NEWS - Nov. 16 to 30 2009

Introduction to Jim Wesberry
E-Magazines by Jim Wesberry
THE REAL INVISIBLE HAND / LA MANO INVISIBLE VERDADERA ............(traducción en español más abajo)
THE FALTERING EAGLE: Speech made in 1970
CLEPTOCRACIA 1990 articulo para el 25 aniversario de ILACIF
ENFRENTANDO LA CORRUPCION EN TIEMPOS DE COVID, Conferencia - Profesionales del Bicentenario del Perú
ETICA E INTEGRIDAD, Congreso Organos Internos de Control, del Estado de Guanajuato, Mexico via Zoom
EL IMPACTO DE LA INTEGRIDAD, presentación en el Foro ISAF de Sonora, Mexico via Zoom
Donde fueron nuestros valores? Como podemos recuperarlos?
75 ANIVERSARIO DE LA Federación Nacional de Contadores del Ecuador
VIDEO: El Auditor Frente sus Tres Mayores Desafíos
MIAMI KEYNOTE: Public Financial Management, 2016
CONFERENCIA 6a Conferencia de Auditores Ecuador: El Auditor Interno Frente sus Tres Mayores Desafios
CONFERENCIA CReCER 2015: Empresas Estales en Busca de Etica---State Enterprises in Search of Ethics
CONFERENCIA QUITO HONESTO: Ambiente Etico = Municipio Eficiente: Principios de Conducta Etica, 2014
My Work in Peru / Mi trabajo en el Perú
CONFERENCIA EN HUANUCO, PERU - El Auditor enfrenta la Erupcion de Corrup$ion del Siglo XXI -2013
CONFERENCIAS EN CHILE - 3 Mayores Desafios al Auditor Interno - 2012 - VIDEO y TEXTO
Personal Information
My Resume (in English)
Mi Curriculum Vitae (en español)
Personal Photo Album
The Top Quartile of Life
AMERICA IN DECLINE? The Life Cycle of a Great Power
LEGENDS: Georgians Who Lived Impossible Dreams
Wesberry v. Sanders, 376 US 1 Landmark US House Reapportionment Case
Press Clips from Georgia Senate Service
The Best Speech I Ever Made
Why I Quit the Georgia Senate
Congressional Testimony
Activities in the Junior Chamber of Commerce
Contador Benemerito de las Americas (Most Meritorious Accountant of the Americas)
Articles from The Journal of Accountancy
My Credo
Interview about Leadership
Collusion Breaks Internal Controls
Creencia - Belief
Think -------- Pensar
WOMAN -------------- MUJER
Message to Garcia - Mensaje a García
COLOMBIA VS KLEPTOKAKISTOCRACIA: Presentación para el Día Internacional Anti-Corrupción 2011
LECTURE AT MANILA'S UNIVERSITY OF THE EAST: Integrity & Honor, Corruption & Dishonor VIDEO
EFFECT OF 2008 GLOBAL CRISIS (JW presentation in English)
SEGUNDA GRAN DEPRESION 2010 (JW presentaciónes en español)
Speeches - English
More Speeches
Conferencias / Discursos - Espanol
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Quotes by Jim Wesberry
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Technology Use in Fighting Corruption
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Items on this page are from November 16 to 30.  Some links may no longer be active

Health care reform will cause a Great Depression

The Health Care Reform Bill, if passed by the Senate and signed into law by President Obama, will send the country cascading into a Great Depression. The financial collapse will revival the bank collapse of the 1930s.

Many giant corporations, and the entire economy itself, teeter on the brink of a depression. Raising taxes now would have the same effect as the Revenue Act of 1932 did. This act, which doubled taxes, sent the country from a deep recession into the Great Depression of the 1930s. Consumer confidence dried up and didn’t return until World War II was in full swing. No one trusted the banks and the few that didn’t collapse had no money to lend.

The current Health Care Reform Bill will add $1.26 trillion in new spending, which will require new taxes to pay for it, and force the middle class taxpayer to pay for tens of millions of uninsured Americans


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The Lesson of Dubai:

The Crisis Is Not Over

As we reach the end of a miserable 2009, signs continue to mount across the globe that the world economy is stirring back to life. The U.S. finally returned to growth in the third quarter, with its strongest showing in two years, India posted inspiring 7.9% growth and the results out of tiny Taiwan, one of the economies slammed the hardest by the global recession, were so impressive one economist beamed that the island "got its groove on." Stock markets, aside from a downward blip here and there, have generally been buoyant. During this season of Thanksgiving and holiday cheer, there seems to be good reason to give thanks and be cheerful.
Or maybe not. The worst of the crisis is almost certainly behind us, but that doesn't mean the crisis is over. Lying ahead are a slew of unresolved problems, policy challenges and, no doubt, further surprises. Unemployment remains a serious global issue, and may yet get worse; excess capacity left over from the boom years haunts the recovery; and the drastic stimulus programs utilized to fight the recession are creating a new menu of potential troubles. 

Read full article





Fears of a dangerous new

phase in the economic

crisis swept around the

globe  as traders

responded to the shock

announcement that a

debt-laden Dubai state

corporation was unable to

meet its interest bill.

Shares plunged, weak

currencies were battered

and more than £14

billion was wiped from

the value of British banks

on fears that they would

be left nursing new


Panic strikes, and investors sell gold and buy dollars
Rattled by concerns about Dubai's debt, investors fled gold for the safety of the U.S. dollar during early trading on Friday. The move comes as the booming appetite for the precious metal among smaller investors has led to near record prices and shortages of American Eagle gold coins at the U.S. Mint.

But as the enthusiasm for gold reaches a fevered pitch worldwide with speculation focused mainly on how high it can go, the sharp drop also serves as a useful reminder: While often thought of as a "safe haven," gold is marked by volatile prices, and it recently sold off sharply when investors truly got nervous.

Indeed, gold fell hard and the dollar rallied during the financial crises this spring. And a similar dynamic could be seen on Friday. The price of gold tumbled 5% in early trading as panicked investors tried to gauge the severity of Dubai's woes. Later, gold cut its losses to a 1.5% drop. The dollar, meanwhile, reversed its long slide, at least for a day. 

Read Article

Crude prices fall on Dubai debt jitters

Shades of the roiling energy markets that were set off last year by the crisis on Wall Street emerged again Friday with crude seeing the largest percentage drop in prices since January.
The sell-off this time followed troubling news from Dubai, which asked lenders for a six-month reprieve on payments for about $60 billion in debt.
Benchmark crude prices plunged by 7 percent in early trading, though those declines eased as investors weighed the chances that Dubai's problems would spread to Europe, Asia and the United States. 

Read Article

The government of Dubai shocked financial markets on Wednesday when it said it would ask creditors of its Dubai World conglomerate for a debt moratorium of at least six months..."Dollar weakness ... sent Asian markets plunging, which then took European exchanges with them," said an analyst with Global te of insecurity and crisis of confidence at a time when fears are mounting about excessive public debt."...

...Standard & Poors  said the development could be considEquities in Paris.

In addition, the partial default by Dubai "fed a climaered a default and downgraded a raft of Dubai government entities including Dubai World...

"This last-minute moratorium on debt repayments at Dubai World is unacceptable has all the smacking of an Ireland -- nay worse, an Iceland -- in the making.

"The two regions may be polemic in climate but mirror images in terms of credit and ability to meet their bills."

Elsewhere on Thursday, gold soared to a record high of 1,195.13 dollars an ounce after a purchase of IMF gold by Sri Lanka's central bank, traders said.

READ FULL ARTICLE " Dubai default threat rattles world stocks"

G-20 summit: 6 countries in recovery

The G-20's six largest economies took a big hit during the global recession in the past year and a half. Challenges remain but most appear on the path to recovery.

United States: Painful rebound
GDP: -1%
Inflation: -1.5%
Unemployment: 9.7%
Markets: 18.3%
Interest rate: 0% to 0.25%

The U.S. economy appears to be stabilizing after declining for four straight quarters, but the recovery has been tepid so far.

Financial markets have shown signs of improvement, and interbank lending has largely returned to normal. Consumer spending is still shrinking due to ongoing job losses and difficult credit conditions, but it has been stabilizing over the past quarters. Furthermore, home sales and new home construction are beginning to make a long-awaited comeback.

Businesses have continued to cut back on spending and have sharply reduced their inventories. But many economists believe that companies are largely done with their cuts, which could lay the groundwork for economic growth this quarter. The massive $787.2 billion stimulus bill is also expected to give GDP a boost in the current quarter.

"The recession is very likely over at this point," Federal Reserve Chairman Ben Bernanke said last week. But he also added, "It's still going to feel like a very weak economy for some time."

Read article

Bankruptcies spike 33%

Number of bankruptcy filings in third quarter of 2009 soars to highest level since 2005

Business bankruptcies filed this year top 2008 total. 

The total number of bankruptcies filed in the third quarter surged 33% in 2009 and is at the highest level since 2005, according to data released Wednesday.

The American Bankruptcy Institute, an industry research firm, said 388,485 bankruptcies were filed during the last quarter, compared to 292,291 filed during the same period in 2008, according to data released by the Administrative Office of the U.S. Courts.

Filings for the first nine months of the year climbed 35% to 1,100,035, compared to 841,496 filings during the same period in 2008. A total of 1,117,771 bankruptcies were filed last year.

"The spike in bankruptcy filings for both consumers and businesses reflect the continuing effects of today's weak economy," said ABI executive director Samuel Gerdano in a statement. "With unemployment surpassing 10% and credit to businesses remaining tight, consumers and businesses are increasingly turning to the financial relief of bankruptcy."

Bankruptcies are at the highest level since 2005, when 2,078,415 were filed before Congress passed amendments to the Bankruptcy Code, said ABI. 

Read article

Extreme risks per Watson Wyatt

Risk ranking* as at 30 June 2009

**1 Depression Debt-deflation trap; falling growth and incomes Globally-diversified long-dated Sovereign

nominal bonds

2 Hyperinflation Extremely high inflation Real assets, for example gold,

globally-diversified inflation-linked bonds

**3 Excessive leverage Debt burden cannot be serviced from income Gold, reserve-status currency

**4 Currency crisis Extreme movement between floating rates Gold, foreign assets

**5 Banking crisis Balance sheets cannot absorb another shock Nominal sovereign bonds (medium


6 Sovereign default Default by a developed country on its debt Country insurance (for example CDS)

7 Climate change Diversion of capital to mitigation uses No general hedge

8 Political crisis Rise in power of extremist groups No obvious hedge

**9 Insurance crisis Insolvency within insurance sector Nominal sovereign bonds (medium

duration); short insurance equity

10 Protectionism Reversal of movement towards free trade No general hedge

11 Disunity in Europe Break-up of the euro Long Germany (hedged)

12 End of capitalism Move to socialism and closing of markets Gold

13 End of fiat money Return to a gold standard Gold

14 War A major global conflict Long neutral countries

15 Killer pandemic Contagious disease with very high mortality Long pharmaceutical equities, short airline equities

 * Our subjective measure based on the impact, the risk and the degree of uncertainty in assessing the risk level.

** We are more confident in being able to attach a probability to these events.



[Less Eagerness to Borrow chart]

Number of Troubled Banks Rises to 552; FDIC Fund Sinks Into the Red...

U.S. lenders saw loans fall by the largest amount since the government began tracking such data, suggesting that nervousness among banks continues to hamper economic recovery.

Total loan balances fell by $210.4 billion, or 3%, in the third quarter, the biggest decline since data collection began in 1984, according to a report released Tuesday by the Federal Deposit Insurance Corp. The FDIC also said its fund to backstop deposits fell into negative territory for just the second time in its history, pushed down by a wave of bank failures....

The FDIC's quarterly banking profile, which analyzed data from 8,099 federally insured banks, reported that 552 financial institutions, with combined assets of $345.9 billion, were on the government's problem list at the end of September, up from 416 with $299.8 billion of assets at the end of June. That means roughly 7% of all U.S. banks are on the list and face a higher probability of failure....

The FDIC said its deposit-insurance fund, which backstops trillions of dollars in deposit accounts, fell to a negative $8.2 billion at the end of September, an $18.6 billion drop from the end of June. The FDIC said one reason for the decrease was that the agency shifted $21.7 billion from the fund into reserves for bank failures over the next 12 months.




The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true. But that happy situation, aided by ultralow interest rates, may not last much longer.

Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.

Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.

In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.


A Chart That Should Keep Progressives Up at Night

...progressives need to turn their attention toward the medium- and long-term fiscal crisis the country faces. How massive is the challenge we face? The following chart, from Keith Hennessey, an ex-Bush policy advisor, says it all:

taxes-and-spending-long-term-trends 2

Obviously the first thing to jump out is the escalating divergence between federal spending and revenues in the decades ahead. And the spending projection in the chart is from 2007, so it doesn’t include the stimulus or spending on the financial crisis (or the projected cost of health care reform). That’s scary enough. But the scariest part may not be evident at first glance.

The red line shows federal taxes as a percent of GDP going back to 1945 and projected outward to 2080 by Hennessey based on its historic growth. The yellow line shows federal spending as a percent of GDP. The chart makes clear that the level of federal taxation has actually varied little since World War II (which says nothing about how marginal tax rates faced by different groups have changed). You can see the last build-up of deficits that occurred from the 1970s through the mid-1990s. You can also see the build-up of the Bush years.

California, Delaware, South Carolina and Florida registered record rates of unemployment in October as weakness in the labor market stretches from coast to coast and limits the economic recovery. Joblessness rose in 29 U.S. states last month compared with 22 in September, the Labor Department said today in Washington. Michigan had the highest jobless rate at 15.1 percent, followed by Nevada at 13 percent and Rhode Island at 12.9 percent. The national rate last month reached a 26-year high of 10.2 percent, weighing on consumer spending that accounts for about 70 percent of the economy.



Transparencia Internacional acaba de publicar el Indice de la Percepcion de Corrupción de 2009.  A continuacion, los indices de los paises latinoamericanos.  La primera columna indica el rango del pais entre todos los evaluados.  La segunda columna, indica el indice regional, con Canada siendo el pais donde la percepcion de la corrupcion es mas bajo y  Haiti, el mas alto.  Haz clic en el cuadro para ver el informe completo.

Transparencia Internacional Indice Corrupcion 2009
TI Index 2009
Transparency International's Corruption Index 2009

Transparency International's 2009 Corruption Perception Index has recently been published. Above is the portion relative to the Western Hemisphere.  Click on he chart to go to the full report.

Global corporate accounting fraud up sharply: survey

Global companies have seen a sharp rise in accounting fraud over the past 12 months, as the pressures of the recession have weighed on employees, according to a new survey on Thursday.

The survey of 3,000 senior executives in 54 countries from accounting firm PricewaterhouseCoopers PWC.UL showed accounting fraud had grown to 38 percent of the economic crimes in 2009, up from 27 percent in the firm's 2007 survey.

The increase in accounting fraud has come as employees face increased pressures to meet performance targets, keep their jobs and keep access to funding or financing from outside institutions.


The survey, entitled Economic crime in a downturn, is based on more than 3,000 companies in 54 countries. It is the largest, most comprehensive international survey of economic crime worldwide.


  • Despite the attention of regulators and companies' investment in controls, fraud remains one of the most problematic issues for companies around the world.
  • The actual level of economic crime and associated financial and non-financial losses has not decreased.
  • One third of companies fell victim to economic crime in the past twelve months.
  • The report finds that economic crime is intractable because of the many kinds of fraud and the broad range of employees, including senior executives, who commit them.
  • It concludes that companies cannot rely on fraud controls alone to detect and deter economic crime. Companies need to build loyalty to the organisation, give employees the confidence to do the right thing, and put in place clear sanctions for those who commit fraud, regardless of their position in the company.


PwC Global Economic Crime Survey - CLICK HERE TO SEE VIDEOS OF RESULTS

PwC Global Economic Crime Report 2009 - CLICK HERE TO DOWNLOAD THE REPORT (PDF)


...el Departamento del Tesoro de Estados Unidos anunciaba que la deuda nacional asciende ya a más de 12 billones de dólares, concretamente a,07 dólares. Significa eso que...cada norteamericano tiene ya una deuda de casi 39.000 dólares.

Para valorar lo que significa un billón de dólares piénsese que con esa cantidad (o sea con una doceava parte de la deuda actual de EE.UU.) se pueden cubrir todos los gastos militares de todos los países de la OTAN. También, con un billón de dólares se dobla el coste total del “New Deal” de Franklin Delano Roosevelt y se multiplica por diez lo que costó el Plan Marshall, ajustando en ambos casos la inflación. Con un billón de dólares, en fin, se podrían comprar Cristianos Ronaldos…

Para hacernos una idea visual de lo que significa un billón de dólares, piénsese que si pusiéramos una fila de billetes de un dólar, uno tras otro, podríamos hacer una cadena seguida desde la tierra al sol. Como hablamos de 12 billones, se podría hacer una cadena de billetes de dólares que realizarían seis viajes de ida y vuelta al sol. 

¿El mundo aprendió la lección con la crisis?

Hemos sido testigos de una recuperación record de la crisis financiera que azota al mundo desde hace unos 3 años. Los principales indicadores bursátiles señalan que la confianza está volviendo con mucha fuerza a los mercados alrededor del mundo, lo que ha llevado a pronósticos optimistas sobre el futuro de la economía mundial para el año 2010. Tal vez el exceso de optimismo por la rápida recuperación nos está llevando a olvidarnos, ¿el mundo aprendió la lección?
Los indicadores de ganancias de los 5 principales bancos de EEUU totalizaron unos $23.300 millones en el primer semestre de este año. La cifra supera por mucho la pérdida de casi $7.000 millones de igual lapso del año previo, no obstante está muy por debajo de los casi $50.000 millones registrados en el primer semestre de 2007, período considerado como el apogeo de Wall Street. Como vemos, estas cifras llaman al optimismo, y al mismo tiempo aumenta el apetito de riesgo que nuevamente parecen exhibir los inversionistas, algo que podría ser muy bueno para salir de la crisis y generar puestos de trabajo, pero al mismo tiempo puede representar la creación de nuevos problemas si se vuelve a las prácticas de los años anteriores a la crisis de baja regulación y ejecución de prácticas contables "acomodaticias a las demandas del mercado", pero alejadas de la realidad.


Jefe FMI dice economía global está en compás de espera

La economía global está en un compás de espera y vulnerable a nuevos posibles trastornos, dijo el lunes el jefe del Fondo Monetario Internacional, quien agregó que una recuperación duradera dependerá de que las autoridades tomen las medidas adecuadas en los próximos meses.

Dominique Strauss-Kahn, director gerente del FMI, dijo que la principal prioridad de los países ricos debiera ser desarrollar planes para limpiar el desorden fiscal que ha dejado más de un año de esfuerzos para luchar contra la crisis.

Sin embargo, aclaró que pensaba que aún es demasiado pronto para retirar las medidas de emergencia.

"Recomendamos pecar de cautelosos, ya que salir demasiado pronto es más costoso que salir demasiado tarde", dijo...


Taiwan se recupera de crisis financiera

La crisis financiera del año 2008 en los Estados Unidos se diseminó hasta cubrir todas partes del mundo, causando que las exportaciones de la República de China (Taiwan) se contrajeran y que la economía sufriera una severa caída.

Las empresas de Taiwán dependen fuertemente de las exportaciones y como tal se encuentran vulnerables a las fluctuaciones de la economía global. La estructura industrial de la nación, por lo tanto, debe ser reformulada. Para logra tal objetivo, se invertirán US$ 6.15 mil millones en biotecnología, energía verde, agricultura industrializada, turismo, medicina y sectores culturales y creativos entre los años 2009 al 2012.

Sin embargo, Taiwán no puede restablecer la salud de la economía global por sí sola.

Antes de la recuperación de la economía global, la demanda doméstica debe ser incrementada para estimular la economía, aumentar los trabajos, mejorar la competitividad nacional y asegurar la viabilidad continua de las empresas domésticas.


Una banca con más capital y sin límites al tamaño

La crisis financiera que ha asolado los mercados mundiales desde el verano de 2007 ha puesto patas arriba el orden natural que regía en el sector bancario internacional. Reguladores, supervisores, agencias de calificación, entidades financieras y los Gobiernos han sido puestos en duda, y su comportamiento y funciones están hoy sometidos a una revisión. Los cambios vendrán, de eso ya nadie duda, y son muchos los expertos que aseguran que el sistema bancario del futuro será bien diferente del que existía antes de esta crisis. Sin embargo, la principal cuestión ahora -en un contexto en el que la globalización económica forma parte del sistema, pero donde los países todavía no han homogeneizado sus modelos de regulación bancaria- es cómo se van a acometer las reformas...


Germany warns US on market bubbles

Germany’s new finance minister has echoed Chinese warnings about the growing threat of fresh global asset price bubbles, fuelled by low US interest rates and a weak dollar.

 ...it would be “naive” to assume the next asset price bubble would take the same guise as the last.

“More likely today is a scenario in which excess liquidity globally creates a new [sort of] asset market bubble.”

 “That low interest rate currencies such as the US dollar are increasingly being used as a basis for currency carry trades should give pause for thought. If there was a sudden reversal in this business, markets would be threatened with enormous turbulence, including in foreign exchange markets.”


"...Since the current recession has lasted a record seven quartersand has been marked by a near-record average GDP decline of 1.8% per quarterwe should be witnessing the start of a powerful and sustained recovery. Yet forecasts of a 2% recovery in growth are only one-fourth as strong as postwar experience suggests. Meanwhile, unemployment sits at a generational high of 10.2%. Why all the pessimism? The source appears to be a growing fear that the federal government is retreating from the free-market economic principles of the last half-century, and in particular the strong growth policies that began under Ronald Reagan. A review of the economic policies instituted by President Barack Obama and the Democratic-controlled Congress lends credibility to this concern...." Edit Link

"More than 14 percent of American homeowners with a mortgage were either behind on their payments or in foreclosure at the end of September, a record-high for the ninth straight quarter and a problem that could threaten the economic recovery. The Mortgage Bankers Association's report Thursday adds to fears that the housing market and broader recovery could be thwarted by the continuing surge in home loan defaults, especially as the unemployment rate keeps rising. Lost jobs, rather than the shady loans made during the housing boom, are now the main reason homeowners fall behind on their mortgages..." Edit Link

"... More than half of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest...$4.8 trillion.In 2015 alone, the estimated interest due - $533 billion - is equal to a third of the federal income taxes expected to be paid that year..." Edit Link

"Unlike in previous crises, such as the Asian financial crisis in the late 1990s or the Mexican crisis in the mid-1990s, Latin America was in a much stronger position to weather the current financial crisis, the head of the U.N.'s Economic Commission for Latin America and the Caribbean said. The global financial crisis has hit resource-rich Latin America quite hard, driving down demand for and prices of the commodities it exports. The region's gross domestic product will likely contract between 1.8% and 1.5% on the year in 2009, but it will quickly recover next year, Alicia Barcena, who heads the commission known as Eclac, said in an interview...." Edit Link

Edit Table

Regulation signs

The global economic crisis brings into relief differences among nations as they tackle financial regulation. A look at principles behind U.S. and European systems.


GLOBAL COLLAPSE COMING? >>> Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction. In a report entitled "Worst-case debt scenario", the bank's asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.

Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of "deleveraging", for years.

"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast.

Under the French bank's "Bear Case" scenario (the gloomiest of three possible outcomes), the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010.

Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade.


High levels of government debt around the world remain the most likely trigger of the next economic downturn, the former chief economist of the International Monetary Fund has warned. countries like the US have been running up such significant national debts as a proportion of their total economies that there is the potential for default at some point in the future.

"There's no question that the most significant vulnerability as we emerge from recession is the soaring government debt," Prof Ken Rogoff told Bloomberg. "It's very likely that it will trigger the next crisis as governments have been stretched so wide."


PATHOLOGY OF A FINANCIAL CRISIS >>> The coroner’s report left no doubt as to the cause of death: toxic loans. That was the conclusion of a financial autopsy that federal officials performed on Haven Trust Bank, a small bank in Duluth, Ga., that collapsed last December, Eric Dash writes in The New York Times. In what sounds like an episode of “CSI: Wall Street,” dozens of government investigators — the coroners of the financial crisis — are conducting post-mortems on failed lenders across the nation. Their findings paint a striking portrait of management missteps and regulatory lapses.

At bank after bank, the examiners are discovering that state and federal regulators knew lenders were engaging in hazardous business practices but failed to act until it was too late. At Haven Trust, for instance, regulators raised alarms about lax lending standards, poor risk controls and a buildup of potentially dangerous loans to the boom-and-bust building industry. Despite the warnings — made as far back as 2002 — neither the bank’s management nor the regulators took action. Similar stories played out at small and midsize lenders from Maryland to California.

What went wrong? In many instances, the financial overseers failed to act quickly and forcefully to rein in runaway banks, according to reports compiled by the inspectors general of the four major federal banking regulators. Together, they have completed 41 inquests and have 75 more in the works.

Current and former banking regulators acknowledge that they should have been more vigilant.


1. Economic forecasting is still an extremely difficult gambit and nowhere near a science. It is a lot more like astrology than mathematics. As the recession bore down on us, the great majority of economic seers said it was not going to happen or if it did happen, it would be mild. In fact, the recession turned out to be long-lasting and severe...
2. Financial market forecasting is even more troublesome than economic forecasting. Hardly anyone I am aware of got the recent stock market recovery right. No one saw a recovery of roughly 60% in broad indices in the span from early March to mid-November...
3. The amount of lying and deception by the financial sector of this country has been breathtaking. The banks lied about the risks they were taking on, about the amount of their exposure, about how well capitalized they were, and about their prospects for survival. Throughout the financial sector there was similar deceit...

4. The government has no special abilities to forecast or predict a darned thing. Alan Greenspan, former head of the Fed, a truly wonderful man and a smart economist, not only did not see the crash, but did not see the bubble preceding it. Not only did he not see it, he thought it was an economic impossibility...


Obama: Too much debt could fuel double-dip recession

PresidentBarack Obama gave his sternest warning yet about the need to contain rising U.S. deficits,  that if government debt were to pile up too much, it could lead to a double-dip recession.


Improper payments by the U.S. government to people, firms and contractors rose sharply to $98 billion in fiscal 2009 and President Barack Obama plans new rules to clamp down, the White House said...Over half the mistakes were made in the Medicare and Medicaid programs


Nearly 15,000 Americans admit offshore tax cheating

 Some 14,700 rich Americans, worried about a stepped-up U.S. crackdown on offshore tax cheats, have turned themselves in under the government's amnesty program.

The Internal Revenue Service amnesty program, which ended in October, offered reduced penalties for voluntarily disclosing previously undeclared foreign holdings. It is part of a broader effort by the United States and other authorities to crack down on tax evasion.

Of the nearly 15,000 newly disclosed accounts, many involved bank accounts in Switzerland and Europe, but assets were hidden in more than 70 countries.


California faces a budget gap of nearly $21 billion over its current and next fiscal years, according to the state government's budget watchdog agency


Economic Optimism Levels Off, Execs Concerned About Government Policies

Optimism among CPA financial executives about the U.S. economy flattened after two quarters of improvement as managers paid more attention to potential challenges and concerns associated with the federal budget deficit, tax reform and regulatory requirements, according to a survey released Monday.


Results from the Economic Outlook Survey Q4 2009, conducted by the AICPA and the University of North Carolina’s Kenan-Flagler Business School, found that 27% of respondents were optimistic or very optimistic about the outlook for the U.S. economy for the next 12 months, though pessimists still outnumber optimists. Forty percent were very pessimistic or pessimistic, and the remainder were neutral.  SEE CHART BELOW

Economic Optimism Levels Off
Executives Concerned About Government Policies

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Stamp out bank
, corruption
 watchdog says

Graft watchdog Transparency International hit out at rich countries over shady banking practices on Tuesday as it published its annual rankings naming and shaming the world's most corrupt nations.

The group slammed developed countries that are otherwise relatively free from corruption for allowing dirty money to be parked in their banking systems and said that no region in the world could claim to be corruption-free.

"Corrupt money must not find safe haven. It is time to put an end to excuses," said the Berlin-based group's head Huguette Labelle.

"Even industrialised countries cannot be complacent: the supply of bribery and the facilitation of corruption often involve businesses based in their countries," the report said.

In the wake of the financial crisis, the Group of 20 (G20) industrialised countries turned up the heat on tax havens, targeting rich countries with long-held banking secrecy laws like Liechtenstein and Switzerland.

But Labelle said extra efforts were imperative, calling for more bilateral treaties on information exchange in order to "to fully end the secrecy regime."

Stepping up efforts against corrupt money is all the more important given the billions being injected into economies around the world to bolster the global financial system, Transparency International added.



Unemployed Americans should hunker down for more job losses
..we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back...we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back. Based on my best judgment, it is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.



Everyone knows that the United States faces massive governmental budget deficits as far as calculators can project, driven heavily by an aging population and uncontrolled health costs. As we recover slowly from a devastating recession, it's widely agreed that, though deficits should not be cut abruptly (lest the economy resume its slump), a prudent society would embark on long-term policies to control health costs, reduce government spending and curb massive future deficits. The administration estimates these at $9 trillion from 2010 to 2019... The...far-reaching overhaul of the health-care system -- which Congress is halfway toward enacting -- would almost certainly make matters worse. It would create new, open-ended medical entitlements that threaten higher deficits and would do little to suppress surging health costs.

CLICK HERE to read one of the best commentaries on the "health care finance bomb"


A Historical Note

The U.S. and Chinese economies -- the world's largest and the fastest-growing major economy, respectively -- have become inextricably intertwined, locked in a kind of co-dependency that neither side thinks is particularly healthy, but which for the moment neither will move to break.

GEORGE SOROS >>> unveils his latest thinking on economics and politics during a lecture series hosted by the Central European University (CEU) from Oct 26-30, 2009. These lectures are the culmination of a lifetime of practical and philosophical reflection. Mr Soros discusses his general theory of reflexivity and its application to financial markets, providing insights into the recent financial crisis. The third and fourth lectures examine the concept of open society, which has guided Mr Soross global philanthropy, as well as the potential for conflict between capitalism and open society. The closing lecture focuses on the way ahead, closely examining the increasingly important economic and political role that China will play in the future. CLICK HERE TO GO TO THE FULL VIDEO SERIES

EUROPE EMERGES >>> from recession Euro zone data show growth Britain, Spain and Ireland lag behind

CALIFORNIA COLLAPSES >>> California is a by-the-numbers state tragedy. Unemployment is higher than 12.2 percent as of September. Business costs are almost 23 percent higher than other states on average. Migration out of the state is at an all time high.

CHINA RISES >>> The Chinese are 'changing us' Rising global power is reshaping the way Americans do business and live their lives.

GOLD RISEN >>> Gold will stay above $1,000 an ounce forever, says Swiss Dr. Doom

ECOMAGEDDEN? >>> Trade deficit threatens a double-dip recession, economic Armageddon

ECO ECONOMICO? >>> Felipe González dice que "estamos incubando" la próxima crisis financiera por no tomar medidas para evitarla

EEUU MOTOR FALLA >>> El Fondo Monetario Internacional (FMI) dijo el jueves que el débil ahorro de Estados Unidos obligará a los países emergentes, incluido China, a buscar nuevos motores de crecimiento. "Cuando las familias estadounidenses decidan ahorrar más, la buena noticia es que se reducirá el déficit, no sólo el déficit fiscal sino también el déficit de cuenta corriente"

ENERGIA VS ECONOMIA >>> "el modelo energético actual no es sostenible" y representa una "seria restricción para el crecimiento económico"

CEPAL: CRISIS CONTINUA >>> La crisis financiera "aún no ha terminado" y sus efectos se seguirán sintiendo "algunos años"

BRASIL ARRIBA! >>> ¿Brasil será la quinta economía en 2026?...En la actualidad, es el quinto país más grande del mundo y también el quinto país en cantidad de habitantes, pero dentro de 17 años será también la quinta economía mundial, sostuvo el ministro de Finanzas, Guido Mantega.

Buffett, Gates tell students worst is behind us

 Capitalism is still alive and well, say the world's two richest men, despite lingering  from the longest, deepest recession since the Great Depression.

"The financial panic is behind us," said famed investor Warren Buffett, who recently made what he called an "all-in wager" on the U.S. economy by acquiring railroad Burlington Northern Santa Fe. "The bottom has come in stocks. Don't pass on something that's attractive today."




Twenty years after the fall of the Berlin Wall, a new BBC World Service global poll finds that dissatisfaction with free market capitalism is widespread, with an average of only 11% across 27 countries saying that it works well and that greater regulation is not a good idea.

In only two countries do more than one in five feel that capitalism works well as it stands—the US (25%) and Pakistan (21%).

The most common view is that free market capitalism has problems that can be addressed through regulation and reform—a view held by an average of 51% of more than 29,000 people polled by GlobeScan/PIPA.

An average of 23% feel that capitalism is fatally flawed, and a new economic system is needed—including 43% in France, 38% in Mexico, 35% in Brazil and 31% in Ukraine.

Furthermore, majorities would like their government to be more active in owning or directly controlling their country’s major industries in 15 of the 27 countries. This view is particularly widely held in countries of the former Soviet states of Russia (77%), and Ukraine (75%), but also Brazil (64%), Indonesia (65%), and France (57%).

Majorities support governments distributing wealth more evenly in 22 of the 27 countries —on average two out of three (67%) across all countries. In 17 of the 27 countries most want to see government doing more to regulate business—on average 56%.

Rising Jobless Biggest Threat to World Trade: WTO HEAD
Rising unemployment is the biggest threat to free trade and could spark greater protectionist policies around the globe, the head of the World Trade Organization said. WTO Director General Pascal Lamy, who is attending a meeting of Asia-Pacific trade and finance ministers in Singapore, said that he did not expect an improvement in the job situation in the next one or two years.

"I think the biggest threat is in the deterioration of the jobs market where unemployment is rising hard, then inevitably protectionist functions appear," Lamy said when asked what was the biggest challenge to free trade.

Jobless queues have jumped across the industrialised world since the global economic crisis erupted a year ago and have been a prime reason nervous governments have resisted calls to start winding back stimulus measures.

The U.S. jobless rate hit a 26-½   year high of 10.2 percent in October and economists polled by Reuters expect it to rise to 10.5 percent by the middle of next year.

In Japan, the world's second-largest economy, the jobless rate in September recovered from a record high, falling to 5.3 percent from 5.5 percent in August and 5.7 percent in July, but job availability remained near a record low.


WEAK & CHOPPY>>>Federal Reserve officials are warning that economic recovery will be weak and choppy. "The strength and durability of the expansion is in question.

SLOW, SLOW, SLOW >>> The Bank of England...boosted its forecasts for growth and inflation but still sees subdued price pressures and a slow recovery as the economy limps out of its deepest recession in decades.

House prices have pulled out of their free fall, but don't expect them to recover until we work through a huge property glut...one out of every seven houses -- whether for rent or for sale -- was empty in the third quarter, according to the US Census Department.



The Commercial Real Estate Crisis



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Whenever you find you are on the side of the majority, it is time to pause and reflect

                     --- Mark Twain

We have never observed a great civilization with a population as old as the United States will have in the twenty-first century; we have never observed a great civilization that is as secular as we are apparently going to become; and we have had only half a century of experience with advanced welfare states...Charles Murray

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