Global financial system implosion begins

[ferrelhadley]

American Airways problem is a 'legacy fleet', like the other big well known carriers Delta and the like, a significant portion of their flight fleet is older aircraft. This made a lot of sense for many years when the extra cost in fuel was set against the pretty much paid off purchase cost. As fuel costs have gone up those with older fleets have found themselves at a comercial disadvantage to some newer budget airlines who have newer aircraft (those entering the budget market and leasing older aircraft are also screwed). Off the top of my head but I think its normally Southwestern that this used as an example of a budget with a young fleet (not 100%). Anyway the ones with new aircraft have a very significant fuel economy discount and the budget model is a better one than a business class orientated model in hard times with high fuel costs.

The other side will be hedging. Those who hedged for high fuel costs are alright, those who hedged for lower costs are paying through the nose.

To a smaller degree those with a strong hub pressence in the midwest will be at an advanatage over those more on the sea board. Due to pipeline issues that have been covered in the science forum, there is a glut of oil in Cushing Oklahoma that cannot get to the sea, so midwestern refinaries have been producing fuel at a $20 dollar discount on the purchase of oil to those on the coasts. This though is likely to reverse as a key pipeline is being reveresed from Oklahoma to the coast.

Airlines were going chapter 11 in the 90s with oil at $20 a barrel. Given the nature of the business in the US its not always clear if them going to the wall is indicative of much more than poor betting and an aging fleet.

In the peak oil thread though I did post a report on smaller cities losing their connections as smaller sub 50 passenger class aircraft are being mothballed. In the US that is kinda important.

 

[Giles]

but that would more likely than not reinforce his view.
Put in a road, bridge, port,dam , blah, blah generates say 5000% return on initial investment over time. Under Giles system, they don't get built.

Yes, but they aren't just borrowing money for the odd long-term project, are they?

Governments all over the world are routinely spending more than they take in taxes year after year just on their basic "running costs".

This is insane, and cannot continue.

I hope it all blows up soon, and we can have something simpler. It might put a lot of Wall St "wizards" out of jobs, but who cares?

Giles..

 

[gosub]

Yes, but they aren't just borrowing money for the odd long-term project, are they?

Governments all over the world are routinely spending more than they take in taxes year after year just on their basic "running costs".

This is insane, and cannot continue.

I hope it all blows up soon, and we can have something simpler. It might put a lot of Wall St "wizards" out of jobs, but who cares?

Giles..

But the borrowing for the long term projects HAS been fucked by well meaning plans to regulate government spending. EU says national governments can't borrow more than 60%, thus PFI was born so than is only the interest on infrastructure projects that counts as government borrowing. Its these type of projects due to their tangibility that Millbank wizards fucked around with and always will do.
You want simplicity, abandon rules, we have entire sectors devoted to working out how to bend them.

 

[laptop]

well-meaning plans to regulate government spending. EU says national governments can't borrow more than 60%, thus PFI was born so than is only the interest on infrastructure projects that counts as government borrowing.

And two or three years ago there were noises about the IMF and/or World Bank musing that PFI was an obvious fiddle, so they might as well include it in government borrowing figures.

That'd leave the UK completely fucked in terms of creditworthiness and IMF emergency backup...

 

[Bernie Gunther]

I think that Giles fundamentally misunderstands the economic role of government under neo-liberal capitalism. Let me try to say it in 'Daily Mail simple' terms for his benefit.

Government is responsible for inflicting debt on citizens for the benefit of investors.

This is a necessary consequence of capitalist over-accumulation.

Hence PFI, student loans, NHS privatisation, bank bailouts etc.

 

[Giles]

I think that Giles fundamentally misunderstands the economic role of government under neo-liberal capitalism. Let me try to say it in 'Daily Mail simple' terms for his benefit.

Government is responsible for inflicting debt on citizens for the benefit of investors.

This is a necessary consequence of capitalist over-accumulation.

Hence PFI, student loans, NHS privatisation, bank bailouts etc.

I do not think that they should have bailed out these banks at all.

I think that they should have let them go bust, if they are bust.

True capitalism = run out of money, you go out of business, and any remaining assets are sold off to whoever wantas to buy them.

If countries are bust, they should go bust properly and just stop spending so much money that they don't have.

Giles..

 

[ferrelhadley]

China PMI well down.

But this may be a lagging indicator of sentiment, some US regional manufacturing indexes are up atm, though others are down. But it is indicative of among other things western shops not stocking up for Christmas and perhaps local issues.

 

[Barking_Mad]

double post.

 

[Barking_Mad]

From Guardian live blog

Breaking news from the Bank of England: UK banks must start building up their capital reserves NOW to protect themselves against the "exeptionally threatening" crisis.
That's the top line from the Bank's Financial Policy committee, which just released its new report into the stability of the system.
Mervyn King is starting to read the statement now. More soon....

 

[Barking_Mad]

Twice on BBC Radio this morning Danny Alexander refused to answer the question re: knowing about any European Banks which had gone bust. He was asked to give a yes/no answer but avoided it.

So, which ones? Belgium banks?

 

[elbows]

From Guardian live blog

http://www.guardian.co.uk/business/2011/dec/01/mervyn-king-bank-reserves-eurozone-crisis

Sir Mervyn King, governor of the Bank of England, insisted that UK banks were well-capitalised but - with the storm in the eurozone escalating - it was "sensible" to improve their resilience.
King warned that "an erosion of confidence" was damaging economic activity, creating "a spiral characteristic of a systemic crisis."
King's warning came as European Central Bank president Mario Draghi admitted that the risks to Europe's economy have worsened this week.

 

[gosub]

Twice on BBC Radio this morning Danny Alexander refused to answer the question re: knowing about any European Banks which had gone bust. He was asked to give a yes/no answer but avoided it.

So, which ones? Belgium banks

opps misread

 

[treelover]

'Twice on BBC Radio this morning Danny Alexander refused to answer the question re: knowing about any European Banks which had gone bust. He was asked to give a yes/no answer but avoided it.

So, which ones? Belgium banks? '

I spoke to a young Lithuanian student yesterday at OS, he said his country's biggest bank went bust last week, he said he scoured UK papers and has googled for info and absolutely nothing has come up, Hungary is also now in crisis with their bonds now seen as junk', etc

 

[Barking_Mad]

'Twice on BBC Radio this morning Danny Alexander refused to answer the question re: knowing about any European Banks which had gone bust. He was asked to give a yes/no answer but avoided it.

So, which ones? Belgium banks? '

I spoke to a young Lithuanian student yesterday at OS, he said his country's biggest bank went bust last week, he said he scoured UK papers and has googled for info and absolutely nothing has come up, Hungary is also now in crisis with their bonds now seen as junk', etc

Ah here: http://balticbusinessnews.com/artic...s-krajbanka-goes-bust-no-state-bailout-coming

 

[love detective]

that's Latvia, not Lithuania!

It was Snoras Bank in Lithuania that went bust, and it's two main (Russian) owners done a runner and I think were arrested in London the other day - Lithuania wants them extradited i think

gf's mum says that everyone she knows has withdrawn what little money they have not only from that bank (which the state had to step in to support the deposits) but from all other banks as well

 

[ayatollah]

I do not think that they should have bailed out these banks at all.

I think that they should have let them go bust, if they are bust.

True capitalism = run out of money, you go out of business, and any remaining assets are sold off to whoever wantas to buy them.

If countries are bust, they should go bust properly and just stop spending so much money that they don't have.

Giles..

In a "True Capitalist" system, every social relationship and institution would be merely a commodity with a defined money value - so with a national default on sovereign debt to the international money market not only should namby pamby things like state assets be sold off, but the population itself should be broken up for the organ banks. I recall a few years ago an african state in debt default , possibly Somalia, or Tanzania, was forced by the IMF to sell off its reserve food stocks - so when a famine did occur, tens of thousands died. It's a great system "True Capitalism", Giles. We're getting there though lad... You must be increasingly happy mate.

 

[A Dashing Blade]

In a "True Capitalist" system, every social relationship and institution would be merely a commodity with a defined money value

Huh? Who taught you this drival?

- so with a national default on sovereign debt . . . the population itself should be broken up for the organ banks.

2+2=5 in your world?

I recall a few years ago an african state in debt default , possibly Somalia, or Tanzania, was forced by the IMF to sell off its reserve food stocks - so when a famine did occur, tens of thousands died.

Malawi circa 2002, but let's not let a little thing like facts distort your polemic eh?

 

[ayatollah]

Huh? Who taught you this drival?

2+2=5 in your world?

Malawi circa 2002, but let's not let a little thing like facts distort your polemic eh?

So you actually agree the IMF DID force an impoverished African country ("circa 2002" - a pompous know all like you doesn't have the exact date to hand ?) to sell off its emergency food stocks then, soon followed by a famine . No doubt you think this was perfectly acceptable. My not being able to recall the precise country doesn't seem to effect the actual POINT of my "polemic".... ie, that the theoretical state of "Pure Capitalism" is a pretty immoral, anti human, state of social organisation.

A Dashing Blade you are such a smug, greedy, self obsessed, pro capitalist twat , that there MUST be a special lampost just waiting for you in the not too distant future.

 

[theCIA]

It seems that it was actually caused by corrupt government officials, not the IMF, read the doc.

sigh...

 

[A Dashing Blade]

So you actually agree the IMF DID force an impoverished African country ("circa 2002" - a pompous know all like you doesn't have the exact date to hand ?) to sell off its emergency food stocks then, soon followed by a famine .

Nope, as the document I to whick I linked (and theCIA did take time to persuse) demonstrates

No doubt you think this was perfectly acceptable.

Which invalidates this particular straw man

My not being able to recall the precise country doesn't seem to effect the actual POINT of my "polemic"

Apols, wasn't referring to the precise country/year but to your assertion that it was caused by the IMF.

A Dashing Blade you are such . . . pro capitalist twat . . .

On a general level, think you confuse "capitalism" with "free-market".
On a specific level, I don't have the time and have even less inclination to discuss my personal socio-political beliefs with you.

 

[Ae589]

Nope, as the document I to whick I linked (and theCIA did take time to persuse) demonstrates

"The decision to sell the Strategic Grain Reserve (SGR) followed advice from the IMF to
reduce the level of buffer stocks held from 165,000 MT to 60,000 MT"

IMF advice is usually a pre-requisite to receiving aid. Or did you mean it wasn't the fault of the IMF because they sold it locally?

On a specific level, I don't have the time and have even less inclination to discuss my personal socio-political beliefs with you.

What do you think this is?

 

[LLETSA]

True capitalism = run out of money, you go out of business, and any remaining assets are sold off to whoever wantas to buy them.

There's no such thing as 'true capitalism' any more than there's such a thing as 'true socialism.'

 

[gosub]

http://www.telegraph.co.uk/finance/...e-banking-system-on-the-edge-of-collapse.html

 

[Bernie Gunther]

"True capitalism" ... isn't that where the Prime Minister gets elected by sucking Rupert Murdoch's wizened old penis and then gives all our money to a bunch of posh coke-heads in the City while the terminally ill are thrown off benefits by ATOS Origin and publically abused by scumbag PR agencies?

 

[LLETSA]

"True capitalism" ... isn't that where the Prime Minister gets elected by sucking Rupert Murdoch's wizened old penis and then gives all our money to a bunch of posh coke-heads in the City while the terminally ill are thrown off benefits by ATOS Origin and publically abused by scumbag PR agencies?

No-it''s just a variant of capitalism.

 

[magneze]

Another interesting Keiser Report, including a scary chart showing UK debt at 1000% GDP. Well worth watching for the guest analysis.

 

[Barking_Mad]

Can anyone detail the likely consequences for people with all this personal debt if/when things go tits up? I understand mortgage defaults, but people owing thousands on loans and overdrafts... Do they just declare themselves bankrupt?

 

[junglevip]

I think the thread title is a bit misleading theses days. I think a 'Global financial system implosion gathers momentum' might be more appropriate

 

[Crispy]

"Global financial system implosion" covers all timeframes

 

[ayatollah]

Can anyone detail the likely consequences for people with all this personal debt if/when things go tits up? I understand mortgage defaults, but people owing thousands on loans and overdrafts... Do they just declare themselves bankrupt?

All debts are re-set to zero, everybody gets to pick a card out of a BIG hat which decides which social class (and therefore what resources like land and machinery/factories they own , or don't own of course) they are going to be in... then we all start up the game again. I'm hoping to be a Russian oligarch this time ... those guys really know how to party !

See, you are worrying unnecessarily... it'll be fun... really !