A snapshot of the global damage
A lot has happened in the global economy during the past few weeks. NWOU offers a snapshot of how quickly things have changed in various economies around the world. The following paragraphs are taken from a more comprehensive article by Doug Noland, “The Only Cure for a Bubble” at http://www.safehaven.com/article-11838.htm
November 10 – Bloomberg (Emma O’Brien and Ye Xie): “Russia’s currency reserves, the third-biggest in the world, are no match for tumbling oil prices and an exodus of capital that may force the central bank to accept a devalued ruble. Just 10 years ago, Russia let the ruble fall as much as 71% as the government defaulted on $40 billion of debt… Now, the combination of a 61% drop in oil prices from their peak in July, slowing economic growth and increasing investor concern about emerging markets are draining Russia’s foreign reserves, which fell 19% to $484.6 billion in the 12 weeks through Oct. 31.”
November 11 – United Press International: “October inflation in Pakistan soared to nearly 25% from 9.31% in October of last year, further aggravating the country’s current economic crisis. Data supplied by the Federal Bureau of Statistics said the October jump in consumer prices was largely brought on by a 31.7% surge in food prices and a hike of over 39% in transportation costs, Dawn reported.”
November 14 – United Press International: “A declining export market contributed to the closing of 67,000 factories in China from January through June, government data revealed. While exports are still growing, the annual growth rate of 9% in October contrasts sharply with the September 2007 annual growth rate of 26%, The New York Times reported… Closing factories have left thousands of Chinese workers angry over the loss of back pay, leading to some clashes with police, the Times said.”
November 11 – Bloomberg (Toru Fujioka): “Japan’s consumers became the most pessimistic they’ve been in at least 26 years… The confidence index dropped to 29.4 last month from 31.4 in September, the Cabinet Office said today in Tokyo. It’s the lowest since the government began compiling the figures in 1982.”
November 10 – Bloomberg (Jason Clenfield): “Japanese machinery orders tumbled 10.4% last quarter, matching the biggest drop on record… The decline in orders, an indicator of capital spending in the next three to six months, matched a record drop set 10 years ago…”
November 13 – Bloomberg (Subramaniam Sharma and M.C. Govardhana Rangan): “Mukesh Ambani and Lakshmi Mittal led India’s richest in losing $200 billion this year as the global financial crisis triggered a plunge in stocks and property values, Forbes Asia said. The combined wealth of India’s 40 wealthiest people slumped 60% to $139 billion, the magazine said… Mittal… lost his top position to Mukesh Ambani of Reliance Industries Ltd. Mittal lost $30.5 billion after the world’s biggest steelmaker ArcelorMittal extended production cuts.”
November 13 – Dow Jones (Meena Thiruvengadam): “The U.S. federal government ran a record October budget deficit of $237.18 billion as it grappled to fund multibillion-dollar efforts aimed at stemming a global financial crisis… The figure is an all-time high for any one month and sharply higher than the October 2007 deficit of $56.84 billion. It also is higher than the entire fiscal 2007 deficit of $162 billion… Treasury’s monthly budget statement showed receipts totaled $165 billion in October, down 7% from a year earlier as a result of a weakened economy that has driven down… tax payments. Outlays in the first fiscal month of the year totaled a record $402 billion, up about $167 billion, or 71%, from the same month a year earlier. Of the increase, about 70% is connected with TARP-related expenses.”
November 14 – Bloomberg (Lester Pimentel and Daniel Cancel): “Ecuador’s bonds tumbled, pushing yields above 100 percent, after Finance Minister Maria Elsa Viteri said the government may miss a $30 million interest payment tomorrow.”
November 10 – Bloomberg (Joyce Moullakis): “London’s financial services industry, which generates about 10% of British gross domestic product, is being ‘deeply affected’ by the credit crisis, with investment banks and hedge funds bearing the brunt… Banks may cut 62,000 jobs in London by the end of next year… the Centre for Economics and Business Research estimated…”
November 11 – Bloomberg (Brian Swint): “U.K. home sales declined to the lowest level in at least three decades and the lending freeze pushed down prices for a 15th month, the Royal Institution of Chartered Surveyors said.”
November 11 – Bloomberg (Brian Swint): “U.K. unemployment rose at the fastest pace in 16 years in October after companies from banks to builders cut jobs as the economy slid into its first recession since 1991. The number of people receiving jobless benefits rose 36,500 to 980,900, the highest level since March 2001…”
November 14 – Bloomberg (Fergal O’Brien and Simon Kennedy): “Europe’s economy fell into its first recession in 15 years in the third quarter… Gross domestic product in the 15 euro nations shrank 0.2% from the previous three months…”
November 14 – Bloomberg (Andreas Cremer): “European car sales plunged almost 15% in October, the sixth straight monthly decline, as credit-market turmoil and an economic slowdown hurt demand.”
November 14 – Bloomberg (William Selway and Adam L. Cataldo): “Philadelphia, Atlanta and Phoenix are asking the U.S. Treasury Department for part of the $700 billion financial rescue package to help them finance construction projects and pay bills. They seek $50 billion on behalf of cities nationally to spend on infrastructure and loans lasting for as long as a year to aid cash flow.”
November 12 – Bloomberg (Terrence Dopp): “New Jersey faces a revenue shortfall of $1.2 billion in the year ending June 30 and $5 billion in the following 12 months, Governor Jon Corzine said… Tax revenue fell $211 million below projections in October, with income taxes 14%, or $116 million, below estimates…”
November 10 – Bloomberg (Michael Quint and Henry Goldman): “New York Governor David Paterson proposed $2 billion of spending cuts, mostly in education and health care, to close this year’s $1.5 billion budget gap and begin narrowing next year’s record $12.5 billion deficit… ‘Many worthy programs with laudable goals, some of which I have supported in the past, will have to experience reductions in funding,’ Paterson…said…”
November 12 – Bloomberg (Henry Goldman): “New York City’s construction industry could lose more than 30,000 jobs by 2010 as residential and commercial building slows… said Richard Anderson, president of the New York Building Congress.”
November 12 – Bloomberg (Adam L. Cataldo): “California faces a $27.8 billion budget shortfall over the next 20 months, according to an analyst for the Legislature, the Los Angeles Times reported. That is $3 billion higher than the amount estimated by Republican Governor Arnold Schwarzenegger’s administration… Mac Taylor, a non-partisan analyst for the Legislature, produced the latest figure… ‘The numbers are just truly awful,’ Taylor told the Times. ‘There are no good options left.'”
November 13 – Bloomberg (Michael B. Marois): “The California Public Employees’ Retirement System said housing-related real estate investments have lost 35% of their value… Calpers, the largest U.S. public pension fund, said the value of its residential land portfolio was $6.1 billion as of June 30, compared with the $9.4 billion total cost of the properties.”
November 13 – Bloomberg (Gabi Thesing): “The German economy, Europe’s largest, contracted more than economists expected in the third quarter, pushing the nation into the worst recession in at least 12 years. Gross domestic product dropped a seasonally adjusted 0.5% from the second quarter, when it fell 0.4%…”
November 14 – Bloomberg (Darrell Preston): “Illinois, the ninth most-populous U.S. state, is $4 billion behind in paying bills to its suppliers of goods and services, Comptroller Dan Hynes said. Vendors face a 12-week delay in getting paid, and the wait may extend to 20 weeks, Hynes said… The ‘unprecedented’ backlog of bills might grow to $5 billion by March… ‘To call this an imminent crisis is an understatement,’ said Hynes… The payment delays may hurt school districts waiting for funding and force state police to park vehicles if vendors stop supplying gasoline, Hynes said. The situation also may affect food supplies to state prisons, physician services to Medicaid recipients and funding of transit agencies, he said.”
November 10 – Wall Street Journal (Sarah McBride): “Mounting debt and a sharp drop in advertising at many of the nation’s radio broadcasters have led to a slashing of their valuations to fire-sale levels and intense competition with other media for ad dollars. ‘It’s grim,’ says Farid Suleman, chief executive of Citadel Broadcasting Corp., owner of a radio network and more than 200 radio stations… He describes current conditions as ‘absolutely the worst I’ve seen'”
November 13 – Bloomberg (Tomoko Yamazaki): “The global hedge fund industry lost $100 billion of assets in October, according to an estimate from Eurekahedge Pte, as firms including Sparx Group Co. and Man Group Plc were hammered by investor redemptions.”
November 11 – Bloomberg (Julie Ziegler): “Harvard University’s $36.9 billion endowment, the biggest in higher education, may face ‘unprecedented’ losses, and the school will seek cost cuts and new sources of revenue. Harvard may need to absorb losses in the fund, President Drew Faust said yesterday… Harvard… most likely will receive less from donors, and its grants and contracts from the U.S. may face pressure along with the federal budget, Faust said. Colleges and universities across the country are taking measures to help cope with the worst financial crisis since the Great Depression.”
November 11 – Bloomberg (Dawn McCarty and Anthony Effinger): “Yellowstone Club, a private ski resort in Montana that lists Microsoft Corp. founder Bill Gates among its members, sought bankruptcy protection from creditors, citing a slump in real estate prices. The club was unable to pay its creditors because of ‘decreasing revenues brought on by, among other things, economic factors causing both difficulties in obtaining credit and declines in the real estate market,’ according to its filing in U.S. Bankruptcy Court… The bankruptcy shows that even the most exclusive enclaves aren’t safe from the deteriorating U.S. real estate market. Most of the club’s revenue came from property sales. Lots once sold for $2 million and higher.”
NWOU disagrees with Noland’s conclusions, which assume that Paulson is well intentioned, but there is no doubt that the Treasury Departments and central banks face a daunting prospect, to reinflate a relatively frozen credit market choked with bad debt by encouraging new loans at low interest rates. The almost daily declines in the stock market since the announcement of the TARP package are a vote of no confidence in this policy. NWOU senses that the public also opposes this policy by a majority.
NWOU has come across several proposed solutions that sound better than the present plan, but we suspect that our readers have also. Rather than focusing on solutions that will never be adopted, NWOU prefers to focus on the pain of the present and the immediate future. We will likely see the bankruptcy of governments and the end of government services around the United States. We expect to see riots abroad and perhaps at home as workers lose their incomes. We expect increases in crime, poverty, and all forms of social deviance. We expect bankruptcies and business failures to increase. We expect many people to become desperate. Unless we see massive demonstrations in Washington, D.C., we expect the Democrats to continue spending policies that may bankrupt the U.S. government.
By the way, the Federal Reserve banks are now leveraged at 50:1, loans against reserves.
Breitbart reports rioting in China. See the story here. In contrast to most of the recent demonstrations and riots favoring more socialism and claims of special rights by the Left, NWOU sees these riots as the beginning of worldwide anti-New World Order riots, and NWOU favors solidarity with the victims of global socialism.
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