Bonus with your ProfitEVEREST Internet Marketing Training Course from Mr. Harry A. on Vimeo.
If you have a business, you must check this internet marketing training course, ProfitEVEREST, by Freeman University
Wednesday, December 10, 2008
ProfitEVEREST Internet marketing Bonus Giveaway
Bonus with your ProfitEVEREST Internet Marketing Training Course from Mr. Harry A. on Vimeo.
If you have a business, you must check this internet marketing training course, ProfitEVEREST, by Freeman University
Monday, December 8, 2008
Blog from Microsoft 2007
So the dow had big rally today and almost hit 9000. As we've been hearing and reading for the past year...now is a good time to get back into the market. Well, now is a good time to continue to short the market. Using ETF's to short is a good and easy way to futher protect you from the down side or if you're like me, a good way to make money on the wild swings downward. The extreem volitility in this market is perfect for placing repetitive bets on the major trend…which is downward. We'll see a nice pop b/c off all the newly printed money the government is throwing to everyone in the corporate soup line, but as soon as the soup runs out…or when they all realize that this just watered down crap, then hold on for the wild ride down…down down.
HC
Monday, November 24, 2008
ProfitEVEREST
Freeman University's ProfitEVEREST Internet Marketing Training Course (DVD intro clip) from Mr. Harry A. on Vimeo.
If you own a business...start using the internet to promote and market your business
Internet advertising and marketing can drive new customer to your business or website, but most do not know the most effective and efficent ways to use its power and reach. I got my hands on a internet marketing training course from Freeman Univeristy, call ProfitEVEREST and it's geared for small to medium size businesses that are not experts in online advertising. It's full of very good real life strategies and techniques to boost the number of leads and customer...and the best part it all the tips and techniques they teach in Profit everest is FREE...won't cost you a cent.
I've been telling you guys for over a year now about this big financial mess...now it's time I let you guys know what you can do to start building a strong foundation to ride out this economic storm of the century.
Please go to www.FreemanU.com and get some more info
Friday, October 10, 2008
We Are Facing an 'Inflation Holocaust': Jim Rogers
"The way to solve this problem is to let people go bankrupt," Rogers said.
"Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who aren't sound and we will start over. This is the way the world has worked for a few thousand years."
The current rescue plans, which will force governments to issue more debt, print money and flood the markets with liquidity, will flare up inflation after the crisis is over and will create worse problems, Rogers warned.
"We're setting the stage for when we come out of this of a massive inflation holocaust," he said.
And the plans are unlikely to fend off a severe economic downturn, as the crisis starts affecting all walks of life.
"We had the worst excesses we had in credit markets in world history. We're going to have to take some pain," Rogers said.
Watch the interview and read the rest here
Add to Onlywire
Thursday, October 9, 2008
Wednesday, October 8, 2008
I'm Baaaackkk!
I've been away for awhile taking advantage of this crazy market. I will be sharing with you what investment strategies and methods I've been using to profit from this market downturn. I've been posting and talking about this upcoming crisis...opps, I mean the one we are current in since I first started this blog. It's still early and there are things that we must play close attention to if we wish to first secure our investments and 2nd, to maximize the our profit in this...one-in-a-generation event.
Harry
Tuesday, December 18, 2007
Fed endorses home mortgage plan
WASHINGTON - The Federal Reserve moved Tuesday to protect home buyers from dubious lending practices, its most sweeping response to a mortgage meltdown that has forced record numbers of people from their homes.
The Fed has been under attack for not doing more to stem the crisis as hundreds of thousands of people lost the roof over their head. The situation raised the odds the country will fall into recession, unhinged Wall Street, racked up multibillion losses for financial companies and resulted in political finger-pointing over who was to blame.
The proposed rules, endorsed by the Federal Reserve Board in a 5-0 vote, would crack down on a range of shady lending practices that has burned many of the nation's riskiest "subprime" borrowers — those with spotty credit or low incomes — who have been hardest hit by the housing and credit debacles. The rules also would curtail misleading ads for many types of mortgages and bolster financial disclosures to borrowers.
"Unfair and deceptive acts and practices hurt not just borrowers and their families, but entire communities, and indeed, the economy as a whole. They have no place in our mortgage system," Fed Chairman Ben Bernanke said. "We want consumers to make decisions about home mortgage options confidently, with assurance that unscrupulous home mortgage practices will not be tolerated," he said.
If ultimately adopted, the plan would apply to new loans made by thousands of lenders of all types, including banks and brokers. It would not cover loans already made.
The proposal would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower's income. It also would prohibit lenders from engaging in a pattern or practice of lending without considering a borrower's ability to repay a home loan from sources other than the home's value.
The plan disappointed both supporters and opponents of tougher home-lending regulations.
Mortgage lenders worried that the Fed plan was too tough and could crimp customers' choices. "We worry that some of the product restrictions could make it harder for bankers to tailor products for their customers and communities and result in some creditworthy customers not being able to obtain a loan," said Edward Yingling, president of the American Bankers Association.
Consumer groups and Democrats in Congress complained that the proposal doesn't provide sufficiently strong safeguards for borrowers.
"The Fed has done too little, too late," said Kathleen Day, spokeswoman for the Center for Responsible Lending, a group that promotes homeownership and works to curb predatory lending. "We don't think it is strong enough to protect people in the future and does nothing to help people left holding the bag now," she said.
Consumer advocates wanted an outright ban on prepayment penalties. These penalties, they say, deter homeowners from refinancing on more favorable terms. The penalties can be hard on borrowers who want to get out of adjustable-rate mortgages that reset from a low introductory rate to a much higher one they have trouble paying off. However, mortgage industry representatives argued that prepayment penalties ensure that lenders receive a minimum return if loans are paid off early, and can provide borrowers with a benefit of lower upfront costs or lower interest rates.
Another disappointment to consumer groups: to make a case for a possible violation, the lender has to have engaged in a pattern of making loans without considering the borrowers' ability to repay. An individual incident would not be sufficient by itself.
"We are pleased the Fed recognized the critical issues that have caused the foreclosure crisis. Unfortunately, the proposal fell short of the mark," said Allen Fishbein, the Consumer Federation of America's point person on housing and credit policies.
Before taking effect, the public, industry and others can weigh in. The Fed will then vote again, and the rules could be revised.
The proposal offers Bernanke, who took over the helm in February 2006, an important opportunity to put his imprint on the Fed's regulatory powers. Some critics have complained that Bernanke's predecessor — Alan Greenspan, who ran the Fed for 18 1/2 years — failed to act as a forceful regulator especially during the 2001-2005 housing boom, when easy credit spurred lots of subprime home loans and many exotic types of mortgages.
When the housing market went bust, subprime loans were most heavily affected.
Of the nearly 3 million subprime adjustable-rate loans surveyed by the Mortgage Bankers Association from July through September, a record 4.72 percent entered the foreclosure process during those months. At the same time, a record 18.81 percent of the subprime adjustable-rate loans were past due.
When home values weakened, borrowers were left with loan balances that eclipsed the value of their homes. They also were clobbered when their loans reset with much higher interest rates.
The House has passed legislation that would put into law some tougher provisions than contemplated by the Fed. A similar bill is pending in the Senate.
Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee and contender for his party's presidential nomination, called the Fed proposal a "significant step backwards." Rep. Barney Frank, D-Mass., said it shows that the Fed is "not a strong advocate for consumers, and two, there is no Santa Claus. People who are surprised by the one are presumably surprised by the other."
For both risky and not-so-risky borrowers, the Fed also proposed:
• Prohibiting certain types of misleading or deceptive advertising for home mortgages. For instance, it would bar using the term "fixed" to describe a rate that is not truly fixed over the life of the entire loan. It also would require that all applicable rates or payments be disclosed in ads with equal prominence as advertised introductory "teaser" rates.
• Require lenders to provide financial disclosures to borrowers early enough for them to use while shopping for a mortgage. Lenders could not charge fees — except for a fee to obtain a credit report — until after the consumer receives the disclosures.
In addition, the Fed proposed barring lenders from paying mortgage brokers a fee that exceeds the amount the would-be borrower had agreed to in advance that the broker would receive.
The Fed also proposed banning certain practices, such as failing to credit a mortgage payment to a borrower's account when the company servicing the mortgage receives it. And it would prohibit a broker or other company from coercing or encouraging an appraiser to misrepresent the value of a home.
___ By JEANNINE AVERSA, AP Economics Writer 1 hour, 16 minutes ago
On the Net:
Federal Reserve: http://www.federalreserve.gov/
Monday, December 17, 2007
Peter Schiff on 'Your World with Cavuto' on the The Housing Bubble
Mr. Schiff has a Catastrophist View that many leading economic figures are also now saying is a stonger possibility due to the real estate and subprime crisis.
Imagining Recession
Ultimately, consumer and business confidence are mostly irrational. The psychology of the markets is dominated by the public images that we have in mind from day to day, and that form the basis of our imaginations and of the stories we tell each other.
Popular images of past disasters are part of our folklore, often buried in the dim reaches of our memory, but re-emerging to trouble us from time to time. Like traditional myths, such graphic, shared images embody fears that are deeply entrenched in our psyche. The images that have accompanied past episodes of market turmoil are largely absent today.
Consider the oil crisis that began in November 1973, resulting in a world stock market crash and a sharp world recession. Vivid images have stuck in people’s minds from that episode: long lines of cars at gas stations, people riding bicycles to work, gasless Sundays and other rationing schemes.
Today, the real price of oil is nearly twice as high as it was at the peak of that crisis, but we have seen nothing like the images from 1973-5. Mostly we are not even reminded of them. So our confidence is not shaken, yet.
Just before the October 19, 1987, stock market crash, the biggest one-day drop in history, the image on people’s minds was the crash of 1929. Indeed, the Wall Street Journal ran a story about it on the morning of the 1987 crash. I know that those images contributed to the severity of the 1987 crash by encouraging people to sell, because I ran a survey of individual and institutional investors the following week.
Images of 1929 – of financiers leaping from buildings, unemployed men sleeping on park benches, long lines at soup kitchens, and impoverished boys selling apples on the street – are not on our minds now. The 1929 crash just does not seem relevant to most people today, probably because we survived the 1987 and 2000 crashes with few ill effects, while 1929 seems not only the distant past, but another world.
But images of the 1987 crash, driven by computers in tall modern steel-and-glass office buildings, do seem to be on people’s minds today. The stock market suffered one of its biggest one-day drops this year on the 20th anniversary of the 1987 crash, with the S&P 500 falling 2.56%. No previous anniversary of the 1987 crash showed any such drop.
The image of a bank run, of long lines of angry people lining up outside a failed bank, was briefly on our minds after the Northern Rock failure in Britain. But the Bank of England’s direct intervention prevented these images from gaining a foothold on our collective psychology.
The images that are uppermost in our minds are of a housing crisis. We imagine residential streets with one “for sale” sign after another. Worse, there are images of foreclosures, of families being evicted from their homes, their furniture and belongings on the street.
If home prices continue to decline in the United States and possibly elsewhere, there could be many more vivid images. You may yet be presented with the image of your child’s playmate moving away because his parents were thrown out in a foreclosure. You may see a house down the street trashed by an angry owner who was foreclosed. Such images become part of your sense of reality, and could disturb your sense of confidence and reduce your willingness to spend and support the economy.
Could such changes in psychology be big enough to tip us into a world recession? While it is far from clear that they will, it is a possibility. Psychology need only change enough to bring about a drop in consumption or investment growth of a percentage point or so of world GDP, and market repercussions can do the rest.
Source HERE
Robert J. Shiller is Professor of Economics at Yale University, Chief Economist at MacroMarkets LLC, which he co-founded (see macromarkets.com), and author of Irrational Exuberance and The New Financial Order: Risk in the 21st Century.
Homebuilders' index scraping bottom
WASHINGTON (AP) -- A December reading of U.S. homebuilders' sentiment remained at a record low for the third straight month.
The National Association of Home Builders said Monday its housing market index, which gauges builders' perceptions of conditions and expectations for home sales over the next six months, came in at 19 in December. The number was at the lowest level since the index began in January 1985.
Index readings higher than 50 indicate positive sentiment. The seasonally adjusted index has been below 50 since May 2006, and declined for eight straight months this year, and has been unchanged since October.
Tighter lending standards, rising defaults among borrowers with weak credit and a sense of worry about the housing market's future have meant fewer buyers for hard-hit homebuilders such as D.R. Horton (DHI, Fortune 500), Pulte Homes (PHM, Fortune 500) and Centex (CTX, Fortune 500).
Many builders are "bracing themselves for the winter months when home buying traditionally slows, scaling down their inventories and repositioning themselves for the time when market conditions can support an upswing in building activity," David Seiders, the trade group's chief economist said in a statement.
That's likely to occur, he said, by the second half of next year.
Confidence dropped in the northeast, but inched up in the Midwest and South. It remained unchanged in western states.
Nationwide, new-home sales are projected to fall to 788,000 this year, down 25 percent from 1.05 million last year, the National Association of Realtors said last week. Sales are expected to drop further to 693,000 in 2008, according to the Realtors' group.
Source HERE
Russia makes 1st nuke shipment to Iran
JERUSALEM - Israel's public security minister warned Saturday that a U.S.
intelligence report that said Iran is no longer developing nuclear arms could
lead to a regional war that would threaten the Jewish state. Source HERE
This should continue to add support to record oil prices and increase the growing friction between Russia and the United States.
Harry
Russia makes 1st nuke shipment to Iran
By JIM HEINTZ, Associated Press Writer 17 minutes ago
MOSCOW - Russia has made its first shipment of nuclear fuel to Iran's Bushehr plant, which is at the center of the international tensions over Tehran's nuclear program, the Foreign Ministry said Monday.
Iran contends the nuclear power plant operation in Bushehr is strictly for civilian purposes, but many critics suspect Tehran intends to use the plant as part of an alleged effort to develop nuclear weapons.
Construction at Bushehr had been frequently delayed. Officials said the delays were due to payment disputes, but many observers suggested Russia also was unhappy with Iran's resistance to international pressure to make its nuclear program more open and to assure the international community that it was not developing nuclear arms.
"All fuel that will be delivered will be under the control and guarantees of the International Atomic Energy Agency for the whole time it stays on Iranian territory," the Foreign Ministry said in a statement. "Moreover, the Iranian side gave additional written guarantees that the fuel will be used only for the Bushehr nuclear power plant."
Russia announced last week that its construction disputes with Iran had been resolved and said fuel deliveries would begin about a half year before Bushehr was expected to go into service.
Two weeks ago, a U.S. National Intelligence Estimate report concluded that Iran had halted efforts to develop nuclear weapons in 2003 and that the program had been frozen through at least the middle of this year.
Although Russia has resisted drives to impose sanctions on Iran, it also repeatedly has urged Tehran to cooperate with the Vienna, Austria-based IAEA to resolve concerns over the nuclear program.
Foreign Minister Sergey Lavrov underlined that position last week after a meeting in Moscow with his Iranian counterpart Manouchehr Mottaki.
Lavrov said resolving the controversy is possible "solely on the basis of the nuclear nonproliferation treaty, IAEA rules and principles and, certainly, with Iran proving its right to the peaceful use of nuclear energy."
Officials at Atomstryexport, the Russian contractor for Bushehr, raised the prospect last week of creating a Russian-Iranian joint venture "to ensure security" at the Bushehr plant, according to the RIA-Novosti agency.
That could indicate Russian interest in ensuring that enriched uranium at the plant is not stolen or diverted. Depleted fuel rods also could be reprocessed into plutonium.
Source HERE
Further reading: Russia starts nuclear fuel deliveries to Iran: officials
MOSCOW (AFP) - Russia's Atomstroiexport corporation said Monday it had begun deliveries of nuclear fuel for Iran's first atomic power station at Bushehr.
"On December 16, 2007, Atomstroiexport began delivery of the fuel for the initial installation at the future Bushehr power station," the corporation said in a statement.
The delivery process will take up to two months to complete, Atomostroiexport said.
Russia is close to completing construction of Bushehr, the power station at the heart of Iran's controversial nuclear programme. The station is expected to start generating electricity approximately six months after the first delivery of fuel.
Source HERE
Sunday, December 16, 2007
Oil rises on storm and and Turkish Bombing of Kurdish rebels
SINGAPORE (Reuters) - Oil prices rose on Monday following a two-day, $3 slide as a U.S. winter storm and Turkish bombing of Kurdish rebels in northern Iraq countered concerns about a weaker U.S. economy.
U.S. light, sweet crude for January delivery, which expires on Tuesday, rose 52 cents to $91.79 a barrel by 0239 GMT, having lost nearly $1 on Friday and more than $2 the day before.
...
A snowstorm heading into New England lent support to prices, as traders factored in higher household use in the top heating oil consuming region. The storm brought snow, freezing rain and high winds to the U.S. Northeast at the weekend.
...
Turkish warplanes targeting Kurdish rebels bombed northern Iraq on Sunday, while up to 100,000 Turkish troops are near the Iraqi border, threatening a major operation that analysts fear could destabilize the region.
Analysts have said the action is not likely to affect oil shipments through Iraq's northern pipeline to the Turkish coast, which has only operated sporadically since the 2003 war, but fear it could further unsettle the rest of the oil-rich Middle East.
"I think this may be a bullish factor for the market," said Ken Hasegawa of Fimat Japan Inc.
...
"The macro-economic backdrop remains complicated," said Commonwealth Bank of Australia analyst David Moore.
Oil prices have been dragged back from last month's record high $99.29 a barrel by growing concerns about the U.S. economy. A concerted effort last week by global central banks to inject more liquidity into credit markets failed to erase those worries.
Friday's data came amid signs U.S. oil demand growth is being clipped by the wider economic problems stemming from the global credit crunch, prompting OPEC to maintain its forecast for oil demand growth of only 1.3 million barrels per day next year.
...
One fresh supply risk arose at the weekend after an influential rebel commander in Nigeria's oil-producing Niger Delta ordered the suspension of peace talks with the government, although there was no immediate sign of a resumption in the attacks that have crippled output since 2006.
Source HERE
The Catastrophist View
What would it take to send the U.S. economy—and New York
By Duff McDonald
- Published Oct 28, 2007
Peter Schiff is laughing at me. I’ve just asked him to entertain the following notion: that we dodged a bullet during August’s financial-market turmoil and, with the stock market bouncing right back from every dip, things might be okay. So why worry?
He stops laughing. “Why worry?” he asks. “Because we dodged a bullet but are about to step on a hand grenade.”
Sitting in a corner office of a nondescript building just off I-95 in
Some people, anyway. The recessionary fears that were sparked by the global liquidity crisis in August have eased, largely because of a resilient stock market and a belief that the Federal Reserve’s interest-rate cut in September curtailed deeper losses. When Goldman Sachs invested in its own imploding Global Equity Opportunities hedge fund in August, calling it an “opportunity” and not a “rescue,” people laughed. Guess who laughed last? Goldman, which had reportedly enjoyed a $370 million gain on its $2 billion rescue by October. The optimists stay focused on stories like Steve Jobs’s next stroke of genius.
But Schiff, whom CNBC calls “Dr. Doom,” has not, as bears do when winter approaches, gone off to hide in a cave. Why not? Because every single one of the underlying economic factors that he has identified as cause for concern has worsened. And his is no longer a lone voice in the woods. If you don’t care to listen to a man nicknamed Dr. Doom, you can listen to people like former Federal Reserve chairman Alan Greenspan, esteemed bond-fund manager Bill Gross, or famed money manager Jeremy Grantham. They’re part of a growing chorus of voices that are saying many of the same things as Schiff.
Their bearish arguments come in many shapes and sizes, but here’s the basic one: The past five or six years have been deceptively fortunate ones for the
The softening of real-estate prices in most parts of the
THREAT NO. 1
The Bottom Continues to Fall Out of the Housing Market
Historically, bond-market investors have been the boring counterparts to their equity-market brethren. But in his October Investment Outlook, famed bond investor Bill Gross was anything but. The managing director of money management firm pimco pointed out that the Federal Reserve is caught in a bind: It must continue to lower interest rates to ameliorate this burgeoning housing crisis, but in doing so, it “risks reigniting speculative equity market behavior, and … a run on the dollar.” (More on the dollar later.) Gross doesn’t have the answers but observes that the Fed is “in a pickle, and a sour one at that.” Worse yet, concerns that a rate cut might be inflationary actually caused bond yields to rise in the wake of the rate cut, something that doesn’t normally happen. The Fed’s influence, always overstated, might turn out to be nonexistent in a credit market that remains on edge.
Hedge-fund veteran Rick Bookstaber, the author of A Demon of Our Own Design, spells out a potentially disastrous scenario that could unfold regardless of what the Fed does: Continued foreclosures result in a further drop in housing prices, which results in further foreclosures, which result in a further drop in housing prices. Even for those of us not selling, reduced home values result in a reduced sense of security, which results in reduced consumption, which results in a slowing economy, which … you get the point.
THREAT NO. 2
The Derivatives-Related Meltdown, Part II
Anybody who glances occasionally at the financial pages these days knows that mortgages issued to home buyers are packaged together (in a process called securitization) into a collateralized-debt obligation, or CDO. That’s what’s known as a derivative, a security whose value depends on the value of other securities. The price of the CDO, you see, is “derived” from the prices of the underlying mortgages. (It works with credit cards, too, or bank loans—any kind of debt will do.)
In principle, the idea of a CDO makes perfect sense. In buying $5 million worth of a CDO, an investor has essentially lent money to an entire portfolio of homeowners, instead of placing all his eggs in one basket, say, by funding a single $5 million mortgage. In the real-estate-crazy environment of the past decade, the CDO market took off like a rocket. But the buyers of these derivatives made a critical error—they confused the spreading of risk with the elimination of risk. A booming economy made this confusion not just possible but irresistible. With relatively few defaults in the first half of the decade, investment firms, including many hedge funds, came to see CDO returns as a sure thing and loaded up on them, often borrowing money to do so, taking on debt to buy debt and thereby setting up a potentially deadly chain reaction. The readiness of the secondary market to buy all these mortgages encouraged the lenders to run wild and lend to anyone who walked through the door, leading—inevitably, in retrospect—to a decline in loan quality. Analyst Christopher Wood of Asia-Pacific investment house CLSA succinctly defines the problem in his highly readable newsletter Greed & Fear: “[Securitization] has one fatal flaw, which will ultimately prove to be its undoing … it removes the incentive of those making the loan to worry about whether the loan is a good credit.”
Still, it all held together until mortgage defaults began to cut into the yields of these CDOs and holders looked to sell them, only to realize their value had slipped. Forced liquidations as a result of that “price discovery” were a primary factor in Bear Stearns’ hedge-fund calamity in August. And it’s not over yet: The aftershocks of the mortgage meltdown are still being felt, as banks such as Citigroup and Deutsche Bank announce multibillion-dollar write-downs.
Each time one of these write-downs has been announced, the market has had a curiously positive response, taking the news as a sign that the worst was over and the banks were cleaning up their books. But because these derivatives are linked to other debt, there’s no reason to be certain that trouble won’t bleed into other markets. Among other things, the liquidity crisis froze the market in structured investment vehicles (SIVs), a nifty bit of financial engineering that banks use to profit from the spread between short-term debt and long-term debt. No one yet knows how nasty these losses could turn out to be because SIVs are stashed, Enron style, off the books.
THREAT NO. 3
Consumers Run Out of Steam (and Take the Economy Down With Them)
The U.S. economy, for all its worldly sophistication, is driven by mall shoppers and late-night Amazon addicts—70 percent of the gross domestic product is accounted for by consumer spending, which is buttressed by debt. According to the Federal Reserve, total
The willingness of consumers to keep spending and piling on debt in the midst of a slowing real-estate market is hailed on Wall Street as an act of patriotism, which Schiff considers perverse. Imagine, he suggests, that you ran into a good friend and asked him how he was doing. His reply: “I took out a third mortgage, maxed out my credit cards, and emptied out my kids’ college savings account so I could buy a bigger TV and a new car, and we’re going to Greece on vacation over the holidays. Things are great!” Schiff lets the idea sink in and then finishes the thought: “And we’re celebrating the fact that we’re doing this as a nation?”
The Catastrophist View
In a recent interview, John Santer, a district director of NeighborWorks
James Glassman, a senior economist at JPMorgan Chase, told a
Roger Ehrenberg, an ex–Wall Streeter and author of the financial blog Information Arbitrage, forecasts extreme financial pain. “You’ve got a weaker dollar, declining economic fundamentals, and a debt-strapped consumer—I’d call that a bad fact set,” he says. “Lay on top of that the mortgage problem and declining home values, and you can paint a pretty ugly picture.”
THREAT NO. 4
That the Rest of the World Decides They Don’t Need Us and the Dollar Tumbles Hard
The dollar is falling, possibly collapsing, depending on whom you talk to. The greenback has sunk close to its lowest point in the post-1973 floating-exchange-rate era, so low that it’s been overtaken by the Canadian dollar—affectionately known as the loonie—for the first time since 1976. How low will it go? When Alan Greenspan was asked by Lesley Stahl of 60 Minutes last month what currency he’d like to be paid in, his response was telling: “[The] key question … is, ‘In what currency do you wish to hold your assets?’ And what I’ve done is I diversify.” Translation: He isn’t betting on the dollar. And neither is the majority of Wall Street.
Here’s why catastrophists see that as a major problem: About 25 percent of our government debt is held by foreign governments, with the major holders being
The bulls will tell you that foreign governments understand the American economy is the key to global economic health, and that they’ll suck it up and take it when we devalue their debt. To which Schiff offers another analogy. Imagine if five people were washed up on a desert island: four Asians and an American. In splitting up their duties, one Asian says he’ll fish; another will hunt, another will look for firewood, and another will cook. The American assigns himself the job of eating.
“The modern economist looks at this situation and says the American is key to the whole thing,” says Schiff. “Because without him to eat, the four Asians would be unemployed.” The alternative: Without the American, the Asians might eat a little more themselves and even spend some time building a boat. This is happening as we speak: With the rise of the Chinese consumer class, the local citizenry is now spending, and the country is no longer totally dependent on exports. Which means they’re no longer totally dependent on us.
Readers of the financial press are surely familiar with the buzzword of the moment, decoupling. It’s used to describe how U.S.-Europe and U.S.-Asian trade relationships are becoming less dependent at the same time as European-Asian ties are growing. Most Asian nations, including
THREAT NO. 5
That We Don’t See It Happening Because It’s a Slow-Motion Train Wreck
Last but not least, we can circle back to the Dow Jones Industrial Average making new highs in October—14,087.55 on October 1—offering hope that our equity portfolios will carry us through to the other side of whatever it is we’re on the wrong side of. Before addressing the fact that the equity market might just be clueless, there’s one last dollar-related point to make. The true value of a stock portfolio isn’t really its quoted worth in dollars—it’s what you could buy with that portfolio if you were to sell it.
Given that we as Americans don’t manufacture that much anymore (we’re a service economy!), we are largely talking about foreign-made goods, such as flat-screens from
Still, a rising Dow is better than a falling Dow, and the bulls are piling into every rally. Which still doesn’t impress Jeremy Grantham, chairman of Boston-based money manager GMO, in the least. “The equity market is always slow to pick up on someone else’s crisis,” he says, referring to the turmoil in both the housing and fixed-income markets. “And so you’ve got a slow-motion train wreck that has to work itself through the system.”
How will it work itself through? Grantham points to the recent strength in profit margins, fueled by—you guessed it!—our plummeting savings rate, and says there’s nowhere to go but down. “If you start with an overpriced market and bring profit margins down, that’s more than enough to bring stock prices down,” he says. “It is the most certain mean-reversion in all of finance.” Grantham calculates that the
So assuming all this is true, that Schiff and his fellow doomsayers are right about the rotten core of the
Last week, though, the argument against
Meanwhile, the public sector is feeling it, too. A recent report by Nicole Gelinas, published by the Manhattan Institute, forecast a budget deficit for
Source HERE
Bears are becoming harder to ignore
Market Beat
Bears are becoming harder to ignore
November 24 2007
Peter Schiff and David Tice don't do what they do for the love it gets them.
They are two of the most bearish investment professionals in America. Their outlook for the U.S. economy and stock market is beyond grim.
Schiff, who heads brokerage Euro Pacific Capital in Darien, Conn., sees the dollar and stock market collapsing and the value of American per-capita economic output falling below that of Greece.
Tice, who manages the Prudent Bear mutual fund in Dallas, likewise predicts that U.S. markets will crumble and says the economy could face something akin to the Great Depression.
Of course, forecasts like these aren't the way to make a lot of friends in this country, let alone on Wall Street. Some would call being bearish on America unpatriotic, even treasonous.
And that means many investors long have automatically tuned out the likes of Schiff and Tice. Besides, the doomsayers have been wrong forever, haven't they?
Yet this year, with the debacle in housing and its toxic fallout in markets and in the financial system, the bears' warnings about the future may no longer seem quite so far-fetched. The risks to U.S. prosperity have risen markedly -- even many stock market bulls will admit that much today.
Schiff, 44, and Tice, 53, have no connection except for their outspoken pessimism about where the U.S. is headed.
They share the same basic thesis: America is facing its comeuppance for 25 years of borrowing and spending, saving little and relying increasingly on foreign capital to support its standard of living.
Now, the bursting of the housing market bubble, the surge in mortgage defaults and the plunge in the dollar have exposed what Schiff and Tice believe are serious structural weaknesses in the U.S. economy.
"Our economy is going to be a mess at the end of this," Schiff says. "Our assets are going to get very cheap."
His tactic for preserving his clients' wealth, he says, is to send it all abroad. He hunts for dividend-paying stocks of large foreign companies that are focused on their home markets -- names such as Swiss telecom giant Swisscom and the parent firm of Hong Kong utility China Light & Power Co.
In theory, Schiff's strategy will protect the purchasing power of the money if the dollar follows his script and continues to melt down.
A former Shearson Lehman broker, Schiff went into the business for himself in the mid-1990s in Southern California and moved East in 2004.
He concedes he was too early with his overseas-only stock strategy in the late 1990s.
With the dollar's slide since 2002, however, foreign stocks have been spectacular performers for U.S. investors. Schiff says his firm's client base has grown to more than 8,000 individuals with a total of $1 billion in assets. He and his brokers make money off the commission income from the trades they make, he says.
The idea of global portfolio diversification is one that many people have taken to heart in the last few years. Month after month, the lion's share of Americans' net new investment in stock mutual funds goes to foreign portfolios, not domestic.
Even so, most U.S. investors aren't abandoning their domestic holdings. That's where Schiff's acerbic views diverge from the mainstream.
The common perception is that the rest of the world needs the U.S. economy as a growth engine. Schiff says that is outdated thinking, given the rise of emerging-market economies such as China, India, Russia and Brazil. Because of America's heavy borrowing needs, "We're a burden on the rest of the world," he asserts.
"China is not export-dependent," he says. "They're exporting because Americans are consuming." Ultimately, Schiff says, "the Chinese are going to buy more of their own products." As their consumption rises and their savings rate falls, "they're not going to lend to us anymore."
If foreigners stopped exporting so much of their capital to the U.S., Schiff says, "they'd have more to spend themselves. And there are a lot more of them than there are of us."
One potential flaw in his strategy, however, is that a U.S. market and economic crash could drag the entire planet into recession or depression. Schiff thinks the rest of the world can overcome an American economic decline, though he says that, initially, foreign stock markets probably would fall along with Wall Street.
Tice's survival scheme for the U.S. economic and stock market downturn he foresees is to go "short": borrowing stock and selling it, betting the price will fall. If a short bet is correct, the seller eventually can repurchase the stock for less than the sale price and pocket the difference.
Tice has been a well-known short seller since the mid-1990s via his Prudent Bear fund. He earned hefty returns in the bear market of 2000 to 2002. But the bull market since 2002 has made life tough for short sellers: They can lose big if the stocks they're targeting rise instead of fall.
This year, Tice's $800-million fund is raking it in again. The portfolio is up about 15% year to date, compared with a 4.2% rise for the average U.S. stock fund. Tice has shorted stocks such as Starbucks Corp. and Harley-Davidson Inc. as well as many banking issues, he says.
He believes the American consumer is tapped out. "Real estate is just imploding," Tice says. Hundreds of billions of dollars in home equity have been pulled out in recent years to support Americans' spending, he notes. That binge now is over.
"The consumer looks like he's dying a slow death," Tice says. He expects that to lead the economy into a morass that will feed on itself.
"This is the big one," he says.
Wishful thinking on the part of someone who stands to lose a lot if the stock market zooms anew? Maybe. If money exits his mutual fund, Tice's management-fee income will dive.
Tice has two daughters, ages 18 and 21. He admits they don't share his dismal view of the future. "They say, 'It can't be that bad,' " he says. "They think we'll muddle through."
The majority of Americans probably share that sentiment. The U.S. economy is, after all, very dynamic. We may well look back on this period in a few years and marvel at how well it all worked out.
And even if the bears' darkest predictions come true, the performance of your investment portfolio may be the least of your worries. The more important question may be whether you have stored enough canned food and ammo.
Source HERE
Saturday, December 15, 2007
Voodoo debt and the coming recession
This article by Bill Fleckenstein's touches on many of the concepts in Mr. Roubini interview (posted yesterday). This article helps to supports and explain some of the concepts and preditions that Mr. Roubini has been sharing with the financial world for almost two years.
Harry
With debt piled high in a variety of voodoo mortgages, the declining economy will soon turn into a bobsled ride to tears.
The eyes tend to glaze over at the mention of "collateralized debt obligations" (CDOs) and "credit default swaps" (CDSs).
It's understandable. These financial instruments -- the glue that has held together the speculation in housing finance and the housing ATM -- have proved somewhat incomprehensible, even to the professionals. That's why I referred to them as "financial dark matter" in my column two weeks ago. (Special thanks to my friend Jim Grant for having gotten me up to speed on this subject in his past two issues of Grant's Interest Rate Observer.)
Shedding light on dark matter
But while CDOs and CDSs are hard to fathom, a disruption in these risk-filled markets would become all too comprehensible to average folks -- as the aftermath would bring serious turmoil in real estate and the economy. In the spirit of "forewarned is forearmed," I will now attempt to explain a bit of this mortgage exotica, and then show what risky behavior it has financed in neighborhoods across America.In the marketplace, there are indices known as ABX.HE. They are a synthetic version of assets backed by U.S. home loans. They are subdivided into "tranches," or sections, that are grouped by their relative risk. Two weeks ago, a friend alerted me to the rather large trade that went through in a particular tranche of one of these indices. (It happened to be the BBB- tranche, which is the riskiest.) When the trade took place, it knocked the bid price a bit lower. It has continued to drift and now is off about 1.5%.
One tranche now bears a stench
What makes that interesting? In the nine months since the ABX.HE began trading, every time one of these indices has sold off, some CDO manager (with a natural appetite for asset-backed home-equity-loan securities) has stepped into the market and driven these slightly fallen angels right back up. But now those buyers seem to have disappeared.I believe that the CDO and CDS markets (the lower-grade tranches in particular) will be ground zero in any financial dislocation. As my friend says: "A slowdown in the housing market is a growth event. Something going wrong in subprime is a volatility event" (i.e., a market dislocation). Granted, it's too isolated thus far to draw any big conclusions from, but then again, all trends must begin somewhere.
Source HERE
The Subprime Bailout: Too little Too Late
The consensus is moving from the soft vs. hard landing debate towards how severe the hard landing will be
Nouriel Roubini Dec 11, 2007
While a few months ago analysts were still heatedly debating whether the US would experience a soft landing or a hard landing (a recession) the center of the macro debate has now clearly shifted away from soft landing versus hard landing discussion to a recognition that a hard landing is the most likely scenario; thus, increasingly now the debate is on how deep and severe the forthcoming hard landing will be.
David Rosenberg of Merrill Lynch is now clearly predicting a recession for the US economy in 2008; Jan Hatzius at Goldman Sachs is not formally speaking of a certain recession in 2008 but most of his analysis is consistent with a high likelihood of a recession in 2008; Mark Zandi of Moody’s Economy.com is also very close to a hard landing view.
More interesting now even the thoughtful Richard Berner – who used to be strongly in the soft landing camp while his counterpart Steve Roach was in the hard landing camp – is now predicting a recession in the US in 2008, even if he expects such a recession to be mild. And even the soft-landing optimists at JPMorgan are now recognizing that the likelihood of a US recession is now at its highest level in years. When mainstream analysts such as Berner start to talk about a recession beng likely you know that the debate has clearly shifted towards a discussion of not whether a recession but rather how deep of a recession.
And in the academic camp some of the most senior economists in the profession – Bob Shiller, Marty Feldstein, Larry Summers, Paul Krugman – are all in various degrees in the hard landing camp or very concerned about a hard landing.
So it is time to move away from the soft landing vs. hard landing discussion and start considering seriously how deep the coming recession will be; in the view of this authors the 2008 recession will be more deep, protracted and painful than the short recessions of 1990-1991 and 2001; this time around – unlike 2001 when only tech investment faltered - most components of aggregate demand are under threat: falling residential investment, falling capex spending by the corporate sector and now evidence of a sharp slowdown and near stall of private consumption that accounts for 70% of GDP. When the US saving-less and debt burdened US consumer is now under threat the risk of a more protracted and severe recession than the mild one of 2001 are significant.
And don’t be misled by better than expected reported same store chain store sales for November this week; those data – as known to all analysts – are distorted by the longer sales calendar in November compared to 2006; whatever gains will be obtained in November will be undone by a payback in December. As Goldman Sachs put it today in a note to clients:
Same-store sales data for major retailers improved substantially in November. Our Goldman Sachs Retail Index jumped to 4.5% on a year-over-year basis, from 1.2% in October. From this vantage point, it looks like the indefatigable American consumer is spending freely as the holiday season gets underway. However, the improvement in monthly data contrasts with relatively tepid weekly reports and declining consumer confidence, and is mostly explained by reporting differences. Some retailers compared a four-week November that ended with the Thanksgiving week in 2006, but included the week after in 2007. The extra holiday shopping days in 2007 boosted sales at these retailers, but will involve a payback in the next release, which will now have fewer holiday shopping days than last year. We estimate this distortion accounted for roughly 2½ percentage points of the improvement in the GSRI… The corollary of better November data is a headwind for December retail sales reports. If the effect of over two percentage points is symmetric, then December same-store sales stand a good chance of coming in at or below zero.
Indeed, according to the UBS/ICSC data that looks at a broader range of retailers than the major ones same store chain store sales fell in 3 out of the 4 weeks of November with the figure in the reporting week ending on December 1st being a negative 2%.
So the US consumer is indeed at a tipping point and the overall holiday sales will end up showing the weakness in the sector that represents over 70% of GDP. If the saving-less US consumer falters – as it soon will being hit by falling home prices, falling HEW, rising debt servicing ratios, high debt burdens, high oil prices, sharply falling confidence, a slackening labor market – a recession becomes inevitable.
Indeed, as reported by the WSJ, the consensus among professional economists is now shifting towards the hard landing scenario as they put the chances of a recession at 38%, the highest in more than three years:
Economists Say Recession Risk Is Climbing By PHIL IZZO December 11, 2007; Page A3 The risk of a U.S. recession is rising, and the Federal Reserve should do something about it, according to economists in the latest WSJ.com survey.Fed officials have "to move to show their willingness to both avert risk of recession and stabilize the financial crisis," said Diane Swonk of Mesirow Financial. She said Fed Chairman Ben Bernanke's emphasis on consensus has proved to be the central bank's "weak spot in crisis mode. Now they need to show conviction instead of consensus."
Fifty of the 52 economists surveyed expect the Federal Open Market Committee to trim its target today for the federal-funds rate, the rate charged on overnight loans between banks. Only two see the Fed holding the rate steady at 4.5%.Some 61% say a quarter-percentage-point cut would be right; 27% say the Fed should cut rates by a half-point. Only 12% say the Fed should stand pat.
The economists, on average, now put the chances of a recession at 38%, the highest in more than three years, and up from 33.5% in November. They also reduced forecasts for U.S. economic growth across the board. They expect the nation's gross domestic product to grow at an annualized rate of 0.9% this quarter, down from 1.6% in the previous survey, with six economists expecting either a negative or a flat reading. Three economists project an economic contraction in the first quarter, with the average growth forecast at 1.5%, down from 1.9% in November.
Source Here
Mr. Roubini predicts the housing crisis almost two years ago
China using "soft power" for Central Asia riches
By DOUGLAS BIRCH and MANSUR MIROVALEV, Associated Press Writers 1 hour, 40 minutes ago
KHORGOS, Kazakhstan - The driver of the 18-wheel tractor-trailer from China idling at the Kazakhstan-China border said apples were the cargo he brought to Almaty, Kazakhstan's booming commercial center.
For Kazakhs, there's a tart irony in the shipment.
Almaty's region is where the first apple trees were found and the first apple orchards planted. The city was a center of the Soviet Union's s fruit industry. Its very name means "Father of Apples."
In the past few years, Chinese fruit, vegetables, TV sets, T-shirts and tires have flooded markets along the old Silk Road in former Soviet Central Asia. Each day, all along the Chinese border, hundreds of tractor-trailers rattle west.
These goods are the most visible sign of Beijing's growing power here as China, Russia, the United States and others compete for financial and strategic advantage on the borders of some of the world's most turbulent countries — Iran, Afghanistan and Pakistan.
It's a struggle in which China seems to be gaining the upper hand.
At stake are oil, hydropower sources, strategic metals, pipelines, transit routes and access to markets. The chief prize is energy supplies: China needs them, Russia wants to control their distribution, and Western powers want to ensure they are not monopolized by Moscow or Beijing.
China today is reaching deep into Central Asia to tap oil and gas reserves, using pipelines and investments to challenge Russia's monopoly on gas shipments and to thwart Moscow's hopes of controlling a bigger share of the region's oil.
In recent years, China and Russia have forged a strategic alliance, as part of a group called the Shanghai Cooperation Organization, to squeeze the United States out of Central Asia, after the U.S. established military bases here. They have largely succeeded.
However, friction is developing between the two neighboring giants. And given China's 1.3 billion people and its economic strength, it seems certain that Russia, with its dwindling population and economy based narrowly on energy, will increasingly be on the defensive.
Of course, Russia's two-century presence in region gives it potent advantages in trying to preserve its influence.
But Niklas Swanstrom of Johns Hopkins University's School of Advanced International Studies argues China is succeeding in using "soft power" — judiciously apportioned aid, aggressive diplomacy and massive investment — to shove Russia aside.
"China will be the dominant player over time," he predicts.
Nowhere, perhaps, is China's presence more starkly evident than at Khorgos, straddling the Kazakh-China border.
On the Kazakh side sits a sleepy village, a mosque and arid steppes where shepherds ride horseback. On the Chinese side sprawls a city, its skyline punctuated by two construction cranes, the skeletons of several large buildings and a massive white arch topped by two scarlet Chinese flags.
Talipzhan Suleimanov, a captain in the Kazakh border service in Khorgos, stood outside his ramshackle post and pointed at the gleaming Chinese city across a dry riverbed.
"This looks like the U.S.-Mexican border," he said. "We are the Mexicans, because the Chinese are so much more advanced."
Central Asia — which includes Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan and Kazakhstan — was long regarded as the middle of nowhere, caught between Russia, China, Siberia and Afghanistan's Hindu Kush mountains.
The region emerged from isolation about 200 years ago as Russian imperial troops and British spies competed for influence in a rivalry that Rudyard Kipling called "The Great Game."
In today's Great Game, Russia finds itself struggling to shore up its influence through arms sales and energy contracts, dominance of mobile phone and TV networks, and shared language and culture — as well as the Kremlin's pledges of billions in fresh investment.
Above all, Moscow wants to preserve its monopoly on distributing Central Asian gas and its major role in other energy sectors. To this end, President Vladimir Putin proposed at an October regional summit in Tehran that all the Caspian Sea states have a veto on any new pipelines crossing the sea bed — apparently so Moscow can block plans to connect Kazakhstan's and Turkmenistan's rich oil and gas fields to the west, bypassing Russia.
But Moscow's dominance of the region's energy reserves is eroding. Despite Russian pressure, both Kazakhstan and Turkmenistan have welcomed discussion of a trans-Caspian pipeline — and Putin's proposal was met with silence.
Twice in the past two years, Turkmenistan has signed contracts to ship natural gas west through Russian pipelines — only to turn around a month later and, in effect, promise to ship the same gas east to China.
Beijing is playing a subtler game. It is a customer, not a competitor, for Central Asia's hydrocarbons and other natural resources. It is playing offense not defense, buying oil companies and expanding its access to Middle Eastern gas and oil through a network of new highways, railroads and pipelines.
During much of the 20th century, Central Asia was a source of raw materials for Soviet factories and a captive market for shoddy Soviet goods. After the Soviet collapse, Russian goods vanished here, replaced first by merchandise from Turkey and now from China.
While Russia is now drenched in oil wealth, its hopes of restoring many of its industries — and weaning itself from reliance on sky-high oil prices — depend on regaining access to markets like those here.
Russia sees Central Asia as an inheritance from its imperial Czarist and Communist past. For China, with its appetite for raw materials and its awakening as a world power, Central Asia is the Wild West: a land of opportunity, a reservoir of resources and a corridor to the Middle East's oil fields and Europe's wealthy shopping districts.
China has been moving in quietly and steadily since the mid 1990s, when trucks loaded up on scrap iron, steel and copper at derelict Soviet factories and carted the metals back to China for recycling.
In the 1990s, China did relatively little trade with Kazakhstan — Central Asia's economic motor, an oil- and gas-rich nation of 15.2 million larger than Western Europe. But by 2006, China ranked third behind Germany and Russia in Kazakhstan's $35.6 billion export market and second after Russia in the nation's $22 billion import market.
The tiny, mountainous nation of Kyrgyzstan imported almost nothing from its giant neighbor to the East. By 2006, 57 percent of Kyrgyzstan's imports came from China — and only 15 percent from Russia.
In Khorgos, trucks leave China packed and typically return empty. The road to the border bears the scars of this one-way trade. The lane leading away from China is deeply rutted, the one leading back is smoothly paved.
In 2003, Beijing predicted a 30- to 50-fold increase in its trade with Central Asia within a decade.
China's growing clout makes many Central Asians anxious.
"Sometimes, it feels uneasy to be next to such a mighty neighbor," said Anastasiya Zhukova, a 24-year-old ethnic Russian and Kazakh citizen who works as a linguist for Chinese companies.
No one expects China to try to conquer Central Asia by military might. But some fear China may transform these countries into "vassal states" with little power to resist Beijing in conflicts over trade or foreign policy.
After Sept. 11, the United States seemed poised to vastly expand its influence here. But after establishing two military bases, it lost ground. It has been forced to close its base in Uzbekistan, and the other, in Kyrgyzstan, is under pressure.
Experts say the U.S. has retreated partly because of pressure from Russia and China, partly for a lack of interest: some American officials see Central Asia's oil and gas fields as too remote to meet U.S. energy needs.
Washington has alienated the region's authoritarian governments by criticizing human rights abuses. The Iraq war, meanwhile, raised concerns that the U.S. will push regime change to secure oil supplies — a fear the Chinese have exploited.
"China does not pursue a policy of waging wars for energy resources, unlike the United States in Iraq," Dong Xiaoyang, a Chinese diplomat, told a September conference of scholars and diplomats in Almaty.
But China knows much of its future energy supply is here.
The state-owned China National Petroleum Company bought PetroKazakhstan in 2005 for $4.2 billion, then China's biggest foreign acquisition. In July 2006, the CNPC and Kazakhstan's Kazmunaigaz completed a $700 million, 597-mile oil pipeline across Kazakhstan to Alashankou in northwest China.
The pipeline, designed to supply up to 15 per cent of China's oil needs, will serve the major new Chinese refinery in Karamay, to open in 2008. By some estimates, one-sixth of Kazakhstan's oil production will someday be pumped to China.
Turkmenistan in August started building a 4,350-mile natural gas pipeline through Kazakhstan to northwest China. When completed in 2009, the pipeline is expected to provide China with 1.1 trillion cubic feet of natural gas a year.
Cheap Chinese goods have turned many poor Central Asians into consumers. But some experts say dependence on Chinese products slows the growth of local industries.
"Our industrial production has been going down for years because of the cheap Chinese goods," said Konstantin Syroezhkin of the Kazakh Center for China Studies. "China is not interested in development of our industries. China has already turned us into an ideal consumer."
Others welcome Chinese investors.
Tajikistan, with a per capita annual gross domestic product of just $1,300, desperately needs investment. Saifullo Safarov, deputy director of the Center for Strategic Research in Tajikistan, said that without Chinese money, his country can't exploit its mineral wealth, locked in what he called "the treasure chest of the Pamir Mountains."
In July, the Chinese Zijin Mining Group bought 75 percent of Tajikistan's Zerafshan Gold Company, once controlled by a British company, and in late September it claimed to have increased the mine's production by 50 percent.
Despite China's economic onslaught, Russia retains enormous influence. Moscow is still the intellectual, economic and business capital for Central Asians, and Russia's capital and other cities draw millions of Central Asian students, merchants and workers.
"Economically, China has conquered all markets, but our mentality remains Soviet and we look at Russia for culture," said Zhukova, the Russian in Kazakhstan whose ancestors helped found Almaty in the 19th century.
Former Prime Minister Almazbek Atambayev of Kyrgyzstan, in an interview with The Associated Press, said the bonds between Russia and the other former Soviet states remain strong. "In many ways, it's like the relation between the United States and Great Britain," he said.
But powerful forces are driving them apart.
All Central Asian nations are promoting their native languages at the expense of Russian, once the lingua franca here. The region used to share Moscow's secular faith in Marxism. Now, Russia is rediscovering its Orthodox Christian roots as Central Asia is gripped by a Muslim revival.
The road from Osh, Kyrgyzstan's second-largest city, to Kyzl-Kyya in the verdant Ferghana Valley, is dotted with the glittering metal domes of new mosques.
Russian popular culture is still entrenched here. But today's Silk Road markets, reborn as warrens of metal shipping containers, sell movies from Hong Kong and American pop music. Radio disc jockeys speak in a polyglot of Russian, English and their native languages.
China so far has filled only part of this vacuum.
Central Asian leaders say that in today's Great Game, the challenge for them is the same as in the past — to benefit from the competition while ensuring none of the players becomes dominant.
"We will retain our independence," said Atambayev, "only if we maintain equally friendly relations with all the countries around us, and not be subdued by one of the powers around us."
Source Here
All of asia is affected, here's a video about Korean "Goose Dads"
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