Drama’s Roundup - January 11, 2008
Posted on January 11, 2008
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Today’s episode of Drama’s Roundup will focus on the United States “economy.”
U.S. stocks sink on write-downs in financials
Why It’s Interesting: The central bank’s increasingly futile attempts to save the US economy are becoming more apparent. Although stocks jumped Thursday on the back of Ben Bernanke’s comments about “substantive additional action” and Bank of America’s buyout of tattered mortgage lender Countrywide (which you’ll be helping them finance), they were down again sharply on Friday on the back of more write-downs (including a possible $15 billion Merrill Lynch loss), signs of slowed consumer spending, a trade deficit and increasing predictions that a recession is going to occur.
Why It’s Interesting: If even traditionally delusional consumers aren’t confident, we’ve got problems.
Who’s Afraid of Mideast Money?
Why It’s Interesting: “Sovereign wealth funds from the Persian Gulf are changing the face of global finance in ways that unnerve many Westerners. In recent months Gulf funds have bought large chunks of Citigroup (C), the private equity giant Carlyle Group, semiconductor heavyweight Advanced Micro Devices (AMD), planemaker European Aeronautic Defense & Space (EADS), and many other big companies.” When David Rubenstein, a founder of Carlyle, states “We will be working for them” it might be time to formally introduce Americans to their new overlords. They gave you oil and you gave them your country. Good deal, no? Fortunately, maybe they’ll be generous and bail you out.
Why It’s Interesting: If you understand economics, you understand why the increase in gold does not bode well for the United States economy. I’m not complaining though. My investments in gold, which began in late 2005, are looking better and better by the day.
Subprime woes to hit student loans
Why It’s Interesting: Anybody with half a brain knew that it would only be a matter of time before the subprime problems started spilling over into other areas, but it’s sad to see that Americans relying on student loans may have to pay more for their subprime college educations.
Why It’s Interesting: As The Nation columnist Barbara Ehrenreich notes, “If hard times have already fallen on a majority of Americans, then ‘recession’ doesn’t seem to be a very useful term any more.” She suggests that the traditional “fixation” on “growth” as a measure of an economy’s health may no longer be useful as “growth, some of the economists are conceding in perplexity, has been ‘de-coupled’ from mass prosperity.” A good read that raises some interesting questions about the illusions of growth, productivity and employment rates.
The Fed May Have to Play Catch-Up
Why It’s Interesting: BusinessWeek observes that “Rising joblessness suggests the downdraft from the credit crunch is spreading, and the central bank will have to slash rates more aggressively to avoid a nasty recession.” The problem with this, however, is that slashing rates more aggressively is equivalent to printing money more aggressively. Printing more money is little more than a short-term band aid and the longer-term expense is potentially far worse - the destruction of America’s currency.
Why It’s Interesting: If the above seem depressing, take solace in the fact that things are going great in the world of Web 2.0. That’s right, data portability is with more and more great companies joining the DataPortability Work Group. Pay no attention to the cynical comment by “Steve” which states “The real story here is why does anyone think that industry leaders joining a standards committee is news.” Celebrate the news that as the US economy crumbles, the walls of closed data access are crumbling too thanks to the “Gandhi-esque resistance” of people like Robert Scoble.
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