#230 bites on global financial crisis

I found this website ‘The Baseline Scenario’ useful in understanding the global financial crisis we are experiencing.

The site provides and offers some easy to read articles, interesting videos and radio and relevant websites offering insights and education:

http://baselinescenario.com/financial-crisis-for-beginners/#video.

#221 spend, spend, spend

Is spending the only way out of recession? What kind of spending are we referring?

Spending using real money, not credit or borrowed money? How does this work when people have no job translating no income, fraught with problems?

I’m still trying to make sense that’s happening in this financial crisis.

Has man been so dishonest that greed had overtaken turning a blind eye to the future? Or callousness on the part of those leaders who think only for today and let tomorrow suffer for itself! The existential philosphy they subscribed?

Many bailouts today are for companies who relied on credit accumulating huge sums which spirals to affecting large banks. Are bailouts for plugging holes in the banking systems?

Has the era of spending on personal credit over? Will the banks reconsider the use of personal credit cards?

What are the true causes of this economic or financial blackhole? Have we not learnt from the Great Depression in the 1920s-30s? Who is responsible? The policy-makers or those who held top positions in companies or corporations?

Has greed overtaken mankind that virtually there is little or no solution to the problem?

Will a dictator like Hitler arise or war looms?

What will tomorrow bring? I shudder to think. Will there be peace? Will there be democracy? If there is democracy, what kind of democracy?

As we’ve seen the governments have to intervene with little results. Every sector of the flailing economy have been looking for the government to bring about some form of bailouts using tax-payers’ money! Why should the tax-payers bail out those scoundrel corporate leaders or directors who were paid handsomely during their tenures on the job? Will these be prosecuted for decisions made callously?

Even in China, a socialist country, the leaders were startled at the force of this financial crisis that their first bailout of several billions have little effect!

Has the world system gone bonkers? Where are we going? What are we doing? How do we salvage this financial black hole today?

Will there be a creative solution out of this financial crisis?

#215 yo-yo stock market

I cannot believe that I read: yesterday the US stock market soared 900 points or 11% (!) while for the past few days, in spite of monies injected, yet…there was a spiral downwards! Why no stability? Who are the suckers? Who are the winners?

Who has been deciding or manipulating the rise and fall of the stock market?!

Who is pocketing the monies? Surely the monies cannot just evaporate!

28th-29th October is the anniversary of the Great Depression 79 years ago! At the time, there was no government intervention or bailout.

Yet today, in spite all the interventions, there is great votility! What is really happening? Who stand to benefit in this yo-yo?

#213 european rights prize

Hu Jia, a prominent activist and currently serving jail sentence from China apparently won the European rights prize. What does this prize stand for?

Will this prize given to Hu Jia encourage more dissent in China?

When people are given the housing and food, will they rise up against the leadership of a country?

Will any nation in Europe give a red carpet for Hu Jia & family to live there? If they had given him the prize, surely they could go a step further in offering political asylum! That surely is freedom of expression for people like him — an opportunity to express his freedom then!

Then, he & his wife will discover if there is…

Is the West using this human rights weapon to minimise and causing dissent in a country that is a rising economic power?

There is great poverty in India yet… However India has a Ghandi proponent for peace. Yet in his lifetime, no one in the West took note of him!

Human rights issue is relative. What is democracy?

Where has democracy brought the West today? Drugs, promiscuous sex, guns, gay rights…whatever social ills there is.

The latest financial crisis is a result of greed of a few. The few squandered the resources of many? Living on borrowed money? Resulting many are having to live on the streets soon!

Today, anything and everything can be turn into weapon of discontent and dissent!

#212 simple understanding

CNN’s senior business correspondent Ali Velshi gave this layman’s understanding on Oprah Winfrey show:

The first step toward grasping the bailout plan is to understand how we got in this mess in the first place. Ali says it started with three basic assumptions about the American economy: homes will increase in value over time, wages will go up over time and investments in the stock market will go up over time. “Very rarely do all three not go up at the same time,” he says. “So we thought that things will be better for us financially year after year.” The banks encouraged that concept because the more the American people spend, the more money banks make.
 
…since Americans thought their finances would increase over the years, they spent as if that money was guaranteed. “We all lived a little beyond our means and then a lot beyond our means,” he says. “Now, our country, our people, our banks and our government are all heavily, heavily indebted and the money is running tight.”

…a mortgage meltdown is primarily responsible for the economic trouble. The cycle started with regular Americans who were unable to afford their mortgage interest rates. As a result, banks foreclosed their homes. Eventually, the effects of the home foreclosures reached a global scale, causing a financial collapse. “We are very powerful people, because we caused this,” Ali says. 

The other key to understanding the financial mess is understanding credit. “Let’s show you how central credit and banking is to your life,” he says. “The bank gives you a credit card, and you use that to spend money at the grocery store. But the bank also gives the grocery store money because the grocery store has to [borrow] to buy things from a supplier, let’s say the cereal factory. …The supplier [or cereal factory] needs to buy wheat or flour, so they borrow money from the bank [too].” But because of the current economic situation, banks don’t trust anyone to pay them back, Ali says. “Your credit line, if you did nothing wrong, may have been reduced by the bank just because they are scared that you might get into trouble.” 

…due to credit reduction, the cereal factory can’t buy as much wheat, and the grocery store can’t buy as much cereal. When stores or suppliers can’t afford to buy as much they used to, they can’t do as much business. Then, people get laid off. 

As a result, all the people who lost their jobs aren’t paying taxes or shopping as much, Ali says. “They’re a net drain on the financial system. They’re not contributing.” Ali says that in the first nine months of 2008, 750,000 people in the United States lost their jobs. In September 2008 alone, an incredible 159,000 jobs were lost. “This is what hurts this system,” he says. “And that’s why it affects you.”

#207 who do you trust?

Having money is a problem these days. Putting money in the bank is no consolation either.

You lose your hard earned cash when a financial institution collapsed. I was told you could file for misrepresentation — that the profile of products bought did not suit the personality of one. How does this work?

The high turnover of officers serving you in the banks leaves one insecure and lacking continuity especially for the smaller or new savers. 

Why the high turnover of bank officers? The officer has to perform, otherwise the manager will be breathing down his neck daily. Should he not perform according to portfolio, the officer is shown the exit. If he did well, he was rewarded handsomely.

The latest news: Iceland is a country that is going bankrupt! What does that mean? Will those who had savings in the banks see these evaporate?

#203 the new poor

There was concerted effort to weed out poverty.

Will this global financial crisis set to increase widespread poverty? 

Today’s poverty is not those living in the 3rd world countries but in the first world!

In the 1929 great depression, this depression followed after the Wall Street Crash. However this global financial crisis has taken more than 10 years after the black market crash in October 1987.

Obviously leaders in the US were either negligent or not able to arrest the problem after the 1987 October crash. In fact, rightly or wrongly, those able to read the economic and financial trends set to bust their home economy by personal gains?!

I guess man has short memory — almost 80 years is a long time…several new generations apart!

I hope the US financial collapse will not ripple across the world — although news had it the hurricane is moving towards Europe. Is this a result of globalisation?

Will tomorrow bring a new form of socialism after the emptiness and greed of capitalism?