GDP – Page 14 – Infinite Unknown

China falls into budget deficit as spending balloons

February 3, 2009 by Infinite

China’s attempts to spend its way out of economic depression led to a fiscal deficit of 111bn yuan (£12bn) last year.

China falls into budget deficit as spending balloons

Despite a near 20pc rise in tax revenues and a record surplus of 1.19 trillion yuan (£128bn) in the first six months of the year, the dramatic scale of government spending in November and December was enough to plunge the entire year into deficit.

The figures are the first indication of how quickly and forcefully China reacted to the economic crisis after it announced a fiscal stimulus package of 4 trillion yuan in November to build new roads, railways, schools and hospitals.

Government spending in December surged to 1.66 trillion yuan, more than triple the previous month’s total and 31pc higher compared to the same month last year.

The news came as Wen Jiabao, the Chinese prime minister, said that he was mulling over another fiscal stimulus package. “We may take further new, timely and decisive measures. All these measures have to be taken pre-emptively, before an economic retreat,” he told the Financial Times.

Japan’s markets prepare for horror week

January 31, 2009 by Infinite

DREADFUL December industrial production figures from Japan and South Korea show the global recession is smashing manufactured trade.

Japan’s industrial production index dropped a record 9.6 per cent, month-on-month, solidifying fears the world’s second-largest national economy is shrinking at a double-digit rate.

Many economists expect preliminary GDP figures to be released in a fortnight will show the Japanese economy shrank at an annualised 10 per cent or more in the fourth quarter of last year.

Japan Heads for Worst Recession as Output Tumbles

January 30, 2009 by Infinite

Mazda Motor Corp. vehicles are assembled at the company’s Ujina plant in Hiroshima City, Japan, on Sept. 16, 2008. Photographer: Tomohiro Ohsumi/Bloomberg News

Jan. 30 (Bloomberg) — Japan headed for its worst postwar recession as factory production slumped an unprecedented 9.6 percent, NEC Corp. said it will cut more than 20,000 workers and Hitachi Ltd. forecast a record loss.

The December drop in output eclipsed the previous record of 8.5 percent set only a month earlier, the Trade Ministry said today in Tokyo. NEC, Japan’s biggest personal-computer maker, forecast its first loss in three years.

The Nikkei 225 Stock Average slumped 10 percent this month, extending last year’s record 42 percent drop as the global recession smothered demand for Japanese cars and electronics. Mounting losses forced companies to fire workers in December, spurring the biggest jump in the unemployment rate in 41 years.

“Japan’s economy is falling off a cliff,” said Junko Nishioka, an economist at RBS Securities Japan Ltd. in Tokyo. “There’s really nothing out there to drive growth.”

The International Monetary Fund said this week that Japan’s gross domestic product will shrink 2.6 percent this year, the bleakest projection for any Group of Seven economy except the U.K. That contraction would be Japan’s worst since World War II.

“We’re in a very grave situation,” Economic and Fiscal Policy Minister Kaoru Yosano said in Tokyo today. “Japan is being hit by this wave of weakening global demand.”

Is It Time to Bail Out of the US?

January 29, 2009 by Infinite

Paul Craig Roberts [email him] was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University.

By Paul Craig Roberts

California State Controller John Chiang announced on January 26 that California’s bills exceed its tax revenues and credit line and that the state is going to print its own money known as IOUs. The template is already designed.

Instead of receiving their state tax refunds in dollars, California residents will receive IOUs. Student aid and payments to disabled and needy will also come in the form of IOUs. California is negotiating with banks to get them to accept the IOUs as deposits.

Don’t miss:
– Paul Craig Roberts: Another real estate crisis is about to hit
– Paul Craig Roberts: Our Collapsing Economy
– Paul Craig Roberts On The U.S. Leadership: “They Are Criminals” – The Potential Here Is Far Worse Than The Great Depression
– Paul Craig Roberts: The American Puppet State

California is often identified as the world’s eighth largest economy, and it is broke.

A person might think that California’s plight would introduce some realism into Washington, DC, but it has not. President Obama is taking steps to intensify the war in Afghanistan and, perhaps, to expand it to Pakistan.

Obama has retained the Republican warmongers in the Pentagon, and the US continues to illegally bomb Pakistan and to murder its civilians. At the World Economic Forum at Davos this week, Pakistan’s prime minister, Y. R. Gilani, said that the American attacks on Pakistan are counterproductive and done without Pakistan’s permission. In an interview with CNN, Gilani said: “I want to put on record that we do not have any agreement between the government of the United States and the government of Pakistan.”

How long before Washington will be printing money?

Peter Schiff: The World Won’t Buy Unlimited U.S. Debt

January 24, 2009 by Infinite

We’re asking others to sacrifice for our ‘stimulus.’

Barack Obama has spoken often of sacrifice. And as recently as a week ago, he said that to stave off the deepening recession Americans should be prepared to face “trillion dollar deficits for years to come.”

But apart from a stirring call for volunteerism in his inaugural address, the only specific sacrifices the president has outlined thus far include lower taxes, millions of federally funded jobs, expanded corporate bailouts, and direct stimulus checks to consumers. Could this be described as sacrificial?

What he might have said was that the nations funding the majority of America’s public debt — most notably the Chinese, Japanese and the Saudis — need to be prepared to sacrifice. They have to fund America’s annual trillion-dollar deficits for the foreseeable future. These creditor nations, who already own trillions of dollars of U.S. government debt, are the only entities capable of underwriting the spending that Mr. Obama envisions and that U.S. citizens demand.

These nations, in other words, must never use the money to buy other assets or fund domestic spending initiatives for their own people. When the old Treasury bills mature, they can do nothing with the money except buy new ones. To do otherwise would implode the market for U.S. Treasurys (sending U.S. interest rates much higher) and start a run on the dollar. (If foreign central banks become net sellers of Treasurys, the demand for dollars needed to buy them would plummet.)

Don’t miss: Jim Rogers: I Would Sell All Government Bonds

In sum, our creditors must give up all hope of accessing the principal, and may be compensated only by the paltry 2%-3% yield our bonds currently deliver.

Britain on the brink of an economic depression, say experts

January 24, 2009 by Infinite

Britain is heading for economic depression for the first time since the 1930s, economists have warned.

Families must brace themselves for a slump of far greater severity and longevity than the recessions of the 1980s and 1990s, they warned. They said the current crisis will be of a scale to rival the biggest peace-time crisis in modern history – the Great Depression.

The warning was delivered by economists and politicians after the Office for National Statistics revealed that the economy shrank by 1.5 per cent in the final three months of 2008 alone.

The contraction follows a 0.6 per cent fall in gross domestic product (GDP) – the most comprehensive measure of Britain’s wealth generation – during the previous three months. This means Britain fulfils the criteria for a technical recession – two successive quarters of negative output.

‘Recession could be the worst since 1930s’ warning as Brown admits: ‘I never saw it coming’

January 24, 2009 by Infinite

So Brown is either lying or incredibly incompetent.

Everybody who does not buy into corporate media brainwashing and has only the slightest interest in economics and politics saw this crisis coming. In fact it was very difficult not to see it.

In 1994 we were taught in university that there would most probably be a crisis coming around 2008 – 2010, by 1999 I knew that there would be a ‘staged’ world economic crisis. Long before 9/11 I told people that gold is ‘the’ investment for the future and I am definitely not a prophet.

Ron Paul, Peter Schiff, Jim Rogers, Max Keiser, Paul Craig Roberts and Marc Faber have warned years ago about this crisis and told people about possible solutions to the problems we are facing right now.

The U.K. and the U.S. are broke.

Britain’s recession could be the worst since the 1930s, an expert warned today in the wake of Gordon Brown’s admission that he hadn’t seen it coming.

As the pound dropped to a new low, economics boffins confirmed that the massive downturn was already bigger than anyone had predicted.

Charles Davis of the Centre for Economics and Business Research told The Telegraph that the contraction of the economy ‘supports our view that in 2009 the economy is set for the steepest contractions in the post-war era, with a fall in the region of 3 per cent year-on-year’.

Under pressure: A bleary-eyed Gordon Brown emerging from a television studio today after admitting he had not foreseen the financial crisis

Mr Davis added: “Today’s figures are the final nail in the coffin for Prime Minister Gordon Brown’s claim to have ‘ended boom and bust.”

His sentiments were echoed by Roger Bootle, managing director of Capital Economics, I think there’s a very good chance this recession will be the worst since the 1930s. I suspect the economy could shrink by 6 per cent from last year to the end of next year – and that might not be the end.”

As the recession took a firmer grip yesterday, it emerged that the pound had closed at its lowest level in 24 years – sliding by more than three quarters against the U.S. dollar to $1.3668.

Paul Craig Roberts: Another real estate crisis is about to hit

January 23, 2009 by Infinite

“Obama’s economic team consists of the very people who brought on the debt crisis. Now they are going to make it worse.”

“However, the financial gangsters and their shills that Obama has put in charge of economic policy are thinking only of their own interests. What happens to the American people is not a concern.”

“The unexamined question is: Who is going to finance the next wave of debt?”

“The US budget deficit for fiscal year 2009 already appears to be on a path to $2 trillion, and that is before Obama’s stimulus program. What we are looking at is a $3 trillion budget deficit if Obama’s program is enacted in time to impact the economy this year.”

“…in marked contrast with the approach of the gangsters running US economic policy. The gangsters are using the crisis as an opportunity to steal from taxpayers and to finance their misdeeds and exorbitant salaries with Federal Reserve loans.”

“Their shills among economists and the financial press tell the people that the solution is to fatten up the banks with funds so they will resume lending to an over-indebted public that will then return to the shopping malls.”

By Paul Craig Roberts:

For a picture of the US real estate crisis, imagine New Orleans wrecked by Hurricane Katrina, and before the waters even begin to recede, a second Katrina hits.

The 1,120,000 lost US retail jobs in 2008 are a signal that the second stage of the real estate bust is about to hit the economy. This time it will be commercial real estate — shopping malls, strip malls, warehouses, and office buildings. As businesses close and rents decline, the ability to service the mortgages on the over-built commercial real estate disappears.

The over-building was helped along by the irresponsibly low interest rates, but the main impetus came from the slide of the US saving rate to zero and the rise in household indebtedness. The shrinkage of savings and the increase in debt raised consumer spending to 72 percent of GDP. The proliferation of malls and the warehouses that service them reflect the rise in consumer spending as a share of GDP.

Like the federal government, consumers spent more than they earned and borrowed to cover the difference. Obviously, this could not go on forever, and consumer debt has reached its limit.

We’ll have to go begging to the IMF, says Cameron

January 23, 2009 by Infinite

David Cameron: ‘If we continue on this path the money will run out’ (PA)

Britain risks bankruptcy and a humiliating bailout by the International Monetary Fund (IMF) because of Gordon Brown’s borrowing, David Cameron said yesterday. With official confirmation that the economy has entered recession expected today, the Tory leader delivered his strongest warning yet: “If we continue on Labour’s path of fiscal irresponsibility, at some point – and it could be very soon – the money will simply run out.”

His speech to the Demos think-tank in London raised the spectre of the 1976 bailout, when James Callaghan’s Labour government was forced to make deep public spending cuts in return for a £2.3bn loan from the IMF.

Related articles:
– Sterling plunges to record lows (Financial Times – 23 Jan 2009)
– Recession figures heighten the gloom (Independent)
– Jim Rogers: Now it’s time to emigrate, says investment guru (Independent)
– Is Britain facing bankruptcy? (Guardian)
– Bank of England Governor paves way to start Bank print presses (The Times)
– Jim Rogers: ‘UK has nothing to sell’ (Financial Times):
“The City of London is finished, the financial centre of the world is moving east.”
– Jim Rogers: ‘Sell any sterling you might have; It’s finished’ (Times)

His remarks are bound to provoke Labour accusations that he is running the country down. Mr Cameron insisted he was not predicting a date by which the Government would “end up back at the IMF”. But he added: “What I am saying is that we are running the risk of those things happening and those are risks that no government should responsibly run.”

The Tory leader added: “We are borrowing, according to the Government’s current estimates, 8 per cent of our GDP in the next financial year. That is the same percentage that Denis Healey [the then chancellor] was borrowing when he went to the IMF in 1976.”

Global Economic Crisis Accelerating

January 22, 2009January 22, 2009 by Infinite

– Obama administration considers launch of ‘bad bank’ (Telegraph)

– US Initial Jobless Claims Match Highest Since ’82 (Bloomberg)

– Barack Obama inauguration: this Emperor has no clothes, it will all end in tears (Telegraph)

– Despite billions, banks still teeter on the brink (MSNBC)

– Microsoft to shed 5,000 jobs (Financial Times)

– Intel to Cut at Least 5000 Jobs (New York Times)

– GM Gets $5.4 Billion Loan Installment From Federal Government (CNNMoney)

– US jobless claims surge, housing start tumble (Forbes)

– Housing Starts, Permits in US Slump to Record Low (Bloomberg)

– Banks Foreclose on Builders With Perfect Records (New York Times)

– Jim Rogers: Now it’s time to emigrate, says investment guru (Independent)

– Saudi prince’s firm loses $8.3B in 4Q (AP)

– Investors flee after brutal losses at global markets (Emirates Business)

– Indians Flee Dubai as Dreams Crash – Fall out of Economic Crisis (Daijiworld):
It’s the great escape by Indians who’ve hit the dead-end in Dubai.

– China growth slows, Bank of Japan sees deflation (Forbes):
(Reuters) – China’s economy slowed sharply in the fourth quarter and Japan’s central bank on Thursday predicted two years of deflation as Asia’s largest economies buckle under the strain of the financial crisis.

– Roubini Sees China Recession Despite ‘Massaged’ GDP (Bloomberg)

– Asian economic woe grows as China slows and Japanese exports plunge (Telegraph):
China’s economy may have ground to a halt entirely between the third and fourth quarters of last year and Japanese exports plunged 35pc in December, underlining the scale of the slowdown in Asia.

– ZIMBABWE: Inflation at 6.5 quindecillion novemdecillion percent (IRIN)

– Sony forecasts $2.9bn operating loss (Financial Times)

– Hedge funds’ $400bn withdrawals hit (Financial Times)

– Google income drops 68% on one-time charges (IHT)

– Is Britain facing bankruptcy? (Guardian)

– Manufacturing outlook plummets (Financial Times)

– Car production plummets as pressure for industry bail-out grows (Telegraph)

– London’s Evening Standard sold to ex-KGB agent (Reuters)

– AIG starts $20bn auction of Asian unit (Financial Times):
AIG, the stricken insurance giant, on Wednesday kicked off the sale of its Asian life assurance unit – one of its most prized assets – in the hope of raising up to $20bn to help repay the $60bn US government loan that is keeping the group alive.

– UBS to Cut Securities Jobs, Close More Debt Units (Bloomberg)

– Japanese Housewives Desperate After Currency Scheme Collapses (Bloomberg)

– New age of rebellion and riot stalks Europe (Times Online)

– Increase in burglaries shows effect of recession (Guardian)

– Chinese media issues stinging attack on Barack Obama and George W Bush (Telegraph)

– Barclays may lose control to Gulf investors (Telegraph)

– Cars to be crushed in insurance crackdown (Scotsman)

– Investors say jailed pilot swiped money for years (Washington Post)

– Capital One Reports $1.42 Billion Loss on Charges (Bloomberg)

– Nokia reports sharp fall in profits (Financial Times)

Bank of England Governor paves way to start Bank print presses

January 21, 2009 by Infinite

Bank of England Governor Mervyn King leaves 10 Downing Street in London

The Bank of England’s Governor paved the way last night to unleash the (Zimbabwe) weapon of “printing money” in a last-ditch drive to combat the rapidly deepening recession.

Mervyn King braced Britain for a further sharp slump and a “difficult year for all of us”, and laid the groundwork for the Bank to turn to “unconventional measures” as interest rates fall towards zero.

Related articles:
– Jim Rogers: ‘Sell any sterling you might have; It’s finished’ (Times)
– Jim Rogers: ‘UK has nothing to sell’ (Financial Times):
“The City of London is finished, the financial centre of the world is moving east.”
– Sterling hits 23-year low against dollar (Financial Times)
– UK cannot take Iceland’s soft option (Telegraph)
– Gordon Brown brings Britain to the edge of bankruptcy (Telegraph)

The Governor made clear that the Bank is preparing to turn soon to so-called “quantitative easing” measures – pumping money into the economy by buying bonds from banks, firms and the Treasury – after interest rate cuts to a record low of 1.5 per cent left it short of ammunition.

Portugal suffers S&P rating cut

January 21, 2009 by Infinite

Portugal on Wednesday became the third eurozone economy in two weeks to suffer a credit rating downgrade because of its failure to tackle deteriorating public finances.

Standard & Poor’s decision to reduce Portugal’s long-term ratings to AA minus, six notches below the highest triple A rating, followed downgrades of Spain on Monday and Greece last week. Ireland, which was put on negative outlook earlier in the month, could follow soon.

The move underlines the growing strains in the eurozone as the weaker economies, mainly in the south, struggle to stay competitive in the worsening economic climate without the option of devaluing their currencies.

The extra cost for Portugal, Spain, Greece and Ireland of issuing government bonds compared with that of Germany, Europe’s biggest economy has risen this week. This is because investors believe the continent’s smaller economies may suffer longer and deeper recessions.

The cost of insuring their government bonds against default through credit default swaps has risen to record highs, too, with investors judging the assets of these countries to be increasingly risky.

UK cannot take Iceland’s soft option

January 21, 2009 by Infinite

The British government faces an excruciating choice. It cannot let Royal Bank of Scotland and its fellow mega-banks go to the wall. Yet it risks being swamped by the massive foreign debts of these lenders if it takes on their dollar, euro and yen exposure by opting for full nationalisation.

Britain has foreign reserves of under $61bn dollars (£43.7bn), less than Malaysia or Thailand. The foreign liabilities of the UK banks are $4.4 trillion – or twice annual GDP – according to the Bank of England. The mismatch is perilous.

It is why sterling has crashed 10 cents from $1.49 to $1.39 against the dollar in two days. The markets have given their verdict on Gordon Brown’s latest effort to “save the world”.

Related article:
– Gordon Brown brings Britain to the edge of bankruptcy (Telegraph)

Credit default swaps (CDS) measuring risk on British debt have reached an all-time high of 125 basis points, just below Portugal. The yield spread on 10-year Gilts over German Bunds has doubled to 53 basis points since last week.

Standard & Poor’s has quashed rumours that it will soon strip Britain of its AAA credit rating – an indignity averted even after the International Monetary Fund bail-out in 1976. But there was a sting yesterday as it responded to the Treasury plan for the banks. “Market confidence in the sector has eroded to such a degree that it is not clear whether these measures by themselves will bring about a material improvement,” the IMF said. “As a result, full nationalisation of some banks remains a possibility in our view.”

Spain was relegated from AAA to AA+ on Monday, and Spain’s public debt is a much lower share of GDP.

Global Economic Crisis Accelerating

January 19, 2009January 19, 2009 by Infinite

U.S. President-elect Barack Obama waves after speaking during the “We Are One: The Obama Inaugural Celebration at the Lincoln Memorial” event in Washington on Jan. 18, 2009. Photographer: Andrew Harrer/Bloomberg News

– Obama Issues Call to Service to Help Repair Nation (Bloomberg):
Obama is using the latest state of the art manipulating techniques. Don’t fall for this puppet of the elite, rather listen to some of the few people – like Ron Paul, Peter Schiff, Marc Faber and Jim Rogers – that are telling you the truth:
Paul Craig Roberts On The U.S. Leadership: “They Are Criminals” – The Potential Here Is Far Worse Than The Great Depression or Peter Schiff: We are the United States of Madoff

More change: Obama Reaches Out for McCain’s Counsel (New York Times)

– California Finds Public-Works Spending No Unemployment Cure-All (Bloomberg):
“What infrastructure spending can do is bolster employment in a group of industries, like construction, with workers who are ready to go,” said Brad Kemp, director of regional research at Beacon Economics in Los Angeles. “What it can’t do is stop the unemployment rate from rising currently because there are a lot of forces coming at consumers, who are holding back on spending.” California is totally broke: Here

– ! Bonds tumble as Government admits no cap on taxpayer risk (Telegraph)

– Brazil Cut Record 654946 Registered Jobs in December (Bloomberg)

– Brussels sees Eurozone economy shrink 1.9% (Financial Times)

– Taxpayers are spending over $1 billion to send refined fuel to the Israeli military — at a time when Israel doesn’t need it and America does (Salon)

– Spain Downgraded by S&P as Slump Swells Budget Gap (Bloomberg):
Jan. 19 (Bloomberg) — Spain had its AAA sovereign credit rating removed by Standard & Poor’s in the second downgrade of a euro-region government in five days, as the country’s first recession in 15 years swelled the budget deficit.

– China GDP Growth May Cool to Slowest Pace in 7 Years (Bloomberg)

– Ruble Drops to Pre-1998 Crisis Low on 6th Devaluation This Year (Bloomberg):
Jan. 19 (Bloomberg) — The ruble fell below the weakest level seen in the 1998 Russian crisis after the central bank devalued for the sixth time in seven days to protect reserves.

– Fifty jobseekers chasing every vacancy in some parts of the country (Telegraph)

– Treasury Yields Flattened as Fed Fights to Cut Mortgage Rates (Bloomberg):
Fed Chairman Ben S. Bernanke helped spark a rally by reiterating Jan. 13 at the London School of Economics that he’s considering buying long-term Treasuries to reduce borrowing rates as the recession deepens.
(Bernanke helped to create the ultimate Bond Bubble: Here, here and here.)

– Bonds no safer than houses (The Financial Standard)

– Denmark agrees on 13.4-bln-euro line of credit to banks: govt (AFP)

– How the Treasury Bubble Will Burst and Why (Seeking Alpha)

– Investor puts pressure on HSBC to let US sub-prime unit go bankrupt (Times)

– Tory chief’s firm cost councils £470m (Independent)

– RBS on the brink as shares plummet by 69% and City is warned: ‘You’re about to become
Iceland-on-Thames’ (Mail Online)

– RBS ready to write off £1bn loan to Russian oligarch (Scotsman)

– RBS Plummets Amid Concern Bank May Be Nationalized (Bloomberg)

– RBS shares dive 70% on mounting debt fears (Times Online)

– Tax rise for rich won’t make society fair, says Mandelson (Guardian)

– More Americans Joining Military as Jobs Dwindle (New York Times)

– Circuit City to close remaining 567 stores in US (Los Angeles Times):
The failure of the No. 2 electronics retailer means the loss of 34,000 jobs.

– BASF warns of possible job and production cuts (Houston Chronicle)

The Bond Bubble – Marc Faber, Peter Schiff, Max Keiser

January 18, 2009 by Infinite

Marc Faber on the US Treasury Bond Bubble

Source: YouTube

Peter Schiff: The Bond Bubble will Burst
Source: YouTube

Max Keiser: The Bond Bubble is about to burst
Source: YouTube

UK is in freefall, warns think-tank

January 18, 2009 by Infinite

Asking for more incompetent, outdated, taxpayer looting government spending.
The Bank of England is destroying the pound and the government is taking care of the rest.

Alistair Darling is bracing himself for official confirmation that Britain is in the grip of a deep recession this week, as the Ernst and Young Item Club warns that 2009 will see the sharpest peacetime contraction in the economy since 1931.

In its quarterly health check of UK plc, the think-tank, which uses the Treasury’s economic model, warned that GDP would slump by 2.7% this year – much worse than the 1% decline forecast by the chancellor just two months ago in his pre-budget report.

“Things are in freefall, and it’s very hard to know just how far they’ve got to fall,” said Peter Spencer, the report’s author. “Companies are planning for the worst in 2009, slashing investment plans and the workforce.” He predicted the economy would continue to contract throughout 2010, instead of bouncing back later this year, as the Treasury has predicted.

Related articles:
– British banks are ‘technically insolvent’ (Independent)
– ANOTHER £100BN BAIL-OUT FOR ‘INSOLVENT’ BANKS (Daily Express)

Spencer urged the chancellor to implement more radical measures immediately to rescue the embattled banking sector and unfreeze lending to firms and consumers. He warned that the “paralysis” that has been afflicting the financial sector for months is rapidly spreading right across the economy.

Official figures will reveal on Friday that the economy shrank for a second successive quarter in the final three months of the year – the usual definition of being in recession.

Panic Could Herald Dollar Rout

January 8, 2009January 8, 2009 by Infinite

One of the few things more troubling for an economy than government intervention is government intervention driven by panic. Time and again, history has shown that when governments rush to engineer solutions to pressing problems, unintended difficulties arise.

In the current crisis, there is growing evidence that Washington is in a state of increasing panic. Despite its massive cash injections, market manipulations and “rescue” plans, the recession is clearly deepening and spreading. With little to show thus far, politicians don’t know if they should redouble past efforts, break ground on new initiatives, or both. However, all agree, unfortunately, that the consequences of doing too little far outweigh the consequences of doing too much.

Although there are many parallels between the current crisis and the crash of 1929, one key difference is the global profile of the US dollar. In 1929, the dollar was on the rise, and would soon eclipse the British pound sterling as the world’s reserve currency. Furthermore, the American economy was fundamentally so strong that in 1934 America was the only major nation able to maintain a currency tied to gold.

Ever since, the US dollar’s privileged “reserve” status has been a principal factor in America’s continued prosperity. The dollar’s unassailable position has enabled successive American governments to disguise the vast depletion of America’s wealth and to successfully increase US Treasury debt to where the published debt now accounts for some 100% of GDP. The total of US government debt, including IOUs and unfunded programs, now stands at a staggering $50 trillion, or five times GDP! If the dollar were just another currency, this never would have been possible.

Singapore GDP Posts Biggest Fall on Record

January 3, 2009 by Infinite

SINGAPORE — Singapore plunged deeper into recession in the fourth quarter as gross domestic product marked its biggest quarterly decline on record, said the government, which lowered its projection for 2009.

The darker outlook for the small, trade-dependent economy — considered to be a bellwether for the rest of the region — likely means the government will step up spending to offset a slowdown in manufacturing and a rapid cooling in the construction and services sectors. It may also pressure the central bank to ease monetary policy to support growth.

Singapore’s economy contracted at a seasonally adjusted, annualized pace of 12.5% in the quarter, accelerating from a 5.4% decline in the third quarter, according to the Ministry of Trade and Industry’s estimate. It was the biggest contraction since the government began publishing seasonally adjusted data in 1976.

“The global economic crisis has worsened since November, with sharp declines in global demand, trade and investments,” the ministry said.

The government cut its forecast for 2009, projecting a range of between a contraction of 2% and growth of 1%, against its estimate in November of a range of a contraction of 1% and growth of 2%.

Citigroup economist Kit Wei Zheng is more pessimistic. He forecasts GDP will contract 2.8% this year. That would make the current downturn worse than the slump in 1998, when the economy shrank 1.4% as it was buffeted by the Asian financial crisis, and worse than the 2001 recession following the collapse of U.S. technology stocks, when GDP shrank 2.4%. “If we are correct, 2009 will mark the most severe recession in Singapore’s history,” he said.

Gulf stocks plummet in turbulent year; Dubai shedding almost three quarters of its value

January 3, 2009January 2, 2009 by Infinite

KUWAIT CITY: Stock markets in the Gulf states yesterday ended 2008 sharply lower as the energy-dependent economies were battered by the global financial crisis while oil prices plummeted. Most of the seven markets witnessed their worst year ever with the bourse of the bustling Dubai shedding almost three quarters of its value and the Saudi market, the largest in the Arab world, slumping by more than half.

More than $515bn were wiped off of their market value as their capitalisation stood at just $600bn compared to $1.116 trillion at the end of 2007. “It was a year of contradictions as share prices rose sharply in the first half but nosedived in the second half similar to the oil price scenario,” Kuwaiti economist Hajjaj Bukhdur said.

“The impact of the global financial crisis on the Gulf economies was much deeper than initially thought. Gulf stocks slumped even more than bourses in the West where the crisis began,” Bukhdur said. The Saudi Tadawul All-Shares Index (TASI) dropped 56.5 percent to close the year at 4,802.99 points, down from 11,175.96 points at the end of 2007. It was pulled down by a sharp slide in the leading banks and petrochemicals sectors.

Kuwait Stock Exchange, the second largest in the Arab world, shed 38 percent to finish the year at 7,782.60 points, almost a four-year low. However, it was down 50.3 percent from its all-time high set in late June. In the United Arab Emirates, the Dubai Financial Market slid 72.4 percent to close at 1,636.29 points, near its four-year low.

Japan’s Economy May Shrink 12.1% This Quarter, Barclays Says

December 29, 2008 by Infinite

Vehicles bound for export wait in a lot in Yokohama City, Japan on Oct. 27, 2008. Photographer: Haruyoshi Yamaguchi/Bloomberg News

Dec. 30 (Bloomberg) — Japan’s economy will probably shrink at an annual 12.1 percent pace this quarter, the sharpest drop since 1974, as exports collapse, Barclays Capital said.

Gross domestic product in the three months ending tomorrow will fall at almost three times the 4.1 percent rate previously predicted, said Kyohei Morita, chief Japan economist at Barclays in Tokyo, after reports last week showed industrial production and exports posted the biggest declines on record in November.

“Given the speed and the length of the contraction, this recession could be the most severe in the postwar era,” Morita said. “We expect negative growth will continue for a fifth straight quarter to the April-June period of 2009.”

Britain’s GDP will decline at fastest pace since the 1940s

December 27, 2008 by Infinite

Getting closer to the truth….’The Great Depression of 2009.’
For the US it will be the Greatest Depression with the dollar and the financial markets collapsing.

The UK economy looks set to contract at its fastest pace since the 1940s next year, according to a report by an independent group of economists.

The Centre for Economics and Business Research (CEBR) expects the UK’s gross domestic product to decline by 2.9 per cent in real terms over the next year, the biggest annual fall since 1946, when the country faced mass de-mobilisation after the Second World War.

Business investment – forecast to collapse by more than 15 per cent in 2009 – is pegged to pose the biggest risk to the economy while household expenditure is expected to fall by 1.8 per cent in the New Year.

CEBR’s managing director, Mark Pragnell, said his team “had to get the history books to find a year with as a large a fall in national output as we expect for 2009.”

Experts: Recession intensifying

December 24, 2008 by Infinite

GDP could fall by as much as 6 percent this quarter

Gray’s Papaya, a hot dog and papaya store in New York’s Fashion District, serves quick, inexpensive food with stand-up dining.

WASHINGTON — As the longest recession in a quarter century intensifies, analysts believe the small decline in economic activity in the third quarter has worsened significantly in the current fourth quarter.

The Commerce Department said Tuesday that the gross domestic product, the broadest measure of economic health, declined at an annual rate of 0.5 percent in the July-September quarter. Corporate profits fell 1.2 percent.

Some economists believe the economy’s decline in the October-December period could be as large as 6 percent. If so, that would be the worst quarterly drop since 1982.

“It will get a lot worse before it gets better,” said Nariman Behravesh, chief economist at IHS Global Insight, a Lexington, Mass., forecasting firm. “We are in the midst of the worst recession in the post-war period, even factoring in a massive stimulus program.”

Marc Faber: “2009 is going to be a catastrophe”

December 23, 2008 by Infinite

The Federal Reserve caused the financial crisis.

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December 23, 2008 Source: YouTube

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December 23, 2008 Source: YouTube

New Zealand recession deepens

December 23, 2008 by Infinite

New Zealand’s economy has contracted for a third straight quarter as the combination of a weak housing market and a slowing global economy takes its toll.

The country’s gross domestic product contracted 0.4pc in the three months to the end of September and that follows a 0.2pc decline in the second quarter and a 0.3pc shrinkage in the first three months of the the year. The decline for the latest quarter was in line with economists’ expectations.

Like that of its larger neighbour Australia, New Zealand’s economy has enjoyed a booming housing market over the past decade. However, the bursting of the housing bubble has prompted New Zealanders to apply a sharp brake to their spending.

UK economic downturn accelerates

December 23, 2008December 23, 2008 by Infinite

The recession in the UK economy in the three months to September was worse than previously thought, official data out on Tuesday showed, underlining the speed of the downturn.

Gross domestic product shrank by 0.6 per cent between the second and third quarters of this year – the worst performance since the end of 1990 – the Office of National Statistics reported.

That compares with an earlier estimate that the UK economy had contracted by 0.5 per cent in the quarter, and is worse than the consensus view of economists who had expected GDP to remain unrevised.

The pound, which has moved closer to parity with the euro in the last week, came under renewed pressure following the release of the revised figures.