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.

What does Hu Jintao's visit to Latin America mean?

Hu Jintao, Chinese President has sealed a deal of free trade with Peru. China wants lower tariffs on its exports and more access to Latin America's raw materials. The visit signals China's growing economic strength and influence in the region.

Hu Jintao also stopped by Cuba, agreeing to buy the island's sugar and nickel as well providing aid to the country.

Peruvian domestic sectors fear that this free trade deal will bring more harm than good with the influx of cheap Chinese goods to the economy.

I think the relationship between the USA and Latin American countries could grow more tensed...

IMF finally approves $2.1B loan to Iceland

The International Monetary Fund on Wednesday approved a two-year, $2.1 billion support program for Iceland designed to restore confidence and stabilize the country's shattered economy.
Iceland's most pressing need is foreign currency. The island is dependent on imports, and foreign suppliers demand foreign currency for payment. Trade in Icelandic kronur is limited since few investors want to buy it and the central bank has put restrictions on currency trade to prevent a massive outflow of capital.
The IMF funding had been delayed amid disputes between Iceland and other countries over how to compensate foreign depositors with money frozen in the island's collapsed banks. An acknowledgement Sunday by Iceland that it is responsible for the first €20,000 ($25,200) of foreigners' deposits appeared to have mollified the other countries.

Financial Crisis is Triggering More Smoking!

This article provides very interesting information about how the current economic crisis, which has of course led to higher levels of stress, has tempted snokers across the country to either increase their smoking and/or switch to a cheaper brand of cigarettes:

The American Legacy Foundation -- the nation's largest public health foundation dedicated to reducing tobacco use in the U.S. -- announced that, according to their new survey, 77% of current smokers reported increased stress levels due to the current state of the economy and 2/3 of those smokers say this stress has had an effect on their smoking.

November marks Lung Cancer Awareness Month, a time when smokers might reflect on the life threatening nature of their addiction, yet this new data indicates smokers are suffering more than ever as stress is causing smokers to delay a quit attempt, increase the number of cigarettes they are smoking, or switch to a cheaper brand instead of quitting. Moreover, some former smokers report they are starting to smoke again because of the stress over the financial situation.

Among the survey findings:
1. One in four smokers stressed about the economy say this stress has caused them to smoke more cigarettes per day, higher among women (31%) than men (17%).

2. A greater percentage of stressed smokers with a household income of less than $35k reported smoking more cigarettes per day (38%) due to the current state of the economy, compared to those with household incomes of $35-74k (24%) and those with incomes of more than $75k (13%).

3. A greater percentage of middle-income ($35-74.9k) smokers have delayed their quit attempts because of stress over the economy (20%) than those with household incomes of under $35k (14%).

4. Unemployed smokers stressed about the economy reported smoking more cigarettes per day (29%) in greater numbers than full-time or self-employed stressed smokers (17%).

2,375 U.S. adults aged 18+, of whom 1,347 had ever smoked, participated in the survey. The survey also found economic stress is causing smokers to re-evaluate their buying habits when it comes to tobacco products:

1. 1/5 of smokers stressed about the state of the economy have switched to a cheaper brand to save money.

2. More stressed smokers with household incomes of less than $35k (28%) reported brand-switching compared to those with household incomes of more than $50k (12%). One quarter of those with incomes of $35-$49k reported switching brands to save money.

Chen Shui-bian ordered held

Former President of Taiwan Mr. Chen Shui-Bian, faces corruption charges and is currently held in captivity. Chen Shui-Bian the two term president of Taiwan from 2000-2008 had gained his popularity through fighting corruption is now ironically being charged with embezzlement, fraud, bribe and money-laundering. Chen claims that he is innocent and that this is a "political persecution!" while hand cuffed and being hauled to a court hearing.

Foreign Companies Look to Investing in India

International brands are coming to India in search of safer markets and cash-rich customers. This is due to a bleak outlook in developed markets where purchasing power has been severely eroded and consumer confidence is low.

The most prominent has been in the airlines industry and in consumer goods.

In airlines industry, several global players such as British Airways, Virgin Atlantic, Singapore Airlines and Emirates have approached the Indian Airline Company, Kingfisher Airlines, to pick up a stake.

PepsiCo on Sunday is going ahead with its planned $500 million investment in India over the next three years. The CEO of PepsiCo India Holdings has said that the global slowdown has mostly affected consumer durables and the financial and banking sectors while there has been no slowdown in FMCG (fast moving consumer goods). This statement was made in September at the India Economic Summit organized by the World Economic Forum and the Confederation of Indian Industry (CII).

The investment would go towards manufacturing capacity expansions, agriculture, research and development, marketing infrastructure and ensuring environmental sustainability.

Pepsico has so far invested $700 million in India since its inception in 1989, and provides employment to 150,000 people directly and indirectly. It has 43 bottling plants in the country out of which it owns 15 and the rest are franchises. The new investment will add another 50,000 direct and indirect jobs.

Survey by Fed Showing the Magnitude of U.S. Economic Crisis

For those of you are interested in data and numbers, the Federal Reserve in Philadelphia has published a survey on November 18, 2008 measuring the magnitude of the current economic crisis in U.S. The survey, based on interviews with 51 leading economic forecasters, is published every three months.

Consumer Confidence Still High in India

There is no lowering of consumer confidence (unlike in the U.S.) in Indian banking as far as the diaspora is concerned. At a time when many overseas banks are
struggling to raise liquidity to stay afloat, non-resident Indians (NRIs) are reposing their faith in Indian banks and betting on the rupee having bottomed out. Lured by higher returns (the last time I checked, the interest rate on savings was 15%!!!), NRIs have poured in $513 million in NRI deposits in September this year — the highest since December 2006.

NRIs have infused a total of $513 million (on net basis) through its major schemes — 1. foreign currency non-resident (banks) or FCNR (B)
2. non-resident external (rupee accounts) or NRE(RA)
3. non-resident ordinary (NRO) accounts. Significantly, bulk of this has hit the NRE(RA) scheme
This reflects the attractiveness of rupee-denominated deposits to NRIs.

NRO deposits that are not repatriable and are meant for local use by NRIs. During April-September this year, banks raised a cumulative $787 million through various NRI deposit schemes as compared to an outflow of $78 million in the year-ago period. Bankers say that it is largely a case of flight to safety towards Indian banks by the diaspora, which has been accelerated by deposit rates becoming more attractive. Since mid-September, Reserve Bank of India (the central bank in India, similar to the Federal Reserve in U.S.) hiked the cap on returns offered on NRI deposits thrice.

The pattern of deposits mobilized indicates that depositors have preferred to park more in NRE (RA), where the currency risk is borne by the depositor. They are at the same time also shunning FCNR (B) deposits where there is no currency risk for the depositor. Earlier, NRI deposits had lost sheen as NRIs preferred the remittance route and earned a higher return on their investments in local fixed deposits, equities and realty through their relatives. Relatives, in turn, could send back up to $200,000 a year!

Interestingly, depositors’ current preference for NRE (RA) has strengthened at a time when the rupee is weakening against the dollar. Since the currency risk is taken by the depositor, whenever the rupee appreciates he gets to take home more dollars in addition to the interest income on the deposit.

Standard Chartered Bank expects the rupee to strengthen further against the dollar in the next financial year. It has projected the local currency at Rs 45 per dollar in 2009-10. Standard Chartered Private Bank global head of NRI Shiv Khazanchi said in Kolkata: "We expect India’s balance of payments to improve to $10 billion in 2009-10 from a negative $11 billion in 2008-09. With this, the rupee is also likely to appreciate to Rs 45 per dollar in 2009-10."

More trouble for auto bailout

The auto industry continues to ask for a federal bailout but was refused once again by Congress. CEOs of major automobile companies ( General Motors, Ford Motor, and Chrysler LLC) were dealing with criticism from Spencer Bachus of Alabama, the committee’s ranking Republican before the companies even started their requests to the House Financial Services Committee. He stated that they don’t understand why people’s tax dollars should support “less efficient businesses”. He said most of the people he works will earn less money than the autoworkers whose jobs would be saved. However, Barney Frank (House Financial Services Chairman) believes that we shouldn’t take into account the pay of the autoworkers because there wasn’t discussion of the pay of the average worker at the financial firms that received government bailouts in October.
The industry is asking for $25 billion in loans to support them through the current downturn and is offering the government an equity stake in the companies if they get the help. General Motors announced Nov. 7 that it could run out of money that they need for operations by the end of this year or early next year if they don’t receive federal assistance. But Paul Kanjorski, D-Pa., said, "I am not yet convinced that we must act so rashly," he said. "The American public demands that we get this right."
Kanjorski asked GM CEO Rick Wagoner for the minimum amount of money necessary to keep GM afloat through March 30 to give Congress more time to work on a bailout package. He asked when they would run out of money. However, Wagoner wouldn't give more details more than the company's statement that it could be out of cash later this year or early next year. He said, "I don't believe we have the luxury of a lot of time," and when he was pressured for an exact deadline he responded that he can’t say for sure. Nardelli said Chrysler had looked at filing for bankruptcy. But he said even if the company decreased costs and contracts under bankruptcy, it would find suppliers demanding cash on the delivery of parts, which would cause an even greater crunch on cash.

Russia Suffers Plunging Reserves as Ruble Struggles

Nov. 19 (Bloomberg) -- Russia's foreign-exchange reserves are draining fast and may take almost a decade of economic stability with them.

Russia's international reserves, the third-biggest after China's and Japan's, have fallen $122.7 billion, or 21 percent, since Aug. 8 as the central bank tried to shore up the ruble. At the same time, President Dmitry Medvedev, 43, has pledged more than $200 billion of tax cuts, loans and other measures to maintain economic growth, threatened by plummeting oil prices and investor flight.

A British Lesson on Auto Bailouts

This articles draws interesting comparison to the current auto-maker crisis in the United States to the British Layland car company. British Layland was once an auto-industry giant in Britain owning 36% of the British market in the early 1970's, but by 1975 faced bankruptcy due to strong competition from Japanese and German car makers, poor quality and poor management of labor relations. The company was bailed out in the 80's with an bailout package equivalent of $5.1 billion in today’s money. But in the bailout failed and the company gone under.

Arguments FOR the Bailout Plan

For those of you who are against the government bailing out the auto industry, this article provides an interesting read on how the $25 billion rescue loan would help maintain an essential industry. The author considers this more as an investment and not as a bailout.

Just to gain some perspective ...

Key Questions Remaining from the G-20 Summit

Five fundamental questions went unanswered in the G-20 summit this past weekend.

1. What is protectionism?
Many of the country's representatives were advocating against protectionism and had agreed to revive the Doha Round of global trade talks. But there are questions raised regarding this. If the three auto industries in U.S. are offered a bail-out, then would it be categorized under a subsidy, which is illegal under the WTO?

2. There is the question of whether governments should encourage or repress consumer spending. Proponents of increased consumer spending believe that it will help revive the economy. That is why the U.S. bailout package was revised to include support to credit card borrowing, student loans and auto loans. Opponents claim that the financial crisis was partly brought in due to excessive spending and borrowing. Therefore, cutting back is exactly what Americans must do to restore balance to the global economy.

3. Is it important to put a price floor on homes?
Treasury's Paulson has argued that the financial crisis will not come to an end until the decline in home prices reaches a bottom. Therefore, many people are trying to prevent more foreclosures and are trying to offer incentives to buyers.

But other experts say that buyers who expect prices of homes to further decline would put off buying them until later when the actually drop. Therefore, trying to prop prices above the level they naturally seek would merely delay the necessary market adjustment resulting in keeping prices unaffordably high.

However, there is no universally approved answer to what the correct or equilibrium level or prices should be, so it is hard to take sides in this situation.

4. Should world leaders try to ensure that a financial crisis such as this one never occurs again?
The obvious answer is yes but there is a catch to it. The G-20's statement instructs the various nations to report back by the end of March about the progress they have made on restructuring financial regulation. In their zeal to show progress, government officials may push lenders to tighten up, offsetting the elaborate efforts to provide fiscal and monetary support.

5. Do we need global coordination?
The obvious answer is again yes. But the government officials focused more on the long run, and they do not have specific guidelines as to how to work together in the short term. This may be good since in the short run, each country has to use different policies to get out of the current situation. While the U.S. may need to consume less and save more, Chine may have to do the exact opposite to boost its economy.

The Onion

If any of you don't know The Onion, it is a satirical newspaper that prints fake articles parodying various aspects of society. This one is about a Fraternities attempt to save the economy, and so if you are in the mood for some lighter reading I suggest checking it out.

No Money, No Problems

According to an article in the New York Times, published yesterday, 7 senior executive from Goldman Sachs have opted to receive zero bonuses at the end of this year. This move serves as a challenge to Goldman's competitors to rise to the occasion and do the same. The article states, that "the move could also ease political pressure on Goldman Sachs and reduce negative reaction to what is expected to be a bleak fourth-quarter earnings report from the bank in December, including perhaps its first loss of the credit crisis."

With executive compensation in the spotlight these days, I find it somewhat noble for these top execs to forgo their bonuses during such a rough economy. That doesn't mean that I feel sorry for them, seeing as they already have millions of dollars in the bank to lean on, but I do think it is something for others to pay attention to.

Arguments against Bretton Woods II

Gordon Brown, many in the European Union and the media have been calling for a “Bretton Woods II” as the next step toward preventing future meltdowns of the international financial system.

This article provides a series of arguments against this:

1. Collaborating the World Bank with the IMF is not a good idea because unlike the IMF, the World Bank has no mandate to establish rules for the international financial system. While the World Bank has competence in fostering financial sector soundness in emerging market countries, they cannot not in the advanced countries where the current turmoil began.

2. Nothing useful can emerge from the Bretton Woods II system until the United States is ready to stop using the IMF as an instrument of U.S. policy.

3. Checks and balances -- If we consider the IMF to be a public health physician, then it has the responsibility to prevent diseases in addition to just identifying them or treating patients. The IMF has to look at the system as a whole, detect weaknesses and recommend corrective action.Today, the United States is not politically or emotionally ready to listen to, let alone adopt, the IMF's advice.

4. The article says that domestically, the United States advocates for checks and balances. But internationally, the United States, having won against communism, behaves as if it alone knows best how to deal with every other global challenge. After fighting enemies in Afghanistan and Iraq, with victory still elusive, Americans are beginning to comprehend the difficulty of trying to re-make the world in their image. But moving into listening mode represents a 180-degree turn.

5. The election of Barack Obama as the next President of the United States provides some basis for optimism, but there are other measures to be considered like giving up the U.S. veto and supporting a large capital increase.

Euro Zone Joins the U.S in recession

Euro Zone has fallen into its first recession after reports emerged last Friday. The European Central Bank is planning to cut interest rates again in December as inflation continues to fall. Tough times are ahead as financial systems around the world are experiencing the ripple effects of the U.S financial crisis. The economy of 15 countries using the Euro sank 0.2% since July-September, and sank as well in April-June. This is the first time since 1999 that the Euro zone contracted in two consecutive quarters.

Unfortunately this seems to be only the beginning. Banks are expecting negative GDP growth in the third quarter as well. Many are speculating that this negative growth will last well into 2009. "Now the recession has been confirmed, the debate is concentrated on its length and severity. It seems that the current financial crisis is going to affect more significantly the real economy than initially anticipated," said Maryse Pogodzinski, economist at JP Morgan.

Auto industry wants a bigger bailout too?? Seriously??

capitalism is on it's knees right now, with it's most fundamental clause: of letting weaker companies collapse so that newer, more efficient ones crop up in it's place, is being challenged by it's most vocal proponent, USA. I'm more aligned towards the democrats when it comes to whether the government should provide funding for all the big ticket items such as healthcare and education, but now the auto industry?? Seriously??? I mean I can't help but agree with the "conservatives" here because this has been brought on my their own failures to mold themselves into better, more efficient companies that make better cars with higher fuel efficiency. Didn't the 80's do anything to wake these guys up and realize their follies before it's too late.
The auto industry now wants a bailout too, but their is fundamentally different from what has been offered to the financial industry. If the government provides them 25 billion dollars, they'll spend it on their own capital needs. The financial package for the finance industry though, is a capital infusion for the country as a whole, cuz these guys just repackage the capital and lend it out. So really, do they "deserve" the money. Are they too big too fail too?? What about the numerous assembly lines and factories working down south, employing thousands of workers in factories owned by Honda, n toyota, n other foreign companies with domestic manufacturing facilities. Shouldn' t they be allowed access too?? Their workers are American's too... Hard working, blue collared workers...

The problem lies with the board of directors for these companies. They need to be penalized for their lack of insght towards the direction of their companies and for the fact that they allowed their companies t get in the position they're in.. And the companies should fail, cuz if it doesn't, america's free market thinking will come dangerously close to being socialistic in nature, with soft budgets and deficits galore.

Will capitalism survive this fight??

Bailouts aren't just for financial industry? This time, it's an auto bailout...

Democratic leaders had just proposed an auto bailout. They want to use $25 billion of the $700 billion financial industry bailout to help General Motors, Ford Motor and Chrysler. However, top Republican senators said on Sunday, Nov 16 that they will oppose the auto bailout plan. "Senators Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any of the Wall Street rescue money to prop up the automakers. They said an auto bailout would only postpone the industry’s demise."

What do you think about this bailout plan?

I personally think it'd be another mistake. If the government can save one industry, it might need to save the other. With the trickle down theory, the failure of industry will have an effect on a lot of others. The bailout plan will also increase the moral hazard problem. The auto industry in Detroit has been dying. This is sad, but not anything new. They themselves have to come up with improvements and/or reforms to fight against foreign companies. The bailout wont be able to help them in the long run.

Pakistan slashes Oil prices

The government on Saturday announced Rs10 and Rs3 reduction in a litre price of petrol and diesel respectively as crude oil prices have declined by about two-thirds in the international market since striking record peaks above $147 a barrel in July this year.
The fear that a prolonged global recession could slam the brakes on energy demand globally, crude oil prices dropped below $50 a barrel on Saturday despite a decision by the Organisation of Petroleum Exporting Countries (OPEC) to cut output.
OPEC produces around 40 per cent of the world’s crude oil and has started cutting 1.5 million barrels a day from the start of this month.
A notification issued by Oil and Gas Regulatory Authority (OGRA) shows that the government has reduced petrol (premium motor gasoline) price by 13.04 per cent and diesel 4.68.
Now, petrol will be sold at Rs66.66 a litre and diesel (high speed) Rs61.14.
Price of light diesel oil (LDO) has also been cut by Rs7 (11.67 per cent) a litre. LDO will now be sold at Rs53 a litre.
In order to give relief to the people living in remote areas who are heavily depending on kerosene oil for cooking and heating purposes, the price of kerosene has been reduced by Rs5 a litre. After this decline of 8.08 per cent, a litre of kerosene will be sold at Rs56.87.
High octane blending component (HOBC) has witnessed a considerable, Rs15 decline a litre (15.62 per cent). The HOBC will be sold at Rs81.08 a litre at retail as well as directly by oil companies to consumers.
Prices of petroleum products in Pakistan are linked to the international market and are reviewed by OGRA fortnightly.
On November 1, the government had also announced a relief in petroleum prices for domestic consumers following decline in crude oil prices in the international market.
But, despite the latest decrease in prices of petroleum products, the government is still earning Rs28 per litre on petrol and Rs9 a litre on LDO by levying a tax called Petroleum Development Levy (PDL).

Pakistan and the IMF

Pakistan has asked the International Monetary Fund (IMF) for a stand-by credit facility of at least $7.6 billion to stave off a balance of payments crisis, Advisor the Prime Minister of Finance Shaukat Tarin said on Saturday.
Tarin said the IMF had already agreed to lend funds to Pakistan, though the formalities had to be concluded.
‘Next week we will officially apply and send them a letter of intent,’ Shaukat Tarin, told a joint news conference held with Governor State Bank of Pakistan Dr Shamshad Akhtar in Karachi.
A finance ministry official told Reuters on Friday that the government had asked for a credit facility of up to $9 billion, and based on its IMF quota it was entitled to get at least $7.6 billion.
As of Nov. 8 State Bank of Pakistan's foreign currency reserves were equivalent to just nine weeks cover for import payments, and the government faced defaulting on its international debt obligations in February next year unless it received a multi-billion dollar infusion.
‘We want reserves to be above three months of import cover,’ Tarin said, adding he expected the IMF to make the first disbursements later this month.
The interest rate on facility would vary between 3.51 to 4.51 per cent with some changes according to market conditions, and would be repayable between fiscal year 2011/12 and 2015/16, Tarin said. Tarin said the IMF had endorsed Pakistan's own strategy to bring about structural adjustments needed to correct unsustainable current account and fiscal deficits.
The strategy included reducing excessive government borrowing from the central bank to zero, but did not involve a cut in defence spending, one of the heaviest items on the budget, Tarin said.
The only point of difference with the IMF, according to Tarin, was the fund's desire to see higher interest rates, but a 200 basis point hike in State Bank's policy discount rate to 15 per cent announced on Wednesday partially met those concerns.

IMF head calls for extra funding

The head of the International Monetary Fund says it will need more funding if it is to play a bigger role in aiding a global economic recovery.
Dominique Strauss-Kahn told the BBC that the IMF was likely to need at least $100bn (£68bn) of extra funding over the course of the next six months.
Mr Strauss-Kahn also called on states to continue cutting interest rates.
His comments came as the Japanese economy officially entered a recession, shrinking 0.1% in the third quarter.
This follows a 0.9% contraction in the world's second-biggest economy in the previous quarter from April to June.
The benchmark Nikkei index fell on opening after the news was released, but rebounded in morning trading and was 1.2% up by lunchtime.
On Saturday, G20 leaders agreed at a summit in Washington to co-operate closely to stimulate worldwide economic growth, with both developed and developing countries working to cut taxes and interest rates, and increase government spending.
Finance ministers were also asked to discuss the longer-term reform of financial regulation, including executive pay and risky lending.
Their proposals will be discussed at a follow-up summit in April.

healthcare for immigrants

this is a really important and moving article, I hope some of you read it...

A different perspective on the healthcare debate- How do immigrants (both illegal and legal) fit into this cenversation? This article is about a 19 year old LEGAL migrant worker critically injured in a car accident who went into a coma and was deported to Mexico without his parents support. At the time he had a deadly infection and was in critical condition. The aritcle goes on to talk about the difficulties that hospitals face when immigrants with no insurance need long term intensive care. The hospital is required to save their life and stabilize them, bt after that the situation is less clear. There are tons of ethical concerns here, not only about moving a legal resident in citical condition but also the level of treatment they will recieve in Mexican facilities. Ironically, the hospitals that have the highest immigrant populations are also the least sympathetic to these ethical and moral considerations. For them, the financial side straps them into decisions which may be distastful to ordinary citizens. Hospitals are not compensated by the federal government for long term care of illegal or uninsured immigrants. They can discharge them to nursing homes but few of those will take them in for the same reasons.

With the global financial crisis in full swing, can we only expect that situations like these will get worse? The Fed doesnt have enough money to bail out big businesses and still have programs to deal adequately with a big and vulnerable population, so how will this affect hospitals and their decisions to deport fragile patients to inadequate facilities over the border? I just dont understand how we (as a nation build from immigrants) can let this happen!

Pact Approved in Iraq, US Pullout Date Set

This article is about US meetings in Iraq recently. They claim that they have come to an accord, and that the United States will pull out completely from Iraq by 2011. Ironically this happened through a vote, which is strange because people insisted that the people in Iraq were unable to stick up for themselves... hmmm.

Even more ironically to me, the United States has entered these talks when our country is in the middle of a recession, and we most likely are not going to have the funding to stay over there much longer. Why admit that you are running out of money when you can pretend to be a peacemaker?!?!? What a nice farewell present from the Bush administration. Great job guys.

But thats just my opinion...

LCD companies fined for price-fixing

Last week 3 leading flat-screen producers -- LG Display (Korea), Sharp (Japan), and Chunghwa (Taiwan) -- pleaded guilty to fixing the prices of LCD panels and agreed to pay $585 million in fines. It was a settlement made with the Justice Department's antitrust division, which includes the companies' cooperation in the department's continuing investigation. Similar investigations are being carried out in other regions of the world.

Like many other businesses, the prices of LCD products have been falling rapidly. Apparently the cartel was set up to slow down the rapidly declining rate, and to allow the companies to "protect profits in a very difficult market." The price-fixing affected the prices of thousands of products, especially those of Dell, Apple, and Motorola. Companies who've purchased LCD panels from the three are filing their own class-action lawsuits.

I understand that in this environment, a company may be desperate to hold on to whatever profit they can. But cartels are (at least according to the article) the be-all and end-all of economic dastardly deeds because of how bad they are for consumers. The Supreme Court calls them the "supreme evil of antitrust." You'd think that companies would think twice before engaging in activities that the law has absolutely no allowance for. Also, the fine ($400 million paid by LG alone) is enough to wipe out any profits made by fixing prices. The article hints that even more fines could be placed on them, since investigations are still ongoing. I wonder what the reasoning was behind these companies' decision. Perhaps the deregulatory pro-business attitude of the previous years gave them the confidence to do so? Who knows.

IMF needs extra funding to play its role in the global economic recovery

Mr Strauss-Kahn, Managing Director of the International Monetary Fund, said that the IMF needed $100bn in extra funding if it were to help with the global economic recovery. Before the G20 summit, it has $250bn, and Japan made a commitment to provide an extra $100bn. However, the IMF would need more because the number of countries needing help is steadity increasing.

The IMF also urged central banks around the world to cut interest rates to boost the world economy.

Word Leaders Vow to Combat Recession

A summit of G20 leaders has been convened in Washington to discuss solutions to the current global financial crisis. World leaders are determined to embrace free trade, ("Among the few solid commitments was a ban on raising protectionist trade barriers for 12 months, and to agree to the long-running Doha round of trade talks by end-December"), make use of fiscal policy and interest rates cut as well as focus on tackling regulatory and accounting issues.

American Express

Following Morgan Stanley and Goldman Sachs, American Express converted to a bank holding company. This conversion puts American Express under Federal Reserve oversight, thus, making American Express regulated like other commercial banks in the finance industry. While the change of status puts American Express under more regulations, American Express had no choice as the current credit situation and increased credit card default left it short capital. With the conversion, American Express can borrow from the Fed, besides being able to secure more customer deposits, and participate in government bailout programs.

While American Express chose a jurisdiction with more regulation voluntarily, could this be a sign that the crisis is forcing companies to submit to regulatory jurisdiction that they otherwise would not want?

Japan Q3 GDP -0.1% qtr/qtr, -0.4% annualised

Japan's economy shrank 0.1 percent in the third quarter, sending the world's second-biggest economy into recession and lagging market expectations for anaemic growth of 0.1 percent.
Japan's gross domestic product figure translated into an annualised fall of 0.4 percent, lagging a consensus market forecast for a 0.3 percent expansion, government data showed on Monday.

Hong Kong in recession as Q3 GDP dips 0.5 pct

Hong Kong slipped into recession in the third quarter as exports were hit by weakening global demand and consumption was hurt by a drop in asset prices and concern about the economic outlook.

The value of exports in the third quarter fell 1.3 percent from the previous quarter and analysts say a downturn for the trade sector will deepen as advanced economies continue to weaken next year.

Expected job losses in the trade, retail and property sectors in particular will push the unemployment rate up from 3.4 percent at present, curbing wage growth and deterring consumption, analysts say.

Private consumption expenditure, which excludes spending by tourists, rose only 0.3 percent in the third quarter from the previous quarter, as locals were hit by a 50 percent plunge in the stock market this year and as property prices have started to decline.

China will still provide some cushion for Hong Kong as mainland companies require financial services in the city and mainland Chinese are still flocking in to shop here.

However, China's economy is also slowing, clouding the outlook for Hong Kong where economists expect the economy to deteriorate further in the fourth quarter.

For Sale by Owner

During the housing boom, many homeowners were able to avoid real estate brokers and their costly commissions by posting their own listings online and finding success.
But with the recent economic crisis, homeowners are faced with a predicament, according to the article in The Times.
On one hand taking the for-sale-by-owner route might allow you to cut corners and reap much-needed savings. On the other hand, with the market as bad as it is, you may want a broker’s specialized knowledge for a quicker sale. The article focuses on four individuals that are trying to sell their home or apartments FSBO. Mr. Ruzal, a 54 year old living in New York trying to sell his apartment points out that "The first five letters of broker is broke". A 6 percent commission that a broker could take on the selling price of his apartment would be almost a years salary for him. This is something Mr. Ruzal, and many others are having a hard time dealing with.

I think this is a hard decision for people selling their homes now. The amount that can be saved by selling FSBO can be significant, but for someone who needs to sell fast or possibly having a better chance of selling may want to take some losses and go through a broker.

Zimbabwe hyperinflation 'will set world record within six weeks'

Transition is not a continuation of the existing system, but a replacement of the current one. One of the severe macro economic problems we talked about in class during transtition was hyperinflation.

This article regarding the current hyperinflation situation of Zimbabwe examplies the reasons why hyperinflation is considered a major macro economic problem. With hyperinflation, money eventually losses its worth and the economy will retract to one similar to a barter economy. Where in economics money is suppose to facilitate trade, in the case of hyperinflation it losses this ability rendering it quite useless. Instead of advancing, the economy "de-advances".

The alternatives citizens of Zimbabwe have in battling this situation is by using foriegn currencies. This solution is of a very practical one that would effectively help. However, what about those who do not have access to this option, these people would be helpless and suffer the full effects of hyperinflation.

So now, imagine a situation where your money effectively losses its value by 50% within 1.3 days. What would it do to the mindset of the people and the economy?

Worst May Be Yet to Come for Citigroup

Citigroup faces more hardship and financial difficulties despite the $25 billion government rescue. With over a year of operation losses and the month long plunge of its share prices in October, Citigroup is still facing further hardships and under heavy pressure to cut cost. Citigroup is seeing their loans made during better times in the economy going sour in this time of crisis, and internal struggle of office politics has made this once financial giant's future look gloomy. The first year CEO Vikram S. Pandit's attempt to purchase Wachovia, was upended by their rival Wells Fargo, and left Citigroup in need of a new strategy to gain deposits.
Christopher Whalen a managing partner at Institutional Risk Analytics said;
"Citi doesn't have a credible management team, they don't have a creditable board... If you look at their loss rate, it is almost inevitable that Citi is going to be asking the government for more money next year."
The bank has announce to cut 40,100 jobs, include cuts in its global assets. But expert say that 9,100 more workers needs to be cut to meet Citigroups goals.

Fall in wine prices- indication of global economic slow down

I was reading the new on the BBC website and I came across this article and thought it was pretty amusing. The article talked about how the pieces of the world’s most revered wines are falling as a result of the global economic slow down. The latest indication of the global crisis, they said was that the crisis was hitting the spending power of even the most wealthy which is evident in the decline of the prices of certain fine wine by close to a quarter since the summer.

Factories Shut, China Workers Are Suffering

As the U.S and the world heads for an economic down turn, China; the world's factory has been hit hard especially in the Pearl River Delta area of southern Guangdong. The Pearl River Delta area is the area that includes the special economic zones of Shenzen and Zhuhai of Guangdong province, where many FDI factories are located. Due to the economic down turn around the world and lower consumer spending, the slow down of exports contributed to around 67,000 closing of factories across China over the first half of the year.
Often after shutting down the worker's remained unpaid and often took to the streets in protest. Many workers who leave the Pearl River Delta for Chinese New Year holidays do not plan to return and a higher number of people leaving the area has shown in the area's increasing train passengers, and many of them do not plan to return for work. Many of the FDI that closed down might not return or replaced by new FDIs due to cheaper labors found in places like Vietnam, and other countries with cheaper labor cost.
The Chinese government is punishing for policies that allow more consumer spending and a $586 billion stimulus package over two years was introduced last Sunday(largest ever in China) in hopes to upset this economic down turn.