Meltdown

[Coopmv]

Russian economy shrinks 7 percent in 1st quarter     MOSCOW - A senior government minister said Russia's economy shrank by 7 percent in the first quarter, a news agency reported Thursday, marking a staggering downturn after eight years of oil-fueled growth. ...   "These figures are worse than we expected," Deputy Economic Minister Andrei Klepach was quoted as saying by ITAR-Tass during a conference in Kiev, Ukraine. He was citing preliminary figures.

Just what can one expect from a one-trick pony?  Russia has few things to offer other than oil.  But having used energy as a weapon against the Europeans has left a good taste in the mouth for the Europeans who are probably not so eager to help bail out the Russians ...

[ezodisy]

Russia has few things to offer other than oil.  ...

gas, women, blini

Gold and Economic Freedom

by Dr. Alan Greenspan

The Objectivist

1966

[ezodisy]

Fibo, you've got to hear this Hugh Hendry two-part interview. I think he's going to be right about much of it. The audio quality is rubbish so you'll have to strain a bit.

http://www.citywire.co.uk/professional/-/video/manager-news/content.aspx?ID=334440

http://www.citywire.co.uk/professional/-/video/manager-news/content.aspx?ID=334597

I put a buy order in for gold at $500. See you there 

[Coopmv]

China's economic muscle 'shrinks'  

Despite China's boom, tweaks are needed to keep it running smoothly
China's economy, the world's second largest, is not as big as was thought, a report by the World Bank has claimed.  According to the bank, previous calculations have overestimated the size of China's economy by about 40%.

The revelation came after the bank updated the way it calculated the country's gross domestic product (GDP).

The bank said the findings meant China would not become the world's biggest economy in 2012 as forecast. It also meant China was poorer than estimated.

This in turn would influence future aid and investment plans, the World Bank said.

China gains extra aid from international institutions and has asked for help in climate change talks because of its status as a developing country.

Adjusting figures

BIGGEST ECONOMIES
US
China
Japan
Germany
India
Source: World Bank

Based on the World Bank's new research, China's economy is now worth some $5.33 trillion (£2.64trillion). Despite the drop in size, the economy was still the world's second largest, the bank said.

The US, at $12 trillion, is the world's largest economy.

The method used for the calculations is called "purchasing power parity", and corrects for differences in prices, which are lower in China than in Western countries, for the same goods.

However, the figures show that average incomes in China are still just 10% of those in the US. China averages $4,091 per person, while average income in the US is $41,000.

MOST EXPENSIVE NATIONS
Iceland
Denmark
Switzerland
Norway
Ireland
Source: World Bank

Based on current exchange rates, China's economy is only half as big, at $2.24 trillion.

In previous years, economists have tried to adjust their figures to take into account local prices in developing nations because they were often significantly lower than those in more industrialised countries.

However, the bank said that many of the prices which were being used were out of date and gave distorted GDP figures.

This time it has used updated prices to create more accurate figures.

Global shift

In its report, the World Bank found that five nations - the US, China, Japan, Germany and India - accounted for nearly half of the world's total GDP.

But they were not amongst the five most expensive places to live, with that honour going to Iceland, Denmark, Switzerland, Norway and Ireland.

In Africa, the main drivers of growth were South Africa, Egypt, Nigeria, Morocco and Sudan, which accounted for almost two-thirds of the continent's output.

[Lethevich]

No posts in this thread for five days, I thought Sidoze and Dm had died (or possibly eloped)...

Welcome back, doom

[ezodisy]

I'm sure we're both revelling in G&D as usual, just been too busy to come on and will be again now, so here's a spate

Nobel economist Paul Krugman: "Indeed, these days America is looking like the Bernie Madoff of economies: for many years it was held in respect, even awe, but it turns out to have been a fraud all along."

Nobel economist Joseph Stiglitz: "Quite frankly, this amounts to robbery of the American people. I don't think it's going to work because I think there'll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer."

Nobel Economist Ed Prescott: "I do predict the U.S. will lose a decade of growth. Marginal tax rates will be increased. Productivity-depressing policies will be adopted. Don't subsidize inefficiency. Cut tax rates to get people to work more. This financial stuff is much ado about nothing. I don't see any reason for the taxpayers to bail out Goldman Sachs in a roundabout way. Let these businesses go bankrupt. They gambled, they lost. That's part of life."

Worsening economic figures are being used to confirm that more bailouts are needed rather than that previous ones might be failing. The logic is much like medieval blood letting: The patient died because we didn't drain enough of his blood.

Senior S&L Regulator Says Government Engaging in Massive Cover-Up of Economic Crisis: "The entire strategy is to keep people from getting the facts"

"Technically, the U.S. is already bankrupt because it has a debt that is almost four times the size of its economy"

[Coopmv]

From last week business week.  $200B a month annualized to $2.4T.  If Americans can cut consumptions by $200B a month, there is still hope.  This is bad news for many retailers and for many foreign countries that dump their products here.  From the Rolexes of Switzerland to the cheap Chinese-made products ...

Bigger U.S. Savings Than Official Stats Suggest

A closer look at BEA numbers shows that Americans reduced spending by 3.1% in the past year, indicating that the savings rate has risen to 6.4%

By Michael Mandel

How much have Americans cut back?

On the face of it, not much. The official data from the Bureau of Economic Analysis say that in February personal spending was down 0.4%, or $40 billion, from the year before. Certainly any drop is bad news, since consumer spending rarely decreases—but $40 billion out of total spending of $10 trillion doesn't seem like enough to wreak economic havoc.

A closer look, however, shows that Americans have tightened their belts more sharply than the numbers report. The reason? Official figures for personal spending include a lot of categories, such as Medicare outlays, that are not under the control of households. They also include items, such as education spending, that should be treated as investment in the future rather than current consumption.

After removing these spending categories from the data, let's call what's left "pocketbook" spending—the money that consumers actually lay out at retailers and other businesses. By this measure, Americans have cut consumption by $200 billion, or 3.1%, over the past year. This explains why the downturn has hit Main Street hard.

Since savings are what's left from disposable income after subtracting outlays, a deeper fall in consumption means a bigger jump in the savings rate. The same analysis implies that the "pocketbook" personal savings rate has risen from near zero a year ago to around 6.4%, rather than the official 4.2%. Thus, households may have gotten a great start on repairing their balance sheets.

Let's break down the spending numbers. Over the past year, outlays on durable goods such as automobiles decreased by a deep 10.8%. Spending for nondurable goods such as clothing fell by 4.2%.

The tricky issue comes with spending on services, which seems to be up by 3.3%, or $200 billion, since February 2008. That number includes a hodgepodge of expenditures that don't correspond to what we mean by "consumer spending." For example, health-care spending, including prescription drugs, is up by $112 billion. But roughly 85% of such spending is funded by government or employer health insurance plans, neither of which directly comes out of the pockets of consumers.

Similarly, the consumer spending numbers include outlays by religious groups and nonprofit foundations, such as the Bill & Melinda Gates Foundation, which is increasing its outlays by about 15% in 2009, to $3.8 billion. The BEA estimates that religious and foundation spending have risen by about 3% from the past year, pushing up reported consumer spending.

CURIOUS CATEGORIES
Another quirk: Spending on education is considered consumption rather than investment in human capital. As a result, more people going back to school during the downturn leads to a reduction in the savings rate. That doesn't make much sense.

Finally, for technical reasons the BEA throws in some "spending" categories where no money actually changes hands. The biggest is "rent on owner-occupied housing," the money that people supposedly pay themselves for living in their own homes. Despite the housing bust, this number rose by 2.6% over the past year, to $1.1 trillion.

The BEA will make some changes this summer, which will improve the calculation of the savings rate for households. But for now, suffice it to say that Americans have taken thrift to heart much more than the official numbers show.

For a full explanation of how the pocketbook savings rate was calculated, see my blog Economics Unbound at businessweek.com/the_thread/economicsunbound/

Mandel is chief economist for BusinessWeek.

[Archaic Torso of Apollo]

No posts in this thread for five days, I thought Sidoze and Dm had died (or possibly eloped)...

I took that as a good sign - no more bad news for a while 

[BachQ]

No posts in this thread for five days, I thought Sidoze and Dm had died (or possibly eloped)...

I took that as a good sign - no more bad news for a while 

  Sorry, the doom continues unabated! 


Friday, April 10, 2009
U.S. Budget Disaster Strikes – March Outlays 2.5 Times Income!! March deficit hits $192 billion ($2.3 trillion annualized) as receipts drop 28%, outlays rise 41% ... "This is truly an EPIC collapse of government receipts, and maybe one of the most important stories of this time. Failing banks are one thing, failing governments is another. ... We simply are piling debt on top of debt and we do not have the cash to pay our current bills much less those of the past."

US DEBT CLOCK:

The deficit is well on its way to the [predicted] $1.75 trillion -- or 12.3% of gross domestic product. ... The deficit through the first six months is more than three times higher than it was at this time last year. The government has borrowed $1 trillion from the public so far this fiscal year. In March, the deficit widened to $192.3 billion from $48.2 billion in March 2008. Outlays rose 41% to $321.2 billion from $227 billion, while receipts dropped 28% to $129 billion from $178.8 billion.

Receipts from individual income taxes fell 27% in March, versus year-earlier figures. Individual refunds are up 14% so far this year. Compared with a year earlier, corporate income tax receipts fell 90% to $3.4 billion.

[BachQ]

New York Times in freefall

...In 2001, The New York Times celebrated its 150th anniversary. In the years that have followed, Arthur Sulzberger has steered his inheritance into a ditch. As of this writing, Times Company stock is officially classified as junk. Arthur made a catastrophic decision in the 1990s to start aggressively buying back shares ($1.8 billion worth from 2000 to 2004 alone). This was considered a good investment at the time, and had the effect of increasing the stock's value. Shares were going for more than $50. Now they are slipping below $4—less than the price of the Sunday Times. Arthur's revenues are in free fall: the bottom has dropped out of both newspaper and Internet advertising. ...

[BachQ]

CNN: Malls shedding stores at record pace -- Vacancy rates at strip malls accelerate dramatically.

[BachQ]

Art prices fall 35% as collectors cash in

By Deborah Brewster in New York

Published: April 7 2009 01:53 | Last updated: April 7 2009 01:53

Art prices plunged during the first quarter of the year as cash-strapped collectors looked to unload works by postwar masters that had earlier boomed in price along with the stock market.  The Mei Moses index, set for release on Tuesday, shows art prices fell 35 per cent in the first quarter, having held up during earlier months of the financial crisis.  ... The decline accelerated as people who lost money in the financial crisis, including victims of the Madoff fraud, put up works for sale, often at a loss, several art world insiders said.

The selling has particularly hit works by postwar and contemporary artists, they said.

[BachQ]

Fibo, you've got to hear this Hugh Hendry two-part interview. I think he's going to be right about much of it. The audio quality is rubbish so you'll have to strain a bit.

http://www.citywire.co.uk/professional/-/video/manager-news/content.aspx?ID=334440

http://www.citywire.co.uk/professional/-/video/manager-news/content.aspx?ID=334597

I put a buy order in for gold at $500. See you there 

Indeed, some interesting predictions ... such as 20 years of deflation ... and the dollar bottoming in a few months (and, thereafter, reaching parity with the euro  ).  It's interesting that he thinks the dollar will become increasingly "scarce" as the $58 trillion debt bubble collapses ....

Hendry's hedge fund made over 32% in 2008 (when the stock market lost 50%), so he's doing something right.   0:)

[BachQ]

Telegraph -- ... "We don't fully realise in the West what a catastrophic collapse Japan has suffered," says Albert Edwards, global strategist at Société Générale. "The West has dumped a large part of its economic downturn onto Japan by devaluing against the yen."

This is about to go into reverse as Tokyo hits the ping-pong ball back across the net. "As the unfolding collapse in the yen gathers pace, the West will see its green shoots incinerated to dust," he said. Japan's industrial output fell 38pc in February (year-on-year), mostly concentrated into the last four months. No major economy imploded at this speed in the 1930s.

[BachQ]

Just what can one expect from a one-trick pony?  Russia has few things to offer other than oil.  But having used energy as a weapon against the Europeans has left a good taste in the mouth for the Europeans who are probably not so eager to help bail out the Russians ...

http://www.bloomberg.com/apps/news?pid=20601087&sid=a4zThUFpjMOY&refer=home
Russia Banks' Bad Loans May Reach $70 Billion as Crisis Deepens

By Emma O'Brien and William Mauldin

April 9 (Bloomberg) -- Russian banks' bad loans will quadruple to $70 billion this year, deepening the country's worst
financial crisis since the government's 1998 debt default, a Bloomberg survey shows. Non-performing loans will increase to 12.8 percent of the 18.4 trillion rubles ($549 billion) owed by Russian companies and  individuals by the end of this year, from 3.2 percent in March.

[BachQ]

U.S. Total Credit Market Debt by Sector: 1929-2008

[Coopmv]

I took that as a good sign - no more bad news for a while 


  Sorry, the doom continues unabated! 


Friday, April 10, 2009
U.S. Budget Disaster Strikes – March Outlays 2.5 Times Income!! March deficit hits $192 billion ($2.3 trillion annualized) as receipts drop 28%, outlays rise 41% ... "This is truly an EPIC collapse of government receipts, and maybe one of the most important stories of this time. Failing banks are one thing, failing governments is another. ... We simply are piling debt on top of debt and we do not have the cash to pay our current bills much less those of the past."

The US will probably take many countries down with it, particularly those that are overly dependent on export if it does go down.  On the other hand, if US taxpayers are indeed putting money into savings at an annualized rate of $2.4T, which can handily replace the debt financing the foreigners have been providing, then things can eventually turn around.

[Lethevich]

Just stumbled across THIS - old news, but funny.

[ezodisy]

Stiglitz

The Obama administration's bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said.

[BachQ]

Stiglitz

The Obama administration's bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said.

The people who designed the plans are "either in the pocket of the banks or they're incompetent."

Actually, BOTH are true: the feds are both incompetent, and they're in the pocket of banks.

There's no doubt that the US federal government is completely out of control.  And under Obama's massive expansion of federal government, tensions have reached a breaking point.  Which is why the below video is so damn refreshing:


http://www.youtube.com/v/0LHrIxc-QyE

Texas Gov. affirms Texas' sovereignty under the 10th Amendment AUSTIN – Gov. Rick Perry today joined state Rep. Brandon Creighton and sponsors of House Concurrent Resolution (HCR) 50 in support of states' rights under the 10th Amendment to the U.S. Constitution.

"I believe that our federal government has become oppressive in its size, its intrusion into the lives of our citizens, and its interference with the affairs of our state," Gov. Perry said. "That is why I am here today to express my unwavering support for efforts all across our country to reaffirm the states' rights affirmed by the Tenth Amendment to the U.S. Constitution. I believe that returning to the letter and spirit of the U.S. Constitution and its essential 10th Amendment will free our state from undue regulations, and ultimately strengthen our Union."