SO, IS it the worst economic crisis in 60 years? Worse than the 1970s with its hyperinflation and the three-day week? Worse than the recession of 1990-92 when hundreds of thousands of people lost their homes in the property crunch?

Banks, such as Northern Rock, that depended on asset-backed securities were the first to go. With losses from sub-prime loans in the US expected to rise above $1 trillion, a wave of bank failures is under way in America. And with the huge US government sponsored mortgage lenders Fannie Mae and Freddie Mac in deep trouble over their $5.2 trillion mortgage book, there are fears for the security of the world financial system itself. Banks lend many times the actual reserves they hold, and at the moment many are effectively insolvent and dependent on state support.

Central banks, such as the Bank of England, have stepped in to buy much of the bad debt, but they can only go so far. When the central bankers use up their available funds and once the banks burn up their assets, there could be a complete meltdown in the global financial system. At the very best, we face a decade of credit restriction and an inevitable recession. ...   more »

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On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac. ...

...Roubini, a respected but formerly obscure academic, has become a major figure in the public debate about the economy: the seer who saw it coming. He has been summoned to speak before Congress, the Council on Foreign Relations and the World Economic Forum at Davos. He is now a sought-after adviser, spending much of his time shuttling between meetings with central bank governors and finance ministers in Europe and Asia. Though he continues to issue colorful doomsday prophecies of a decidedly nonmainstream sort -- especially on his popular and polemical blog, where he offers visions of "equity market slaughter" and the "Coming Systemic Bust of the U.S. Banking System" -- the mainstream economic establishment appears to be moving closer, however fitfully, to his way of seeing things. "I have in the last few months become more pessimistic than the consensus," the former Treasury secretary Lawrence Summers told me earlier this year. "Certainly, Nouriel's writings have been a contributor to that." ...   more »

A compelling new report says that runaway corruption in China poses a lethal threat to the nation's economic development and "undermines the legitimacy of the ruling Chinese Communist Party."

Evidence from official audits, press articles and law enforcement data, the report says, indicates that "corruption in China is both pervasive and costly."-- Bribery, kickbacks, theft and fraud, particularly by government officials, are said to be rampant.

Pei Minxin (裴敏欣) wrote the report issued last month by the Carnegie Endowment of International Peace, based in Washington. Pei is a political scientist educated at the Shanghai International Studies University. He earned his PhD at Harvard and his work has been widely published in the US. ...   more »

The Shadow Government Statistics Newsletter

"John Williams' Shadow Government Statistics" is an electronic newsletter that exposes and analyzes the flaws in current U.S. government economic data and reporting, as well as in certain private-sector numbers, and provides an assessment of underlying economic conditions, net of financial-market hype .

• Published 11 to 12 times per year, the newsletter is supplemented by occasional Special Issues and by interim "Flash Updates" and "Alerts" that cover key economic reports and highlight unusual developments. (See "Newsletter Coverage" below for the publication's regular scope of coverage.)

• Subscription service provides website access to current and archived content, data on proprietary alternate estimates of the CPI, Unemployment and the GDP, an ongoing estimate of M3 growth -- where the M3 series no longer is reported by the Federal Reserve -- and a financial-weighted index of the U.S. dollar. Also available is an inflation calculator that estimates comparative prices between any two months, 1913 to date, using both the official CPI and the SGS-alternate measure. Postings to the website of all new material are advised directly to subscribers by e-mail. ...   more »

A war with Iran would ruin our economy and finally kill off our weakened, anemic democracy.

An attack on Iran, which Israeli and Bush administration officials appear set to carry out if Iranian uranium enrichment is not halted, would ignite a regional war in the Middle East and lead to economic collapse and political upheaval in the United States.

"In short and simple terms, we would be plunged into a depression that would make the Great Depression of the 1930s in which I spent my childhood look like boom times," said William R. Polk, former professor of history at the University of Chicago and a member of the Policy Planning Council under President Kennedy. "Industries would fail, banks would collapse, government revenues would dry up, universities would have to close, health care, even as limited as it now is for roughly 75 million Americans, would virtually cease. In short, something like [what] the South suffered at the end of the Civil War would plague the country." ...   more »

SCIY Editor Vladimir Yatsenko will teach an online course in the Vedas starting in October 2008. We carry the details here as well as a link to one of the lecture transcripts posted earlier in SCIY.   more »

When Henry Paulson agreed to leave his job as chairman of the powerful Wall Street investment bank, Goldman Sachs to go to Washington as Treasury Secretary in 2006 he demanded extraordinary powers as de facto economic czar. He got it. Paulson is also head of the President’s Working Group on Financial Markets -- the secretary of the treasury and the chairmen of the Federal Reserve Board, the Securities and Exchange Commission and the Commodity Futures Trading Commission. The Working Group is the financial world's equivalent of the Pentagon war room. Paulson, not Fed chairman Bernanke, is the person running the Administration’s crisis management. And his recent actions indicate he has lost control as the snowballing problems from the semi-government mortgage companies Freddie Mac and Fannie Mae to the collapse of the multi-trillion dollar market in Asset Backed Securities (ABS) to the real economy are compounding into the worst crisis since the 1930’s Great Depression. ...   more »

This article attempts to sketch out Sri Aurobindo's contribution to the future of humanity as carried in his major texts. In doing so, it also tries to underline the cross-cultural nature of these texts and the disciplinary redefinitions implicit in them.   more »

Why is there an underlying assumption that a market collapse and financial meltdown needs to be a bad thing? Doom and gloom is all the talk, as if the only positive thing is when the markets are going up. Many believe that increasing markets are ‘healthy’ and declining markets need ‘fixing’. Isn’t the idea of pure market capitalism that the markets determine the prices freely, i.e. what market participants are willing to (and can afford) to pay, not what sellers would like prices to be? Is it a question of what is vs. what should be? Every seller would like a higher price, but their dreams about higher prices are only justified by people willing to pay the price.

Short sellers have known for a long time the profits that can be made in declining markets. Catastrophe is opportunity; it is the birth of modern day fortunes such as Rockefellers and Morgans. These noble houses were not crafty geniuses who invented the cure for cancer, they were shrewd, well-informed executives who were at the right place at the right time, and they had the cash to strike.

In fact, it is much easier to profit from calamity than success, because of the predictability and calculability of crises (.pdf warning). Success is more difficult to predict, and you do not have a measure of how successful a company can be. If a company goes IPO at $20 per share, and you expect them to increase, the price could go to $50 or $500 like Google. However, if you expect bankruptcy, you have a ground floor at zero. In addition, the statistics are in your favor, 95% of all businesses in USA fail. Knowing that, it makes sense statistically to bet on failure rather than success. ...   more »

Brace yourself. Nouriel Roubini, whose gloom-and-doom predictions about the housing market collapse and subprime-mortgage debacle have come true, is getting even more bearish.

During an interview late last month, he offered up an even gloomier outlook for the economy than he did during an interview in March. Mr. Roubini said the failure of IndyMac Bancorp Inc. of Pasadena, Calif., just reinforces his earlier predictions, and he is now forecasting that more than 100 banks will blow up, the housing market won't rebound before 2011, Fannie Mae of Washington and Freddie Mac of McLean, Va., will become insolvent, and financial losses from the credit crisis will top the $1.5 trillion mark.

Much of Wall Street snickered when Mr. Roubini, a professor at New York University's Stern School of Business and founder of New York-based economic research firm RGE Monitor, first made dire predictions of a devastating economic downturn in a July 2006 report, "A Coming Recession in the U.S. Economy." But as each frightening prediction turned into reality, skeptics became followers, and the market turned a nervous ear to his subsequent predictions. ...   more »

There is an extended essay on Integral World on a topic which began as a short article here on SCIY.  The article was on ideological orientations of theories and practices which claim the title integral. The article on integral world goes into much greater depth exploring the genealogies of ideological orientations. The link is here:
http://www.integralworld.net/carlson.html