One person's misery could be other person's good fortune.... China Tries to Restore Power; Storms Forecast to Ease By John Liu and Li Xiaowei Feb. 4 (Bloomberg) -- China stepped up efforts to restore power supplies and transport links to regions hit by the worst snows in more than 50 years, as forecasters said storms will ease for this week's Lunar New Year holiday. ``Disaster relief work is the top priority of the whole nation,'' China's top legislator Wu Bangguo said during a visit to the Railways Ministry in Beijing yesterday, the official Xinhua News Agency reported. Snow and freezing rains in southern and eastern China are forecast to give way to clearer weather before the Chinese New Year begins in three days, the China Meteorological Administration said. No rain is expected between Feb. 6 and Feb. 9, which may allow the snow and ice to melt, it added. More than three weeks of snow in central and southern China brought transport networks to a standstill, killed at least 60 people and caused economic losses of at least 53.8 billion yuan ($7.5 billion). The warmer weather may allow millions of people stranded in the southern cities of Guangzhou, Changsha and others to resume their journey home. President Hu Jintao called on government officials to do everything possible to restore transportation and power production at a meeting with senior leaders yesterday, according a statement on the Web site of the Cabinet, the State Council. Airports Running All airports resumed operating yesterday, the General Administration of Civil Aviation said on its Web site. Traffic on the Jingzhu Expressway, connecting the southern cities of Guangzhou and Zhuhai with Beijing, has been cleared, China Central Television reported, after a stretch of it was jammed with more than 10,000 vehicles yesterday. Tanks were used to clear some icy highways, Xinhua reported. Nationwide, more than 17,000 vehicles are still stuck on freeways, the state broadcaster said. A woman was killed in a stampede at Guangzhou railway station as hundreds of thousands of passengers sought to board a train, Xinhua reported late yesterday, adding it was the second death as a result of overcrowded railway stations. On Jan. 13, a student in Wuhu, Anhui province, died after being pushed off an overcrowded platform, Xinhua said. About 136,000 rail passengers remained stranded at stations at 11 a.m. yesterday, state television reported. More than 92,000 passengers were waiting for trains in Guangzhou, after a peak of 800,000 people last week, it said. Police Deaths Three police officers died during the storms, the Ministry of Public Security said on its Web site, without giving a cause of death. More than 21,000 officers suffered frostbite and cold- related illnesses. The government's priorities are the transportation of coal for power plants, goods needed for disaster-relief efforts and food, Wu, president of the Standing Committee of the National People's Congress, said yesterday, according to Xinhua. No effort should be spared in resuming power supplies and transport in the snow-ravaged regions, he added. China's worst-affected areas are Hunan, Jiangxi and Guizhou provinces, which have only half their normal power capacity, the National Development and Reform Commission said in a statement on its Web site yesterday. About 90 percent of state-owned coal mines have been asked to continue production during the weeklong Lunar New Year holiday, Xinhua said yesterday, citing the State Administration of Work Safety. China relies on coal for 78 percent of its power. Trucks Mobilized All of the country's railway container trucks have been mobilized to ensure the transportation of coal, Xinhua said, citing the Railways Ministry. Coal shipments were boosted to a record 42,200 trucks a day from Feb. 1, it said. ``We have the faith, courage and ability to overcome the severe natural disaster,'' Chinese Premier Wen Jiabao, who was onboard a train to disaster-hit central Hunan province, was cited as saying at the weekend by Xinhua. PetroChina Co. and China Petroleum & Chemical Corp., China's two largest oil refiners, were asked to ``prioritize'' oil supplies for power line repairs, the National Development and Reform Commission said. The price of vegetables in 36 cities rose more than 30 percent between Jan. 25 and Jan. 30 because of the transport problems, and only started to stabilize in the past few days, the commission, the country's top economic planner, said in a separate statement yesterday. Meat prices also gained while grains and vegetable oils were little changed, it added. Crop damage estimates were raised to 141 million mu (23 million acres) early Feb. 1 from than the 103 million mu on Jan. 30, the Ministry of Agriculture said in a statement yesterday.
Wall Street Embraces Government to Avoid Recession By Kathleen M. Howley Feb. 1 (Bloomberg) -- With U.S. mortgage foreclosures set to top 1 million this year and home prices falling at the fastest pace since the Great Depression, Lehman Brothers Holdings Inc. Vice Chairman Thomas Russo says the government must take action to prevent a recession. ``The direction we are heading in isn't a good one,'' Russo said in an interview. ``We need significant fiscal and monetary intervention.'' The worst drop in new home sales on record has turned financial leaders into champions of big government with everyone from Russo to executives at Citigroup Inc. and JPMorgan Chase & Co. supporting public measures to keep the housing market from sinking the economy. It's a change from Wall Street's usual stance that markets work best without government interference. ``Sentiment can change when there's money on the line, even in an industry that up to now has been doctrinally opposed to government having a role in the markets,'' said Thomas Schelling, a Nobel laureate in economics who taught at Harvard University for 30 years. Wall Street fueled the growth of subprime lending by packaging home loans into securities and marketing them as low- risk investments. As demand rose, lending standards dropped, driving the homeownership rate to an all-time high of 69.2 percent in 2004. The median U.S. home price reached a record $230,200 in July 2006. Last month it was $208,400. Countrywide's Loss Now, many of the same people who profited by putting buyers into properties they couldn't afford are advocating federal help to manage the bust. Their demands were answered this week when the House and the Senate Finance Committee approved economic stimulus plans worth $146 billion to $157 billion. The Senate version includes a tax break for banks and lenders. Losses from investments in subprime mortgages may total as much as $400 billion worldwide, Deutsche Bank AG said in November. Angelo Mozilo, chief executive officer of Countrywide Financial Corp., supports the government's Hope Now program, a coalition of mortgage companies aimed at preventing foreclosures by freezing adjustable rates or refinancing loans of subprime borrowers. That type of loan increased Countrywide's net income to almost $2.7 billion in 2006 when it was the biggest U.S. subprime lender. Mozilo earned $48 million that year. Countrywide reported a net loss of $703.5 million in 2007, dragged down by loans to people with bad credit, and the Calabasas, California-based company agreed Jan. 11 to be acquired by Charlotte, North Carolina-based Bank of America Corp. for about $4 billion. `Amazing Hit' Hope Now is being pushed by Treasury Secretary Henry Paulson, former chairman of Goldman Sachs Group Inc., and backed by firms such as New York-based Citigroup, led by Chief Executive Officer Vikram Pandit, and JPMorgan, headed by CEO Jamie Dimon. In addition, the government expanded Federal Housing Administration mortgage funding in August to help subprime borrowers and President George W. Bush has proposed using tax- exempt bonds to refinance mortgages. Those programs won't help homeowners who have seen their property values drop below their loan balances. The measures aren't enough, Russo said. ``The whole financial system has taken an amazing hit already and the bulk of the mortgage rate resets are still to come,'' Russo, 64, said. Without additional government action, declining home values will prompt people to snap their wallets shut, choking the 70 percent of the economy that's driven by consumer spending, Russo said in a paper he presented at the World Economic Forum in Davos, Switzerland, last week. Russo said the paper reflected his own views and analysis, not those of New York-based Lehman, the fourth-biggest U.S. securities firm by market value. Russo's Proposals About $550 billion of subprime loans will reset before 2009, Russo said. Most of those borrowers will have no option except to walk away from their properties because the drop in home prices and an increase in lending standards will prevent them from refinancing or selling, he said. Russo, in the paper originally written for the Group of Thirty, a research group led by former Federal Reserve Chairman Paul Volcker, proposes giving government-backed loans to homeowners with adjustable-rate mortgages, whether prime or subprime, in danger of default. He also supports a tax credit for people who buy homes in 2008 that would roughly triple the current tax benefits given to mortgage holders. In addition, the Federal Reserve needs to cut its benchmark rate to 2 percent, reduce the discount rate to match it, and ``broaden access'' to the discount window where banks get government-subsidized temporary loans, he said. The Fed lowered the benchmark interest rate to 3 percent on Jan. 30, the second cut in nine days. Quick Action Those measures surpass the Hope Now program and the stimulus plans that passed this week. A provision in the House measure would temporarily increase in the size of loans that can be bought by Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies. ``To be useful, a fiscal stimulus package should be implemented quickly and structured so that its effects on aggregate spending are felt as much as possible within the next 12 months or so,'' Fed Chairman Ben Bernanke said in Jan. 17 testimony to Congress. In backing government action, Bernanke broke from the creed of Milton Friedman, the free-market champion who said such programs don't work. Bernanke described Friedman in a 2002 speech as the man who inspired his interest in monetary policy when he was a college student. While top regulators and executives are demanding help, some of their colleagues are shaking their heads in disbelief. Mark Kiesel of Pacific Investment Management Co., the world's largest bond fund manager, said rescuing borrowers will worsen the economic misery for everyone. Kiesel helps oversee more than $700 billion of fixed-income investments at Pimco. `Blunt Instrument' ``Keeping the market from correcting itself only prolongs the problem,'' he said. ``It helps a couple hundred thousand people stay in their homes a little longer, but it also may have the unintended consequence of lifting mortgage rates for everyone because if you're going to be changing the rules, investors will need to be compensated for that risk.'' David Henderson, an economist at the Hoover Institution at Stanford University in Stanford, California, agrees. ``Government intervention is a blunt instrument aimed at a particular problem that ends up hitting all of us,'' Henderson said. ``Let the housing problem work itself out.'' The camp that favors government action is growing. Growing Group ``We look forward to continuing our work with the administration, Congress, state and local officials'' to limit the number of foreclosures, Washington Mutual's Schneider said in a statement last month in support of the Hope Now program. The Seattle-based company, the largest U.S. savings and loan, on Jan. 17 reported a fourth-quarter loss of $1.87 billion after writing down the value of its home mortgage unit. Alex Pollock, former president of the Federal Home Loan Bank of Chicago, urges the creation of a federal lending agency based on the Home Owners Loan Corp., or HOLC, created by Congress during the Great Depression. Robert Kuttner, co-founder of the Washington-based Economic Policy Institute, Senate Banking Committee Chairman Christopher Dodd and others have proposed similar ideas. Many who are calling for action point to the 1930s, the last time the U.S. national median home price fell, as an example of what government should do. Great Depression During the worst economic slump of the 20th century, HOLC issued tax-exempt bonds and used the proceeds for below-market- rate mortgages. It refinanced one-fifth of U.S. homes between 1933 and 1936 after negotiating with the original lenders to accept less than the amount owed on the defaulted mortgage. Former Treasury Secretary Edward Carter Glass opposed President Franklin D. Roosevelt's expansion of government after the 1929 stock market crash. Senator Robert Taft, a critic, said it was socialism. Most Americans supported Roosevelt and his ``New Deal'' plan. He won every state except Maine and Vermont when he ran for re-election in 1936. In the 1930s, lenders were seizing homes at an average rate of 3,000 a day, adjusted for today's housing stock size. In the fourth quarter of 2007, new foreclosures averaged 2,939 a day, double the pace of a year earlier, according to RealtyTrac Inc., an Irvine, California-based real estate data company. Statistics like these are managing to change even the most ardent opponents of big government. William McCarthy, a mortgage broker in Parker, Colorado, said he has been against federal intervention his entire life. Now 62 and facing eviction Feb. 11 after his lender foreclosed on his $199,200 mortgage, he said the government has to take action. Suicides and Bankruptcy ``This has reached the point of being catastrophic,'' said McCarthy, who declared bankruptcy in July when his business failed after 18 years. ``I had a client who called me sobbing because his wife committed suicide rather than face eviction. Something's got to be done to help people.'' McCarthy said he took an interest-only adjustable-rate mortgage in 2005 when he and his wife, Janna, bought a 1,680- square-foot, ranch-style retirement home in Littleton, Colorado. His wife has a heart condition and needs a home without stairs, McCarthy said. They planned to sell their primary residence and refinance the ranch's interest-only loan before it reset, he said. Risk Taking They didn't act fast enough. In March 2006, U.S. home sales began the biggest decline in 26 years, according to data compiled by the Chicago-based National Association of Realtors. The house didn't sell. Now, they are losing both properties. ``My wife goes to bed crying every night, and there's nothing I can do,'' McCarthy said. ``The bank won't even return my calls.'' Bailing out borrowers who take risks creates a ``moral hazard'' that leads to riskier behavior as people assume the government will step in to save them, said Kiesel. In March 2006 Kiesel sold his house near Pimco's headquarters in Newport Beach, California, and rented a home in anticipation of the housing slump. ``The housing market will find its own bottom, without a government bailout,'' Kiesel said. To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net . ------------------------------------- Now, many of the same people who profited by putting buyers into properties they couldn't afford are advocating federal help to manage the bust. - But the Buyers did afford then....it is just that they lost their jobs because we buy everything from China now.
What may yet to come in food supply.... Last Year's Md. Crab Harvest Second-Lowest on Record By David A. Fahrenthold Washington Post Staff Writer Monday, February 4, 2008; 1:08 PM Last year's harvest of blue crabs from the Chesapeake Bay in Maryland was the second-lowest on record, state officials said today, as environmental damage, drought and past over-fishing drove down harvest of the state's most valuable seafood catch. About 21.8 million pounds of blue crabs were caught by watermen during the April-to-December season, officials at the Maryland Department of Natural Resources said this morning. That was 6 million pounds less than last year, and just above the all-time-low, 20.2 million pounds in 2000. "We're concerned about the health of the blue-crab fishery, and about the health of the blue crab itself," said Lynn Fegley, who oversees blue-crab programs at the department. The fishery, in this case, means the watermen and seafood processors that depend upon the crabs. Natural resources officials said that, in response, Maryland will soon begin seeking input from watermen, scientists and other experts about altering the rules that govern crab harvests. "We need to figure out a way to rebuild the population of crabs in the bay," said Frank Dawson, an assistant secretary at the department. "And that's really going to take a long-term plan." This announcement comes at a particularly fraught time for the bay's blue crabs, which have been mired at historically low population levels for about a decade. In Virginia last month, state regulators proposed a set of regulations aimed at cutting back their state's harvest from the bay. Part of the reason for last year's poor harvest was a long summer drought, which changed the salinity of water in the Chesapeake and sent crabs fleeing up into tributaries, away from watermen's pots. But the other causes, officials said today, may have to do with more troubling, long-term trends: a bay that once teemed with these crustaceans may be growing slowly less hospitable to them. Pollution has created "dead zones," where crabs struggle to breathe. Warm weather has contributed to die-offs in the underwater grasses that crabs use as nurseries. And, for years, scientists have said that watermen were taking too large a portion of the bay's overall population. Thomas J. Miller, a professor for the University of Maryland Center for Environmental Science, said today that a declining harvest could actually be a good sign -- if it signaled that more crabs are dodging watermen's traps and surviving to reproduce. Or, he said, it could be a bad sign, if it is an indication that there are simply fewer crabs to catch. "We really don't know the answer" yet, Miller said in a telephone interview.
By Chris Isidore and David Goldman, CNNMoney.com staff writers February 5 2008: 1:53 PM EST NEW YORK (CNNMoney.com) -- New recession alarms shook Wall Street Tuesday as a key survey of service sector executives showed business activity retreating in January for the first time in nearly five years. The Institute for Supply Management's (ISM) non-manufacturing index came in with a reading of 44.6, a new summary number for the report. The 44.6 summary number is a new reading that does not have comparable readings from past reports. The reading for business activity in the service sector plunged to 41.9 in January from 54.4 in December. Economists surveyed by Briefing.com had forecast a reading of 53. A reading above 50 indicates growth in the sector, and a reading below 50 represents a sector-wide decline. The January reading is the first below 50 since March 2003. The business activity reading also experienced the largest month-to-month drop in the 10-plus year history of the index. Tuesday's report was issued roughly an hour earlier than its usual 10 a.m. release time because someone who was familiar with the report had inadvertently made a comment about it on Monday night. ISM chose to be cautious and released the report before markets opened Tuesday, an ISM spokeswoman told CNNMoney.com. Signs of a recession. Both the 41.9 business activity reading and the 44.6 summary number represent the second lowest growth figures on record, trailing only the October 2001 reading after the Sept. 11 attacks. It's a sign that the service sector - which has carried the economy through a downturn in manufacturing - has followed that troubled sector into decline. The enormous drop in business activity has intensified some economists' fears. "We don't have plunges like this unless we're coming into or [are] in a recession," said Sam Bullard, economist at Wachovia. "Until we see two consecutive monthly declines, it's hard to definitively say we're in a recession, but these numbers make you think." The service sector encompasses the retail, transportation and health care sectors. It also includes sectors that have been hit hard by problems in the economy, including finance, real estate and construction. "The service sector is a much larger component of the economy [than manufacturing], and this is very much a recession reading," said Keith Hembre, chief economist for First American Funds, who now believes the U.S. economy has fallen into recession. Some recent unexpected growth. Last Friday the more closely watched ISM Manufacturing reading came in at a 50.7 reading for January, up from 48.4 in December, showing an unexpected return to growth in that sector. This marks only the sixth time in the report's history that the service sector has recorded lower growth than the manufacturing sector, and it's by far the largest margin by which the service sector has trailed manufacturing. Scary employment signal. The report also set off more alarms about the nation's labor markets, since it has been the service sector that has provided most of the job growth in recent years as factories closed or cut employment. The ISM report showed 24% of service-sector employers had fewer employees than a month earlier, nearly double the 13% who were trimming staff in the previous reading. Only 6% were adding staff, down sharply from the 16% doing so in December. The report said employment comments on the survey included "Did not replace some positions"; "Reduced headcounts with hiring freezes in place"; and "Layoffs." Friday the government's January employment report showed employers trimmed 17,000 jobs in the month, the first decline in employment in more than four years. But the service sector continued to add jobs in the government reading, while manufacturing and government employers trimmed their staffs.
MOD HAT: if anyone else has a problem with this or any other thread please address those concerns to the mod in charge (in this case ME) or plazma in a PM. DONT TRY TO DE RAIL A THREAD!!!!!!!!
Sinking Credit Business Week February 7, 2008, 5:00PM EST The lending industry lowered standards too far. Now it's raising them abruptly, choking consumers when they need credit the most by Peter Coy At the head of Canada's Bay of Fundy, the salt water can fall a breathtaking 50 feet from high tide to low tide. But even the Bay of Fundy has nothing on the U.S. economy, where money has gone from superabundant to scarce in less than a year. The latest bad news: On Feb. 4, the U.S. Federal Reserve reported a sharp constriction of credit in its quarterly survey of banks' senior loan officers. It appears that many banks are using the liquidity supplied by big Federal Reserve interest rate cuts to heal their balance sheets rather than to make new loans. "Restraint has become widespread, deep, and generic, affecting all types of borrowers and most types of loan categories," writes George Magnus, senior economic adviser at UBS (UBS) Investment Bank in London. If Americans can't borrow, they can't spend as much. The increasingly dire numbers suggest that a consumer-led recession is likely if not already under way. Stoking such fears, the Institute for Supply Management reported on Feb. 5 a sharp decline in its index of nonmanufacturing activity in January. The report carved 370 points from the Dow Jones industrial average, the biggest one-day loss in nearly a year. The first story in this week's Special Report zeroes in on the latest lending sector to feel a squeeze: credit cards. To guard profitability, issuers are imposing tighter lending standards, lower limits, and higher late fees. Some are cutting the credit lines of customers who appear to be on the edge. But such actions could help precipitate the very recession that the card issuers fear most. Citing concerns of a recession, UBS on Feb. 4 slapped sell recommendations on the stocks of three of the biggest credit-card issuers: American Express (AXP), Capital One Financial (COF), and Discover Financial (DFS). How did we get into this mess? One reason is that when the tide of money was still rolling in, lenders skipped the traditional vetting of borrowers and gave money to anyone with a decent FICO score—and plenty of people with mediocre ones. The second story in our package explores the company behind that score, Fair Isaac Corp. (FIC), and shows how a good idea in the wrong hands can lead to bad outcomes. --------------------------------------- What no body talks about is that good people with good scores lost their jobs. So, no matter how good your score was, that would not have helped when jobs moved overseas. -KMG
"Global systemic crisis / September 2008 - Phase of collapse of US real economy" (http://www.europe2020.org/spip.php?article527&lang=en) I hope this is slightly off centre, but the signs are unmistakable.
Thank you stretched. The website has a lot of good information. Here is one worth noting Moonbats Active Again in Massive Jobs Disaster
Almost correct (only off by a month) - about three years ago, I posted the correct date for the start of the 6 year window in which the run on the dollar will occur (Oct08 until Oct2014) That run quickly converts into the worst depression that North America and Western Europe have ever experienced. The BRICs will will not even enter into recession, nor will some others, like Australia, N.Z., Vietnam etc. and several African states that have long term (30Year) contracts with China to supply energy, raw materials, and food stocks. I guess I should add your source to the growing list of publications (The Economist is now at the top) I can sue for plagerism of my thoughts on the global economy. Please Register or Log in to view the hidden image!
He he. There are more radical views out there, please tell me your views differ! Please Register or Log in to view the hidden image! From "Never Been Wrong Robertson" (http://fourwinds10.com/siterun_data/business/economy/news.php?q=1202785222)
I can not read them all. However, many seem to be built on some paranoia, not upon inspection of trends and facts, as mine were. Thus in general, I suspect there is considerable difference between most of them and my POV. For example I suspect than many of these "more radical" POVs have humanity going to economic hell. My POV does not. Only the current leaders (US and western EU) will suffer badly in the coming depression. China and India (and some others in Asia) will still have "booming economies" - I.e. GDP growth rates at least twice the US average for GWB's 8 years. Brazil and other suppliers of energy, food stocks, and raw materials will not grow as rapidly ("economic colonies" never do as well as their "masters") but will have growth rates about the same as US has had until recently - I.e far from any danger of recessions.
Sandy seems to have disappear (proven wrong too many times I guess) so here is some more BAD news (for Joe American, not for Sandy's rich friends, writing all those novel new mortgage forms. From her POV, those new mortgage types had nothing to do with the current problem.): "... The average rate for {municipal} bonds whose interest is set at weekly auctions rose to 6.73 percent on March 5, up from 3.80 percent two months ago, according to an index compiled by the Securities Industry and Financial Markets Association. ..." From: http://www.bloomberg.com/apps/news?pid=20601087&sid=aVs1vGz8s4Vc&refer=home Where do you think that cities will get the extra cost? - From Joe American’s taxes on his home, of course. Perhaps Joe will trick them as the new mortgage products and their sales men tricked Joe - I.e. now that Joe has lost his job so company profits could be at all time highs (cheaper imported components via outsourcing etc) Joe will just "walk away" for the mortgage he cannot pay at the new, higher "reset" rate. Effect of that will be that the middle class who can still pay their mortgage will see their real estate tax bill jump up even more. US and EU are headed for the GWB created depression as even the upper middle class tighten their belts. Henry ford understood long ago that the workers need a piece of the pie to buy the goods the factory owners plan to sell. GWB still thinks otherwise and Joe has been transferring wealth to the already rich via GWB's tax and other policies. First time in more than 100 years that Joe's salary has gone down in purchasing power while that of the richest is soaring to the sky.
Gulf states to depeg from dollar? http://www.businessweek.com/ap/financialnews/D8VF9ARG0.htm What would be the fallout from this?
Not very much for anyone but them, I think. Yes, it is one more step in turning the world away for using dollar as the global currency. Certainly a bigger step than Brazil and Argentina recently took with the same but smaller effect: Now their mutual trade and settlement of trade inbalance are made in each other's currency, not in dollars as they have been for years. The dollar is not only going down in value, but losing importance as a global currency, mainly in small steps like these. No one wants to get stuck holding them when the dollar collapses, but Japan will as it needs the US 7th fleet to protect it.
I think they are presently only worried about inflation. Their banking system appears not to be largely vulnerable to US dollar ups and downs, though the subrprime crisis reduced their earnings. http://www.canada.com/calgaryherald....html?id=a4d75850-6bd2-4807-924d-e2a8ad826383 Unless you know any different?
Interesting that you linked a faked interview on a website that also has things like this posted: The gathering of Sananda’s “flock” is determined, also, by your own planet. The most beautiful planet in the Cosmos, has been plundered and raped until the pollution has nearly suffocated her. She has asked for her graduation into 5th Dimension, where no evil shall dwell upon her surface. This was granted to her on the occasion of the Harmonic Convergence August 17, 1987. Creator gave 25 years for her people to “wake up” and help with her restoration, the end date being 2012, but the evil ones have prevented balance from happening. With the speeding up of time due to the Photon Belt, the 25 years have passed, and you are in “overtime”. The process of cleansing has been bombarded with more evil upon her surface, air, and oceans. She is at the point of dying, and to preserve her life, she must rid herself of the negativity. You might want to do a little research on that "interview". Please Register or Log in to view the hidden image! Try to stick to things like FT or The Economist. I really don't want to get my economic news from Tom Cruise.
Yes inflation is their concern. When their currency has a firm tie to the dollar, it will take more of their currency to buy a bushel of wheat, etc. as the purchasing power of the dollars falls. (China has let the Yuan appreciate about 16% in last year, not IMHO because of pressure from US Congress etc, but because inflation is a growing problem in China –especially in politically sensitive parts of the economy like food costs. –Pork is up more than 50% now. The CCP is scared of reactions by the masses when they cannot buy food, but thus far the material living standards are rapidly advancing for the typical Chinese worker – in stark contrast to what is happing to the typical US worker, my “Joe American.” I am not very knowledgeable about "Islamic bonds" etc. but think that instead of the forbidden "interest" they get a piece of the "action." For example, if Ford want to build a factory in Dubai and for some reason (perhaps related to local tax on it) it is better to borrow the money locally, some part of Ford's profit on the cars made in that factory, perhaps for 20 years, would be sent to the Dubai bank that financed the factory (and of course they get the loan repaid too at the end of the agreed 20 year period or amortized annually.) No interest is paid - just the same amount of money, on average, but the lender is keeping some of the risk – e.g. the cars may not sell etc. I advocate that the lender keep some of the risk so he is more cautious about the loans he makes. With the new loan types permitted under GWB, such as Liar Loans etc, the lender can (and did) sell away the risk, so only a quick profit was of interest to the lender, not whether or not the loan could be re-paid after the introductory rate period expired. Etc. Now that GWB has screwed Joe American, perhaps the US can adopt something like the Islamic bonds - it really is better for the society than what GWB's administration has allowed to be created.
London has anticipated you. Please Register or Log in to view the hidden image! http://www.azcentral.com/business/articles/0310biz-islamicfinance0311-ON.html
