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Global financial system implosion begins

So, Merv King finally admits that any competent banker could and should have foreseen the crisis:

Sir Mervyn King has admitted that the Bank of England should have "shouted from the rooftops" its concerns about the looming disaster in the City
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But then endorses austerity. :facepalm:

Martin-Rowson-04.05.2012-010.jpg
 
littlebabyjesus said:
Yes. If it is sustainable growth, and that growth can be measured in a way that properly takes sustainability into account. I think we face too many challenges in the near-future to have the luxury of lots of people not working, and everyone working and working as smartly as we can will produce improvements in the way we do things which can and should be called growth, I think.

I used to think that this 'endless growth' model was madness. Now I'm not so sure. We need the right kind of growth - that's the key. And some kinds of 'growth' that we currently have need to be reclassified as contraction because they are not sustainable.
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It's the distinction between use values and exchange values isn't it? Capitalism measures growth in terms of exchange values only, and so it's possible for "growth" to coincide with a reduction in actual useful products. Another example of Marxist economics offering far better insights than the capitalist apologetics they teach in university economics departments.

Sustainable growth in use values would be an extremely positive thing. Sustainable growth in exchange values would quite likely mean even worse inequality and poverty and, in the context of energy depletion, would probably entail a reduction in use values.
 
ymu said:
So, Merv King finally admits that any competent banker could and should have foreseen the crisis:
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In part of that speach he said
Mervyn King May 2012 said:
Successful regulation means understanding and guarding against the big risks, not compliance with ever more detailed rules.....That means focusing on the wood not the trees, looking not just at individual banks but also at how their fortunes are tied together with other banks and with the rest of the economy.
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sounds very similar to the below, which he said in January 2005, in what was almost the peak of the pre-crisis bubble​
Mervyn King Jan 2005 said:
The trick is to see the wood for the trees. If there is a major crisis, there’ll be a wood,
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Anyroads, whether he could see the trees, the wood, a huge forest, all of them or none of them is largely irrelevant. Crisis comes as an inherent part and parcel of capitalism, you can't regulate that part out of it anymore than you can have a cup of tea without any tea in it​
 
yeah, but this lot have managed to turn a crisis into a probable decade long depression directly through their policies.

They're not just capitalists, they're utterly incompetent capitalists who don't even understand how to keep the capitalist system functioning.
 
free spirit said:
yeah, but this lot have managed to turn a crisis into a probable decade long depression directly through their policies.

They're not just capitalists, they're utterly incompetent capitalists who don't even understand how to keep the capitalist system functioning.
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Quite an interesting point free spirit .. the utter incompetence of much of the capitalist class in making the 2008 crisis MUCH more severe than it neded to be. It is claimed that a few national capitalist groupings, the Canadians for instance, managed to avoid the siren call of the most extreme bank deregulation.. and hence avoided the worst aspects of the property bubble and speculative banking frenzy which derailed the system in 2007/08. Maynard Keynes, as an arch capitalist speculator himself, was always moaning about how "irrational" the majority of capitalists were in running their own system - always going for the short term profit, and over-reacting in a sheep-like manner to both booms and slumps.

Essentially one has to fall back on the cliche that capitalism is both a dynamic and fundamentally unstable system - resting as it does on that powerful but very fundamental human appetite of GREED. Not everyone is equally greedy of course, but the system attracts the most pathologically greedy and psychotically ruthless to excell in its operations - just look at the activities and personalities of the key bankers who were at the top of the pile when the crisis broke.

To a certain extent, as a revolutionery socialist, there is some comfort in the irrational incompetence of most of the capitalist class, in that it prevents them re-stabilising the system once again - just look at the self-defeating "austerity" bollocks - simply a re-run of the early 1930's economic mistakes - and once again powered simply by an atavistic hatred by the capitalist class of welfare services for the working classes. Unfortunately the ruling classes have always been a lot cleverer in MAINTAINING their rule than in running the economy ! And the Left has always been a lot better at pointing out their incompetence than setting up an effective mass movement to replace it ! Ho Hum.
 
Paul Krugman here:

http://krugman.blogs.nytimes.com/2012/05/13/eurodammerung-2/?smid=tw-NytimesKrugman&seid=auto


Some of us have been talking it over, and here’s what we think the end game looks like:

1. Greek euro exit, very possibly next month.

2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.

3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.

3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.

4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:

4b. End of the euro.

And we’re talking about months, not years, for this to play out.
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frogwoman said:
China's economy has actually been in a lot of trouble for a while now. The Chinese section of the CWI have produced some good stuff on this and it's worth looking at some of the documentaries on empty properties in China.
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Yeah. I recently saw a feature on Thames Town - quite bizarre.
 
Accidentally released - and incredibly embarrassing - documents show how Goldman et al engaged in 'naked short selling'
Rollingstone May 15
The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time – primarily with the retail giant Overstock.com, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks.

Last week, in response to an Overstock.com motion to unseal certain documents, the banks’ lawyers, apparently accidentally, filed an unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed.
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Bunch of crooks.
 
ska invita said:
yeah i guffawed when i saw that - what an arrogant cock. A soundbite purely for the UK audience I reckon.

to top off all the 'bad news' today I think the valuation of facebook shares at $38 each looks like a mini dot com bubble.
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Its absurd innit - I just cant see how FB can be worth that kind of money or generate the revenue/ profits required to justify this
 
not-bono-ever said:
Its absurd innit - I just cant see how FB can be worth that kind of money or generate the revenue/ profits required to justify this
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yeah, no chance. it looks to me like a symptom of all this capital floating around and no 'safe' place to invest it. capital investors need permanent growth to satisfy themselves, and in a time when the whole economy is going south there's competition for places to buy shares/investments in... hence so much money going into property (and driving up prices and rents when the housing market should be collapsing). Also i reckon people who can buy at $38 will do so, and sell by the end of the day to mugs for $48 or whatever. The more i look at the economic system we have the more absurd the whole thing appears
 
Re Facebook I am guessing that they are touting projections of the data available through tracking etc on Facebook users that will generate capital for shareholders; this is then reflected in the share price. I am mostly hoping that these projections are at best wildly optimistic and at bestest not founded in reality in any meaningful sense.

It is interesting to note that if you try to insert a link to Facebook Purity the browser plugin that cleans up all the adverts and similar nonsense from Facebook, it will no longer let you, telling you it is a 'spam site'. Imo this is possibly an indication that the plugin is significantly impacting advertising
 
teqniq said:
Re Facebook I am guessing that they are touting projections of the data available through tracking etc on Facebook users that will generate capital for shareholders; this is then reflected in the share price. I am mostly hoping that these projections are at best wildly optimistic and at bestest not founded in reality in any meaningful sense.
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From what I can see lots of broker types have been telling people its overpriced, but investment bankers and their pensioners money are easily parted
 
gosub said:
some worrying stats coming out of China

http://www.telegraph.co.uk/finance/...ionary-slump-as-money-contracts-in-China.html
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One of our clients has gone bust with absolutely no warning this week, they are a Chinese shoe factory, always seen as solvent and successful, always paid our invoices the same day they were presented. Both me and the UK based sales rep didn't see this coming, they were supposed to be one of the good ones, supplying Next and M&S.

There is a lot of this about.
 
We're fucked aren't we?

I've belived this since reading up on peak oil a year or so before the 2008 crash. Depressed to see it all coming to grisly fruition. :(
 
Kaka Tim said:
We're fucked aren't we?

I've belived this since reading up on peak oil a year or so before the 2008 crash. Depressed to see it all coming to grisly fruition. :(
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Yeah, its a bit hard not to get that sort of feeling when the following sort of stuff is said out loud.

Robert Chote, chair of the Office for Budget Responsibility, who was speaking to the Guardian as world financial markets staggered to the end of a week that rekindled memories of the collapse of Lehman Brothers in 2008, warned that there was risk that a fresh downturn would do irreparable damage to the UK. Britain has made up less than half the ground lost when output plunged by more than 7% in 2008-09, and Chote said there was a risk that "you go down and you never quite get back up to where you started".
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http://www.guardian.co.uk/business/2012/may/18/uk-greece-exits-euro

Any good soundtrack suggestions for a prolonged, semi-controlled demolition?
 
elbows said:
Yeah, its a bit hard not to get that sort of feeling when the following sort of stuff is said out loud.



http://www.guardian.co.uk/business/2012/may/18/uk-greece-exits-euro

Any good soundtrack suggestions for a prolonged, semi-controlled demolition?
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Maybe I should be asking this on the Greek thread instead, but....

How, precisely, would a Greek default plunge the UK into such a terrible state? I mean it's 2% of the Eurozone GDP, so how would it have such an effect on the UK economy?

I suspect it relates to massive exposure to Greek debt in the financial sector, plus a shitload of CDS exposure, but the article doesn't provide any information about that.
 
They've spent two years trying to build firebreaks round Greece rather than fix the inherent weakness in the EUro. If Greece goes however, markets will rightly go if it can happen there what about.... So will have to downgrade all the credit ratings making borrowing for EUrozone more expensive, but the likes of Spain can't afford even higher interest rates so there's a cascade failure
 
Actually the ECommission have put some mechanisms in place that could stave off economic bankruptcy but at a cost of democratic bankruptcy instead.. National leaders as well as not wanting to be emasculated realize that probably won't wash.. And while the Commission has on it's books a more democratic ESM the differential between the EFSF and national bonds is based on a lack of democratic accountability.. Switching back at later date would involve bond holders factoring in what price democracy..
 
Diamond said:
Months? More like hours...

I'm a city lawyer and every major partner that I know of in the firms that matter have been called in to work the weekend.

Redonimation is imminent.
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My g/f works in one I the largest law firms in Canary Wharf... She's pretty sure all her lot haven't been called in... Major panic???
 
The Greeks are out, this is a given I would say. The Dastardly methodical Germans have had escape routes planned for various scenarios for a long time now, these are constantly being tweaked to update with developments. It going to be messy , but there are damage limitation plans in the works.

Diamond - surely your lot have their risk and exposure info right up to date on a daily basis ?
 
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