U.S. NATIONAL DEBT CLOCK

The current Outstanding Public Debt of USA is $9.8 trillion. Before this mammoth total, a $700 billion bailout plan looks dwarfed...

Since the subprime crisis, the National Debt has scaled at an average of $2.42 billion per day since September 28, 2007!

What are your comments on this?

ps. The debt may have increased by now. Check it out here.

Yes it has increased!! It has crossed $10 trillion a few days back. The digital clock in New York City could accomodate a debt of no more than $9.99 trillion, but with the debt crossing 81% of US's GDP, the clock had to remove the dollar($) sign to make way for the "1" 's place in the digits.

As you sow, so shall you reap

In 1999, NY Times reported on " Fannie Mae Eases Credit To Aid Mortgage Lending ". Following are extracts from the same, which clearly point out the root causes of the cheap mortgage-funded buying of houses way back in 1999 which exploded in early 2007 in the form of a subprime crisis and housing mess.

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

And here is the icing on the cake :

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

It clearly shows that the mortgage crisis we've inherited today is because of

1. Clinton administration. Yet we blame George Bush, Ben Bernanke, Paulson and the CEOs of investment banks appointed after 2000.

2. "Phenomenal Growth in profits" turned into spiraling losses in the form of write-downs, billions of dollars, sacking of employees world-wide, the list is endless.

Towards the end, NYtimes also mentions the obvious....

The government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

To end, all I can say is that in the greed for profits and votes, no one heeded this one last warning!!

Keep the comments rolling in.....

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From investment banks to "traditional banks"

WSJ reports:

The Federal Reserve said it had approved the transformation of both Morgan Stanley and Goldman Sachs from investment banks to traditional bank holding companies, a step that would place the last two Wall Street titans under the close supervision of national bank regulators, subjecting them to new capital requirements and additional oversight.

What does this mean?

In short, this heralds a new time in Wall Street where the central bank will exercise control over wall street titans like Goldman Sachs and others, a shift from privatization to disguised socialism. Now the two securities firms will have to provide increased information regarding the managing of their funding, balance sheet and business models.

Becoming traditional banks, the 2, also have increased access to direct loans from the central bank (Fed). Such a move may be considered good by those who are apprehensive of the global meltdown. This will increase the security of the banking system as a whole, and is expected to prevent further losses.

The Federal Reserve defines such a step was made to "provide increased liquidity to these firms as they transition to managing their funding within a bank holding company structure."

What are your comments and suggestions for the same? Do post your smart opinions too....

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Very appropriate!!

Special thanks to Barry Ritholtz of "The Big Picture"

Tata nabs most of the incentives in Singur, WB

For those who think that Tata Nano is doing a huge favour in Singur, take a rethink. Its Tata who is enjoying most of the incentives!!

Business Line reports on how 'Tata chose Singur as base for Nano plants' :

A comprehensive package of incentives — subsidy on land, concessional power, a soft loan and tax paybacks — to match the benefits that Tata Motors would have got in Uttarakhand or Himachal Pradesh, was what got it to choose Singur in West Bengal for making its low-cost car Nano.

And these are the benefits which had been given by Uttarakhand/Himachal Pradesh:

(a) 100% exemption from Excise Duty for 10 years.
(b) 100% exemption from Corporate Income Tax for first 5 years and 30%
exemption from Corporate Income Tax for next 5 years.

Excerpts from the WBIDC's agreement between the Tata Motors Ltd. and West Bengal Government, governing the long-term lease of land in Singur :

The terms of lease to TML for the 645.67 acres of land for the mother plant are described below. The lease rental payable per year per acre by the vendors will be Rs. 8000/- per acre for the first 45 (forty five) years and Rs. 16000/- per acre for the next 45 (forty five) years. The initial lease tenure will be 90 years. On expiry of 90 years, the lease terms will be fixed on mutually agreed terms at that point of time.

So, whats your take on this?? Tata has been nicely pampered into chosing Singur as its final destination for making the people's car Tata Nano. Keep the comments coming in...

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The Big Mac Theory of War presented piping hot!

Interesting to note the Mcdonalds theory of war, given by Thomas Friedman in 1996 that

No two countries that both have a McDonald's have ever fought a war against each other.

The nearest this theory had got to be proven wrong, was during the Falklands War, but now it finally has: The Russia-Georgia conflict (if people count it as a war).

The theory is simple : If the the standard of living of the middle class of the two respective countries has reached such a stage where the country can sustain a McDonald outlet or a few of them, then their chances of going to war considerably reduce.

Interesting theory...After the Big Mac Index, used to calculate the PPP(Purchase Power Parity) by 'The Economist' for calculating the price of one Big Mac burger offered by McDonalds, here is another economic/civil term going to be used. Very rightly said by the 'Guardian' : McWar and McPeace.

Increase the comments count!!

Africa is on the economic rise!

Latest statistics reveal that Africa is outpacing the general growth rate of the world economy current pegged at 3.7% by growing at an annual rate of 5%, that despite the inflation and violence.

In the year 2008, the continent has recorded FDI Investments of $36 billion, more than it ever! Whats more, it has a positive balance of trade ($2.1 billion).

The economy of various countries in the continent, like South Africa, Ethiopia, Uganda, Kenya have made a revival of sorts, and are on track to getting more loans from Asian countries (namely China, Singapore and so on).

With lots of Olympic medals too in their pockets, Africa has had less conflicts in the Great Lakes region too, and have benefited from the zooming price of oil and other raw materials.

With all that, I infer that Africa is going to score big on the outsourcing bandwagon in the 21st Century. In such times, companies want to keep their costs of production and operations to a bare minimum, something they achieved by outsourcing work to India and China. But the income levels in India and China have also increased which puts a strain on these companies to manage their budget. This is the perfect time for African countries to improve their competitiveness in yet another shrinking sphere : outsourcing!

Keep the comments rolling in....what do you feel on the prospects of Africa?

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