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..There's a little Samuel Pepys in all of us..

Saturday, August 06, 2011

A few updates to follow on.. and a couple of issues which cropped up later in the day..
Standard and Poors issued a report late yesterday afternoon.. downgrading the credit rating of the US to AA+ from the triple-A rating it's always held..
And this is a direct result of the cavalier manner their recent loan extension legislation..
It's also a direct hit on Obama, and his fiscal policies.. this downgrade will have major resonance until November next year..
The Americans have lost face, and they know it.. It will take a minor miracle for Barack to regain a fraction of the national confidence which swept him to power..
It also reflects the problems his administration can have, should a contentious issue need to pass legislators quickly..
S&P said in its report issued late on Friday..
"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilise the government's medium-term debt dynamics.. More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policy making and political institutions have weakened at a time of ongoing fiscal and economic challenges.. The political brinkmanship of recent months highlights what we see as America's governance and policy making becoming less stable.. less effective.. and less predictable than that which we previously believed.."
If there is one trait these fragile global economies cannot endure, it is hubris.. and the American legislative process held the world to ransom for nearly nine days..
Now, there are those who say the American economy can absorb this downgrade.. that S&Ps have 'misinterpreted' the figures.. But others are concerned with the warning from S&P, intimating this would be under review in two years time, and again, this, too, will reflect directly on Barack.. His response was painful platitudes.. "We can come through this.. we will come through this, together.."
Truth is.. that Obama's merely the unfortunate President, to have problems of this magnitude.. He has inherited five decades of profligate spending...
Now the following is a quote from Wikkipedia.. and is perhaps the best in describing economic spirals..
"The usual explanations include numerous factors, especially high consumer debt, ill-regulated markets that permitted overoptimistic loans by banks and investors, the lack of high-growth new industries.. and growing wealth inequality, all interacting to create a downward economic spiral of reduced spending, falling confidence, and lowered production.."
This described the conditions which led to the Great Depression.. which took the world ten years to recover from..
And with the serious concerns about the stability of the Eurozone compounding the effects of the collapse of the world's largest economy.. we, here in Britain, stand somewhat insulated.. but still between a rock and a hard place..
Our two largest trading partners are taking economic bodyblows.. France is looking at an election in 2012.. and uncertainty concerning Sarkozi's future is directly influencing the 'consumer confidence index' in that country..
Italy is carrying a debt load of more than 3 trillion Euros.. and an economy that could well need a bailout of unprecedented size, with terms either Italy or possibly Spain, could accept..
The entire world has mortgaged it's grandchilden's future to pay for a short 50 years of over-indulgence and profligate lending.. and all those economies already salvaged, along with those waiting in the wings.. will need terms that at least show a glim of light at the end of the tunnel..
There has to be a timeframe, even if it be say, thirty years, for the reduction of the principal to the point where it no longer has a direct impact on the man on the street.. To deny that hope, would be to admit the real consequences of our credit society which would only exacerbate the situation..
What hurts.. the unpleasant measures some might call Draconian.. is felt most keenly by those who can least afford it.. Those on pensions and other fixed-income schemes..
When the price of a chocolate bar is 80 pence.. when all the household basics begin costing just that bit more everytime they go out.. pensioners notice..
When electicity and gas bills go up by 16% and 12% respectively.. pensioners notice.. The popular phrase bandied about in the media.. ' or heat..' is not an issue to smile about..
It's going to be a reality for some..

As previously mentioned.. there will be a meeting early in the week of the G7 Finance Ministers.. Their primary concern will be the problems Spain and Italy will soon be facing.. It would be catastrophic for both the Eurozone, and the single currency, should either of those countries find themselves needing a bailout..
But this is a global problem.. and Deputy Finance Ministers from the Group of 20 leading economic powers held a conference call on today to discuss the crises in Europe and the United States.. This, according to a Brazilian Finance Ministry official..
Investors are eager to see signs of a coordinated policy response among major economies, which might prevent the crises from spreading or getting worse..
Deputies routinely prepare the ground ahead of meetings by top officials..
A European source said G7 Finance Ministers and central bankers from the largest developed economies could confer by telephone later today.. perhaps tomorrow..

Now.. something to take note of..
Union Finance Minister Pranab Mukherjee said earlier this afternoon.. that India is the second fastest-growing large economy in the world, and is widely expected to be among the top three economies in the next two decades..
Addressing the National Conference of Confederation of Indian Industry (CII) in New Delhi, Mukherjee said: "The global economy has just witnessed one of its worst crises in recent history and is still suffering from its aftermath. It is a matter of pride for us that the Indian economy experienced only a brief pause in its rapid growth and could recover with an average of over eight percent growth in the years following the out-break of crisis.. In the past two decades, the Indian economy has rapidly globalised.. and from around 2003-04.. it has moved on to a higher trend GDP growth rate of 8.5% to 9% per annum," ..
Not bad.. considering we're looking at a gain of what.. 0.5%..?

A brief mention here..fears over the EuroZone debt crisis spiralling out of control sent Italian bond yields to 14-year highs and the Milan bourse to more than two-year lows this past week.. But those who might be looking for something to stabalise the market will have to consider options which do not include the calling of a snap election.. While Spanish Prime Minister Socrates decided he needed a fresh mandate for his austerity program.. Italian Prime Minister Silvio Berlusconi today ruled out calling early elections to stem market panic that has pounded Italian assets and forced his government to bring forward austerity measures..
Berlusconi's conservative government has been weakened by infighting, and the Leftist Opposition has called for a government of technocrats to restore credibility in the country's finances..
Italy is due to go to the polls in 2013..

We mentioned a few days ago.. that the US had 'lost face'..
China.. the largest foreign holder of United States debt.. said earlier today that Washington needed to “cure its addiction to debts” and “live within its means,”.. this diplomatic slap on the wrist came just hours after the rating agency Standard & Poor’s downgraded America’s long-term debt..
The sternly worded commentary, which was released by China’s official Xinhua news agency, was Beijing’s latest effort to express its displeasure with Washington..
Beijing’s reaction to the downgrade was the harshest among foreign leaders though..
Officials in Japan and France said their faith in the United States government remained strong.. The Australian Prime Minister, Julia Gillard, warned against overreacting.. while the Indian Finance Minister, Pranab Mukherjee, said the downgrade had created a “grave” situation, one that would require some time to analyze..
Beijing has a limited field of options though.. it must continue to buy United States Treasury bonds just to protect the value of their investment.. China holds $1.1trillion in US debt.. but, Chinese officials are clearly concerned that the country’s substantial holdings of American debt are being devalued.. The commentary, which was televised throughout the country, was vitriolic in it's assessment of the US.. “The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” was part of the story as published in the Chinese press, and reported by the State media..
“China, the largest creditor of the world’s sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China’s dollar assets.. International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country,” .. the Xinhua news agency reported..
A 'global reserve currency'.. an interesting, and somewhat threatening thought from such a powerful nation..

A group known as Anonymous announced this afternoon that it has hacked some 70 law enforcement websites across the Southern and Central United States.. in retaliation for the arrests of its sympathizers in the U.S. and Britain..
The group also claimed to have stolen 10 gigabytes of data, including emails, credit card details, and other information from local law enforcement bodies..
"We are releasing a massive amount of confidential information that is sure to embarrass, discredit and incriminate police officers across the U.S..." said the group.. adding that it hoped the leak would "demonstrate the inherently corrupt nature of law enforcement using their own words" and "disrupt and sabotage their ability to communicate and terrorize communities."
And they want to trust this medium, to prompt issues to be raised on the floor of the House..?

In the deadliest day for American forces in the nearly decade-long war in Afghanistan.. insurgents shot down a Chinook transport helicopter on today, killing 30 Americans and 7 Afghan commandos on board..
American officials said later this evening that 22 of the dead were members of a Navy SEAL unit, along with other American servicemembers and the Afghan unit.. The helicopter was hit by a rocket-propelled grenade in the Tangi Valley of Wardak Province to the west of Kabul, one coalition official said, though others said the exact weapon remained in question..
Now if ever there was doubt the Taliban posed a threat to the stability of Afghanistan, it has surely been dispelled..
The war against the Taliban is one which has no forseeable end.. There are simply too many of them, and the terrain is not only vast advantage they posess..
As evidenced by the destruction of the Chinook and all aboard..
Russia eventually had to say 'enough' and walk away..
The time for us to see whether the pro-Western government of Karzai sinks.. or swims.. on it's own..
We can't afford not to..

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