Shobhit Mathur’s Home Page

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3088685/US-Economy-Even-Hank-Paulsons-bail-out-plan-cannot-detox-global-banking.html

Even if Congress backs the Paulson bail-out, the $700 billion blast cannot save the US, Britain or the world from the deepest economic slump since the Thirties. If Congress balks, God help us. The credit system is suffering a heart attack. Inter-bank lending is paralysed. Funds are accepting zero interest on US Treasury notes for the first time since Pearl Harbour, because no bank account is safe.

Wherever you look – dollar, euro, sterling Libor (the rate at which banks lend to each other), or spreads on credit derivatives – the stress has reached breaking point. If borrowers cannot roll over the three-month loans that are the lifeblood of business, they will default en masse. Read the rest of this entry »

WASHINGTON — Pakistani and American ground troops exchanged fire along the border with Afghanistan on Thursday, a top American military official said, ratcheting up tensions as the United States increases its attacks against militants in Pakistan’s restive tribal areas.

The clash started after the Pakistanis fired shots or flares at two American helicopters that Pakistan says had crossed its border.

The two American OH-58 Kiowa reconnaissance helicopters were not damaged and no casualties were reported.

But American and Pakistani officials agreed on little else about what happened.

American and NATO officials said that the two helicopters were flying about one mile inside Afghan airspace to protect an American and Afghan patrol on the ground when the aircraft were fired on by troops at a Pakistani military checkpoint near the Tanai district in Khost Province. The officials said small-caliber arms were used.

In response, the American ground troops shot short bursts of warning fire, which hit well shy of the checkpoint, and the Pakistanis fired back, said Rear Adm. Gregory Smith, a spokesman for the United States Central Command.

But a spokesman for the Pakistani Army, Maj. Gen. Athar Abbas, said Pakistani forces fired warning shots at the American aircraft after they crossed into Pakistan’s territory in the area of Saidgai, in the Ghulam Khan region of North Waziristan. “On this, the helicopters returned fire and flew back,” General Abbas said. The general’s statement did not address the account of ground fire.

Local residents said that one of the two helicopters had entered inside Pakistan territory by about a mile, while the other hovered on the Afghan side of the border.

“When our forces fired warning shots, we were a little scared of a possible retaliatory fire from the helicopters,” said one of the residents, Hajji Said Rehman Gorbaz. “But we were happy to see the helicopter flying back into Afghanistan. We were happy that our forces fired at the helicopter.”

Pakistan’s president, Asif Ali Zardari, said Thursday that his nation’s military had fired only flares at the helicopters, seeming to draw a distinction with warning “shots,” which usually refers to bullets or other ordnance that could more seriously damage the helicopters.

“They are flares,” Mr. Zardari said as he sat down to meet Secretary of State Condoleezza Rice at the United Nations. He said the flares would alert the pilots that they had crossed the border, which he said is rugged and poorly marked.

Ms. Rice agreed that the border between Pakistan and Afghanistan was “very, very unclear.”

But the encounter drew immediate protest from Pentagon officials in Washington. “The flight path of the helicopters at no point took them over Pakistan,” a Pentagon spokesman, Bryan Whitman, told reporters.

Mr. Whitman said United States and NATO military officials were speaking to their Pakistani counterparts to determine what happened and to ensure there was no repeat, adding, “The Pakistanis have to provide us with a better understanding of why this took place.”

General Abbas, the Pakistani spokesman, said the clash had been reported to NATO headquarters in Kabul and was under investigation by Pakistani and NATO officials.

Military officials and diplomats said the episode showed there was a risk of a much more serious, and lethal, misunderstanding along the border.

Pakistani civilian leaders have denounced an incursion by American Special Operations forces into Pakistan on Sept. 3, which was authorized under orders given by President Bush in July, and the Pakistani Army has vowed to defend its border.

Yousaf Raza Gilani, Pakistan’s prime minister, told reporters on Wednesday, “We will not tolerate any act against our sovereignty and integrity in the name of the war against terrorism.”

The United States says its goal is to stop attacks on troops in Afghanistan by Al Qaeda and by Taliban militants based in Pakistan.

The latest clash on Thursday comes after a week of claims by Pakistani intelligence officials that American helicopters had strayed across the border, and that an American remotely piloted surveillance aircraft had crashed, apparently because of a mechanical failure, in Pakistani territory.

American officials denied these claims, saying they were being manufactured by Pakistani officials in response to rising anti-American sentiment in Pakistan after the increased American activities in the border area.

http://www.telegraph.co.uk/finance/economics/3062121/US-dollar-set-to-be-major-casualty-of-Hank-Paulsons-bailout.html

By Edmund Conway
Last Updated: 10:47PM BST 22 Sep 2008

Whether or not tomorrow’s accounts of today’s turmoil prove David Owen of Dresdner Kleinwort right; whether or not this is the beginning of the end of the dollar’s pre-eminence in the world’s central banks and foreign exchanges, the economic landscape has undoubtedly changed forever.

The US taxpayer bail-out of America’s banking sector is an event whose significance will reverberate for many years. What it means for free markets, for the way Western economies are run, for the prosperity of the world economy, must remain to be seen.

But as investors scrambled to make sense of last week’s events, already one conclusion was all but irrefutable – the US dollar will have to take another major fall. Read the rest of this entry »

Threatened by a “financial tsunami,” the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.

The commentary in the overseas edition of the People’s Daily said the collapse of Lehman Brothers Holdings Inc (LEH.P) “may augur an even larger impending global ‘financial tsunami’.”

The People’s Daily is the official newspaper of China’s ruling Communist Party, and the overseas edition is a smaller circulation offshoot of the main paper.

Its pronouncements do not necessarily directly reflect leadership views, but this commentary by a professor at Shanghai’s Tongji University suggested considerable official alarm at the strains buckling world financial markets. Read the rest of this entry »

http://www.business-standard.com/india/storypage.php?autono=334370

Legendary investor Jim Rogers is probably the last word when it comes to investments in commodities. Along with George Soros, he co-founded the Quantum Fund in 1970. The fund went on to deliver absolute returns of 4,200 per cent in the decade that followed, while the S&P 500 delivered only 50 per cent during that period.

Rogers correctly predicted China’s resurgence as an economic superpower way back in the 80’s and that crude oil will touch the $100 mark. His last two books, ‘A Bull in China: Investing Profitably in the World’s Greatest Market’ and ‘Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market’ have been well received.

Rogers was in Mumbai on the occasion of the launch of the Birla Sun Life Commodity Equities Fund. At the conference and in an interview with Jitendra Kumar Gupta, he shared his outlook on commodities and the world economy. Excerpts:

How can one identify the start of an upward or downward cycle in any commodity?

In the late nineties, when I came with the conclusion that the commodity bear market is ending, I could see that no body has build offshore drilling rigs and tugs since 1981, with drilling declining for 15-20 years. I could also see that the inventories of food, which were very high in the mid-eighties, had gone down to nothing.

There was no production or capacities added for decades. I travelled around Asia, enough to know that Asia was booming, so could see that this was all coming together. And, if this is all coming to an end over the next 10-15 years, I will also be able to see the upturn in the commodity cycle. I tried and looked at the big picture for the demand and supply, and some time I get it right. Read the rest of this entry »

http://news.bbc.co.uk/2/hi/south_asia/7611721.stm

Five civilians and seven militants have been killed in north-west Pakistan in a suspected US missile attack, local officials say.

Missiles hit two buildings near Miranshah, the main town in the North Waziristan region on the Afghan border.

It has emerged that President Bush recently authorised US raids against militants in Pakistan without prior approval from Islamabad.

There is growing concern in Pakistan over unilateral US military action.

Early reports said all, or nearly all, of the dead were Taleban fighters killed by one missile.

But later reports from the scene said missiles hit two buildings – in one three women and two children were killed, and in the other seven Taleban militants died. Read the rest of this entry »

MOSCOW — Russia could point missiles at strategic US targets in central Europe, including planned American missile shield sites in Poland and the Czech Republic, a senior Russian general said Wednesday.

“I can’t exclude that if such decisions are taken by our military-political leadership, the missile shield in Poland and the Czech Republic and other such objects could be chosen as designated targets for some of our intercontinental ballistic missiles,” General Nikolai Solovtsov said, quoted by Interfax. Read the rest of this entry »