A CHINA NÃO É AMEAÇA, MAS UM NECESSÁRIO EQUILIBRIO MUNDIAL.

A China não é o monstro que querem rotular para a opinião pública mundial.
Nos últimos cinco anos, o país, através de suas exportações, foi o principal responsável pela contenção de abusos inflacionários em países ricos e pobres. Havia uma cultura empresarial de produzir pouco e ganhar muito, com o excesso de protecionismo a maus e incompetentes empresários, pelo próprio Estado. E as concorrências ficaram mais acirradas, exigindo, do setor produtivo, modernização tecnológica, capacidade gerencial e preços. E o povo já começou a usufruir desses benefícios que chegaram direta ou indiretamente.

Por outro lado, não se denunciam os absurdos cometidos pelo atual modelo capitalista, concentrador de riquezas, volátil, fabricador das crises de 1929, 1987, 2007 e de muitas outras, que descapitalizaram e desorganizaram a economia de paises pobres e em desenvolvimento. A subprime das Letras Hipotecárias é um forte exemplo disso. O mercado financeiro ganhou bilhões de dólares com essas crises pré-fabricadas e maquiado nos balanços contábeis. E os Bancos Centrais ficaram coniventes com elas.

Voltando ao assunto China, o país já está dando demonstrações claras e reais de que será um grande aliado dos brasileiros e vejamos por que:
- De 2004 a 2007 importou do Brasil mais de USD 31, 3 bilhões de e exportou USD 29, 6, acusando um saldo a nosso favor, na balança comercial, de mais de USD 1,7 bilhões;
- Já é o terceiro maior importador de produtos brasileiros, atrás somente dos Estados Unidos e da Argentina. Em curto prazo, passará a ser o primeiro.
- Acho até salutar que os Chineses interfiram no controle dos preços do aço, que tiveram aumentos despropositados, nos últimos anos, adquirindo um terço do controle acionário da Xstrata. O monopólio nessa área é prejudicial ao Brasil e aos demais países em desenvolvimento. De 2004 a 2007, o minério de ferro, teve um aumento acumulado de mais de 170% (um absurdo) A Vale ou qualquer outra empresa, nacional ou não, não pode continuar impondo preços descabidos para os seus produtos e que chegam a influenciar decisivamente a geração de inflação, além de prejudicar o desenvolvimento de qualquer Nação.
-Cobrar da China, de cultura e costumes milenares, com um quarto (1/4) da população mundial, a liberdade total de informação e imediata, é criar instrumentos poderosos para a desorganização do Estado Continente. Essa mudança tem que vir paulatinamente, para realmente gerar benefícios econômicos, políticos e sociais.
- Não precisamos brigar com a China ou depreciá-la, mas sim, aproveitar as imensas possibilidades que o país nos oferece para se tornar o maior importador de produtos brasileiros. Em resumo, a China é pior em que, em comparação com o regime capitalista que concentrou quase 50% de todas as riquezas em mãos de apenas 2% da população mundial? E olhe ainda que os Chineses, com as suas reservas internacionais, estão financiando mais de 8% do deficit do Tesouro americano.Os chineses estão realmente fazendo o bem, ao dispertar o capitalismo selvagem para uma realidade em que invistir mais no capital humano, é mais importante do a especulação na agiotagem financeira internacional.

What the US subprime mortgage crisis teaches us -
- a lay person’s three lessons from Down Under
by Ally Hauptmann-Gurski
From every crisis, we can learn something. We should go to great lengths to analyse and scrutinise when something goes wrong or we will experience repeat performances of these crises, needlessly subjecting new generations to one kind of hardship or another - or several. We do it with aircraft crashes, even near misses, so why not apply this learning process to other areas of life? The answer is: Nobody likes a messenger with a lesson and the urge to cock that gun and shoot him is hard to resist.
It is not impossible that mankind learns, despite what we sometimes think. There are two examples in world history where mankind proved it was willing and able to learn. One is Black Friday of 1929 and number two is the Versailles Treaty after WW I. Although it does not seem to be public knowledge what systems exactly have been put in place to prevent dramatic share market falls like in 1929, which caused the world’s economies to fall over like card houses - some system must exist or the crises that we experienced since WW II would have blown out and up. Similarly, ‘Versailles’ has not been repeated in the aftermath of the many conflicts which erupted after WW II.
The fallout from the 2006/2007 mortgage crisis in the US is not clear yet, and analysing the parameters of its development opens up the learning process. While some say it will be half a disaster for most of the world, other state calmly that the powerhouse of the world economy, the Australasian region, will not be affected to a degree which will cough up the card house effect. Whichever way it turns out, there is something to learn!
But why is there a mortgage crisis at all? Which events led to it? Which underlying structures produced such a mis-development? (Please allow me to use this word although I have not found it in the dictionary. The English language does not seem to sport a word for the German ‘Fehlentwicklung’, which means several steps of a development to an undesirable results. The word implies the chain reactions and fluency of seemingly minor events which lead to bad situations.) If you hold the view that the current mortgage crisis is just a glitch in the normal course of events and the hardship of mortgage foreclosures can be shrugged off as the normal ups and downs in the economy, then you need not read on. You have no desire to learn, and you probably live a sheltered existence.
The Evaporation points of money
Mortgage defaults only caus a crisis in the financial system when the lenders do not recupe their loans. Foreclosures where house prices have remained stable or even went up, are a disaster for the mortgagee but not for the financial institutions or the nation. When some and then many houses do not fetch the mortgagee’s and lenders’ inputs, write offs occur. When there are too many write offs, money has evaporated - and that is the situation which needs preventing. Few and occasional write offs can be shrugged off; from a certain number all segments of the economy become affected or infected should be the word.
OUT, OUT, AND AWAY
US house prices have been falling for a while, because buyers simply could not support rising prises. They simply did not have the asking prices, as too much money was sucked out of the US economy by the Iraq war and other military expenses. While some claim that this will all turn out to be productive expenditure in the long run, it does not feel like it in the short term.
PREDATORY SALESMANSHIP
Mortgage salesmen with neither conscience nor guidance from adequate regulations have written loans to people who could not support them. They have even written these subprime loans when people could have afforded a ‘proper’ loan, just because they got more commission. Then the interest environment changed. More money went to the military, so it was unavailable to the general economy at home. Like lack of lubrication causes machinery to come to an eventual standstill, removing a certain percentage of money from an economy shows up somewhere, eventually.
What has been overlooked in the tangle, is the time lag effect. It takes a few years for the lack of funds to have noticeable effects, i.e. falling prices and foreclosures. When there was no effect in the first one or two years, politicians and military thought they could carry on like before, compounding the for later on.
There are many think tanks who study economic matters extensively. If it was desired that a crisis like the subprime one is not repeated, two crunchpoints need to be studied and measures taken, which prevent their re-occurrance.
Which percentage
can be removed from an economy without ill effects?
Number one is the percentage of money that can be taken out of the economy for ‘unproductive’ expenditure, plus alertness to the time factor. Like in a family budget, government can only spend so much in certain categories and still have a healthy economy a few years down the track. Everyone can live significantly beyond their means, of course, for a while. But evenutally, inevitably, it is going to blow up in the face. What happens then slips away from a person’s or a nation’s control. It could be one year, two or more years down the track, but it will happen. With national economies there is more unpredictability when the chicken will come home to roost, because economies are influenced by thousands, if not millions of influences. Without fail, however, the path of living beyond a budget has a slippery surface.
ETHICS FROM WITHIN OR OUTSIDE?
Number two is regulating the conduct of lenders, including their salemen and women. It should not be tolerated that unscrupulous, unethical lenders, i.e. loan sharks and crooks in common parlance, cause a financial crisis in one country which spills over to other countries. If salesmen in the US write predatory loans, Australians, for instance, pay more for petrol or Japanese become unemploed? If the world economy is set up in this way, changes are due.
Business is about making money, and if people are not given limits they will be predators. Government is not only for talk and ceremonies, government is there to intervene when undesirable parameters develop. They need to give business limits, i.e. regulations to abide by, less for the protection of mortgagees who are gullible, but for the protection of the millions who could, but should not, be dragged down in the avalanche kicked off by loan sharks. Much of the savings that evaporate in write offs are an old person’s livelihood. Predatory sales staff of financial institutions should not be allowed to make these savings disappear.
MONOCULTURE
Number three is one that applies longterm thinking. It comes as a worry that ups and downs of the US Dollar, caused by cicumstances in one economy, leave exporters and importers all over the world at the mercy of a single country’s economic management or mismanagement. Depending on what currency dealers think that day, sellers may obtain less for their goods or could have a windfall. A seller’s windfall is a buyer’s adverse event and vice versa. Monoculture is never an advisable strategy, akin to all eggs in one basket, so it makes no sense that trade between Kenia and Norway should be influenced by internal events in far away US. Ukrainians buy Russian gas in US Dollars; does this make sense? Australians pay less for petrol when their Dollar rises because the greenback has gone out of fashion temporarily. But when the greenback comes back en vogue, their costs of going to work rise dramatically. The ups and downs of the Dollar also translate into electricity prices. It is intolerable that the price of such a staple should be so unpredictable and dependent on the hunches of currency dealers plus domestic issues in the US. It is a nonsensical situation that the population should not know what it may cost to drive to Grandma next Sunday, and that Grandma cannot know what the electricity for baking biscuits may cost.
It made sense during the cold war to count everything in US Dollars, who mostly funded the destruction of the evil empire. Nearly twenty years after the fall of the Berlin Wall, however, we should adapt the system to the new global realities, where less dependency on one country is needed to create stable environments for the multitude of economies that we have today.
A first step in that direction has become visible. The impact of the subprime mortgage crisis is less severe in the Australasion region. The much maligned Chinese cash reserves can now provide a buffer should it get worse. It is quite likely that the storm will pass us by.
This ‘diversification’ can be achieved for all countries if a monetary unit for intenational trade only were developped which was composed of all (or most) currencies. It will be difficult to set up because many countries may have very different ideas of how much their currency’s weight within such a composite monetary unit should be.
Generally speaking, no country should have more than 10 %, because that would ensure domestic issues of any one country do not assume a domineering influence, for better or for worse – for better of some and worse for others.
These are the lessons that we can learn from the subprime mortgage crisis on this 5th January 2008. My hope is that there will be changes, changes which go beyond a short term fixes, i.e. a structural rethink of which parameters require alteration for a post cold war world.

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The recent PostGlobal panelists' comments on the recent financial distress have been disappointingly populist. Does Mr. Gumede know the extent of financial regulations in the US and Europe? If anything, one could convincingly argue that these regulations are overreaching and they obfuscate and distort the investors' actions. Economic capital estimates are pointless and would have been ineffective in limiting the damage of previous shocks. Risk management is a concoction of high IQ morons (not my definition). The wave of securitization is overall a very good thing (my apologies to Martha Stewart), as it favors risk sharing. Hedge funds and banks are agents, and if they lose money, the ultimate responsibility lies with the principals, i.e., the investors. They should not be salvaged or regulated, but just allowed to fail. Those who invested or delegated wisely have nothing to fear.

The desirable outcome of this crisis is a simplification of financial instruments to make them easier to track and price, and the elimination of imprudent and low-performing players. It had to happen. It should have happened a year ago, but it's good enough that it happens now.

I absolutely despise being forced to defend U.S. bankers. However, Mr. Gumedes blame of the crisis on these bakers, pun intended, is off base and a bit naive. For example, US bankers have a lot more in common with other bankers than either US. or African bankers have to the populations of their own countries. Your world bankers invested in these "derivitives" because they were greedy, like the US bankers.The greed of the voracious cannibal capitalists excedds all reason and is therefore destined to burst, as it always has. Trouble is that taxpayers, everywhere, then pick up the huge bills in the interest of the country: Right? As long as we have regulators who are regulated by those they regulate we will have big bubbles.

There were a lot of people who saw this coming a mile off, but the current administration was too much "laissez faire" and would not constrain the banks. Now the Bushies have come out as expected, influencing the Fed to start a "no bank left behind" package to save everybody. At our expense, of course.

There were a lot of people who saw this coming a mile off, but the current administration was too much "laissez faire" and would not constrain the banks. Now the Bushies have come out as expected, influencing the Fed to start a "no bank left behind" package to save everybody. At our expense, of course.

There were a lot of people who saw this coming a mile off, but the current administration was too much "laissez faire" and would not constrain the banks. Now the Bushies have come out as expected, influencing the Fed to start a "no bank left behind" package to save everybody. At our expense, of course.

There were a lot of people who saw this coming a mile off, but the current administration was too much "laissez faire" and would not constrain the banks. Now the Bushies have come out as expected, influencing the Fed to start a "no bank left behind" package to save everybody. At our expense, of course.

Once upon a time US capital markets had the reputation of being the cleanest major markets in the world. Enron, etc., badly tarnished this reputation, especially because major accounting firms, law firms, and investment bankers acted as enablers for fraud. It's not that foreign markets are cleaner; rather, US markets have lost much of their comparative advantage. There were proposals for serious reform, but they got nowhere. The best Congress could do in reaction was the pitifully inadequate Sarbannes Oxley. The idea that US markets are subject to too much regulation is ludicrous. Sure, companies often prefer to peddle securities in countries where the consequences of misleading investors are not too serious. Likewise, it's cheaper to manufacture toys in China, but it's not necessarily a good idea. Gumede is right about the need for regulation. But it's not going to happen, until a catastrophe overwhelms the political punch of Wall Street and discredits free-market ideologues. The current turmoil could conceivably turn into such a catastrophe, but probably won't. This time. What is the proverb about the pitcher and the well?

Mr. Gumede should learn the difference between "investment banks" and "community banks." By using the generic terms "banks" and "bankers," he confuses the two and for readers it would appear that a banker is a banker. That just is not true.

For the most part, community banks in the US are responsible stewards of there shareholders equity and their customers deposits and trust. Community banks are not to blame for the excesses that created the subprime melt down, but if community banks are thought to be the same as investment banks because commentators use the generic "banker" term, then community banks will be punished with more expensive to implement regulation.

There is a difference between investment banks and community banks and the media and Mr. Gumede should not confuse them, else the innocent will be punished for the sins of the guilty.

You can't really regulate the system, the sharks will just find another scam to milk Joe Citizen and the U.S government. S&L, Enron, Sub-Prime Housing Loan meltdown are basically the result of some people getting too greedy. What you can do, however, is make the punishment extremely harsh to deter criminal activity such as fraud within the financial system.

Am I the only one that thinks this started with free trade? Clinton began the bleeding of real money out of this country and Bush has taken it to a new level. Millions of Americans have seen their jobs go overseas. Toys, clothing, metals, shoes, call centers, i.t. help lines, etc. have all been affected. The workers of these companies have been forced to take lower paying jobs (mostly in the service sector) while still trying to live like middle class people. At the same time, financial institutions have been giving out credit like candy to these needy people. Zero money down, pay later plans have been the terms of this era. Now, banks are calling in their markers and people can't pay...what a shock. The same people who have been told 'defecits don't matter' can't understand that it's better to have 10 dollars in your wallet then borrow 10,000 dollars. I can't stand people who have been saying for years that the economy is doing great under bush when he has been doing the same thing, putting our future on the federal credit card. Do people understand that the national debt incures interest? I have been screaming that this was going to happen for 7 years now. I hope that the people don't take what I am about to say as being conceded, but I have been right so far, so I hope you listen. IF WE WANT TO AVOID BECOMING A THIRD WORLD COUNTRY WE HAVE TO END FREE TRADE AND RESTORE MANUFACTURING....NOW!!! Only Kucinich seems to understand that under current treaties the U.S. does not have the power to dictate policy to the WTO. The only way to stop them is to DISBAND the WTO and World Bank and return to bilateral treaties. There is no other solution. Please write your senator and vote Kucinich.

The problem is not with regulation but with irresponsible practices of some of the companies. Just look at the housing market crunch. The reason is that any Harry, Tom, and Dick were able to get a loan with or without any guarantee or putting down a single penny. You just walk into a real estate dealer's office and everything was taken care, no questions asked.
So it had to come down flat on the floor. The taxpayers have taken care of so many irresponsible lending practices from S & L onwards. Here comes another one, and it will be followed by credit card crunch.
I feel sorry for the poor American taxpayers who have to bail out so many crocodiles, but do not have the money to pay for the health or college of their children. When they ask for this, there is a simple answer: Don’t you know you are living in a capitalist country. Or how in the world can we socialize our healthcare system, as if socialism starts and ends at healthcare.
Sometimes I just wonder if McCarthyism is really dead. I personally feel it is alive and well standing in every corner of life and gazing at poor middle class.
If there is anything that is hated in this country, it is Keynesianism, but when it comes to bail outs of fat cats, everyone starts looking towards Mr. Bernanke, Chair, Federal Reserve. So why don’t they oppose those doses. Is that not Keynesian economics at work?
I better shut-up as I was trained as political scientist who knows nothing about economics or greatness of its ideas.

A regulated financial structure will be as doomed to fail as the compeletely unregulated one. Financial markets are in principle rickety, strengthening regulatory monitoring will simply backfire, encouraging more hedge funds changing hands & moving around like a wild goose. To tighten the leash on the current marathon of financial banwagons requires more active monetary policy on the part of Fed in the form of revising current interest rate, re-fixing the exchange rate regime & putting somesort of 'lid' on the hedge funds flowing back & forth from Asia to the US.

A regulated financial structure will be as doomed to fail as the compeletely unregulated one. Financial markets are in principle rickety, strengthening regulatory monitoring will simply backfire, encouraging more hedge funds changing hands & moving around like a wild goose. To tighten the leash on the current marathon of financial banwagons requires more active monetary policy on the part of Fed in the form of revising current interest rate, re-fixing the exchange rate regime & putting somesort of 'lid' on the hedge funds flowing back & forth from Asia to the US.

Let me qualify this before i ask a question: Iam ignorant when it comes to economic issues. If iam incorrect in my assessment, please correct me.

My question is simply why did banks issue home loans to individuals with a bad credit history?
In the past banks did not loan money to risk adverse borrowers. Surely they knew the effect it would have on the markets and the economy. If not, then those making irresponsible decisions ought not be in that position.

It is my understanding that a combination of factors including low interest rates contributed to the problem. While lenders approved loans for first-time, inexperienced and/or credit-risk home buyers enticed by low mortgage rates, mortgage companies lowered their standards and real estate agents failed to inform perspective buyers how much their interest rates would eventually increase. Hence when they did, mortgage payments doubled and tripled. Now millions are defaulting on their loans.

At one time real estate agents, mortgage companies and banking institutions followed protocol (laws?) and used good business sense. Lenders did not approve loans for credit-risk borrowers, real estate agents explained financial terms and mortgage companies had financial guidelines a perspective buyer had to meet. The checks and balances prevented situations like this from occurring.

What happened?

Were some laws relaxed? Could it be profit and greed? Or a combination thereof?

People are people and when given a chance many will scam the system.

Regulations are a must in a world where profit and greed trump common sense, ethical business practices and responsible decision-making.

Perhaps regulations will be encumbering, however, it is their own fault for not playing by the rules. And until such time when pragmatic, honest brokers can be trusted to follow the rules, regulations are a must, unfortunately. But then again Iam not an economist and could be completely off. Either way something needs to be done to avoid similar situations.

Is there another solution?

Why did lending institutions relax loan requirements -- did they see a short term gain? Iam flummoxed by this.

I agree with the (repeating) Mr. Fox that we need to wait and see whether the current financial controls available to central banks are enough to create a soft landing for this liquidity crisis. The much desired outcome is a reassessment and repricing of risk associated with the unrated and triple BBB rated bonds that are at the center of this crisis.

There's another way to go than regulation and that's tax. So a government can set a sales tax on bonds as on many products and can scale the tax by the riskiness of the bonds. In essence the tax acts as a brake on the sale of loans and as a sharper brake on the sale of riskier loans. It would countermand the tendency to discount risk in a boom economy (because of a belief in eternal asset appreciation), and so cushion a landing in a bust.

US Banks and Companies are the most regulated in the World. In fact, I would go as far as to suggest that we in the US need less rather than more regulation. Sarbannes Oxley has reduced the competiveness of US companies who need teams of accountants like myself to function even in low risk markets. More regulation would be counterproductive and, if anything, the current crisis shows that even the steepest regulatory requirements can't prevent markets from making bad decisions. I personally doubt the current downtourn is a genuine crisis as right now the full measure of failures related to sub-prime has yet to be accurately appreciated. Let's see what happens... I certainly don't see the foreclosures and bad debt here in California that would support any kind of global meltdown. Fundamentals in teh US are still very strong.

US Banks and Companies are the most regulated in the World. In fact, I would go as far as to suggest that we in the US need less rather than more regulation. Sarbannes Oxley has reduced the competiveness of US companies who need teams of accountants like myself to function even in low risk markets. More regulation would be counterproductive and, if anything, the current crisis shows that even the steepest regulatory requirements can't prevent markets from making bad decisions. I personally doubt the current downtourn is a genuine crisis as right now the full measure of failures related to sub-prime has yet to be accurately appreciated. Let's see what happens... I certainly don't see the foreclosures and bad debt here in California that would support any kind of global meltdown. Fundamentals in teh US are still very strong.

I think we need a stronger definition of "regulate" here. US markets are already heavily regulated, hence the financial services boom being enjoyed by London at the expense of New York. Maybe the problem is the implicit governmental guarantee that Mr. Gumede alludes to that is making banks reckless with the risk premiums that they had been charging until recently?