After losing their homes to foreclosures in the sub-prime mortgage crisis, thousands of Americans had put their belongings in self-storage facilities tempted once again by low rates. With failure, once again in clearing their monthly rents, the storage owners according to their agreements with their customers are auctioning off their possessions at throwaway prices. The number of auctions is rising every day. According to Blair Auction & Appraisal, a company that conducts auctions at self-storage facilities in the Mid-West, it recently sold the contents of 45 units at one site in Detroit alone.

A cottage industry has developed to profit from items that are after all some unfortunate persons’ belongings, who have become a tragic victim of absurd credit policies. Nearly non-existent 35 years ago, self-storage facilities have sprung up through out the country. Even as the US economy is faltering, this is one industry that is thriving with 51,000 of them spread across the nation.

Not every area is witnessing an increase in auctions though. Storage facilities in Ohio, for instance, are finding a large number of customers rescuing their possessions at the last minute. On the other hand, Chicago seems to have the largest number of dispossessed.

Source:Telegraph
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According to statistics available from RealtyTrac, in October 2007 224,451 foreclosure filings that included default notices, auction sale notices and bank repossessions, were reported that was 94% higher than the figure in October 2006 and a 149% increase from 2005. Nevada, California and Florida were the states with the highest rate of foreclosures.

Foreclosure problems in small-town America are more widespread and severe, as nearly three-quarters of them have been financed with installments or personal property loans rather than mortgage loans. In such cases when owners default, it leads to repossession rather than foreclosure. Property prices are fast plummeting and houses are being sold at half the prices they fetched just three years ago.

Cheap and easy credit had once started a building boom in the country where many people would buy houses despite of their vulnerable financial positions and poor credit ratings. The mortgage crisis along with demographic changes has altered the economy of these suburbs. As more and more people are moving out of these places small retailers are going out of business. Restaurants, car shops, clothing stores are seeing a downswing in the number of customers. Rising fuel prices have also made commuting from the suburbs an expensive proposition. According to Christopher Leinberger, an urban theorist and visiting fellow at the Brookings Institution in Washington DC, transport now accounts for 19% of the household costs compared to 3% a hundred years ago. These spaces being custom made for residential purposes only could not be converted to commercial spaces. Urban Theorists are worried about the possible outcome of these areas once people can no longer afford to live in these regions.

via:Guardian

Witnessing a rise in the prices of food commodities globally, top UN officials have warned that the rising food prices worldwide can spark unrest and threaten political stability. The statement has been issued by Sir John Holmes, undersecretary general for humanitarian affairs and the UN’s emergency relief coordinator after two days of continuous riots in Egypt and other parts of the world over doubled rates of basic food commodities around the world. The prices of food commodities have escalated globally on an average by 40% in the last one year. The increasing food and fuel prices are said to have damaging effects all over the world coupled with the disaster of climate change due to global warming. Explaining this Sir John Holmes said,

The security implications should also not be underestimated as food riots are already being reported across the globe. Current food price trends are likely to increase sharply both the incidence and depth of food insecurity.

In addition to this, the major Asian exporters of rice such as Bangladesh, China, India, Indonesia, Burma, the Philippines and Thailand have started hoarding rice in their countries to feed the population of their countries. This has led to further food crisis fueling up the prices. The economists and environmentalists both warn that though climate change due to global warming is a burning issue, the hiking food and fuel prices are as important and damaging with a parallel time scale and have to be tackled immediately.

Via: guardian

This is certainly a bad news for the whole world as employers in the U.S cut the most workers in five years last months. According to the Labor department in U.S, employment fell by 80,000 jobs in March 2008. So it is the lay offs in five years. Some economists have now convinced that the economy is in recession, but some have admitted that U.S is in its early stage of recession period. Carl Lantz, U.S. interest rate strategist at Credit Suisse in New York, says,

There doesn’t appear to be any silver lining. It shows that we’re right in the middle of a recession, our expectation is that it will be a longer recession than the last two, and we’re just in the beginning.

The economy is suffering the effects of a housing collapse, a credit crunch and a financial system in turmoil. Due to this people and businesses are bound to hunker down, crimping spending, capital investment and hiring. Those things in turn further contribute to weaken the economy.

The Workers from construction and manufacturing areas are largely hit due to slowdown. The interest rate by Federal did provide a short-term boost to financial markets. But these gains have been more than wiped out by the fall in markets throughout March. Certainly it is big problem for President Bush who has been criticized by opposition leaders on many external and internal matters of the country. There is need to address longer-term economic needs by developing alternative energy sources and boosting investment in education and worker retraining.

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Via

However, the French are not going the Italian way. Rise of dairy products is cutting down the volume of cheese from the plates of the French. Skyrocketing price of cheese and dairy products has been blamed to the European Union’s quota on milk production that has driven tens of thousands of dairy farmers out of business.

Global food inflation is not bad news for every country. Growing import demand from China and India is helping South American farmers make large profits. Soybean exports are increasing profits of soybean cultivators in not only Argentina and Brazil but also Paraguay, Uruguay and underdeveloped Bolivia are expanding soy cultivation. Meat exports are fuelling profits of beef-producing companies of Argentina and Brazil. Demand for salmon from Europe, USA and Asia has made the coastal salmon farms of Chile a multi-million dollar industry.

The fixed domestic demand and rising import demands have not reduced the profit of food industries in certain countries – after all no man can survive without food and some are snobbish enough not to exclude the exclusive items from the menu.

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Source:Los Angeles Times

It is the ordinary American that is the victim of housing foreclosures that forces them to lose their homes, employment is scare as many continue to lose jobs due to the downturn of the local industries. Michigan is facing a mini-recession with its car industry collapsing and people losing jobs, 40 states have seen an increase in the want for a food stamp and the numbers have risen by 10% in more than 6 states which include Arizona, Maryland and Florida, the home of most of the Hollywood celebrities. Food stamps are actually electronic cards that can be swiped to buy food. Prices of food items have risen so people cannot buy like they used to even with the use of food stamps.

A country which spends millions on its military forces to liberate countries from tyrant rulers, a country having nuclear powers, a country that pledges to eradicate terrorism from the world, a country having military troops in all parts of the world; such a country facing its greatest recession clearly indicates that while the government is busy looking after the world, they fail to look after their own countrymen who suffer due to employment while the best brains around the world find jobs in US.

It is time for the upcoming government to recognize the crisis in their own country before they implement their foreign policies across the globe.

via: independent

Political opinion is divided on the issue. Senator John McCain, the Republican presidential candidate, has emphasized personal accountability of the Americans. McCain does not want the government to bail out the small borrowers and the banks whose irresponsible behavior triggered the current crisis. On the other hand, the Democrats disagree with McCain. Senator Hillary Rodham Clinton wants the government to do more. According to her, in today’s economy the trouble that starts on Wall Street often ends up on Main Street.

If government intervenes, what remains to be seen is who would have to bear the burden of the crisis - the taxpayers or the banks and the borrowers. With fear of foreclosures, erosion of household wealth and escalating inflation, any federal government spending to bailout the troubled banks and the loan defaulters will shift the burden on taxpayers. However, can government intervention actually help the economy?

The federal government had already introduced tax rebates and spending programs to make consumers spend more freely. Debt aversion is in fact not bad because increased saving stifles growth and history tells us that debt aversion is what prolonged the Great Depression. Debt is bad only when it fuels consumption with no long-term benefit. Even with the housing market continuing with its correction, housing remains an intelligent debt. With the end in the housing market correction, the next growth cycle will begin and smart investment in real estate will pay off.

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Source: yahoonews

The severe credit crunch that several of the world’s economies are facing has already led to some hard decisions. Already hundreds of thousands of people have lost jobs as companies try to make up for lost profitability by cutting costs and downsizing operations. Britain has not been untouched by this alarming situation, and as many as 11,000 jobs are threatened in its financial services sector according to CBI.

A quarterly study of financial industry by PricewaterhouseCoopers points out to a fall in employment and profitability rates to their lowest levels in more than five years. The survey also points out a steady decline in any optimism of a recovery. Of 79 firms surveyed, 97 per cent said that credit conditions were likely to worsen over next six months. Nearly 90 per cent said that the trend would continue longer than that. This is a sharp contrast to December’s findings wherein 70 per cent firms were optimistic of the situation easing in six months. The number of firms who are likely to go for reduction of staff outnumbered the firms who are likely to hire by 33 percentage points. Business volumes are also reported to be decreasing alarmingly.

The situation in the markets is very pessimistic and investors’ confidence has taken a beating. This could further dampen any chances of an early recovery. The CBI has put faith in liquidity injections and interest rate cuts to improve the position, but these are likely to be only short term measures with little, if any, effect at all. Restoring the fundamentals would take longer than that. Ian McCafferty, the CBI’s chief economic adviser said:

Credit markets are unlikely to return to anything like normality for some time to come. Even when they do, we will not see a return to the very favorable lending conditions that existed before August.

Clearly the crunch is likely to get worse as more firms from around the world come in with bad results. This could lead to a sort of spiral as the poor health of financial markets gets passed on to next financial years as well.

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For years, Japan has been fighting deflation resulting from excess production of goods. However, the economic scenario has drastically changed this year with rapid rise in consumer prices. In February, the prices of core consumer items including fresh food has recorded 1 percent increase from the price level in the previous year – the fastest rise in nearly 10 years. Most of the inflationary pressure is arising from hike in gasoline and food prices. According to Takehiro Sato, chief economist, Morgan Stanley, both the economies in the US and Japan have already entered a mini-recession that is likely to continue until around April-June quarter.

The trimming of jobs has occurred largely in the small and medium sized companies, as they have been unable to adjust to high oil and raw materials prices. The overall income of households has dropped by 0.1 percent and disposable income fell by 1.1 percent further aggravating the problems of the Japanese economy. The OECD had projected that the GDP growth for the first quarter would be 0.3 percent and predicted a 0.2 percent rise in the second quarter. The organization had said that despite of support from the neighboring buoyant Asian economies, Japan’s growth appears to be softening.

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Source: yahoo

We, Indians, are indeed obsessed with the idea of delegation. Earlier this week our Tourism minister, Ambika Soni took this obsession to new heights. India will soon have a tourism task force comprising of ex-servicemen to ensure safety and well-being of tourists. She proposes to deploy these tourist officials in all prominent tourist spots.

Apparently, unflattering statistics prompted this rather ridiculous proposal. India welcomed only five million guests in 2007 while Singapore saw about ten million in the same year. And perturbed Soni saw the formation of a tourist-protection army as the best possible solution. Also, considering the recent spate of accidents involving tourist and questions raised in the media, does this task force not aptly convey the concerns of the government and construct a foolproof escape route for it? Indeed, a bold attempt by the Minister to kill two birds with an arrow!

But does this task force actually address the problems of tourist in India? Agreed that safety and security is one of the prime areas of this issue but realistically, will this make any difference? Isn’t it like adding one more beast to the battlefield?

Five years down the lane, the scenario will be no better than now. This tourist army will just add another column to the list of government servants. Instead, why not try to get to the core of the issue. Conduct an exhaustive survey and try to find out where we falter as a host. Questionnaires for this could be distributed at airports and other tourist places. Diligent and systematic analysis of these questionnaires will then definitely reveal the weak areas and more so, along with the ways to improve it.
Undoubtedly, this will take time and perhaps, a lot more effort than announcing another force, but in the long run this is sure to benefit us.

It also stands important that India be fair and strict in dealing with tourists. The notion that Indian laws can be easily done away with is widespread among the international community. Therefore, the Indian government has to send a strong signal falsifying this notion.
The Scarlett Keeling case should be dealt with soon and brought to a justifiable end. Legal and criminal cases involving tourists must be looked into sooner and verdict should be delivered well before it starts haunting and deterring others planning on destination India.

Back home, the government must improve the existing institutions and agencies. There is no point in having two, equally inefficient protection forces. It makes so much sense to concentrate on the current order and try to put it place than to create a parallel system, which in the long run will only complicate matters.

Source: Hindustan Times

Image: Satrumun

The US economic growth is all set to slow down during the first half of 2008, as the possibility of a recession is increasingly becoming likely. This has been the projection made by a large number of economists surveyed by Blue Chip. The US economy is expected to grow at a rate of 0.1 percent in the first quarter and by 0.5 percent in the second quarter.

The economy as a whole is expected to grow by 1.5 percent in 2008 that is more than one percentage point lower than the growth rate predicted last September. Industrial production growth rate will be a mere 1.0 percent this year with the housing industry facing the worst ever slump since 1959. Rise in international crude prices will fuel inflationary forces with projected 1.5 percent rise in annual inflation. The dismal economic performance will culminate to lower consumer spending that would further pull down the economic growth rate. The US citizens are increasingly becoming weary of their job security on the face of rising unemployment. In February 63,000 people lost their jobs as builders and manufacturers are firing more and more workers.

The multibillion-dollar fiscal spending package with tax rebates is not expected to provide any stimuli to the US economic growth. Heavy debt, inflation pressures, rapidly declining home prices and fear of job security will force consumers to use the tax rebates to increase their savings and clear debts. The only silver lining is the positive impact that a weakening US dollar will have on narrowing trade deficit. For the first time in five years, US trade deficit fell to $711.6 billion last year from $758.5 billion in 2006. However, Wall Street economists surveyed by Thomson /IFR predict that higher level of oil imports at higher prices is expected to cause slight increase in the trade deficit.

Source: Yahoo
Image: NY Mag

US economic slowdown seems to have finally hit China. China’s trade surplus unexpectedly experienced a sharp fall in February. This sudden fall was not expected given the 48% record growth in the country’s trade surplus in 2007. The gap between China’s exports and imports had expanded to $262.2 billion last year.

USA, one of the major importers of Chinese goods had accused China of keeping its domestic currency Yuan undervalued to keep Chinese exports cheap. The West has also urged China to open up its domestic economy to foreign investment and allow greater imports. The surge in 2007’s Chinese exports had occurred despite of a number of product safety issues concerning Chinese goods including toys, toothpastes and clothing items. Beijing has introduced measures such as export tax on steel and some other goods to contain excessive export growth, which it fears might overheat the Chinese economy.

The Chinese export control measures had seen smaller trade surplus last December. The decline in February’s trade surplus can be attributed to the Chinese export control measures alongside with the adverse effect of the low US demand. Inflationary pressures are also feared to have contributed to increased production costs. Rise in prices of coal, iron ore, fuel along with upward trend in labour cost is adding to the cost of export goods.

Source: BBC
Image: ChinaDaily

President George W Bush presented his last budget to the nation. This is President Bush’s signature budget with the chunk of the spending being earmarked for the military in carrying out the President’s pet campaign against terrorism. The $3.1 trillion budget has not offered the ailing US economy anything special to regain its health.

The budget has emphasized more on saving with increased spending in the military sector and more tax cuts and the obvious outcome of deficit spending – more debt. The severe curtailing in government spending in health care programs will leave less money for the Medicare programs for the elderly and the Medicaid for the poor. With high premium extracted by insurance companies in the private sector, the elderly and the impoverished Americans depend on the government for health coverage.

While President Bush is concerned about the well-being of the people in terrorist afflicted terrains of the world, he seems to be less concerned about the ailing and impoverished citizens of his own country. After all, this is Bush’s last term as the President of USA and so populist policies are not his concern.

In trying to salvage the sinking economy, he has resorted to tax cuts. The President’s critics in the Democratic Party say that his tax cut measures will benefit only the rich Americans. President Bush, who is gifting deficit budgets to the country has projected that his policies will take the economy to the path of a balanced budget by 2012. An ambitious aspiration no doubt, given the $410 billion deficit in the current year and $407 billion deficit projected for 2009. The obvious question that arises is where is the administration’s spending arising out of this budget deficit going?

In his effort of saving government’s money Bush wanted to save those costly papers used to print the budget proposals and has instead posted his entire budget document online. At least the US administration will not be required to borrow from foreign nations in printing paper copies of the budget.

Source: ABC News

The untouched place and status of the United States in the pyramid of world economies has now being touched by countries such as India and China and company’s like Goldman Sachs, Merrill Lynch and JPMorgan who have showed and delivered to the world that they are at par with the United States and no longer need its support to exist in the current competition of the market.

The very explicit inflation, the United States housing bubble and domestic credit crisis of the United Stated has shown that it is as vulnerable to ambiguities of the market as any other country. The stipulated “decoupling” in universal terms has failed miserably in the United States, as the dependency between the environment and the growing economy has led to certain serious imbalances in the country. The situation concerning the credit backlash on the colored population and other consumer crisis in the US suggests the downfall of the market in very clear terms

Also, with the shrinking of the domestic market, the companies in the US, like McDonald and IBM are earning a majority of their revenues from foreign markets. When foreign markets are delivering and making profits for the domestic US companies, the follow on strategies of the companies seems to be the enhancements of their dealings and affairs in the foreign investors and markets.

This has been a very evident situation in the United States, where the colored population and also the African-American have been undergoing the backlash in terms of credit and finance, which is being currently referred to as the ‘mortgage crisis’. Their dreams of affording a home, they can call their own has received an antagonist response from the creditors who hold and mould the economy of America.
The so called colored people and the African-Americans in particular with a low credit history are being almost being vertically hit by the ‘subprime loans’, which has led to the financial crisis of the past year. They had been given loans easily, with very less formalities, but heavy interest rates that have led to the present crisis.

Cleveland, Baltimore and Detroit have been the worst hit areas, where the majority of the colored populations have had to face the challenge of leaving their cherished homes because of their inability to provide the stipulated installments for the home loans granted to them. In lieu of the situation being redeemed, the creditors have led almost 70,000 homes to be foreclosed, which has amounted the whole scenario to be referred to as “financial apartheid” for the minority populations.

For the upcoming US elections, this seems to be a very potent issue to be taken in hand by the Democrats or Republics. It about time now that some one redeems the colored population of the United States from this prevalent apartheid.

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