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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: i-node who wrote (525151)	11/2/2009 10:52:42 AM
From: tejek	Respond to of 1583867

Is Recession Normal? No David Dreman, 10.30.09, 07:20 AM EDT Forbes Magazine dated November 16, 2009 Multiples are inflated because earnings are depressed. It's that simple. The pundits on CNBC are telling us that a stock market correction is overdue. The reason a pullback is supposedly imminent: The economy is going to need a long time to heal. Unemployment advances toward 10%, and consumer spending, as a percentage of income, is at its lowest level in decades. Economic pessimists include such notable commentators as forbes columnists A. Gary Shilling and the libertarian congressman Ron Paul (see "On My Mind"). And then, say the bears, stock prices are already pretty high. The S&P 500 index is at 133 times bottom-line earnings for the 12 months through September. Hold on. Let's look more closely at the bear case. While it's true the market has had an enormous rally since early March, it is important to remember that it had fallen more precipitously than at any time since the Great Depression. The financial sector of the S&P 500, for example, fell 83% between June 1, 2007 and Mar. 6, 2009. This sector's decline was steeper than the overall market's decline between September 1929 and the 1932 low. So yes, this rally is strong and sharp, but remember that it comes off the worst stock market drop since the 1930s. It still hasn't really come close to recovering the ground it has lost. The Financial Select Sector SPDR Fund (XLF) is trading at 60% below its 2007 high. So please don't judge the current rally in the context of typical market cycles. Remember, about a year ago our global financial markets were in a state of panic. If you check market history, you will see that the rallies following such panic attacks tend to be sharper and swifter. And please don't fixate on trailing price/earnings ratios. Multiples are inflated because earnings are depressed. It's that simple. We are in a severe recession, and hundreds of companies have ailing income statements. Stock market investors aim to see around corners, and they should be doing that now. Corporate earnings will be down sharply this year (particularly if you include writeoffs), but they will rebound over the next three years. I can't tell you how quickly the recovery in earnings will come, but I am sure it will come. Go back to that market of 1932, when the Dow Jones industrial average bottomed out at 41.22. The Dow almost tripled within the next three years, even though it took earnings almost five years to catch up to where they were before the crash. In short, it's normal for stocks to rebound ahead of earnings. The bears have a different view. They think the economic malaise will last for years or even decades, as in post-1989 Japan. Get used to a new normal in our economy, they say, one in which growth is sluggish or nonexistent for a whole generation. I say rubbish. The great global investor John Templeton (1912--2008) said that the four most dangerous words in investing are "This time it's different." In more than 30 years of managing money I have witnessed many a shift in market sentiment. It lurches from irrational exuberance (as with tech stocks a decade ago) to irrational gloom (bank stocks in March). I just don't accept today's gloomy view. read more......... forbes.com

To: i-node who wrote (525151)	11/2/2009 10:55:07 AM
From: tejek	1 Recommendation Respond to of 1583867

Thanks Mr. Bush! Global Finance: Britain Is No. 1 The World Economic Forum reorders the world of finance by rating Britain and Australia over the U.S.—and booting France and Germany from the top 10 By Leona Liu London has officially dethroned New York as the world's top financial center, according to an index released this month by the Geneva-based World Economic Forum (WEF). The WEF's 2009 Financial Development Index ranks 55 countries on the sophistication and stability of their financial systems and markets. The nations were evaluated according to more than 120 criteria, ranging from the favorableness of their institutional and business environments to the size of their equity and bond markets, and from their technology infrastructure and human capital to the ease of obtaining consumer and commercial loans. Perhaps the biggest surprise in this year's study—the second release of an annual index launched in 2008—was that Britain rose to the No. 1 spot despite its economic troubles, up from No. 2 last year. Britain was buoyed by the relative strength of its financial markets, particularly in foreign exchange and derivatives, and by its world-beating insurance coverage. The other headline news—though perhaps not as surprising—was that the U.S. fell from No. 1 in 2008 to No. 3 this year. While the country is still by far the world's wealthiest, financial instability and a noticeably weakened banking sector pulled down its scores. The No. 2-ranked country, Australia, jumped nine rungs in the rankings, thanks to its greater financial stability, low sovereign debt, and ready access to consumer credit. France and Germany rank 11th and 12th The results of the study will undoubtedly fuel the ongoing debate as to whether London or New York is the top dog in global finance and markets. Britain's elevation to No. 1 could be short-lived. The country continues to be weighed down by recession, while the U.S. reported a return to growth in gross domestic product during the third quarter of 2009. Britain's institutional environment also could weigh on its ranking next year: The government has been criticized in recent months for excessive intervention in the financial sector, and there is rising concern over increased regulation and higher tax rates, which could encourage London-based hedge funds and other financial intermediaries to move elsewhere. To be sure, the total scores for most developed nations fell sharply, due to the effects of the credit crisis—and those that suffered the most from lowered financial stability were among the largest industrialized economies. France and Germany, which held top slots in last year's index, fell out of the top 10 altogether, landing at 11th and 12th place, respectively. The sheer size and global nature of these countries' financial systems exposed them more than others to the effects of the downturn. The fall of such countries as France and Germany allowed developing nations such as Brazil, Chile, and Malaysia to close the gap on their Western counterparts. Nouriel Roubini, an economics professor at New York University and the leading academic for the study, wrote in a summary: "For some of these developing countries, it was a result of learning from the mistakes of past financial crises, while for others it reflected the relative lack of complexity and global integration of their financial systems." Yet emerging economies have a way to go before they catch up with more developed rivals. Some suffer from underdeveloped infrastructure, murky legal and regulatory regimes, or weak corporate governance. Few score well on financial access for consumers and small businesses, as measured by the availability of credit and the penetration of retail banking services such as savings accounts, microcredit, ATMs, branch offices, and point-of-sale financial services. read more........... businessweek.com

To: i-node who wrote (525151)	11/2/2009 10:56:48 AM
From: tejek	Respond to of 1583867

Read and learn........ China Warns of World Slump If Stimulus Withdrawn Oct. 31 (Bloomberg) -- Chinese Commerce Minister Chen Deming warned against withdrawing economic stimulus measures, citing the risk of another world slump. “There are increasing signs that the global economy is heading in a positive direction, but there are still many uncertainties,” Chen said at a forum in Shanghai today. If countries “withdraw the stimulus measures now, the global economy will plunge.” Billionaire investor George Soros said yesterday that the global economy’s recovery from its worst crisis in 70 years may “run out of steam” and another recession may follow in 2010 or 2011. U.S. stocks tumbled yesterday as declines in consumer confidence and spending and the threatened bankruptcy of commercial lender CIT Group Inc. underscored the risk of a slump. “For the world as a whole, it’s premature to think about exiting stimulus,” Nobel Prize-winning economist Joseph Stiglitz said at the economic conference in Shanghai today. While the worst of the crisis is over, challenges include high unemployment, weak investment and consumption, rising commodity costs and fluctuating currencies, Chen said. It will be difficult for consumption to return to pre-crisis levels, he added. Around the world, central banks are paring emergency measures taken at the height of the financial crisis. Japan, Australia Japan’s central bank said Oct. 30 that it will stop buying corporate debt at the end of the year. Australia this month became the first Group of 20 nation to raise rates since the height of the crisis and Norway’s central bank followed. In the U.S., the economy grew in the third quarter for the first time in more than a year, propelled by emergency programs to boost buying of cars and homes, according to Commerce Department figures released Oct. 29. Gross domestic product expanded at a 3.5 percent annual pace. In a speech today, Stiglitz said that “when we look at if workers can get jobs, if they can work full time, if businesses are able to sell goods they produce, in those terms, we are nowhere near the end of recession” in the U.S. The nation’s unemployment rate reached a 26-year high of 9.8 percent in September and economists project it will exceed 10 percent by early 2010. Talking to reporters, Stiglitz said the economic data would be “miserable” without the effect of stimulus measures. China’s Pledge In China, the State Council pledged Oct. 21 to continue monetary and fiscal stimulus even after the economy exceeded officials’ expectations for the first nine months of the year. Growth is likely to top the government’s 8 percent target for 2009, the central bank said yesterday. Chen acknowledged the “dilemma” that global stimulus measures may cause long-term problems by swelling government debt and stoking inflation. Nations’ efforts to protect their own economies are also fueling protectionism in trade, he said. Investment to create jobs may also intensify overcapacity problems in industry, the official added. Stiglitz said emerging economies including China need to guard against “bubbles” caused by the surge in liquidity as governments try to stimulate growth. --Li Yanping, Judy Chen. Editors: Paul Panckhurst, Alex Devine. bloomberg.com