Krisis ekonomi global bukan pilihan kita. Tetapi, kerana kita bukannya memencilkan diri di sebuah pulau, pastinya kita terbabit. Jadi, kerajaan kenalah bertindak bijaksana dan rakyat kenalah segera susun semula keutamaan masing-masing. Selain itu, kerajaan kena berterus terang akan kedudukan ekonomi kita yang sebenar dan rakyat juga wajar pintar mencari peluang daripada suasana dharurat ini. – Ruhanie Ahmad
Inflasi Dijangka Sederhana, Kata Shahrir
PUTRAJAYA, 21 Jan (Bernama) -- Kadar inflasi dijangka menyederhana lagi pada bulan ini berikutan harga bahan api yang rendah, kata Menteri Perdagangan Dalam Negeri dan Hal Ehwal Pengguna Datuk Shahrir Abdul Samad hari ini.
Katanya harga bahan api merupakan faktor paling ketara yang menyumbang kepada penurunan itu dengan pengurangan terbaru harga petrol dan diesel.- BERNAMA (komen: macam mana harga gula naik?)
http://www.bernama.com/bernama/v5/bm/newsbusiness.php?id=385264
Hentikan Pekerja Asing
PUTRAJAYA 21 Jan. – Sudah tiba masanya pengambilan pekerja asing terutamanya dalam sektor pembuatan dan perkhidmatan dihentikan segera, kata Menteri Dalam Negeri, Datuk Seri Syed Hamid Albar.
Langkah itu katanya, selaras dengan keadaan ekonomi semasa negara yang turut merasai kesan kemelesetan ekonomi global.
“Majikan patut memberhentikan pekerja asing terlebih dahulu, hantar mereka balik ke negara asal dan jangan ambil lagi. Mereka sepatutnya menggunakan sumber tenaga tempatan,” katanya. – UTUSAN (komen: alangkah eloknya jika KDN keluarkan arahan!)
http://www.utusan.com.my/utusan/info.asp?y=2009&dt=0122&pub=Utusan_Malaysia&sec=Muka_Hadapan&pg=mh_01.htm
Syarikat Jepun Masih Agresif Ambil Pekerja
JOHOR BAHARU, 21 Jan (Bernama) -- Syarikat-syarikat Jepun yang beroperasi di negara ini masih agresif mengambil pekerja baharu walaupun berlaku kelembapan ekonomi semasa akibat krisis kewangan global.
Naib Pengerusi Hal Ehwal Pengurusan Dewan Perdagangan dan Industri Jepun (Jactim), Akira Hashimoto berkata sekurang-kurangnya 10 syarikat multinasional terkemuka di sini masih menawarkan pekerjaan di pelbagai peringkat, termasuk graduan baharu. – BERNAMA (komen: jangan pula eksploitasi pekerja dalam keadaan krisis ekonomi!)
http://www.bernama.com/bernama/v5/bm/newsbusiness.php?id=385223
Pengecualian Enam Bulan Kepada Majikan Bayar Levi
KUALA LUMPUR, 22 Jan (Bernama) -- Para majikan di dalam industri tekstil and elektrik akan dikecualikan dari membayar levi pembangunan sumber manusia bagi tempoh enam bulan ke atas sektor itu berkuat kuasa 1 Februari. – BERNAMA (komen: hati-hatilah waktu tentukan siapa yang layak.)
http://www.bernama.com/bernama/v5/bm/newsbusiness.php?id=385312
Singapura Semak Semula KDNK Setelah Ekonomi Mengecil
SINGAPURA, 21 Jan (Bernama) -- Singapura terus menurunkan unjuran Keluaran Dalam Negara Kasar (KDNK) negara itu bagi 2009, kini kepada -5.0 hingga -2.0 peratus, setelah kelembapan ekonomi yang melanda dunia sekarang ini terus mengheretnya ke dalam kemelesetan.
Awal bulan ini, kerajaan telah mengunjurkan pertumbuhan KDNK republik itu bagi tahun ini akan berada dalam jajaran antara -0.2 dan 1.0 peratus. - BERNAMA (komen: ini contoh tindakan berterus terang.)
http://www.bernama.com/bernama/v5/bm/newsbusiness.php?id=385092
Inflasi Dijangka Sederhana, Kata Shahrir
PUTRAJAYA, 21 Jan (Bernama) -- Kadar inflasi dijangka menyederhana lagi pada bulan ini berikutan harga bahan api yang rendah, kata Menteri Perdagangan Dalam Negeri dan Hal Ehwal Pengguna Datuk Shahrir Abdul Samad hari ini.
Katanya harga bahan api merupakan faktor paling ketara yang menyumbang kepada penurunan itu dengan pengurangan terbaru harga petrol dan diesel.- BERNAMA (komen: macam mana harga gula naik?)
http://www.bernama.com/bernama/v5/bm/newsbusiness.php?id=385264
Hentikan Pekerja Asing
PUTRAJAYA 21 Jan. – Sudah tiba masanya pengambilan pekerja asing terutamanya dalam sektor pembuatan dan perkhidmatan dihentikan segera, kata Menteri Dalam Negeri, Datuk Seri Syed Hamid Albar.
Langkah itu katanya, selaras dengan keadaan ekonomi semasa negara yang turut merasai kesan kemelesetan ekonomi global.
“Majikan patut memberhentikan pekerja asing terlebih dahulu, hantar mereka balik ke negara asal dan jangan ambil lagi. Mereka sepatutnya menggunakan sumber tenaga tempatan,” katanya. – UTUSAN (komen: alangkah eloknya jika KDN keluarkan arahan!)
http://www.utusan.com.my/utusan/info.asp?y=2009&dt=0122&pub=Utusan_Malaysia&sec=Muka_Hadapan&pg=mh_01.htm
Syarikat Jepun Masih Agresif Ambil Pekerja
JOHOR BAHARU, 21 Jan (Bernama) -- Syarikat-syarikat Jepun yang beroperasi di negara ini masih agresif mengambil pekerja baharu walaupun berlaku kelembapan ekonomi semasa akibat krisis kewangan global.
Naib Pengerusi Hal Ehwal Pengurusan Dewan Perdagangan dan Industri Jepun (Jactim), Akira Hashimoto berkata sekurang-kurangnya 10 syarikat multinasional terkemuka di sini masih menawarkan pekerjaan di pelbagai peringkat, termasuk graduan baharu. – BERNAMA (komen: jangan pula eksploitasi pekerja dalam keadaan krisis ekonomi!)
http://www.bernama.com/bernama/v5/bm/newsbusiness.php?id=385223
Pengecualian Enam Bulan Kepada Majikan Bayar Levi
KUALA LUMPUR, 22 Jan (Bernama) -- Para majikan di dalam industri tekstil and elektrik akan dikecualikan dari membayar levi pembangunan sumber manusia bagi tempoh enam bulan ke atas sektor itu berkuat kuasa 1 Februari. – BERNAMA (komen: hati-hatilah waktu tentukan siapa yang layak.)
http://www.bernama.com/bernama/v5/bm/newsbusiness.php?id=385312
Singapura Semak Semula KDNK Setelah Ekonomi Mengecil
SINGAPURA, 21 Jan (Bernama) -- Singapura terus menurunkan unjuran Keluaran Dalam Negara Kasar (KDNK) negara itu bagi 2009, kini kepada -5.0 hingga -2.0 peratus, setelah kelembapan ekonomi yang melanda dunia sekarang ini terus mengheretnya ke dalam kemelesetan.
Awal bulan ini, kerajaan telah mengunjurkan pertumbuhan KDNK republik itu bagi tahun ini akan berada dalam jajaran antara -0.2 dan 1.0 peratus. - BERNAMA (komen: ini contoh tindakan berterus terang.)
http://www.bernama.com/bernama/v5/bm/newsbusiness.php?id=385092
7 comments:
Puteramaya
Salaam Siber!
komen: jangan pula eksploitasi pekerja dalam keadaan krisis ekonomi!
Japan moves to ease credit freeze as deflation looms
Reuters
Thursday, January 22, 2009
TOKYO: The Bank of Japan said Thursday it would buy corporate bonds to ease an increasingly severe funding squeeze and warned that deflation was returning to the world's No. 2 economy for the second time this decade.
The central bank said core consumer prices and gross domestic product would both fall for two years, as plunging exports and corporate investment, on top of record lows in business confidence, send Japan into a deepening recession.
The bank left interest rates on hold at 0.1 percent but warned the economy was worsening sharply, and delivered a similar warning about deteriorating access to credit.
The bank said it would buy corporate bonds as well as commercial paper and support the hard-pressed property market by accepting real estate investment trust debt as collateral, agreeing to take on new credit risks to help firms raise cash in gummed up financial markets.
"The fact that the BOJ is going to take credit risk is significant. It is a serious announcement," said Jun Miyata, a senior fund manager at T&D Asset Management, but he said bonds of up to three years should be in the central bank's sights.
Japanese exports plunged a record 35 percent in December from a year earlier as Asian consumers buckled under the global financial crisis and a U.S. recession crushed demand for electronics and autos.
The collapse in exports pushed Japan deeper into recession in the fourth quarter, analysts said, and with the global economy crumbling and the yen at 13-year highs against the dollar, there was no light at the end of the tunnel.
The bank was similarly bleak in its outlook.
"Exports are falling sharply on slowing overseas economic growth," the bank said in a statement. "Domestic demand is also weakening as corporate revenues as well as household's job and income environment worsens.
"Japan's economy is worsening sharply and is expected to continue worsening in the near term."
The bank saw consumer prices falling 1.1 percent in the year to March 2010 and a 0.4 percent fall the following year, along with two years of economic contraction up till early 2010.
The central bank said it saw the economy turning up by early next year but warned uncertainty was high and analysts said this was pretty optimistic.
"I'd like to hear from the governor how he sees Japan's economy returning to a recovery path, namely what he expects regarding economic developments in the second half of fiscal 2009 and the first half of the following year," said Kyohei Morita, chief economist at Barclays Capital.
Along with exports, Japanese imports slumped in December, signaling sinking domestic demand, and a survey showed business sentiment tanking, adding to the gloomy outlook.
"External demand will likely cut Japan's GDP by more than one percentage point for the final quarter of last year," said Junko Nishioka, chief economist at RBS Securities. "Exports are likely to continue to fall at least until the first quarter of this year and possibly longer."
Exports to Europe, the United States and the rest of Asia all fell at a record pace in December.
While exports to the United States have falling since the U.S. mortgage defaults mutated in to a global credit crisis 17 months ago, Asian demand held up for most of last year. Now regional shipments are tumbling just as fast.
Exports to Asia sank 36.4 percent, the third straight month of decline. Shipments to China fell 35.5 percent.
Most of the decline was to due to falling demand for electronic parts to mainland China, South Korea, Hong Kong and Malaysia, where technology factories are shutting down in the face of the recession in their biggest market, the United States, a finance ministry official said.
While the U.S. recession is still the main drag on Asian trade, there are signs the global financial crisis is rippling across Asian economies, forcing consumers and companies that were once expected to be drivers of growth to shrink from spending.
The volume of automobile shipments to Asia fell 32.9 percent in December from a year earlier, a finance ministry official said, almost twice as fast as previous month.
Shipments to China of chemicals used in the construction industry also fell, the official said.
"The sharp fall in exports to Asia shows that worsening economic conditions in the United States and Europe are damaging Asian economies," said Yoshiki Shinke, senior economist at Dai-ichi Life Research Institute.
Exports to United States plunged 36.9 percent as automobile shipments sank. It was the 16th straight month of decline.
"The yen's sharp rise is also very damaging and will delay a recovery in Japan's economy," Shinke said.
Rising risk aversion amid fears about the stability of U.S. and European banks sector woes pushed the safe haven yen to a 13-year high of 87.1 per dollar on Wednesday.
Top Japan currency bureaucrat, Naoyuki Shinohara, said he was monitoring exchange markets but declined to comment on whether Tokyo would intervene to rein in the currency. Finance Minister Shoichi Nakagawa warned against rapid moves.
Collapsing exports and a surging yen are hitting Japanese companies. The mood among Japanese manufacturers' hit a new low and service sector sentiment sank to the worst in seven years, the Reuters Tankan survey showed.
To deal with the downturn, many companies are cutting jobs, raising more concerns over domestic consumption.
Japanese imports tumbled 21.5 percent, more than a 16.5 percent fall economists had forecast. They had predicted a 30.1 percent decline in exports.
Sliding exports left Japan with a trade gap for three months in a row, the longest time it has run a deficit since 1980.
(sekiranya enjin ekonomi yang ini kaput - jangan berangan hanya ada deflasi sahaja. Jangan harap enjin Shanghai Street mampu macam enjin merah kecil). ikut ide bijaksana jepun ini, caveat emptor -whatever: explotiation: a fool of a bear and his honey will soon part
Won't the Guys In Putrajaya Love It
(spend big najib big spender)
1. Singapore unveils $13.7bn stimulus package
By John Burton in Singapore
Published: January 22 2009 10:16 | Last updated: January 22 2009 11:11
Singapore on Thursday unveiled a record S$20.5bn ($13.7bn) stimulus package to provide an economic safety net as the wealthy city-state enters its worst post-war recession, with growth expected to contract by up to 5 per cent this year.
”The resilience package will not get us of recession. But it will help avert an even sharper downturn and more lasting damage to the economy,” said Tharman Shanmugaratnam, the finance minister.
The main aim of the programme is to save jobs and prevent Singapore’s current unemployment rate of 2.2 per cent from doubling, according to economists. A sharp increase in the jobless rate could provoke a political backlash against the People’s Action party government, which celebrates its 50th anniversary in power this year.
The aggressive spending plan is rare for Singapore, which normally has a strict policy in limiting budget deficits.
This year’s budget deficit at S$8.7bn is expected to amount to 6 per cent of gross domestic product and will be financed for the first time by tapping into the government’s reserves, which are estimated at about $300bn.
The corporate tax will be cut by one percentage point to 17 per cent to encourage hiring. Companies also will receive financial support to retain workers. Infrastructure building will be accelerated to provide new jobs and tax rebates and other subsidies will be given to households.
The finance minister warned that the recession could last into 2010 and ”recovery, when it comes, will be weak”.
Chua Hak Bin, research head at Citigroup in Singapore, said the measures would have little impact on reviving the economy. ”Unfortunately, Singapore is the most open economy in Asia. Its fortunes are tied to global growth and trade. So the budget is not going to make that much of a difference.”
The city-state can not depend on domestic consumption to offset a sharp decline in exports, the main economic engine, due to the open nature of the economy and Singapore’s relatively small population of 4.8m people. Consumer spending also is curbed by the government requiring forced savings into a state-run pension funds.
Credit Suisse believes the biggest impact of the economic downturn will be on foreign workers, who will be forced to leave Singapore as their employment permits expire. It estimates that 200,000 foreigners could depart, which ”would have far-reaching implications for the economy” by depressing private consumption and property prices.
Credit Suisse said that the unemployment rate could climb to 5.6 per cent by 2010, the highest in more than 20 years, in spite of the budget measures.
(they can hit the panic button at 170billion sing dollar!)
2. Japan faces two years of negative growth
By Michiyo Nakamoto in Tokyo
Published: January 22 2009 01:38 | Last updated: January 22 2009 09:22
The Bank of Japan warned that the world’s second-largest economy faced two years of negative growth and deflation, adding that it would buy Y3,000bn in commercial paper to ease the strain on businesses as government figures showed exports declined by a record 35 per cent last month.
Japan’s central bank kept its benchmark interest rate on hold at 0.1 per cent but said it would also buy bonds issued by real estate investment trusts and consider taking the “highly unusual step” of buying corporate bonds.
Masaaki Shirakawa, BoJ governor, said “the outlook for the Japanese economy has deteriorated dramatically and there is a high probability that it will continue to do so.”
The central bank now expects the economy to contract by 1.8 per cent this fiscal year and to decline by 2 per cent in fiscal 2009.
In its previous assessment in October, the central bank expected growth of 0.1 per cent this year followed by 0.6 per cent in 2009.
The BoJ’s view that the economy would contract further in 2009, first reported in the Financial Times, is in contrast to the official Japanese government line, which forecasts zero growth for that year.
Mr Shirakawa noted that the yen’s rise was a significant factor behind the deterioration in the Japanese economy.
The yen has strengthened 19 per cent against the US dollar in the past year, shattering the cost competitiveness and profitability of Japanese exporters.
Government figures showed exports in December plunged by a record 35 per cent for the second consecutive month, following a 26.7 per cent drop in November
(and yet tnb have the gall to announce losses on the yen exchange just like mof2 did:
Chinese sentenced to death over tainted milk
A Chinese court on Thursday sentenced two men to death for their role in the production and sale of melamine-tainted milk that killed at least six children and made nearly 300,000 ill.
The former head of the dairy firm at the heart of the scandal, the now bankrupt Sanlu Group, got life in prison and a fine, which may anger some affected parents who had hoped she would face the ultimate punishment...)
don't we love stimulus packages
even presidents and kings and
tribal gangs
hey big spender!
spend a little time with me
a whooping billion! cried abu mussa
The Deficit King
(master of the universe)
Geithner hints at harder line on China
By Jackie Calmes
Friday, January 23, 2009
WASHINGTON: Timothy Geithner, who moved closer to confirmation as Treasury secretary on Thursday, told senators that President Barack Obama believed China was "manipulating" its currency, suggesting a more confrontational stance toward that country than under the Bush administration.
Geithner's comment was made in writing to the Senate Finance Committee hours before it voted 18 to 5 to recommend that the full Senate confirm him. The statement, which is expected to anger the Chinese government, comes at a particularly sensitive time, with economies in the United States and China weakening and tensions already rising around the globe over trade. The United States, moreover, is increasingly dependent on China to finance its ballooning fiscal deficit.
An administration official said that Geithner was only repeating what Obama had said during the campaign, and pointed out that his statement also emphasized that Obama intended to use "all the diplomatic avenues available to him" to address the currency question.
It remained unclear whether Geithner was signaling that Obama would officially declare later this spring that China was engaging in currency manipulation, when the administration is required by a 20-year-old trade law to report to Congress on exchange rate issues. Such a finding would begin a legal process that starts with diplomacy and could end with the imposition of trade barriers like tariffs. The objective would be to persuade China to let the value of its currency, the yuan, float freely — a move that would let its value rise, increasing the cost of Chinese exports.
"President Obama — backed by the conclusions of a broad range of economists — believes that China is manipulating its currency," Geithner wrote. He stopped short of charging that China is manipulating its currency intentionally to gain an unfair trade advantage, as the 1988 law requires for an official citation of currency "manipulation."
Even so, the Obama administration's restatement of that position in writing on its second day was immediately seen as significant. The Bush administration purposely did not use the term "currency manipulator" to avoid antagonizing the Chinese, even when it was criticizing Chinese trade policies.
The more aggressive position will be popular with organized labor in the United States, a major supporter of Obama's presidential campaign, and with many manufacturers who say China is purposely keeping its currency devalued against the dollar and leaving American exports at a competitive disadvantage against lower-priced Chinese goods.
"It's huge," said Simon Johnson, a former chief economist at the International Monetary Fund who is a professor of economics at the Massachusetts Institute of Technology. "I'm very supportive in general and I think China needs to be called to account and the IMF has not done it."
But, he added, "I have to say this is really a bit of an issue for Obama's internationalist sort of theme for his foreign policy because this is going to be at least a spat with China, and if we don't back down it's then a row, and you know how that goes."
Prices of Treasury debt fell modestly after news of Geithner's comments, reflecting worry among investors that China might be less willing to buy United States debt if the new administration pushed the country to further revalue its currency. The yield on the 30-year bond, which moves in the opposite direction from its price, climbed to 3.247 percent from 3.159 percent on Wednesday afternoon.
Even before, yields on long-term government debt had been moving up in the last three weeks, as investors anticipated a significant increase in government borrowing.
The Obama official, who did not want to be identified because of the sensitivity of Geithner's confirmation process, cited the Treasury nominee's earlier oral testimony to the Finance Committee. "As Tim Geithner said, it is important for the United States and the world economy that our major trading partners operate with a flexible exchange rate system," the official said, "in which market forces determine the value of exchange rates. The new administration is committed to using a fully integrated approach to bring this about in the current economic environment."
As a senator, Obama supported legislation as recently as last year that would open the door to trade sanctions against China for currency manipulation.
Geithner's statement was in response to a written question about the new administration's stance that was submitted by Senator Charles Schumer, Democrat of New York, a vocal critic of Chinese currency policies.
On Thursday, Schumer welcomed Geithner's reply. "For the first two days, this is a big step" from the Obama administration, he said in an interview. "And I think it's an indication: They are not going to be anti-free trade; they are not going to be for putting artificial barriers in the way. But when other countries do, they're going to be much tougher on them."
The National Association of Manufacturers, whose members have pushed previous administrations to get tougher with China, was pleased, but also cautious given the potential for a confrontation that could exacerbate global woes.
"You know the world has changed a lot with the financial crisis and China has a lot in U.S. Treasuries," said Frank Vargo, vice president for international economic affairs at the manufacturers' association. "This needs to be done in a cooperative, not a confrontational, way."
Some market strategists said Geithner's statement inflamed a contentious issue unnecessarily given that Chinese exports and economy were slowing significantly.
"Things have changed quite a bit since Hank Paulson made an issue of this," said one, Edward Yardeni, an independent analyst, referring to Henry Paulson Jr., the just-departed Treasury secretary. "The Chinese trade surplus is shrinking dramatically and China's economy is falling into recession. I think it really wasn't necessary. It doesn't accomplish anything."
Paulson initiated a round of strategic talks with the Chinese and, on his watch, the Chinese allowed the yuan to depreciate nearly 20 percent.
Geithner would be as aware of Chinese sensitivity as anyone, and no one has suggested that he made his statement in error. Before taking his post as president of the Federal Reserve Bank of New York, Geithner was a policy director at the International Monetary Fund. Before that, he was the under secretary of the Treasury for international affairs in the Clinton administration, a crisis manager during the Asian financial crisis of the 1990s and a Treasury attaché to Japan. By his own description, Geithner's expertise is in matters of currency exchange rates and monetary policy.
In his written statement to the Senate panel, Geithner further noted Obama's support as a senator for "tough legislation to overhaul the U.S. process for determining currency manipulation and authorizing new enforcement measures so countries like China cannot continue to get a free pass for undermining fair trade principles."
"The question is how and when to broach the subject in order to do more good than harm," he added. "The new economic team will forge an integrated strategy on how best to achieve currency realignment in the current economic environment."
The full Senate is expected to confirm Geithner, 47, as Treasury secretary on Monday. Some Republican senators blocked a vote for this week, given lingering objections about Geithner's failure until recently to pay about $34,000 in payroll taxes on his income at the fund from 2001 to 2004.
He was roundly criticized in his Finance Committee hearing on Wednesday, but its bipartisan vote reflected members' opinion that Geithner's expertise outweighed his personal tax lapses. Those were "completely unacceptable," said Senator Kent Conrad, Democrat of North Dakota. "In normal times that alone would lead me to oppose his nomination. These are not normal times."
All the panel's Democrats and five of the 10 Republicans voted for Geithner.
"I'm convinced he's a person of great integrity even though he's made these mistakes," said Senator Orrin Hatch, Republican of Utah. But another Republican, Senator Michael Enzi of Wyoming, said, "I'm really disappointed that we're even voting on this," given that other nominees had been disqualified for less.
the disease of usuary ameliorate
the madness of plastic credit limits
while electronic banking radiates
an aura of peace and serenity
and the guards still dress sharp
teaser ready and eco-friendly
while the bank managers take you your credit for a fool and sell you
to the lowest bidder of liability of debt issues - it is all in a click
his crazy
Saudara Mika
Terima kasih atas kiriman background reading.
Salam takzim - Ruhanie Ahmad
Persoalannya ialah:
Angka Buta Tuli
(berat ringan timbangan)
Kadar inflasi dijangka menyederhana lagi pada bulan ini berikutan harga bahan api yang rendah, kata Menteri Perdagangan Dalam Negeri dan Hal Ehwal Pengguna Datuk Shahrir Abdul Samad hari ini.
apa gunanya kadar inflasi menyerdahana
kepada yang berkemampuan tetapi sedikit sangat kekayaan - kais
pagi makan pagi
kemarahan dan korupsi merata-rata
senyuman dalam derita juga sedekah
apa maknanya kadar inflasi bila
harga terlalu tinggi dan ramai
wanita belia dan kanak-kanak yang tidak ada kerja untuk mereka?
- macam di Gaza?
kemarahan dan korupsi merata-rata
senyuman dalam derita juga sedekah
apa makna angka kematian
bila dunia terus hidup
dalam gelap gerhana kezaliman
di mana cahaya kemanusiaan
insani dalam dunia yang rakus
hati yang jahil keberkatan kerehdaan tuhan yang esa
kemarahan dan korupsi merata-rata
senyuman dalam derita juga sedekah
secupak sedirham setahil seriyal
secupak mengantang sedirham meriyal
si-fakir dan si-kafir itu senang bersaudara
dan cencaru cencaru cencaru
kais petang makan petang
Terima kasih atas kiriman background reading. - terima kasih kembali...
January 19, 2009
Higher Wages and Debt Relief
What Obama Left Out of His Economic Recovery Plan
By MIKE WHITNEY
Barack Obama and Co. are planning to launch their own version of economic "shock and awe" in the opening weeks of the new administration. Aside from the $825 billion stimulus package, which will be used to create 3 million new jobs and make up for flagging consumer demand; Obama is planning a financial rescue operation for banks that are buried under hundreds of billions of dollars of troubled assets. Spearheaded by Treasury Secretary Timothy Geithner and White House economics chief Lawrence Summers, the new program will create a government-backed "aggregator" bank that will purchase mortgage-backed securities (MBS) and other problem assets for which there is currently no active market. The proposed "bad bank" will do what the TARP program was supposed to do; wipe clean the banks balance sheets so they resume lending to consumers and businesses. Until the credit mechanism is fixed, the economy will continue slip deeper and deeper into recession.
This is not a normal recession where the mismatch between supply and demand will work itself out over time. The banking system is clogged and dysfunctional, the Wall Street funding-model (securitization) has broken down, global markets are in disarray and falling, and unemployment is steadily rising. The system is broken and can't be fixed without intervention. The question is, what parts of the present system are salvageable and which parts should be scrapped altogether. So far, too much attention has been devoted to re-inflating the credit bubble and not enough to off-balance sheets operations, over-leveraged assets, SIVs, opaque hedge funds, unregulated derivatives contracts and a financial system that operates without guard rails or oversight. The Obama team is more focused on treating the symptoms than curing the disease. That suggests that their ties to Wall Street make them unsuitable for the task at hand. The job requires competent people who are free from institutional and class bias which prevent them from acting in the public interest.
While it is true that the banks need emergency triage; the underlying problem is falling demand brought on by stagnant wages. This can't can be solved by making credit more easily available. In fact, credit expansion is what led to the present crisis. There needs to be a rethinking of wealth-distribution so that future crises can be avoided. The only way to maintain a healthy economy, without producing destructive speculative bubbles, is by strengthening the middle class via higher wages. That's the key to sustained consumer demand. The recent attempt to bust the auto makers union indicates that many members of Congress believe that the economy can thrive even though a disproportionate amount of the nation's wealth goes to the upper 5 percent. The current economic crisis illustrates the flaws in this argument.
Presently, the banks are sinking faster than the government's efforts to bail them out. That's why Obama asked Congress for the remaining $350 billion of the TARP funds. He knows that he'll need to be ready to provide emergency funding for capital-starved financial institutions (like Bank of America) as soon as he is sworn in. The market for mortgage-backed securities, credit card debt, car loans and student loans is frozen. The Fed has started to purchase large amounts of these toxic assets, but to no effect. Bernanke's purchase of agency debt--Freddie Mac and Fannie Mae--has pushed the 30-year fixed mortgage below 5 percent for the first time, but housing prices continue to tumble and sales are at record lows. The Fed's monetarist lifeline has done nothing to slow the pace of defaults, foreclosures or bankruptcies. Money supply alone cannot reverse the effects of a collapsing credit bubble.
Economists are finally making realistic projections of the costs of the meltdown. According to the Wall Street Journal:
"Estimates from Goldman Sachs: $1.1 trillion from residential mortgages, $390 billion from corporate loans and bonds, $234 billion from commercial real estate, $226 billion from credit cards, and $133 billion from auto loans."
Roughly $2 trillion in losses for financial institutions. Originally, experts thought the losses would be no more than $200 billion, a small sum considering that 65 percent of mortgages were securitized between 2003 to 2007 representing roughly $4 trillion in additional mortgage debt. Clearly, with housing prices plummeting, foreclosures skyrocketing and millions of mortgages under pressure from negative equity; losses were bound to be significantly larger than originally predicted. The banks have no way of making up the $2 trillion of lost capital, which is why economist Nouriel Roubini says, "the banking system is basically insolvent."
Up to this point, Secretary of the Treasury Henry Paulson has tried to keep critical banks functioning through capital injections. In theory, this allows the bank to lend even though it may be holding billions in toxic assets that are downgraded with every reporting period. As it happens, the injections have not increased bank lending at all. According to a recent report, the banks increased their reserves by over $600 billion in a matter of months. In other words, the banks are taking money from the Fed's lending facilities and hoarding it for the tough times ahead. Naturally, this has angered Congress which feels that it was duped into giving away $350 billion with no guarantees about how it was to be used.
Summers and Geithner have decided to abandon the capital injection program and buy the bad assets directly. The costs to the taxpayer and future generations in terms of larger deficits, higher interest rates, less capital for private investment, and lower standard of living will be astronomical. Even so, the plan is expected to zoom through congress without any serious opposition just like the TARP.
Between the massive stimulus package and the so-called "bad bank" program; the economy could show signs of life by the 3rd Quarter, (If there is not a run on the dollar!) but who's really served by these deficit-producing fiscal policies; working people or bankers?
Will these solutions address the growing wealth gap, which is greater than anytime since the Gilded Age? Will they "level the playing field" or create opportunities for upward mobility? Or are they just a quick-fix to get the country through a rough patch without social upheaval?
The Obama economic recovery plan is a misreading of the real problem, which is not the availability of credit, but debt. Bernanke, Summers and Geithner are approaching the issue from the wrong end; they want to stimulate the economy through credit expansion and more red ink. This is just more of Greenspan's bubblenomics; the endless boom and bust cycle triggered by low interest crack sold to credulous speculators. The only ones who benefit are the Wall Street insiders who know how the cards are marked and then vamoose before the bubble pops. Easy money won't reverse the deflationary slide from a deep recession. It's time to rebuild on a solid foundation of rising wages, a stronger workforce, and a revitalized middle class. There's only two ways to grow the economy; higher wages or credit expansion. The latter option has already been tried and it ended in disaster.
Still, don't expect the Fed or the Treasury to be dissuaded by the facts. The Fed is presently purchasing mortgage-backed junk from Fannie and Freddie to push down interest rates so it can seduce buyers into going deeper into debt. Fortunately, most people are wise enough to see that it is not in their best interest to buy a home during the biggest real estate crash in history. In fact, most people already have more debt than they can handle, so they're cutting back sharply on spending. Falling stock markets, battered 401Ks, and loss of job security have caused a fundamental change in consumer attitudes. Frugality is making a comeback while consumer confidence is at its nadir. It's hunker-down time in USA.
The Fed's low interest rates and other credit-enhancing inducements have been unable to stimulate spending. According to the Wall Street Journal:
"U.S. household debt, which has been growing steadily since the Federal Reserve began tracking it in 1952, declined for the first time in the third quarter of 2008. In the same quarter, U.S. consumer spending growth declined for the first time in 17 years.
That has resulted in a rise in the personal saving rate, which the government calculates as the difference between earnings and expenditures. In recent years, as Americans spent more than they earned, the personal saving rate dipped below zero. Economists now expect the rate to rebound to 3% to 5%, or even higher, in 2009, among the sharpest reversals since World War II. Goldman Sachs last week predicted the 2009 saving rate could be as high as 6% to 10%.
As savings increase, economists say, spending is likely to contract further. They expect gross domestic product to decline at an annualized rate of at least 5% in the fourth quarter, the biggest drop in a quarter-century."
(Hard-Hit Families Finally Start Saving, Aggravating Nation's Economic Woe, Kelly Evans, WSJ)
Summers and Geithner should pay attention to what's going on in the country and change their approach. The US consumer will not lead the way out of this economic downturn. It's physically impossible. The country is undergoing a generational shift from profligate consumerism to thriftiness. Stimulus alone won't get people spending. Salaries will have to go up to make up for losses in retirement funds and housing prices; and the face-value of mortgages and credit card debt will have to be written-down. Otherwise, spending will continue to falter and the economy will tank. No economic recovery plan has a chance of succeeding if it doesn't address these two key issues; higher wages and debt relief.
Naturally, the Federal Reserve does not want to deal with the underlying causes of the crisis. After all, they're in the credit-peddling business. The Fed's job is to generate business for the financial community, which means creating a favorable environment for credit expansion. In recent weeks, the Fed has provided billions of dollars to GMAC (General Motors finance arm) so that prospective buyers of GM vehicles can secure 0 percent financing even though they have bad credit scores. This is how the Fed stealthily perpetuates subprime lending even though it leads inevitably to disaster. The Fed is working a similar scam through the FHA where according to Business Week:
"The same people whose reckless practices triggered the global financial crisis are onto a similar scheme that could cost taxpayers tons more...
"As if they haven't done enough damage. Thousands of subprime mortgage lenders and brokers—many of them the very sorts of firms that helped create the current financial crisis—are going strong. Their new strategy: taking advantage of a long-standing federal program designed to encourage homeownership by insuring mortgages for buyers of modest means.
You read that correctly. Some of the same people who propelled us toward the housing market calamity are now seeking to profit by exploiting billions in federally insured mortgages. Washington, meanwhile, has vastly expanded the availability of such taxpayer-backed loans as part of the emergency campaign to rescue the country's swooning economy.(FHA-Backed Loans: The New Subprime, Chad Terhune and Robert Berner, Business Week)
Unbelievable; one Fed sting after another. And when they blow up, as they often do, the taxpayer foots the bill. This shows that the Fed has only one arrow in its quiver; easy money. Bernanke's panacea for joblessness, falling demand, plummeting asset prices and deflation is credit expansion--one size fits all.
In a recent Financial Times op-ed, Lawrence Summers showed that he's resolved to tackle the central issues head on. This comes as something of a surprise since Summers was one of the main proponents of deregulation. Here's what he said:
"We need to reform tax incentives that encourage financial risk taking, regulate leverage and prevent government policies that give rise to a toxic combination of privatized gains and socialized losses. This offers the prospect of a prosperity that is more firmly grounded and more inclusive. More fundamentally, short and longer-term imperatives come together with respect to policies that seek to ensure that any future prosperity is inclusive. The policies that are most effective in helping to support demand are those that help households struggling either because of low incomes or because they have recently lost part of their income. Recent events also remind us that individuals can become impoverished or lose health insurance through no fault of their own. This reinforces the need for people to have basic health and retirement security protection regardless of what happens to their employers." ("The pendulum swings towards regulation", Lawrence Summers Financial Times)
Summer's article is an indictment of the finance-driven system that he helped create. He sounds more like Robert Reich than Milton Friedman, but has he really changed that dramatically or will he continue to serve the interests of Wall Street once he's in office?
The test for Summers will be how he goes about fixing the banking system. That will prove whether he's sincere or not. As expensive as it may be, recapitalizing the banks and purchasing their bad assets is the easy part. The hard part is to establish a facility, like the Resolution Trust corporation (RTC), and use it as a morgue for winding down insolvent banks. It requires someone who can ignore political and institutional pressure and be impartial in deciding whether a financial institution can be saved or not. The bad banks have to be put out of their misery. It's is a tough job, but it has to be done. Otherwise, zombie banks will suck up vast amounts of public money even though they're unable to effectively distribute credit to consumers and businesses. That's what dragged Japan's economy into the "lost decade".
Anil Kashyap, of the University of Chicago Booth School of Business summed it up like this:
"Policy makers should stay focused on recapitalizing the banking system.... Financial firms won't start lending again until their balance sheets are in better shape. But BAD BANKS SHOULD BE SHUT DOWN or nationalized more aggressively. "It is a complete waste of taxpayer money to bail out somebody who is insolvent".
The good news is that there is a solution. The bad news is that it will be an excruciating undertaking to turn out the lights at hundreds of banks where the liabilities greatly exceed the assets. But that's what it will take to get the banking system back on its feet.
The Obama stimulus package is a good place to start, but it skirts the core issues of wages and debt relief. Both of these will have to be factored into any plan that, as Larry Summers says, "seeks to ensure that any future prosperity is inclusive."
(Understand that United States of Amerrica and her allies are a big factor in the global economy and interantional finance and should any nation desire to come out the mess and from the pit of the Recession due to Sub-Prime Fiasco a stronger nation then that nation and her leaders need to effectively answer the challege spelt out above)
Post a Comment