Daily Digest - Feb 2

Sunday, February 1, 2009, 7:11 PM
  • More Economists Say Crisis Is Worse Than Great Depression (Hat Tip Christopher Peters)
  • YES WE CAN!! have a global depression if we really continue to work at it...
  • Soros Compares Mishandling Of Current Crisis To Great Depression
  • Credit-Crunch Protest in Europe 22 photos (Hat Tip DamTheMatrix)
  • Governments Across Europe Tremble as Angry People Take to the Streets (Hat Tip DamTheMatrix)
  • The New Paranoia: Hedge-Funders Are Bullish on Gold, Guns, and Inflatable Lifeboats (Hat Tip CapeSurvivor)
  • Four Bad Bears (Chart) Dow 1929-1932
  • Homelessness surges as funding falters
  • Upcoming Frontline Episode
  • Gold, 3:20 minute point to about the 5:00 minute point
  • WSJ Bad Bank Video
  • Senator sees Republican backing for stimulus eroding


More Economists Say Crisis Is Worse Than Great Depression (Hat Tip Christopher Peters) 

More prominent economists have declared that the U.S. is facing a depression that may be even worse than that of the 1930s.
Noting that current efforts to rescue the mortgage industry are less successful than those used during the 30s, Edward J. Pinto, former chief credit officer at Fannie Mae has warned that the current crisis could be worse. 

Mr. Pinto said that, while the subprime crisis was often compared to the Depression, there were differences that made the current problem more acute. The Depression-era collapse in housing prices did not generally put homeowners at risk of owing the bank more than their house was worth. That is not the case today.
In addition, hedge fund manager and billionaire philanthropist George Soros has warned that the current crisis outstrips that of the 30s:

The bursting housing bubble "acted like a detonator that exploded a much larger bubble," he said.
"The economies of the world are falling off a cliff. This is a situation that is comparable to the 1930s. And once you recognize it, you have to recognize the size of the problem is much bigger," he said. 

YES WE CAN!! have a global depression if we really continue to work at it... 

I used to be optimistic about the capacity of our political leaders and central bankers to avoid the policy mistakes that could turn the current global recession into a deep and lasting global depression. Now I'm not so sure. 

I used to believe that the unavoidable protectionist and mercantilist rhetoric would not be matched by protectionist and mercantilist deeds. Protectionism was one of the factors that turned a US financial crisis into a global depression in the 1930s. Protectionism imposes large-scale structural sectoral dislocation, as exporters are ejected from their foreign markets and domestic producers that depend on cheap imported imports suddenly find themselves to no longer be competitive, on top of the global effective demand failure we are already suffering from.

I used to believe that our central bankers would overcome their natural conservatism, caution and timidity to do what it takes to bring to bear the full measure of what the central bank can deliver on a disfunctional financial sector and on a depressed economy, at risk of deflation. Now I'm not so sure. While the Fed is turning on most of the taps (albeit in a unnecessary moral hazard-maximising way), the Bank of England and the ECB are falling further and further behind the curve. What the Bank of Japan does, no-one fully understands, and I will observe a mystified, if not respectful silence. 

Soros Compares Mishandling Of Current Crisis To Great Depression 

Billionaire investor George Soros has slammed US Treasury Secretary Hank Paulson for behaving in the same manner as bankers in the 1930's and mishandling a financial crisis that threatens a repeat of the Great Depression. 

Billionaire investor George Soros has slammed US Treasury Secretary Hank Paulson for behaving in the same manner as bankers in the 1930's and mishandling a financial crisis that threatens a repeat of the Great Depression.

Soros told BBC Newsnight that the world was merely at the beginning of a financial storm and warned, "We mustn't allow the financial system to collapse as it did in the 1930s."

Referring to Hank Paulson, the US Treasury Secretary, Soros stated, "The way Paulson is handling the situation is reminiscent of the way the bankers handled it in the 1930s."

He added: "The financial system has gone overboard and the financial engineering has grown to big, it takes up too big a share in the world's resources."

"Now it is shrinking. When it becomes regulated it will be less profitable than the last 25 years." 

Credit-Crunch Protest in Europe 22 photos (Hat Tip DamTheMatrix)

Governments Across Europe Tremble as Angry People Take to the Streets (Hat Tip DamTheMatrix) 

France paralysed by a wave of strike action, the boulevards of Paris resembling a debris-strewn battlefield. The Hungarian currency sinks to its lowest level ever against the euro, as the unemployment figure rises. Greek farmers block the road into Bulgaria in protest at low prices for their produce. New figures from the biggest bank in the Baltic show that the three post-Soviet states there face the biggest recessions in Europe. 

It's a snapshot of a single day - yesterday - in a Europe sinking into the bleakest of times. But while the outlook may be dark in the big wealthy democracies of western Europe, it is in the young, poor, vulnerable states of central and eastern Europe that the trauma of crash, slump and meltdown looks graver.

Exactly 20 years ago, in serial revolutionary rejoicing, they ditched communism to put their faith in a capitalism now in crisis and by which they feel betrayed. The result has been the biggest protests across the former communist bloc since the days of people power.

Europe's time of troubles is gathering depth and scale. Governments are trembling. Revolt is in the air.


Alexandros Grigoropoulos, a 15-year-old middle-class boy going to a party in a rough neighbourhood on a December Saturday, was the first fatality of Europe's season of strife. Shot dead by a policeman, the boy's killing lit a bonfire of unrest in the city unmatched since the 1970s.

There are many wellsprings of the serial protests rolling across Europe. In Athens, it was students and young people who suddenly mobilised to turn parts of the city into no-go areas. They were sick of the lack of jobs and prospects, the failings of the education system and seized with pessimism over their future.

This week it was the farmers' turn, rolling their tractors out to block the motorways, main road and border crossings across the Balkans to try to obtain better procurement prices for their produce. 

The New Paranoia: Hedge-Funders Are Bullish on Gold, Guns, and Inflatable Lifeboats (Hat Tip CapeSurvivor)

During the final months of 2008, as the financial markets imploded, talk on trading desks turned to food and water stockpiles, generators, guns, and high-speed inflatable boats. "The system really was about six hours from failing," says Gene Lange, a manager at a midtown hedge fund, referring to the week in September when Lehman went bust and AIG had to be bailed out. "When you think about how close we were to the precipice, I don't think it necessarily makes a guy crazy to prepare for the potential worst-case scenario."

Preparations, in Lange's case, include a storeroom in his basement in New Jersey stacked high with enough food, water, diapers, and other necessities to last his family six months; a biometric safe to hold his guns; and a 1985 ex-military Chevy K5 Blazer that runs on diesel and is currently being retrofitted for off-road travel. He has also entertained the idea of putting an inflatable speedboat in a storage unit on the West Side, so he could get off the island quickly, and is currently considering purchasing a remote farm where he could hunker down. "If there's a financial-system breakdown, it could take a year to reset the system, and in that time, what's going to happen?" asks Lange. If New York turns into a scene out of I Am Legend, he wants to be ready.

He's not the only one. In his book Wealth, War, published last year, former Morgan Stanley chief global strategist Barton Biggs advised people to prepare for the possibility of a total breakdown of civil society. A senior analyst whose reports are read at hedge funds all over the city wrote just before Christmas that some of his clients are "so bearish they've purchased firearms and safes and are stocking their pantries with soups and canned foods." This fear is very much reflected in the market-prices of corporate bonds have been so beaten down at various points that they suggest a higher default rate than during the Great Depression. Meanwhile, while the overall gold market has fluctuated, the premium for quarter-ounce gold coins-meaning the difference between the price for gold you can hold in your hand and that for "paper gold," such as exchange-traded funds-rose to an all-time high of 20 percent. "Gold is transportable, it's 100 percent liquid, and it's perfectly divisible in the context of ounces, bars, or coins," says the head of a California research firm who keeps a supply of it, along with food, water, and guns, on hand. "And most important, there's no counterparty"-i.e., it's an investment beholden to no one, and perhaps one of the few assets that will retain value if the financial system collapses.

While it may look like these Wall Streeters are betting on such a collapse, their embrace of survivalism is an outgrowth of their professional habits of mind: Having observed the economy's shaky high-wire act from their ringside seats, they are trying to manage their risk and "hedge" against a potential fall. "It's like insurance," says an investor who has stockpiled MREs and a hand-cranked radio. "And by the time you need it, it's way too late." Leave it for others to weep for the collapse of the social order. These guys would prefer to be in a high-speed boat or ex-military vehicle, heading off toward their fully provisioned compounds in pursuit of the ultimate goal: to win the chaos.

Four Bad Bears (Chart) Dow 1929-1932, S&P 500 in 1973-1974, 2000-2002, 2007-2009

Homelessness surges as funding falters. Providers to the poor try to stretch meager resources to meet growing need 

SEATTLE - As snowstorms blew into this Northwest city and the economy iced over in December, the occupants of a shelter nestled among industrial buildings on the north side prayed for divine intervention. 

"We were hoping for the Christmas miracle," says Glen Dennis, 41, who was working his way through a residential drug-treatment program at the CityTeam Ministries shelter. Dennis and the other 11 guys in the long-term program -dubbed the "disciples" - also worked each day to prepare for some 50 to 60 overnight shelter guests, and dish up free hot meals to about 100 people. "We kept doing what we were doing, and hoped someone would come by and drop off a big check."

But the check did not come - even after a coalition of other shelters, nonprofits and local churches tried to pull together a rescue package to keep the shelter open. On Dec. 27, CityTeam Ministries, based in San Jose, Calif., closed the Seattle facility - leaving scores of people to seek food, shelter and sobriety elsewhere. For Dennis, who had been free of crack cocaine for nearly 11 months, the upheaval led to another painful relapse out on the streets. 

Upcoming Frontline

Gold, 3:20 minute point to about the 5:00 minute point

WSJ Bad Bank Video

Senator sees Republican backing for stimulus eroding  

WASHINGTON (Reuters) - The Senate's No. 2 Republican warned on Sunday his party's support for President Barack Obama's economic stimulus bill was eroding and "major structural changes" were needed to win Republican support. 

"You have to start from scratch and reconstruct this," Sen. Jon Kyl of Arizona told "Fox News Sunday."
He said the proposed bill, with a price approaching $900 billion, "wastes a ton of money." Kyl took issue with items in the bill, including a $500 tax rebate, the creation of dozens of new government programs and transfers of cash to states.

"There would be major structural changes that would have to occur," he said.

Republicans sought not to delay the bill, but wanted "huge amendments that would redirect it" to address the housing industry collapse and provide tax relief measures, Kyl said.

Sen. Richard Durbin of Illinois, the Senate's No. 2 Democrat, told the program that Democrats were "very open" to Republican ideas and amendments to the bill, including provisions on infrastructure spending and to provide oversight to avoid mistakes made in implementing the TARP bailout program.

The Obama administration and Democrats have already cut two provisions in the bill passed by the House of Representatives without a single Republican vote. Dropped from the bill was $200 million to fix up the National Mall and millions for family planning that Republicans said would fund contraceptives. 

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Davos's picture
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Re: Daily Digest - Feb 2

Gallery Credit-crunch protests: Credit-crunch protests around Europe

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Re: Daily Digest - Feb 2

I'll post this in tomorrow's DG but these 2 were of interest:

The specter of millions more unemployed clearly has the Chinese government worried. The government has not released annual figures on social unrest — what it terms “mass incidents” — for several years, but foreign media reports suggest growing protests as unemployment spreads. A January article in Outlook Weekly, a magazine published by the government news agency Xinhua, predicted a record year for mass protests. “It is fair to say that the Chinese government takes very seriously the issue of employment of migrant workers,” said Chen Xiwen, a senior rural planning official who released the joblessness estimate at Monday’s briefing. “Guaranteeing employment and livelihood is to guarantee social stability,” he said. 

Mr. Chen advised government officials to actively intervene to head off protests, rather than “shy away from coming out and let public security departments and police go to the front lines.” The military called upon its forces Sunday to exercise strict obedience to command in the face of challenges to social stability.


Zimbabwe is revaluing its dollar again, removing twelve zeros from the currency with immediate effect.

The country's central bank is introducing seven new notes in an effort to stave off economic collapse.

The country is in the grip of world-record hyperinflation. The most recent estimate in July 2008 put it at 231m%.

Only last month, a Z$100 trillion note was introduced and the government moved to allow people to use foreign currencies alongside Zimbabwe's dollar.

The announcement will see Z$1 trillion reduced to Z$1.

The denominations of the new notes are Z$1, Z$5, Z$10, Z$20, Z$50, Z$100 and Z$500. 

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Re: Daily Digest - Feb 2



The Chinese need to send out stimulus checks (bread)-I saw they sent a few coupons..and have their own Superbowl (circus). That would sedate the masses for a while.



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Re: Daily Digest - Feb 2

Not familiar with the gentleman in the video above, but his sentiments fit with a lot of what you see in the mainstream recently. This almost hysterical (by the way one need not gesticulate wildly or shout to be hysterical) aversion to gold and gold investment. He's says something like, I don't like it when I'm bullish on gold and used "gold bug" two times within a few seconds. This is heavily coded language. My interpretation is that he's screaming to the gatekeepers, "I'm not one of them." Another take on mainstreamers steering people away from gold is that they want to suppress demand and therefore price through their advice and counsel.

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Re: Daily Digest - Feb 2

Hello CapeSurvivor:

TV Mush Brain

Toooo funny. Yeah they need some Britney Spears (?SP) and some celebrity drama to help numb them into nirvana.

Hello MaineCoonCat:

I could only bear to listen from 3:20 to 5:00. Even that was painful. What you said really struck a chord with me, I couldn't put it better than "Gold, 3:20 minute point to about the 5:00 minute point" but if I could have I would have written what you did!

It will be interesting to see what happens when the first currency topples.


Take care. 

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Re: Daily Digest - Feb 2

mainecooncat, I would love to see this guys portfolio.  Think he has any gold??

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Aussie media..

Taxpayers should not be bailing out the bunglers

    * Paul Krugman  (2008 Nobel Prize winner in economic science)
    * The Age
    * February 3, 2009

If Obama is going to give money to the banks, there should be a return.

QUESTION: What happens if you lose vast amounts of other people's money?

Answer: You get a big gift from the federal government — but the President says some very
harsh things about you before forking over the cash.

Am I being unfair? I hope so. But right now that's what seems to be happening.

Just to be clear, I'm not talking about the Obama Administration's plan to support jobs and
output with a large, temporary rise in federal spending, which is very much the right thing to
do. I'm talking, instead, about the Administration's plans for a banking system rescue —
plans that are shaping up as a classic exercise in "lemon socialism": taxpayers bear the cost
if things go wrong, but stockholders and executives get the benefits if things go right.

When I read recent remarks on financial policy by top Obama Administration officials, I feel
as if I've entered a time warp — as if it's still2005, Alan Greenspan is still the Maestro, and
bankers are still the heroes of capitalism.

"We have a financial system that is run by private shareholders, managed by private
institutions, and we'd like to do our best to preserve that system," says Timothy Geithner, the
Treasury secretary, as he prepares to

put taxpayers on the hook for that system's immense losses.

Meanwhile, a Washington Post report based on Administration sources says that Geithner
and Lawrence Summers, President Barack Obama's top economic adviser, "think
governments make poor bank managers" — as opposed, presumably, to the private-sector
geniuses who managed to lose more than a trillion dollars in the space of a few years.

And this prejudice in favour of private control, even when the Government is putting up all the
money, seems to be warping the Administration's response to the financial crisis.

Now, something must be done to shore up the financial system.

The chaos after Lehman Brothers failed showed that letting major financial institutions
collapse can

be very bad for the economy's health. And a number of major institutions are dangerously
close to the edge.

So banks need more capital. In normal times, banks raise capital by selling stock to private
investors, who receive a share in the bank's ownership in return. You might think, then, that if
banks currently can't or won't raise enough capital from private investors, the Government
should do what a private investor would: provide capital in return for partial ownership.

But bank stocks are worth so little these days — Citigroup and Bank of America have a
combined market value of only $US52 billion — that the ownership wouldn't be partial.
Pumping in enough taxpayer money to make the banks sound would, in effect, turn them into
publicly owned enterprises.

My response to this prospect is: So? If taxpayers are footing the bill for rescuing the banks,
why shouldn't they get ownership, at least until private buyers can be found? But the Obama
Administration appears to be tying itself in knots to avoid this outcome.

If news reports are right, the bank rescue plan will contain two main elements: government
purchases of some troubled bank assets and guarantees against losses on other assets.

The guarantees would represent a big gift to bank stockholders; the purchases might not, if
the price was fair — but prices would, The Financial Times reports, probably be based on
"valuation models" rather than market prices, suggesting that the Government would be

making a big gift here, too.

And in return for what is likely to be a huge subsidy to stockholders, taxpayers will get, well,

Will there at least be limits on executive compensation, to prevent more of the rip-offs that
have enraged the public? Obama denounced Wall Street bonuses in his latest weekly
address — but according to The Washington Post, "the Administration is likely to refrain from
imposing tougher restrictions on executive compensation at most firms receiving government
aid" because "harsh limits could discourage some firms from asking for aid". This suggests
that Obama's tough talk is just for show.

Meanwhile, Wall Street's culture of excess seems to

have been barely dented by the crisis. "Say I'm a banker and I created $30 million. I should
get a part of that," one banker told The New York Times. And if you're a banker and you
destroyed $30 billion? Uncle Sam to the rescue!

There's more at stake here than fairness, although that matters too. Saving the economy is
going to be very expensive: That $US800 billion stimulus plan is probably just a down
payment, and rescuing the financial system, even if it's done right, is going to cost hundreds
of billions more. We can't afford to squander money giving huge windfalls to banks and their
executives, merely to preserve the illusion of private ownership.

Paul Krugman was awarded the 2008 Nobel Prize in economic science.

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Re: Daily Digest - Feb 2


Thank you for your daily digest of economic news.  Since our plate is so full, your work is very much appreciated. 

 Present moment

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Re: Daily Digest - Feb 2

Hello PresentMoment:

It is a pleasure to contribute to this fine comunity, takes me 2 extra seconds out of my day to cut and paste what I consider to be the most interesting of what I read. Take care 

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Mexico’s Peso Stuns UBS With Biggest Drop Since 1995
No mention of Mexico's oil production collapsing as well as everything else.
UBS AG apparently doesn't know about Peak Oil.
Why would anybody bother listening to THEM ?
Mexico’s Peso Stuns UBS With Biggest Drop Since 1995 (Update3)
By Andres R. Martinez and Valerie Rota

Jan. 30 (Bloomberg) -- The steepest decline in Mexico’s peso in 13 years blindsided everyone from UBS AG economists to Gustavo Huitron, the local marketing manager for Mercedes-Benz.

After weakening 20 percent last year, the currency fell to a record
low of 14.4484 per dollar today. RBS Greenwich Capital Markets in
Greenwich, Connecticut, now predicts another 3.8 percent drop by June
30. The peso’s worst performance since 1995’s so-called Tequila Crisis
is being driven by the U.S. recession and falling oil prices, which are
cutting Mexican exports and government revenue.

The peso’s slide put luxury automobile dealers in Mexico City on the
wrong side of a discounting promotion that began in November. Imported
luxury cars are typically sold in U.S. dollars, so Mercedes decided to
entice buyers by offering an exchange rate of 9.99 pesos, a 22 percent
discount on the currency’s trading price at the time. Huitron said he
didn’t count on the peso’s continued decline. The discount widened to
30 percent today.

Initially, there was little interest in the offer, but “in December,
customers responded,” chipping away at the dealership’s revenues, said
Huitron. “We never anticipated this, nor did we desire this.”

The tumble also caught Zurich-based UBS, the world’s second- biggest foreign-exchange
trader, by surprise. The bank forecast in November that the peso would
strengthen to 12.5 by year-end. Now, UBS says the peso will fall as low
as 15 by Dec. 31 as Latin America’s second-largest economy shrinks. RBS
predicts a rate of 14.9 pesos by June 30. The peso traded at 14.3333 at
5 p.m. New York time.

‘Relative Weakness’

The U.S. recession “will hurt Mexico more than other countries, and we’ll see a relative weakness in the peso in 2009,” said Gabriel Casillas, a UBS economist in Mexico City.

Mexico’s central bank says the economy may contract as much as 1.8 percent this year. Gross domestic product expanded 1.5 percent last year, after 3.2 percent growth in 2007.

Sales to the U.S., which buys about 80 percent of Mexico’s exports, tumbled 21 percent in November, the biggest decline since at least 1993, the U.S. Department of Commerce’s most recent trade report shows.

Oil, which funds more than a third of the Mexican government’s
budget, plunged 72 percent from a record $147.27 a barrel on July 11.
Expatriate Mexicans sent home 3.6 percent fewer dollars last year, the
first annual decline in remittances since at least 1995.

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Australia facing debt-driven depression.

Australia facing debt-driven depression.

Just in ABC news..........

Posted 49 minutes ago
Updated 50 minutes ago

The world is facing a "full-blown depression" and Australia needs to
drastically rethink its attitude to debt if it is to climb out of its
current economic trap, says leading economist Steve Keen.

Dr Keen, an Associate Professor from the University of Western Sydney,
says Australia is facing years of weak economic growth because of high
debt levels.

"The scale of what we're in for is driven by the level of private debt
that's been built up in a speculative bubble that in Australia has
been going up for 45 years and in America for 65," he said.

"We've got to the stage where we literally have twice as much debt as
we had prior to the Great Depression compared to incomes. That's what
caused the Great Depression and that's what's going to cause this one."

Dr Keen predicts Australia will have double-digit unemployment figures
by 2010,

"It's certainly approaching ... in terms of unemployment levels of 7,
8, 9 per cent. Certainly I think double-digit unemployment next year
and getting worse and staying there for some substantial period," he said.

Dr Keen says Australia's economic outlook will not improve until the
Government "shifts direction" and recognises the current financial
crisis was caused by far too much money being leant irresponsibly.

"The problem is you've got to cancel that debt either by abolishing it
formally or by trying to refloat the economy and cause inflation and
reduce the debt burden, but we're still at least a year or two away
before that realisation will sink in," he said.

"Japan is still in a recession/depression 18 years after it fell in a
similar trap to us, with far too much debt being used for speculative
lending, particularly on real estate and shares in Tokyo.

"Until we realise the debt should never have been issued in the first
place and then go about resetting, and frankly a biblical way, the old
classical way of abolishing debt, we're going to be stuck in this trap.

"For Australia, even so, we've lost our manufacturing base, we've got
to rebuild manufacturing to have the income that will generate
sustainable demand in the future."


Dr Keen says today's expected 100 basis point cut in interest rates
will go some way to reducing Australia's debt burden but nowhere near

"It will certainly help a bit but, if you put it in perspective, each
1 per cent cut in rates reduces the interest payment burden on our
economy by roughly $20 billion. That's because our debt level is
currently about $2 trillion," he said.

"Now when people start to try and reduce their debt level, even if
they try and knock it off by 5 per cent per annum that involves a $100
billion drop in their spending.

"Now the Government is talking nothing of that scale to try to
counteract in the other direction, so inevitably this is going to push
us down."

Dr Keen says he would not be surprised to see the Reserve Bank of
Australia slash rates by 125 basis points.

"In terms of the rate cut, it's like guessing which cockroach is going
to cross the line first in Changi, how the Reserve is going to react,"
he said.

"But my punt is that they're going to go for slightly more than 1 per
cent and slightly less than the New Zealanders went for, so I'd say
1.25 is feasible."

Dr Keen says on a small minority will come out of the economic crisis
better off.

"There aren't going to be too many winners out of it except those that
are cashed-up - cashed up with a secure job," he said.

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Re: Daily Digest - Feb 2

Surplus countries key to economic revamp: Keating

(Keating is a past PM and Treadurer - just in case you weren't aware)

Mr Keating told ABC 1's Lateline program that governments should move on from inter-government institutions such as the International Monetary Fund (IMF) and G7 to combat the global financial crisis.

He says China and India deserve more of a say.

"What we need is a completely new global political and economic settlement," he said.

"Get rid of the old G7. We've got to get rid of the old IMF. We've
got to bring the surplus countries into the political framework.

"The G7 is made up of debtor countries, countries like the United States, Britain, France, Italy - these are all borrowers.

""There's no surplus countries in that. If you look at the structure
of the IMF the Chinese get 3.7 per cent of the vote, the Indians get

"The Europeans and the Americans get 51 per cent and there is just
now way the Chinese communist party is going to hand over control of
their currency and their political fortunes to a Washington-based, US Treasury run institution."

"So unless there is going to be a totally new settlement... we are not going to get out of this."

Mr Keating says he expects the effects of the economic slowdown will be felt for a long time.

"The United States is also going to go through a very long and deep
recession and a massive period of adjustment and I'll be very surprised
if this is any less than six or seven years," he said.

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Veneroso: Japan on the Edge of the Abyss


From naked capitalism today:


EVEN IN THE GREAT DEPRESSION. December industrial production came in
down 9.6%, worse than the METI forecast. It is now down almost 21% year
over year. METI forecasts a further 4.7% decline in February. The
inventory to production ratio soared again. Maybe METI will be correct.

If it is, Japan industrial production will have fallen 28% (non
annualized) in four months. It will have fallen by a third in about a
year. Nothing in the history of major nations compares. A 28% decline
in four months would be more than half of the entire decline in U.S.
industrial production over the 3 years and nine months of the U.S.
Great Depression.

It would be a greater decline in four months
than in any 12 month period in the Great Depression in the U.S. We are
literally looking at the unimaginable. (I am attaching the U.S.
industrial production index from the Great Depression for comparison).




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