A master plan for China to bail out America
Arvind Subramanian is senior fellow, Peterson Institute for International Economics and Center for Global Development, and senior research professor, Johns Hopkins University
This is the first time for at least two decades that all three major general tax sources — property, income and sales — have all declined at the same time. That’s the real frightening thing for cities.
—Michael A. Pagano, a co-author of the report and dean of the College of Urban Planning and Public Affairs at the University of Illinois, Chicago
In a survey of more than 300 municipalities released last month, the National League of Cities reported that four out of five finance officers said their cities would be less able to meet needs in 2009 than this year. The group called the findings troubling, with no sign of getting better.
Financial Crisis Takes a Toll on Already-Squeezed CitiesBy SUSAN SAULNYPublished: October 7, 2008City officials across the country say they are feeling increasingly helpless as the national economic crisis eats away at the core sources of municipal revenue.
You’ve got to make a bet on whether the financial system and the market system as we have known it since the end of World War II is going to survive. You certainly don’t sell on panic here. You buy.
We’ve approached the edge of the cliff. Do we go over the cliff or begin to recede? History says we recede, but there’s no guarantee. This is the most difficult financial environment I’ve lived through.
—Leon Cooperman, 65, who manages $6 billion at hedge fund Omega Advisors Inc
The United States remains at the epicenter of the financial market turmoil that originated in the summer of 2007, and that has continued to reverberate and spread across the globe. The seriousness and the pervasiveness of the turmoil cannot be overstated.
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Financial institutions are in the midst of a significant deleveraging process—a process that accelerated a month ago and that has by no means run its course.
—John Lipsky, First Deputy Managing Director, IMF
The global financial system has undergone unprecedented turmoil in the last few months, and the situation has worsened considerably since Spring…Concrete actions, however, are needed to tackle insufficient capital, falling asset valuations, and a dysfunctional funding market.
—Jaime Caruana, Counsellor and Director of the IMF’s Monetary and Capital Markets Department
…certain ominous dates are fast approaching. One is Oct. 23, when the auction will take place to settle the credit-default swaps relating to the Lehman bankruptcy. I saw one estimate that the amount of money firms will owe each other could be as much as $400 billion.
…Twelve years ago, Alan Greenspan invented the term “irrational exuberance.” That era seems tame compared with this one. What is going on in the markets is anything but exuberant — at this point, though, it is undeniably irrational.
A Day (Gasp) Like Any Other
By JOE NOCERA
Published: October 7, 2008
This crisis doesn’t wear you down over time. It hits you over the head with a two-by-four on a daily basis.
Believing that fundamental conditions of the country are sound…my son and I have for some days been purchasing sound common stocks.
—John D. Rockefeller, 10 October 1929
The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune…Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months.
The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.
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As the ghosts of numerous tyrants, from Julius Caesar to Benito Mussolini will testify, people are very hard on those who, having had power, lose it or are destroyed. Then anger at past arrogance is joined with contempt for present weakness. The victim or his corpse is made to suffer all available indignities.
Such was the fate of the bankers.
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The autumn of 1929 was, perhaps, the first occasion when men succeeded on a large scale in swindling themselves. [On the buy-back of investment trusts as values plummetted]
–The Great Crash, John Kenneth Galbraith
I felt that the work mocked me, foiled me, thwarted me. I felt that Averroës, trying to imagine what a play is without ever having suspected what a theater is, was no more absurd than I, trying to imagine Averroës yet with no more material than a few snatches from Renan, Lane, and Asín Palacios
—Borges
Averroes – existence precedes essence
Avicenna – essence precedes existence
If financial conditions fail to improve quickly, near-term economic prospects could deteriorate markedly. Still, the NABE panel expects that lower oil prices, a bottoming out in home prices and a better functioning of financial markets should enable the economy to resume trend-like growth by the second half of 2009.
—Chris Varvares, NABE President-elect and the president of Macroeconomic Advisers, said in a statement.
It is pretty much all out war. They are pulling out all the stops to try and get borrowers and lenders to meet and do transactions once again.
—Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ
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