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Apiraami Pathmalingam

#Acrisissoseveretheworldfinancialsystemisaffected - 0 views

www.globalissues.org/...global-financial-crisis

central bank global crisis banks

shared by Apiraami Pathmalingam on 14 Jan 11 - No Cached
  • the US has defended the dollar as a global currency reserve
  • allow them to lose more money without going bust
  • Banks borrowed even more money to lend out so they could create more securitization. Some banks didn’t need to rely on savers as much then, as long as they could borrow from other banks and sell those loans on as securities; bad loans would be the problem of whoever bought the securities.
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  • Some banks loaned even more to have an excuse to securitize those loans.
  • High street banks got into a form of investment banking, buying, selling and trading risk.
  • banks even with large capital reserves ran out, so they had to turn to governments for bail out
  • In Europe, starting with Britain, a number of nations decided to nationalize, or part-nationalize, some failing banks to try and restore confidence
  • US Fed announcing another $800 billion stimulus package at the end of November.
  • 360 banks that received Treasury bailout funds and found that almost all were using the money in ways other than to lend
  • The banking system virtually collapsed and the government had to borrow from the IMF and other neighbors to try and rescue the economy
  • Eurozone countries such as Portugal, Italy, Greece and Spain are also facing potential problems, while Iceland has gone through many in the past.
  • urged the US to provide meaningful assurances and bailout packages for the US economy
  • Asia was sufficiently decoupled from the Western financial systems
  • foreign investment in Asia
  • While the Western mainstream media has often hyped up a “threat” posed by a growing China, the World Bank’s chief economist (Lin Yifu, a well respected Chinese academic) notes “Relatively speaking, China is a country with scarce capital funds and it is hardly the time for us to export these funds and pour them into a country profuse with capital like the U.S.”
  • Many of these debts were incurred not just by irresponsible government borrowers (such as corrupt third world dictators, many of whom had come to power with Western backing and support), but irresponsible lending (also a moral hazard) from Western banks and institutions they heavily influenced, such as the IMF and World Bank
  • I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.
  • I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.
  • prices fully and efficiently reflect all available information
  • Central bankers’ belief that controlling inflation was necessary and almost sufficient for growth and prosperity had never been based on sound economic theory.
  • World Bank admitted that developing countries have “come to the rescue” of the global economy, picking up the slack of the advanced economies which were hurt the worst by the financial crisis.
  • developing world is becoming the driver of the global economy. Led by emerging markets, developing countries now account for half of global growth and are leading the recovery in world trade
  • Bank believes the following factors help to explain this: Faster technological learning Larger middle-classes More South-South commercial integration High commodity prices, and Healthier balance sheets that will allow borrowing for infrastructure investment
  • Apiraami Pathmalingam on 14 Jan 11
     
    This article takes about what the many banks did and where the money was distributed.
Jeremy Ip

A glut at fault | The Economist - 0 views

www.economist.com/...a_glut_at_fault

Rating Agencies

shared by Jeremy Ip on 12 Jan 11 - No Cached
  • EVERYONE is a victim; everyone is to blame.
  • China gets added to the running list of actors without whom this economic snafu would not have been possible, joining the ranks of
  • Wall Street executives, mortgage brokers, credit-rating agencies, homeowners, the White House, Senator Charles Schumer, former Senator Phil Gramm, the rest of Congress, and possibly you.
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  • by keeping its currency low and its savings high, China financed an unsustainable consumption frenzy in America
  • hina was thus able to offer cheap exports and underwrite America's debt through the purchase of treasury bills. What resulted was an addict-dealer relationship in the form of trade imbalance
Apiraami Pathmalingam

Fed Documents Breadth of Emergency Measures - 0 views

www.nytimes.com/...02fed.html

central banks crisis

shared by Apiraami Pathmalingam on 10 Jan 11 - No Cached
  • the Federal Reserve opened its vault to the world on a scope much wider and deeper than previously disclosed
  • Fed loans offered at rock-bottom rates.
  • released details of more than 21,000 transactions under the array of emergency lending programs and other arrangements it conjured up in response to the crisis
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  • The central bank, in essence, pumped liquidity, the lifeblood of credit markets, into the circulatory system of an economy that was experiencing a potentially fatal heart attack.
  • “I think our actions prevented an even more disastrous outcome,” said Donald L. Kohn, who was the Fed’s vice chairman during the crisis. Without the Fed’s help, he said, “liquidity would have dried up even more than it did, asset prices would have fallen even more than they did, and economic activity and employment would have fallen further and faster then they did.”
  • Fed should have forced banks to restrict executive pay and reduce the financial burdens on mortgage borrowers as a condition of its aid.
  • European Central Bank drew the most heavily on these currency arrangements, the records show, but nine other central banks also made use of them: Australia, Denmark, England, Japan, Mexico, Norway, South Korea, Sweden and Switzerland.
  • Apiraami Pathmalingam on 10 Jan 11
     
    This article contains alot about what the federal reserve did to try to get money flowing again.
Sophia Wang

Global financial crisis has one beneficiary: The dollar - The New York Times - 0 views

www.nytimes.com/...22iht-dollar.4.17174760.html

financial crisis global currencies

shared by Sophia Wang on 13 Jan 11 - No Cached
  • The great market upheaval of 2008 has stripped 45 percent from the value of global equities, led bank lending to nearly dry up and caused commodity prices to crash from stratospheric heights
  • it is helping to lift the long-suffering dollar
  • As stock markets sank again Wednesday, the dollar rose against its European counterparts, with the British pound falling to $1.6242, a five-year low, and the euro falling to $1.2843, near a two-year low. Only the yen, on a tear of its own, has been stronger
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  • The dollar's rebound "is a sign of real panic and risk aversion
  • Institutional investors, faced with losses suffered on U.S. investments, are also liquidating overseas assets to meet margin calls
  • Central banks everywhere have moved to an emphasis on supporting economic growth from a focus on inflation
  • investors expect more and faster interest rate cuts in Europe, bringing the rates closer to their U.S. and Japanese counterparts, which would make investing in short-term European assets less of a draw
  • Prime Minister Gordon Brown of Britain said Wednesday that Britain and other major economies were likely to fall into recession, following similar comments from Mervyn King, the Bank of England governor
Apiraami Pathmalingam

Fed Documents Breadth of Emergency Measures - 0 views

www.nytimes.com/...02fed.html

central banks

shared by Apiraami Pathmalingam on 11 Jan 11 - No Cached
  • Fed Documents Breadth of Emergency Measures
  • the Federal Reserve opened its vault to the world on a scope much wider and deeper than previously disclosed.
  • end of 2008, the Fed had about $1.5 trillion in outstanding credit on its books
  • ...5 more annotations...
  • Without the Fed’s help, he said, “liquidity would have dried up even more than it did, asset prices would have fallen even more than they did, and economic activity and employment would have fallen further and faster then they did.”
  • huge sum that went to bail out foreign private banks and corporations.”
  • forced banks to restrict executive pay and reduce the financial burdens on mortgage borrowers as a condition of its aid.
  • opened swap lines with foreign central banks, allowing them to temporarily trade their currencies for dollars to relieve pressures in their financial markets
    • Apiraami Pathmalingam
      Apiraami Pathmalingam on 11 Jan 11
       
      This shows that Fed was trying pull back all the money back into the country
  •  Without the Fed’s help, he said, “liquidity would have dried up even more than it did, asset prices would have fallen even more than they did, and economic activity and employment would have fallen further and faster then they did.”
  • Apiraami Pathmalingam on 11 Jan 11
     
    This article covers alot information about alot of the business and commercial bank. It says what the FED did during the crisis to help them.
Santiago Sanchez

Roubini Global Economics - Finance & Markets Monitor - 2 views

www.roubini.com/...edge_funds_in_financial_crisis

shared by Santiago Sanchez on 11 Jan 11 - No Cached
  • hedge funds act in concert to destabilize global economies.
  • a hedge fund is a limited investment partnership otherwise exempt from registering with the Securities and Exchange Commission under Sections 3C1 and 3C7 of the Investment Company Act of 1940.
  • If their objective was to profit from the current instability, they were remarkably unsuccessful. According to Hedge Fund Research, the average fund this year is down 17 percent.
  • ...8 more annotations...
  • that hedge funds are risktakers – gunslingers on a global scale. While it is true that the aggressive incentive fee structures (often 20 percent of any profits on top of a management fee of about 2 percent of assets under management) appear to encourage risk taking, career concerns are an offsetting factor.
  • some of the few remaining successful hedge fund managers such as Steven Cohen of SAC Capital Advisors, Israel Englander of Millenium Partners and John Paulson of Paulson & Co (who is scheduled to appear in the November 13 hearings) have taken their funds out of the market and are in cash investments
  • the typical hedge fund has a half life of five years or less and the fact that it is hard to restart a hedge fund career after a failure, managers can be quite risk averse
  • excessive risk taking took place in a context of poor operational controls, where trading limits were exceeded multiple times and ordinary risk management procedures were dysfunctional
  • some recent and spectacular hedge fund failures. The failure of Amaranth, a multi-strategy fund with more than $8 Billion assets under management, with more than 80 percent invested in a natural gas trading strategy, is often cited as an example of undiversified financial risk exposure.
  • there is no evidence that these funds maintained significant positions in the Asia currency basket over the time of the crisis
  • As to the question of illicit enrichment that Dr. Mahathir charges George Soros with, his funds did not increase in value, but actually lost five to ten percent return per month over the period of the crisis.
  • If there were any factual evidence at all to support a claim that Soros had intervened in the markets to bring down the Ringgit, it would have been produced by now. I should note that the silence is deafening. I suspect that what is really going on is that Soros was an expedient target of opportunity. The only remaining question is why, given the lack of evidence, Dr. Mahathir felt compelled to bring such serious charges against the hedge fund industry in general, and George Soros in particular.
  • kevin windwar on 11 Jan 11
     
    On October 2, the U.S. House Oversight and Government Reform Committee announced a Hearing on Regulation of Hedge Funds scheduled for Thursday, November 13, 2008. The focus is on the causes and impacts of the financial crisis on Wall Street, and the Committee will hear from hedge fund managers who have earned over $1 Billion
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