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Strategies & Market Trends : The Residential Real Estate Post-Crash Index-Moderated -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (40471)	9/16/2011 11:51:08 AM
From: Les H	2 Recommendations Read Replies (1) \| Respond to of 119360

Ford's arithmetic The 2008 crisis started as a debt crisis, then hit the financial sector and finally spread to the real economy. The next downturn, if it comes, will also start as a debt crisis but it will hit entire states rather than private borrowers and banks. Some economists believe that the fundamental reasons of the past and the impending crisis lie not in the financial sector. Boris Kagarlitsky, director of the Institute of Globalization and Social Movements, considers the imbalance between consumption and production as one of the main economic problems of the last few decades. In his time, Henry Ford increased his workers' wages so that they could save money to buy the cars they built. The wise industrialist devised what Kagarlitsky called "a model of expensive labor" that gained traction after WWII but was gradually renounced in the 1980s when advanced countries opted for cheap labor. Industrial production shifted from Europe and the United States to regions with cheap labor, primarily South East Asia, and cheap labor was imported en masse to fill low-paid jobs. As a result, workers could no longer save enough to buy cars, but mass production cannot exist without mass consumption and, moreover, production begins to generate demand itself. Consumer lending has become a major toll for encouraging demand in the last few decades. Thus, the imbalance between production and consumption was aggravated by the debt problem that triggered the crisis in 2008. The debt crisis grew into a financial crisis, but the governments of industrialized countries were unwilling to risk the bankruptcy of financial corporations and preferred to bail them out with public money. Yevgeny Gavrilenkov, managing director of the Troika Dialogue group, said that now the debt problem has moved from the private to the public sector and that this is particularly pronounced in European countries. They are trying to resolve the national debt problem by raising private capital through public property privatization while at the same time cutting government spending and increasing taxes. This creates a risk of recession because a decline in the incomes of the population will reduce demand, the main driver of industrial production. The circle has been closed. en.ria.ru

To: Les H who wrote (40471)	9/16/2011 1:51:44 PM
From: Les H	Read Replies (1) \| Respond to of 119360

US-Europe stalemate over rescue fund boost, tax demands Europe and the US hit stalemate Friday when Washington demanded the eurozone boost its bailout fund, but Germany refused without a global tax on financial transactions, Austria's finance minister said. Maria Fekter said that US Treasury Secretary Timothy Geithner called on Europe to increase the 440-billion-euro the European Financial Stability Facility, but that German Finance Minister Wolfgang Schaeuble rebuffed the call immediately. After talks in Poland resulted in Greece being told it will have to wait until October to see if it can secure urgently-needed loans worth eight billion euros, Fekter said Geithner "demanded we put more money in to stabilise the financial sector, to stabilise the banking sector and to increase the EFSF." To which, she said, "Schaeuble told him that with taxpayers' money alone, this probably will not be do-able to the extent the US are envisaging." She said the eurozone side responded by calling for US backing for the EU's preferred tax on financial transactions and that "the US should participate." However, Fekter said: "But [Geithner] ruled that out emphatically." news.ph.msn.com