Symtoms of Global Crash

The economic crisis problems revealed are symptoms, and the remedies proposed address symptoms

Many experts are discussing and writing about the problems causing the financial and economic crisis and recession. They discuss problems in managing “asset value”, in managing complex financial securities, in preventing large sudden financial losses, in confusing interrelationships between institutions, in understanding the real financial situation or credit worthiness of a bank or other enterprise, in the need for some sort of regulation, and on and on. None of the problems discussed are the real problem. They are symptoms of one real problem. Remedies discussed are not directed at solving any real problem. Remedies address the symptoms to prevent failures and to keep the business and financial system functioning, in spite of the fundamental unsolved problem.

The symptoms are complex and confusing and do not indicate any solution

The symptoms of the problem are difficult to understand. Since they are symptoms, it is difficult to find real solutions. Symptoms cannot be solved; symptoms can only be alleviated. Money spent to bail-out companies, to provide capital or loans for continued operations, or to provide insurance or guarantees only enable continuance of unsolved problems. Mergers and takeovers do not solve problems, but either damage a healthy enterprise or make a strong enterprise stronger. In analyzing all the symptoms there is no obvious course of action for government intervention, enterprise reorganizations, new best business management practices, new financial structures, or other possible measures.

The common answer is more regulation to reduce the impact of problems

Over the years, there have been recessions, financial crises, business failures, and corporate governance scandals that indicate business, financial, and economic management problems. The underlying problem has never been identified or solved. Governments respond with the tools they have in monetary and interest rate policy, spending to alleviate symptoms and stimulate the economy, and more regulation and compliance reporting, which only adds to overheads and at best identifies recurring symptoms. Symptoms continue to recur because no effort is ever made to identify and solve the fundamental underlying problem.

The business symptoms of the fundamental problem are well-known and affect every enterprise

The business symptoms of the fundamental problem are well-known. Thousands of business management books have been written and thousands of “solutions” have been implemented. The books and “solutions” address the symptoms and not the real problem. Since the fundamental problem has never been solved, the symptoms remain today in reorganizations, unknown costs, unknown “asset value”, intangible assets, unknown investment returns, unknown capital solution worth, unknown business net worth, unmanaged value and quality chains, unmanaged performance effectiveness, unmanaged human capital worth, incomplete and inaccurate accounts and financial reporting, accounting complications added by each crisis, faulty financial and risk models, unknown business data and unreported business management information, business and information complexity, business alignment, business collaboration and integration, data reconciliation and information management, excessive waste and costs, and on and on. These symptoms are the unsolvable problems of 20^th century management addressed in four hundred articles at the Business Change Forum.

The one fundamental problem causing the symptoms is straight forward; the failure to manage the business

All the symptoms of the economic crisis and all the symptoms encountered by every bank, financial institution, corporation, association, government agency, or other enterprise are caused by only one fundamental problem. The business is not organized and managed.

The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. The failure to organize and manage the business is the one fundamental problem addressed at the Business Change Forum. Every symptom of the economic crisis and recession and every symptom of problems within an enterprise are caused by this one fundamental problem.

The fundamental problem must be solved first to provide the structure for new practices, solutions, and regulations

The response to the economic crisis is straight forward once we understand the fundamental unsolved problem, which must be solved first. The objective must be to organize and manage the business of every enterprise to eliminate structures laid over every business that distort information, prevent actual business data capture, mislead management and regulators, and prevent direct business management.

The organized and managed business has one current and strategic business structure that is used for all business organization, planning, directing, control, reporting, and governance. Actual business data is captured against the structure and actual business management information is reported by the structure. The one business structure is the foundation for a new set of best business management practices; new professional principles and standards, compatible structures for markets, industries, and economies; new services and solutions that can be used by any business; new structures for business consolidation, collaboration, and integration, and new government policies and regulations to oversee managed businesses.

The knowledge to organize and manage the actual business is available today as Result-performance Management (R-pM). The guidance and procedures needed are provided today in the Business Management Toolkit. Business management is explained and the Business Management Toolkit is available today at result-performance-management.com.

A Government Business Management Program can solve the problem, eliminate symptoms, and provide future stability

Once the fundamental problem is understood, the solution is manageable. A solution should take the form of a government-led Business Management Program within a nation or across cooperating nations. The program must produce results in business management support for local enterprises; new business services and solutions required for business management; new professional principles and standards; coordinated government programs; a new structure for business, financial, industry, market, and economic management; and appropriate government business assistance, policies, regulations, and reporting requirements.

The program eliminates the business, financial, and economic symptoms, provides significant competitive advantages to local businesses, spurs economic growth, enables management of industries like the financial or automotive industry, enables management of market supply and demand, and enables management of business and economic cycles to provide on-going stability. The cost of the program is insignificant compared to the potential costs of bailouts and lost government revenues due to the downturn.

The Solution to the Economic Crisis is explained in free downloads

Three free white papers explain the dead-end 20^th century management problems that caused the economic crisis, the way to eliminate the problems, and a government program to address the crisis by stimulating the economy, solving the problems, building an structure for financial and economic management, and organizing local businesses to flourish in the eventual recovery.

• How to Eliminate Problems that caused the Economic Crisis explains the major unsolvable 20^th century management problems and the 21^st century business management solution
• The Only Solution to the Economic Crisis; Manage the Business explains how to manage the business to capture actual business data and provide management the information needed for actual business, corporation, industry, and economic management
• A Government Business Management Program to Answer the Economic Crisis outlines a government program to encourage business management and manage economic cycles to prevent future crisis

These three white paper downloads are available free to R-pM Community Members atResult-performance Management.com. There is no cost or obligation to join the R-pM Community. Join by entering your email address and password. Your email address is protected and used only for download problems and occasional R-pM Member news and white papers.

Will Global Market Come Up

When will the market come back?

I suspect that most Realtors are being asked this question daily – probably multiple times.

Every day and night – we are being bombarded with headlines like “Housing prices tumble”, “Housing market continues to decline”, “No end in sight for drop in home sales” “Foreclosures up”.

The net effect of this kind of sensational journalism is that people who need to make a move are waiting. The question is, what are they waiting for and when will it happen.

If you ask most of these folks, exactly what they are waiting for – the answer is often that they are waiting for housing prices to begin to climb as they did in the early part of this decade.

Well – guess what? That’s not likely going to happen any time in the foreseeable future. Here’s what is going to happen.

Right now, we are in a depreciating market. This basically means that while the number of buyers looking to buy homes is roughly the same as it was last year and the year before, the number of houses for sale is much higher than it was. This puts the buyers in a good position. They can pick and choose which houses to buy. This also means that they set the price. The homes that do sell are selling for less than would have sold for 18, 24 and 36 months ago.

At some point, the glut of inventory (the number of homes for sale) will start to drop a bit. This will happen because some folks will pull their homes off the market or they simply won’t put them on. Buyers will start to act a little more quickly as they see homes they were considering start to sell out from under them. This will in turn decrease the inventory a bit more. This cycle will keep going until eventually the market will “bottom out” which simply means that the prices will stop declining.

Home prices, at that point will probably remain stable for a while and they start to rise a bit. The thing is that even when they do start to rise, the odds that they will rise as they did a few years ago are extremely low. Housing prices will rise, but at a normal pace – most likely keeping in stride with the economy in general.

You must realize that the level of increase from a few years ago was artificial. Prices went up because everyone was buying/selling/buying. People were purchasing homes with the intent of staying in them only a year or so and then “flipping” to another house where they would do it again. I know people that moved 5 or 6 times in 3 or 4 years. A feeding frenzy was rampant. Houses were selling in a matter of days or even hours after being put on the market. Bidding wars ensued.

None of this has any precedent. It was a self-perpetuating house of cards that had to tumble at some point. It did.

Now, at some point, the market will hit bottom, and begin to start a new cycle.

As to when it happens, some people think it’s very near. Anecdotal evidence suggests that houses that are priced properly are selling in a few weeks instead of a few months. Hard data isn’t available yet to say what 2008 is actually going to be like.

Some think it’s going to be a while.

So – when will the market come back? It will probably never come back to where it was 24 months ago, but it will come back to a normal cycle – soon (we hope).

If you have a need to move, talk to your Realtor and look at the market conditions in your own town. In spite of the gloom and doom from the national media, every market is different. If you have a need to move, you should move.

Global Market

Global Market Analysis

The economy hasn't yet recovered from the implosion of risky investments that led to the worst recession in decades—and already some of the world's biggest banks are peddling a new generation of dicey products to corporations, consumers, and investors.

In recent months such big banks as Bank of America (BAC), Citigroup (C), and JPMorgan Chase (JPM) have rolled out newfangled corporate credit lines tied to complicated and volatile derivatives. Others, including Wells Fargo (WFC) and Fifth Third (FITB), are offering payday-loan programs aimed at cash-strapped consumers. Still others are marketing new, potentially risky "structured notes" to small investors.

There's no indication that the loans and instruments are doomed to fail. If the economy keeps moving toward recovery, as many measures suggest, then the new products might well work out for buyers and sellers alike.

But it's another scenario that worries regulators, lawmakers, and consumer advocates: that banks once again are making dangerous loans to borrowers who can't repay them and selling toxic investments to investors who don't understand the risks—all of which could cause blowups in the banking sector and weigh on the economy.

CDS-LINKED CORPORATE CREDIT LINES

Some of Wall Street's latest innovations give reason for pause. Consider a trend in business loans. Lenders typically tie corporate credit lines to short-term interest rates. But now Citi, JPMorgan Chase, and BofA, among others, are linking credit lines both to short-term rates and credit default swaps (CDSs), the volatile and complicated derivatives that are supposed to act as "insurance" by paying off the owners if a company defaults on its debt. JPMorgan, BofA, and Citi declined to comment.

In these new arrangements, when the price of the CDS rises—generally a sign the market thinks the company's health is deteriorating—the cost of the loan increases, too. The result: The weaker the company, the higher the interest rates it must pay, which hurts the company further.

The lenders stress that the new products give them extra protection against default. But for companies, the opposite may be true. Managers now must deal with two layers of volatility—both short-term interest rates and credit default swaps, whose prices can spike for reasons outside their control.

Making matters more difficult for corporate borrowers: high fees. Banks are raising their rates for credit lines across the board—but the new CDS-based credit lines cost far more than the old lines. FedEx (FDX) could end up paying $1.9 million to $3.6 million a month if it decides to tap a new line from JPMorgan and Bank of America. On its previous line with JPMorgan, FedEx would have paid about $540,000.

Yet many companies have little alternative. With corporate credit remaining tight, banks increasingly are steering borrowers to the CDS-linked loans. All told, lenders have handed out nearly $40 billion worth this year—roughly 70% of the total in credit lines extended to borrowers in fairly good standing. That's up from around 14% in 2008. FedEx, United Parcel Service (UPS), Hewlett-Packard (HPQ), and Toyota Motor Credit have all taken the plunge. "It wasn't our idea," says a UPS spokesman. "The banks pulled back from offering set rates."

BIG BANKS OFFERING PAYDAY LOANS

At the other end of the borrower spectrum, big banks are entering another controversial arena: payday loans, whose interest rates can run as high as 400%. Historically the market has been dominated by small nonbank lenders, which mainly operate in poor urban centers and offer customers an advance on their paychecks. But big lenders Fifth Third and U.S. Bancorp (USB) started offering the loans, while Wells Fargo continues to boost its payday-loan program, which it began in 1994.

More big banks are getting into the market just as a recent flurry of usury laws has crippled smaller players. In the past two years lawmakers in 15 states have capped interest rates on short-term loans or kicked out payday lenders altogether. The state of Ohio, for example, has imposed a 28% interest rate limit. But thanks to interstate commerce rules, nationally chartered banks don't have to follow local rules. After Ohio limited rates, Cincinnati-based Fifth Third, which has 400 branches in the state but also operates in 11 others, introduced its Early Access Loan, with an annual interest rate of 120%. "These banks are skirting state laws," says Kathleen Day of advocacy group Center for Responsible Lending. Says a spokeswoman for Fifth Third: "Our Early Access product fully complies with federal regulations and applicable state regulations."

Lenders argue they offer a valuable service for those who need emergency cash. Wells Fargo says it warns customers using its Direct Deposit Advance that the loan is expensive and tries to offer alternatives. "We have policies in place to prevent long-term usage of the services," says a spokeswoman. U.S. Bancorp didn't return calls.

National regulators are taking notice, however. The Office of Thrift Supervision says it is "looking into" two institutions that are offering the high-interest loans. "We need to make sure there's no predatory lending and also ensure that there are no risks to the institutions," says an OTS spokesman.

DERIVATIVES FOR SMALL INVESTORS

On the investing front, too, Wall Street firms are embracing more risk. Big brokerage houses, including Morgan Stanley Smith Barney (MS) and UBS (UBS), are selling new forms of "structured notes," a type of debt instrument. Wall Street sold $15 billion of the products in the second quarter, up from $13 billion in the first, according to StructuredRetailProducts.com. Some of the new notes have a minimum investment of only $1,000.

Structured notes are essentially derivatives for small investors—and they make sense for some. Basic structured notes let buyers benefit from the growth in stock, bond, or currency prices while offering some degree of loss protection. But many of the latest iterations are highly complex and may not compensate for all the risk. Buyers "have to have the [financial] experience to be able to evaluate the risk," says Gary L. Goldsholle, general counsel at the Financial Industry Regulatory Authority, the securities industry's self-governing organization.

The new debt investments offer attractive rates, sometimes guaranteeing double-digit returns for the first couple of years. But when those teaser rates disappear, investors face huge potential losses over the life of the instrument, up to 15 years. A Morgan Stanley spokeswoman says the firm "services a broad range of products for retail and ultrahigh-net-worth clients," including structured products, and "offers training to financial advisers to assist them in making suitability determinations." UBS declined to comment.

The risks to investors can be tough to tease out of the prospectus. A July offering from Morgan Stanley promises 10% interest for the first two years. After that, it pays 10% when short-term interest rates and the Standard & Poor's 500-stock index both stay within certain ranges. If they don't, the investment pays nothing.

The prospectus says the latter scenario would have been a rare event over the past 15 years. But as the recent market turmoil has shown, historical patterns aren't always reliable. Investors in similar notes got burned last year when Lehman Brothers failed. Says Bob Williams, a broker at Delta Trust Investments in Little Rock who's often pitched on such investments: "I'm not convinced half the brokers in this country, much less their clients, understand these products."

BUSINESS EXCHANGE: READ, SAVE, AND ADD CONTENT ON BW'S NEW WEB 2.0 TOPIC NETWORK

A Debt Trap?

Consumers who take out payday loans run the risk of ending up in a cycle of debt, says a 2009 report from consumer advocacy group Center for Responsible Lending. The report cites data showing people who take out the short-term, high-cost loans nearly doubled their chances of filing for Chapter 11: "These households' higher bankruptcy risk exists even when compared to households with a similar financial status."

Can we Change this

Hunger and World Poverty

About 25,000 people die every day of hunger or hunger-related causes, according to the United Nations. This is one person every three and a half seconds, as you can see on this display. Unfortunately, it is children who die most often.

Yet there is plenty of food in the world for everyone. The problem is that hungry people are trapped in severe poverty. They lack the money to buy enough food to nourish themselves. Being constantly malnourished, they become weaker and often sick. This makes them increasingly less able to work, which then makes them even poorer and hungrier. This downward spiral often continues until death for them and their families.

There are effective programs to break this spiral. For adults, there are “food for work” programs where the adults are paid with food to build schools, dig wells, make roads, and so on. This both nourishes them and builds infrastructure to end the poverty. For children, there are “food for education” programs where the children are provided with food when they attend school. Their education will help them to escape from hunger and global poverty.

Hunger and World Poverty Sources: United Nations World Food Program (WFP), Oxfam, UNICEF.

Note: The world hunger map display above is representational only and does not show the names and faces of real people. The photographs are computer composites of multiple individuals.

Adolf Hitler

Ty wanted to read the Life Of Adolf Hitler

Click This

http://www.hitler.org/writings/Mein_Kampf/

How to help Others

Have you ever thought about volunteering your time to a local charity or community organization? There are many different reasons for you to start volunteering:

To help others

To learn about an activity or organization that interests you

To beat boredom (if you find yourself sitting around the house feeling totally bored, volunteering in an activity you enjoy can be a great way to change things)

To overcome a loss you have experienced (one of the best ways to help yourself in a time of loss is to help others)

To gain perspective on life (there is no better way to understand your blessings than to help people in need)

Your reasons for volunteering are as individual as you are, but no matter what your reasons you can get a lot out of volunteering. You can learn about yourself, learn about others and meet a lot of interesting people by volunteering. You can help others as you help yourself.

For more information on volunteering in general and the advantages of volunteering, see this site.

One of the hardest parts of volunteering can be finding a volunteering opportunity that fits your personality. The following list will give you lots of different ideas and will show you many different possibilities. Look in your local area until you find a volunteer position that works for you.

Homeless Shelters

If you live in a city of any size, then there is at least one homeless shelter that helps homeless people with meals, beds and other services. Most homeless shelters welcome volunteers and have a variety of programs through which you can get involved. You might help prepare or distribute meals, work behind the scenes in the business office, help organize a food drive to stock the pantry, etc. You can learn more about the problem of homelessness and ways you can help by looking at this site. Look in the phone book for a local homeless shelter if you are interested.

Food Banks

Food banks often work with homeless shelters, but they also serve poor people living in the community (especially around the holidays). Food banks collect food, manage their inventory and distribute food to those in need. The following link shows you the different volunteer opportunities available at food banks around the country:

Gleaners Food Bank of Indiana

Any food bank will offer similar opportunities in your area. Look in the phone book for a local food bank if you are interested.

The Guideposts Sweater Project

If you would like something to do in your spare time at home, one innovative way to volunteer is to get involved in The Guideposts Sweater Project, sponsored by Guideposts magazine. People around the country knit sweaters that are then sent to needy children around the world. This article gives you a description of the project and a pattern for the sweaters. Don't know how to knit? Not a problem, because the article also links to sites that teach you how!

Ronald McDonald House

There are Ronald McDonald Houses around the country - almost every major city has one. The idea behind all Ronald McDonald Houses is very important. When a child is seriously ill, the child is frequently treated for long periods of time at a hospital or university medical center. Many families have to travel long distances to get to the hospital, and "where to stay" becomes a problem. Staying at a hotel becomes extremely expensive, and a hotel can be a lonely and sterile place. Ronald McDonald Houses provide a low-cost "home-away-from-home" for parents and children to stay during treatment. Volunteers help prepare meals, talk to families, take care of the house and so on. The programs offered at the Dallas Ronald McDonald House are typical, and you can read about volunteer opportunities there. Then call the Ronald McDonald House in your area to find out more.

Special Olympics

As described on the web site for Special Olympics International, "Special Olympics is an international program of year-round sports training and athletic competition for children and adults with mental retardation." The site also describes a wide variety of volunteer activities, including sports training, fund raising, administrative help, competition planning and staffing, etc. Look in the phone book for a local office or search the Special Olympics Web Site for more information.

Habitat for Humanities

Habitat for Humanities builds and gives houses to poor people in local communities. Volunteers not only help others, but can learn a great deal about building houses by getting involved. See the Habitat for Humanities web site for more information. Call the national office or your local office for information about volunteer programs in your area.

State Parks

Many state parks offer volunteer programs, and in these programs you can try anything from educational programs to trail construction and maintenance. This site for the North Carolina State Park system shows some of the possibilities available. Contact a state park near you and see what options are available if you are interested.

City Programs

Most large cities offer a wide range of volunteer opportunities. Look in the phone book and call around to see what might be available where you live. [Do not be discouraged if your first few calls seem to hit a brick wall. Many city governments are large and fairly disorganized. Keep calling around until you find someone who understands what you are talking about and who is willing to help.]

Helping Others Learn to Read

When you think about it, reading is one of the most important skills an adult can have. Many adults, however, have never learned how to read. Literacy volunteers act as tutors who help illiterate children and adults learn this important skill. There is probably a literacy program in your area. See also Reading Is Fundamental (RIF).

Hospitals

Many hospitals have volunteer programs to help patients both inside and outside the hospital. This page for the Summit Medical Center is typical. The volunteers programs allow participants to explore medical careers and gain work experience. Contact local hospitals to learn more about opportunities in your area.

Libraries

Many libraries need help reshelving books, running children's programs, making books available to the community, and so on. This program specifically for teens at Phoenix Public Libraries trains teen volunteers to assist library staff and the public during the Summer Reading Program. Contact a local library for volunteer opportunities in your area.

Senior Citizens Centers

Many senior citizen centers offer volunteer programs to provide friendship and community activities to senior citizens. If you would like working with senior citizens, call a senior citizen center in your neighborhood and see what kinds of volunteer programs they have available.

Animal Shelters

Many animal shelters are non-profit or government organizations, and therefore they welcome volunteers to help take care of animals, keep facilities clean and work with the public. Call a local animal shelter for more information.

United Way

The United Way is a nationwide umbrella organization for thousands of charitable organizations. The United Way raises billions of dollars and distributes it to these charities. There are local United way affiliates across the country and they need volunteers. Contact your local affiliate for more information.

Red Cross

The American Red Cross helps people in emergencies - whether it's half a million disaster victims or one sick child who needs blood. Volunteer opportunities exist across the country. Contact your local Red Cross for more information.

Salvation Army

The Salvation Army provides social services, rehabilitation centers, disaster services, worship opportunities, character building activities for all ages and character building groups and activities for all ages. Volunteer opportunities exist across the country.

Environmental Organizations

The Sierra Club (and numerous other environmental groups) encourages volunteer support to help with environmental activities. You can help in many ways: by helping lobby on conservation issues, by leading hikes and other activities, or by lending a hand at the Chapter Office. Contact the local office of an environmental organization near you. See also the Earth Day site.

Political Campaigns

If it's an election year, there are thousands of opportunities to volunteer in political campaigns around the country. You can learn more than you imagine by helping a candidate win election. This article talks about some of the options. Pick a candidate whose ideas you believe in (either on the local, state or national level) and volunteer to be a part of his or her campaign.

800 Number Volunteer

Many 800 help-lines rely on volunteers to staff the phones and handle other tasks. If there is an 800 phone bank in your area, you may be able to volunteer to help out.

Web site creation

Many small charities and organizations do not yet have web sites. You can help by learning how to create a web site and volunteering your services. You could also raise money to pay for the web site, or seek help from a local company in the form of a donation. When creating a web site for a charity, you will want to take care to listen very carefully to the people who work for the charity to understand exactly what they want their web site to look and feel like. This will be extremely important to them, and you should be willing to change and improve the site to match their mental image. See this page for information on creating web sites.

The Peak Of Luxury

This is the new mode of luxury ........

Millions of people dont have even Huts..

The same timee Plz view this

What a Fruit

GOOOD NOOOOOOOOOOOOOOOO

Tsunami

The tsunami generated in the Pacific is predicted to hit New Zealand's East Cape

at 9.44am and will be approximately one metre high.

Sea level readings indicated a tsunami was generated in the Pacific and Warwick

Smith, senior seismologist at GNS, told Breakfast that if there is a tsunami, it

will hit the East Cape first at 9.44am.

It would then hit Gisborne at 10.00am, Napier at 10.40am, Wellington at

10.50am and Auckland at 11.12am.

Civil Defence says the tsunami will only be around a metre high with spokesman

Vince Cholewa saying it may cause some problems in very low lying areas.

Civil Defence warnings have been issued throughout New Zealand especially for coastal and low-lying areas.

The first wave may not be the largest wave so people are advised not to go to

the beach until it is cleared by the local councils.

Samoan reports say the wave that hit in Apia was 0.7 of a metre while the second, larger wave in Pago Pago was measured at 1.7 metres.

New Zealand Foreign Affairs staff are still gathering information on the

earthquake and tsunami and a spokesperson says reports remain sketchy and

they have had no confirmation of any fatalities in and are awaiting further information.

ONE News has been told that three people have died in Samoa but this has not been officially confirmed.

New Zealand's Ministry of Civil Defence Director, John Hamilton, says the Ministry

has activated the National Crisis Management Centre and is co-ordinating central government response for New Zealand.

The Civil Defence Emergency Management sector is activating its emergency plans.

Regional Civil Defence Emergency Management Groups are working urgently with

local authorities, local emergency services and local media to warn and if

necessary evacuate coastal areas at risk.

Hawke's Bay Civil Defence Emergency Management is advising all coastal

settlements of the risk, and asking public to keep away from beaches.

Waikato Civil Defence and Emergency Management is urging people living or

working on the Waikato region's coasts to be on high alert for tsunami warning information.

Detailed evacuation advice will come from local authorities and local emergency

services and people should keep their radios on at all times.

People should act on it promptly. If told to evacuate they should, where possible

, take a radio and cellular phone with them, along with items that are essential

for them such as glasses, hearing aid and medicines.

Scope of Financial Crisis

Scope of Financial Crisis

One interesting puzzle of this crisis is that while it started with mortgages, it affected every financial sector pretty similarly. Below are the total returns from April 30 2008 through March 31 2009, for a variety of financial institutions with market cap greater than $30MM as of April 2008 (about 800 firms).

Stock Returns By Sub Industry From 4/30/08 - 3/31/09

One would think that size or industry would highlight those with the most direct mortgage ownership. It suggests that while mortgages may have started the crisis, the real problem was the amplification process that decimated everything. To this day only mortgage backed debt has had abnormally large loss rates. Speculative grade defaults for 2008 were 4.1%, which makes it the 12th worst year in the last 30, hardly consistent with the market debacle of the past 12 months. Auto loans, credit cards, etc. have reported an increase in losses, but are holding up pretty well. Everyone expects them to get much worse, but that's a forecast.

A similar issue is the performance across countries, where the US is actually doing better than most countries. This is all quite puzzling, as it appears the amplification mechanism is much more important than the initial cause. I don't really understand that mechanism

How we can remove poverty

Poverty is the very big problem of undeveloped or 3rd world country, where every one is struggling for the basic needs of life. They don't even have a penny for eating food at one time. Many people die because of this poverty, because they don't have food to give some energy to their body.

If the government takes some good steps then this poverty can be easily removed. There should be a proper movement of money in the society. It should not happen that only one man is earning more and more money. When the money will circulate in the country then there will not be any poor person.

There should be sufficient recourses for a poor man to earn money for themselves. Government should make some criteria, that poor people become able to start their own work. If they will have some money then they can sell fruits and any other vegetable or food like burgers. If each and every person of the country will work and earn money then poverty can be removed easily. Government also have to control the inflation, because when poor people will spend all of their money on food and basic things like milk for children, then how their poverty will be removed. When the cost of the basic needs of life will be less then, it will be a big relief for the poor people.