sábado, 11 de outubro de 2008

Britney Spears Womanizer Lyrics

Where you from, how's it going?
I know you
Gotta clue whatcha doing
You can play brand new
To all the other chicks out there
But I know what you are
What you are, baby

Look at you
Gettin more than just a re-up
Baby, you
Got all the puppets with their strings up
Fakin like a good one
But I call em when i see em
I know what you are
What you are, baby

You're a womanizer
Oh, womanizer
Oh, you're a womanizer, baby
You you you are
You you you are
Womanizer, womanizer
Womanizer, womanizer

Boy don't try to front
I know just what you are
Boy don't try to front
I know just what you are

(You)You got me goin
(You)You're oh so charmin
(You)But I can't do it
(You)You womanizer

Boy don't try to front
I know just what you are
Boy don't try to front
I know just what you are

(You)You say I'm crazy
(You)I gotcha crazy
(You)You're nothin but a

You've got the swagger of a champion
To bad for you
You just can't find the right companion
I guess when you have one too many
Makes it hard, it could be easy
Who you are
That's just who you are, baby

You must mistake me for a sucker
To think that I
Would be a victim, not another
Say you're playin how you want it
But no way I'm never gonna fall for you
Never you, baby

You're a womanizer
Oh, womanizer
Oh, you're a womanizer, baby
You you you are
You you you are
Womanizer, womanizer
Womanizer, womanizer

Boy don't try to front
I know just what you are
Boy don't try to front
I know just what you are

(You)You got me goin
(You)You're oh so charmin
(You)But I can't do it
(You)You womanizer

Boy don't try to front
I know just what you are
Boy don't try to front
I know just what you are

(You)You say I'm crazy
(You)I got you crazy
(You)You're nothin but a

Maybe if we both lived in a different world
It would be all good
And maybe I could be your girl
But I can't so we don't

You're a womanizer
Oh, womanizer
Oh, you're a womanizer, baby
You you you are
You you you are
Womanizer, womanizer
Womanizer, womanizer

Boy don't try to front
I know just what you are
Boy don't try to front
I know just what you are

(You)You got me goin
(You)You're oh so charmin
(You)But I can't do it
(You)You womanizer

Boy don't try to front
I know just what you are
Boy don't try to front
I know just what you are

(You)You say I'm crazy
(You)I got you crazy
(You)You're nothin but a

Boy don't try to front
I know just what you are
Boy don't try to front
I know just what you are

You're a womanizer
Oh, womanizer
Oh, you're a womanizer, baby

Britney Spears - "Womanizer"

Rogers: Global Bankers Have Unleashed Inflationary Holocaust

George Soros on Markets (Bill Moyers)

BILL MOYERS:  Welcome to the Journal.

You are not alone if you are worried about the financial melt down. So is my guest George Soros, one of the world's best known and successful investors, making billions in times of boom or bust. He's been warning for years of a financial melt down fueled by easy credit and sleepy regulation. Now he's out with this timely book, "The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means."

In the interest of full disclosure, you should know that I served three years on the board of George Soros' foundation, the Open Society Institute, dealing with such issues as a free press, the rule of law, and human rights. But I've had no involvement in his political activities and nothing to do, with his business interests unfortunately. It's good to see you.

GEORGE SOROS:  Same here.

BILL MOYERS:  Let's imagine for a moment that we're not in a New York studio but we are in Neely's Barbecue Stand in Marshall, Texas, my hometown, and we're surrounded by people I know, people who have lost half of their 401(k)s in the last three or four weeks, and what they want to know is does this financial meltdown represent the end of the American dream as they have known it.

GEORGE SOROS:  No. No. I think it's got nothing to do with the American dream as such. There has been some kind of an ideological excess; namely, market fundamentalism for the last 25 or so years. And now that world is collapsing...

BILL MOYERS:  What do you mean "market fundamentalism"?

GEORGE SOROS:  It's that markets will correct themselves, that you should leave it to the markets, and there is no need for government intervention in financial affairs. Letting markets run rampant. And that doesn't work.

Markets have the ability to adjust and they're very flexible. There is this invisible hand. But it is also prone to be mistaken. In other words, markets instead are reflecting reality. They always look at reality with a bias. There is always a prevailing bias. I'll call it, you know, optimism/pessimism.

And sometimes those moods actually can reinforce themselves so that there are these initially self-reinforcing but eventually unsustainable and self-defeating boom/bust sequences or bubbles. And this is what has happened now.

This current economic disaster is self-generated. It was generated by the market itself, by getting too cocky, using leverage too much, too much credit. And it got excessive.

BILL MOYERS:  You used the word "disaster."

GEORGE SOROS:  The financial system is teetering on the edge of disaster. Hopefully, it will not go over the brink because it very rarely does. It only did in the 1930s. Since then, whenever you had a financial crisis, you were able to resolve it. This is the most serious one since the 1930s, there hasn't been one as serious as this.

Unfortunately, the authorities are behind the curve. They are reacting to these crises as they emerge. One thing leads to another, one market after another gets into difficulty. And they react to it. And they don't quite understand what's hitting them. So they are not anticipating and not gaining control of the situation.

BILL MOYERS:  This is what's interesting, why wouldn't the government be able to look at what you looked at and see what's coming?

GEORGE SOROS:  Because actually they have been working on false premises. This sounds very strange, but there's been this development of, this belief of market fundamentalism. And particularly the idea that markets always revert to the mean and deviations from the mean occur in a random fashion. And you can calculate it.

And you will get a nice distribution and you can anticipate it. And based on that, you can manage your risk. And that actually was based on a false idea. This namely, the markets self-correcting because the market moods have a way of affecting the fundamentals the markets are supposed to reflect.

And there's always a divergence between our perception and what actually exists. For instance, take the simplest situation, namely housing.

Banks give you credit based on the value of the houses. But they don't seem to somehow understand that the value of the houses can be affected by the amount of credit they are willing to give. Now, we've developed these fabulous new ways of securitizing mortgages, which has made credit much more amply available.

And we've been able to calculate risk. And, therefore, we were willing to give more and more credit. And that has pushed up the value of the houses. Also, of course Greenspan kept interest rates too low, too long. And so you had very low interest rates, easy credit, and house prices have been appreciating at more than ten percent a year for a number of years. And the willingness to lend actually increased. There was an insatiable appetite for these new fangled securities.

BILL MOYERS:  Yeah. Nobody understood, really.

GEORGE SOROS:  Which they didn't properly understand. And there was always a separation between the people who generated the mortgages and packaged them and sold them to you and the people who owned them. So nobody was paying attention to the quality of the mortgages because they didn't have an interest. They — all day collecting fees. And then there were other people holding the mortgages.


GEORGE SOROS:  And that was not factored into those instruments. The idea was that by distributing risk, you actually reduce risk. But by separating the principal from the agent, you actually greatly increase the risk. And that was not reflected. And the rating agencies didn't realize it. So they gave triple-A ratings. And then a few weeks later, those triple-A bonds became practically valueless. And that's what has happened.

BILL MOYERS:  But how does the system become deranged like that? So separated from reality like an individual who goes insane because he or she is separated.

GEORGE SOROS:  Well sometimes we get carried away. I mean, you know, let's say in the Middle Ages, people were religious. And so they had tremendous discussions about how many angels can dance on the eye of a needle. Now, if you believe that angels can dance then that's a legitimate question. And this is exactly what has happened here. You thought that you could slice and dice and engage in this kind of financial engineering. And it became very, very sophisticated and got carried away.

BILL MOYERS:  What happened that we lost control?

GEORGE SOROS:  There was a failure of regulations because they couldn't understand these new instruments. But they said, "Oh, well, the banks have very good risk management techniques. So we leave it to them to calculate their own risks."

And, you see, it wasn't only in the housing market. There were all kinds of other financial instruments. So there was not just one bubble. I describe in my book there is the housing bubble. But this housing bubble, when that burst, it was only the detonator that exploded the bigger bubble, the super bubble.

Which is this 25 years of constant credit expansion using greater and greater leverage. The amount of credit in the economy has been growing at, I don't know, I don't know the exact figure, but maybe at least twice as fast as the economy itself. I think it's more like three.

And now, suddenly, you have a contraction of credit. And it's a sudden thing. And it's a period of great wealth destruction. And that's how these poor people in Texas suddenly find that their 401(k) is worthless.

BILL MOYERS:  So as we talk, Secretary Paulson and the government seem to be coming around to what you've been advocating and that is taking taxpayer money, public capital, and injecting it directly into the banks — in effect, nationalizing some of these banks. Why do you think that will work when everything else has failed?

GEORGE SOROS:  Well unfortunately because they are delaying it, it may not work so well because there's a certain dynamism. And they're always behind the curve. So there are many things that they're doing now if they had done several months ago, it would have turned things around.

BILL MOYERS:  That's a very gloomy assessment. You're saying that everything they're doing is coming too late? How does that ultimately play out?

GEORGE SOROS:  Unfortunately, that is the case. I'm quite distressed about it. I hope that you know, eventually they'll catch up.

We are determined to put the money in, not to allow the financial system to collapse. And that's the lesson we learned in the 1930s. It's an important lesson. But because we are behind the curve, the amounts get bigger and bigger. If we understood it earlier, we could have brought it to a halt perhaps sooner. But they've got still a number of things to do. And this idea, you see, of just buying noxious instruments of you know, off the balance sheet of the banks was a non-starter.

BILL MOYERS:  But that was the idea.

GEORGE SOROS:  But it was the wrong idea.

BILL MOYERS:  But this is disturbing, George. If everything we're doing keeps accelerating the downward negative feedback and isn't working, are you suggesting, can one insinuate from what you say that we're heading for 1930?

GEORGE SOROS:  Hopefully not. But we are heading for undoubtedly very difficult times. This is the end of an era. And this is a fact.

BILL MOYERS:  End of an era?

GEORGE SOROS:  At the end of an era.

BILL MOYERS:  Capitalism as we have known it?

GEORGE SOROS:  No. No, no, no. Hopefully, capitalism will survive. But the sort of period where America could actually, for instance, run ever increasing current account deficits. We could consume, at the end, six and a half percent more than we are producing. That has come to an end.

BILL MOYERS:  So what do we do now?

GEORGE SOROS:  We are probably at the height of the financial crisis. I think it can't get much worse. I think it could get a bit worse yet. But then you have the fallout in the real economy.

BILL MOYERS:  We're in a downward spiral.

GEORGE SOROS:  We are in a downward spiral.

BILL MOYERS:  How long will it go on?

GEORGE SOROS:  Look the one thing that my theory says is that you can't predict the future because the future depends on how you react to it. So if we do the right things then things will not — will be less painful. If you do the wrong things, they'll be more painful. Now, so far we've been doing the wrong things. I very much hope that we'll have a different government in a few months and they'll be doing the right things.

BILL MOYERS:  Well, don't be shy. What do you think the new government should do?

GEORGE SOROS:  Well, first of all you have to prevent housing crisis from overshooting on the downside the way they overshot on the upside. You can't arrest the decline, but you can definitely slow it down by minimizing the number of foreclosures and readjusting the mortgages to reflect the ability of people to pay. So you have to renegotiate mortgages rather than foreclose.

And you provide the government guarantee. But the loss has to be taken by those who hold the mortgages, not by the taxpayer.

BILL MOYERS:  You mean the homeowner doesn't take the loss. The lender.

GEORGE SOROS:  The homeowner needs to get relief so that he pays less because he can't afford to pay. And the value of the mortgage should not exceed the value of the house. Right now you already have 10 million homes where you have negative equity. And before you are over, it will be more than 20 million.

BILL MOYERS:  But, you're talking about taking action three months from now, whether it's a McCain administration or an Obama administration. What happens in these next three months? And I'm serious about that.

GEORGE SOROS:  I am very worried about it. And I hope that they will have a new secretary of treasury, somebody else.

BILL MOYERS:  Sooner than later?


BILL MOYERS:  You don't think...

GEORGE SOROS:  It would be very helpful if...

BILL MOYERS:  You don't think Paulson's up to it?

GEORGE SOROS:  Unfortunately, I have a negative view of his performance.


GEORGE SOROS:  Because he represents the very kind of financial engineering that has gotten us into the trouble. And this buying off the noxious things was a...

BILL MOYERS:  Buying the bad assets, that was his...


BILL MOYERS:  First idea.

GEORGE SOROS:  Yeah, and before that, he wanted to create a super SIV, special investment vehicle, to take care of the other special investment vehicles. That didn't fly. And they are now within a week recognizing that they have to change and inject money into the banks to make up for the whole in the equity because those banks lost money. And they can't make it up by taking their assets off their hands. You have to recognize the losses and replenish the equity.

BILL MOYERS:  Is that what you would do with the bailout money now? Right now?

GEORGE SOROS:  Yes, yes, yeah.

BILL MOYERS:  You would put it where?

GEORGE SOROS:  Into the capital of the bank so that the capital equity can sustain at least 12 times the amount of lending. So that's an obvious thing. And every economist agrees with this.

You see, what is needed now the bank examiners know how those banks stand. And they can say how much capital they need. And they could then raise that capital from the private market. Or they could turn to this new organization and get the money from there. That would dilute the shareholders. It would hurt the shareholders.

BILL MOYERS:  Of the bank?

GEORGE SOROS:  Of the banks. Which I think Paulson wanted to avoid. He didn't want to go there. But it has to be done. But then, the shareholders could be offered the right to provide the new capital. If they provide the new capital then there's no dilution. And the rights could be traded. So if they don't have the money, other people could, the private sector could put in the money. And if the private sector is not willing to do it then the government does it.

BILL MOYERS:  The assumption of everything you say is that the government is going to be a big player now in the economy and in the financial markets. But what assurance do we have that the government will do a better job?

GEORGE SOROS:  We don't. Right now they are doing a bad job. So you want to use the government as little as possible. The government should play a smaller role. In that sense, people who believe in markets, I believe in markets. I just want them to function properly. To the extent you can use the market, you should use the market.

Governments are also human. They're also bound to be wrong. Moreover, they are bureaucratic. So they are slow and they are subject to political influence. So you want to use them as little as possible. But to not to use them, see, assumes that markets are perfect. And that is a false belief.

BILL MOYERS:  Has the whole global system become so complex with such gargantuan forces interlocked with each other, driving it forward, that it doesn't know how to obey Adam Smith's natural laws?

GEORGE SOROS:  No, I think our ability to govern ourselves doesn't keep pace with our ability to exercise power over nature, control over nature. So we are very complicated civilization. And we could actually destroy our civilization because of our inability to govern ourselves.

BILL MOYERS:  Would this all be happening if we still had a strong sense of the social compact? I mean, our social safety net has been greatly reduced. The people have a real sense that the gods of capital have left little space for anyone else. People at the top don't have much empathy for people at the bottom.

GEORGE SOROS:  There is a common interest. And this belief that everybody pursuing his self-interests will maximize the common interests or will take care of the common interests is a false idea. It's a suitable idea for those who are rich, who are successful, who are powerful. It suits them to justify you know, enjoying the fruits without paying taxes. The idea of paying taxes is an absolute no-no, right?

BILL MOYERS:  Unpatriotic.

GEORGE SOROS:  Unpatriotic. So, yes, you must have, in my opinion, you need, for instance, a tax on carbon emissions. But that is unacceptable politically. So we are going to have cap and trade. And the trading will have all kinds of loopholes and misuse of the regulations and all kinds of ways of making money without actually dealing with the problem that it's designed to cure. So that's how the political process distorts things.

BILL MOYERS:  So let's think about those people down at Neely's Barbecue going home tonight having heard you. What they've heard you say is the system is really disfunctioning right now. It's out of control. Nobody's in charge. They've heard you express your own worry that in the next three months it could get much, much worse.

And they've heard you say that you don't see much good news immediately on the horizon. So let's leave them something to think about as they go home. Let them go home and say, "Mr. Soros said here are three things we can do, simply." One?

GEORGE SOROS:  Well, deal with the mortgage problem. Reduce foreclosures. Recapitalize the banks. And then work on a better world order where we work together to resolve problems that confront humanity like global warming. And I think that dealing with global warming will require a lot of investment.

You see, for the last 25 years the world economy, the motor of the world economy that has been driving it was consumption by the American consumer who has been spending more than he has been saving, all right? Than he's been producing. So that motor is now switched off. It's finished. It's run out of — can't continue. You need a new motor. And we have a big problem. Global warming. It requires big investment. And that could be the motor of the world economy in the years to come.

BILL MOYERS:  Putting more money in, building infrastructure, converting to green technology.

GEORGE SOROS:  Instead of consuming, building an electricity grid, saving on energy, rewiring the houses, adjusting your lifestyle where energy has got to cost more until it you introduce those new things. So it will be painful. But at least we will survive and not cook.

BILL MOYERS:  You're talking about this being the end of an era and needing to create a whole new paradigm for the economic model of the country, of the world, right?


BILL MOYERS:  One of the British newspapers this morning had a headline, "Welcome to Socialism." It's not going that way, is it?

GEORGE SOROS:  Well, you know, it's very interesting. Actually, these market fundamentalists are making the same mistake as Marx did. You see, socialism would have worked very well if the rulers had the interests of the people really at heart. But they were pursuing their self-interests. Now, in the housing market, the people who originated the houses earned the fee.

And the people who then owned the mortgages their interests were not actually looked after by the agents that were selling them the mortgages. So you have a, what is called an agent principle problem in socialism. And you have the same agent principle problem in this free market fundamentalism.

BILL MOYERS:  The agent is concerned only with his own interests.

GEORGE SOROS:  That's right.

BILL MOYERS:  Not with...

GEORGE SOROS:  That's right.

BILL MOYERS:  The interest of...

GEORGE SOROS:  Of the people who they're supposed to represent.

BILL MOYERS:  But in both socialism and capitalism, you get the rhetoric of empathy for people.

GEORGE SOROS:  And it's a false ideology. Both Marxism and market fundamentalism are false ideologies.

BILL MOYERS:  Is there an ideology that...

GEORGE SOROS:  Is not false?


GEORGE SOROS:  I think the only one is the one that I'm proposing; namely, the recognition that all our ideas, all our human constructs have a flaw in it. And perfection is not attainable. And we must engage in critical thinking and correct our mistakes.

BILL MOYERS:  And that's one...

GEORGE SOROS:  That's my ideology. As a child, I experienced Fascism, the Nazi occupation and then Communism, two false ideologies. And I learned that both of those ideologies are false. And now I was shocked when I found that even in a democracy people can be misled to the extent that we've been misled in the last few years.

BILL MOYERS:  The book is "The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means". George Soros, thank you for being with me.

GEORGE SOROS:  Pleasure.

An exclusive conversation with Warren Buffett

A discussion about the economic crisis with Paul Volcker

Weekly Economic and Financial Commentary

Weekly Economic and Financial CommentaryPrint

Weekly Economic and Financial Commentary

U.S. Review

Recession as the New Benchmark Outlook

Key economic signals of jobless claims, employment declines and a sharp dip in the Institute for Supply Management index have corroborated our model-based forecast for recession. The downturn that began last quarter (we expect a negative GDP report on October 30) will be followed by further declines in the third and fourth quarters. We expect the peak-to-trough decline in real GDP to total 1.5 – 2.0 percent, in line with the contraction registered during the 1990-91 recession. However, we expect that final sales to consumers and businesses will drop about three percent, which would be the largest decline since the 1981-1982 recession.

Consumer spending will be the big loser this cycle compared to the last recession. Job losses and higher gas prices have squeezed consumer confidence and spending—particularly on big tickets items, such as cars and household durable goods. Consumers are also scaling back purchases of smaller items and services. With persistent job pressures and lower wealth levels our expectation is that the recovery of 2009 will be characterized by less of a consumer boom than was typical in prior recoveries.

Business investment spending will likely be on a downward slide through the next four quarters. Equipment spending will be hampered by weak profits, lower final sales expectations and very limited credit supply. Non-residential investment is expected to go through its late cycle recession pattern. Housing remains in its long-term correction to the overbuilding in the past. Even in the recovery of 2009, the longer run pressures of overbuilding will limit any housing recovery to a below historical pace. State and local government spending will also come under increased pressure as tax revenues decline and interest costs rise. Net exports should continue to grow into 2009. While the size of the contribution will be less than in 2008, the gains from trade in 2009 will be the bright spot for the economy.

Unemployment, Inflation and the New Benchmark for Risk

The economic downturn will likely drive the unemployment rate higher than the current consensus expects and cut deeply into personal income growth. The current environment will produce one positive outcome – inflation will moderate and energy prices will fall significantly. Lower inflation will allow the Federal Reserve to follow a more accommodative monetary policy, with 50 to 75 basis points of further easing likely.

Increased volatility in the financial markets is not only dominating the headlines but also dramatically reshaping the economic outlook. Capital is much harder to come by today for even the strongest of credits and this is already having a debilitating impact on consumer spending, business fixed investment and employment. The heart of the crisis is the lack of transparency (the lemons problem) in complicated financial instruments, which makes it difficult to value certain assets and to determine the creditworthiness of certain financial and non-financial businesses.

Preparing for Recovery

But more than that, the role of credit will define the amplitude and breadth of the economic recovery. Sectors such as housing, commercial real estate and consumer durables are likely to have weaker than normal recoveries, reflecting the problems associated with deleveraging the economy and the loss of purchasing power on the part of the consumer. Meanwhile, exports will take on the role of the water carrier for the economy. At least for 2009, our expectation is that credit will remain tight and inflation modest but persistent. There is no quick fix for the economy for the credit excesses of the last 20 years.

U.S. Outlook

Retail Sales• Wednesday

Advance Retail Sales should decline for the third consecutive month with broad-based weakness across retailers as consumers increasingly pull back from discretionary spending. Retail sales excluding the volatile auto sector are also expected to decline. Moderating income growth and a weakening labor market are continuing to put downward pressure on household balance sheets leaving consumers seeking bargains. Discounters and wholesale clubs should be the only bright spots. Hurricanes also put additional stress on retailers, disrupting operations in many parts of the country.

The weakness in retail sales means that consumer spending will almost certainly decline in the coming quarters and could be a harbinger of real trouble this holiday season.

Previous: -0.3% Wachovia: -0.4%
Consensus: -0.5%

Consumer Price Index • Thursday

Consumer price inflation moderated significantly in August, with the overall CPI declining 0.1 percent and prices excluding food and energy items rising just 0.2 percent. We expect headline CPI to increase modestly in September with food prices remaining one of the notable problem areas. However, the decline in gasoline prices should keep headline inflation at bay even with the effects of Hurricane Ike putting short-term upward pressure on prices at the pump.

Core prices are also expected to post a modest increase as weak motor vehicle prices, apparel and shelter costs help offset increases in medical care and airline tickets. With commodities falling and global economic growth slowing, inflation should continue to moderate in coming months.

Previous: -0.1% Wachovia: 0.1%
Consensus: 0.1%

Housing Starts • Friday

Single-family activity has been on a steady downtrend for several years. While the pace of declines has moderated during the past couple of months there is clearly room for further declines. We have lowered our forecast for new construction activity significantly as the credit crisis continues to hit builders. The lack of credit for buyers and builders, along with the onset of a recession, should push starts down an additional 10 to 15 percent before bottoming out sometime in the first half of 2009. Single-family markets should bear the brunt of the declines, but multi-family starts will trend lower as well.

Previous: 895K Wachovia: 895K
Consensus: 880K

Global Review

More Needs to Be Done to Unfreeze Credit Markets

On Wednesday, major central banks announced the first coordinated rate cut since the days following the terrorist attacks of September 2001. The Fed joined with central banks in Canada, the Euro-zone, Sweden and Switzerland by cutting respective policy rates by 50 basis points each (see chart at left). The People’s Bank of China joined in the action by cutting its benchmark lending rate by 27 basis points, and the Reserve Bank of Australia had sliced its policy rate by 100 basis points earlier in the week.

If the objective of the coordinated rate cuts was to unfreeze the frozen credit markets, then the action largely failed. As shown in the top chart on page 4, three-month LIBOR rates continued to rise after the coordinated reductions in policy rates. U.S. dollar LIBOR rates remain especially elevated. In “normal” times, LIBOR rates are usually just a few basis points above central bank policy rates. Times are hardly normal. For example, the U.S. dollar 3-month LIBOR rate is now more than 325 basis points above the fed funds rate of 1.50 percent. The unprecedented elevation of LIBOR rates relative to central bank policy rates reveals the reluctance of banks to lend to each other.

If coordinated rate cuts are not helping, then what needs to be done to unfreeze credit markets? A closer look at sterling LIBOR rates is instructive (see middle chart). Although sterling LIBOR rates remain elevated, they have not jumped even like dollar LIBOR rates over the past week or so. The relative stability of sterling rates perhaps reflects policy actions that British authorities have announced. The government took the extraordinary step to recapitalize the British banking system by buying up to £50 billion (about $90 billion) in preferred shares. It also will provide a guarantee for bonds issued by British banks worth £250 billion (about $440 billion). These steps should give some assurances to nervous bankers that their counterparts will still be solvent and able to repay when loans mature in a few months.

Similar extraordinary actions may be needed in other countries, including the United States. Fortuitously, finance ministers and central bank governors of the G-7 countries are holding a regularly scheduled meeting this weekend. Perhaps these officials will announce coordinated measures to strengthen the international financial system, perhaps by recapitalizing the banking system in each country. This is a global financial crisis and coordinated global action will be required to end it.

Failure to put out the fire that is engulfing the global financial system would produce an economic calamity. We recently revised our global forecast. (See our Monthly Economic Outlook, which is posted at www.wachovia.com/economics.) We now project that global GDP will grow only two percent next year. Not only would this sluggish growth rate qualify as a global recession, but it would also be the slowest year of global growth since the early 1990’s (see bottom chart). Underlying our projection of global growth is our assumption that authorities will take the steps necessary to stabilize the global financial system. Failure to do so probably would lead to the deepest global recession in the post-World War II era.

Global Outlook

U.K. CPI Inflation• Tuesday

The sharp rise in energy prices earlier this year has caused inflation to shoot up in the United Kingdom. Although the current CPI inflation rate is well above the Bank of England’s two percent target rate, the Bank joined other major central banks this week in a coordinated move to cut interest rates. Although the consensus forecast anticipates that the inflation rate climbed even higher in September, inflation should soon recede due to the marked decline in energy prices since July and to the incipient British recession. Declining inflation will give the Bank scope to ease further in the months ahead.

Labor market data will also be released next week. The economy is slowing rapidly, so it is only a matter of time before unemployment begins to rise. Indeed, most investors look for an increase in the unemployment rate in September.

Previous: 4.7% (year-over-year)
Consensus: 5.0%

Euro-zone CPI Inflation• Wednesday

CPI inflation in the Euro-zone has risen well above the 2 percent rate that the ECB considers to be consistent with “price stability.” Nevertheless, the ECB joined other major central banks this week in a coordinated move to cut interest rates. Because growth is slowing quickly and energy prices have dropped significantly, ECB policymakers reckoned that inflation will continue to recede in the months ahead. A benign reading on the core rate of inflation could open the door for another ECB rate cut next month.

Data on Euro-zone industrial production in August will print on Tuesday. Although the consensus forecast anticipates that industrial production rose 1.1 percent in August relative to the previous month, growth should slow markedly in the months ahead.

Previous: 3.8% (year-over-year)
Consensus: 3.6%

Chinese Trade Balance

Although the Chinese trade surplus jumped to a record in August, the overall surplus for the first eight months of the year is about 7 percent lower than it was during the same period last year. The market consensus forecast looks for a significantly lower surplus in September than in August, and the trade balance should narrow further in the months ahead as slower economic growth in the rest of the world weighs on Chinese export growth.

Other September data releases next week include foreign direct investment and the money supply. This data, in conjunction with some other releases the following week, should give investors insights into how the Chinese economy fared during the third quarter.

Previous: $28.6 billion
Consensus: $23.4 billion

Point of View

Interest Rate Watch

Solvency Trumps Liquidity in an Uncertain Economy

Easier Federal Reserve policy this week and expected further easing ahead does provide liquidity to the capital markets. But as outlined in our global outlook, the questions on capital and solvency appear to be the driving factors in credit markets right now. Volatility in the financial markets reflects the inability to properly assess capital adequacy and counterparty risk in an environment where information on the proper price of financial assets is practically impossible to gather. Capital is much harder to come by today for even the strongest of credits and this is already having a debilitating impact on consumer spending, business fixed investment and employment.
Financial markets cannot properly price assets due to the lack of transparency in complicated financial instruments. Financial instruments are difficult to value and credit quality perceptions change daily. Therefore commercial paper issuance and trading had dried up even though this paper has been among the most liquid and tradable instruments in the past.

Less Credit at any Rate for Private Credits

At the long end of the yield curve, credit is feeling the pinch too. Interest rates on conventional home mortgages are around three-quarters of a percentage point higher than they should be and qualifications for a home mortgage have swung from much too easy to far too tight. Home equity lines have also been scaled back and in some cases, credit card limits have been cut. The troubles in the commercial paper market have been particularly bad news for the auto sector, with dealer financing and buyer financing both drying up.

Topic of the Week

U.S. Commercial Paper Market Continues to Decline

The U.S. commercial paper market declined by $56.4 billion for the week ending Wednesday, the fourth consecutive week of declines and the lowest level since August 2005. The preceding week, commercial paper registered a decline of $94.9 billion the largest weekly decline recorded since the Federal Reserve began tracking the data series in 2001.

Many investors, in particular money market mutual funds, are reluctant to purchase commercial paper due to liquidity pressures and market uncertainty. In a recent release announcing the Commercial Paper Funding Facility (CPFF), the Federal Reserve noted, “…the volume of outstanding commercial paper has shrunk, interest rates on longer-term commercial paper have increased significantly, and an increasingly high percentage of outstanding paper must now be refinanced each day.

The CPFF will provide a liquidity backstop to U.S. issuers of commercial paper through a special purpose vehicle (SPV) that will purchase three-month unsecured and asset-backed commercial paper directly from eligible issuers. Commercial paper purchased by the SPV must be rated at least A1/P1/F1. Commercial paper that is not asset-backed can be secured with up-front fees paid by the issuer or with other forms of collateral.
The Federal Reserve also stated, “By eliminating much of the risk that eligible issuers will not be able to repay investors by rolling over their maturing commercial paper obligations, this facility should encourage investors to once again engage in term lending in the commercial paper market. “

Wachovia Corporation

Disclaimer: The information and opinions herein are for general information use only. Wachovia Corporation and its affiliates, including Wachovia Bank, N.A., do not guarantee their accuracy or completeness, nor does Wachovia Corporation or any of its affiliates, including Wachovia Bank, N.A., assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or any foreign exchange transaction, or as personalized investment advice. Securities and foreign exchange transactions are not FDIC-insured, are not bank-guaranteed, and may lose value.

terça-feira, 7 de outubro de 2008

1929 vs Today

1929 vs Today

We are in a brutal bear market when and at what level it bottoms is only known by liars. Below are some charts from the 1929-1932 bear market and a current Dow chart. Do not get sucked into thinking it cannot go lower. It seems like the market is due for a bounce, but the evidence just isn't there yet.

How to Ruin the U.S. Economy

Posted on Monday, October 6, 2008, 12:00AM

1) Have a fiscal policy that creates immense deficits in good times and bad, burdening America's posterity with staggering burdens of repaying the debt.
2) Eliminate regulation of Wall Street and/or fail to enforce the regulations that already exist, instead trusting Wall Street and other money managers and speculators to manage other people's money with few or no regulations and little oversight.

3) Have an energy policy that disallows producing our own energy and instead requires that we buy energy from abroad, thus making our oil prices highly volatile and creating large balance of payments deficits, lowering the value of the dollar and thus making the problem get progressively worse.

4) Have Congress mandate that banks and other financial entities lend money to persons they know in advance to have poor credit ratings or none at all.

5) Allow investment banks, insurers, and banks to bet their entire net worth and then some on the premise that borrowers known to be improvident will in fact repay those loans.

6) Allow the creation of large betting pools called "hedge funds" that can move markets and control the outcome of trading, thus taking a forum for savings and retirement for families and making it into a rigged casino game that exists primarily to fleece suckers like ordinary working men and women.

7) Have laws that protect corporate officers from being sued for misconduct but at the same time punish lawyers in the private sector who ferret out such misconduct and try to make accountable the people responsible for shareholder and investor losses. If one of those lawyers gets particularly aggressive in protecting stockholders, put him in prison.

8) Appoint as head of the United States Treasury Department a man whose whole life was spent on Wall Street, who became fantastically rich through his peddling of junk bonds at his firm while the firm later sold short those same sorts of bonds.

9) Scare Americans into putting up $750 billion of their hard earned money to bail out the billionaires and their friends who created the market for loans to poor credit risks (The "subprime" market) and the unbelievably large side bets on those loans, promising that such a bailout would save the retirement savings of Americans, then allow the immense hedge funds to make the market crater immediately afterwards.

10) Propose to save the situation by surtaxing the oil industry, which is owned by our fellow Americans, mostly in their retirement plans, thus penalizing Americans for investing in companies that efficiently and legally produce an indispensable product.

11) Insist that the free market requires that banks and insurers with friends of the Secretary of the Treasury be saved but allow other entities not so fortunate to fail, thus creating total uncertainty and terror among financial institutions, and demolishing all of the confidence built up in financial circles since the days of FDR.

12) Then have the Republican candidate say he would keep on the job the Treasury Secretary who facilitated the crisis, failed to protect the nation from the crisis, got the taxpayers to pony up to save his Wall Street buddies, and have the Democratic candidate, as noted, say he would save the day by taxing the stockholders of energy companies.

There, that should do it.

segunda-feira, 6 de outubro de 2008


Para o espanto dos entrevistadores a resposta foi: CHOCOLATE.

Então foi realizada outra entrevista pedindo para que fossem enumerados os principais motivos.

Confira as respostas:

1. O chocolate satisfaz mesmo quando amolece.
2. Você pode comer chocolate no carro sem ser interrompido pela polícia.
3. Você pode comer chocolate na frente da sua mãe.
4. Se você morder com força, o chocolate não grita e não reclama.
5. Duas pessoas do mesmo sexo podem comer chocolate juntas sem serem chamadas por nomes feios.
6. Chocolate não reclama que você o comeu muito rápido.
7. Você pode pedir chocolate a alguém sem levar um tapa na cara.
8. Chocolate não deixa pêlos na sua boca.
9. Você não precisa mentir para o chocolate.
10. O chocolate não liga se você é virgem ou não.
11.Você pode comer chocolate quando está menstruada ou menstruado.... sei lá.....
12. Você pode comer chocolate em qualquer dia da semana.
13. Um bom chocolate é fácil de se encontrar.
14. Você nunca é muito jovem , ou muito velho para comer chocolate.
15. Quando você come chocolate os vizinhos não ouvem.
16. O tamanho do chocolate não importa, apenas o prazer que ele proporciona.
17. O chocolate sempre cheira bem.
18. Não dói comer chocolate pela primeira vez.
19. Você pode levar o chocolate na bolsa.
20. Você pode comer chocolate à vontade, que nunca vai engravidar.
21. Chocolate não transmite AIDS.
22. Você não precisa usar camisinha pra comer chocolate.
23. Se o seu filho lhe vir comendo chocolate, não vai ficar fazendo perguntas constrangedoras.
24. Ninguém termina um casamento por falta de chocolate.
25. Você não precisa esperar quase uma hora pra comer outro chocolate.

E a melhor de todas:
26. Depois de comer, não precisa ficar abraçado com a embalagem.

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