Will mumbai bounce back this time?

The Indian stock market reopened for trading today, after having closed on Thursday following the terrorist attacks in Mumbai, India’s commercial capital. After an initial fall, the markets were behaving normally once trading started, said a strategist working for a research firm. However concerns do exist that the attacks may have a longer-term economic impact.

This is not the first time that Mumbai has faced terror attacks. Each time the city has been attacked that city has only bounced back, that is the spirit of the people of Mumbai. The people of the city as well as the businesses in the city and the foreign investors rest assured that the city will not let them down. A standard Chartered Bank employee is quoted as saying “this time will be no exception.”

In my opinion it is clear that the attacks were just to destabilize the country as the attackers seem to have no other motive in particular other than just making their presence felt. Being from the city however, I feel like this time it is different. Mumbai is known to bounce back each time but this time the city seems shattered. It is or rather was the safest city in the country and now news clips show not a soul on the streets once its dark. I mean the city will definitely bounce back but I don’t think it will be like all other time when come Monday and people just carry on with their life and pretend nothing ever happened. This time I feel the impact is deeper hence I am not surprised when they say that the concern of a long-term economic impact exist.

Power back in the Game!!!

I didn't want to post much politics especially since the election is over, and really this is more about governance, but I have to post this. One of our times greatest thinkers, the author of two amazing books one of which brought her the Pulitzer Prize, Samantha Power is back with president-elect Barack Obama. She served as a senior foriegn policy advisor during his campaign until she called democraitc nominee Sen Hillary Clinton a "monster" for her campaigning behavior in Ohio. This time she will serve on his transition team to prep the incoming secretary of state (all fingers and toes pointing to Sen. Hillary Clinton). I am extremely happy about this as Professor Power is one of my heroes and I would go to Harvard just to take a class with her.

Have Bailouts Worked in the Past?

More and more as the months go on, numerous countries and economic zones are all coming out with their own version of a bailout package. Though this idea of government bailout might seem to be something specific to the past twenty or so years, this article shows both the United States and the United Kingdom and the different bailout packages each country has seen, dating back to the first US bank bailout in 1792.

Japanese Production Falls Sharply

Japan’s industrial output has fallen sharply as fears of recession grow. Both consumer spending and industrial production have fallen more than 3%. Companies are having to adjust their outputs to compensate for the decline in consumption, and just like the United States, the auto industry is hit the hardest. Analysts predict that production will decrease by 8% in the next quarter. The reason for such sharp declines is because Japan relies heavily on exporting goods to foreign markets, which have also been hit by the global recession.

China Fears Unrest Amid Slowdown

The increase in economic slowdowns in China will lead to considerable unemployment, which could stimulate social unrest. The unemployment can be attributed to bankruptcies and production cuts. The forecast of growth for the fourth quarter is expected to be 8%, down from 9% the quarter before. Even with that, China is still growing faster than any other leading economy. To help fix these economic problems, the Chinese central bank cut interest rates fairly aggressively.

Eurozone Sentiment at 15-Year Low

Confidence among Eurozone residents has fallen to a fifteen year low. The economic sentiment indicator has dropped to 74.9 from an already low of 80.0. The Eurozone has experienced two consecutive quarters of economic contraction; therefore, putting them into a recession. Because of this recession, the European Central Bank is expected to aggressively cut interest rates. To also help fix the problem, the European commission has a €200 billion recovery plan in hopes of saving jobs.

Gas prices fall for 73rd straight day

Gas prices fell for the 73rd straight day today and there are only four states with prices above $2 a gallon. Those four states are Alaska at $2.778 and Hawaii next at $2.716. Hawaii makes sense but Alaska? I thought Gov Palin was supposed to this off-shore drilling energy expert? Next is New York at $2.208 which has one of the highest costs of living of any state in the nation, along with Hawaii. Then DC at $2.066; and Vermont, at $2.009. The two lowest states are Missouri at $1.541 a gallon and Kansas at $1.652.

The national average of unleaded fell 0.8 cent today to $1.827 a gallon, according to AAA. The price has fallen to the lowest it has been in about four years. HOORAY!

Real life M. Night Shyamalan Character

A man who crossed the tracks at an Amtrack station to get a cup of coffee got much more than he had bargained for yesterday morning. Jack Daniels, 61, of Canton, was crossing the tracks at the Canton Junction Station about 11:20 a.m. Thursday when he was hit by a northbound Amtrak Acela train heading from New York to Boston which was speeding by at 90 mph. An onlooker run up to Jack to tell him he was hit by a train and Jack didn't believe him and just wanted to know where his teeth were!! The only known injuries so far Jack has sustained are missing teeth and bruises all along his back. This reminds me of that M Night Shyamalan character, ya'll know which one! Except this one was inside the train.

South Korea to inject billions into banks through U.S. credit line

South Korea looks to the U.S federal reserves for a $30 billion swap line to buy out the bad debts from its banks. South Korean banks has been hit hard by this economic down turn due to its reliance on short term credit market, and has become increasingly reluctant to give out loans in fears for further bad debts. The banking crisis has lead to difficulties for small and medium sized business to borrow money as banks tightens up in this weakening market.
The Won(south Korea Currency) has loss nearly 36% of its value against the U.S dollar, lowest level in the past decade reflecting investors' worries about the South Korean economy. Bank of Korea has spend $10.2 billion since October to supply its local traders with foreign currency liquidity through swap deals, depleting its foreign reserves.
$4 billion of the $30 billion swap with be injected into the banking system via an auction. Some analysts were predicting that the nation could go into recession next year, and other criticise that it is to early to be talking about such financial moves for South Korea.

Bombs over Baghdad

Well technically rockets over Baghdad today over the Green Zone killing 2 contractors and injuring 15 others. The Green Zone is a highly secure area in central Baghdad where Saddams palace and other government buildings are held.

Hopefully this is all over in 16 months if not then by 2011 (Bush's new plan for withdrawal, which by the way gives unprecedented power to the Iraq forces and government over our troops). This man was willing to cut any kind of a deal before Obama took office.

Some sadder *ish

This is the link to what's been happening in the Mumbai the past few days. Indian police have reported that the attack has officially ended today this morning in the Taj Mahal Hotel. It started in the Chhatrapati Shivaji railway station when gunmen just started firing indiscriminately into the crowd. They then moved from hotel to hotel not seeming to have a particular target in mind, although they also attacked a Jewish outreach centre.

I remember talking on the phone with an Indian friend of mine the night it started and she said her parents were fighting about whether she could still continue with her trip to Mumbai over winter break. This is a crazy world. I am telling you guys the winning strategy in the bogus war on terror is not bombings and surges. It's giving people opportunities, and listening to them when they speak so they don't feel they have to blow up buildings and kill masses of people to be heard.

Some sad *ish

A Wal Mart employee was stampeded to death at a New York suburbian Wal Mart this morning. He was a 34 year old man. Several other employees and shoppers were trampled and he was the only one that died. Today is the first day of the shopping season before Christmas.

This is some sad stuff right here. I can't think of a more senseless way to die. Besides maybe what's been going on in Mumbai. What the hell?!?! A man died because people were so eager to spend money. And this is a time when we're supposed to be too scared to send money back into circulation! I'm really saddened by this. Maybe more sad than I was when on the day we voted for the first black president, we also took the rights for gays to get married.

Europe announces 200bn euro plan

The European Commission announced 200 billion Euro economic recovery plan, in hopes to save millions of European jobs. The European Commission hopes to boost consumer confidence and stimulus spending. Some of the money will will go to training, improving energy links and broadband access, and developing less polluting cars. But it is a difficult task for the European Commission because of the heterogeneity of Europe, there are many different countries, economic systems and institutions that translates to different needs. Some countries like the UK and German who has already taken step to battle against this economic crisis feels this stimulus package would be redundent. The EU would also have to start puerswading its 27 members to start pumping money into thier economy which could prove to be very difficult also.

Consumer Spending Down 1 Percent in October

Consumer spending dropped 1% in October which was 0.01% steeper drop than the expected nine percent. The drop was due to consumer's concern of the worsening economy. the government measure of the U.S GDP through the July - September quarter showed a 0.5% decline of the U.S economy, with October's steep decline in consumer spending it seems like that the annual GDP decline would be greater than 0.5%. Some projects a 4% annual decline in this quarter based on October's figures.

New Efforts for Stimulus in Europe and China

EU outlined an $258 billion proposal to stimulate the spiraling world economy due to the American sub prime mortgage crisis. China after announcing its $590 billion stimulus plan, the People's Bank of China has lowered its by 0.54% and cut the reserve ratio by 1% for larger banks and 2% for smaller banks. Though demands for real estate mortgages has slowed, lower interest rate would encourage small and medium size businesses to take out loans to help them through this economic down turn. China's $590 billion stimulus plan is largely hinges the ability for banks to create loans and fully employ the money multiplier effect.

The global economy is showing signs of improving

Recently, the stock market in Europe and Asia have improved, according to this article in the NY Times.  This may mean that things are beginning to look up; however, it could also be an anomoly.  The article also mentions that "savings rates are beginning to rise even as net pay falls."  I think that this is an interesting development-it should help the banks, because people are going to be putting more money into them if they're saving; however, retailers are going to be even more hurt by the recession, which will not be good for the economy.  

Japan Jobless Rate Falls to 3.7%, Consumer Cut Back

Japan’s unemployment rate unexpectedly fell in October as people stopped looking for work. Household spending fell.

The jobless rate fell to 3.7 percent last month from 4 percent in September, the statistics bureau said today in Tokyo. The median estimate of 35 economists surveyed by Bloomberg News was for unemployment to rise to 4.2 percent. Household spending fell 3.8 percent from a year earlier.

Toyota Motor Corp., world’s second biggest carmaker, said last week it will cut 3,000 contract workers, joining Isuzu Motors Ltd. and Mazda Motor Corp. in announcing job cuts. Consumers are now paring back spending because of concern about job security, rather than the risk of inflation that bothered them in the first half of the year.

Prime Minister Taro Aso plans to respond to the worsening outlook for consumer spending in Japan by asking Japanese corporate executives next week to seek higher wages for workers, Kyodo News reported yesterday, citing people familiar with the matter. The report didn’t mention whether Aso planned to ask companies to try to retain workers.

The government and the Bank of Japan downgraded their assessments of the world’s second-largest economy this month. Japan fell into its first recession in seven years last quarter.

Companies announced job reductions after exports declined at the fastest pace in almost seven years last month, prompting production cuts.

GM Said to Study Shedding Saturn, Saab, Pontiac to Win U.S. Aid

General Motors Corp., working to cut costs to win $12 billion in government loans, is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer, people familiar with the matter said.

Selling or dropping brands would save money and reduce overlap as the biggest U.S. automaker struggles to avoid running out of operating cash by year’s end, said the people, who didn’t want to be identified because no decision has been made. GM’s other U.S. brands are Chevrolet, GMC, Buick and Cadillac.

GM has been trying to combine Cadillac/Hummer/Saab and Pontiac/Buick/GMC brands into big dealerships able to benefit from higher volumes and lower marketing costs. Toyota Motor Corp., which includes the Scion brand, sold an average of 1,071 cars at U.S. dealerships in 2007 compared with 274 at Saturn, 118 at Pontiac and 115 at Saab, according to Automotive News.

Rubinomics Recalculated - What will president-elect Obama do to help the economy?

Many people are looking forward to what Mr. Obama will do to help pump up the economy. So-called Rubinomics is an economic formula that refers to balanced budgets, free trade and financial deregulation, a combination that was credited with fueling the prosperity of the 1990s.
It is testament to former Treasury Secretary Robert E. Rubin’s star power among many Democrats that as President-elect Barack Obama fills out his economic team, a virtual Rubin constellation is taking shape. The president-elect’s choices for his top economic advisers — Timothy F. Geithner as Treasury secretary, Lawrence H. Summers as senior White House economics adviser and Peter R. Orszag as budget director — are past protégés of Mr. Rubin, who held two of those jobs under President Bill Clinton. Even the headhunters for Mr. Obama have Rubin ties: Michael Froman, Mr. Rubin’s chief of staff in the Treasury Department who followed him to Citigroup, and James P. Rubin, Mr. Rubin’s son.

However, this time, Rubinomics might change to a total different definition.
-Instead of deregulation, Mr. Obama has sworn to usher in a period of re-regulation
-Instead of balancing budgets, the Obama team will be going deeper into debt for at least two years by spending hundreds of billions of dollars more to stimulate the economy, without concern for deficits, for aid to the jobless, states and cities; tax cuts for workers; and job-creating construction of roads, schools and other public works. This weekend the team has mentioned a stimulus plan that will create or save 2.5 million jobs.
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Hopefully, these plans will actually work, and these few good news will help bring up consumer confidence.

Bush Urges Countries to Avoid Protectionism

This article talks about the global financial crisis that started in the United States. and how George Bush has tried to dissuade other countries from using protectionist policies. Bush says that the lesson to be learned from the great depression is that protectionism doesn't work, and can only add to the problems. Do you think he is right??

Is the Bailout Constitutional

This article was published on October 20, 2008. The author argues if the recent bailout was even constitutional.

A good read for those interested in politics and American national government.

Conundrum between Deflation and Inflation

The M1 money supply has been increasing and there are high levels of liquidity. Central banks around the world, including emerging economies, have used expansionary monetary policy (cutting interest rate) to ensure this. Besides that, large amounts of capital and liquidity are being injected into the economies around the world. Theoretically, from a monetary perspective, this is highly inflationary.

However, it is the banks and other investors who are increasingly unwilling to lend money. The rates at which banks lend money to each other remain extremely high and mortgage rates are rising, despite global interest rate cuts by central banks. Banks are not facing a liquidity problem as they have ample reserves. The problem is that they are unwilling to lend for fear that borrowers will default on their loans.

Banks are hoarding cash, and consumers have increased saving. So when there is enough money going around, but nobody wants to lend/invest it, the result is a credit crisis.

If demand collapses, and goods start to pile up, prices fall (due to a surplus),w which leads to deflation. This is what is happening in the current economy.

Currently, in the battle between inflationary forces (too much money floating around) and deflationary forces (the unwillingness to lend/invest), the deflationary forces are winning in the economies around the world as the severe credit squeeze and deleveraging that has been taking place are working their way through the system. But inflation lurks in the background.

Citigroup JP Morgan and Capital One Bid for Chevy Chase

Citigroup Inc, JPMorgan Chase & Co and Capital One Financial Corp are among the final bidders for Chevy Chase Bank.

Chevy Chase has $11.4 billion of deposits and 292 branches, according to the Federal Deposit Insurance Corp website. Though the asset side of the bank is not very attractive, the deposit side is incredibly valuable because it is in Washington, D.C.

Deflation: What Investors Need to Know

Forget inflation for now. Prices are falling on almost everything, including stocks.

Investors need to adjust to a new reality: A few months ago, inflation was a top worry, especially the impact of sky-high fuel prices. Now, although consumers can celebrate falling prices at the gas pump, investors' worry is exactly the opposite.

Instead of inflation, the problem is deflation, a downward drift in prices that could squeeze corporate profits and investor returns to uncomfortable levels.

This article talks about some trends and problems relating to deflation.