Roubini: S&P may fall 30% during 2-year period

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Short term rebound?

After Wall Street has experienced the worst October ever due to the current financial crisis, is it time now for a rebound? The index gained 889 points yesterday on speculation of a rate cut from US, Europe and Japan. But would it be just a jab in the arm for a short term boost?
The overarching sentiment is still negative, with many companies yet to report their full year results. Technically, the volume is still not healthy enough to prop the momentum and any advance would probably be short lived. For those who are investing, swing or intra-day trading would be a good strategy. After all, it's safer to cash in profits than spend sleepless nights chasing the stock prices.

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How to save money in a year to weather the financial crisis

From CNN:

"Stephanie Nelson, founder of couponmom.com, a site that tracks deals at your local grocery store, says that shoppers can save an average of $50 to $100 a week on their groceries if they spend about 30 minutes once a week planning out their supermarket trip."

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Medicaid payouts delayed

From Las Vegas Sun: State delaying Medicaid payouts

"In an attempt to juggle a surge of Medicaid bills, the state is putting a hold on some payments to University Medical Center and other health care providers, prompting fears of delays in receiving large amounts of anticipated cash."

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Medicare and Medicaid shortfall is explosive

The total national deficit including medicare, medicaid and social security stands at a staggering $59 trillion. Among these, the medicare looms as a threat to the nation as funds are expected to be depleted by 2019. With the first baby boomers turning 62 this year, the first wave of the 78 million baby boomers are retiring and currently only three taxpayers are supporting one retiree with the number expected to dwindle. The bailout from the Fed for the financial crisis seems to spill over.

Why is the Medicare running a shortfall? Read here

Read about the Social Security and Medicare shortfall here

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Oil falls below $69

Finally, the price of oil is back to more sane level after the financial crisis. Will it be back to $20??? Who knows.

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The Next Crisis : Credit Card Debt?

While all eyes has been on the debilitating subprime mortgage crisis as the catalyst of the current financial crisis, there is a looming problem that deserves public attention. Plastic money.

According to latest information gathered by the US Census bureau, there were 164 million credit card holders in the United States in 2005 and that number is projected to grow to 176 million Americans by 2010. These same Americans own approximately 1.4 billion cards - an average of nearly nine credit cards issued per credit card holder. The number of credit cards circulated in US is larger than the rest of the world combined according to David Robertson, publisher of industry newsletter the Nilson Report. The total credit card debt of America is a staggering $962 billion and the average household in 2008 carried nearly $8,700 in credit card debt (Federal Reserve Statistics). In fact, Bank of America revealed on Oct 6 that $3 billion of it's $184 billion credit card portfolio has soured, a 50% increase from just a year ago.

In Canada, 25% of 4000 Canadians surveyed had $10,000-$40,000 consumer debts excluding mortgage.

In 2003, South Korea's economy was hit by credit card crisis where nearly 4 million South Koreans defaulted.

What is the cause the problem?

People are spending more than they are earning, compromising their future with temporal satisfaction. This is a result of generation than yearns for instant gratification with tomorrow's money. In essence, people are lured to the bliss that materials promise to provide - but that is never true. While basic necessities are required, true happiness comes from cultivating meaningful relationships.

Click here to more about handling credit cards

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Mc Cain's Bloopers on Wall Street

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Warren Buffett: I Haven't Seen As Much Economic Fear In My Adult Lifetime - Charlie Rose Interview

In an exclusive interview with Warren Buffet, the billionaire commented the recent financial crisis to be on similar proportions as an economic Pearl Habor.

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Financial Crisis Takes a Toll on Hospitals

Hospitals are in debt, as construction projects are put on hold and interest rates go up.

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Balance Sheet : What is left is not right, and what is right has none left

Essentially what the world is facing now is a crisis of confidence. Banks are not trusting each other's balance sheets and reluctant to lend. Cash are horded and liquidity is frozen. As one banking professional said of the balance sheet, "What is left is not right, and what is right has none left" People are forced to take a hard look at the realistic value of assets that they are holding.


In the absence of trust, even further rate cuts will not flow down to interbank lending rates. With the demise of Lehman, and crippling of AIG, banks are jittery to part with cash not knowing what to expect next.

In order to revive the banking system, trust must be restored. How can trust be restored? Government has to come in temporarily to buy up ill investments and insure deposits. This will serve as a soft landing for banks while they painstakingly revamp their balance sheets to reflect the realistic values of their assets. All over the world as well, governments are infusing money into the capital markets to prevent a worldwide financial meltdown.

• The Australian government under Kevin Rudd has proposed to guarantee deposits in full for the next three years. 
• US has passed a bill for 700 billion dollars
  
• Germany tied up a rescue package worth 480 billion euros
• Britain is nationalising banks by investing 37 billion pounds
• France provides 360 billion euros of bank guarantees

And the number continues to tick...

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End of Financial Crisis Could Be in Sight

Soros shares here why the bailouts from the US Teasury has not helped, and five steps that they can take to alleviate the crisis and prepare for a turnaround. He also mentions that the shift of power from the West to Asia is already taking place.

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Tipping the scale to Asia

With US public debt currently standing tall at US$10 trillion dollars and reserves of US$70 billion, compared to China with a public debt of US$614 billion and reserves of US$1.5 trillion, the scale of economic power has been tipped. The US owes China at least US$500 billion in bonds.

China is now the emerging economic superpower, together with a growing presence of India. The US has been piling up debt while China has been piling up reserves. China will own more of the world, if they convert their dollar reserves and government bonds into assets.

Not only economic power, but now China wields an increasing influence as a major political power. Earlier this year, Clinton has made a comment on how the US debt to China will threaten security by selling their enormous reserves and bonds. Just weeks ago, the prophecy was partly fulfilled when the Chinese wanted to halt lending to US banks on fear of the widening crisis.

Nevertheless, the Shanghai Composite Index was not spared in this financial carnage, and fell 68% from its all time hight of 6092 on 16 Oct 2007 to 1922 on 17 Sep 2008. The recent influx of investment in China has caused the economy to be overpriced, especially when the US, a major trading partner is falling. It was time for a major correction. However, China needs to have a more critical look into eradicating corruption, that is fueled in part by the widening income gap. If China can address this issue, the nation will indeed prosper in an unprecedented way, and all those who are wise will ride on this wave.

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Credit Default Swap : The $62 Trillion Ticking Timebomb

The current crisis has ballooned from the subprime mortgage crisis of the US, mainly due to the over exposure of complex debt instruments centering around mortgage. There is another ticking bomb, called the credit default swaps current valued at $62 trillion that spells a greater disaster.

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