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Global financial system implosion begins

david dissadent said:
Asia is full of powder kegs, often religous and ethnic but also poverty. There is probibly a dozen threads worth on that topic alone, but at the moment there is no coherent orginised ideology or movement that I can see other than the affiliated jihadis. This could change rapidly though as the region still has the living memory of the Maoist, Marxist and anti colonial struggles as a template. This together with more modern templates of the likes of the 'color' revolutions, the east european velvet revolutions and the EZLN and even al Quada can be used by people to build revolutionary movements quite quickly. Whether it is desirable is another question. Im not expecting it but Id not be shocked to see a Maoist insurgency in China.
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I'd be surprised if such an insurgency didn't exist already. There are Maoist insurgencies throughout India, which don't get reported in the West. And remember that Communists are already in government in Bengal and Nepal.
 
Perhaps the posts about the possibility of an increase in revolutionary activity are intersting enough and have enough milage to form there own thread. How does one go about getting a thread split round these parts?
 
Inflation will be a problem to a certain degree, but it remains to be seen if the enlarged market with the Asian economies will not simply provide cheap goods again.

That said I would reckon that we will have at least some inflation.

The letter to the telegraph is fine, but there are always two sides to a story, and during the Great Depression the economy simply stayed depressed because there was little or no effective demand in the economy.

It is by no means certain that we have such a position yet.

Tax cuts certainly stimulate the economy to a certain degree, but if it proves to be too little, then government spending may have to rise, or else there will be more unemployment which will exacerbate the recession.
 
Wow the markets are revolting again today. Japan's index at a 26 year low, probably because the G7 made a thinly veiled threat to try to devalue the Yen, as its strength is threatening the stability of the system!
 
OK so the markets recovered later, and it looks more likely that Japan's own central bank will intervene to stop their currency getting too much stronger, as opposed to other countries trying to do it.

Meanwhile the carry trade suddenly seems to be getting more of a mention in the news. When Iceland when to poop I wondered why the carry trade was not getting mentioned too much, now it appears that Britain benefited from it rather a lot too, and in the last week its started to unwind faster.

I heard about the potential horror of derivatives way back in 2002 or 2003 but only heard about the carry trade last year. What a fun world, where people borrow from a country with very low interest rates like Japan, and invest it in higher interest rate countries like the UK or Iceland. Now a lot of that money is whooshing out of our countries and back to Japan & the USA. Another game thats changed dramatically and the consequences most, including myself, have no real clue about.

My boss is clutching at straws to remain positive, today he is blaming the media for going overboard, and is wanting to believe the words of some bloke he knows who runs a machine tool company in the USA who says things arent that bad. Oh well, his fate and mine are tied to the UK commercial property sector so who knows exactly when reality will bite us, or how bad. I still expect it to fall off a cliff soon, but if I try to be optimistic I suppose it could be nearly a year before that happens, allowing for lag.
 
Gmarthews said:
Sure, some stocks will stop being used at least for a bit, the credit ratings agencies will be nationalised and around we go again. The market won't stop existing, it'll just go down for a bit, until more and more people reckon it is at the bottom and then start to buy.

In fact the government could get a jump on the market by opening up sales of stock to the public at large, thus diversifying it, which along with a few choice regulations should see it fine. Some simple Keynesian measures to raise effective demand and bingo Capitalism II. And the added advantage of firing lots of people, thus bigger profits etc.
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Not sure I like the idea of nationalised credit rating agencies. That should be quite a big deal in terms of freedom of the individual, power of the state.


There was an article on Taleb in the Standard yesterday so assume he's been doing some PR, read like his modeling is holding up, if so will probably end up as a subroutine long term:rolleyes:. Also didn't think whats going on is a black swan which made me smile anyway.

Still recovering from Birthday and a Wedding caile in Scotland at the weekend, but thanks whoever put that "A crude awakening" link, ta looks interesting, will look at that 2morrow. Been a buzz on jet fuel since the NBAA about algae-based jet fuel
 
(Gosub - Re: sugar - you might find this interesting regarding feedstock).

/derail.


Back to economics, and Jim Kunstler's waxing his board...

...let's say that we are witnessing the two stages of a tsunami.

The current disappearance of wealth in the form of debts repudiated, bets welshed on, contracts canceled, and Lehman Brothers-style sob stories played out is like the withdrawal of the sea.

The poor curious little monkey-humans stand on the beach transfixed by the strangeness of the event as the water recedes and the sea floor is exposed and all kinds of exotic creatures are seen thrashing in the mud, while the skeletons of historic wrecks are exposed to view, and a great stench of organic decay wafts toward the strand.

Then comes the second stage, the tidal wave itself -- which in this case will be horrific monetary inflation -- roaring back over the mud flats toward the land mass, crashing over the beach, and ripping apart all the hotels and houses and infrastructure there while it drowns the poor curious monkey-humans who were too enthralled by the weird spectacle to make for higher ground.

The killer tidal wave washes away all the things they have labored to build for decades, all their poignant little effects and chattels, and the survivors are left keening amidst the wreckage as the sea once again returns to normal in its eternal cradle.

So, that's what I think we will get: an interval of deflationary depression followed by a destructive wave of inflation that will wipe out both constructed debt and constructed savings, scraping the financial landscape clean.

There's no question that stage one is underway. But we can be sure the giant wave of money recklessly loaned into existence in just a few weeks time will wash back through the global economy leaving a swath of destruction.
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http://jameshowardkunstler.typepad....imes-and-the-wall-street-journal--all-st.html

Surf_Monkey_optimized.jpg


Surf's up, dude.
 
i'd be interested to hear how severe people will think the consequnces of this will be ok poeople with credit card debt etc...

I've never had a credit card so *wipes brow*
 
Nikkei today
jp_n225-7880362522480140100-1002072731.gif


Ticking along nicely.....

Hang Seng, stonking day chaps!!!
hk_hsi-15019530102480140100-1002072731.gif


Equity is still a good thing, scrappy little bits of Yankee paper, fuck em
 
Ah yes, the Posrche Effect

normal.jpg


Showing a clean pair of heels to the rest of the market
Seems that VWs value now exceeds the rest of the German carmaking segment in total

My the worlds fuvkin loony aint it?
 
18% interest rates in Iceland! :eek: That's gotta hurt someone somewhere...

http://www.guardian.co.uk/business/2008/oct/28/creditcrunch-iceland

from the above:US carmakers General Motors and Chrysler sought government cash for a merger, Russia was in talks with China for export-backed loans for its companies, Kazakhstan pumped $5bn into its banks and Mongolia was preparing a $500m to $600m bail-out for its banking sector.

Who knew Mongolia had a banking sector worth that much?
 
The Mongolians have many large herds of goats

I suspect they use the rather rare financial instrument, the Goatvertible Bond as collateral!!:D
 
Was on the phone to my dad last night. He had some savings in Icesave. Read a warning news story on the Thursday, took all his money out on Friday, and the bank was kaput on Monday! :eek: close!
 
Darkfibre: read your links, and read the rest of Kunstler's stuff -don't think he would call talking fuel a derail.
Talked to me boss who was at Orlando, highlighted the wrong one (the joys of an non IT lit boss, will be a couple of weeks to get link (was his pick but fills the brief.) Was based round aglae ponded in deserts. Ethanol is bad as the one highlighted, the maths was in New Scientist almost 2 years ago we don't have the land capacity to feed and fuel 6.7 billion long term doing it any other way.(well will be solar chlorophyll v solar furnace)
And I'd still call a chess match with "the forces of conservatism;)".

ETA: prefered wired b4 they sold my POP3 to lycos.
 
elbows said:
My boss is clutching at straws to remain positive, today he is blaming the media for going overboard, and is wanting to believe the words of some bloke he knows who runs a machine tool company in the USA who says things arent that bad. Oh well, his fate and mine are tied to the UK commercial property sector so who knows exactly when reality will bite us, or how bad. I still expect it to fall off a cliff soon, but if I try to be optimistic I suppose it could be nearly a year before that happens, allowing for lag.
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I had a partner from Vantis in today. They have been doing the rounds of their clients. The only ones who are not squealing like stuck pigs (my words) are the ones in engineering, tech & telecoms.

oddly, he didn't press us to settle our account quickly. I think he thinks we might be a client after the others go down. worrying.
 
gosub said:
Not sure I like the idea of nationalised credit rating agencies. That should be quite a big deal in terms of freedom of the individual, power of the state.
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I'm sure the same was said when education and health was similarly taken into control. But that is the reaction to market failure; if the market doesn't tend towards optimum then it is the duty of the government to introduce a system to try and align incentives.

In this case the credit agencies being paid by the banks meant that they had no resort but to rate the securities as AAA, even if they were unsure if they were or not.

All markets have a bottom, and they will find it soon enough. The question is how will it start growing again? There is no reason that it will - so we might find ourselves in a depression which is typified by a lack of effective demand.
 
Re: Credit rating agencies.
There is a very strong case for them to be licensed and regulated.
I see no case for nationalisation. But then I could be biased, the houses I spent my early years, state bureaucrats ensured we had no fitted carpet and even that my dad had no access to a desk at home...not a system I would want to see extended to the population as a whole.
You only have to look at state capital expenditure over the last few decades to see they would be useless at credit rating, so many "for the want of a nails", and instead of reforming the 47 treasury act they went for off balance sheet PFI's. Not the best track record for what would be a major power seizure for the state.





Off topic but RIP Lieutenant Ted Briggs, the bloke who got my granddad's gong.
 
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