'Oh! where is the economic bottom', ask Americans

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From Fazle Rashid
NEW YORK, Nov 20: Contraction and recession are no longer the pet words in the financial markets around the globe. A more petrifying term, deflation has overtaken them all. Gloom persists. The Dow Jones Industrial Average dropped from 14,000 points in 2003 to 8000 point yesterday. Analysts painted a depressing picture of the economy raising the spectre of deflation
Deflation is an economist's nightmare. It is a hallmark of depression. A big worry is that deflation would blunt the impact of interest rate cuts by the Fed Reserve, forcing policy makers to use other tools to try to revive the economy, the New York Times (NYT) in a report said today. The financial crisis and the bear market it spawned seem to be taking a new painful turn. Americans are asking, 'where, oh where is the bottom?'
The Fed Reserve are weighing several measures that may be applied to guard against deflation, Don Kohn the vice-chairman said. He, however, hastened to add that possibility of deflation hitting the US economy is "still remote". The Fed Reserve took long time to accept that the economy has been hit by a concession. Fed chief Ben Bernanke would not be as pessimist as his deputy, saying 'risk of deflation remains small'.
The Consumer Price Index, a measure of how much Americans pay for groceries, and other goods and services fell by one per cent in October. It is the biggest one-month drop in the 61-year of the index, NYT said. The market certainly appears to be in the grip of a deflation scare, another reputed paper said.
Mortgages and credit markets have been severely jolted in the wake of US Fed's refusal to buy toxic assists from the troubled banks. The criteria for the eligibility of receiving help from Troubled Asset Relief Programme ( TARP ) has changed. The world's biggest investment banks are lining up behind a proposal for mandatory central clearing of the $54,000 billion over the counter credit derivatives markets. The initiatives are to thwart the move of a radical overhauling of the sector.
The Arab nations flushed with money are planning big investments in the agriculture sector. Al-Qudra Holding, an Abu Dhabi based investment company, said it was contemplating buying 400,000 hectares of arable lands in African and Asian countries. The investors from Saudi Arabia, the UAE, Egypt and Libya are seeking overseas farmland. The investors from these countries have visited sites in Pakistan, Ethiopia, Sudan, Uganda, Angola, Ukraine, Thailand and the Philippines.
The investors from Arab nations will invest and buy back the produce to boost food stocks. Several Arab nations encountered food riots in the recent past. Bangladesh should not miss this opportunity. The investors would only use land and water and rely on overseas supplies of fertilisers, seeds, tractors and in some cases specialised labour.
Meanwhile President-elect Obama is yet to decide who will be his Treasury Secretary, the most vital cabinet position considering the severest economic turmoil the nation is facing now. He has, however, tentatively decided to make Hillary Clinton, the secretary of state and Tom Daschle, former Senate Democratic leader as secretary of health and human services.
President-elect Obama is putting emphasis on transparency and accountability. He has already decided to curb the undue influence of the lobbyists though lobbying with law makers and the White House to get things done is legal and lawful. Obama transition team has set some conditions on former president Bill Clinton in order to install Hillary on the cabinet. Bill Clinton has accepted several restrictions on his business and philanthropic activities to remove obstacle to his wife's becoming the secretary of state. Bill Clinton has agreed to 'eliminate conflicts of interests', the NYT reported.