Summary: As the slumping economy continues to worsen, questions had to be asked and answered. The United States Federal Reserve chairman Ben Bernanke was in the hot seat today over the financial crisis, he was asked questions of why the economy crashed in 200 ...
Sunday, September 5, 2010
Huge earthquake rocks Christchurch New Zealand – Before and After Pics
BEFORE Photo from TwitPic - scottjpalmer
BREAKING NEWS: One of the biggest earthquakes in recorded history has struck Christchurch and the South Island this morning.
The massive 7.4 magnitude earthquake hit before dawn, causing widespread damage and cutting power.
The quake was centred 30km west of Christchurch and 33m underground. It hit at 4.35am and there have been many reports of damage.
It was felt widely across the South Island, including Christchurch and Timaru, and there have also been reports of the quake being felt as far as Wellington. Several aftershocks have been felt.
The rail network in the South Island has been shut down while it is inspected for damage.
Civil Defence is considering activating its emergency management national crisis centre.
Saturday, September 4, 2010
More than 400 US Banks Will Fail: Roubini
Even if the US and European economies manage to avoid a double dip, it will still feel like a recession, while more than half of the 800-plus US banks on the "critical list" are likely to go bust, according to renowned economist Nouriel Roubini of Roubini Global Economics.
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cnbc.com |
The second half of the year will remain weak as tailwinds become headwinds, Roubini told CNBC on the shores of Lake Como, Italy at the Ambrosetti Forum economics conference.
"In the second half, fiscal policy becomes a headwind, no more cash for clunkers," Roubini said. "The positive scenario is that growth will be below par."
Roubini recently said the chance of a double-dip recession in the US was now more than 40 percent.
"The big risk is that there will be a downturn in markets that could impact the bond, the equity and the credit markets," he said.
“Job losses have been higher, the US jobs number will show that. There is no private sector jobs growth," he said. "Consumption is weak, exports are weak and housing is weak."
"If there is no final sales and no final demand, companies will not invest," he added.
New Normal Coming and More Banks Will Fail
Roubini said he believes hopes of decoupling will be dashed as the slowdown in the US impacts China, Japan and the euro zone.
"In Europe, Germany is strong but the rest of the continent is pretty dismal," he said. "The rest of the world cannot cope without the prop of the US consumer. Chinese growth in the second half will be 7 percent."
“Get used to it," Roubini said. "Deleveraging has to continue as governments and consumers deleverage in the developed world."
“The biggest banks have been backstopped, but 800-plus small- and medium-sized banks in the US remain on the critical list and half of those will go bust."
Nouriel Roubini -
Roubini Global Economics
Nouriel Roubini -
Roubini Global Economics
"We have to expect the new normal," he added. "We do not need a double dip for it to feel like recession."
“The biggest banks have been backstopped, but 800-plus small- and medium-sized banks in the US remain on the critical list and half of those will go bust," Roubini said.
Roubini said corporate and consumer debt problems will get worse and that there are more problems ahead in the commercial and residential property market.
"Policy makers are running out of bullets, the problem is we need fiscal consolidation, fiscal policy is constrained by the debt problem, monetary policy is becoming ineffectual," he said.
Roubini, known as Dr. Doom to most and voted as Roubini the Realist by CNBC.com readers, said further quantitative easing is pointless as interest rates are already low.
"We are in a liquidity trap and we have insolvency problems," he said.
“What we need is credible spending plans over the medium term on health care, welfare and retirement age," Roubini said. "This will create a fiscal constraint lasting well into next year."
"The best growth over the next 18 months will come from the domestically-focused Brazil, which will outgrow China for the first time in 20 years," he added.
US Mulls Afghan Bank Bailout
Officials with the Kabul Bank have announced a cash withdrawal limit of $1,000 per customer today as large numbers of depositors swarmed the bank and fear of a full-on bank run rose. The US Treasury Department is said to have assigned a team to “investigate” the matter, but a panic could cripple the banking industry and spark US intervention.
Amid the panic the Afghan government insists that it will back the bank’s deposits entirely, but the run seems to be continuing and it is unclear how able they would be able to cover a major failure without international, presumably American, funding.
With all the political fallout from bank bailouts within the United States, the prospect of the US government going abroad and bailing out a struggling bank or even a struggling banking system in a foreign country, even an occupied one, would be a matter of considerable controversy.
At the moment the Afghan government insists the well connected bank, which is partially owned by President Hamid Karzai’s lesser known brother Mahmoud, is solvent, but a number of bad investments in foreign real estate and iffy loans made to “insiders” within the notoriously corrupt government leave its future very much in doubt.
Though officials tried to downplay the risk even if the banking sector does collapse, insisting that only about 5% of Afghans even have bank accounts, the fact that these five percent are almost exclusively allies and contractors to the occupation forces and people in the employ of the government is no small concern. With many Afghan security forces using these banks to cash their paychecks, the already enormous rate of attrition could soar even further, imperiling NATO’s designs on building up a massive Afghan military to fight its battles.
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