CREDIT CRISIS – THE WORST IS YET TO COME
Financial System Upside Down
by Alar Tamming, Tavex and Dr. Krassimir Petrov,
Prince Sultan University
December 8, 2008
Mark Twain once said that “if you don’t read the newspaper, you are uniformed. If you do read the newspaper, you are misinformed”. It is no surprise then, even to people who don’t follow the news, that a truly serious financial crisis is sweeping the world.
The headlines of newspapers and internet portals speak for themselves. Readers are inundated with facts about what is taking place. At one moment, bank write-offs to the extent of trillions are being discussed. The next moment, notice is given of guardian-angel intervention by governments and interest rate cuts by central banks. Aid packages in the trillions exceed the calculation skills and comprehension capabilities of ordinary people by a factor of several times. The main message conveyed by all of this “information” is mostly emotional. While write-offs may lead the reader to pessimism – what will become of my life, the government creates a feeling of security with the aura of a paternal figure, adding trillions of dollars to banks and “guaranteeing” that bank deposits and security holdings won’t simply vanish. Those geniuses are on the task and will never let the system collapse, the reader thinks, so he turns his attention to the next page of the paper.
What is missing is a deep analysis of the causes of the crisis, as well as possible future scenarios – papers look neither in the distant past, nor in the distant future. The cause of the financial crisis is claimed to be driven by two emotions – fear and greed; blame goes to poor regulations and greedy Wall Street investment bankers; rhetorically is added the fact that crises accompany capitalism, that they have regularly occurred in the past, and that they will continue to occur in the future. Some stock broker releases investment advice that from a long-run perspective, now is a good time to buy stocks.
Unfortunately, investing in stock markets is never as simple as it sounds. If every time we buy when stocks are down and afterwards stocks go up, then we would be all fabulously wealthy. Naturally, it is forgotten that this is accompanied by inflation and a drop in the purchasing power of money. Moreover, the fact that the world’s largest companies and banks can go bankrupt is never mentioned in financial publications; neither is the possibility that the assets of shareholders could be completely wiped out. Bankruptcies of large companies and banks are regarded only as a theoretical possibility and relegated to the pages of abstract economics textbooks.
Divorces — past and present — hit by economy
http://www.cnn.com/2008/LIVING/11/18/divorce.hard.times.ap/index.html
NEW YORK (AP) — Bonnie Rabin is fond of saying that divorce lawyers are a bit like liquor stores. They’re busiest in the really good times, and the really bad.
Attorney Bonnie Rabin says she’s had to renegotiate for clients who have suffered economic losses.
These, of course, would be the bad times.
After all, “Money is THE great source of stress in relationships,” says Rabin, one of five partners in a Manhattan matrimonial firm, who speaks with the quiet authority of someone who’s spent two decades speaking to troubled spouses. “You think it might be sex, or the kids. But no, it really comes down to money.”
And so it stands to reason that in such a dire time — when “virtually every day, I hear from a client who’s lost their job,” Rabin says — troubled relationships become more troubled. And once seemingly solid unions begin to fray. 
Watch kids want judge to force dad to divorce »
But that doesn’t mean everyone’s rushing to divorce court. It just means that every step of the process is more fraught, more complicated, more difficult. Breaking up in this economy, it seems, can be a lot harder to do.
Poverty, Pension Fears Drive Japan’s Elderly Citizens to Crime
By Stuart Biggs and Sachiko Sakamaki
Nov. 14 (Bloomberg) — More senior citizens are picking pockets and shoplifting in Japan to cope with cuts in government welfare spending and rising health-care costs in a fast-ageing society.
Criminal offences by people 65 or older doubled to 48,605 in the five years to 2008, the most since police began compiling national statistics in 1978, a Ministry of Justice report said.
Theft is the most common crime of senior citizens, many of whom face declining health, low incomes and a sense of isolation, the report said. Elderly crime may increase in parallel with poverty rates as Japan enters another recession and the budget deficit makes it harder for the government to provide a safety net for people on the fringes of society.
“The elderly are turning to shoplifting as an increasing number of them lack assets and children to depend on,” Masahiro Yamada, a sociology professor at Chuo University in Tokyo and an author of books on income disparity in Japan, said in an interview yesterday. “We won’t see the decline of elderly crimes as long as the income gap continues to rise.”
Crime rates among the elderly are rising as the overall rate for Japan has fallen for five consecutive years after peaking in 2002. Over 60s accounted for 18.9 percent of all crimes last year compared with 3.1 percent in 1978, with shoplifting accounting for 80 percent of the total, the report said.
The trend has captivated Japan’s media, which include regular accounts of the latest thief or pickpocket as well as undercover footage of people shoplifting food in convenience stores and supermarkets.
Global Crisis? This is the real crisis!
http://www.boncherry.com/blog/2008/10/26/global-crisis-this-is-the-real-crisis/
If you think that the current economic crisis is something that has never happened in history before, you may be wrong! After the collapse of the agriculture sector in Zimbabwe in 2000, the inflation in that country skyrocketed to 231 million percent a year! Just think about it – 231 000 000%! Unemployment went up to 80% and a third of country’s population left it.
Let`s now have a look at the photos that you may not be able to see anywhere else in the world.
Here is a boy getting change in 200 000 dollar notes!
One 200 000 dollar note equals less than $0.10 cents.
U.S. has plundered world wealth with dollar: China paper
BEIJING (Reuters) – The United States has plundered global wealth by exploiting the dollar’s dominance, and the world urgently needs other currencies to take its place, a leading Chinese state newspaper said on Friday.
The front-page commentary in the overseas edition of the People’s Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies.
How we got here
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Gold is hovering again around $900, commodity prices are on the rise, and the U. S. dollar is back to its downward trend of the last few years. This isn’t a surprise.
The $700-billion bail-out plan is mum about the dollar — a big mistake (reflected in the immediate currency/gold price movements), since the Fed’s mismanagement of the dollar as a reserve currency contributed to the present mess. The signals were all there for the Fed to see. Yet academic fads blinded it. How did we get here? More important: how to get out? Take a deep breath.
Abruptly, in 1971, the world moved from fixed to floating exchange rates without in-depth debate. Under a fixed exchange rate anchored in gold, 5% interest in London or 5% in NY reflects the same returns. Money, whether the dollar or the pound, anchors pricing. Coca Cola knows that in pricing its beverages and selling them around the world, or in issuing U. S. dollar denominated debt, it faces no exchange rate risk. The company is neither inadvertently drawn in the exchange rate business nor does it need to hedge and pay fees to avoid being in that business.
