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The Saving and Loan crises in 1989

The “Black Monday” in 1987 was followed in quick succession by two more crises in US economy till the advent of new millennium. The Saving and Loan crises in 1989 and thereafter the Long Term Capital Bailout in 1998; were the two turmoil that rocked the US economy. In US, like banks, savings and loan institutions accept deposits from public and offered mortgage loans to them. They are in the business since 1800s and remained under strict regulation till 1970s. In late 70s, new competitors, Money Market Funds started offering higher interest rate than S&Ls. The S&Ls sought deregulations to offer higher interest rate and more loans from government; what they got. It was something like handing in babies with shot-guns. The 1980s real estate boom saw many S&Ls grew so fast as never before! Their speculative assets grew faster than ever. Loans granted against superficially priced properties brought many S&Ls prospects down, even to dooms! It was due to huge payment defaults

Global meltdwon in 1987 and there after

After the Wall Street crash in October 1973 due to unprecedented surge in crude oil price; there was lull for little more than a decade. The Wall Street rocked again on October 19th, 1987,the Monday. The US stock market indices, the DOW Jones Industrial Average lost 508 points. That means on a single day the stocks lost 22.6% of their values! This day was also termed as another “ Black Monday ”. Two of the potential culprits behind this crash were identified. One was, as the gift technology; the program trading and other a new financial hedging method called portfolio insurance. Both of them together caused the sharp fall of stock prices for massive sell offs. Of course there other factors like US trade deficit, weakening of dollar and overvaluation of stock values played its roll with investor’s sentiments. But in a single day, a fall that sharp could never take place unless the traders used computers for stock trading. Program trading is that when a trader can book order to sell or b

1973 Oil Crises

Readers, sorry for inconvenience! It is due to some technical draw back I needed to shift the article ' 1973 Oil Crisis' . please click HERE for " The Ramadan War and Oil crises" .

Flat Belly Diet

Many young women with bulging waist line get frustrated trying with diet and exercise. At last they give up and leave it in the hands of fate! Obviously, their tummies keep ballooning. So were their worries too. If you are one of them or just worried about the bulging belly, there is good a news for you. The editor of Prevention Magazine, after through research, developed a diet that helps you to control your bulging tummy and turn it to flat belly. There is no exercise, just a diet; called Many young women with bulging waist line get frustrated trying with diet and exercise. At last they give up and leave it in the hands of fate! Obviously, their tummies keep ballooning. So were their worries too. If you are one of them or just worried about the bulging belly, there is good a news for you. The editor of Prevention Magazine, after through research, developed a diet that helps you to control your bulging tummy and turn it to flat belly. There is no exercise, just a diet; called Flat Bel

The Great Depression!!

>A shanty town ship " Hooverville" A mother of seven, aged 32 years only, photo taken in 1930s Wall Street crash! Wall Street gone tumble tosser, consumers cut down their expenses pulling down the demands. Industries started layoffs, to cut down expenses. The demand further plunged due to escalating unemployment rate. So the Great Depression crept in. The debtors could not repay their loans, banks began to fail. The depositors lost money; there was no deposit insurance in 1930s, as of now. 744 banks failed in the first ten months of 1930 losing $140 billion. Can you imagine, before the decade was over around 9000 banks failed in America! Do you know what Hooverville, Hoover blanket, Hoover Flag, Hoover soup meant? In US during that turbulent time Herbert Hoover was the president. The battered people; who sold their houses and started living in shanties; created townships which were known as Hooverville. To brave the wintry cold they covered themselves with news papers,

Gobal meltdown and aftermath !! 1929 Crash

The devastation of First World War and technological progression both together offered a great opportunity of investments and employments in 1920s. That ushered great optimism in the Wall Street as well. Most of the American participated in stock market speculations and investments. You could buy the stock at a fraction of their prices, called “buying on margin”, the rest borrowing from brokers. Obviously share prices sky rocketed. Again the old rule “what goes up must come down” worked. Unfortunately; what went up struggling for number of days; came down in three days! That was the crash. It was on October the 24th, 1929 famous as “Black Thursday”; a massive sell off took place. The volume of trading was more than triple. The price came tumbling down. This time again Richard Whtney of J.P. Morgan and company tried to rescue the market, he started buying the shares aggressively. The downfall halted for time being. The market looked up on 25th, the Friday. On 26th, the Saturday (then tr

GLOBAL MELTDOWN & THEREAFTER !

What goes up that comes down; this old adage is still valid. We all know that. But when it makes a free fall, then it crashes. This exactly happened in the all major stock markets all over the world, the Wall Street took lead. Thank god! History of Wall Street suggests what comes down crashing, stands up sooner or later. Sooner the better and worse the later; this is true with the recovery, as witnessed, no less than ten crashes, in the last century. Let us recapitulate what we have seen in the last century. Since it is going to be a long narrative, I shall write it in few installments. Hope you will hold your patients. The first financial crash Wall Street witnessed in last century was in 1907. The New Year saw Wall Street in very depressed condition. The stocks were traded at 25% lower prices. It was due to tight money supply condition. At that time Otto Heinze came with a get-rich-quick scheme. He was joined by his brother Augustus Heinze, who was a copper magnet. Finally the tri

Obama in Bush !

There has been a short break from blogging for me. The reason for this I have explained in my other blog BUGULE . In case you are interested you can have look there. What I gathered from this short break is the current hot selling topics in the web marketing while global recession is setting in. In US and other developing economies lot many people are considering going for insolvency for their unpaid loans. The avenues available for them better than bankruptcy is the point of hot discussions. Many individuals and agencies are entering into this business; with a license from the concerned authority they are acting as debt consultants. Even for the lenders they show the way; that where the recovery of their funds is remote possibility, there are alternatives available for them to get back some of their money at least. US housing scam deluged their own banking system, towing others too. The measures of bailing out the faltering banking and insurance majors, is appealingly temporary soluti

The avalanche in Wall Street

The avalanche in Wall Street and burses all over the world is the sole point of discussions everywhere. In fact poor are bearing the burnt when they go to the market and fail to understand what relation the price of rice or cooking oil has with the stock market. So the middle class are, though most of them have burnt their fingers while participating directly investing in equities or through the mutual funds route. The worst sufferers are Americans, though the sub-prime crisis was initially caused by those who took loans but failed to pay. It is obvious that they have spent the money for procuring more goodies or using it for speculative purpose. But now their speculation having turned out to be abysmally wrong, many of them are filing for insolvency or bankruptcy taking with them till date no less than dozens of reputed bankers. The current symptoms suggest another great depression like 1929-30s is surfacing fast. Though the socialistic measure of pumping exchequers money into the b

Oil and Hormuz Strait Pt………III

Earlier I discussed about the strategic importance of Hormuz Strait in relation to global oil supplies. It is equally sensitive to political developments in any of those counties surrounding it, specially Iran. There is an alternative transportation route for oil bypassing this strait out of gulf region. The route is 1190 Km (745 miles) long East-West Pipelines through Saudi Arabia stretching to Red Sea. But this pipe line at best can handle five million barrels per day, that makes one third of the oil what oil tankers can handle. So, additional capacity is required to be created but that would increase the transportation cost. At the same time the pipe line would relieve the strait of its heavy tanker’s traffic and hazards involved. But this move will be unwelcome by many Gulf States , since this will benefit the Saudi Arabia, as it will receive the transit fees for the oil transported, paid by them. There are reports, that Iran threatened closure of the Strait of Hormuz is a glob

The US Rescue Package!

The Bush Government's rescue operation through legislation of bill to address the current avalanche in US economy, may be a welcome relief but not a solution. This is observed by the George Soros, the investment Guru. Here is what Geroge Sores wrote about the rescue package in Financial Times.com : The emergency legislation currently before Congress was ill-conceived – or more accurately, not conceived at all. As Congress tried to improve what Treasury originally requested, an amalgam plan has emerged that consists of Treasury’s original Troubled Asset Relief Programme (Tarp) and a quite different capital infusion programme in which the government invests and stabilises weakened banks and profits from the economy’s eventual improvement. The capital infusion approach will cost tax payers less in future years, and may even make money for them. Two weeks ago the Treasury did not have a plan ready – that is why it had to ask for total discretion in spending the money. But the general i

Oil and Hormuz Strait pt..........II

The importency of Hormuz Strait is understandable in the following statement – practically the entire oil from Bahrain, Iran, Iraq, Qatar, Saudi Arabia and the United Arab Emirates are transported through this. About two fifth of all globally traded oil are transported through it. About 80 per cent of all Japanese oil imports transit through it and the same is applicable for 12 per cent of total American oil imports & 25per cent of total Western European oil imports. A reliable estimate predicts that by 2020 the amount is likely to double than what is transported currently, i.e 35 million barrels per day. That will require about 30 tankers each day. Though the strait is 95 km wide, but only to two 3 km wide channels are available for navigation. Each used exclusively for inbound and outbound traffic. If the prediction comes anywhere near to reality then the traffic will be hazardous and extremely slow. Congestion and prolong delay will be a matter of fact. It may be difficult to h

Oil and Hormuz Strait

Do you have any idea what in the terminology of transport geography `CHOKEPOINTS’ are? Straights are called `Chokepoints’ because they limit the capacity of sea passage that cannot be easily bypassed. Two thirds of world`s oil production are transported by sea routes. This has been in continuance since 1878, when the first oil tanker began shipping oil in the Caspian sea. Ever since the world`s maritime tanker fleet has grown substantially to become a specialized segment of the maritime industry. Like seven wonders, seven seas, seven days; the seven `Chokepoints’ through which oil is transported play a very crucial role, maintaining the global oil demand- supply equation and obviously the price! The seven `Chokepoints’ or straights are, Hormuz, Malacca, Bab el-Mandab, Boshphorus, Gibraltar, Panama and Suez. While the last two are manmade, rest all are gifts of nature. The world`s most important chokepoint is the Strait of Hormuz. This is the most important sea passage from the Persia

THE FACTS OF DARJEELING

“DARJEELING”, the very name of this hill station in India reminds you the colonial days and tea. Because it was the British colonizers; who were constantly on look out for cooler places, obviously in India it uses to be in hills what would remind them their home. The temperature in tropical countries, particularly in summer months use to be unbearable for them for mercury touching anywhere between 35 to 44 degree Celsius! In India Shimla and Darjeeling earned their reputation for hosting the colonial administrators with their staffs with families during summer months for running colonial administration for years. Though with English rulers, gone are the colonial days and prestige of Darjeeling, but it still holds name in world for its tea. It still the producer of world number one flavored tea and sold at a price, unthinkable for we ordinary mortals! Off late, a new hue for Gorkhaland is raised time and again. It stared in the decades of 90s, lot of agitations, number of strikes call

MONEY MATTERS

Taking the global queue, the Indian Stock indexes have plunged and everyday finding new low. Informed experts opine that the bear phase is ushering. Everybody is busy with all their wisdom, calculations how long the bear phase will last. No doubt it is pertinent question. The investors have deserted the market, without a sign of returning early. The day traders are trying hard to recover their loses. The general feelings of payment crises under existing circumstances is not ruled out. News are there as brokers committing suicides. Obviously it transpires that they did so apprehending trouble due to non payment of their dues. The Finance Minister assured neither Indian Banks nor Indian burses are under any sort of threat. Let us trust him and raise no question. Whenever the bear phase users in the market , you know, people start guessing the bottom. Because the bottom offers ideal time to enter the market. But most of us, keep guessing but can never identify the true bottom. Better not

Young would be investors

The Stock Market is going tumble tosser all over the world due to US economy. The sub prime crisis is finally taking heavy tolls. Many old bankers are getting bankrupt. The Indian banks are safe but the withdrawal of funds by FIIs is taking toll on its burses. The budding young investors should take the steps carefully and stage wise. Better they follow the simple rule of saving first. Few tips I am giving here. First of all budgeting is most important factor in young professional’s life. Unless you do that you wonder where your money goes! Writing a budget shows actually how do spend and shows the area and how you can control them. You can identify the area needs to be controlled. Never forget to add the expenses you do on shopping and entertainment and include your savings too. Keep a track on your utility bills and keep comparing them. Mind you the plastic money or credit cards are major boosters to spending. Not that they do not have any role to play. At an odd hours, god forbid,

THE OIL GAME

The world oil price rebounded above $100 per barrel after touching recent low to $99 per barrel. On September the 10th the member of OPEC countries met to discuss the oil price which dramatically declined from their peak $147 per barrel in July amid a global economic slowdown. All over the world the rate of inflation rose high and they are still hovering around their recent peak level. However a surprise decision to cut production by 520000 barrels a day taken by member of OPEC cartel. It is reported that OPEC president and Algerian energy minister, Mr Chakib Khelil said the output cut would start immediately. He further added "if you do your own calculations, it is a cut of 520000 barrels per day"; announcing a new OPEC output quota of 28.8 million barrels per day. The International Energy Agency (IEA) meanwhile cut its estimate for global oil demand this year and next, saying consumers mainly in the United States are changing their lifestyles in response to high prices. T

The Wayward Children

Lack of parental care harms to the full blown growth of their child to what extent, one has to see to believe it. The orphans do not have their parents. Whether are they are raised in a orphanage or on the streets, they grow like their alike amidst of them. So at orphanage, the only difference is under supervision of nurses and teachers they grow better, disciplined and balanced. But the children who are growing under the most uncaring and negligent parents are the worst suffers. Because of presence of their parents prevents others to interfere. Neither have they belonged to streets nor to home. At school most of these children are worst performers and keep very low profile. They are introverts. In the initial stages it is very difficult to separate them from others of their age group. Problems become visible in at their teens and it aggravates fast. If the care is taken even at the initial stages, it results better in reforming. Later it becomes almost impossible, most of them turn ps

The Lingering Wish

A Blogger keeps posting because he wants his blog to remain alive and read as widely as possible. Most of the blogs are dedicated to a specific subject. There are professional bloggers who for the obvious reason to attract more traffics insist on covering those subjects which are current market craze. Like life-style, traveling and making money in as many ways as possible. Though I am not a professional blogger, it was just out of freak I started once blogging with my childhood memories. It began with the famous Google’s social network site: Orkut. I kept postings few in a series till my childhood days at my hometown where I was born and brought up was covered. It was a industrial town, where my father served and I was born, schooled. It was a industrial town, where we lived in a quarter, that I used to consider as our home, without realizing what a home meant. This I realized in my late teens, when I joined Air Force and understood that town I belonged to, never belonged to me. With

RESERVATION AND POLITICS IN INDIA (PART -II)

In a recent move, Indian human resource minister, Mr, Arjun Singh promulgated a fresh bill that reservation should apply to the member of faculty in all government educational institutions even in premium institutions like IITs or IIMs! Here the ruling parties’ president, being self form a European country advocates the applications of reservations in corporate or private jobs as well. The vehement opposition by different industry leaders on any such move and a threat to move out elsewhere, if they are forced to recruit substandard staffs; for time being it is sent to cold store. All the chambers of commerce declared in unison that Indian government should take care of backwards in macro level for improving their lots, instead of pushing and absorbing them in government organization and educational institution, resulting poor quality and demoralizing the deserving lots. This hampers all the way national interest. It is well known that such policy is not sustainable in national interest