People have been writing all kinds of stuff about the big stories of 2009. Even though this article in nytimes doesn’t say so, I think this is probably the biggest story of 2009. Along with that, the ability of the US govt to prevent the flight of capital (or the illiusion of it) is quite remarkable.
“What the average citizen doesn’t explicitly understand is that a significant part of the government’s plan to repair the financial system and the economy is to pay savers nothing and allow damaged financial institutions to earn a nice, guaranteed spread,” said William H. Gross, co-chief investment officer of the Pacific Investment Management Company, or Pimco. “It’s capitalism, I guess, but it’s not to be applauded.”
compared to Indians. Shanghai composite is down 5% today.
Have you bought anything lately from Walmart (beyond soap, diaper and mouthwash) that actually works? I haven’t. I picked up $10 faded glory sun glasses recently that gave me a headache. Turns out that the glasses are not 20/20 (they seem to magnify slightly) and were not labelled as such. Memorex Mi3020? Looks cool, but the connector breaks in a few weeks and you can’t find the receipt to claim the warranty.
Target seems to be a much better place to shop – definitely so in densely populated areas where walmart is totally in the pits. Travel to a less densely populated place like Denver – it’s a different walmart there.
Tom Friedman writes in NY Times about how US should sustain high oil prices to force research in alternative and domestic sources of energy.
This was disputed by Henry C.K. Liu of Asia Times in a lengthy four page article, full of interesting data and analysis, but rambling at times and lacking a sharp focus.
Select quotes.
In other words, higher energy prices do not take money out of the economy, they merely shift profit allocation from one business sector to another. More than $365 billion a year goes to foreign oil producers who then must recycle their oil dollars back into US Treasury bonds or other dollar assets, as part of the rules of the game of dollar hegemony. The simple fact is that a rise in monetary value of assets adds to the monetary wealth of the economy.
The fact of the matter is that the US already controls most of the world’s oil without war, by virtue of oil being denominated in dollars that the US can print at will with little penalty. Petro-war is launched to protect dollar hegemony, which requires oil to be denominated in dollars, not physical access to oil. Much anti-war posturing in an election year is merely campaign rhetoric.
For those of you not interested in reading this – his argument about “political economics” can be summarized as complex math, where you’re asked to do “2+2″ for variable values of 2. Another key argument is that the big guys (Wall Street, Arabs) are always going to protect themselves with “hedging” – so it’s the little guy who always loses. And a bunch of other insightful stats about money supply (translation: how you become poorer with constant bank balance and low inflation – which is manipulated by governments).
In the end, it’s clear that Friedman is a journalist and Liu is an economist.
September 15th, 2007
arun
Lots of goodies published by Reserve Bank of India are here – but the site is down.
But you can always check the Google cache – View as HTML feature.
You might be tired of reading about the credit crunch for the Nth time on your favorite financial website and you might still be scratching your head about making sense of all of this.
Asians make most of the goods consumed in the US, take all the money and invest it right back in American banks which lend the money to people who’re not credit worthy and that hurts Asian markets? There must be something wrong with this logic you think.
I’ve tried to make sense of all of this by compiling some data myself (I think all the data is out there, but is not presented this way because of the political sensitivities). Also, I’m not sure how trustable the data is i.e. has it been verified independently from multiple sources.
But here it is. Emperor’s clothes. So every month the US persuades other countries to sell goods/services that are really worth ~900B USD for around 500B, then pursuades them to buy things for around 300B.
At this rate, the US should be running a deficit of 200B per month = 2.4T per year. But it doesn’t. Why? Because some of the richest countries invest the money right back in the US.
Did you know that China is the richest country in the world already? This is according to the CIA, based on their bank balance.
Worried about your salary and housing prices? Or just trying to figure out how to write up a page that becomes popular?
http://patrick.net/housing/crash.html
