Global financial system implosion begins

[Marty1]

The UK essentially lost its job in march, but has been maintaining the same lifestyle on the credit card ever since. And that credit card company has been lending to everyone, and we've underwritten that debt ourselves - which should be fine as we have a good job.

There's a lot of pent up demand as the housing market froze with the lockdown.

Unfortunately when the government furlough scheme ends, hundreds of thousands of people will lose their jobs.

A clearer picture will emerge in the next few months.

As you know, there are problems with comparing a nation's finances with a credit card. Anyway roll on the debt jubilee.

Oh, not good for my parents then who are looking to put their house on the market next year

 

[yield]

Oh, not good for my parents then who are looking to put their house on the market next year

Who knows?

 

[Idaho]

Oh, not good for my parents then who are looking to put their house on the market next year

In my experience, if you are moving house (both buying and selling) then the state of the market balances out.

 

[gosub]

Sounding The Alarm For The US Dollar?

Stephen Roach predicts the broad dollar index will drop by 35 percent and foresees legitimate challenges to the greenback’s status as the world’s dominant reserve currency.

www.forbes.com

 

[Idaho]

Sounding The Alarm For The US Dollar?

Stephen Roach predicts the broad dollar index will drop by 35 percent and foresees legitimate challenges to the greenback’s status as the world’s dominant reserve currency.

www.forbes.com

It's still the currency of international settlement and guards that status very very jealousy - to the point of war.

 

[Flavour]

there's no currency close to being ready to replace it for the time being. everyone distrusts China, none of the major powers would allow the Euro to become the world currency and its too unstable anyway... nah, the Dollar has some life in it left

 

[Idaho]

there's no currency close to being ready to replace it for the time being. everyone distrusts China, none of the major powers would allow the Euro to become the world currency and its too unstable anyway... nah, the Dollar has some life in it left

Although one of the key features of old systems is that they often look bruised but undefeated just before capitulation.

 

[Flavour]

True, but the Dollar was only able to achieve the position it still holds as world reserve currency in 1945 when the economies of literally everywhere else were totally destroyed and the US was the only major power whose homeland wasn't royally fucked. I think it would take an event of a similar magnitude and for there to be a power who was clearly much-less-damaged by it in order for it to shift. And the US was broadly seen as a desirable world leader by much of non-communist political ruling class of everywhere else in the world (in 1945) while I can't say the same of contemporary China. They're too disliked/distrusted already

 

[MickiQ]

In my experience, if you are moving house (both buying and selling) then the state of the market balances out.

my son and his girlfriend had their house purchase fall through just before lockdown began, they're holding off looking again counting on a drop in prices.

 

[Idaho]

True, but the Dollar was only able to achieve the position it still holds as world reserve currency in 1945 when the economies of literally everywhere else were totally destroyed and the US was the only major power whose homeland wasn't royally fucked. I think it would take an event of a similar magnitude and for there to be a power who was clearly much-less-damaged by it in order for it to shift. And the US was broadly seen as a desirable world leader by much of non-communist political ruling class of everywhere else in the world (in 1945) while I can't say the same of contemporary China. They're too disliked/distrusted already

Unless a group of nations decide to adopt some kind of trustees system that ties together the central bank digital currencies (CBDC) that so many countries are developing.

 

[Idaho]

my son and his girlfriend had their house purchase fall through just before lockdown began, they're holding off looking again counting on a drop in prices.

First time buyers?

 

[MickiQ]

First time buyers?

Yes, they were just about to exchange contracts in March when not their seller but the one he was buying off decided to pull out as his business was taking a hit from the lurgy. Girlfriend had literally moved out of the house she was renting with 3 other girls to stay with us for a couple of weeks, 6 months later she's still here. They still had to fork out all the fees though.

 

[Idaho]

I have a friend who inherited £20k and wanted to use it to buy a flat. He went through 4 late-failed buys and lost most of that money in the process.

 

[gosub]

there's no currency close to being ready to replace it for the time being. everyone distrusts China, none of the major powers would allow the Euro to become the world currency and its too unstable anyway... nah, the Dollar has some life in it left

The almighty US dollar might be losing lustre as a global currency

Several factors will keep its position safe for now but China’s currency could pose a challenge as its global influence grows

www.livemint.com

China has pretty much hyperindustrialized civil engineering, and is now looking for export markets for those skills (belt and road). These recipient countries know a road, a bridge, a railway, dock etc pay back overtime so they buy them on the never never. Its not in China's interest to enter into these contracts at an agreed price and then watch money inflate while the US prints as much as it likes to feed the Dow like it was a fruit machine

 

[yield]

Only a shift in labour’s bargaining power can light up US inflation
Financial Times. August 31, 2020
Federal Reserve chairman Jay Powell last week said the Open Market Committee would target average inflation

Spoiler: text

With his speech last week to the virtual Jackson Hole conference, Jay Powell, the chairman of the Federal Reserve, might have raised the curtain on the final act for the US dollar as the global reserve currency. It may not be the end, but it is the beginning of the end.

Mr Powell’s address largely conformed to news reports in the days running up to it. He said that the Open Market Committee would target average inflation — in a shift to Flexible Average Inflation Targeting, or FAIT, from Flexible Inflation Targeting — and that monetary policy decisions would be informed by the assessment of the shortfall from the undefined maximum employment level.

The wide latitude that the central bank has assumed to keep interest rates lower for longer does not bode well for the US dollar. If the Fed were to be seen as tolerant of high inflation to make up for low inflation in the past, faith in the dollar as a store of value will be eroded. For a global reserve currency, that would be strategically costly.

Inflation has remained dormant for so long not because central banks were successful in taming it. Former Fed chairman Paul Volcker brought down price rises in the 1980s, but at the cost of two recessions. Afterwards, expanding global trade, the decline in the crude oil price and the advent of ecommerce pitched in.

Above all, the balance between capital and labour shifted in favour of capital. Globalisation — the outsourcing of jobs and offshoring of manufacturing — weakened workers’ bargaining power, compressing wages and, thus, operating costs for companies. Profit margins could expand without end-user prices having to rise too much.

Thus, independent central banks targeting inflation did not tame inflation, but the erosion of labour power and the consequent moderation in wages did. Central bankers had nothing to do with it. If they really were responsible for lowering the inflation rate, they should have been able to push it higher. Since the turn of the millennium, first Japan and then others have tried valiantly to generate inflation but in vain.

If a medicine did not work, a good doctor should ask herself whether the medicine was the wrong one, rather than keep increasing the dosage. If not, the medicine loses whatever potency it has and creates substantial side effects. That is precisely what has happened with ultra-loose monetary policy since 2008.

Yet Mr Powell is going all-in on failed policies. He has admitted that inflation has never returned to 2 per cent on a sustained basis and productivity is on the decline. These outcomes are not in spite of Fed policy but because of it.

Zombie companies — those that do not earn enough to cover their interest payments — are nearly one-fifth of all listed businesses in America, according to Deutsche Bank, from virtually zero at the turn of the millennium. Meanwhile, the top 10 per cent of the population owns 87 per cent of the stocks, so the rising market perpetuates inequality, leaving the other 90 per cent with bank accounts that earn nothing.

Rather than trying to take credit for a “Great Moderation,” the Fed should be recognised for achieving a great polarisation — social and economic, and consequently, political.

Spoiler: more text

Together with its support of the fiscal deficit through the continued purchase of Treasury securities, and with the purchase of risky instruments across the spectrum, the Fed is fostering bubbles in financial assets. Inflation will remain tame, despite the acronym changing from FIT to FAIT, as long as the balance of power is tilted against labour.

For inflation to raise its head, labour needs to acquire pricing power. Until then, money creation will simply juice assets and make them a bigger source of instability. We shall see if a new administration tilts the balance. If it does, then along with fiat money debasement, the inflation fire will be lit. That could be the last straw for the US dollar.

The return of inflation will also end asset price inflation. Investors should be prepared for the return of the 1970s; perhaps worse, with social turmoil accompanying stagnant growth and high inflation.

Emerging markets will have a new problem this decade — that of managing the appreciation of their currencies. They can and should pay down their debts and focus on supporting consumption through domestic production, as currency strength would be a drag on exports. Those that execute that strategy well will find favour with investors.

The good news for America is that no other currency is a better store of value than the dollar because the race to debase currencies is global. But that is bad news for investors. The only anti-dollar in the world is gold.

Bizarro world, the FT calling for strong unions and labour bargaining power. Still don't think the USA is at risk of losing its place as global reserve currency.

 

[Idaho]

Bizarro world, the FT calling for strong unions and labour bargaining power. Still don't think the USA is at risk of losing its place as global reserve currency.

Nothing makes sense.

Re. USD; there is a lot of work to do to topple it. However the dollar is far from its heyday. The fact that alternatives are being widely discussed counts for something.

 

[gosub]

The analysis is interesting, (and in the main I am on the same page) - the solution though, well I think he is miles off

 

[ska invita]

The analysis is interesting, (and in the main I am on the same page) - the solution though, well I think he is miles off

yeah was going to post this - a historic decoupling of the real and market parts of the economy. never happened before? seems possible.


this link has text for those who dont want to watch a video Something remarkable just happened this August: How the pandemic has sped up the passage to postcapitalism – Lannan Foundation virtual talk

this link between profit forecasts and share prices has disappeared and, as a consequence, the share market’s misanthropy has entered a new, post-capitalist phase.

capitalism is now in a new, strange phase: Socialism for the very, very few (courtesy of central banks and governments catering to a tiny oligarchy) and stringent austerity, coupled with cruel competition in an environment of industrial, and technologically advanced, feudalism for almost everyone else.
This week’s events in Wall Street and the City of London mark this turning point – the historic moment that future historians will undoubtedly pick to say: It was in the summer of 2020 when financial capitalism finally broke with the world of real people, including capitalists antiquated enough to try to profit from producing goods and services.

 

[frogwoman]

The 'stonks line' seems to bear little or no relationship to what goes on in the economy tbh.

 

[Flavour]

It's a bubble

 

[Idaho]

The 'stonks line' seems to bear little or no relationship to what goes on in the economy tbh.

Except that stonks are a significant part of the economy, even though the relationship between their price and, say, the price of bread is currently impossible to fathom.

 

[frogwoman]

Millions out of work yet it's 'surging to record highs' ??

 

[Idaho]

Millions out of work yet it's 'surging to record highs' ??

Because the financial markets are flooded with Central bank money and cheap credit. It's such large amounts and it's all on the balance sheets of large investment banks. They have to put it somewhere, and stocks are one of the only places, even though everyone knows they are totally overvalued.

 

[yield]

The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90%—And That's Made the U.S. Less Secure
Time. September 14, 2020 Outline - Read & annotate without distractions

Like many of the virus’s hardest hit victims, the United States went into the COVID-19 pandemic wracked by preexisting conditions. A fraying public health infrastructure, inadequate medical supplies, an employer-based health insurance system perversely unsuited to the moment—these and other afflictions are surely contributing to the death toll. But in addressing the causes and consequences of this pandemic—and its cruelly uneven impact—the elephant in the room is extreme income inequality.

How big is this elephant? A staggering $50 trillion. That is how much the upward redistribution of income has cost American workers over the past several decades.

 

[ska invita]

The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90%—And That's Made the U.S. Less Secure
Time. September 14, 2020 Outline - Read & annotate without distractions

insane
theft pure and simple

also this

Wealth of US billionaires rises by nearly a third during pandemic

Report includes Jeff Bezos, whose personal fortune has risen by 65% since 18 March

www.theguardian.com

good system eh

some crazy numbers
hyper capitalism doesn't begin to describe it

Jeff Bezos, the founder and chief executive of Amazon, who was already the world’s richest person, has benefited most from the pandemic and subsequent global lockdowns. His personal fortune, as estimated by Forbes magazine, has risen by $73.2bn since the start of the crisis to a record $186.2bn. That 65% increase results mostly from the soaring value of Amazon shares as more people turn to the delivery service. In just one day in July, Bezos saw his fortune increase by more than £10bn.

Elon Musk, founder and chief executive of electric car company Tesla, has also benefited from the pandemic. His estimated fortune has risen by 274%, to $92bn, while Facebook’s Mark Zuckerberg has seen his wealth increase by 84% or $45.9bn to $100.6bn.

<<<<,thats in the last six months

 

[Marty1]

insane
theft pure and simple

also this

Wealth of US billionaires rises by nearly a third during pandemic

Report includes Jeff Bezos, whose personal fortune has risen by 65% since 18 March

www.theguardian.com

good system eh

some crazy numbers
hyper capitalism doesn't begin to describe it

Jeff Bezos, the founder and chief executive of Amazon, who was already the world’s richest person, has benefited most from the pandemic and subsequent global lockdowns. His personal fortune, as estimated by Forbes magazine, has risen by $73.2bn since the start of the crisis to a record $186.2bn. That 65% increase results mostly from the soaring value of Amazon shares as more people turn to the delivery service. In just one day in July, Bezos saw his fortune increase by more than £10bn.

Elon Musk, founder and chief executive of electric car company Tesla, has also benefited from the pandemic. His estimated fortune has risen by 274%, to $92bn, while Facebook’s Mark Zuckerberg has seen his wealth increase by 84% or $45.9bn to $100.6bn.

<<<<,thats in the last six months

Bezos in particular is a blight on humanity.

He’s a parasite wealth extractor that regards its host (customers) with contempt as lazy cunts who will always go for the path of least resistance (convenience).

 

[discokermit]

Bezos in particular is a blight on humanity.

He’s a parasite wealth extractor that regards its host (customers) with contempt as lazy cunts who will always go for the path of least resistance (convenience).

you are his host. his employees. you and the people who make the goods are the ones he steals that wealth off.

 

[Marty1]

you are his host. his employees. you and the people who make the goods are the ones he steals that wealth off.

What role do customers play in that scenario?

 

[discokermit]

What role do customers play in that scenario?

i got twelve jars of cockles delivered to the door for less than they cost in the shop so my opinion is compromised by my addiction to shellfish.

 

[Marty1]

i got twelve jars of cockles delivered to the door for less than they cost in the shop so my opinion is compromised by my addiction to shellfish.

Bezos approves of your addiction.