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The crisis of 2008-09 is seen as a crisis of capitalism. Self-regulation of financial markets in the United States is condemned and the unwillingness of the market-oriented system to learn from past experiences of a similar kind is stressed. Nowhere though is neo-liberalism defined. Markets are seen to be inherently inefficient, unable to gauge risks, and unable to create effective demand to match growing supply. Unregulated markets in financial assets are unrelated to the real economy and were the root cause of the crisis.

It appears that they would like to see an economic system that is focused on government spending to uplift the poor and not on industrial and finance development. They must welcome the stimulus packages of the United Progressive Alliance government focused on raising rural purchasing power. They do not consider expanding supplies as a necessary element. Nor do they recognize the role of private versus state entrepreneurship in bringing about speedy economic growth and employment.

In recent years, the financial flows have gone far beyond the requirements of the real economy. Many novel financial products were developed that assumed that risks were measurable and that people acted rationally and hence the markets could be managed. The excessive dependence of the U.S. on cheap imports from China, its huge current account and budget deficits, the low interest rates to keep that economy stimulated, and the decline of American domestic savings almost to zero led to overextension of credit for housing, consumer goods, and other items.

The International Monetary Fund (IMF) has revised up its forecast for global gross domestic product. Initially the IMF predicted a 2.6 percent decline for this year, but has now updated its forecast to a slightly better 2.3 percent decline. It predicts growth of 2.3 percent in 2010.

Dougal Crawford, senior economist at government credit agency the Export Finance and Insurance Corporation, believes aggressive public policy in both advanced and developing countries have played a significant part in the recovery. “Clearly, public policy has supported output, limited the collapse in the global financial system and boosted confidence,” he said.
Despite signs of recovery, growth will be restricted by the private sectors in the major industrialized economies repairing their balance sheets and high unemployment.
And although the housing market in the US was steady, “housing activity remains very subdued and any recovery will be constrained by high unemployment, households focusing on rebuilding savings and a large stock of unsold existing homes,” he said.

The key benchmark indices were flat in the early deals in the midst of mixed cues from global markets. The Sensex was up 12 points at 17,208 levels and the Nifty rose 5 points to 5,114.While some buying interest was seen in power and IT stocks, metal counters were under pressure. The BSE metal index fell 2.1 per cent. The power index on the BSE gained 0.5 per cent and the IT index rose 0.7 per cent.

Amongst the Sensex stocks, RCom led the gainers. The stock rose 2.5 per cent. Reliance Infra, TCS and Wipro advanced more than 1 per cent each. Sterlite Ind, however, was the biggest loser in the pack. The stock plunged more than 7 per cent in early trades. In US markets, stocks advanced modestly on Thursday as a jump in the price of oil lifted energy companies and offset weakness in bank shares.

The Dow rose 47.08, or 0.5 percent, to 10,062.94, its highest close since Oct. 8 last year. The broader Standard & Poor's 500 index rose 4.54, or 0.4 percent, to 1,096.56. The Nasdaq composite index rose 1.06, or 0.1 percent, to 2,173.29.Asian markets were trading mixed today. Japan’s Nikkei and Hong Kong’s Hang Seng were trading with marginal gains. South Korea’s Kospi was down 0.3 per cent and China’s Shanghai Composite slid 0.5 per cent.

We come back after a day’s shatter and all is well with global markets. We had a very good move last week which has got us way back above that 5,000 mark yet again. So, we start on the front-foot this morning, no question about that, lots of earnings have come in and they have been good so far and the big question is whether the Nifty can negotiate its way past 5,100 this week on the back of earnings where it has got stuck a few times in the past. 

Last week was surprisingly good, yes; I don’t expect people expected to see suddenly a 300-400 point move on the Sensex. It came on the back of many large cap players. Earnings so far have been pretty okay, there has been no problem with the frontline earnings from the IT and financials. We have had global markets remaining fairly stable as well. So I think we start off on a positive note today after the break and hopefully we will make it past 5,100 this time around.  

On global markets:

People are watching over their shoulders but so far there has been no smash on the global screen at all; the Dow is very close to the 10,000 mark; it’s almost there and I think if it crosses over psychologically that might mean quite a bit for traders out there. The Commodity Research Bureau(CRB) index is trading at two month high despite the fact that base metals have corrected a bit, crude is at USD 74 per bbl, the Volatility Index (VIX) shows no sign of rearing its head; its languishing at 22, so there is no problem that is visible, gold is trading at USD 1,070 per ounce. 

So while everyone is talking about the possibility of the technical correction and that’s purely if not for anything else the fact that the markets have not corrected at all for the last many weeks and months in any significant fashion but that said that’s an expectation, the real screen is actually not betraying anything. We saw little bit of an impasse with global flows over the last few weeks but FIIs covered up their short positions on Monday; 500 crore of Nifty futures buying, they got some money in the cash as well. So from a flows perspective as well things haven’t turned yet, so it seems like the global support is very much there at least yet.      

Will we need money flow for the Nifty to move higher? 

Last week was not surprising because of the two possible triggers, one was the Reliance news or the Ambani news and we saw it reflected in most of the Reliance group stocks; Index of Industrial Production (IIP) numbers were good and expectedly so but even so that might have rubbed off to sentiment and we saw some short covering from the FIIs, so all of that lead the market back to 5,050.

The first few wages have not been too bad so there have been no great disappointments there either. So it appears that the Nifty might head back to 5,100 kinds of levels. Now whether it stalls there once again as it has the last few times or this time since there is some sense of leadership, the market might take that out and head closer to 5,200. I think we will figure that out over the next three-four days particularly as more earnings kick in. 
   

The U.S. tech market projected to recover in fourth quarter of 2009 (Q409), followed by the global tech market improving in 2010. According to the latest Q309 Forrester Research 'U.S. and Global IT Market Outlook,' the Q209 was another down quarter in the U.S. and other markets as expected.

An individual who is financially independent may be more happier since more options are on the table to choose from in order to achieve happiness.

It seems like a nightmare with no end in sight. Dumb Money will hail their fight for survival but ignore the fact that both companies, GM and AIG, should have fallen victim to Economic Darwinism a long time ago. GM should have filed for Chapter 11 last year, while AIG should have been completely wiped off the financial and economic map. A long time ago, those two were considered blue chip global economic giants but have crumbled ever since that bubble busted. Now they are nothing more than a Dumb Money illusion, and they try to hold on to them regardless at what cost and negative economic impact.

GM's only option was bankruptcy but idiotic socialist policies thought it would be nice to waste over $30 Billion before they have to give in and understand that bankruptcy is the only solution for a severely mismanaged, over-employed and debt ridden company on the decline (Experts say GM bankruptcy almost inevitable; AP). GM's new CEO Henderson, who took over after the government ousted former CEO Wagoner in a move way overdone but accomplished with wrong methods, continues to hold on to his hope that GM may avoid a necessary bankruptcy filing which needs to be followed by more heavy job cuts (GM CEO says tasks are large to avoid bankruptcy; AP).

Another possible step after the bankruptcy filing is to leave Detroit, once an auto manufacturer fortress which has since broken down to one of the poorest big cities in the country with plenty of challenges ahead, altogether (GM chief leaves door open to move out of Detroit; AP). Michigan politicians scramble to avoid such a move. In the meantime, six GM executives dumb over 200,000 share into the market in an attempt to at least get a few bucks out of the collapsed automaker (Six GM executives sell more than 200,000 shares; AP). GM dismisses the sales and claims there is no lack of confidence by executives. Sure, and a mutual fund is a professional investment vehicle managed by sophisticated investors. Pathetic!

Chrysler has already filed for Chapter 11 and Fiat picks up what they want. Fiat also offered to snap up all of GM's European assets, most likely during the Chapter 11 filing. Ford, soon to be the only U.S. auto manufacturer left, continues to struggle for survival. Ford has avoided to ensure their total collapse and refused to take socialist money. They rather go down then allow the Obamanites to ruin the company, which makes their survival more likely.

Ford will continue to face tough times over the next few years and needs to accelerate their cuts in operating expenses. Ford has offered 300 Million shares to boost capital (Ford offering 300M shares in public offering; AP). Unless the UAW does not play along, Ford may have to follow Chrysler and GM with a bankruptcy filing sometime next year.

AIG, which has cost taxpayers over $200 Billion due to severe lack of competence and idiotic socialistic agendas, continues to trim down and sell assets (AIG sells Japan headquarters for $1.2 billion; AP). AIG takes their time to get rid of parts of their business and they may finally face reality. AIG should have been gone over six months ago and while they attempt to imitate to operate as a viable business they lose customers as well. It is only a matter of time, and once the second wave of the financial crisis hits, the economy resumes its downtrend and the credit crisis starts to unfold, AIG will not have the strength to continue to follow their illusion and pay the bill for constant mismanagement.