America's Financial Crisis

[Armanen]

Re: America's Financial Crisis

http://www.msnbc.msn.com/id/27054709

[Azad]

Re: America's Financial Crisis

More spending ... money they don't have.

Fed announces new steps to inject billions into economy

By Jeannine Aversa, AP Economics Writer
WASHINGTON — The Federal Reserve will provide as much as $900 billion in cash loans to squeezed banks in an urgent effort Monday to break through a dangerous credit clog that threatens the economy and has unhinged financial markets around the globe.

http://www.usatoday.com/money/industries/banking/2008-10-06-fed-reserves_N.htm?csp=34

[yerazhishda]

Re: America's Financial Crisis

What will $700 billion dollars buy? Here's a hint: not the world economy.

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Dow down 700 points

NEW YORK (CNNMoney.com) -- Stocks tanked Monday, with the Dow, S&P 500 and Nasdaq falling to nearly five-year lows as credit markets seized up and European governments' rush to prop up failing financial firms underscored the global reach of the credit crunch.

Credit markets remained tight, with two key measures of bank jitters hitting an all-time high. Treasurys rallied, lowering the corresponding yields as investors sought safety in government debt. Gold rallied for the same reason. Oil dipped. The dollar jumped versus the euro and fell against the yen.

The Dow Jones industrial average (INDU) lost as much as 604 points before pulling back a little bit, hitting the lowest level during a session since Nov. 24, 2003, when it touched 9629.83.

The Standard & Poor's 500 (SPX) index fell 7.7%, hitting its lowest point since Sept. 12, 2003. The Nasdaq composite (COMP) lost 7.9%.

source: CNN

[Armanen]

Re: America's Financial Crisis

Armenia will not be able to attain the kind of freedom you are referring to in our lifetimes.

30 years ago many Armenians were saying "we will never see an independent Armenia in our lifetimes". I realize that with the current geopolitical situation in the Caucasus, Armenia's small size and population, self-sufficiency isn't likely for sometime, maybe never, but it should be a goal that Armenia pursues, if not overall then in some key industries. For example with more investment Armenia could be 100% energy independent, solar, wind, hydro-electric, and nuclear. We get our enriched uranium from Russia but if we built enough wind and solar plants then if worse came to worse Armenia could rely on the other aspects of its energy industry. Second, we buy most of our arms from Russia. While I do not see Armenia producing planes or tanks anytime soon, there is no reason why we can not expand on our small arms industry which currently makes firearms and some add ons to military vehicle's. I may be missing a few more things so let me know, but my point is we can and must build on these. I wish I had saved the article, but there was an Armenian film maker, journalist and freedom fighter who had drawn up plans to build a tank that would be idle for Artsakh's terrain, he was contacted by israeli officials who wanted him to sell them that info, but he refused since he said it was only for Armenia.

As many nations have been realizing lately, nations can prosper with international trade yet, if international trade is carried out haphazardly, nations can also be held slave to it as well.

This is what I want, I realize we may never be able to be fully self-sufficient, but I do not want us to be 100% free trade and let anyone buy anything anytime either. If borders are opened with turkey it should be after a law is passed that doesn't allow turks to buy key industries or property in certain parts of the country, like the border regions. Free trade is not some cure all, the core nations take advantage of the periphery whilst talking about the benefits of "free trade" There is much more to becoming a high income nation than open borders and no tariffs.

Armenia cannot survive another generation under its current socioeconomic situation.

Let's not be melodramtic. Armenia has done better than most would have expected with the s*it conditions forced upon it, and things have and will continue to improve.

However, striving for Armenia's free access to the global market has to be done strategically and with great political prudence.

Agreed!

Observing the caliber of our population in the diaspora and in the homeland does not give me much hope for this.

Observing the caliber of people in general, the decadence of society and those or rule over us, we may not have to worry about any of this. Big things are ahead and Armenia is just one jigsaw in the much grander puzzle.

[Armenian]

Re: America's Financial Crisis

Self-sufficiency is as free as a nation will ever be. Free to wage war without having to worry about key resources, impact(s) of disruptions caused by the war, not having to bend to the desires of another nation because they own key industries in your nation, etc. Armenia is a long way from this happening, if ever, but it would be a HUGE event for Armenia if we could become in theory, self-sufficient.

And please take into account the political systems and regional dynamics i.e. geopolitcs of cuba and n. korea. Economics depends heavily on politics, that's why adam smith called it "political economy" and he would be pissed to see so many modern economists try to portray economics as separte from politcal events.

Armenen, you and Annon are essentially talking about two different things. Armenia will not be able to attain the kind of freedom you are referring to in our lifetimes. In the modern world (post industrial world), nations simply cannot prosper under isolation. In the past, in the pre-modern world, the vast majority of a given nation's/kingdom's population were the "self-sufficient" peasantry and a tiny minority were the nation's nobility. The tiny minority of nobles more-or-less lived off the land's peasantry and empires were forged out of nations that succeeded in directly controlling/exploiting international trade routes. However, in the past, a nation did not necessarily have to control vast networks of trade routes to survive. The relatively small population of any given land lived off the natural wealth of that land. Today, with a massive global population explosion, technology, high standard of living and dwindling natural resources, nations simply cannot afford to remain isolated from the global society. A nation like Armenia, in particular, cannot even 'survive' under isolation due to its severe lack of natural resources, not to mention it being landlocked and surrounded by enemies. So, in a sense, it's a two edged sword in the modern world. As many nations have been realizing lately, nations can prosper with international trade yet, if international trade is carried out haphazardly, nations can also be held slave to it as well. Let's face our hard reality, Armenia cannot survive another generation under its current socioeconomic situation. Something must be done to break the shackles of life in the Caucasus if Armenia is to move forward in the modern world. However, striving for Armenia's free access to the global market has to be done strategically and with great political prudence. Whether-or-not our national leaders can pull this off is altogether another story. Observing the caliber of our population in the diaspora and in the homeland does not give me much hope for this.

[Armanen]

Re: America's Financial Crisis

Self-sufficiency is as free as a nation will ever be. Free to wage war without having to worry about key resources, impact(s) of disruptions caused by the war, not having to bend to the desires of another nation because they own key industries in your nation, etc. Armenia is a long way from this happening, if ever, but it would be a HUGE event for Armenia if we could become in theory, self-sufficient.

And please take into account the political systems and regional dynamics i.e. geopolitcs of cuba and n. korea. Economics depends heavily on politics, that's why adam smith called it "political economy" and he would be pissed to see so many modern economists try to portray economics as separte from politcal events.

[Anonymouse]

Re: America's Financial Crisis

That makes more sense.

However, I do not support free trade as I think it is over rated and I would like to see Armenia's economy be self-sufficient one day, so that if we wanted we could become an autarky.

Self-sufficiency is feudalism and those social property relations do not exist anymore. Those that try, like Cuba or North Korea, suffer alot. In these social property relations of private property and capital, trade (whether free or managed) is an inevitability.

[Armenian]

Re: America's Financial Crisis

The German perspective.

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Germans Approach Bailouts With Reluctance

A boy played with a kite made of German banknotes in 1922, as hyperinflation in the ’20s
rendered much of the currency worthless. Germans now are more cautious in financial matters.

Germans tend to be the strait-laced, play-it-safe types in financial matters. That has left them particularly frustrated at footing the bill for bank bailouts and fretting over their accounts because of a global financial crisis that seems to emanate from the spendthrift ways of others and the unfathomable risks taken by Wall Street bankers. American taxpayers may be no happier about bailing out Wall Street, either, but those living in Germany know that they bear little resemblance to Americans on economic matters. After struggling at times in recent years, the German government has the federal budget nearly balanced, though that goal is most likely out the window now. The world’s leading exporter of goods, Germany had a current-account surplus of $185 billion last year, compared with the United States’ deficit last year of $731 billion in that broad measure of trade.

Unlike in fellow European Union countries like Spain, Ireland and Britain, there was no real-estate bubble here. Germans abhor credit. And few own stocks, just 5.4 percent according to a study by the Deutsches Aktieninstitut, a nonprofit group that promotes equity ownership. Instead, most Germans sock away 11 percent of their incomes on average into savings accounts, often with Sparkassen, municipally owned savings banks that are popular and stable. Risk averse and cautious with their own money, most German citizens are particularly unhappy about the notion of paying billions for bad mortgage bets made by their financial institutions. It is a battle between the bankers and the piggy bankers. “It’s always the taxpayers,” said Marianne Rochlitz, 61, who works at the Berlin State Opera, expressing a common complaint in interviews with Germans passing through the Alexanderplatz in Berlin on a rainy October afternoon. “Whatever it is that happens, we have to pay for the mess.”

Attitudes here help explain why German officials were quick to reject out of hand a notion that France and a couple of other nations briefly toyed with: a $414 billion bank bailout. They have chosen to stand pat, in the belief that they have rooted out and rescued their own mortgage-lamed institutions, and they do not want to foot the bill for other countries’ problems. Yet the financial crisis has been unpredictable. Germany’s own flagship institution, Deutsche Bank, had enormous but manageable write-downs of over $11 billion from the earlier stages of the crisis. Now, like other large European banks, Deutsche Bank is extremely leveraged, given the erosion in its share price, analysts said. Chancellor Angela Merkel has responded in a discreet fashion, siding with the piggy bankers, while explaining the local bailouts. “I have my own savings and no fear about them,” Mrs. Merkel told constituents Thursday in an interview with the newspaper Bild. Germany is a country where economic prudence was ingrained in the popular consciousness by long centuries of war and the wrenching hyperinflation of the 1920s. “Americans have trust in the future and are willing to borrow against it,” said Matthias von Arnim, a German financial expert and author. “The Germans say, ‘In the future everything is going to be worse, so I have to save.’ ”

One very big exception came during the dot-com bubble, when even the equities-shy Germans grew exasperated watching everyone else get rich playing the stock market. They piled in just as the bubble was about to burst, in an unfortunate case of better late than never that turned out to be better never than late. It is a parallel, experts here say, to the last-minute leap several German banks made into American mortgage debt toward the end of the rise in real-estate prices in the United States. Mrs. Merkel defended the decision to rescue Hypo Real Estate, a commercial property lender, with a nearly $50 billion line of credit from the government and several banks as a move to protect the public. “We act not in favor of the banks but for the security of the individual citizens of our country,” Mrs. Merkel told Bild. But the evident concern etched on the faces of government leaders here is not just about answering to the displeased German voters. It is much more the fear that, if the instability in the financial system continues, there could be more bailouts to come. For now, the problems seem to be limited to a few lenders, particularly among the more plodding German banks. They plunged into complex, mortgage-backed securities with particular gusto because they saw American and British institutions making huge profits.

The problem for German policy makers is twofold. On one hand, they can never be sure whether another nasty surprise will pop up on another German bank’s balance sheet. On the other hand, even financial boy scouts can be caught off guard as panic and broken trust continue to ripple through global markets and as credit to highly leveraged lending institutions dries up. There is nowhere to hide, and the definition of a healthy balance sheet keeps changing. It has been easier for German leaders to blame the Americans than to admit that some of their own institutions were hooked on bad mortgage debt. The current cover of the German magazine Spiegel shows a picture of the Statue of Liberty’s torch, extinguished, under the headline, “The Price of Arrogance.” Government officials have fretted publicly about the crisis, in particular the need for the United States to get its house in order and pass a rescue package, which Congress did this week and which President Bush signed on Friday. Most memorably, Germany’s finance minister, Peer Steinbrück, declared last week that “the U.S. will lose its status as the superpower of the world financial system,” and that “the financial crisis was above all an American problem.”

It was just a few days later, however, that the German government, along with a number of banks, was forced to put together the rescue deal to save Munich-based Hypo Real Estate, which was announced Monday by the company. “The Europeans were laughing, more or less, when the U.S. investment banks came down,” said Arnoud Boot, professor of finance and banking at the University of Amsterdam. “They said, ‘We don’t have that. We have superior supervision.’ ” He added: “Now, look at what’s happening to commercial banks in several European countries. That type of rhetoric is misplaced.” Last year, when the financial crisis first erupted, two German banks had to be rescued after speculating in subprime-related securities. The state lender SachsenLB had to be bailed out by the state of Saxony and other regional banks. IKB Deutsche Industriebank lost billions of euros speculating on mortgage-backed securities and had to be bailed out by the state-owned KfW Bankengruppe and then sold for pennies on the dollar to an American private equity firm.

KfW, in turn, revealed last month that it had half a billion euros caught up in the Lehman Brothers collapse, including a last-minute transfer as Lehman entered bankruptcy that made KfW a laughingstock nationwide. Klaus Zimmermann, director of the German Institute for Economic Research in Berlin, said that the greater regulation that German government officials have called for in the United States would not necessarily have prevented the crisis. But Mr. Zimmerman said that he saw the German banking system as more stable, primarily because banks here are better diversified than many United States institutions. In interviews here, German citizens actually seemed less willing to blame the Americans for the troubles at home, pinning the problem on the greed of their own banks. “The Americans always go first,” said Gesine Wiemer, 40, who works in marketing for a scientific research company, “but the rest of them go along with them.”

Source: http://www.nytimes.com/2008/10/04/wo...ermany.html?em

[Armanen]

Re: America's Financial Crisis

That makes more sense.

However, I do not support free trade as I think it is over rated and I would like to see Armenia's economy be self-sufficient one day, so that if we wanted we could become an autarky.

[Anonymouse]

Re: America's Financial Crisis

What does that have to do with my comment about buffet and gates wanting to protect their companies investments in turkey?

Sorry, I meant to quote your statement about Armenia's integration (or lack of) into the world economy.