Global financial system implosion begins
- Thread starter Falcon
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pocketscience
Well-Known Member
Yes if you take 10 year samples thats right but what i think what Ska's getting at, and righly making a point about in the context to this thread, is the sudden surge between 95-2000 which subsequently leads to a series of erratic boom and busts.
Asked what allowed for that in real terms rather than the catchall "dot com bubble", I'd say it's the acceleration of a more efficiently globalized economy facilitated by IT developments.
The boom and bust nature i can only assume is the human inability to keep up with the demands of that accelerated economy. Or seen another way, markets/ companies getting ahead of themselves.
All a hunch I might add. I've not a clue about macroeconomics
ska invita
back on the other side
Savings account?
This makes for more panic inducing reading: World faces wave of epic debt defaults, fears central bank veteran
Though I found the ending analysis interesting:
A reflex of "asymmetry" began when the Fed injected too much stimulus to prevent a purge after the 1987 crash. The authorities have since allowed each boom to run its course - thinking they could safely clean up later - while responding to each shock with alacrity. The BIS critique is that this has led to a perpetual easing bias, with interest rates falling ever further below their "Wicksellian natural rate" with each credit cycle.
The error was compounded in the 1990s when China and eastern Europe suddenly joined the global economy, flooding the world with cheap exports in a "positive supply shock". Falling prices of manufactured goods masked the rampant asset inflation that was building up. "Policy makers were seduced into inaction by a set of comforting beliefs, all of which we now see were false. They believed that if inflation was under control, all was well," he said.
In retrospect, central banks should have let the benign deflation of this (temporary) phase of globalisation run its course. By stoking debt bubbles, they have instead incubated what may prove to be a more malign variant, a classic 1930s-style "Fisherite" debt-deflation.
Mr White said the Fed is now in a horrible quandary as it tries to extract itself from QE and right the ship again. "It is a debt trap. Things are so bad that there is no right answer. If they raise rates it'll be nasty. If they don't raise rates, it just makes matters worse," he said.
There is no easy way out of this tangle. But Mr White said it would be a good start for governments to stop depending on central banks to do their dirty work. They should return to fiscal primacy - call it Keynesian, if you wish - and launch an investment blitz on infrastructure that pays for itself through higher growth.
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One silver lining: If this becomes a dominant narrative over the coming year then its seriously bad news for the tories
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mauvais
on reddit or something
Every UK bank has a £75k guarantee. They periodically send out these reminder letters.Hmmmm just opened a letter from Co-op explaining their protection for depositsmaybe these fucks know the game is up and it's only a matter of time.
mauvais
on reddit or something
As for this FTSE stuff, there's another fundamental misunderstanding.
The value of the All Share is based on a reference point from 1962, i.e. in 1962, it was 100, based on the value of companies.
But what was £1 in 1962 is worth nearly £15 today. So of course the index as a long term chart gets more volatile over time, or rather, there is more vertical movement. And you could offset it against inflation, I suppose, but in part it is inflation, so it all becomes a bit silly.
The value of the All Share is based on a reference point from 1962, i.e. in 1962, it was 100, based on the value of companies.
But what was £1 in 1962 is worth nearly £15 today. So of course the index as a long term chart gets more volatile over time, or rather, there is more vertical movement. And you could offset it against inflation, I suppose, but in part it is inflation, so it all becomes a bit silly.
It's the classic 'pig cycle' problem. Those ships were ordered at the top of the market, but by the time they entered service the oil crisis had hit and freights were at rock bottom. Loads of tankers came out of the shipyard and straight into lay-up in the 70s, especially 'Capesize' tankers, the market for which plummeted when the Suez Canal reopened in 1975. It was the same a few years ago: ships ordered during the early-2000s boom were entering service just as the recession bit and freights dropped through the floor. Plus, because scrap steel prices fell as well, there was little incentive for owners to scrap old tonnage.
I'm not sure what to make of the Baltic Dry dropping as it has. On the one hand it's sometimes been quite a good barometer of wider economic conditions, in that a sharp drop in freights has coincided with or preceded a bigger economic slowdown. On the other hand it could just be down to an oversupply of tonnage - the world fleet's been growing steadily in recent years, even though tonnage on order is way below its level in 2008-9 - and therefore a problem mainly limited to the shipping industry. Or a bit of both.
There almost certainly will be come the next recession, whether that's imminent or not, but you don't need to go as far as Singapore to see a ghost fleet. With apologies for linking to the Fail, the River Fal is also used as a lay-up point. There are various others around the world. The problem is that demand for shipping will invariably plummet in a recession, and in theory that ought to lead to older and less efficient (and less environmentally friendly) tonnage being scrapped, but if scrap prices drop too then owners hold back on sending ships to the breakers. Plus, the ship-breaking industry is coming under a lot of scrutiny atm for its dodgy practices and horrendous health and safety record. If the cost of scrapping ships rises, which it is doing, there's even less incentive to take tonnage off the market. The annual UNCTAD Review of Maritime Transport - link is to last year's - is the best single source of info on world shipping.
ska invita
back on the other side
hah yeah i bank with co-opHmmmm just opened a letter from Co-op explaining their protection for deposits
in recent times theyve put a sticker up on the till windows explaining the degree of protection - it made me worry too
also theres a sign saying to get more than 2k out you have to book it in advance - which all felt a bit bank-run-stopping to me :S
Im sure its all very innocent....though the signs went up just after all the shit hit the fan at the bank
It is one of the more vulnerable banks in the event of a crash though, or at least it was in recent years.
I was looking for a link to back this up but instead found this cheery thing from the NEF
UK banking sector ‘extremely vulnerable’ to financial crisis, report warns
Germany was given a resilience rating of 73 out of 100, while the UK scored 27. The US was the next worst ranked country, scoring 56 out of 100.
Wolveryeti
Detty Pig
Big unknown at the moment seems to be the extent to which the big oil producing countries are selling off their assets in a scramble to raise cash. Low oil prices are generally growth-positive, but not if a sell-off of existing assets is depressing prices and confidence - thereby crowding out new investment. It's kind of like a reverse quantitative easing.
mack
Fact Me Till I Fart
hah yeah i bank with co-op
in recent times theyve put a sticker up on the till windows explaining the degree of protection - it made me worry too
I'm not really worried at all as I've got fuck all in the bank
but like you say they were close to going down recently..I'm sure it's all sorted now!
ska invita
back on the other side
Ive got two bank accounts with two different banks - that other is a Barclays which sits empty - old student account. If Coop looks like folding and theres a run im planning to go online and move the money over to Barclays - should be possible without having to queue up.
God knows if this works, but thats my plan
God knows if this works, but thats my plan
gosub
~#
That's what should happen. But as Zombie ships send maritime freight into worst crisis in living memory said, its beyond that. Rate is currently 1/3 of DOC's
. As I said same thing is happening in aviation that I know a lot more about...Banks are keeping these assets working at prices that undermine the entire sector to hold off writing off the bad debts from their balance sheet. It'll be the best run assets that aren't going anywhere, only moving occasionally to ensure things don't seize up and keep crews in recency.
That's what should happen. But as Zombie ships send maritime freight into worst crisis in living memory said, its beyond that. Rate is currently 1/3 of DOC's
Torygraph clickbait. It's hardly a surprise that a drop in freight rates means that some ships are working at uneconomic rates, and I don't think this can fairly be described as the worst crisis in living memory. Not yet, at any rate.
gosub
~#
Disagree, there's enough similarity between that sector and mine to pick up the resonance. Ship building will still be dealing with the fallout in ten years, the only reason for not walking away from current positions on order books is its contractually prohibitive to do so. And these 'zombies' can only damage responsible operators, but you can't run below DOC's for too long (especially if your financier is only doing so to cover up bad loans)...... Writing is on the wall.
I don't think we're really disagreeing, except that I'm not going to give much weight to an alarmist article written by someone who doesn't know much shipping. Sure, there'll be fall-out from this for years - twas ever thus, shipbuilding being a particularly slow industry to respond to market conditions - but I'm far from convinced this is a worse crisis than a few years ago, still less the 70s.
ViolentPanda
Hardly getting over it.
Royal Bank of Mattress.
mauvais
on reddit or something
Your money's guaranteed by the government - why piss about? If the FSCS underwriting fails, we're all fucked anyway.
DotCommunist
So many particulars. So many questions.
I've put all I have in pork bellies
gosub
~#
It is in aviation, the run up to 08 demand/supply factors made aircraft one of the best investments going + 'innovations' like fractional ownership massively inflated the sector..... 08 saw a return to sanity, pre 08 we were selling used at more than we bought new, currently used is in line with heavy plant depreciation write downs, but new build is twiddling its thumbs and resell piling up, whilst 'zombies' undermine balance sheets...a liquidity crunch and there is going to be some proper bargins.
ska invita
back on the other side
Because Id rather have it that same day then wait for the government to give it to me back one day in the future after i've filled out a million forms and waited for the magic moment.
Its not really pissing about to move it to another account - it'll take 2 minutes
mauvais
on reddit or something
Meh. The scheme's supposed to pay out within a week. I think hopping from bank to bank based on speculation soon starts to turn into a run on the retail banks in itself, which is pretty morally dubious, a little like shouting 'fire' in a theatre.
Santander 123 account pays 3pc up to £20k. M&S offering £100 (or £200) to switch, £10/month plus smaller 6pc saver. ICICI (a bank not a football firm) are top instant access i think. NS&I are fully guaranteed you can now get £50k premium bonds. Otherwise go to moneysavingexpert.com
You'll like this Ska I..
You'll like this Ska I..
mauvais
on reddit or something
A TSB current account (5% on £2k) plus a regular saver type affair (~5% as you accumulate £250/mo for a year) nets you about £180/year, FWIW, at least if you have a few grand to play by its rules with.
hipipol
Peckham Wry
The name Trustee Savings Bank is an interesting one.
By including "trustee" in its name it is implying, though not stating, that it is a Trust Bank. ie a Custodian and Fiduciary institution
Bollocks
Buying Hill Samuel, while they were still independent, was a bit a of a giveaway in exposing the underlying strategy
mauvais
on reddit or something
Bailed Out Bank of The Hispanic Vulture didn't have quite the same customer engagement.
hipipol
Peckham Wry
Money itself is purely notional and its value relative
You have a bit of paper that promises to pay the bearer the sum of x pounds on presentation to the Bank of England
making it a zero coupon bearer promissory note, - ie with its value very much derived from the perceived credit worthiness of the issuer and its underwriter - in this case UK Govt and the BoE
As most of the stuff we wear and eat is denominated in a different PN, the relative value of our PN with the supply countries PN, makes the different between us feeling good or starving in unheated hovels burning the furniture to keep hypothermia death at bay until such time as we rely on the State, and then die in poverty by the tens of thousands
ViolentPanda
Hardly getting over it.
Is that similar to Cameron putting all he has into pig heads?
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