernanke Seeks to Avert Deeper Slump by Accepting Mortgage Debt : My bias on this matter is clear. Let me see what happens, in a similar case, where you and I have bought some financial assets at price P1, and now it's down by significant amount, P2. If I need liquidity, I will have to accept the market price, which at no point no one says is the best judge of valuation, at times being even extreme and book losses. So can you and I also go to the Fed., pledge our assets and get value closed to P1 (keep aside AAA rating as yesterday it said S & P & Moody's have made fun of it as it didn't downgrade many yet!). So banks can take risk to maximize their profits and find lender of last resort at fair value, not you and I. Why?
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Bernanke Policy to `Destroy' U.S. Dollar, Faber Says : Faber said so before also, when Fed had its 1st interest rate cut in recent times. I absolutely agree with his statement that the ``In the U.S., they pursue essentially economic policies that target consumption, which in my opinion is misguided,'' Faber said in an interview with Bloomberg Television from Chicago. ``They should pursue economic policies that stimulate capital investment and capital formation.'' ...He predicted shares in India and China could lose 30 to 40 percent of their value as markets decline worldwide. '.
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Would-Be Borrowers Still Go Begging as Fed Cuts: I expressed my concern about this many times...reaching out to the people who need something most isn't easy.
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Government: U.S. needs foreign cash: 'A majority of American voters think these foreign infusions harm both the national security and the economy of the United States, according to a recent survey by Public Strategies Inc.' Quite expected, but that goes true for other countries also when mostly US-based FIIs poured money in other countries financial markets to create bubble and exited by creating a mess. Although I understand the vast difference between SWF and FIIs, however foreign funds of FIIs has historically not been responsible market participant, as such and SWFs are too new an entity to have much of any record on their responsible behaviour.
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Stiglitz the Nobelist Gets Math Wrong on Iraq War: A non-issue as $3 or 1.7 or whatever trillions is all based on your assumptions. US defense spends stats are only good.
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India Mustn't Kill Loan Sharks to Help Farmers: 'According to a 2003 assessment of farmer indebtedness conducted by the government, eight out of 10 farming households in India have 2 hectares (4.9 acres) of land or less; slightly more than half of them have no debt. As for the rest, half of each household's average 9,000 rupee debt is to ``non-institutional agencies,'' which is the government's euphemism for moneylenders. The smaller a farmer's land holding is, the more indebted he becomes to the loan sharks. This is not by accident. Banks Don't Lend - The formal credit-delivery system, which in villages consists of government-owned and cooperative banks, lends hardly any money to marginal farmers. The latter have no alternative except to agree to pay usurious interest rates -- often 100 percent a year -- to individual lenders. And farmers aren't alone.
Jena, the failed Orissa shopkeeper, was fortunate to have obtained cheap funds under a special government plan that seeks to promote self-employment among educated jobless youth. Not everyone is so lucky. Almost every small-business owner in the fast-growing economy is hungry for credit. Effective interest rates of 50 percent a year and more are quite common even as the State Bank of India's published prime-lending rate, the one at which the bank lends to its best customers, is 12.25 percent.'



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Trade Case Takes Aim at China on Financial Data : At times, decisions like this by Chinese policy-makers (to whom I have probably overpaid my respects repeatedly) act funny. One can surely gauge their deep suspicion and concern in case a financial catastrophe takes place, however market rumours anyway spread. Authentic news can alsways help, and these news-organizations, in-spite of their obvious bias, can't do any more damage than unfounded market rumors at time of disasters.
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Bovespa Beats Biggest Stock Markets on Brazil Consumers, Steel : Here's B of BRIC and some comarison with China. However I doubt the statement that said Chinese m-cap is less than $500 billion. And Brazil again here: Brazil Sends in Police, Sacrifices Jobs to Protect Rainforest
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Buffett says U.S. in recession, stocks not cheap: So the million dollar question finally gets answered from the Omaha...and I believe him more than the Fed or other Federal reporting agencies. And here's another on same topic: Warren Buffett withdraws bond re-insurance plan
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News from the schools, February 2008: ICFAI was in the process of getting accredition from AASCB (The Association to Advance Collegiate Schools of Business). Though I looked at the Economist just to see how it's been doing lately, I found this interesting piece here: Business schools and research, Practically irrelevant?. The article I wrote long back (and now many uses) on Web 2.0 and Academic Publishing is getting more elite recognition. Here is the final report of AASCB on Impact of Research.
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Peloton runs out of road: Being a victim of leveraged positions myself, I wonder why such products got created in the name of hedging and liquidity. All leveraged products should have a statutory warning. This is where I see Economist also coming out with Readers' comments. I also saw What's in the journals, February 2008 which led to Roll up your sleeves—midlife is your best and last chance to become the real you. and thereby following for other journal articles. I am not sure whether this is the vindication that contents (whatever sources, if meant for people at large) must be free, or similar practices have been there for long.

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The Reckoning : A different type of article from Bloomberg, and with lot of insightful numbers, as usual. '"A year ago, everyone thought trees were going to grow to the moon," Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said in an interview on Jan. 27 at the World Economic Forum in Davos, Switzerland. "Obviously, 2007 was a much tougher year than expected, and 2008 is probably going to be the same."'.
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M&A Drop Presages Lean Year for Leaders Goldman, Morgan Stanley : '...investment banks raked in a record $42.4 billion in M&A advisory fees for 2007 for their work on $4.05 trillion in announced acquisitions'. SPeaks for itself...'By year-end, $865 billion in deals had been canceled, more than in any previous year...On Feb. 6, Rio Tinto rejected an all-stock offer from Melbourne-based BHP that would have been worth about $147.1 billion. A deal at that price would trail only the $186 billion sale of Time Warner Inc. to America Online Inc. in 2000 and Vodafone Group Plc's $185 billion takeover of Mannesmann AG in 1999.'


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UBS Faces Dearth of IPOs After Vaulting to Top in Stock Sales : 'The cut bankers got on U.S. IPOs last year averaged 6 percent, according to data compiled by Bloomberg. European initial share offerings generated an average fee of 2 percent.' I assumed these numbers to be much less...surprisingly high if equity is to be used as a low cost financing means of productive assets.
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Rupee weakens to 5-½ mth low as equities weigh: I am really concerned about the fall in Indian Rupee. Out of currencies of all major economies, it may be the worst performing globally. When US$ is in sort of a free-fall, INR still falls against US$ meaning the fall must be higher against other leading currencies. What a pity...the cries for subsidizing the exporters still abound everywhere in the lobby circles.
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Derivative Trades Fell Most in 14 Years in Money Market Freeze : The world trades nearly 10-15% of its annual GDP in derivatives trading everyday. Amazing.
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Venezuela, Ecuador send troops to Colombian borders : I saw the death of Raul Reyes in BBC as well, however as my funda of Latin American geo-politics is not as strong (Kumar has some knowledge of it, like Che Guevara and contemporaries like that). Understand that this is a significant news, but not sure of the implications much (nor know well the relationships the latin American leaders share amongst them).
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The Fall of the Dollar Empire : Came across this article with one of mine on crude, gold and inflation: I often wondered about the currency depreciation (the race to the bottom for export competitiveness and US being a late comer in that club though so long it was the founder and beneficiary of it) impact in US, and saw this: There are two views about the impact of the dollar decline on the US economy: one holds that it would eventually benefit the US economy through boosting exports while others believe that it damage the US economy. What is your opinion?

A.The export view is sheer unadulterated nonsense. The Dollar has been in fundamental decline since the end of WWII, as has its trade deficit!!! A weak currency is not a panacea for economic health. It merely delays the inevitable drive to increase competitiveness, as demonstrated by Germany which has again become the world's No. 1 exporter despite an 80 % appreciation in the Euro since 2001! The drop in the Dollar has, on the contrary, caused only a minimal reduction of its annual $ 750 billion trade deficit, which proves that US lack of competitiveness is truly endemic and not a function of exchange rates. A weak currency also boosts inflation as imports become more expensive. In America's case it represents a 'double whammy' because, while imports become more expensive they are unavoidable since the US doesn't produce many of the consumer goods it needs...The US is totally dependent on China's goodwill. If the US were to ban all imports from China tomorrow morning the US economy would suffer a heart attack as it would have to import those same goods more expensively from elsewhere. In retaliation, the Chinese would sell their surplus Dollar mountain and precipitate a global economic depression. The emerging economies would be better able to withstand such an Armageddon scenario because they are accustomed to hardship, while decadent US consumers are already bankrupt despite an environment of extended global economic growth. It went on to paint gloomier picture...
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Auction Supply `Tsunami' Foreshadows Deeper Municipal Losses : It's the chain reaction triggered by sub-prime to housing to CDOs to Muni-bonds and underwriters to student loan organizations ...to God knows what. A society running on insulins of credit is bound to face the squeeze at any place as the squeeze intensifies. All important question is, would it have a short-term impact or long term one. And even in long term or short term, how short and long they can potentially be? As I see it now, $: Yen stands at 102.88, I myself was bearish on Yen, and if this carnage continues, Yen can be at less than 100 a dollar within weeks. That still will not undo even half of all the carry trades, and I still keep my stand to be bearish over yen over the longer term (I am actually bearish on both dollar and yen, relatively more on yen). And on 3/3/08, as the world's financial markets bleed again from 29/2 losses of the NYSE/Nasdaq, China again shows that it has decoupled from the US markets.
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Gaza Pitfalls in Every Path : A solution must be found and this massacre must be stopped. Many say that's easier said than done, however I still believe it's difficult but possible. Abbas must ensure Palestine is united, and just for the sake of some useless power, he should not be a puppet of Israel/US. Neither the Hamas should run terrorist campaigns against Israel (though out of the two sides, which side is a worse terrorist is open to debate).

Copyright: Ranjit Goswami.