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Lessons From the Selloff

BHEL

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Lessons From the Selloff
The selloff will help if it breaks down economic policy-making myths.Article
more in Opinion »Email Printer Friendly Share:
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Well, it`s finally sinking in. Yesterday`s global stock selloff is best understood as the recognition by investors that the financial panic is world-wide, and moreover that it almost certainly means a global recession. As bad as the carnage is and will be, this isn`t the end of days. It might even be clarifying if it causes economic policy makers to abandon some of the illusions that have guided them for the past 14 months.

AP
NYSE floor traders, Oct. 6, 2008.
One such myth is that the Treasury`s bank asset-purchase plan that passed Congress last week is somehow a financial silver bullet. It is merely a single tool, and in any case it can`t do much about the panic now afflicting banks across Europe. It also can`t rescue the property markets in Dubai, or the flight from emerging market stocks that also marked yesterday`s news. Europe in particular is going to have to fill the capital hole in its banks with its own rescue effort.
The rout might well have been worse if Congress hadn`t passed the plan, which signaled that the U.S. political system wouldn`t let the banking system crash. A problem now is that Treasury Secretary Hank Paulson still hasn`t shown he knows how to use his new tool, and his appointment of a 35-year-old former Goldman Sachs employee as the auction czar doesn`t call to mind Paul Volcker arriving at the Fed in 1979. With no disrespect to Neel Kashkari, who is Mr. Paulson`s choice, a financial panic is a bad time to be introduced to global markets. At a minimum, Treasury should have done better than leak his name to the newspapers. This is the kind of roll out that needs to be better than seat-of-the-pants -- and continues the problem of weak execution at Treasury.
Another myth is that exports to the rest of the world would somehow rescue the U.S. economy. This was the idea behind the devaluationists -- in Washington and at Harvard -- who pushed a weak dollar to promote exports to counter the U.S. housing slump. So much for that one. Yesterday`s selloff was worse in Europe and Latin America than it was on the U.S. Trying to steal "demand" from the rest of the world was short-sighted in the way that beggar-thy-neighbor tactics always are. And with Europe and Japan already in recession, and China slowing down, the export contribution to U.S. GDP is likely to fall sharply.
A third mistaken idea is that Federal Reserve rate-cutting would save the day. This is the poor sister of the weak-dollar lobby, popular on Wall Street and at Chairman Ben Bernanke`s Fed. Despite a year of falling rates, the financial panic is worse than ever and now the real economy is getting hit. The Fed`s rate cutting led to dollar flight that produced a commodity spike and oil as high as $147 a barrel. That only made a recession more likely as it sapped consumer discretionary income around the U.S. and worried families and business alike.
The good news is that some in the Fed now seem to realize this, and the Open Market Committee has stopped its pell-mell flight to a 0% fed funds rate. Instead, the Fed is using its discount window to provide liquidity to banks seeking safety, including yesterday`s addition of $600 billion to its Term Auction Facility, growing to $900 billion by November. That`s a striking amount of money, but it is the right way for a central bank to manage a panic.
Another useful step -- contained in last week`s rescue -- allows the Fed to start paying interest on reserve balances held at the central bank. This removes an implicit tax on banks and serves to put a floor under the fed-funds rate, because no one will lend overnight money at less than they can get by holding it on deposit at the Fed. This is another tool to begin the major and essential task of rebuilding the banking system.
Meanwhile, in other good news, the dollar has strengthened and commodity prices have fallen markedly from their record peaks in July. Much of this is a reaction to a potential recession, especially oil`s fall below $90, because the Fed`s monetary policy is still far from tight. But the dollar`s relative strength means Chairman Bernanke can afford to worry less about a run on the greenback and thus has more room to maneuver. As commodity prices fall back to Earth, consumers will pay less for gas and groceries and that should also help the economy in the months ahead.
The fourth illusion to burst is that temporary Keynesian "fiscal stimulus" would make all the difference. The Bush Administration and Congressional Democrats teamed up for that mistake in January, promising that $165 billion in tax rebates and spending would spare us from recession. Just a month ago, President Bush was still promoting these rebate checks as a blessing.
However, rebates merely took money from one part of the economy and redistributed it to others who either saved or spent it. Neither one changed incentives to invest or take risks. The result was a short-term fillip to statistical GDP but no surge in real growth. Mr. Bush should have learned this lesson from the failure of the rebates that were part of his tax cut of 2001. He listened to his political advisers instead of to the economists who gave him better advice in 2003. Because they were immediate, marginal and permanent, the 2003 tax cuts did help ignite a recovery. The world economy could use a similar U.S. tax-cut boost now to reduce the depth of recession and speed on recovery.
This is where our two Presidential candidates could help, if they have a mind to. The response by both Barack Obama and John McCain to the financial panic has done neither man credit. Both have been tactical and political in the most self-interested sense. Mr. Obama may get away with it given his lead in the polls, but Mr. McCain could use this moment to show some leadership.
Senator McCain could use tonight`s debate to map out an economic argument for the final month of the campaign. He would explain to voters how we got here, and that he has a plan to calm the panic, rebuild the banking system and revive the economy. He could start by saying his economic plan was designed before this crisis, but given the panic he has scrapped it and is proposing a major and immediate across-the-board tax cut.
It ill serves voters if the two men running for the Presidency of the United States offer little more than campaign boilerplate amid a crisis of this magnitude. The whole world is focused on these sobering events. The time is now for the country`s next President to match the moment.
Please add your comments to the Opinion Journal forum
...

Lessons From the Selloff

Larsen

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Lessons From the Selloff
The selloff will help if it breaks down economic policy-making myths.Article
more in Opinion »Email Printer Friendly Share:
Yahoo Buzz MySpace Digg Text Size
Well, it`s finally sinking in. Yesterday`s global stock selloff is best understood as the recognition by investors that the financial panic is world-wide, and moreover that it almost certainly means a global recession. As bad as the carnage is and will be, this isn`t the end of days. It might even be clarifying if it causes economic policy makers to abandon some of the illusions that have guided them for the past 14 months.

AP
NYSE floor traders, Oct. 6, 2008.
One such myth is that the Treasury`s bank asset-purchase plan that passed Congress last week is somehow a financial silver bullet. It is merely a single tool, and in any case it can`t do much about the panic now afflicting banks across Europe. It also can`t rescue the property markets in Dubai, or the flight from emerging market stocks that also marked yesterday`s news. Europe in particular is going to have to fill the capital hole in its banks with its own rescue effort.
The rout might well have been worse if Congress hadn`t passed the plan, which signaled that the U.S. political system wouldn`t let the banking system crash. A problem now is that Treasury Secretary Hank Paulson still hasn`t shown he knows how to use his new tool, and his appointment of a 35-year-old former Goldman Sachs employee as the auction czar doesn`t call to mind Paul Volcker arriving at the Fed in 1979. With no disrespect to Neel Kashkari, who is Mr. Paulson`s choice, a financial panic is a bad time to be introduced to global markets. At a minimum, Treasury should have done better than leak his name to the newspapers. This is the kind of roll out that needs to be better than seat-of-the-pants -- and continues the problem of weak execution at Treasury.
Another myth is that exports to the rest of the world would somehow rescue the U.S. economy. This was the idea behind the devaluationists -- in Washington and at Harvard -- who pushed a weak dollar to promote exports to counter the U.S. housing slump. So much for that one. Yesterday`s selloff was worse in Europe and Latin America than it was on the U.S. Trying to steal "demand" from the rest of the world was short-sighted in the way that beggar-thy-neighbor tactics always are. And with Europe and Japan already in recession, and China slowing down, the export contribution to U.S. GDP is likely to fall sharply.
A third mistaken idea is that Federal Reserve rate-cutting would save the day. This is the poor sister of the weak-dollar lobby, popular on Wall Street and at Chairman Ben Bernanke`s Fed. Despite a year of falling rates, the financial panic is worse than ever and now the real economy is getting hit. The Fed`s rate cutting led to dollar flight that produced a commodity spike and oil as high as $147 a barrel. That only made a recession more likely as it sapped consumer discretionary income around the U.S. and worried families and business alike.
The good news is that some in the Fed now seem to realize this, and the Open Market Committee has stopped its pell-mell flight to a 0% fed funds rate. Instead, the Fed is using its discount window to provide liquidity to banks seeking safety, including yesterday`s addition of $600 billion to its Term Auction Facility, growing to $900 billion by November. That`s a striking amount of money, but it is the right way for a central bank to manage a panic.
Another useful step -- contained in last week`s rescue -- allows the Fed to start paying interest on reserve balances held at the central bank. This removes an implicit tax on banks and serves to put a floor under the fed-funds rate, because no one will lend overnight money at less than they can get by holding it on deposit at the Fed. This is another tool to begin the major and essential task of rebuilding the banking system.
Meanwhile, in other good news, the dollar has strengthened and commodity prices have fallen markedly from their record peaks in July. Much of this is a reaction to a potential recession, especially oil`s fall below $90, because the Fed`s monetary policy is still far from tight. But the dollar`s relative strength means Chairman Bernanke can afford to worry less about a run on the greenback and thus has more room to maneuver. As commodity prices fall back to Earth, consumers will pay less for gas and groceries and that should also help the economy in the months ahead.
The fourth illusion to burst is that temporary Keynesian "fiscal stimulus" would make all the difference. The Bush Administration and Congressional Democrats teamed up for that mistake in January, promising that $165 billion in tax rebates and spending would spare us from recession. Just a month ago, President Bush was still promoting these rebate checks as a blessing.
However, rebates merely took money from one part of the economy and redistributed it to others who either saved or spent it. Neither one changed incentives to invest or take risks. The result was a short-term fillip to statistical GDP but no surge in real growth. Mr. Bush should have learned this lesson from the failure of the rebates that were part of his tax cut of 2001. He listened to his political advisers instead of to the economists who gave him better advice in 2003. Because they were immediate, marginal and permanent, the 2003 tax cuts did help ignite a recovery. The world economy could use a similar U.S. tax-cut boost now to reduce the depth of recession and speed on recovery.
This is where our two Presidential candidates could help, if they have a mind to. The response by both Barack Obama and John McCain to the financial panic has done neither man credit. Both have been tactical and political in the most self-interested sense. Mr. Obama may get away with it given his lead in the polls, but Mr. McCain could use this moment to show some leadership.
Senator McCain could use tonight`s debate to map out an economic argument for the final month of the campaign. He would explain to voters how we got here, and that he has a plan to calm the panic, rebuild the banking system and revive the economy. He could start by saying his economic plan was designed before this crisis, but given the panic he has scrapped it and is proposing a major and immediate across-the-board tax cut.
It ill serves voters if the two men running for the Presidency of the United States offer little more than campaign boilerplate amid a crisis of this magnitude. The whole world is focused on these sobering events. The time is now for the country`s next President to match the moment.
Please add your comments to the Opinion Journal forum
...

Lessons From the Selloff

Infosys

Posted by : Bhavishyavani
Price when posted : BSE: Rs 1304.10 ( -1.04 % ), NSE: Rs. 1301.80 ( -1.28 % )

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Lessons From the Selloff
The selloff will help if it breaks down economic policy-making myths.Article
more in Opinion »Email Printer Friendly Share:
Yahoo Buzz MySpace Digg Text Size
Well, it`s finally sinking in. Yesterday`s global stock selloff is best understood as the recognition by investors that the financial panic is world-wide, and moreover that it almost certainly means a global recession. As bad as the carnage is and will be, this isn`t the end of days. It might even be clarifying if it causes economic policy makers to abandon some of the illusions that have guided them for the past 14 months.

AP
NYSE floor traders, Oct. 6, 2008.
One such myth is that the Treasury`s bank asset-purchase plan that passed Congress last week is somehow a financial silver bullet. It is merely a single tool, and in any case it can`t do much about the panic now afflicting banks across Europe. It also can`t rescue the property markets in Dubai, or the flight from emerging market stocks that also marked yesterday`s news. Europe in particular is going to have to fill the capital hole in its banks with its own rescue effort.
The rout might well have been worse if Congress hadn`t passed the plan, which signaled that the U.S. political system wouldn`t let the banking system crash. A problem now is that Treasury Secretary Hank Paulson still hasn`t shown he knows how to use his new tool, and his appointment of a 35-year-old former Goldman Sachs employee as the auction czar doesn`t call to mind Paul Volcker arriving at the Fed in 1979. With no disrespect to Neel Kashkari, who is Mr. Paulson`s choice, a financial panic is a bad time to be introduced to global markets. At a minimum, Treasury should have done better than leak his name to the newspapers. This is the kind of roll out that needs to be better than seat-of-the-pants -- and continues the problem of weak execution at Treasury.
Another myth is that exports to the rest of the world would somehow rescue the U.S. economy. This was the idea behind the devaluationists -- in Washington and at Harvard -- who pushed a weak dollar to promote exports to counter the U.S. housing slump. So much for that one. Yesterday`s selloff was worse in Europe and Latin America than it was on the U.S. Trying to steal "demand" from the rest of the world was short-sighted in the way that beggar-thy-neighbor tactics always are. And with Europe and Japan already in recession, and China slowing down, the export contribution to U.S. GDP is likely to fall sharply.
A third mistaken idea is that Federal Reserve rate-cutting would save the day. This is the poor sister of the weak-dollar lobby, popular on Wall Street and at Chairman Ben Bernanke`s Fed. Despite a year of falling rates, the financial panic is worse than ever and now the real economy is getting hit. The Fed`s rate cutting led to dollar flight that produced a commodity spike and oil as high as $147 a barrel. That only made a recession more likely as it sapped consumer discretionary income around the U.S. and worried families and business alike.
The good news is that some in the Fed now seem to realize this, and the Open Market Committee has stopped its pell-mell flight to a 0% fed funds rate. Instead, the Fed is using its discount window to provide liquidity to banks seeking safety, including yesterday`s addition of $600 billion to its Term Auction Facility, growing to $900 billion by November. That`s a striking amount of money, but it is the right way for a central bank to manage a panic.
Another useful step -- contained in last week`s rescue -- allows the Fed to start paying interest on reserve balances held at the central bank. This removes an implicit tax on banks and serves to put a floor under the fed-funds rate, because no one will lend overnight money at less than they can get by holding it on deposit at the Fed. This is another tool to begin the major and essential task of rebuilding the banking system.
Meanwhile, in other good news, the dollar has strengthened and commodity prices have fallen markedly from their record peaks in July. Much of this is a reaction to a potential recession, especially oil`s fall below $90, because the Fed`s monetary policy is still far from tight. But the dollar`s relative strength means Chairman Bernanke can afford to worry less about a run on the greenback and thus has more room to maneuver. As commodity prices fall back to Earth, consumers will pay less for gas and groceries and that should also help the economy in the months ahead.
The fourth illusion to burst is that temporary Keynesian "fiscal stimulus" would make all the difference. The Bush Administration and Congressional Democrats teamed up for that mistake in January, promising that $165 billion in tax rebates and spending would spare us from recession. Just a month ago, President Bush was still promoting these rebate checks as a blessing.
However, rebates merely took money from one part of the economy and redistributed it to others who either saved or spent it. Neither one changed incentives to invest or take risks. The result was a short-term fillip to statistical GDP but no surge in real growth. Mr. Bush should have learned this lesson from the failure of the rebates that were part of his tax cut of 2001. He listened to his political advisers instead of to the economists who gave him better advice in 2003. Because they were immediate, marginal and permanent, the 2003 tax cuts did help ignite a recovery. The world economy could use a similar U.S. tax-cut boost now to reduce the depth of recession and speed on recovery.
This is where our two Presidential candidates could help, if they have a mind to. The response by both Barack Obama and John McCain to the financial panic has done neither man credit. Both have been tactical and political in the most self-interested sense. Mr. Obama may get away with it given his lead in the polls, but Mr. McCain could use this moment to show some leadership.
Senator McCain could use tonight`s debate to map out an economic argument for the final month of the campaign. He would explain to voters how we got here, and that he has a plan to calm the panic, rebuild the banking system and revive the economy. He could start by saying his economic plan was designed before this crisis, but given the panic he has scrapped it and is proposing a major and immediate across-the-board tax cut.
It ill serves voters if the two men running for the Presidency of the United States offer little more than campaign boilerplate amid a crisis of this magnitude. The whole world is focused on these sobering events. The time is now for the country`s next President to match the moment.
Please add your comments to the Opinion Journal forum
...

USA ka yeh hall sirf Real Estate ki vajahse

Unitech

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Tuesday, Oct. 07, 2008
Wall Street`s Crisis of Confidence: When All News is Bad News
By John Flowers / New York

For about 30 minutes on Tuesday, the Dow Jones Industrial Index gained back close to half of yesterday`s loss, which included the biggest point drops in more than 20 years for most of the world`s major stock indices. But investors could not look past the struggling U.S. financial sector, nor the overleveraged European banks. Very quickly, they sent the Dow on a day-long 500 point plunge — with it and the S&P 500 hitting five-year lows.

The market had initially been buoyed by decisions that occurred before it opened — both the Fed`s decision to buy the short-term debt, called commercial paper, that companies issue to fund expenses like payroll and inventory, and the Reserve Bank of Australia`s surprising decision to cut its official interest rate by a full percentage point.

But even the unprecedented Fed decision was quickly discounted by the market. Chris Low, chief economist of FTN Financial, said buying commercial paper was a "very good move," but explained that "investors almost have to see things work now before they`ll believe them." In particular, Low pointed out, investors may want to be sure that this year`s bailout shows results — unlike last year`s Master Liquidity Enhancement Conduit, which was an attempt to solve the subprime crisis by three private banks (Citigroup, JP Morgan Chase and Bank of America) using private money — essentially what Treasury Secretary Hank Paulson hopes to do now with public funds. Within months, however, the Conduit was abandoned when no investors were willing to buy the toxic mortgages. And so the government bailout was devised. "It`s gotten to the point that Bernanke and Paulson have lost enough credibility," Low said. "They have to show results now." He added: "Even if all of these plans work, there`s still going to be a pretty dramatic decline in growth. A recession is inevitable."

By the end of Tuesday`s trading day, the Dow had plummeted 5% to 9,447.11. The other major indices declined as well with the NASDAQ down 5.8%, the S&P 500 down 5.74%, while investors retreated to traditional safe harbors such as gold, which was up $17.10 to $833.80, and oil, up $3.39 to $91.20 respectively.

Even hints from Federal Reserve Chairman Ben Bernanke, testifying on Capital Hill today, of a possible rate cut did not help. His prognosis that slow growth in the American economy, not inflation, is now the Reserve`s primary concern only added bad news to a day that included fallout from yesterday`s after-hours Bank of America announcement that it will need to cut its dividend and raise $10 billion in capital. The bank, which has acquired Countrywide Financial and plans to do the same with Merrill Lynch, dropped almost 25% on the announcement. Morgan Stanley shares also plummeted 25% on rumors, which the company denied, that Mitsubishi-UFJ may not take an expected 20% stake in the embattled firm. J.P. Morgan was down about 9.5% while Citigroup fell more than 12%.

All this took place a day after many of the world`s major stock indices had experienced their largest percentage point drop since the October 1987 crash. American investors, it seems, are still worried about what may be on financial companies` balance sheets. The ad-hoc nature of the European response to its banking crisis has also raised concerns. Investors were clearly worried that even if a global financial meltdown is averted, a broad recession may be inevitable. And so, as governments attend to one crisis, the markets discover another to fret about — and the cycle of panic continues.

...

Todays CNN ? Times news

Infosys

Posted by : Bhavishyavani
Price when posted : BSE: Rs 1304.10 ( -1.04 % ), NSE: Rs. 1301.80 ( -1.28 % )

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Tuesday, Oct. 07, 2008
Wall Street`s Crisis of Confidence: When All News is Bad News
By John Flowers / New York

For about 30 minutes on Tuesday, the Dow Jones Industrial Index gained back close to half of yesterday`s loss, which included the biggest point drops in more than 20 years for most of the world`s major stock indices. But investors could not look past the struggling U.S. financial sector, nor the overleveraged European banks. Very quickly, they sent the Dow on a day-long 500 point plunge — with it and the S&P 500 hitting five-year lows.

The market had initially been buoyed by decisions that occurred before it opened — both the Fed`s decision to buy the short-term debt, called commercial paper, that companies issue to fund expenses like payroll and inventory, and the Reserve Bank of Australia`s surprising decision to cut its official interest rate by a full percentage point.

But even the unprecedented Fed decision was quickly discounted by the market. Chris Low, chief economist of FTN Financial, said buying commercial paper was a "very good move," but explained that "investors almost have to see things work now before they`ll believe them." In particular, Low pointed out, investors may want to be sure that this year`s bailout shows results — unlike last year`s Master Liquidity Enhancement Conduit, which was an attempt to solve the subprime crisis by three private banks (Citigroup, JP Morgan Chase and Bank of America) using private money — essentially what Treasury Secretary Hank Paulson hopes to do now with public funds. Within months, however, the Conduit was abandoned when no investors were willing to buy the toxic mortgages. And so the government bailout was devised. "It`s gotten to the point that Bernanke and Paulson have lost enough credibility," Low said. "They have to show results now." He added: "Even if all of these plans work, there`s still going to be a pretty dramatic decline in growth. A recession is inevitable."

By the end of Tuesday`s trading day, the Dow had plummeted 5% to 9,447.11. The other major indices declined as well with the NASDAQ down 5.8%, the S&P 500 down 5.74%, while investors retreated to traditional safe harbors such as gold, which was up $17.10 to $833.80, and oil, up $3.39 to $91.20 respectively.

Even hints from Federal Reserve Chairman Ben Bernanke, testifying on Capital Hill today, of a possible rate cut did not help. His prognosis that slow growth in the American economy, not inflation, is now the Reserve`s primary concern only added bad news to a day that included fallout from yesterday`s after-hours Bank of America announcement that it will need to cut its dividend and raise $10 billion in capital. The bank, which has acquired Countrywide Financial and plans to do the same with Merrill Lynch, dropped almost 25% on the announcement. Morgan Stanley shares also plummeted 25% on rumors, which the company denied, that Mitsubishi-UFJ may not take an expected 20% stake in the embattled firm. J.P. Morgan was down about 9.5% while Citigroup fell more than 12%.

All this took place a day after many of the world`s major stock indices had experienced their largest percentage point drop since the October 1987 crash. American investors, it seems, are still worried about what may be on financial companies` balance sheets. The ad-hoc nature of the European response to its banking crisis has also raised concerns. Investors were clearly worried that even if a global financial meltdown is averted, a broad recession may be inevitable. And so, as governments attend to one crisis, the markets discover another to fret about — and the cycle of panic continues.

...

Technical pull back is in cards

Infosys

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Price when posted : BSE: Rs 1304.10 ( -1.04 % ), NSE: Rs. 1301.80 ( -1.28 % )

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Abhi tu sirf Langoti hi pull out honi baki hai hindi mein kahavat (Saying) hai Bhagte bhoot ko longot bhali , jab Infy ka Baap (USA)ICU mein hai aur langoot choot gai hai tu ab murthy kiske asre pe nachega? tu bhaio jaldise infy becho varna langot bhi nahi bachegi yeh mein gurantee ke sath kahata hu...

In reply to:

Technical pull back is in cards

Posted by : vkk43

I too feel that INFY below 1300/- can be looked into for ST trading as results are in all probability likely to b better.

Technical pull back is in cards

Infosys

Posted by : Bhavishyavani
Price when posted : BSE: Rs 1304.10 ( -1.04 % ), NSE: Rs. 1301.80 ( -1.28 % )

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Abhi tu sirf Langoti hi pull out honi baki hai hindi mein kahavat (Saying) hai Bhagte bhoot ko longot bhali , jab Infy ka Baap (USA)ICU mein hai aur langoot choot gai hai tu ab murthy kiske asre pe nachega? tu bhaio jaldise infy becho varna langot bhi nahi bachegi yeh mein gurantee ke sath kahata hu...

In reply to:

Technical pull back is in cards

Posted by : vkk43

I too feel that INFY below 1300/- can be looked into for ST trading as results are in all probability likely to b better.

Todays CNN / Times News

Tata Steel

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Price when posted : BSE: Rs 357.35 ( 2.03 % ), NSE: Rs. 357.75 ( 2.21 % )

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Tuesday, Oct. 07, 2008
Wall Street`s Crisis of Confidence: When All News is Bad News
By John Flowers / New York

For about 30 minutes on Tuesday, the Dow Jones Industrial Index gained back close to half of yesterday`s loss, which included the biggest point drops in more than 20 years for most of the world`s major stock indices. But investors could not look past the struggling U.S. financial sector, nor the overleveraged European banks. Very quickly, they sent the Dow on a day-long 500 point plunge — with it and the S&P 500 hitting five-year lows.

The market had initially been buoyed by decisions that occurred before it opened — both the Fed`s decision to buy the short-term debt, called commercial paper, that companies issue to fund expenses like payroll and inventory, and the Reserve Bank of Australia`s surprising decision to cut its official interest rate by a full percentage point.

But even the unprecedented Fed decision was quickly discounted by the market. Chris Low, chief economist of FTN Financial, said buying commercial paper was a "very good move," but explained that "investors almost have to see things work now before they`ll believe them." In particular, Low pointed out, investors may want to be sure that this year`s bailout shows results — unlike last year`s Master Liquidity Enhancement Conduit, which was an attempt to solve the subprime crisis by three private banks (Citigroup, JP Morgan Chase and Bank of America) using private money — essentially what Treasury Secretary Hank Paulson hopes to do now with public funds. Within months, however, the Conduit was abandoned when no investors were willing to buy the toxic mortgages. And so the government bailout was devised. "It`s gotten to the point that Bernanke and Paulson have lost enough credibility," Low said. "They have to show results now." He added: "Even if all of these plans work, there`s still going to be a pretty dramatic decline in growth. A recession is inevitable."

By the end of Tuesday`s trading day, the Dow had plummeted 5% to 9,447.11. The other major indices declined as well with the NASDAQ down 5.8%, the S&P 500 down 5.74%, while investors retreated to traditional safe harbors such as gold, which was up $17.10 to $833.80, and oil, up $3.39 to $91.20 respectively.

Even hints from Federal Reserve Chairman Ben Bernanke, testifying on Capital Hill today, of a possible rate cut did not help. His prognosis that slow growth in the American economy, not inflation, is now the Reserve`s primary concern only added bad news to a day that included fallout from yesterday`s after-hours Bank of America announcement that it will need to cut its dividend and raise $10 billion in capital. The bank, which has acquired Countrywide Financial and plans to do the same with Merrill Lynch, dropped almost 25% on the announcement. Morgan Stanley shares also plummeted 25% on rumors, which the company denied, that Mitsubishi-UFJ may not take an expected 20% stake in the embattled firm. J.P. Morgan was down about 9.5% while Citigroup fell more than 12%.

All this took place a day after many of the world`s major stock indices had experienced their largest percentage point drop since the October 1987 crash. American investors, it seems, are still worried about what may be on financial companies` balance sheets. The ad-hoc nature of the European response to its banking crisis has also raised concerns. Investors were clearly worried that even if a global financial meltdown is averted, a broad recession may be inevitable. And so, as governments attend to one crisis, the markets discover another to fret about — and the cycle of panic continues.

...

The Start of The End

Reliance

Posted by : Bhavishyavani
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The economists continue to tell us that we have learned the lessons of the Great Depression, and that safeguards built into our financial system since then will prevent America from sliding into a similar economic meltdown today.

Florence Litzerman of Portland isn`t so sure. By no means does she consider herself an expert on the economy, but she knows what she sees.

Litzerman, 91, lived through the Great Depression. She can`t help but make a comparison between the 1930s and what`s going on today, given the housing slump, rising unemployment and bank failures that led to legislators approving a 0 billion financial bailout plan last week.

...

TARGETS AND INDICATORS FOR THE NEXT ONE YEAR

IFCI

Posted by : Karthikn
Price when posted : BSE: Rs 32.65 ( -0.15 % ), NSE: Rs. 32.60 ( -0.15 % )

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markets may hit -5% tomorrow..watch out...

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TARGETS AND INDICATORS FOR THE NEXT ONE YEAR

Posted by : bubbu64

sorry for the typo error

Pls read it as I am finding it unbelievable, heavy buying into prime stocks...

Decoupling days are coming ahead.........

IFCI

Posted by : sambala
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Neel was born in Akron, Ohio, to Chaman and Sheila Kashkari, Indian immigrants originally from J&K, who took the well-trodden academic route to the United States. Chaman Kashkari, who taught at the University of Akron, is now a retired professor of engineering, and Sheila Kashkari is a pathologist. Neel`s wife Minal works for defense contractor Lockheed Martin. The couple has been active in Republican circles with political contributions to the party.

Kashkari is now the second Indian at the heart of the US and world financial crisis. Vikram Pandit heads Citigroup which is now locked in a titanic battle with Wells Fargo over the acquisition of the bank Wachovia.
...

In reply to:

Decoupling days are coming ahead.........

Posted by : sambala

Indian-American given job of saving Wall Street

7 Oct 2008, 0023 hrs IST, Chidanand Rajghatta,TNN

WASHINGTON: A 35-year old Indian-American whiz whose parents migrated from Jammu and Kashmir is being entrusted with task of rescuing Wall Street,the US economy -- and the pretty much the entire financial world tied to its coat tails -- from a dizzying tailspin that is crushing markets and people across the globe. ( Watch )

US Treasury Secretary Henry Paulson on Monday named Neel Kashkari, currently the Assistant Secretary for International Affairs in the Department of Treasury, as the interim head for its new Office of Financial Stability, including the Troubled Asset Relief Program, to oversee the $700 billion bailout program aimed at arresting the US economy`s precipitous slide arising from the mortgage crisis.

Kashkari is one of nearly half-dozen Indian-Americans, including Louisiana Governor Bobby Jindal, who have served in the Bush administration at Tier Two cabinet levels. But the new job clearly puts Kashkari in a different league altogether.

A long-time understudy and associate of Secretary Paulson going back to their days at Goldman Sachs, Kashkari was nominated as assistant secretary and confirmed by the Senate only in July this year in a little-noticed development at that time because it came at the tail-end of the Bush administration`s eight-year run in office.

But the monumental crisis that has spooked Wall Street and the associated world has thrown the young Indian-American engineer-turned-financial expert into the spotlight. Hours before the appointment, the financial world and blogosphere was agog with the news of such a young man being tasked with such a huge task on a day the market continued its downward spiral.

"It seems a curious time to appoint a young acolyte from "The Firm" (Goldman Sachs) to run one of the most critical financial rescue programmes in US history," the Financial Times` blog Alphaville observed, noting Kashkari`s substantial science background. "There is a small matter of experience. He is 35 years old and - if appointed and confirmed - will, as the Wall Street Journal points out, gain a `position of substantial power` overseeing Treasury`s effort to buy the financial industry`s bad loans and other distressed securities."

On a day the Dow tanked 800 points at one point and went close to 9500, a wiseacre on Market Ticker forum wrote, "Seriously? The guy overseeing the $700 billion is named `CashCarry`? You really can`t make this stuff up..." The last time the Dow was below 10,000 was October 2004.

Kashkari has a bachelor`s degree in engineering from the University of Illinois at Urbana-Champaign (birthplace of the original Internet browser Mosaic) and went to earn a master`s degree in aerospace engineering to initially take up a career in sciences. He worked as the R&D Principal Investigator at the company TRW in Redondo Beach, California, where he developed technology for NASA space science missions such as James Webb Space Telescope, the replacement for Hubble, which is scheduled for launch in 2013.

But apparently, the call, or lure, of the finance world was so strong that he enrolled for an MBA at Wharton School of the University of Pennsylvania, graduating in 1997. He then joined Goldman Sachs in San Francisco, where he led the firm`s IT security investment banking practice, advising public and private companies on mergers and acquisitions and financial transactions, before moving to New York where he worked closely with then chairman and CEO Henry Paulson. When Paulson was named Treasury Secretary, he immediately drafted Kashkari as his senior advisor before he was appointed Assistant Secretary in July this this year.

Decoupling days are coming ahead.........

IFCI

Posted by : sambala
Price when posted : BSE: Rs 32.65 ( -0.15 % ), NSE: Rs. 32.60 ( -0.15 % )

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Indian-American given job of saving Wall Street

7 Oct 2008, 0023 hrs IST, Chidanand Rajghatta,TNN

WASHINGTON: A 35-year old Indian-American whiz whose parents migrated from Jammu and Kashmir is being entrusted with task of rescuing Wall Street,the US economy -- and the pretty much the entire financial world tied to its coat tails -- from a dizzying tailspin that is crushing markets and people across the globe. ( Watch )

US Treasury Secretary Henry Paulson on Monday named Neel Kashkari, currently the Assistant Secretary for International Affairs in the Department of Treasury, as the interim head for its new Office of Financial Stability, including the Troubled Asset Relief Program, to oversee the $700 billion bailout program aimed at arresting the US economy`s precipitous slide arising from the mortgage crisis.

Kashkari is one of nearly half-dozen Indian-Americans, including Louisiana Governor Bobby Jindal, who have served in the Bush administration at Tier Two cabinet levels. But the new job clearly puts Kashkari in a different league altogether.

A long-time understudy and associate of Secretary Paulson going back to their days at Goldman Sachs, Kashkari was nominated as assistant secretary and confirmed by the Senate only in July this year in a little-noticed development at that time because it came at the tail-end of the Bush administration`s eight-year run in office.

But the monumental crisis that has spooked Wall Street and the associated world has thrown the young Indian-American engineer-turned-financial expert into the spotlight. Hours before the appointment, the financial world and blogosphere was agog with the news of such a young man being tasked with such a huge task on a day the market continued its downward spiral.

"It seems a curious time to appoint a young acolyte from "The Firm" (Goldman Sachs) to run one of the most critical financial rescue programmes in US history," the Financial Times` blog Alphaville observed, noting Kashkari`s substantial science background. "There is a small matter of experience. He is 35 years old and - if appointed and confirmed - will, as the Wall Street Journal points out, gain a `position of substantial power` overseeing Treasury`s effort to buy the financial industry`s bad loans and other distressed securities."

On a day the Dow tanked 800 points at one point and went close to 9500, a wiseacre on Market Ticker forum wrote, "Seriously? The guy overseeing the $700 billion is named `CashCarry`? You really can`t make this stuff up..." The last time the Dow was below 10,000 was October 2004.

Kashkari has a bachelor`s degree in engineering from the University of Illinois at Urbana-Champaign (birthplace of the original Internet browser Mosaic) and went to earn a master`s degree in aerospace engineering to initially take up a career in sciences. He worked as the R&D Principal Investigator at the company TRW in Redondo Beach, California, where he developed technology for NASA space science missions such as James Webb Space Telescope, the replacement for Hubble, which is scheduled for launch in 2013.

But apparently, the call, or lure, of the finance world was so strong that he enrolled for an MBA at Wharton School of the University of Pennsylvania, graduating in 1997. He then joined Goldman Sachs in San Francisco, where he led the firm`s IT security investment banking practice, advising public and private companies on mergers and acquisitions and financial transactions, before moving to New York where he worked closely with then chairman and CEO Henry Paulson. When Paulson was named Treasury Secretary, he immediately drafted Kashkari as his senior advisor before he was appointed Assistant Secretary in July this this year.


...

In reply to:

Decoupling days are coming ahead.........

Posted by : sambala

``All the talk of bailouts for these big financial companies take the front page on all the papers, but the impact of the economic crisis on individuals is sometimes overlooked. This is a sad and tragic reminder of how quickly people can spiral into a horrible place,`` one blogger lamented.

Neighbours said the Rajarams were a quiet, decent family who pretty much kept to themselves and did not socialize much. The eldest son Krishna, a Fulbright scholar majoring in business economics at his father’s alma mater UCLA, appeared to be visiting home at the time of the incident.

Local school authorities said the two younger kids were also extremely bright and the parents had been very much involved in their education. The family did not appear to be particularly troubled, although some neighbors told reporters that Rajaram was pretty intense.

According to the police, there was no evidence that Rajaram had sought help from mental health professionals. However, the context of the letters and the fact Rajaram had purchased the handgun as recently as September 16 indicated that his actions were ``premeditated,`` they said.

``He had become despondent over his financial situation,`` Deputy Chief Moore related. In one of his letters, he talked of two options: taking his own life or taking his own life and that of his family. ``He talked himself into the second strategy,`` Moore said.

One of the neighbours reported that Rajaram had spoken to her twice in the last two weeks asking whether she would be home this past weekend. He urged her to keep her side windows shut because he had heard of burglaries in the area. He seemed nervous -- shaking, pacing and taking notes on a notepad as he spoke to her, she told the LA Times.

She surmised after the bloody massacre that he was trying to have her close her windows so that she wouldn`t hear anything.

Apparently, no one did, because it was not until Monday when another neighbour rang the Rajarams` bell to remind Subasri, who worked at a local pharmacy, about the carpool ride did the tragic incident come to light.

Decoupling days are coming ahead.........

IFCI

Posted by : sambala
Price when posted : BSE: Rs 32.65 ( -0.15 % ), NSE: Rs. 32.60 ( -0.15 % )

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``All the talk of bailouts for these big financial companies take the front page on all the papers, but the impact of the economic crisis on individuals is sometimes overlooked. This is a sad and tragic reminder of how quickly people can spiral into a horrible place,`` one blogger lamented.

Neighbours said the Rajarams were a quiet, decent family who pretty much kept to themselves and did not socialize much. The eldest son Krishna, a Fulbright scholar majoring in business economics at his father’s alma mater UCLA, appeared to be visiting home at the time of the incident.

Local school authorities said the two younger kids were also extremely bright and the parents had been very much involved in their education. The family did not appear to be particularly troubled, although some neighbors told reporters that Rajaram was pretty intense.

According to the police, there was no evidence that Rajaram had sought help from mental health professionals. However, the context of the letters and the fact Rajaram had purchased the handgun as recently as September 16 indicated that his actions were ``premeditated,`` they said.

``He had become despondent over his financial situation,`` Deputy Chief Moore related. In one of his letters, he talked of two options: taking his own life or taking his own life and that of his family. ``He talked himself into the second strategy,`` Moore said.

One of the neighbours reported that Rajaram had spoken to her twice in the last two weeks asking whether she would be home this past weekend. He urged her to keep her side windows shut because he had heard of burglaries in the area. He seemed nervous -- shaking, pacing and taking notes on a notepad as he spoke to her, she told the LA Times.

She surmised after the bloody massacre that he was trying to have her close her windows so that she wouldn`t hear anything.

Apparently, no one did, because it was not until Monday when another neighbour rang the Rajarams` bell to remind Subasri, who worked at a local pharmacy, about the carpool ride did the tragic incident come to light. ...

In reply to:

Decoupling days are coming ahead.........

Posted by : sambala

Death of the American Dream: Indian kills family of five, self in LA
7 Oct 2008, 1909 hrs IST, CHIDANAND RAJGHATTA,TNN

WASHINGTON: Multiple gunshots echoed in the upscale home of an Indian family in a quiet, gated, suburban Los Angeles community last weekend, echoing the troubled times in America.

When police turned up on Monday morning after calls from a concerned neighbour waiting for a carpool ride, they found the body of 45-year old Karthik Rajaram, an unemployed financial advisor, lying in one room with a handgun he had used to shoot himself dead.

With him lay his two youngest sons Arjuna (7) and Ganesha (12), both shot dead. In different rooms across the house they found the bodies of Karthik’s wife Subasri (39), his mother-in-law Indra Ramasesham (69), and his eldest son Krishna (19). They all appeared to have been shot to death by Karthik Rajaram.

Police also found two suicide notes – one for the cops and one for extended family and friends -- and a will. In them, Rajaram he spoke of his financial difficulties and took responsibility for killing his family members, police said.

Police did not elaborate on the contents except to suggest that Rajaram appeared to be in dire financial straits.

``This is a perfect American family behind me that has absolutely been destroyed,`` LAPD Deputy Chief Michel Moore told reporters. ``It is critical to step up and recognize we are in some pretty troubled times.``

Rajaram had an MBA in finance from University of California Los Angeles (UCLA), and formerly worked for PriceWaterhouseCoopers and Sony Pictures. But he had been unemployed for several months, according to local media reports citing authorities.

Investigators also determined that he was at least the part-owner of a financial holding company, SKGL LLC, which was incorporated in Nevada, ostensibly to hold his family assets.

The family appears to have been well-off at one time. According to the Los Angeles Times, they sold their home in Northridge in 2006 for $750,000, making a sizeable profit on a home they purchased in 1997 for $274,000. They had also taken out two loans for $241,400.

Rajaram once made more than $1.2 million in a London-based venture fund before he ran out of luck playing the stock market, reports said. A 2001 article in The Daily Telegraph of London, under the headline ``Bust, but big bucks for the big boys,`` called Rajaram a ``winner`` in a deal for NanoUniverse, a LA- and London-based venture fund taken public on the London Stock Exchange. For a 12,500-pound investment, Rajaram, one of the company`s founders, received 875,000 pounds -- or about $1.2 million in 2001 dollars -- after a voluntary liquidation, the newspaper reported.

Although the family rented their current 2800-sq foot home, they lived a typical upper class life. They had two cars, a Chevy Suburban and a Lexus SUV and they reportedly paid their rent on time.

The incident sent shock waves through the neighbourhood, the larger Indian community and American financial world on a day the monetary world saw yet another bloodbath. Indians are widely known and recognized as the most successful ethnic community in the U.S with the highest per capita income among all segments of the population, including Whites.

But the country is now starting to hear of many hard luck stories, including among Indians, although nothing like this. And not in the City of Angels, far removed from the frenzied financial world of New York.

It wasn’t immediately clear if Rajaram’s extreme action stemmed from the ongoing economic turmoil, but even the police, unusually, referred to the troubled times. And as the story burnt the wires, the online community debated the incident heatedly.



Cont.....

Decoupling days are coming ahead.........

IFCI

Posted by : sambala
Price when posted : BSE: Rs 32.65 ( -0.15 % ), NSE: Rs. 32.60 ( -0.15 % )

View full thread (176 messages)

Tracked by: 2 Boarders

Death of the American Dream: Indian kills family of five, self in LA
7 Oct 2008, 1909 hrs IST, CHIDANAND RAJGHATTA,TNN

WASHINGTON: Multiple gunshots echoed in the upscale home of an Indian family in a quiet, gated, suburban Los Angeles community last weekend, echoing the troubled times in America.

When police turned up on Monday morning after calls from a concerned neighbour waiting for a carpool ride, they found the body of 45-year old Karthik Rajaram, an unemployed financial advisor, lying in one room with a handgun he had used to shoot himself dead.

With him lay his two youngest sons Arjuna (7) and Ganesha (12), both shot dead. In different rooms across the house they found the bodies of Karthik’s wife Subasri (39), his mother-in-law Indra Ramasesham (69), and his eldest son Krishna (19). They all appeared to have been shot to death by Karthik Rajaram.

Police also found two suicide notes – one for the cops and one for extended family and friends -- and a will. In them, Rajaram he spoke of his financial difficulties and took responsibility for killing his family members, police said.

Police did not elaborate on the contents except to suggest that Rajaram appeared to be in dire financial straits.

``This is a perfect American family behind me that has absolutely been destroyed,`` LAPD Deputy Chief Michel Moore told reporters. ``It is critical to step up and recognize we are in some pretty troubled times.``

Rajaram had an MBA in finance from University of California Los Angeles (UCLA), and formerly worked for PriceWaterhouseCoopers and Sony Pictures. But he had been unemployed for several months, according to local media reports citing authorities.

Investigators also determined that he was at least the part-owner of a financial holding company, SKGL LLC, which was incorporated in Nevada, ostensibly to hold his family assets.

The family appears to have been well-off at one time. According to the Los Angeles Times, they sold their home in Northridge in 2006 for $750,000, making a sizeable profit on a home they purchased in 1997 for $274,000. They had also taken out two loans for $241,400.

Rajaram once made more than $1.2 million in a London-based venture fund before he ran out of luck playing the stock market, reports said. A 2001 article in The Daily Telegraph of London, under the headline ``Bust, but big bucks for the big boys,`` called Rajaram a ``winner`` in a deal for NanoUniverse, a LA- and London-based venture fund taken public on the London Stock Exchange. For a 12,500-pound investment, Rajaram, one of the company`s founders, received 875,000 pounds -- or about $1.2 million in 2001 dollars -- after a voluntary liquidation, the newspaper reported.

Although the family rented their current 2800-sq foot home, they lived a typical upper class life. They had two cars, a Chevy Suburban and a Lexus SUV and they reportedly paid their rent on time.

The incident sent shock waves through the neighbourhood, the larger Indian community and American financial world on a day the monetary world saw yet another bloodbath. Indians are widely known and recognized as the most successful ethnic community in the U.S with the highest per capita income among all segments of the population, including Whites.

But the country is now starting to hear of many hard luck stories, including among Indians, although nothing like this. And not in the City of Angels, far removed from the frenzied financial world of New York.

It wasn’t immediately clear if Rajaram’s extreme action stemmed from the ongoing economic turmoil, but even the police, unusually, referred to the troubled times. And as the story burnt the wires, the online community debated the incident heatedly.



Cont........

In reply to:

Decoupling days are coming ahead.........

Posted by : sambala

US economy crisis: Indian kills self, family in LA

Tuesday, October 7 2008 13:26(IST)

Los Angeles, Oct 7: Hit hard by the US financial crisis and unemployment an Indian killed his mother-in-law, his wife and three sons and then killed himself inside a home in an upscale San Fernando Valley neighborhood, police said. Authorities said the man had an MBA in finance but appeared to have been unemployed for several months and had worked for major accounting firms, such as Price Waterhouse, police said.

The two-story rented home is in a gated community in Porter Ranch, about 20 miles northwest of Los Angeles. Officers found the bodies Monday, Oct 6 morning after the wife failed to show up at a neighbor`s home to go to work, Deputy Chief Michel Moore said. The deaths occurred sometime after Saturday, Oct 4 evening.

Assistant Chief from the Los Angeles County Coroner`s Office, Ed Winter identified the suspect as Karthik Rajaram, 45. He said the victims included Rajaram`s mother-in-law, Indra Ramasesham, 69, and his 19-year-old son Krishna Rajaram, a Fulbright Scholar and honor student at UCLA.

Also dead were Rajaram`s wife, 39, and their two other sons, 12 and 7. Som