Posts

Showing posts from October, 2009

Curbing pay will not eliminate roots of crisis

Business Times - 27 Oct 2009


Curbing pay will not eliminate roots of crisis

By LEON HADAR
WASHINGTON CORRESPONDENT

PROPONENTS of the free market were quick to express their disdain over the sight of American bureaucrats imposing restrictions on the pay of executives on Wall Street. The 'socialists' in the Obama administration were taking the first step in having the government dictate salaries in the private sector, they contended.

You know the story. First, they came for the executives in companies that received government bailout money, and I didn't speak out - because I didn't receive government support. Then, they came for everyone else . . . Yep! It's the slippery slope on the road of turning the USA into the USSR, starting with enforcing the level of pay on top executives at 'too big to fail' firms under TARP.

Well, comrade, the Obama administration does have something called a Pay Czar - 'Czar' being a pre-Soviet term - who last week unveiled …

The real Cassandra of the crisis

Business Times - 24 Oct 2009


The real Cassandra of the crisis

Lawyer Brooksley Born had warned that the completely unregulated and unobserved trade in derivatives could bring down the entire financial system

By LEON HADAR
WASHINGTON CORRESPONDENT

MOST of those who follow economic news are familiar by now with the name of Nouriel Roubini, an economics professor at New York University's Stern School of Business, who was one of the few economists who had predicted the financial crisis more than three years ago.

In a speech at the International Monetary Fund (IMF), he warned of an impending collapse of the global financial system and a deep recession.

But there was apparently another Cassandra, who unlike Roubini hasn't been transformed into an instant celebrity, but who more than 10 years ago had not only warned that the completely unregulated and unobserved trade in financial derivatives could bring down the entire financial system, but who also had the guts to stand up to then Fe…

The small problem of the biggest deficit ever

Business Times - 20 Oct 2009


The small problem of the biggest deficit ever

America's huge deficit is likely to remain since any efforts to curb it may be unpalatable

By LEON HADAR
WASHINGTON CORRESPONDENT

OBAMA administration officials are trying to spin the terrible economic news - that the United States registered its largest annual budget deficit in history - by urging everyone to look on the bright side. Yes, the US posted a US$46.6 billion deficit for September and a historic record US$1.42 trillion deficit for the 2009 fiscal year (ended Sept 30).

But, hey, there was some good news. The budget deficit was actually lower than expected.

Indeed, the size of the deficit this year wasn't as bad as government economists had originally thought it would be. In August, federal budget analysts calculated that the government would end the year US$1.58 trillion in the red. And in May, they had predicted a deficit of US$1.84 trillion.

'This year's budget deficit is lower than we…

Federal Reserve in Capitol Hill crosshairs

Business Times - 16 Oct 2009


Federal Reserve in Capitol Hill crosshairs

But it's hoping that signs of rebound would ease political momentum of 'audit the Fed'

By LEON HADAR
WASHINGTON CORRESPONDENT

IT'S not surprising perhaps that the US Federal Reserve system has traditionally been the target for bashing by America's populist movements on the political left and right. It has also become an obsession for many conspiracy theorists everywhere, who depict it as the central headquarters of a mighty yet shady cabal of financiers who control the global economy and promote the interests of the Ruling Class.

After all, the Fed - a set of 12 regional banks under the direction of a seven-member board of governors appointed by the president and approved by the Senate - is one of the most powerful public institutions in Washington if not in the world; its decisions could determine whether national economies, private business or your average consumer would be poor(er) or rich(e…

Weak dollar conspiracy theories are moot

Business Times - 13 Oct 2009


Weak dollar conspiracy theories are moot

There may be very good reasons why the Arabs, Chinese and Russians should meet

By LEON HADAR
WASHINGTON CORRESPONDENT

NEWS reports about the ups and down and the US dollar tend to be buried in the business sections of American daily newspapers and heated discussion about this somewhat technical and esoteric subject are usually confined to a relatively small circle of investors and financial analysts.

Last week, however, the greenback ignited excitement - and not only among currency traders - after The Independent, a London daily, came out with an explosive scoop on Monday suggesting that officials from the Arab oil sheikdoms, Russia and China were working together to find ways to stop using the US currency in order to set the value of oil deals.

The report by veteran Middle East correspondent Robert Fisk had all the making of a espionage thriller in which shadowy conspirators - Arab sheiks, ex-KGB agents, communist …

Whose recovery is it anyway?

Business Times - 08 Oct 2009


Whose recovery is it anyway?

Most Americans view the current recovery to be more statistical or technical than real

By LEON HADAR
WASHINGTON CORRESPONDENT

ECONOMISTS have yet to embrace a universal term for the downturn that the American and global economies have been experiencing since December 2007.

At the early stages of the slump when it looked as though the world as we had known it was coming to an end, some pundits were naming it the Great Depression II. The less apocalyptic-sounding names included the Credit Crunch and the Financial Crisis. Now that things seem to be under control - or so everyone hopes - the more common term used by the experts is the Great Recession.

Indeed, a depression usually describes any economic downturn where real gross domestic product declines by more than 10 per cent, while a recession is an economic downturn that is less severe. And given that this has been the worst American economic recession since the end of World Wa…

US jobs data show situation could worsen

Business Times - 06 Oct 2009


US jobs data show situation could worsen

Unemployment at its highest in 26 years means confidence could take a hit

By LEON HADAR
WASHINGTON CORRESPONDENT

THE report coming out of Copenhagen about US President Barack Obama's high-profile failure to win the Olympics games for Chicago made for a less than auspicious backdrop for the other depressing news last week.

The latest jobs report that was issued by the US Labour Department on Friday seemed to be worse than the economists had predicted. The consensus among economists had been that the American economy would lose 190,000 jobs in September. Instead 260,000 were lost, with the unemployment rate rising to 9.8 per cent, the highest it's been in 26 years or - to make it sound even worst - in a quarter century.

If the decision by the International Olympic Committee (IOC) to reject Chicago's bid to host the 2016 Olympic Games came as blow to the perceived international star power of President Obama w…