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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (25266)	3/10/2005 2:22:00 AM
From: mishedlo	Read Replies (2) \| Respond to of 116555

financialsense.com As savings rise, consumption falls. Since the rich save more money than the poor, the concentration of wealth in fewer hands increases savings and decreases consumption. As demand drops, and economic growth fails to keep pace with growth in the labor force, unemployment rises. Classically, this is a self-correcting process; labor costs eventually adjust, excesses are flushed out of the system, and growth begins anew. But in a depression, the above process is accompanied by a collapse of the financial system. A recession is a normal, necessary part of the business cycle and will not, in itself, cause a healthy financial system to collapse. However, as wealth becomes concentrated, it has a detrimental effect on the financial system. As Batra goes on to explain, in a sound financial system, banks make loans only to credit-worthy customers who are unlikely to default on their loans. But when wealth becomes concentrated, the number of less affluent people increases, as well as their borrowing needs. These less affluent people, who now make up the majority, have fewer assets and are thus less credit worthy. Even in such an environment, banks cannot afford to be choosy -- they must make loans in order to stay "competitive" with their peers and simply to stay in business. Thus, as the concentration of wealth rises, the number of unhealthy banks with shaky loans also rises in a dangerous spiral, increasing the possibility of systemic failure.

To: patron_anejo_por_favor who wrote (25266)	3/10/2005 10:03:12 AM
From: mishedlo	Respond to of 116555

DATAWATCH - Australia´s low unemployment rate points to April rate rise - BT Thursday, March 10, 2005 2:53:47 AM forexstreet.com DATAWATCH - Australia's low unemployment rate points to April rate rise - BT SYDNEY (AFX) - Australia's continuing low unemployment rate has raised the probability of an interest rate hike in April, BT Financial Group senior economist Tracey McNaughton said Data released by the Bureau of Statistics today showed Australia's unemployment rate remained at a generational low of 5.1 pct seasonally adjusted in February, the same level as in January and below expectations of a 5.2 pct rate McNaughton noted the bond markets saw a sell-off shortly after the result in anticipation of the Reserve Bank of Australia lifting its official cash rate by 25 basis points to 5.75 pct on April 6, following on from a 25 basis points rise to 5.50 pct on March 2 The labor data also saw the Australian dollar strengthen, rising to 0.7942 usd immediately after the data was released at 11.30 am Sydney from 0.7919 just before At 1.30 pm the Australian dollar was trading at 0.7976 usd Last week's rise was the first in 15 months, with the central bank stating it was necessary to curb inflationary pressures caused by supply constraints including labor shortages "We expect the Reserve Bank will look through the recent evidence of sagging business confidence, will side-step the decline in consumer confidence, and will by-pass entirely the recent string of weaker-than-expected retail spending data," McNaughton said Instead, she said, the central bank will single-mindedly focus on creeping capacity issues which were again highlighted by employment data "With so many jobs available, and so few workers to fill them, it is only a matter of time before wage pressures begin to rise," McNaughton said Federal Treasurer Peter Costello told reporters after the data's release that a tight labor market was "a good problem to have" "In the month of February the economy has kept creating jobs," Costello said "There's never been a better opportunity to get a job. There are more jobs chasing people than people chasing jobs."

To: patron_anejo_por_favor who wrote (25266)	3/10/2005 10:06:07 AM
From: mishedlo	Read Replies (2) \| Respond to of 116555

The Bush administration has completed a national security review of the planned sale of I.B.M.'s personal computer business to Lenovo of China, clearing the way for the deal, I.B.M. announced yesterday. The unusual scrutiny given to the deal mainly reflects the ambivalence in Washington toward China, and its rising economic and military power. Other Chinese companies are expected to follow Lenovo's example by shopping for acquisitions in the United States. -------- read the rest here: nytimes.com