By now, you must have heard a lot of speculations on the supposed end of the world in 2012.
If you believe in it, we couldn't agree with you more. For those that don't, read the article. After all, we don't wanna end up saying 'we told you so' when you're inches away from your grave. Read on to find our reasons on why the world will end in 2012.
Global Warming - You didn't care then, its too late now
Our scientists had always told us about the ill-effects of global warming and Al Gore and Leo Di Caprio also sent us constant reminders of how we should try and use less water and use eco-friendly substances etc. We know you didn't try to save the earth from global warming and now is thus, the time to face the music.
Seriously, do you want more proof of the fact that that the world is slowly reaching its end? With over a hundred earthquakes, tsunamis, hurricanes, terror attacks, hailstorms, floods, volcanic eruptions, landslides, etc we have a "titanic" reason to worry.Worldwide Mess - There's a reason for this MessTranslates to the major social, political and economic mess that's going on around the world. Some of the major events that have shook the world and also claimed lives are the Egyptian Revolution, the Libyan Civil War, the Occupy Wall Street Movement, London Riots and our home-grown Anna Hazare movement, apart from many other revolutionary movements in various other countries is indicative something larger that might be in store for us.
This is where it really starts getting eerie. The world is indeed going to end according to the predictions made by Mayan astrologers, Hindu mythology, the Bible and Nostradamus. All of them suggest the same fate for 2012 i.e. the beginning of the end of the world. Who cares if a few supposed 'intelligent thinkers' don't believe in it? The predictions of Nostradamus were accurate with respect to the London Fire of 1966, the II World War and 9/11.
2011 is already ending on a mournful note since it has seen the death of a lot of influential personalities. A number of our loved celebs left this world. Steve Jobs died, so did Tiger Pataudi and Amy Winehouse and Dev Anand and Jagjit Singh and Elizabeth Taylor and many others. Co-incidentally, this was also the year which saw the death of Osama bin Laden and Muanmar Gaddafi. What more do you want us to say? You're next?
A few years back leaks had been found in the earth's magnetic poles giving rise to speculations that it would lead to some massive upheaval on the planet. This year again, reports have flown about the shift in the earth poles which has again given us reason to believe in the theory. 2013 Doesn't Sound Right Those of you that don't think 13 is an unlucky number, we're not talking to you. Those that do only have to imagine the significance of the year 2012. Isn't it way too uncanny that the astrologers don't see the world stepping into 2013? The number 13 itself gives the inkling of a bad omen. So, it is only obvious that the world is coming to an end on 2012, right?
Manmohan Knows - He knew all Along
This explains his silence in the face of the socio-political unrest that has hit the country. Therefore, while everyone is screaming about the country being a banana republic and the all the politicians being corrupt, etc. etc. Manmohan is basking in the warmth of his secret knowledge. So, dear Mr. Prime Minister, now that we have revealed you secret, what do you have to say to that?
The last U.S. soldiers rolled out of Iraq across the border into neighboring Kuwait at daybreak Sunday, whooping, fist bumping and hugging each other in a burst of joy and relief. Their convoy's exit marked the end of a bitterly divisive war that raged for nearly nine years and left Iraq shattered, with troubling questions lingering over whether the Arab nation will remain a steadfast U.S. ally.
The mission cost nearly 4,500 American and well more than 100,000 Iraqi lives and $800 billion from the U.S. Treasury. The question of whether it was worth it all is yet unanswered.
The last convoy of MRAPs, heavily armored personnel carriers, made a largely uneventful journey out except for a few equipment malfunctions along the way. It was dark and little was visible through the MRAP windows as they cruised through the southern Iraqi desert.
When the convoy crossed the border into Kuwait around 7:45 a.m. local time, the atmosphere was subdued inside one of the vehicles, with no shouting or yelling. Along the road, a small group of Iraqi soldiers waved to the departing American troops.
"My heart goes out to the Iraqis," said Warrant Officer John Jewell, acknowledging the challenges ahead. "The innocent always pay the bill."
NATO Training officers stand during a ceremony marking the official closure of NATO training mission in Baghdad, Iraq, Saturday, Dec. 17, 2011.
Soldiers standing just inside the crossing on the Kuwaiti side of the border waved and snapped photos as the final trucks crossed over.
"I'm pretty excited," said Sgt. Ashley Vorhees. "I'm out of Iraq. It's all smooth sailing from here."
The war that began in a blaze of aerial bombardment meant to shock and awe the dictator Saddam Hussein and his loyalists ended quietly and with minimal fanfare.
U.S. officials acknowledged the cost in blood and dollars was high, but tried to paint a picture of victory — for both the troops and the Iraqi people now freed of a dictator and on a path to democracy. But gnawing questions remain: Will Iraqis be able to forge their new government amid the still stubborn sectarian clashes? And will Iraq be able to defend itself and remain independent in a region fraught with turmoil and still steeped in insurgent threats?
Many Iraqis, however, are nervous and uncertain about the future. Their relief at the end of Saddam, who was hanged on the last day of 2006, was tempered by a long and vicious war that was launched to find nonexistent weapons of mass destruction and nearly plunged the nation into full-scale sectarian civil war.
Some criticized the Americans for leaving behind a destroyed country with thousands of widows and orphans, a people deeply divided along sectarian lines and without rebuilding the devastated infrastructure.
Some Iraqis celebrated the exit of what they called American occupiers, neither invited nor welcome in a proud country.
Others said that while grateful for U.S. help ousting Saddam, the war went on too long. A majority of Americans would agree, according to opinion polls.
The low-key exit stood in sharp contrast to the high-octane start of the war, which began before dawn on March 20, 2003, with an airstrike in southern Baghdad where Saddam was believed to be hiding. U.S. and allied ground forces then stormed across the featureless Kuwaiti desert, accompanied by reporters, photographers and television crews embedded with the troops.
The final few thousand U.S. troops left in orderly caravans and tightly scheduled flights. They pulled out at night in hopes it would be more secure and left in time for at least some of the troops to join families at home for the Christmas holidays.
Before the final convoy departed Saturday evening from Camp Adder base near Nasiriyah in southern Iraq, the vehicles lined up in an open field to prepare. Soldiers went through last-minute equipment checks to make sure that radios, weapons and other gear were working.
Gen. Lloyd Austin, the commanding general for Iraq, walked through the rows of vehicles talking to soldiers over the low hum of the engines. He thanked them for their service and reminded them to stay vigilant on their final mission.
"I wanted to remind them that we have an important mission left in the country of Iraq. We want to stay focused and we want to make sure that we're doing the right things to protect ourselves," Austin said.
The final troops completed the massive logistical challenge of shuttering hundreds of bases and combat outposts, and methodically moving more than 50,000 U.S. troops and their equipment out of Iraq over the last year — while still conducting training, security assistance and counterterrorism battles.
As of Thursday, there were two U.S. bases and less than 4,000 U.S. troops in Iraq — a dramatic drop from the roughly 500 military installations and as many as 170,000 troops during the surge ordered by President George W. Bush in 2007, when violence and raging sectarianism gripped the country. All U.S. troops were slated to be out of Iraq by the end of the year, but officials are likely to meet that goal a bit before then.
"The biggest thing about going home is just that it's home," Staff Sgt. Daniel Gaumer, 37, from Ft. Hood, Texas said before the convoy left Camp Adder. "It's civilization as I know it, the Western world, not sand and dust and the occasional rain here and there. It's home."
Spc. Jesse Jones, a 23-year-old who volunteered to be on the last convoy, said: "It's just an honor to be able to serve your country and say that you helped close out the war in Iraq. ... Not a lot of people can say that they did huge things like that that will probably be in the history books."
The total U.S. departure is a bit earlier than initially planned, and military leaders worry that it is a bit premature for the still maturing Iraqi security forces, who face continuing struggles to develop the logistics, air operations, surveillance and intelligence-sharing capabilities they will need in what has long been a difficult region.
Despite President Barack Obama's earlier contention that all American troops would be home for Christmas, at least 4,000 forces will remain in Kuwait for some months. The troops will be able to help finalize the move out of Iraq, but could also be used as a quick reaction force if needed.
Obama stopped short of calling the U.S. effort in Iraq a victory in an interview taped Thursday with ABC News' Barbara Walters.
"I would describe our troops as having succeeded in the mission of giving to the Iraqis their country in a way that gives them a chance for a successful future," Obama said.
The U.S. plans to keep a robust diplomatic presence in Iraq, foster a deep and lasting relationship with the nation and maintain a strong military force in the region.
U.S. officials were unable to reach an agreement with the Iraqis on legal issues and troop immunity that would have allowed a small training and counterterrorism force to remain. U.S. defense officials said they expect there will be no movement on that issue until sometime next year.
Obama met in Washington with Iraqi Prime Minister Nouri al-Maliki last week, vowing to remain committed to Iraq as the two countries struggle to define their new relationship.
Ending the war was an early goal of the Obama administration and will allow the president to fulfill a crucial campaign promise during a politically opportune time. The 2012 presidential race is roiling and Republicans are in a ferocious battle to determine who will face off against Obama in the election.
Capt. Mark Askew, a 28-year-old from Tampa, Florida who was among the last soldiers to leave, said the answer to the question of whether the Iraq war was worth the cost will depend on what type of country and government Iraq ends up with years from now, whether they are democratic, respect human rights and are considered an American ally.
"It depends on what Iraq does after we leave," he said, speaking before the final convoy departed. "I don't expect them to turn into South Korea or Japan overnight."
http://www.cfainstitute.org/ethics/Documents/global_market_sentiment_survey_report.pdf
New York , New York, United States, 15 December 2011
CFA members from across the globe remain pessimistic about the prospects for capital markets in the coming year, according to the CFA Institute 2012 Global Market Sentiment Survey. The survey measures the mood of more than 2,500 CFA charterholders and members on the outlook for world capital markets and the ongoing struggles associated with the global credit crisis. To review the executive summary and full survey results, visitwww.cfainstitute.org/gmss.
"Investors remain terribly concerned about the prospects for market performance and ethics in 2012, and it is difficult to envision a return to strong economic performance without prompt attention to restoring investor confidence," said Kurt Schacht, CFA, managing director for market policy at CFA Institute. "Industry participants must act to give investors reason to trust in the fairness of markets again, and regulators worldwide need to intensify efforts to deal effectively with ongoing systemic disruptions. With the exception of a few local markets, there is very little to cheer about in 2012."
Survey Indicates Somber Mood for World Markets
Significant highlights of the global survey include:
"Investors remain terribly concerned about the prospects for market performance and ethics in 2012, and it is difficult to envision a return to strong economic performance without prompt attention to restoring investor confidence," said Kurt Schacht, CFA, managing director for market policy at CFA Institute. "Industry participants must act to give investors reason to trust in the fairness of markets again, and regulators worldwide need to intensify efforts to deal effectively with ongoing systemic disruptions. With the exception of a few local markets, there is very little to cheer about in 2012."
Survey Indicates Somber Mood for World Markets
Significant highlights of the global survey include:
Equities expected to underperform other asset classes. Globally, 59 percent of respondents predict that asset classes other than equities will be top performers in 2012. However, U.S. respondents are more optimistic, with a majority predicting global equity markets to be top performers.
Sovereign debt crisis likely to continue. More than 75 percent of respondents see no improvement in the current sovereign crisis in 2012. This sentiment is widely shared across the globe.
Outlook for the global economy is poor. Only 34 percent of respondents expect the global economy to expand, while 29 percent think the global economy will actually contract.
Perception of integrity of capital markets remains dismal. More than 75 percent of respondents see no improvement in integrity in the markets in 2012. Of those surveyed, 22 percent think the integrity of global capital markets will be worse in the coming year (a nine-point increase from last year), while 22 percent feel it will be better (a 10-point decrease from last year).
Lack of progress in global capability to detect and mitigate systemic risks.Compared to just 23 percent in 2011, 38 percent of respondents see improved regulation and oversight of global systemic risk as the most needed regulatory/industry action in 2012, vs. other options such as improved enforcement of existing laws and regulations.
One Bright Spot: the BRICs (Brazil, Russia, India and China) see reason for optimism about local economic prospects. Respondents in BRICs, and in Australia, overwhelmingly predict economic expansion in their home markets in 2012. The outlook is much different in Europe, where 85 percent or more respondents in key countries see no prospect of economic growth.
U.S. Attitudes Break With Global Consensus on Key Issues
Though much of the survey results were relatively consistent worldwide, U.S. respondents take a unique view on several issues, including the potential for equity returns. Key divergence in U.S. attitudes include:
Only 12 percent of U.S. respondents believe the U.S. market economy will contract, vs.23 percent who expect the global market economy to contract.
U.S. respondents are more optimistic about equity markets than the rest of the world. At56 percent, the United States is the only country in which a majority predicts global equity markets to be top performers.
When asked to select the most urgently needed regulatory or industry action, 28 percentof U.S. respondents chose improved regulation and oversight, vs. 38 percent of respondents worldwide. As the second most urgent priority, 32 percent of U.S. respondents ranked effective enforcement of existing laws and regulations, vs. 22 percent of respondents worldwide.
At 26 percent, U.S. respondents represent the greatest percentage of those who believe that companies with increased cash on their balance sheets should begin or increase dividend payments, rather than retain the cash for other business opportunities.
The CFA Institute 2012 Global Market Sentiment Survey was created to seek input from CFA Institute members and gather feedback on market sentiment, performance and market integrity issues in the coming year. The survey was conducted online from 2-11 November 2011.
About CFA Institute
CFA Institute is the global association for investment professionals. It administers the CFA and CIPM curriculum and exam programs worldwide; publishes research; conducts professional development programs; and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has more than 100,000 members, who include the world's 96,000 CFA charterholders, in 133 countries and territories, as well as 135 affiliated professional societies in 58 countries and territories. More information may be found at www.cfainstitute.org.
The global economy has been one victim of the recent crisis of European sovereign debt, but Europe's banking sector and the investors who have financed it will be the next. A great deal of pushing and shoving has forced European authorities to accept that there is a problem in their banking sector. Some are working hard to understand the problems and others see themselves as immune, though they probably are not; but all have been tempted to let political factors influence decisions that need to be based on sound economic and regulatory footings.
You can Bank of It - European Banks need tons of Money - GMO.pdf
• Ember Therapeutics Launches with $34 Million of Third Rock Ventures' Cash More...
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• Cerulean Pharma Inc. Closes $15 Million Series D Financing More...
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• Enlight Biosciences Forms New Partnerships with AstraZeneca PLC (AZN) and Novo Nordisk A/S (NVO) More...
• Phylogica Ltd. and Pfizer Inc. (PFE) Complete First Stage of Peptide Vaccine Collaboration More...
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• MorphoSys AG and Novozymes, Inc. (NZYMb.CO) Sign Long-Term Alliance on Slonomics(R) Technology for Industrial Biotechnology Applications More...
• Vertex Pharmaceuticals (MA) (VRTX) Taps Jeff Leiden as New CEO to Diversify Beyond Hepatitis C More...
• Mustard Tree Instruments Promotes Peter Cregger to Chief Operations Officer More...
• Agilent Technologies Inc. (A) Names Gooi Soon ChaiSenior Vice President, Order Fulfillment and Supply Chain More...
• Geisinger Health System President and CEO Dr. Glenn Steele Named Premier Healthcare Alliance Board of Directors Chairman More...
• Suzy Jones Joins the Patrys Limited (PATZF.PK) Board as a Non-Executive Director More...
• Arrowhead Research Corporation (ARWR) to Report Fiscal 2011 Fourth Quarter and Year-End Financial Results More...
• Acacia Research Corp. (ACTG) Subsidiary Enters into Settlement Agreement With SRU Biosystems, Inc. More...
• SciClone Pharmaceuticals, Inc. (SCLN) Announces Final Settlement of Stockholder Derivative Litigation More...
• Ipsen Announces $45 Million R&D Investment and Headquarters Relocation in 2012; Plans to Hire More...
• Eli Lilly and Company (LLY) Planning New Irish Biopharma Plant More...
• Trophos ALS Drug Fails Ph3 Trial More...
• Celgene International Sarl (CELG) Release: Phase III Study Evaluating REVLIMID® in Patients with High-Risk Smoldering Multiple Myeloma Presented at American Society of Hematology More...
• Amgen (AMGN) Presents Final Results from the Largest Phase 3 Open-Label Study Assessing the Safety and Efficacy of Nplate® (Romiplostim) More...
• Threshold Pharmaceuticals, Inc. (THLD) Announces Promising Phase 1 Clinical Trial Results in Patients With Advanced Leukemias More...
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• ContraFect Corporation Completes Successful Pre-IND Meeting With FDA More...
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• Few Allergies in Unstressed Babies, Karolinska Institute Study More...
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• Meta-analysis of Five Clinical Trials Including Columbia Laboratories, Inc. (CBRX)' PREGNANT Study Published in American Journal of Obstetrics and Gynecology More...
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• Cerulean Pharma Inc. Closes $15 Million Series D Financing More...
• Sartorius AG Closes Acquisition of the Biohit Liquid Handling Business More...
• Hunter Immunology Limited and Probiomics: Merger to Speed Development of Promising New Vaccine for COPD More...
• Enlight Biosciences Forms New Partnerships with AstraZeneca PLC (AZN) and Novo Nordisk A/S (NVO) More...
• Phylogica Ltd. and Pfizer Inc. (PFE) Complete First Stage of Peptide Vaccine Collaboration More...
• HCPro Partnering with TEMIS to Boost Power of New Compliance Products More...
• Atlas Venture and Shire plc (SHPGY) Enter Alliance to Invest in Innovative Early-Stage Rare Disease Therapies More...
• MorphoSys AG and Novozymes, Inc. (NZYMb.CO) Sign Long-Term Alliance on Slonomics(R) Technology for Industrial Biotechnology Applications More...
• Vertex Pharmaceuticals (MA) (VRTX) Taps Jeff Leiden as New CEO to Diversify Beyond Hepatitis C More...
• Mustard Tree Instruments Promotes Peter Cregger to Chief Operations Officer More...
• Agilent Technologies Inc. (A) Names Gooi Soon ChaiSenior Vice President, Order Fulfillment and Supply Chain More...
• Geisinger Health System President and CEO Dr. Glenn Steele Named Premier Healthcare Alliance Board of Directors Chairman More...
• Suzy Jones Joins the Patrys Limited (PATZF.PK) Board as a Non-Executive Director More...
• Arrowhead Research Corporation (ARWR) to Report Fiscal 2011 Fourth Quarter and Year-End Financial Results More...
• Acacia Research Corp. (ACTG) Subsidiary Enters into Settlement Agreement With SRU Biosystems, Inc. More...
• SciClone Pharmaceuticals, Inc. (SCLN) Announces Final Settlement of Stockholder Derivative Litigation More...
• Ipsen Announces $45 Million R&D Investment and Headquarters Relocation in 2012; Plans to Hire More...
• Eli Lilly and Company (LLY) Planning New Irish Biopharma Plant More...
• Trophos ALS Drug Fails Ph3 Trial More...
• Celgene International Sarl (CELG) Release: Phase III Study Evaluating REVLIMID® in Patients with High-Risk Smoldering Multiple Myeloma Presented at American Society of Hematology More...
• Amgen (AMGN) Presents Final Results from the Largest Phase 3 Open-Label Study Assessing the Safety and Efficacy of Nplate® (Romiplostim) More...
• Threshold Pharmaceuticals, Inc. (THLD) Announces Promising Phase 1 Clinical Trial Results in Patients With Advanced Leukemias More...
• Celgene International Sarl (CELG) Release: Final Phase II Data Evaluating REVLIMID® and Rituximab in Patients with Relapsed or Refractory Chronic Lymphocytic Leukemia More...
• VIVUS, Inc. (VVUS)' Experimental Diet Drug Keeps Weight Off for 2 Years More...
• Salix Pharmaceuticals, Ltd. (SLXP) Announces NDA Submission for Crofelemer for the Treatment of HIV-Associated Diarrhea More...
• ContraFect Corporation Completes Successful Pre-IND Meeting With FDA More...
• Merck & Co., Inc. (MRK) Chemists Use High-Tech Science to Combat Alzheimer's Disease Challenge More...
• Few Allergies in Unstressed Babies, Karolinska Institute Study More...
• Acupuncture Might Ease Chemotherapy Pain, Acupuncture in MedicineReveals More...
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Find below some of our observations-
Capital Goods & Infra Sector
· In the construction space, valuations are cheap but order inflows and competition is a concern. In addition , the average debtor days for construction companies is on the rise reaching 200 days.
· In the Infrastructure space Road, T&D are areas where order inflow is relatively strong.
· Problems continue to persist in order book, execution of projects and operating margins.
· Our view is that one should not look at capital goods space at these levels as more pain is expected there.
· Government paralysis has severely affected firms like IVRCL and Nagarjuna
· Companies such as Voltas and L&T having some exposure to middle east will help them to ward off the domestic blues.
Pharmaceutical Sector
· Moderation in expected growth rate (low double digit) is visible in the Pharma sector after the rapid growth seen over the last 2-3 years.
· Increasing competitive pressures and trade discounts are putting further pressure on margins of the companies.
· Specialties / chronic therapeutics will be less impacted in the domestic market. Select players could benefit from domestic market consolidation. Sales force in the domestic market has increased by manifold over the last few years.
· Inorganic growth would continue over the next 6-12 months in order to bridge the gap in expectations. However, acquisitions in emerging markets / US will be key growth avenue. Sun Pharma is the only company to have added value through acquisitions. Rest players have broadly not been very successful with acquisitions.
· US Pharma market is also seeing some growth moderation. Base effect, patent cliff impact just about to start on US business.
· Emerging markets contribution to generics markets is set grow at 15% for next 5-10 year . Their market share is expected to reach 27% from the current global share of 18%
2 of 2 File(s)
tfp20111215INFLATION .pdf
IIFL_DM_14122011.pdf
India has emerged as a preferred destination for Private Equity investments owing to its strong domestic growth, entrepreneurial ability and favorable demographics. However, the global financial crisis in 2008 and 2009 and the more recent concerns on sovereign debt crisis, slowing economic growth and high inflation continue to pose challenge for Private Equity investors with regard to investments as well as exits.
The current report builds on a series of earlier reports on Private equity and analyzes Private Equity returns in India. Specifically, the report seeks to understand the key drivers for Private Equity returns and exit environment in general. Going further, it talks about the outlook for Private Equity exits in India and suggests probable strategies for General Partners which could potentially help in generating outperformance.
Return-from-Indian-Private-Equity_1.pdf
DataWind, the Canadian company that is manufacturing Aakash, has started the online booking and pre booking of the much anticipated low cost Android tablet. Online booking is for students' version of the tablet and pre booking is for UbiSlate 7, the upgraded version of Aakash.
Students' version of Aakash will be available for Rs 2,500 and will be delivered in seven days. The commercial version, UbiSlate 7 is priced at Rs 2,999. The payment mode for both the tablets is cash on delivery.
The commercial version of Aakash tablet will be powered by Android 2.3 and will have a resistive touchscreen, Cortex A8-700 MHz processor and graphics accelerator HD video processor, 256 MB of RAM and 2 GB of internal memory.
Other specifications are a one standard USB port, 3.5 mm audio jack, a 7 inch display with 800 x 480 pixel resolution, resistive touchscreen, GPRS and WiFi support.
"The improved version of Aakash tablet will be available in retail outlets by January end," aspokesperson of DataWind told The Mobile Indian.
The tablet was to be made available in retail stores by the end of November. "The delay in the availability of the tablet has been due to upgradation in the tablet and some unforeseen delay in manufacturing," the spokesperson said.
To book and prebook student and commercial versions respectively of Aakash tablet, users have to visit DataWind's website and fill up the required form. In case of booking they will get a booking ID and a message which will state, "You will shortly receive an email confirmation from our support team with further details."
In case of pre booking users will get a confirmation message which will state, "The commercial version of the Akash UbiSlate 7 would be launched in early weeks of December. After the commercial launch we would get in touch with you to deliver your device as soon possible."
As a matter of fact, the confirmation message a reader will see is factually incorrect as The mobile Indian had reported earlier the Aakash tablet will be available only by January end.
Datawind has however not cleared how it is going to establish the identity of students who will book the cheapest version of Aakash tablet. When The Mobile Indian contacted spokesperson of Datwind he said, "Anyone can book the student version of Aakash tablet."
This defeats the purpose of providing students an affordable tablet as now anyone can place an order to get the tablet. Interestingly, now it has been revealed that the government has procured only 10,000 Aakash tablets for distribution in schools and colleges of the initial 1 lakh proposed.
It looks like the company was in a hurry to start the online booking process and has not done not proper homework before staring it.
Anyone who has taken out a car loan or bought a house with a mortgage has taken on debt. It's the same for countries. They often need to borrow money to keep services going, with the promise to pay it back.
What is national debt and what is a deficit? How does debt get paid back? Here are the basics.
What is the National Debt?
National debt is the sum of all outstanding debt owed by the federal government. It includes not only the money the government has borrowed, but also the interest it must pay on the borrowed money. The government goes into debt when it doesn't collect enough revenue to cover the expenses it incurs from spending on programs such as the military, or building roads and bridges. The revenues come from corporate and income taxes, and the fees the government imposes, such as for visas and passports, student loans, and admission to national parks.
What is the Deficit?
The deficit refers to the difference, in a single year, between government receipts and spending. Those deficits become the national debt when they are added together. They're tied to each other, but they're different.
Deficit spending is sometimes viewed as temporary but necessary. For the government, that might be true if it needs to spend money to fight a war. For a person, it might be true if he or she wants to take out a loan to buy a car.
But over time, running large annual deficits is a bad thing, for the government and for the average person. Here's why: think of the government's annual deficit spending like a person using a credit card to spend above his or her means. If that type of spending continues year after year, the interest on the credit card builds up. The minimum payments become larger and larger. Eventually, the charges become so unwieldy that the card holder can't pay them off without making big sacrifices (say, selling the house and the car) or declaring bankruptcy.
It's also important to note that a government can still have a national debt even if there's no deficit in a specific year. Here's how that works.
In 2001, for instance, the government had a surplus of $127 billion. However, $127 billion was a surplus for that year alone and did not eliminate the national debt, which at that time was $5.9 trillion — from all the previous years of deficits.
What is the Debt Ceiling?
The debt ceiling is a cap, set by Congress, on how much debt the U.S. government can carry. The debt ceiling idea came about in 1917. Before then, Congress had to approve borrowing for each item when the government needed money.
But to have more flexibility as the U.S. entered World War I, lawmakers agreed to give the government approval for all borrowing — as long as the total was less than a specific number. That debt limit number — usually set at a high figure — would be set by Congress.
Whenever the government is going to exceed the debt limit, Congress has to vote its approval to raise it.
So looking at this in real money, the debt ceiling in 2011 is $14.294 trillion. The national debt is more than $14.5 trillion. Congress has to approve raising the debt limit. If it doesn't within a certain time frame, funds would not be available to pay bills.
The debt ceiling has frequently been raised — 74 times since March 1962 and 10 times since 2001.
History of U.S. National Debt
From its beginning as a nation, the U.S. has been in debt at one time or another, according to the Bureau of Public Debt. The country has usually spent more than it's taken in order to keep services going.
The Revolutionary War created a debt of $75 million. The fledgling government had to pay for its soldiers, along with food and supplies. To pay off the debt, the government sold bonds, which we'll see later is one way governments fund themselves.
It wasn't until 1835 — and after another war, the War of 1812 — that the U.S. was in the black.
The Civil War produced a massive round of debt, reaching a figure of $2.7 billion by 1864. After 1865, the U.S. ran deficits in 11 of the next 47 years, having surpluses in the other 36.
Jumping ahead to the 20th century, a major period of debt followed World War I and the build up for World War II, and social programs to fight the Great Depression caused a major increase in debt to $260 billion by 1950.
Over the years, government's role expanded with programs such as agricultural subsidies, highway construction, Medicare, Medicaid, public education, the federal courts, mail delivery, food and work safety inspectors, law protection agencies like the FBI, among others.
And of course there's defense — even with some cuts in the 1990s — leaving the U.S. still spending more for it that any other country.
The debt continued to grow from $260 billion in 1950 to $909 billion in 1980. Between 1980 and 1990, the debt more than tripled, according to the BPD.
How the Debt is Financed
If you've ever bought a savings bond, you've helped provide money to cover the debt. That money helps pay off the government's theoretical 'credit card.'
The government borrows money by selling Treasury Securities such as Treasury Bills or T-Bills— and bonds to the public and/or foreign countries.
These securities come with the promise of a payday with interest. They can be short-term payoff — say, three years — or they can be longer, up to 30 years.
Where Government Spends Money
In 1900, the government spent $332 million on defense, $297 million on domestic spending and other items such as interest on the debt for a total of $629 million in spending, according to the Treasury Department. But there was a surplus that year because the government took in $670 million in revenue.
Fast forward to 2010 and there's a change in spending and programs. The biggest cost was Medicare and Medicaid at $793 billion; and together they made up 23 percent of the budget, according to the Congressional Budget Office.
Next came Social Security at $701 billion or 20 percent, followed by defense spending at $698 billion and 20 percent of the budget.
Medicare, Medicaid and Social Security, along with such items as Congressional salaries, are considered mandatory payments—they have to be paid even if the money isn't in the government till.
And interest on the debt itself was $197 billion in 2010, or 6 percent of the budget.
Summing up 2010, the government had an annual deficit of $1.3 trillion, and the national debt at that time — the sum of all previous yearly deficits — was $13.1 trillion.
Before we move on, we need to note Social Security. Established in 1935, Social Security pays for itself through taxes collected on individuals and money it makes by investing in the government.
In 1968, it was included in the Federal budget. That changed in 1986 when it was taken 'off budget' — or not included as government spending — but has since been used in calculating total budget spending. So, while technically on the federal budget books, Social Security has its own source of revenue.
Who Owns the Debt
The U.S. government sells securities like bonds and T-Bills to finance its debt. Anyone can buy them, including other countries.
The U.S. is the biggest holder of its own debt, with institutions and investors holding 42.2 percent, according to the U.S. Treasury Department. Another holder of U.S. debt is the Social Security trust fund at 17.9 percent. The trust fund is the 'extra' or surplus that was set aside for deficits in payouts. The fund traditionally invests in U.S. securities.
The U.S. Civil Service Retirement Fund and the U.S. Military Fund own a combined 8.1 percent. So, 68.2 percent of the debt is 'home'-owned.
The rest of the debt is owned by countriesincluding Japan, the United Kingdom, Brazil, Venezuela and Saudi Arabia. China owns 7.5 percent of the total U.S. debt, much less than popularly believed.
Why the Debt Matters
A high debt level affects the cost of living, interest rates to buy homes or cars, as well as the overall economy, say analysts.
Money owed to the people/countries/investors who subsidize the debt by buying debt instruments must be paid off.
If the investors and lenders believe the U.S. can't pay its national debt, they stop loaning the government money and the interest rates go up for banks and consumers.
Debt is repaid through higher taxes and/or spending cuts.
Source: CNBC.com
The original article can be found at http://tgs.nationalinterest.in/2011/12/09/shekhar-gupta-spots-recession/ and is written by Dr VAN.
Shekhar Gupta spots recession from The Gold Standard by V Anantha Nageswaran
When a mainstream journalist writes apocalyptic stuff – stuff that many of us have been warning about for years – then you know that things must be really dire. In fact, we have been warning about this ever since the UPA came to office, not just in 2009 but in 2004. I still vividly recall a friend chiding me for an email I had sent out in 2004 in a state of depression after knowing the election results, then. He was justifiably proud of the democratic and peaceful transfer of power that took place. I was more fearful of the future. It gives me no pleasure to write that my fears (and worse) have or are in the process of being realised.
UPA's agenda was regressive. Pro-poor politics is not regressive. Pro-poverty economics is. What UPA has been practising is the latter. They were wedded to that from day one in 2004. Eight to ten years of sustained onslaught on governance, on Centre-State relations, on fiscal health, on civilized discourse with your political opposition (and any opposition for that matter) is too much for any country to handle. India is no exception.
Shekhar Gupta paints a disturbing picture of bank losses turning bad; Indian corporates going overseas and a fiscal bankruptcy to rival Greece!
Every country has been caught in the grip of hubris. That is one unifying theme for the new millennium. India too had assumed its growth rate to be on autopilot at 8% or above. How all of them handle these rude shocks of growth well below what they had taken for granted is going to be the story of 2012 and beyond. It will be interesting to see how India's famed shock-absorbers, resilience and social safety valves work in what are going to be rather difficult times ahead.
In contrast, T. N. Ninan strikes an ambiguous tone – not either wholly negative or positive.
Karthik Muralidharan makes the point that this blogger made in his column in MINT on FDI in retail: Policies should leave room for States to choose and reject reforms so that experimentation can happen naturally and knowledge-transfer would follow:
A more promising approach is to reduce the structural risks of reform, and for the Centre to support experimentation by states to better understand the impacts of specific reforms, and to then facilitate knowledge transfers across states that enable scaling up successful reforms. Proceeding with second-generation reforms in this manner is both economically and politically prudent.
Finally, the analysts at Kotak Mahindra must feel vindicated about their scepticism of India's export numbers. Those of us who either argued for and believed in the veracity of India's export data for 2011 must feel a bit embarrassed now, even if the logic of those who argued against the Kotak hypothesis was sounder.
