Sunday, August 05, 2007

The World Economy


Increase in GDP 1997-2007 (The Great Wall of money - Telegraph)

UAE 225%

Russia 195%

India 146%

China 131%

USA 54%

Dollar Reserves

1st China

2nd Japan

3rd Russia

15th USA

Current Account Balance

China + $179 billion

Japan + $174 billion

Germany + $135 billion

USA - $862 billion (note the minus sign)


The IMF recorded a 23% rise in world food prices during the last 18 months.

Debt

The American Home Mortgage Investment Corp, the 10th-largest mortgage lender in the U.S., has said that “it can't pay its creditors, potentially becoming the first big lender outside the subprime mortgage business to go bust”. (MarketWatch) Information Clearing House

"The big money has been fleeing the US for the last 3 years." Information Clearing House

"There will be bank failures." Information Clearing House

"Nearly 4 million American jobs have been sent overseas, the country has increased the national debt by $3 trillion dollars, and foreign investors own $4.5 trillion in US dollar-backed assets." Information Clearing House
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Banks
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According to The Economist, 4 August 2007 (Market turmoil A good time for a squeeze Economist.com) :
"...The real worry comes from... the banks... Many banks have already agreed to underwrite deals and are finding that they cannot sell the debt on to investors. One estimate suggests that more than $300 billion of debt is already in the pipeline. Big losses could follow.
"Banks will also suffer from their exposure to failed hedge funds, just as some have already been hit by their exposure to the subprime mortgage market...
"A bank failure (or the fear thereof) could create a systemic panic.

"Yet although banks are the biggest worry, their balance sheets look fairly solid."
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The Fundamentals:

"There is no way the global economy is about to collapse. It sounds trite, but the fundamentals really are strong. The world's leading economies are all displaying high levels of profitability and solid growth, with quite low inflation." - I share your pain, but we'll all gain in the end

"The fast-growing countries of the East mean the global economy will be able to shrug off even a fully-blown US recession. Last week, the International Monetary Fund issued its latest global forecasts - which said the world economy will expand by 5.2 per cent in both 2007 and 2008, with China, India and Russia accounting for more than half that growth." I share your pain, but we'll all gain in the end


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