Our financial system is crumbling this week.

[dangerous]

The US dollar and gold have been moving in tandem for several months but today gold moved higher and the dollar reversed down. This could be significant and a sign inflation is coming- I still say markets predict the future.

The way things are going, I don't think you need market data to predict that inflation is coming.

I agree but there has been a lot of arguing in financial blogs about how long there would be deflation and when inflation would ensue- the gold bugs against the rest of the world kind of thing. If the us dollar starts to fall it would be more evidence that all currencies are being devalued and hard assets like precious metals will gain.

[Freed Roger]

i realize the traditional pensions (defined amount of lifetime annuity based on years of svc, salary etc - like for govt and auto workers) aren't as prevalent as the past. 401K plans are taking over. But there are still a lot people covered with pensions.

So I've been wondering this - when/how often do businesses and govts have to fund these pensions? These amounts to be kicked in I suspect will need to be gigantic to cover the losses in fund investment value versus required projected payouts which are steady. And when these amounts are to be put in, I'm wondering its effect - on the plus side, it could it be an influx of money into the market -assuming much goes into the market. on the negative side the sheer size of this amount to fund could bankrupt the govts, fire depts, school districts, and businesses that have to make the contribution.

I know years ago, the pension was trued up after actuaries assessed it. [expletive], I wonder if this is another bailout coming of govt pension plans. not sure about businesses - if the employees take the [expletive] job.

[Jocephus]

So, just how bad is the economy?

Story Highlights:
Is it fair to invoke Great Depression?
Some economists say comparison overblown
Nation had another Great Depression few remember, scholar says
Depression survivor: "People had a wonderful spirit of survival"

http://www.cnn.com/2009/US/02/20/econom ... index.html

[Jocephus]

fwiw

http://www.recovery.gov/

[Jocephus]

and if you're bored, here is a pdf of the stimulus package

http://frwebgate.access.gpo.gov/cgi-bin ... :h1enr.pdf

[Hungary Jack]

The US dollar and gold have been moving in tandem for several months but today gold moved higher and the dollar reversed down. This could be significant and a sign inflation is coming- I still say markets predict the future.

The way things are going, I don't think you need market data to predict that inflation is coming.

I agree but there has been a lot of arguing in financial blogs about how long there would be deflation and when inflation would ensue- the gold bugs against the rest of the world kind of thing. If the us dollar starts to fall it would be more evidence that all currencies are being devalued and hard assets like precious metals will gain.

With all the stimulus (monetary and fiscal), not to mention huge current account deficits, a falling dollar seems a question of when, rather than if.

There have been some inklings that companies are starting to see some traction in price increases, which believe it or not is a good thing. Most industries have suffered from excess competition for years, and deflation was a real concern. Of course, a return to 1970's style inflation would be disastrous, but I think the global economy is much better positioned to handle inflationary pressures now.

[dangerous]

Luanshya, Feb 20, 2009 (UN Integrated Regional Information Networks/All Africa Global Media via COMTEX) -- The sharp fall in international copper prices is leading to huge job losses and deepening poverty in Zambia's economic heartland, Copperbelt Province.

Luanshya Copper Mine, a joint venture of the Swiss-based International Mineral Resources and Bein Stein Group Resources of Israel, closed its operation in December 2008, resulting in 1,700 retrenchments.

"I am suffering very much. I got my [termination] package of around 15 million Kwacha [about US$3,000], but then I had a bank loan. It was supposed to run for three years, according to the agreement; they [bankers] deducted everything at once from the package and I remained with nothing. In fact, I still owe the bank," Geoffrey Mwape, a former Luanshya employee, told IRIN.

"Life is very hard. I have to pay bills and rentals. I am living like I don't know what tomorrow will bring, as if I was not in employment. My children have been sent back from school [because I cannot pay the fees]."

Global demand

Copper is a key metal in the electronics and building industries, but the global economic slump in the demand for commodities has seen international copper prices tumble from record highs of nearly $9,000mt between 2005 and 2007 to about $3,000mt at present. In response, labour forces are being reduced, expansion projects put on ice and mining operations closed.

The Bwana Mukubwa and Luanshya Copper mines now have only maintenance staff, while the owners of Luanshya have also shut down their Chambishi copper smelter and suspended their $354 million Mulyashi mine project.

Our people are suffering, where is the government? They are being made paupers, where is the government? They can't take their children to school; they can't feed their families, where is the government?

"What is happening is a very sad scenario - we can't have a situation where investors are just pulling out at their will and government is not doing anything; it's not right and it should not be condoned," said Chishimba Kambwili, the parliamentary representative for Luanshya who recently staged a one-man protest against mine closures outside State House, Zambia's presidential residence in the capital, Lusaka.

"Our people are suffering, where is the government? They are being made paupers, where is the government? They can't take their children to school; they can't feed their families, where is the government?" he asked.

Copper accounts for 80 percent of Zambia's foreign earnings and since 2003 has been the main driver of an annual economic growth rate of five percent.

Boom and bust

Copperbelt is no stranger to unemployment: copper prices stagnated throughout the 1990s, and the latest round of job losses is expected to rekindle memories of those days.

Mopani Copper Mines recently announced it would retrench up to 1,000 of its 16,000 employees by the end of February 2009, and the country's biggest mine, Konkola Copper Mines (KCM), owned by the London-listed Vedanta Resources, this week retrenched 700 of its workforce of 15,000 after shutting down its smelting plant.

Many retrenched miners have resorted to informal trading to make a living. "I can't venture into farming now because I have no money to buy [agricultural] inputs and besides, I have lived my life as a miner," said Emmanuel Sampa, who has worked at three mines, the last being Luanshya.

"My children have passed [grade seven and nine examinations] but I have no money to take them to school. Last week, I went and closed my two [bank] accounts because maintaining them is very costly now," he said.

"I am selling my TV and sofa so that my children can go to school - I bought the TV at 1.2 million kwacha [$220}, but am selling it for 500,000 kwacha [$90]."

Zambia's mines were major employers in recent years when the copper price enjoyed a renaissance, encouraging expansion of the mining industry and creating jobs.

About two-thirds of Zambia's 11.7 million people live on a $1 or less a day, and only 500,000 formal jobs exist in the country, according to the Central Statistical Office.

Survival

"It's a problem how people are surviving, because it is not just people who were working for the mines that are losing jobs. Many companies that depended on the mines, like those in the construction and supplying business, are now folding because there is no more business for them," Peter Kahokola, a civic leader in Copperbelt, told IRIN.

"What this means is that the councils [municipalities] throughout the province are finding it very difficult to operate - the councils depend on these companies for survival through rates and other taxes. Now, most council workers have to go for two months without pay. We have started seeing a lot of crime because people want to survive."

The curtailed resources have also limited the capacity of local authorities to effectively provide public services: bad roads, heaps of rubbish and unreliable water supplies are now a common feature in towns across the region.

"Things are really bad; in most of these towns, including Luanshya, the mine hospitals and clinics were completely free for miners and even surrounding communities in some cases," Kahokola said.

"Now, it is mandatory that we should all pay 25 percent of the medical bills, so people are failing to go to the hospital because they simply have no money to pay, and we may see a lot of deaths over the next few months if the situation is left unchecked."

Zambia's president, Rupiah Banda, recently announced that the government would take over mines facing operational difficulties, but maintained the state would not consider nationalising all mines unless the private sector failed to sustain their operations.

Zambia is Africa's largest copper producer. At the peak of production in the 1980s, the country produced about 750,000mt of finished copper annually, before output dropped to 200,000mt in the 1990s. Current production is about 600,000mt annually, and a government projection of 1 million metric tonnes in 2010 is viewed as unlikely.

[ This report does not necessarily reflect the views of the United Nations ]


Copyright UN Integrated Regional Information Networks. Distributed by AllAfrica Global Media (allAfrica.com).

[dangerous]

American Italian Pasta Co (NASDAQ GM)

[dangerous]

Amazon.com Inc (NASDAQ GS)

[dangerous]

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