Its not a crisis of confidence

"The real problem with the economy is that long accepted patterns of cross-border technology transfer, trade, and finance are simply unsustainable."

Ben Bernanke, the chairman of the Federal Reserve supports that: "at the root of the problem is a loss of confidence by investors and the public in the strength of key financial institutions and markets"
On Oct. 20, Paulson went further, explaining the bank recapitalization program this way: "Our purpose is to increase confidence in our banks and increase the confidence of our banks so that they will deploy, not hoard, their capital. And we expect them to do so, as increased confidence will lead to increased lending."

The implication of the Bernanke-Paulson view is that the underlying economic system is fundamentally sound, so that restoring trust in the financial system will put us back on a growth course. From that perspective, the infusion of massive amounts of capital into banks, which replaces the money lost in bad mortgages, will enable lending to begin again. Once investors see that all is well, then they will cease their irrational behavior, and start putting money back into stock markets and companies around the world.

However, what if the Bernanke view is wrong? What if financial stress is a symptom, not a cause?
Click here to read more

Slower boat from China

PERHAPS it should not be considered surprising.Consensus predictions had been for a more modest decline amid fading hope that China’s economy was fundamentally “decoupled” from the West. It is now becoming necessary, on a near daily basis, to re-evaluate just how much independence its economy enjoys.You can read the article here

W.

A chronicle on the life and presidency of George W. Bush

A bigger world

"GLOBALISATION used to mean, by and large, that business expanded from developed to emerging economies. Now it flows in both directions, and increasingly also from one developing economy to another. Business these days is all about “competing with everyone from everywhere for everything”, write the authors of “Globality”, a new book on this latest phase of globalisation by the Boston Consulting Group (BCG)."

Follow this link to read the interview to Mr Matthew Bishop a Chief Business Writer, US about globalization and capitalism

China signs zero-tariff trade deal with Senegal

Since we are discussing trade, :

China signed Friday a trade deal with Senegal to offer zero-tariff treatment to more than 400 categories of goods imported from Senegal.

The agreement was inked by Chinese Ambassador to Senegal Lu Shaye and Senegalese Minister for Commerce Mamadou Diop in Dakar, Senegal's capital.

The trade deal will elevate their bilateral trade and economic ties to a new stage and will also foster people-to-people exchanges between the two sides, said Lu.

The two peoples will benefit from the agreement which raised the number of tariff-free Senegalese export products to China from about 190 in 2005 to more than 600, the Chinese ambassador added.

Diop said that the agreement was of great significance for the two countries to strengthen their economic and trade cooperation.

Friendly bilateral cooperation in various fields, particularly in trade and economy, has been booming since China and Senegal resumed diplomatic ties in October 2005, the minister said.

More Senegalese are now running businesses or have started their own enterprises in China, he said, adding that he welcomed more Chinese businessmen to make investment in Senegal.

At the Beijing Summit of the China-Africa Cooperation Forum in 2006, the Chinese government pledged to further open China's market to exports from Africa's least developed countries by raising the number of products enjoying zero-tariff treatment from190 to 440.

'Joe the Plumber' Becomes Focus of Debate

Who is 'Joe the Plumber'? He is Joe Wurzelbacher, an Ohio man looking to buy a plumbing business who came to symbolize the notion of 'spreading the wealth' in Wednesday night's third and final presidential debate. (Oct.16)


John McCain commented the answer of Barack Obama in the debate.Click here to watch the video.


However, Joe the plumber,'' the Toledo, Ohio, man whose complaints about Barack Obama's tax plan were highlighted by John McCain in the final presidential debate, owes the state of Ohio almost $1,200 in back income taxes. According to records on file with the Lucas County Court of Common Pleas, the state filed a tax lien against Samuel J. Wurzelbacher for $1,182.98 on Jan. 26, 2007, that is still active.

Our world in 2009

This is a post from Economist's blog. It has many entries and it is worth checking it out.Follow this link to read all the entries



"BUDGET deficits in the rich world will balloon in 2009. Recession will lead to soaring government spending.

In Britain, Gordon Brown's erstwhile "prudence" will be long forgotten as the budget deficit pushes towards 6% of GDP. Ireland, already in recession, projects a budget deficit of 6.5% of GDP.

In America, as David Brooks points out in the New York Times, a combination of factors points in the same direction: spending on the bank bail-outs, an inevitable new stimulus package for the economy, a Keynesian spending spree on infrastructure, tax cuts promised during the campaign and a costly health-care plan (assuming Barack Obama wins the presidency).

What we’re going to see, in short, is the Gingrich revolution in reverse and on steroids. There will be a big increase in spending and deficits. In normal times, moderates could have restrained the zeal on the left. In an economic crisis, not a chance. The over-reach is coming. The backlash is next.

Mr Brooks sees a looming era of big government. This will be highly contentious, and not only in America.

In Europe, budget deficits will burst through the 3% ceiling of the European Union's stability and growth pact. Rules against state aid for industry will come under strain (if you can bail out the banks, the argument will run, why not the airline, or the car company, or the steel industry?).

In other words, it looks as if the old economic rulebook will be increasingly rejected or ignored—to the dismay of those who remember the reasons why the rules were written in the first place.