Rice in economic damage control - International Social/Political

A first year economics student would inform Rice that basic economic strength is built on PRODUCTION and SAVINGS – America has neither! Almost its entire manufacturing base has gone off-shore and dodgy financiers have been running the country on CREDIT for years – the result, collapse of course!

The American ‘solution’ is to print more worthless money and continue to spend like drunken sailors – Bush uses drug dependence analogies to describe his latest ‘strategy.’ His latest idiot solution is to print more money and ‘give it away,’ this ‘strategy’ he says will act as “a shot in the arm” – there goes those junkie descriptors again, remember the “addiction to oil,” which resulted in the U.S. junkie resorting to criminal activity in order to feed its habit!

Save your breath Condi, the show is over for you and the entire Bush regime; we recommend seeking advice from good lawyers in preparation for the dock! Fortunately this Nazi regime has been exposed and now faces legal consequences for its many crimes.

The European reserve Bank refuses to act like a drug pusher and artificially reduce rates to ACCOMMODATE failing markets – it looks like its ‘cold turkey’ for the U.S. junkie! I believe evading responsibility for one’s actions is common to all drug addicts and pathological personalities.

Down you go, America!

That old black magic has me in its spell
That old black magic that you weave so well
Icy fingers up and down my spine
The same old witchcraft when your eyes meet mine

The same old tingle that I feel inside
When that elevator starts its ride
Down and down I go, round and round I go
Like a leaf that’s caught in the tide

I should stay away but what can I do
I hear your name, and I’m aflame
Aflame with such a burning desire
That only your kiss can put out the fire

You are the lover that I’ve waited for
The mate that fate had me created for
And every time your lips meet mine

Baby down and down I go,
All around I go

In a spin, loving the spin I’m in
Under that old black magic called love.

Get a grip Condi, your voice was cracking as you spoke!

DAVOS, Jan 24 (IPS) - China and India have claimed that that they are "decoupled" from the credit and banking crisis in the United States.

Faced with renewed calls that the two emerging locomotives of the world economy have to take a bigger burden in mitigating the impact of the meltdown in the U.S. banks due to the sub-prime mortgage crisis, leaders from the two Asian giants said at the World Economic Forum's annual Davos meeting that their economies are placed in a dynamic of their own.

"India's economic growth is driven by its domestic demand which is growing at a brisk pace," said India's trade minister Kamal Nath. "We are not worried by the developments in the U.S. economy," he told IPS. "India was never coupled with the U.S. economy."

"We do not want a big trade surplus, it is a big problem," said Cheng Siwei, vice-chairman of the standing committee of China's National People's Congress. He said the Chinese economy can withstand a reduced demand from U.S. consumers for Chinese goods.

U.S. trade policy experts agree that the impact of the recession on the emerging economies would not be severe. "I believe the world economy has in fact largely decoupled from the U.S.," said Fred Bergsten, director of the Peterson Institute for International Economics.

Participating in a session on the impact of the U.S. recession on emerging economies, Bergsten said "the emerging markets now account for roughly half the world economy; even if they slow down by half a percent or so, they are still going to provide substantial growth in the 6-7 percent range. Even if the industrial world drops down into the 1-2 percent range, world growth will be in the 4 percent range."

In an interview to IPS, Nandan M. Nilekani, chief of the Indian information technology giant Infosys, said "the Indian economic fundamentals are strong because of several factors." These include "technological innovation, a robust labour force, and innate strength of innovation."

If there is a global slowdown all economies would be affected to some extent, "but India is placed in a different situation and not in the same league as some other emerging economies," he argued.

But many participants at the WEF meetings, which focused a great deal on the emerging recession in the U.S. economy, called for strong leadership. "The thing that markets are desperate for right now is leadership, whether globally or regionally, and it seems this is lacking," said John Studzinski, head of the U.S. private equity firm Blackstone.

"Until the markets see a lot more leadership on a proactive basis rather than a reactive basis, you are going to continue to see this great anxiety, and feel frustration," he said.

China has recently invested in Blackstone, a development that has prompted analysts to examine the role played by so-called sovereign wealth funds from the emerging economies.

Increasingly, sovereign funds have come to the rescue of leading financial banks such as Citibank and UBS to face the sub-prime mortgage crisis. "I would make an argument today that the greatest single benefit to the longevity of the U.S. financial structure is investment made by sovereign wealth funds (into financial institutions)," said Michael Klein, a senior Citigroup official.

But there are growing fears about possible "financial protectionism" as the political elite in France, Germany and even the U.S. are raising fresh concerns about the control of their prized assets by sovereign funds from the emerging markets.

"The questions are very much that (sovereign wealth fund) investment in future continues to be commercially driven, and in no way shifts to political (drivers)," said David Mccormic, U.S. Undersecretary of the Treasury for International Affairs.

© 2008 IPS-Inter Press Service

January 23, 2008

Business leaders and economists gave a bleak outlook for the economy which is heading for a 'severe downturn'

A full-blown, prolonged recession in America is now inescapable, with the rest of the world set to be dragged into a severe global slowdown despite yesterday’s emergency US interest rate cut by the Federal Reserve, leading economists said in Davos this morning.

A darkening outlook for the global economy looked set to dominate the week-long World Economic Forum, as plunging stock markets and the Fed’s drastic and dramatic reaction overshadowed the opening of the annual gathering of political and business leaders.

Some of the world’s most prominent economic pundits told an opening session this morning that the Fed’s surprise three-quarter-point cut in US official interest rates was already “too little, too late” to stave off recession in America.

In a bleak discussion of prospects, the economists predicted that Britain, Europe and much of Asia also now face a sharp and unavoidable downturn in their economies, even if they escaped recession.

The Fed itself also came under heavy fire, along with other central banks.

Top policy-makers, including Larry Summers, the former US Treasury Secretary, joined economic experts in delivering a series of broadsides against the Fed.

A series of experts said that the US central bank not only had been “behind the curve” and “asleep at the switch”, but had failed to take necessary, pre-emptive action to curb the emergence of the financial instabilities that triggered the present crisis.

They said that the Fed appeared to have given stock markets an unjustified bailout this week.

Others, including John Snow, Mr Summers’s Republican successor, defended the Fed’s strategy, however, and applauded yesterday’s aggressive rate move.

The ominous assessments of the likely economic fate of the United States this year were led by Nouriel Roubini, the influential economic consultant.

“It’s not whether we have a soft landing or a hard landing in the US, but rather how hard a landing it is going to be,” he said.

“The recession is going to be deeper and lasting ... at least four quarters … It’s going to be a severe recession.”

Professor Roubini said that the Fed’s steep rate cut this week was “too little, too late” to stop a consumer-led slump in the US economy because American consumers were “shopped out”, laden down with heavy debts, and the financial system was under “severe stress”.

He said: “The Fed cannot prevent this recession from occurring.”

His bleak prognosis was echoed by Stephen Roach, the former chief economist at Morgan Stanley and now the investment bank’s chairman in Asia.

He agreed that with American households under financial pressure from debt burdens that were at record highs and the housing market slump, the US economy faced a sharp retreat by shoppers from the country’s Main Street shops and malls.

Mr Roach highlighted how Americans have been spending the equivalent each year of 72 per cent of US national income, far above the 67 per cent average over recent decades.

He gave warning that if spending patterns now fell back to historic levels in a year “it would be the mother of all recessions”.

It was likely that consumer spending would fall back in this way, although over several years, and this was a necessary adjustment from behaviour that had been unsustainable, he said:

“We have used the overvalued home like an ATM [cash] machine, and in doing that we have taken debt loads up to record highs," he said.

"None of that is sustainable. So we have got to take the excess out of consumption.”

He added that the problem was that Americans were saying, “We do not want to stop excessive consumption”, while the rest of the world was saying, “We want you to keep consuming to excess so that we can sell you things you do not need.”

“What kind of a world is this?” he asked.

Both Mr Roach and Profession Roubini said that Europe, Asia or emerging markets could escape fallout from a US recession.

“Europe is not going to get a special dispensation from the global slowdown,” Mr Roach told delegates.

He added that India and China were “not yet at the stage where they can fill the void that is going to be left by the American consumer”.

He said: “I think it is going to be a close call but think we will not actually move into global recession.”

In a poll here, Davos delegates voted a US recession the No 1 threat facing the world. But not all the leading economists present saw a worldwide downturn as inevitable.

Fred Bergsten, director of the well-regarded Washington-based Peterson Institute for International Economics, said: "I believe the world economy has in fact largely decoupled from the US … That means things are much too bleak and pessimistic around here in terms of the outlook.

"My conclusion is that a global recession if inconceivable.”

The Fed’s rate cut this week left delegates sharply divided over the wisdom of its action, and its broader record in running the US economy.

Mr Snow said: “Have the Fed and other central banks been asleep at the switch? No. The issue of whether the central banks are capable of vigorous action, bold action was answered yesterday.”

He said that the Fed’s move should ensure any recession was “short and shallow”.

His predecessor, Mr Summers, gave a damning view.

He said that it was “hard to give a high grade” to the Fed over its recent policy “when they have been consistently behind the curve”.

© Copyright 2008 Times Newspapers Ltd

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