The Dearing Dialogue

Evraz, the coal mining company in Russia that just suffered a disaster of 106 deaths and is facing criminal charges of negligence, is taking over Oregon Steel Mills in Oregon and Colorado.  It’s been cleared by US regulators according to the Russia Journal

Evraz was also penalized for water pollution, poisoning the drinking water of the City of Novokuznetsk in Russia. 

Do we really want this company doing business here?

Why sub-prime mortgages may have impact on the whole economy

Exactly how far could this cotagion go?  I suspect it has alot to do with expectations.  Right now, the public can not stop talking about the sub-prime mortage fiasco, which I think should have been picked apart a long time ago.  This “adjustment” is long overdue.  Maybe society is just coming to that realization and going overboard, however, the Fed is remaining extremely calm.  Tomorrow will tell us a lot on just how calm they are.  If they raise interest rates, its likely to fight inflation and likely to create even a greater and quicker demise to borrowers and lenders in the sub-prime market.  This can have a ripple effect over the next few months on consumer spending in the economy.  Given the fact that much of the spending over the last 5 years has been fueled by home equity loans, a rise in interest rates will likely curtail the behavior of home owners to spend - thus shrinking the prime mover of our economy, asset allocation. 

The Global Urban Real Estate Boom

With the end of ARMs, Interest Only Loans, and other conveniant gimmicks thought up by unregulated mortgage brokers, borrowers will be forced to put down anywhere from 5 - 20% on loans for new homes.  But how many in our debt-laden economy are going to be able to come up with 20k or 40k on a 400k home?  The inevitable conclusion is a decline in home prices.

Now the other option for Chairman Bernanke is to lower interest rates in order to spur consumer spending.  But that will tank the US dollar and only make a bad, inevitable conclusion, much worse.

It’s gonna be a wild ride down!

It looks like he is throwing his hat in the ring of the Malawian presidency one more time.  How will he fair?  That depends if he can rally the support of both the public and his own party members.  Presently as UDF (United Democratic Front) party chairman, he is being defied by his own allies. 

See:  UDF MPs defy Muluzis Instructions

He has a close group of powerful colleagues that may be able to provide the support he needs to lynchpin his way into a successful campaign.  Key to his success are members of parliament.  If they rally behind him, it will be for their own survival.   Muluzi is likely to play the dirty game of ethnic politics in order to rally groups towards his favor.  Hopefully its stays relatively clean, given the growing division caused by years of rough and tumble politics and a glut of self-interested politicians. 

President Bingu wa Mutharika on the other hand has the support of international organizations and governments.  These are likely to aid him in a re-election campaign.  If he’s smart, he’ll stay out of the ethnic game and carry on with his ministry against corruption.  His hands will likely get dirty looking for mud to sling on Muluzi, but that shouldn’t be too hard to find given Muluzi’s tainted years in office.