Saturday, August 27, 2011

EUROPE….CAB DRIVER


Last week I went to a part of a European country where I found the lifestyle being lived over their after 2008.I remember that in 2009 January I came here and after that I am back again exactly after 2 and half years later. I wanted to travel to conference on Last week and hence I took a cab to travel around 80 km for attaining the conference. While travelling on the way I was having words with the cab driver and form their I am conveying the story prevailing over their. This story is hardly being covered by any media or print publication since stories of life are only heard and less recorded.

5 years earlier the cab driver was not cab driver. He was working and was drawing health amount to meet his expenses. He had lover who later on turned to be his wife. His wives also used to work in a company and were married very happily. They bought an residential apartment at 300000 euros and met the expenditures very easily. In other words life was really rocking for this 29 years old chap. The apartment was quite big and big enough to have the 3 children's under one roof with couples enjoying their happily married life. What a person can expect from his life other than having a peaceful life with a peaceful family. According to me it was a one of the best in fact ideal family in Europe.

Life changed dramatically within last one year. Wife lost her jobs and stayed at home. She is buys taking care of the children's. The residential apartment which he brought at 300000 euros is now juts 120000 euros and not a worth to live any more as all the residential property prices of that place has come to half. Banks have already asked to clear the payments and he is only having half the price to pay of the present value. He himself is struggling to run the medical expenses and other stuffs and whispers in his own eras how he will manage later on once the government goes for abolishment of the taxes on medical expenses and other stuffs. He calls himself I am on the way to become lunatic.

He cries often and curses himself for getting married. More he curses for having the twin's child and the other one so early. He cries for his good old happy days. The country of where I am narrating this story stands with this note that if you have lost your job you become cab driver. Now the city has too many cab drivers and less to travel. I requested the banks that I can't pay but all my words went in vain. He cries and only weeps with thousand of people across Europe.

What the hell you will do with knowing the name of state. It's a place on the world that's enough. Oh before I leave I forget to tell the identity of the cab driver. He was financial banker with whom I attained my last conference 2 and half years ago. No need of name since no real life stories comes to media for publication. I remembered my old days along with my cab driver.
the real story of the real growth of the European economy.I hope my story needs no furtehr analysis of the pains and the crsis being lived by the people of the europe.This is only one story their are thousands and thousands like this more painful and more torchruing.Who covers them what speculators has to say and what the government can say in Europe and US.Is this economic growth or growth of END OF THE WORLD.

Friday, August 26, 2011

MASSIVE DEATH ...GIFTED BY SPECULATORS

Mr. Ben S. Bernanke declares......
 
It’s a big day for Federal Reserve Chairman Ben S. Bernanke. In a much-anticipated speech in Jackson Hole, Wyoming the world expects that the US FED will come up with another round of QE3. The main hope of the world is that quantitative easing 3 Fed would either buy more government bonds or shift existing holdings toward longer-term securities.
 
It has been found that any Quantitative easing is supposed to help the economy three ways:
  • By weakening the currency (dollar), it makes. exports more competitive (U.S)
  • By lowering interest rates,
  • It boosts the housing market and allows owners to cut mortgage payments or borrow more; and by pushing investors into riskier assets such as stocks,
  • It prompts a rise in the stock market that puts consumers in a mood to spend more.
But I am very sorry to say hat even if Mr. Ben S. Bernanke declares QE3 there is negligible chances that it will see the daylight of the world. We have bailout that US economy is no longer having a monopolistic economy of Mr.Obama. Its belong to Republicans too where decision making is simply not tough but its WAR. Hence the probability of declaring cheap money on the streets is far away despite of having announcement from the FED chief. Even if the cheap money is being floated on the streets, investors will find other avenues of investments just like the previous utilization of QE1 and QE2.
 
Investments will find its way into commodities as international prices remain on the higher side, with more savings and less consumption as exploitation of Borrowed Spending is now a threat for every one.
 
The biggest question that’s stands in front of the world economy is that:
Does the Fed really want exploit borrowing and consumption and take more risk when they’re still struggling with too much debt?
And does the Fed really want to keep older Americans under punishment by keeping yielding close to zero for two years since they depend on safe, fixed-income investments . US economy needs policies to create jobs and no cheap money. Since cheap money will further pump the bubble of commodity prices and making inflation unbearable for emerging and other nations. Various financial assets will soar like any thing along with GOLD making new historic highs since dollar valuations will decline with QE3.
 
WHAT IS BEING AWAITED......
The World economy and its speculators are eagerly awaiting and already I the process of spooking stories that another flood of cheap moneys will sail US economy out of the woods of recession. This time its not going to be so easy game for the world economy. Short term speculations will kill the world markets more in the coming weeks and by the time my readers read the article the action might have been acted. Borrowing and Lending are no longer easy. Indian markets along with other Asian markets might be ready for another collapse which is being disguised by the market speculators.

Tuesday, August 16, 2011

US Real Growth Wheels.

What a Performance:
Companies across the United States have a record amount of cash that they have accumulated since the recession ended. They have increased their cash reserves every quarter for more than two years, and businesses in the S&P 500 index had a total of $963.3 billion at the end of March, according to the most recent data from Standard & Poor's. The growing cash hoard has been the result of stronger profits.

Companies have kept costs low by being slow to hire. Revenue, meanwhile, is growing, particularly from overseas customers. For the 460 companies in the S&P 500 that have reported second-quarter results, total earnings are up 12 percent from a year ago. Hence cost cutting measures have resulted profitability of US manufacturing. It’s well clear that US corporate are not inclined to hire manpower and also not inclined to increase productivity. Keeping all these factors how US economy expects that its unemployment rates will come down to below 9% when profitability growth of 12% for the 2nd quarter of US economy is derived on the wheel of less hiring and increased job cuts. The profitability earned via these routes is being deployed to investments avenues other than the real investments which will bring growth to the ailing US economy.

Game Awaited by Analysts:
At the same time US is expected to recover a little bit but that should not be taken that the US economy is growing and its back to pre recession levels. US economy doesn’t need any easy money to be flooded on the streets. They needs job creation. They need money to be generated and flowed from one to another and not getting it accumulated at one corner. They need to have circulation of funds which will finally lead to economic growth and will bring the wheel of US economy to move.

Wall Street Analyst is waiting for the following cues which will again help them to speculate the number games. Slow growth of US economy leads to drop in crude prices. Lower crude prices leads to more savings and less consumption expenditure. Hence consumption numbers will grow in coming weeks hence analysts will use this map as a growth picture. This is not the original economic growth mechanisms. Commodity prices will also come down resulting more savings and more dreaming of consumption. Lower oil prices will also help businesses at every level from manufacturers to transportation companies to electric utilities. But this savings will remain in the pockets and will not be utilized for capacity expansion neither for reduction of unemployment numbers. But yes my dear Wall Street analyst will be able to cook the game of numbers and scale Dow Jones to 12000 levels. Key commodities, such as copper, aluminum, cotton, wheat, corn, soybeans, oats and rye, has fallen; hence more savings in the hands of US consumers and exploitation of expenditure will be spooked so that consumption picks up.

The below image reflects the Exploitation of Borrow and Consume:

But over all these positives speculations one prime thing have been missed off that is the mind set of the US consumers,. The recent doldrums activity of US economy has shaken the faith of the US citizens .This will lead further to less consumption. And the old policy of US economy that is Borrow and Consume is no longer going to work for the growth of the US economy.

Once upon a time in US Economy:

Manufacturing has always been the bedrock of American economic might. Thirty years ago 20 million Americans worked in the sector. Today only 12 million do, and that number is falling by 50,000 a month. As manufacturing has declined, its place has been taken by new ''knowledge'' industries such as finance and IT. But these industries do not create the vast numbers of well-paid jobs that once provided the bedrock of American society. Instead they provide very high paying jobs for relatively few people. This produces the second big long-term change in America's economy - the stagnation in average incomes. US is loosing I term of technical know-how and knowledge. Their quality has dropped and the proof is that China gas emerged as a leader. One cannot blame China if their person has become more knowledgeable and more inclined towards development. US have died due its ego of being the ruler of the world economy. It never thought of the ways of how to repay back the borrowings. While I am writing there are series of questions coming into the mind of me and also of my readers.

• Can America's post-industrial knowledge economy support its global power?

• Can it create millions of well-paid jobs to replace those lost in manufacturing?

• How can the US maintain a high-wage economy without rebuilding manufacturing?

The below image reflect the Industrial production of US economy which is very much clear that growth was hardly striking in the past decade.

WHERE THE SHOE PINCHES?
But knowledge is free hence one cannot be stooped from procuring the know-how and building world class genius. They only way US can rebuild US manufacturing would be to drive American wages down to the point that they meet Chinese wages as they rise. Man-power resources need to be utilized efficiently by US in order to compete with the emerging nations. What other nations like India China are having is that they are having a huge uninterrupted flow of talents and qualified young manpower. US are lagging very much behind this and no monetary system can fill up this gap of the US economy. US manufacturing has shifted to China taking the advantage of low cost of production but did UD took its own manpower and transplanted them to China .no never. It never happened that way otherwise US unemployment should not have been a nightmare of 9% above. Today US have raised the voice over the valuation of the Yen over the dollar saying yen is manipulating currency. But did any one calculate the dollar over valuation over the yen. US needs to improve its quality of manpower. The door of globalization has increased the competition and its no longer feasible for US economy to dream that’s its manpower is undefeatable.What US needs is to competet and rebuild its manpower quality otherwise it will be too late to amend any thing for US economy.

Monday, August 15, 2011

COMING NUMBERS OF US AND EURO ECONOMIES.


Bad days for US Treasuries
$1.6 trillion US treasuries are being held by China alone making the world’s leader in holding the neck of UD dollar. But after the rating of US economy the treasuries have taken a set back in its value. Some of the recent facts findings make its well clear that in the coming days US treasuries will no longer be as precious investments avenue as it used to be earlier. Arab economy has healthy investments in US treasuries as it’s the prime exporter of US crude.

In a very recent note the Chairman of the Arab Banks Federation and Executive President of the Al-Baraka Banking Group (ABG) Adnan Yousif have commented that redistribution of risk will be accepted and followed in the coming days. Arab holdings of US Treasury bonds is at about $470 billion. They did not call for withdrawing the funds but that necessarily did not mean that the holdings are in safe heavens for US economy. US is the most powerful economy in the world and all countries depending on its currency (dollar) would meet the same fate.

China in a very recent note expressed their concerns that it will go for diversification of its foreign currency a holding which means that the US treasuries are no longer able to draw investors across the globe. Its true that if there is any doubt about the US treasuries then their will be a global collapse of the safe holdings.

Coming Data Outlook:
Regarding the outlook of US economic data it can be well predicated that manufacturing is will get slower as government will no longer be able to provide much stimulus to the system. Consumer numbers are going to drop to negative in the coming weeks as skeptical nature of the consumer mind is going to change consumption patterns. Consumers will be more reluctant to spend and more inclined to save for the bad days of US economy. In the other way round US savings rate have picked up from -12% to some comfortable zone. Hence savings are more and consupmtion will be less resulting slow growth of US GDP. So dont expect any growth mnumbers from the economy and if they come with a surprise they should be taken with a  surprise.
Unemployment numbers are going to remain on the higher side as US industry will be inclined to save more and spend less and making cuts at their end. In fact I will not be surprised to see unemployment numbers takes a higher toll since industries across the Atlantic will going for massive cuts as government’s cuts are going to affect their demand generation.
Deeper problems exist for Europe as there are more cuts on spending leading to less growth and expectation for growth numbers from the economy.

WHAT WE FAIL TO UNDERSTAND?

Economies grow via three interconnected phenomena, (1) the division of labor, specialization, and exchange; (2) saving and the accumulation of capital for investment; and, (3) efficient allocation of scarce resources via a system of prices and profit-and-loss.US economy and Europe both are lagging in the 3 segments mentioned above. Its biggest factor of manpower is getting ruined due to delay in Job creation.US economy is loosing its real capital the human capital. Growth consumption and all other factors depends on the utilization of human capital.US has only exploited borrowing capacity of consumers and lead to rule the world economy.US must understands that its no longer capable enough to control and rule the world economy.US needs to focus on its next generation where it will designs its economic growth bringing in world leaders in every sector from technology to even shoe making.

No monetary system can build US economy neither US will gets back its old good days. Exploitation of capital and human resources needs to rule out and US politicians and Wall Street Analyst needs to understand this simple fact.US needs to wait for its next generation to GROW UP AND LEAD THE ECONOMY. Printing money will only spook short term gains and not a stable growth for the US and Europe economy.

The question?
Can any of the Wall Street Analyst, Bankers, and Politicians can declare that what legacy they are keeping for the next generation of US and European economy. Just find the answer.

Saturday, August 13, 2011

BANKS CRY,MORTAGAGE RATING,Q3&Q4

The World financial market lost around 4.40 trillion Dollars in 10 days.


What a cry was for the loss across the globe, but did we ever hear the cry of the banks across Europe and US. We never placed our ears to them. With the blessing of globalization the world economic system has become so much convoluted that a single pinch at any of the global footstep.

The Cry of Banks.With recent fraught of Europe the US banks are very much on the verge of peril. Three US banks are having great numbers of exposure in European debts. Citigroup ,JPMorgan Chase and Bank of America are having have billions of dollars exposed to European banks and debt. U.S. banks are most at risk in Europe because of the gyrations of the overseas debt markets and potential inability to undertake fixed-income underwriting securities from European economy.The respective exposures being taken by the 3 banks of US are as follows:

• Citi's exposure to Greece, Ireland, Italy, Portugal,Spain as well as other financial institutions and corporations located in Europe sit at roughly $13 billion.

• Citi has the most overseas exposure of anyone in our group, with roughly 50% to 60% of revenues non-U.S. based, both on the corporate and consumer side.

• JPMorgan Chase's aggregate net exposure to Greece, Portugal, Spain and Italy currently stands at about $14 billion, with the bank's total credit exposure sitting at $121 billion.

• Sovereign exposure in all five countries represented approximately 26% of the aggregate net exposure, with the majority of the sovereign exposure in Spain.

What ever might be the position or exposure of US banks into the European debts that amount is being owned by the US citizens and not of the Financial Players of the Wall Street. It will be a contagion fall for the US and rest of Atlantic.

Mortgaging Ratings:Borrowing.



France is one the verge of collapse due to having maximum exposure in Italian and Greek government debt which especially vulnerable. Using data from European Union stress tests on 91 European banks, Fitch Ratings said losses of 50 percent on Greek bonds and 25 percent on Portuguese and Irish bonds wouldn't have made any of four big French banks flunk the test. Moreover the prime reason why Europe don’t want its rating of France to be below AAA credit rating since by mortgaging the rating of France Europe will raise funds to save the other nations.

US will not be taking any guarantee or backing the any European economy as they have lost faith on the European banks. Now the difficult phase comes for Europe regarding whom they will mortgage and who will lend them. U.S. money market funds have been slashing their exposure to banks in the Euro zone. Their holdings of Euro zone bonds declined about 10 percent in July, to $340 billion from $378 billion, according to research from J.P. Morgan Securities LLC.

More than the question of who will lend the question of political stability is very much on debate side. Political unrest was not visible during 2008 recession which is very much present now in the atmosphere of global economy. You might get G-20 and G-7 nations meeting on an emergency basis but the questions come who will bailout whom. The nations will come up with another round of printing money but no mechanisms for how to repay the lender.

Q3 and Later on Q4.
Every nation is actively planning to keep the inflation moving like a pendulum with borrowed capital. But even if this time Q3 (Quantitative Easing) comes for a rescue that will again come to an end at some of time. Within that time all the Presidential elections across the Atlantic will get over and another round of Q4 will be ready as a promotional political Measure. But what we economist has forgotten is the physiological behavior of the citizens of these Atlantic countries.

The riot of Europe is a prominent example of the change happening in the nature and outlook towards the future Course of Actions adopted by these ‘Fragmented Economies’. Cutting down spending and finding no way to increase income is one of the worst and toll of weakening an economy further making its recovery difficult for a prolonged period. We need to understand that we are not dealing with numbers or bailouts we are dealing with humans and their human labor which is the real back bone of any economy across the planet.

EUROPE...WHO IS NEXT......

 
My Best Child S&P.
If some one has done mistake in early then it does not make sense that every time it will repeat the mistake. S&P has done the perfect thing that this time it has went ahead and declared the most vulnerable danger awaiting for the world market. In other words what the 12000 Dow Jones and Mr.Obama administration was trying to hide was reveled by S&P.

This time the rating agency deserves an honor that it did not get influenced by any powerful authority on the earth. I will not make my easy to be prolonged to boar my readers but I will rather cut short and request my readers across the world ACCEPT THE BRUTAL FACTS. Easy days for the world market and US  is over. It time for some hard work and cut short your appetite and focus on basic growth strategy rather than focusing deeply on how fast we beat each other in economic growth competition. Can any one explain how the Dow Jones climbed the ladder of 12000 when real growth was not happening in US economy. And if growth was their then a meager of 1% in GDP drags Dowjones to 12000 mark then 3% GDP growth will make Dowjones climb 20000.Sounds funny, extremely funny.

No clothes for my Emperor.
This time we have something more to dig out. Europe is not the volcano of financial collapse. Greece after that its was Spain and now Italy has come out with its naked body. It reveals that the Emperor has no clothes to wear and not even in the wardrobe.

Rating agencies in the last couple of weeks have been battered like anything for declaring the original crisis figures and situations to the world economy. Thanks to the world leaders in hiding their fragmented economic situation. If we make quick look towards the Italian economy we find it is standing one the verge of collapse. Italy’s average quarterly growth rate since 2000 has been just 1%,meanwhile, its debt-to-GDP ratio is 120%.What an economic performance maintained by one of the largest economy of Euro zone. You will surprise to know that is Italy is the third-largest economy in the euro zone. It's also the third-largest bond market in the world, behind the US and Japan.

So when a call will raise over its economic payment structures the world will go for hip hop dance. Spain's 10-year borrowing costs rose above 6% yesterday, while Italy's hit 5.7% and are still rising. If there is panic in the market that European economies are all plummeting then borrowing cost will increase and bonds will bear the heat. Already the gap between the yield on Italian government bonds and German government bonds is at a euro-era record. (In other words, investors are lending to Italy at much higher rates than to Germany. Banks of Italy are under the biggest threat since Italian banks hold so much Italian government debt that any Panic bell will make the life difficult for Italian Banks.

Money Makers
Among these entire debacles the biggest Money Makers of these situations is those who are lending easy money at high cost to these fragile fragmented economies.The biggest problem apart from providing easy money and Austery measures is the political condition prevailing over these fragile US and European economies. The biggest hard work is that to bring growth in these economies which were ailing for decade under low economic growth. In act these economies were dead a long ago, Euro might have kept them alive. It very astonishing to find that US and Europe lived and ruled the world economy on ‘Borrowed Capital’ without thinking when they have to be returned. Cutting down expenditures will only result less jobs and no consumption and Zero economic growth. I find next year also many economies of Europe will use the German Credit card and Austerity cards for mounting debts.

Another Feather: France
France has already proved the theory that cutting down expenses internally leads to Zero economic growth. Despite of delivery a Zero GDP growth France government insisted that French economic fundamentals remained "solid" and that the country was still on course to reach its official target of 2.0 percent growth for the year. Now tell me whom you will believe and where you will plan your safe investments. Now if S&P grades France economy to a negative marking will it is Big Crime or is not the word expected from rating agency as loyal voices raised their voice when S&P downgraded US treasuries. Some economic data of the Eurozone economies will really make one to think where the world is heading for:

• Production in the 17-nation euro area slipped 0.7 percent from May, when it rose 0.2 percent.

• Output of capital goods slumped 1.5 percent in June from the previous month, when it rose 1.1 percent.

• Energy production slipped 0.4 percent and output of intermediate goods decreased 0.6 percent.

• Production of durable consumer goods declined 2.5 percent from May.

What might happen if France is downgraded?
If France, the euro zone’s second-largest economy, lost its AAA rating the effect would stretch far beyond its borders.
France provides the second-largest contribution, after Germany, to the euro zone’s temporary rescue fund, the European Financial Stability Facility, which enjoys an AAA rating to borrow at low rates and lend to states under bailout programmes.

By this time France, Belgium, Spain and Italy, are all under intense pressure from the financial markets, hence from Friday onwards a ban on the speculative practice of short-selling bank stocks to combat "false rumors" that destabilized them have been imposed.

Hence I rating agencies have done their ratings correct this time its their Duty to inform and cautious the global citizens about the hidden deeds of the greatest world Leaders and Financial Heads.

Who is Next?
In fact this is one of the hardest questions but still it needs its reply. Turkey is the next economic going to face slow down in growth as it is already over heated and Belgium might be the next tag line of every economic news paper.


Friday, August 5, 2011

US EMPLOYMENT........ DOWJONES BUBBLE

Another round cooked number were presented to keep the face of DOWJONES above 12000 marks. Obama administration has again and will try in future to keep the face of Wall Street to be promising when in real terms it has no words to make any promise. The community of financial analyst should try to avoid and cut US economy from the map of investments and prospects or any type of clue which will guide the world market. Since cooked numbers will only give birth to bubble of speculation, where the future becomes quite dark.
In my last article I mentioned that US will try to cook numbers since Republican and Democrats are not street fight for the 2012 elections.
Companies in the private sector hired 154,000 workers, but governments at all levels continued to trim jobs, putting the overall gain at the critical headline figure of 117,000. Payrolls rose by 117,000 workers after a 46,000 increase in June Their is nothing to jump with joy that the number has come down to 9.1% since as per the New Policy of budget cuts governments are going to shed jobs in coming days. When the government jobs numbers are going to decline in coming days the unemployment numbers are not going to come down. So its can be easily estimated and not speculated that US unemployment will come down in coming days. According to the budget cuts government job creation will be less or negligible and the entire dependency will come on private sector.

The below image shows the payroll statistics.

This time the biggest increases occurred in health care (31,000), retail (26,000) and manufacturing (24,000). Government shed 37,000 jobs, marking the ninth consecutive decline in unemployment numbers. Now the real pictures come out like this that as government will not be able to create jobs, hence inflation which is backed upon consumption will not pick up as a result economic growth numbers will be less in coming days.

Now the interesting part is this that US private sector is not expanding or neither interested to hire as per the pre recession levels this will also add to the decline numbers of unemployment and GDP growth numbers of US. By this time Wall Street itself has went for shedding of jobs. The finance sector saw 4,000 jobs disappear last month, according to the Bureau of Labor Statistics, continuing the trend begun last month when the sector lost 15,000 jobs. If I drill down further I find Credit intermediation and related activities lost 3,000 jobs, while real estate, rental and leasing lost 900 jobs. Securities, commodity contracts and investments gained 700 jobs, while commercial banking saw an increase of 200.according to the estimations it is being expected that wall street to loose further jobs in coming months,.

Final part of the show will be that how US administration will cook its forth coming numbers to Bubble the Dow Jones.

Now get ready for the cooked numbers and BUBBLE DOW JONES.

Tuesday, August 2, 2011

US ECONOMIC ARMAGEDDON



Happy ending but pains way ahead:  
Finally the debt ceiling was increased by $2.1 trillion resulting new limit for US debt to $16.1 trillion. It has been taken by the world media as a high voltage of drama being played between the Democrats and the Republican. In fact according to me this drama was the beginning of the bigger picture which will be released in the due course of the time. The 2012 presidential and congressional elections which will be held will be fought over spending cuts and job creation. It seems that the US economy will be now on the political game rather on economic revival game which the required to be played at the moment. Both the Democrats and the Republicans are internally divided and radicalized, with centrists in both parties increasingly isolated hence the high voltage game is yet to begin for US economy along the world economy.

Politics beyond Economics
Now one question in mind will expenditure cut and taxes increase will lead to US economic growth. We get the answer in history of US economy. In 1980, Ronald Reagan won power by promising to cut taxes and increase defence spending — a combination that meant he would have to borrow billions. And by the time he left office, the U.S. had gone from being the world’s biggest creditor to the world’s biggest debtor, its total debt having surged from $997billion to $2.85trillion.

The downgrading of the US bonds and other money market instruments has already created huge damage to the fragile economy of US.  He downgrading will lead to a further capital outflow from US money markets, which are an important source of short-term funding for many businesses and financial institutions around the world. Increasing the debt limit will only increase more hard days for the US economy to come out of the crisis.

What’s is found till now from the new debt increase policy being adopted is that the debt ceiling will rise by about US$2.1 trillion, in two stages until 2013, so beyond the 2012 presidential campaign - key Democrat demands that  In exchange for these concessions, Republicans have successfully pressed for spending cuts amounting to at least US$2.5 trillion over 10 years, of which about US$1 trillion are agreed. The remaining US$1.5 trillion will be the subject of a new bipartisan Congressional committee.
Failure by that committee to agree later this year would trigger automatic cuts in programme defended by Democrats and Republicans respectively - social security and military expenditure. Under the framework negotiated by Congress, approximately half of those cuts would be in defence spending and the other half in domestic programmes such as farm subsidies or discretionary spending (including Medicare).Cutting down expenditures was required since Us have been active in defence spending from the time of Mr.Bush who increased the debt limit of US to $11 trillion before quitting his office.

After that another round of Disaster control plans were run which included a $700 billion bank bailout, a $700 billion stimulus program, a couple of trillion in “quantitative easing,” that is, in debt monetization. It was not debt monetizing, its was printing dollar to pay the bill of US economy. Federal Reserve’s balance sheet had expanded by trillions of dollars as the Fed purchased troubled mortgage bonds and derivatives in its effort to keep the financial system solvent and functioning. According to the Government Accountability Office’s audit of the Federal Reserve released by Senator Bernie Sanders, the Federal Reserve provided secret loans to US and foreign banks totaling $16.1 trillion, a sum larger than US Gross Domestic Product (GDP).

The cooked numbers:
The US economies have cooked the estimations number for its economy. For example its has hiked its GDP growth numbers spooking speculation around the world economy about its growth where as the real growth remains subdued. Even while calculating the unemployment number, US economy was propagating that the unemployment numbers stood at 9.2% where its has overlooked the number being created by Discouraged Labors.  A discouraged worker is a person who has ceased looking for a job, because there are no jobs to be found. A discouraged worker is not considered to be in the work force and is not counted among the U.3 unemployed. The U3 is today’s official unemployment rate. It represents those people in the total civilian work force who are unemployed and still seeking to be employed. It is a number that is less than half as high as the unemployment number that was used until after President Clinton took office, and it woefully under reports the serious problem in the present U.S. job market. It may surprise you to learn that these are not the actual unemployment numbers though. In fact, when unemployment is measured according to the formula that was used when President Bill Clinton took office, it is actually around 20% Today’s formula only counts a narrow segment of the non working population as unemployed.
More over the new tension of Republican and Democrats are going to make the policy decisions of US more critical and more difficult in the coming days. The world economy should now try to make itself very much clear that US economy is not going to provide any easy steps for the speculators to breed their thoughts.

Now what we have way ahead?
The tussles between policy frame work in US economy will remain as a high voltage Multiplex Movie. The debt will keep on increasing despite of spending cuts since the real engines of US economy that is manufacturing is sitting idle. It is not focusing or neither having intention to expand or start up its manufacturing in US .Rather they are more inclined to open shops in emerging economies. Can any one figure out what will be the utility of cutting down expenditures when the US corporate is having a stock pile of cash to the tune of more than $2 trillion. But where is the money heading if manufacturing is not happening in US. Manufacturing is taking place but Its being drifted towards emerging economies where shops are being opened like India, China and Indonesia.
Upcoming numbers and any positive cues from Us will be hard to be taken as now is teems that 2012 presidential elections will drive cooked numbers from the US economy leading to a catastrophic speculation fault from the world economic speculators.
Some questions for my readers?
  • I have some astonishing number to be provide to you to think in gamut to finish my article.
  • A U.S. Treasury Department reported that U.S. debt will rise to $19.6 trillion by 2015 and if the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.
  • Will this hike of Debt limit will suffice in the future.
 While all these are highly demanded question in the mind and also highly un-answered across the world since US economy mind set have been changed to skip hard work and look for shortcuts to make any thing overnight. One should not forget that from the time of late 1970 US economy has learnt to live on debt and borrowed capital without the thought of how to repay back. Since this repayment mind set needs no economist it needs physiologist to change the mind of America.

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