Quite few weeks before, there was a comment on one of my article about Depression in 2008, which I boldly ruled out. But two weeks back, I have started seeing the D word to swing across many people and I did write an article "Face of Depression in 2008". While I was writing "Face of Depression..." I was one amoung many who believed that 2008 has been fixed by Fed's action moves to make it not like 1930 (Great Depression). But I dont think we are shore yet....
Yet another violent week last week, with General Electric profit miss and weak 2008 outlook battered stocks Friday and put investors on edge. Fallout from losses at General Electric and other factors pointing to a U.S. recession hit global stock markets hard.
The rippling effect of US economy on other foreign nationals started showing up. European stocks dropped for the fifth session in a row as weak corporate results continued to spook investors. Japan's average index lowered around 3% approx. The IMF forecast U.S. economic growth to be 0.5% in 2008 and the downturn is expected to hamper growth in other Western nations. (IMF forecast also noted that India & China will have a slight lower economic impact in 2009).
Finance chiefs from the Group of Seven rich nations did show concern about the credit crisis rippling around the world. (This indeed shows how nations have been inter linked with each other). With exchange rate fluctuations going high .. Euro raised too much against dollar last week. This has raised so much concern amoung as the fear of global economy imbalances may cause prominent issues.
Retail which drives the huge percentage of GDP formula of America, showed very sluggish growth. Which clearly shows the lack of consumer confidence.
At this stage or considering first quater of 2008... with rising oil prices which has hiked commodity prices across the world and the rising food prices, many foreclosures, job losses across the nation - Just bad days, my friends, Just bad days.
Monday, April 14, 2008
Wednesday, April 9, 2008
Last week in Wall Street:
Apologize for the late article this week. Not sure what the hell I was doing, but I did became lazy.
Anyway, last week in Wall Street, who cares ah??? :) To date, the recent liquidity measures implemented by the Federal Reserve seem to have been helpful in addressing some of the strains in financial markets. Funding pressures appear to have eased somewhat, and liquidity seems to have improved in several markets. But "while acknowledging for the first time that the economy may be in a recession", Bernanke told the Joint Economic Committee of Congress last week that the Fed's actions ``will help to promote growth over time and to mitigate the risks to economic activity.''
Joint economic committee meeting was indeed very interesting to watch. Ben did take many jabs but did stood put in the 13 round boxing match with the congressmen. To me, many of the congressmen questions looked very legitimate to me. One of the congressmen did asked Ben to explain what assets were taken as collateral by Fed for 30 Billion dollar and are those assets worth?
Not many solid answers for this question, raised the question to me personally, that did Fed made a sound investment in this Bear's deal or they just helped to avoid a economy meltdown. Lets put this way, if Bear's dont pay in 10 years, (I believe the deal is for 10 years)... Fed own's those assets.. I dont think Fed would have taken just a plain pan shop as collateral, may be some sky scrappers in waters street, who knows....
Anyway, I was reading an article on the salary of the Top CEO's of the Wall street, damn fuckers, they earn around 31 Million Dollar/Year. And the average mean salary of an asian men in America is 53,000$. Yes, they are the key to the business world, but 31 Million, that is f***ing big.
Yet another blow to the economy came with the news that, Job loss was estimated to be 80,000 just for March. Wallstreet Journal came with the estimate to anticipate further job cuts. But honestly, from my friends circle in wall street, trading floor. Not many of layoffs happening this season because of the lesson wall street learned during last bubble. During 2001, due to a bubble, wall street did layoff many people, but when the economy boomed, they couldnt find the resources back. They say, companies have flushed many stupid junks who used to sit in office seat and rubbing the rubber with their ass.
Anyway, last week in Wall Street, who cares ah??? :) To date, the recent liquidity measures implemented by the Federal Reserve seem to have been helpful in addressing some of the strains in financial markets. Funding pressures appear to have eased somewhat, and liquidity seems to have improved in several markets. But "while acknowledging for the first time that the economy may be in a recession", Bernanke told the Joint Economic Committee of Congress last week that the Fed's actions ``will help to promote growth over time and to mitigate the risks to economic activity.''
Joint economic committee meeting was indeed very interesting to watch. Ben did take many jabs but did stood put in the 13 round boxing match with the congressmen. To me, many of the congressmen questions looked very legitimate to me. One of the congressmen did asked Ben to explain what assets were taken as collateral by Fed for 30 Billion dollar and are those assets worth?
Not many solid answers for this question, raised the question to me personally, that did Fed made a sound investment in this Bear's deal or they just helped to avoid a economy meltdown. Lets put this way, if Bear's dont pay in 10 years, (I believe the deal is for 10 years)... Fed own's those assets.. I dont think Fed would have taken just a plain pan shop as collateral, may be some sky scrappers in waters street, who knows....
Anyway, I was reading an article on the salary of the Top CEO's of the Wall street, damn fuckers, they earn around 31 Million Dollar/Year. And the average mean salary of an asian men in America is 53,000$. Yes, they are the key to the business world, but 31 Million, that is f***ing big.
Yet another blow to the economy came with the news that, Job loss was estimated to be 80,000 just for March. Wallstreet Journal came with the estimate to anticipate further job cuts. But honestly, from my friends circle in wall street, trading floor. Not many of layoffs happening this season because of the lesson wall street learned during last bubble. During 2001, due to a bubble, wall street did layoff many people, but when the economy boomed, they couldnt find the resources back. They say, companies have flushed many stupid junks who used to sit in office seat and rubbing the rubber with their ass.
Thursday, April 3, 2008
Time Vs Life (Not the Magazines)
Recently I heared a folk song "Cat’s in the Cradle". This song was sung by Harry Chapin in 1974. There is ofcourse quite a controversy in this song, that this was not performed by Harry but it was by Cat Stevens. I am not sure how many Cat Stevens fan read my article...
The song is about the life of a busy man who isn’t there when his son grows up and who, in old age, is ignored by the son, who is very busy and grew up just like the father. The singer regrets not having spent time with the son, yet at the same time he describes his own busy life. (Read the lyrics of this song or listen it once, it is worth like the song "Life in a fast lane" by Eagles).
I wonder whether, had the father spent more time with the son, the son would have been better off. The father wouldn’t have earned as much, and the son wouldn’t have had the financial security that the father’s earnings enabled him to have, but they would have had more time together.
One is always constrained by both time and the ability to consume goods. And I believe its upto any individual to make that choice. In my sense, except for those who inherit large fortunes from great great grandfathers, the choice comes down to additional earnings and resources for one’s family, or more time with the family.
I think, you can never blame anyone, because thats the choice or road which anyone takes. Its the balance one identifies as balanced; but may look imbalance to others or to himself only he himself sees with his third eye. I am sure this applies to me too.
The song is about the life of a busy man who isn’t there when his son grows up and who, in old age, is ignored by the son, who is very busy and grew up just like the father. The singer regrets not having spent time with the son, yet at the same time he describes his own busy life. (Read the lyrics of this song or listen it once, it is worth like the song "Life in a fast lane" by Eagles).
I wonder whether, had the father spent more time with the son, the son would have been better off. The father wouldn’t have earned as much, and the son wouldn’t have had the financial security that the father’s earnings enabled him to have, but they would have had more time together.
One is always constrained by both time and the ability to consume goods. And I believe its upto any individual to make that choice. In my sense, except for those who inherit large fortunes from great great grandfathers, the choice comes down to additional earnings and resources for one’s family, or more time with the family.
I think, you can never blame anyone, because thats the choice or road which anyone takes. Its the balance one identifies as balanced; but may look imbalance to others or to himself only he himself sees with his third eye. I am sure this applies to me too.
Saturday, March 29, 2008
Face of Depression in 2008
Federal Bank or Fed (like RBI in India) last week did helped one of the top investment banks (Bear Sterns) going out of business; Bear Sterns was funded around 200 Billion USD to remain in business by Fed in terms of collateral as Bonds.
Why on a Sunday night, Fed Chairman Ben Bernanke came out immediately in the moment when Bear's were losing shareholders or investors, which is anyway a stock trading investment bank - not our savings account or checking account money held in commercial bank or government money going down. Why did Fed did that inspite of Protestors who lost homes did charged Bear's office last week? Fed could have helped them by giving the money to people? 200 Billion could bring these people out of debt..
Do you know the rippling effect which happens when a stone is thrown in the pond.What is this connected to Fed & Bear. Let me explain.
Say if you are a small town, you have few banks, few business (lets take a food store) in the town runs by borrowing money from the bank (You asking why?, lets take an example, if you want rice you go to a shop and buy. But does the farmer have to wait till he gets an order, then plants rice and then gives you, NO. He borrows from a bank, puts that money into land as seeds and then after harvest, wait for profit - Once he gets money, he pays the bank and makes some profit).. You as a customer to these businesses rent a house, use electricity and buy food etc.
Lets say some day banks don't have money to lend or simply they don't lend any further to business or any new business. What happens. Business cant run because they need money to run. So the Mayor of the town will have to import from other cities to feed you. So the money of the town is spend as expense to buy rice or commodities from other towns. If that is the case, think about you buying rice from farmers market and from a super market store. The rice in the super market store might have come from china too :).. so the price is going to be = Price of rice (that may be cheap) but + transportation cost + inventory cost + import duty cost .etc....
Now think about USA... if banks in USA loose money or they run out of business, huge industries in USA would get huge hit and inflation will peak. (This Bear thing did happen in India, you guys should remember. Chit Funds, when few chit funds cheated and the news spread, many people raided other chit funds. So even good performing chit funds would have got hit when people asked their money back.)
My point is, may be only to avoid this, Fed did back up Bear so that, if Bear falls, it may send a false hope across investors - many would pull their money - other investment banks might get affected. This is called Credit-Crunch in financial market, where no one is ready to use their money for anything. And this causes a state, in short named as,DEPRESSION. As in 1929.
Monday, March 24, 2008
Last Week in Wall Street
Market Last week:
Last week was a week of thrill action with the following action taking place:
a. Fed's involvment with JPMorgan to bid for Bear Sterns (Bear Sterns is the fifth largest investment management bank in wall street) to make sure Bear does not file into bankruptcy.
b. Fed cutting interest rate by 75 basis points (i.e., 0.75%)
c. Fed allowing investment bank to borrow under the same umbrella as commercial banks (This means my friends - our money is put to risk) - This has not been done from late 1931 - which was done at that time during the great depression.
d. Fed annoucing to take mortage related securities (shares to say in simple) in turn of borrow money by mortgage related institutions
e. And not the least Goldman and Lehman showing better revenue than predicted. ow ow ow... The American stock market did see a green signal last week - with shares raising - and investors coming back to wall street - This increase showed reciprocal decrease in oil and commodities prices. Good week in general.
But I dont know why but I keep thinking this way... the market is bearish.. which means every body is feared of recession... and market not performing well... meanwhile fed & few others are trying to do something which is keeping the market up and down...
I dont know how many of you guys take dogs for walking... I do... sometimes, my dog becomes too tired that it does not want to move... it sits in a place... and looks at me like "Shit man wont you stop for a minute... let me grab my breadth"... at that moment.. if you understand him... you take a break with him... and few moments later... here we go.. it comes back to action... and we are back home... but if you push him hard at that moment... either it gets angry... or it comes with you.. but you guys drag and drag and spoil a good morning....
I know finance and dog-walking are not related in any sense... but this keeps me thinking that are we trying to push a market which is bearish.. does this mean.. if the Fed runs out of play in their play books... does the market going to recession for sure and there we go... lets sit tight for a year to watch the market coming up?
Anyway, in short.. recession is talk of the town, whether you like it or not... but you do see bar with full of action which was deserted last week...
Last week was a week of thrill action with the following action taking place:
a. Fed's involvment with JPMorgan to bid for Bear Sterns (Bear Sterns is the fifth largest investment management bank in wall street) to make sure Bear does not file into bankruptcy.
b. Fed cutting interest rate by 75 basis points (i.e., 0.75%)
c. Fed allowing investment bank to borrow under the same umbrella as commercial banks (This means my friends - our money is put to risk) - This has not been done from late 1931 - which was done at that time during the great depression.
d. Fed annoucing to take mortage related securities (shares to say in simple) in turn of borrow money by mortgage related institutions
e. And not the least Goldman and Lehman showing better revenue than predicted. ow ow ow... The American stock market did see a green signal last week - with shares raising - and investors coming back to wall street - This increase showed reciprocal decrease in oil and commodities prices. Good week in general.
But I dont know why but I keep thinking this way... the market is bearish.. which means every body is feared of recession... and market not performing well... meanwhile fed & few others are trying to do something which is keeping the market up and down...
I dont know how many of you guys take dogs for walking... I do... sometimes, my dog becomes too tired that it does not want to move... it sits in a place... and looks at me like "Shit man wont you stop for a minute... let me grab my breadth"... at that moment.. if you understand him... you take a break with him... and few moments later... here we go.. it comes back to action... and we are back home... but if you push him hard at that moment... either it gets angry... or it comes with you.. but you guys drag and drag and spoil a good morning....
I know finance and dog-walking are not related in any sense... but this keeps me thinking that are we trying to push a market which is bearish.. does this mean.. if the Fed runs out of play in their play books... does the market going to recession for sure and there we go... lets sit tight for a year to watch the market coming up?
Anyway, in short.. recession is talk of the town, whether you like it or not... but you do see bar with full of action which was deserted last week...
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