Comments on: Turmoil in the Financial System - How it started, What it means, Where are we headed?, by Shobhit Mathur

By: Balu

Balu — Thu, 02 Apr 2009 19:56:34 +0000

to briefly answer Pratik-ji, Community reinvesment act alone can’t be blamed for the crisis. The existence of a secondary mortgage market because of Fannie/Freddie, repeal of the Glass Steagall Act, allowing investment banks to lever up 30:1, no regulation of CDS (where one would not only buy/sell insurance to hedge but also to make speculative bets), Alan Greenspan lowering interest rates so low so as to induce a housing bubble after the tech bubble, all these are factors. Rating agencies were asleep at the wheels also. So it was a combination of many factors. Only blaming Community Reinvestment is rather short-sighted.

By: Pratik Desh.

Pratik Desh. — Mon, 27 Oct 2008 23:29:06 +0000

Sir, I have heard conservatives put blame on the Community Reinvestment Act of 1977 for this crisis. They argue that this compelled banks to give loans to low income people with shaky credit and backed up the shaky loans with federal vehicles (Freddie Mae and Fannie Mac).

Can you qualify or refute this statement? It would be much appreciated.

By: Jyotikar Pattni

Jyotikar Pattni — Fri, 17 Oct 2008 10:53:24 +0000

Dearest RupeshKumar: Prannamm Namaskaraam:
Truly since 1960’s this propaganda has become a manifestation of political economy rather than pure financial economics. Fundamental issue facing our world is “ACCUTE SCARCITY” of oil, gold reserves, and grains. Now, if your economist in India suggests that India will not be subject of Globalisation and that it is a term associated purely with the AMERICANISM, then strictly speaking you and your economist professor in India perhaps must contemplate upon removing the “STOCK-MARKET” world wide. When you do so, you remove the term “global-political-economy”. Until then, whatsoever transpires in the USA will have great repurcussions and effects and consequences in the west U.K., EUROPE and its ripples spread across the globe without the shadow of a doubt. Just remember this much: THE GIMMICK OF articificially saving the banking system in itself affects not only the American tax payers but the investors and business enterprises world wide. Why? It is because we see today stock market share prices with artificially false shareholder value. Therefore “VALUE” is the cause of all doom and gloom.
Many potential trans-national and multi-national corporations have already entered into massive “mergers and acquisitions” program and “joint ventures” program to survive in the next ten years. This entails in the main transporting the port of manufacturing to low-cost labour and establishing lower-cost materials, lower-cost distribution costs [by putting up assembly plants in the country of exports]. So effectively “TOYOTA” ; “HONDA”; and others are made in Japan but assembled in respective territories for distribution to be minimal. For example: We have huge shift in production plants moving to ‘Wales’ in the U.K., and so forth.
The future world will NO LONGER be a dominance of USA and EUROPE but a shift in ownership and control of multinational and transnational corporations as more and more rich companies in India, China, Russia and Africa awake and buy out the American and European companies at large. It is only a matter of time, I humbly re-iterate, that AFRICA and INDIA once third world countries will be feeding GREAT USA AND EUROPE.
Already India is the fastest growing and the most booming economy in the world and this in itself will attract back those very Indians who fled India to got to the USA in search of more money and better lifestyle.
Lifestyle?
One only need ponder upon the lifestyle of the American Hindus. Most of my family and friends spend nearly 60 hours working and 30 hours in travelling to and from work places. Thats nearly half the time gone. Average per day of 11 hours is therefore spent say like this: 6 hours in sleep, 3 hours in domestic chores, and probably 2 hours in personal time [less than 5%].
Compared to UK: Where the time spent in personal development is between 20% and 30% of the total time.
To much apathy and compassion, we have to reserve our better judgement for the worst times ahead and sincerely hope and pray that THE GREAT AMERICA shall be LED by a reliable president, an honest humankind.
“VALUE” is what needs restoring.

By: interest only mortgages uk

interest only mortgages uk — Sun, 12 Oct 2008 02:13:33 +0000

interest only mortgages uk…

Well spoken. I have to research more on this as it is really vital info….

By: Rupesh Kothari

Rupesh Kothari — Fri, 10 Oct 2008 15:32:14 +0000

There are fundamental problems with the US economy. The US consumers are overloaded with debts. The jobs losses over the past few years and the recent loss of wealth due to the stock market crash is going to increase the influx of Seniors in the job pool, as they decide to delay retirement or get back to part time work. This is going to place pressure on wages.

Listed below is the link to a presentation made by an Indian Economist in February 2008. Listen to his insight and straight forward talk.

http://video.google.com/videoplay?docid=4343898391323537541

By: Jyotikar Kaku Pattni

Jyotikar Kaku Pattni — Thu, 02 Oct 2008 09:28:30 +0000

Any economist who understands “SHAREHOLDER VALUE”, “TRUE COST OF CAPITAL”, AND “VALUE CHAIN” attributed to the STOCK MARKET share prices will comprehend in sympathy with the fact that there is no REAL “core dividend” or “liquid shareholder profit” other than those in “abstracts” and “balance sheet” equations of LONG TERM AND MEDIUM LIABILITY VERSUS MEDIUM TERM WRITTEN OFF ASSETS OF DEPLETING BANKS. Now, the bailout plan or the rescue package in reality does NOT benefit a poor AMERICAN. Let us be more realistic and acknowledge that it is a stimulus or catalyst to merely diminish a blazing flame, already in its sinking mode. How, if this dark truth, shall improve minimum family struck with poverty and dealing with higher even more imposing cost of living, inflation, and scarcity of resources not to mention redundancies, absence of jobs, and loss of INCOME. In which way would a poor American familuy be better off? Is the USA government bit enough or has the federal reserves of the USA even with the help of tax payers money the capacity to absorb in full a deficit of nearly $550Billion dollars plus, finance its current wars, plus on top of all these, encapsulate and embrace the sinking fund of the TRUE SHARE HOLDER VALUE of companies NOT PRODUCING real profits but artificial balance sheet values. What will happen when the real federal money will NOT be available in tranches at the right moment? Then what happens? Is there a PLAN B OR A PLAN C?
As such, I am not convinced enough that this is the manner in which the issue at stake will be resolved. However, on paper, in terms of balance sheet, and in terms of temporary measures, it will show artificial stock market. Any wise person would withdraw from speculating on the stock market shares. I am compelled to write this message with much compassionate sympathy and concerns for the poorest American families and American families that struggle hard to sustain survival on a tight monthly budget with increasing costs of maintenance, food, petrol, clothing, overheads, and double mortgages. Now, it seems too optimistic, and too good to be true but will this be another BUSH blunder just before he goes out of power or would this be the only right thing “BUSH” ever did? On paper it appears a common sense plan with core financial insurance creating answers across the board. What happens when the federal interest rates cannot be maintained at levels envisaged? I truly hope and pray that STOCK MARKETS whose apparent movements manifest in demand and supply of the shares of a particular company in speculation of the rising cost of oil and gold will sustain the rescue plan if anything for the poor American Citizens. All else are matters of ‘this, that and the other’ and everyone would wishfully want to be able to express thesis, antithesis and synthesis of an issue that is both ‘right’ and ‘wrong’. However, this so called “rescue plan” is an extra ordinary step up effort by the most experienced and skilled financial and economic experts and hence it appears to be a sound package. The “uncertainty” or the “risk” is does ANYONE know how stock market shares will trade in a month’s time? In a mamoth buy out of toxic assets, let us hope that they are at least bought of at “fair” prices or at least favourable prices. If that being the case, the infusion of capital will not imply pampering businesses but a blessing in disguise. God bless U.S.A.

By: Jyotikar Kaku Pattni

Jyotikar Kaku Pattni — Wed, 01 Oct 2008 17:34:42 +0000

Getting the facts correct is the first view of the failed USA BUSH GOVERNMENT:
Factual statistics contained at Harvard Business School library: show: Total expenditure of more than $3.5 trillion dollars in Afghanistan and Iraq wars in the last eight years by Bush Administration.
If “Watergate” was bad, this “Bush” administration over the last eight years has ruined U.S.A. completely; not only AMERICA but U.K. as well!
U.S.A spent on Iraq and Afghanistan through March 2008 approximately USA $700 BILLION– A DEFICIT OF FATAL DISASTERS across the levels unrecoverable.
Based on assumptions set out in our book, the budgetary cost to the UK of the wars in Iraq and Afghanistan through 2010 will total more than £18 billion. If we include the social costs, the total impact on the UK will exceed £20 billion
Before the 2003 invasion, oil cost less than $25 a barrel and futures markets expected it to remain around there. That is nearly $100 a barrel now.
Gold price nearing just under $1,000 per ounce that compared to 1998 was $300 per ounce.
Current average: USA Dollar $1.40 to 1Euro
Federal debts over 25 billion USA$ grown out of proportion.
U.S. dollar is headed for its intrinsic value
There being futile hope, all the lengthy advises and counsel remains extremely hypothetical and inappropriate even.
The world is short of liquid cash! How could one envisage even contemplate to save when nearly over seventy-five percent of the AMERICANS are re-mortgaging their properties? This is the truth bitter, as it may seem! Whilst it is true that USA citizens need to get together their resources, and finances, and strategies to ECONOMISE and to be more careful about expenditure, such crises are not of NORMAL economic standard suggestive scenario. We are witnessing a global breakdown resulting from wastage of scarce resources and depletion of real growth in industrial output!
One panel suggests that the worst is yet to come. Perhaps this is a time whence many American citizens will realise value chain in a different perspective. Preparing for hard times in the U.S. is one of the smartest strategic moves you can make in your portfolio right now before “value” takes yet another negative turn and causes more upheaval.
Dismally sad but truthful the future of USA is dire whichever way one looks at from whatever angle one contemplates.
It is one of the most complex, paradoxical and chaotic situation for USA.

By: mamta rani

mamta rani — Wed, 01 Oct 2008 16:13:54 +0000

An enlightening article on the present american economic scenerio affecting banks in the world. Awakening article for every individual.
good work