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 yen gained against the euro and the dollar on speculation the global economic recovery will slow, reducing demand for higher-yielding assets.
The yen rose to 134.95 per euro as of 1:25 p.m. in Tokyo from 135.89 in New York yesterday, after earlier reaching 134.90, the highest level since Oct. 20. Japan’s currency fetched 91.12 per dollar from 91.80. The dollar traded at $1.4808 per euro from $1.4804 yesterday, when it touched $1.4770, the strongest level since Oct. 13.

The dollar fell against the Japanese currency after the Wall Street Journal reported, citing people familiar with the situation, that the U.S. Treasury Department and GMAC Financial Services Inc. are talking about a third round of taxpayer support for the lender.
“This development may renew worries over the health of the U.S. financial sector,” Takashi Kudo, director of foreign- exchange sales at NTTSmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp., said about the GMAC report. “This could add to the argument for the Fed to keep borrowing costs low, and would likely be negative for the dollar and positive for the yen.”
The infusion would range from $2.8 billion to $5.6 billion and be in the form of preferred stock that may increase the government’s stake from its current 34 percent if converted to common equity, the Journal said.
The dollar reached 92.32 yen yesterday, the strongest level , on speculation that Federal Reserves will change rhetoric on the duration of credit easing when policy makers meet next week.

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. 
Our markets on Last week:

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.

Research firm Forrester continues to look ahead to a strong recovery in the U.S. IT market, with 7.7 percent growth, led by IT consulting services (up 11.4 percent), software (up 9.3 percent), and computer equipment (up 8.3 percent). Communications equipment will be slower to come back, but will still increase by 3.6 percent and the IT outsourcing will rise by 4.5 percent. For this latest outlook, Forrester analyzed data on IT investment and economic growth reported by the U.S. Department of Commerce and incorporated its data in its own proprietary forecasting model for U.S. IT spending. Forrester also analyzed the financial reports of 49 IT vendors to identify quarterly trends for different technologies in the U.S.
The outlook notes that the growing revisions to U.S. IT investment data in 2007 and 2008 by the U.S. Department of Commerce raised the base periods for measuring 2009 growth, making the 2009 declines even greater than before. "Those revisions confirmed Forrester's position that a tech boom was starting to take shape in 2008, before being rudely interrupted by the September financial crisis," says Andrew Bartels, Vice President and Principal Analyst, Forrester Research.

With revitalization in sight, Bartels advice to tech vendors is to stop the cost cutting. "Despite the deeper-than-expected cuts in tech purchases in the first half of 2009, the stage is set for a revival of the U.S. tech market starting in Q4 2009 and gaining strength in 2010. So, now is the time for tech vendors to step up sales and marketing, and get ready to take advantage of the rebound in tech buying," adds Bartels.

DEVELOPING economies are leading the world in economic revival after the global financial crisis and will become an increasingly more important part of the international economy, says an index prepared by banking group HSBC.
HSBC launched its emerging markets index (EMI), based on data from more than 4000 purchasing managers from companies in 13 emerging countries, such as China and India.
The index shows that emerging markets industrialized and services output has recovered more swiftly and to a higher level than developed economies since the financial crisis last year.
The HSBC EMI shows emerging markets manufacturing and services yield surge in the third quarter of 2009 to 55.3, from 50.7 in the second quarter of this year.
The index hit an all-time low of 43.8 in the fourth quarter of 2009.Any reading above 50 signals expansion.
HSBC chief economist Stephen King said the index showed that while there were some encouraging signs of recovery in the industrial world, the real economic action was taking place elsewhere.
"Although the United States remains the most important trading partner for many emerging nations, its relative importance is declining,'' Mr. King said.
HSBC expects emerging nations to place economic growth of six per cent next year, while developed world will expand by only 1.8 per cent.
HSBC group chairman Stephen Green said that as the world's economic centre of severity shifted from west to east, the economic strength of emerging markets would play an increasingly central role in the development of financial markets and international relations.
HSBC head of global markets Tony Cripps said the implication for the Australian economy from the switch from developed to emerging-led economic growth were positive.

He said the knob would continue to increase demand for commodities and push up commodity prices.
Mr. Cripps said markets such as China would become more dominant determinants for the Australian dollar than the US.

Wealth can be defined in many ways and true wealth is not only cramped to financial wealth but includes other factors as well. The examples below focus on financial wealth and financial independence.

There have been bounty of studies which tried to determine if wealth equals happiness and while the opinions may differ there seems to be a connection between financial wealth and happiness.

Here are two reports that attempted to answer the question:

1.‘Does Money equal to happiness?’
2. ‘Why Money Doesn’t Buy Happiness?’ 
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.

An individual who is financially dependent has fewer options to choose from and spends most time to make other people happy such as ‘the employer’.

Time may be a key factor when it comes to happiness and time may just be your most precious asset. In today’s world time has become a very expensive ‘commodity’ but nevertheless the majority treats their time worse than the ‘Septic Tank’ and the ‘International Beggar’ treat the U.S. economy.

The majority uses the same tool in order to rape their time and completely disrespect their most precious asset:
Mutual Funds!

Mutual Funds are the most efficient way to waste money.
Mutual Funds are the most efficient way to destroy wealth.
Mutual Funds are the most efficient way to underperform on a constant base.
Mutual Funds are the most efficient way to illustrate stupidity.

Laziness decreases both health and wealth and mutual funds are just about the ‘laziest mismanagement tool’ available in the markets.

Happiness is a state of mind and each individual needs to define what classifies happiness in their case but a numerical value is not the best ‘Happy-Meter’.
So, when are you wealthy?

That’s one question which many people have asked themselves and definitions about that topic differ.

Here is one definition:
Consider you are completely satisfied with your current life-style. If you would retire today and you have enough money (passive income) to continue the exact same life-style until you reach 100 years of age then you are wealthy.

Let’s put some numbers to the above definition of wealth and examine two examples, one were the persons is wealthy and one were the person isn’t wealthy.

Example 1 – Wealthy Person:
1.Assume that your current life-style is completely satisfactory to you and you don’t wish to change it and that it costs you $100,000 per year. You are 35 years old.

2.So, given the guidelines of the above example, you have 65 years until you reach 100 which means that you will be considered wealthy when you have $6,500,000 (65Y * 100K).

3. You could retire now and continue to live the same life-style. If you decide to only put it into a money market account which currently earns you roughly 3% interest you would be able to live of the interest and if you don’t ‘upgrade’ your life-style your capital would actually increase. Even if you chose to ‘upgrade’ as long as you won’t spend more then the monthly interest you would increase your wealth as well.

Since you can live of the interest wouldn’t a smaller amount of capital be required to be wealthy and financially independent?

Yes, of course. The definition above is an extreme and without the ‘addition’ of funds (i.e. interest payments, capital gains, asset appreciation).
If you assume an annual return of only 3% you could achieve that status with about $3,400,000 (make that $4,000,000 due to taxes) since 3% annual ROI would yield you $102,000.

Example 2 – Rich Person which is not wealthy

1.An individual, who has $100,000,000, is 35 years old and has current ‘life-style’ expenses of $6,000,000 per year.

2.Once again, excluding the ‘addition’ of funds as described above, that individual would ‘run-out-of money’ in less then 17 years and therefore although rich at the moment not wealthy.

3.To consider that individual wealthy the total assets would need to be $390,000,000 (65Y * 6M).

Again, the above examples are very simple and exclude many things such as appreciation of assets, taxes and inflation which therefore could be considered unrealistic and capital requirements as to high in order to achieve ‘wealth’ status

The example used the ‘cash-is-king’ rule but if an individual reaches the definition of wealth as described above any financial problems, given that the life-style expenses used to calculate wealth won’t increase, should be ruled out and that individual can fully be classify as a wealthy and financially independent person.

What is your definition of wealth and when would you qualify an individual as wealthy?


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.

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