Saturday, December 19, 2009


The monsoon this year was erratic and insufficient. Then came some unseasonal rainfall in late September.
Below is a news clipping from the Economic Times newspaper - 18 Dec, 2009.
Retail Prices are in Rs/Kg. ( 1 USD = INR 47 approx)

Rising food prices are always a concern in a developing country where a large percentage of the population spends over 50% of their daily income on food.

Insufficient rainfall has also resulted in severe water cuts in the city of Mumbai this year. It's going to be a long wait till the monsoon returns by June 2010.

Thursday, December 17, 2009

Bernanke named TIME's "Person Of The Year 2009"

Here's the TIME Magazine link

Well I'm guessing you already know what I think, but here's a recap.
My December 15, 2009 post.
Bernanke: Why are we still listening to this guy?
My December 4, 2009 post
Sen. Bunning lashes out at Bernanke

Here are some more links
Calling The Time "Person Of The Year": Jackass

Bernanke Named Time's 'Person of the Year' The Big Picture
TIME’s Person of the Year 1927 – 2008 (George Bush Jr was on there twice!)

Well all is well in the world. Obama wins the Nobel Peace Prize and Bernanke is TIME Magazine's man of the year.

Just like Wall Street bankers in 2007, he's being 'congratulated' before actually getting the job done and well before we know what the consequences of his actions will be!!

Is his medicine going to be too toxic for the world's financial markets in the long run?

"TIME's Person of the Year is bestowed by the editors on the person or persons who most affected the news and our lives, for good or ill, and embodied what was important about the year."
Yes, his actions at the FED have drastically changed the world's financial landscape.

  • Failing to control subprime lending in 2006-07 as also a massive bubble in the US Real Estate market. He may not have had jurisdiction over the investment banks when he took up the job, but he made no efforts to clamp down on reckless lending by US commercial banks to the real estate sector. Instead of slamming the brakes on an ''overheating'' property market, he just chose to clean up the mess once things fell apart!
  • Then buying all kinds of ''toxic securities'' to support collapsing investment banks and AIG!
  • Preaching a strong dollar policy, but doing everything to damage its long term fundamentals.
  • Massive increases in money supply and government debt are going to be key threats to any sustainable recovery in the USA .
  • Just like the Japanese post 1989, he has resorted to bailing out zombie banks and maintaining record low interest rates for 'extended' periods - Once again, that's not going to work!.

My main issue with Ben Bernanke at the FED, is that this guy never saw the crisis coming at all! That to me is just unacceptable!!!

For everyone's sake, let's hope he has better luck anticipating/ preventing/preparing for the next crisis!

Central Banks and finance ministers the world will be looking to Bernanke for leadership, market direction and advice in 2010 as they try to roll back subsidies and gradually reduce their supporting grip on the so called 'free markets'.

According to me, that's the biggest danger we face as world economies struggle to recover from a really toxic, exhausting and chaotic 2008 and 2009!

Wednesday, December 16, 2009

Total Bank Credit continues to contract

Well ---- bank lending continues to contract!

Creditworthy customers are hard to find and in an uncertain job market, US Commercial banks aren't taking any chances.

According to David Rosenberg, ''In the third quarter, it contracted at a record $1trillion at an annual rate (over 9% decline - also a record).''

Here's a link from the New York Times

Link: Poll Reveals Trauma of Joblessness in US
It's obvious why banks are just refusing to go all out issuing loans again - they don't want any more non performing loans. This downturn is far from over, and the banks know it.

Over the last couple of weeks, large U.S. Financials have been raising more capital via fresh equity issues.Yes, yes repaying the TARP! They want to get their 'equity dilution' done while the going is good.!

And yes, while they may be going slow on the lending front, they are 'confident enough' of the uncertain business environment ---- to go ahead with bonuses to bankers this Christmas.

But there again, if you had the U.S. Treasury and the FED to backstop your losses and bail you out of crazy leveraged transactions - you would be confident too!!

Tuesday, December 15, 2009

Bernanke: Why are we still listening to this guy?

Another link from Mish !

Just incredible how wrong an ''expert'' can be.
Be careful when you blindly follow expert advice!!!

While the crisis of 2008-2009 may have been the ''mother of all crises''; the very fact that the guys in the driving seat may have been 'making things up as we went along' is extremely disturbing.
After failing to forsee a crisis; to compound the fallout by resorting to short term fixes, instead of long term solutions is just tragic!

Friday, December 11, 2009


Over the last few months, Ireland, Spain, Greece & Dubai have been getting a lot of attention in the financial media.
Issues like unemployment, real estate meltdowns and debt concerns continue to haunt the ''green shoot recovery'' in Europe's weaker economies

Coming to Greece, Fitch Rating cut Greece's rating to BBB+, on lingering worries of an ever expanding deficit of 12.7% of output --- that's way over the EU limit.
Greek Swelling Deficit a Concern for Euro Area, Almunia Says ... / Brussels - Brussels to rebuke Greece over budget deficit

Concerns over Greece's $350Bn debt resulted in the Greek/German 10yr yield spread widening to over 200bps
Greek/German 10-yr yld spread widens above 200bps | Reuters

The equity markets in Greece have pulled back sharply as well.
Just goes to show you how quickly these fragile stock markets can give up recent gains!

Clearly, the the aftershocks of the 2008 meltdown and subsequent credit contraction and asset deflation, continues to spit in the face of Wall Street's 'green shoot recovery'.

Wednesday, December 9, 2009


Hat tip to Mish for the link.

U.S. Bank Failures 2009 : The Credit Crisis continues

FDIC: Bank Failures in Brief ( details of bank assets and deposits)
For an economy that's on the road to recovery, the number of bank failures just continues to increase!
It's not a topic that gets covered on CNBC or most international business news networks either.
The Credit Crisis -> It's not over yet!

Tuesday, December 8, 2009

Copenhagen climate summit : Change for better or for worse!

I came across this article via Elaine Supkis' Culture of Life News Blog

Firstly, here's her post.
Copenhagen Incompetence: Hot Air For Global Cooling

........ and then the link from the Telegraph in the U.K.

Copenhagen climate summit: 1,200 limos, 140 private planes and caviar wedges – Telegraph

Yes, you read that right, these guys are going all out to save the planet.
If limos and private jets are what it takes, then so be it.

This brings me to the main point I want to discuss.
Politicians and government bureaucrats the world over are the same - always attempting to fool all of the people all of the time.
I'm not going to get personal here, but I despise them all equally.

They love summits, conferences & trade talks!
Breaking promises and commitments is just second nature to them, and as for change for the better or the first foot steps in the right direction, well they're just not up for it!

Their performance in the boom time that led to the crisis and the subsequent meltdown and now the ''magical recovery'' tells the whole story.

  • Failing to curb, control or regulate a speculative boom in real estate, but instead proclaiming that the whole world had entered a new era of never ending growth. Continuing to lend to sub prime borrowers who would be prime default candidates if things took a turn for the worse. But then why would the government bother, when everyone was getting rich by speculating!

  • Post the meltdown, refusing to set up any viable long term solution, but instead looking at short term fixes. Cash for clunkers being a case in point. Why not try setting up cross country railroads instead. Oh wait! I forgot about the automobile lobby!

  • Continuing to encourage more borrowings at a time when individual debt levels are rather high. Then resorting to massive increases in money supply and government borrowing, as lenders of the last resort to everything and everyone in the ''free market'' economy.

  • Always coming up with solutions that involve decisions that have to be taken immediately. Like the TARP ...........If we don't do it now it will be too late etc etc

  • Nevermind that the lines between governments and banks in the west are blurred, but to tamper with accounting practices and then refuse to curb, regulate and control the ginormous derivatives market, well that's just suicidal.

  • CHANGE- Well that often means 'more of the same', a plan that usually involves more borrowing and spending. ''Change'' is also used as a general diversionary & distraction tactic. Take Climate Change for example. I know it's a real concern and long term problem, but it's not an issue that came up yesterday. Sadly no long term fixes here, these guys are just using it to divert attention away from other pressing issues - unemployment, banker bonuses, massive massive government debts etc. And once again the public is going to fall for it!

Well that's the end of my rant!

We live in uncertain times, and anyone who advises you to take on more debt or more risk, obviously has pre - planned his own bailout package!

It's actually a time to pay down debt and avoid speculative investments.

Focus on capital preservation and conservative fixed income generating strategies that will stand you in good stead if things take a turn for the worse.

Friday, December 4, 2009

Wednesday, December 2, 2009

FOMC's wide range forecast!

Obviously, no one at the FOMC is ready to commit on a narrow range as far as economic forecasts go.

As David Rosenberg said in his update this Thanksgiving, FOMC estimates are quite wide. Take a look at his charts on this.

Yes, these are the same guys who in 2008, thought that the sub prime crisis was contained, and that the U.S. economy was in decent enough shape.
And these are the same people who today, are encouraging individuals to spend rather than save, even borrow and spend to save the U.S. economy!
Listen to David Rosenberg - he's one guy who has been consistent in his views all along, and he DOES NOT think that the risk reward ratio for ''risky assets'' favours an investor today!