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Global financial system implosion begins

elbows said:
Oh yes and Germany is openly having a go at some of the British economic policies in quite a strong way . . .
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Not the most difficult thing in the world tbh, Brown & Darling fucking us over knowing they can leave the Tories to sort it out.
 
I think Germany has quite a lot of personal debt, but they rent houses rather than buying, so it's considerably less in that regard.
 
Yeah, it's also because the Germans, tied to the Euro, aren't in a position to massively expand their govt deficit and the govt is getting a lot of stick from a variety of quarters to follow the US, UK, Spain, Ireland, France, Japan, Australia etc etc by taking a dose of Keynes.

The French, au naturellement, have said 'FUck you' to the ECB and are spending €s...
 
It'll be interesting to see how the ol carbon cradits market does as factories close and emission reduction targets planned for years ahaead are chieved overnight

I suspect much gnashing of teeth in Zug

HaHa!!
 
Appertly there is a new phrase doing the rounds in IT, long time contracters are trying hard to get into permenant positions and the jobs are being called GOOD jobs, get out of debt......
 
Well, well, talk about pre-internet memes making a comeback.

GOOD jobs were around in the early 90s during the last recession after everyone binged on not-so cheap credit...

The 90s are back!!
 
A Dashing Blade said:
Not the most difficult thing in the world tbh, Brown & Darling fucking us over knowing they can leave the Tories to sort it out.
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Agree...All Brown and Darling are going to achieve by spending all this money is prolonging the inevitable and in the process loading us up with a huge quantity of debt. It's also why they are trying to force the banks to lend more, it was banks lending too much that got us in this mess, fuckwits. They just hope they can win the next election before we figure out just was a disaster their current policy is going to be. The germans in this instance are completely correct.
 
boskysquelch said:
http://news.bbc.co.uk/1/hi/business/7779442.stm
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What makes that one funny is his own honesty about the situation now its all gone to poo:

According to the US Attorney's criminal complaint filed in court, Mr Madoff told at least three employees on Wednesday that the hedge fund business - which served up to 25 clients and had $17.1bn of money under management - was a fraud and had been insolvent for years, losing at least $50bn.
He said he was "finished", that he had "absolutely nothing" and that "it's all just one big lie", and that it was "basically, a giant Ponzi scheme", the complaint said.
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Skimix said:
Agree...All Brown and Darling are going to achieve by spending all this money is prolonging the inevitable and in the process loading us up with a huge quantity of debt. It's also why they are trying to force the banks to lend more, it was banks lending too much that got us in this mess, fuckwits. They just hope they can win the next election before we figure out just was a disaster their current policy is going to be. The germans in this instance are completely correct.
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Yes, except its not just the UK trying this. The current system is globally buggered, we are in the panic and denial phase, and longer term we are going to end up with quite a different flavor of capitalism. Im not actually sure how much our leaders are in denial, or whether reality has dawned on them and they are just trying to prop things up with more debt in an attempt to have a controlled demolition rather than an uncontrolled one. It may make matters worse, or it may not make much difference as things as so fundamentally broken anyway.
 
Also I am fond of saying that the god of growth is dead. In reality they might be so addicted to the god of growth that they will wish him back by any means necessary. eg If we have a 20% decline then there will be a bit of room for growth to return, till we hit the resource ceiling again.

Lets just hope we avoid war as a tool of destruction that gives new room for growth once the war ends.
 
Let's hope the world does. But bear in mind the assortment of civil disorder, riots, terrorist attacks and attempted coups that took root in Thailand, Mumbai, China and Greece. There is a great deal of anger and panic in the world. World resources of many kinds are dwindling as is consumerism; the time of plenty is over. But greed, particularly rampant greed, is something that is a bit more difficult to end. The anti-war movement, as a national, let alone worldwide united front, is in disarray. If history is anything to go, and capitalism and nation states regress to their default operating system, it can only be a matter of time before we see a national (and in turn international) externalisation and channelling of populations and military infrastructure against other nation states, and new, potentially HIGHLY destructive wars erupt.

Albert Einstein once said:

"I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones."

The probability that the opening months of 2009 will ring in new wars, that become multi-fronted, polarised and eventually global in scope is incredibly high.

It is all so sad, as there are practical, holistic, green solutions to all the economic, environmental and resources challenges civilisation is facing.
 
goebfwai said:
It is all so sad, as there are practical, holistic, green solutions to all the economic, environmental and resources challenges civilisation is facing.
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I know. I was just reading the NEF's Nine Meals from Anarchy (Schumacher Lecture, 2008) which mentions the Green New Deal, which sounds exactly like what is needed. But politicians and business interests are too greedy and stupid to let go of the now decomposing corpse of capitalism. Fucking tragic.
:(
 
kyser_soze said:
Well, well, talk about pre-internet memes making a comeback.

GOOD jobs were around in the early 90s during the last recession after everyone binged on not-so cheap credit...

The 90s are back!!
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More likely the 70s.

hipipol said:
It'll be interesting to see how the ol carbon cradits market does as factories close and emission reduction targets planned for years ahaead are chieved overnight

I suspect much gnashing of teeth in Zug

HaHa!!
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Is this to do with Glencore? A company I just found out existed today.




Glencore credit risk soars on mining fear - Report
Bloomberg cited Mr Jonathan Pitkanen a credit analyst at Aviva Investors in London as saying that the cost of protecting against a default by the world's largest commodity trader Glencore International AG has risen 5 fold in 2 months as investors run scared from mining companies.

According to data compiled by Bloomberg, Glencore is the largest shareholder in Swiss copper and nickel producer Xstrata Plc, which has plunged 74% on the London Stock Exchange in the same period. Credit default swaps for Baar, Switzerland based Glencore's 5 year bonds climbed to 1,240 basis points.

The chart of the day shows how Glencore's credit default swaps jumped while shares of Xstrata fell.

Mr Pitkanen said in an interview that “It is all fear at the moment. People are scared and they are running scared from this sector. The market's reaction has been completely overcooked.”

Standard & Poor's on October 14th cut its outlook for Glencore to stable from positive and affirmed its BBB rating. He said that “The movement in the spread doesn't seem to bear any resemblance to their credit fundamentals at the moment.”

A basis point on a credit default swap contract protecting USD 10 million of debt from default for 5 years is equivalent to USD 1,000 a year. The contracts rise as investor confidence deteriorates and fall as it improves.
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link
 
david dissadent said:
I dont know much about Glencore but alot of people seem to be hinting that they are in huge trouble.
http://en.wikipedia.org/wiki/Glencore

Sound like nice chaps.

link, seems people are questioning there liquidity. They appear to be the worlds largest comodities traders and some are saying that they are selling everything like mad to stay liquid.
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Another piece of news from them back on the 11th Dec

http://www.ft.com/cms/s/0/de66d404-c7ea-11dd-b611-000077b07658.html

not one of its trading partners admits to any concerns.

"It is surprising. What the CDS signals and what we see in the commodities market is completely different", says a senior executive at a Glencore competitor. "We continue to trade with them without any problem."

Several trading firms, pricing agencies and final users of commodities told the FT they had reviewed the issue and concluded that the CDS misrepresented Glencore's financial situation.

However, the CDS drama has prompted Glencore into an unprecedented lifting of the veil. Its third-quarter results in November were more widely circulated than usual. Last week it issued a terse, but nonetheless public statement.

"Glencore's current liquidity, representing cash and undrawn amounts under its committed bank facilities, exceeds $3.5bn, and continues to increase on the back of lower working capital requirements", it said. "Glencore has sufficient liquidity to comfortably cover debt maturities in the next 12 months."

The company needs less working capital because falling commodity prices means lower costs to shift the same volume of oil or metal.

However, as an investment company it is seeing the value of some assets drop. Glencore owns more than 34 per cent of Xstrata, the London-listed mining stock, whose shares have fallen from £44.20 in May to 720½p yesterday.
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Glencore started as a buyout of the old Marc Rich organisation. Management bought marc rich out because Marc Rich's fugitive status affected the companies ability to secure trade financing.

Trafigura (look up the story of the Probo Koala) and Masefield are also run by ex Marc Rich lieutenants
 
the missing money, so far, from the pyramid scheme :

Clients of Santander, Spain - $3.1bn
HSBC, UK - $1bn
Natixis, France - $605m
Royal Bank of Scotland, UK - $601m
BNP Paribas, France - $460m
BBVA, Spain - $400m
Man Group, UK - $360m
Reichmuth & Co, Switzerland - $325m
Nomura, Japan - $303m
 
It makes sense that a firm that by the sounds of things is solely trading in newly mined/produced commodities like ores/metals will be in trouble as metal prices have plummeted. The Daily Telegraph were reporting on 10 December research by Barclays Capital that showed prices had dropped further than during the Great Depression:

http://www.telegraph.co.uk/finance/...all-further-than-during-Great-Depression.html

It costs more to extract new ores and turn them into metal, and there are probably - like paper and plastics - growing stockpiles of scrap metals that will grow further, coming in from sources like old cars, factory closures, street recycling bins etc. The cost of this recycled metal will be cheaper.
 
goebfwai said:
It makes sense that a firm that by the sounds of things is solely trading in newly mined/produced commodities like ores/metals will be in trouble as metal prices have plummeted. The Daily Telegraph were reporting on 10 December research by Barclays Capital that showed prices had dropped further than during the Great Depression:

http://www.telegraph.co.uk/finance/...all-further-than-during-Great-Depression.html

It costs more to extract new ores and turn them into metal, and there are probably - like paper and plastics - growing stockpiles of scrap metals that will grow further, coming in from sources like old cars, factory closures, street recycling bins etc. The cost of this recycled metal will be cheaper.
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These guys make money whether the prices rise or fall, as long as they've bet the right way they can make huge amounts of money in a market that has fallen like this. Companies like this do a lot more than the metals/ores.
 
Well as Ive jsut been learning, it means they are limited in terms of monetary policy. But they have fiscal policy tools left, which is stuff like tax cuts, more government spending, increasing the debt of the nation.

I suppose one of the big fears is that if they have trouble servicing their debt, they will run out of fiscal options too, and will then be largely impotent in the face of horror. I dont know if thats the point where the policy of war comes out of the closet.
 
FT had a story about World Bank and US energy department reports on oil demand. The US energy department reckons global demand would drop 50,000 barrels a day this year and 450,000 b/d in 2009., and that US demand would be at the lowest level in 11 years.

The world bank thinks the commodities boom is over, but that prices wont collapse as far as 1990's levels, with oil at about $75 in 3 years time. The author of their report disagree's with many other industry people & bodies, by not believing that the credit crunch will eventually result in high prices & upward trends due to lack of investment in capacity.

They also say that world trade will contract for the first time since 1982, and that this will be the worst global recession since the great depression. I will get carried away and go further by predicting that we could see the economy shrinking at rates similar to gloomy peak oil decline estimates. Hopefully Im well off the mark with that one but over the longterm I expect the global ecomony could easily halve in size.

edit - oops for a minute I got confused and thought I was writing this message in the peak oil thread, I suppose the subject matter could apply to either thread, its where the 2 meet.
 
Under classic or even state capitalism 'lite', there is very little that any government would seem able to do to hold back the tide of this global recession. All they can really do is tinker around the edges to mitigate it's sociological impacts. The main ingredients of the economic stew the world is in are already there. All they can do is tinker about with a few of them and adjust the seasoning here and there.

They could certainly be doing more though to create a renaissance in urban food gardening, self-build, allotments, back garden chicken rearing and so forth. It's a great, empowering way to reduce poverty and enable societies to recapture the feel good factor. And also gain solid quality of life improvements in the face of lower incomes and numerate reductions of the money orientated, arms length means of the traditional labour market to grow, build and provide life's essentials.
 
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