Global financial system implosion begins

[Bernie Gunther]

Trouble with that sort of stuff is that exactly what makes for a more resilient community also makes the refusal of work easier.

e.g. t's easier to go on strike if you know you can feed yourself to a bare minimum without access to money.

So governments who work for neo-liberal capitalism have reasons not to support resilience of that kind. Indeed, if it ever became a significant factor, they'd probably try to make it illegal.

 

[david dissadent]

erm, ok then... what do they do if this doesn't work then? start paying people to borrow money off them?

You can give it away. America has already done this this year. Its called a fiscal stimulus.

http://en.wikipedia.org/wiki/Japanese_asset_price_bubble

Japan had a similar problem in the 90s. It is where many people believe america is headed to. Incidently they have similar demographic challange with a big bulge in retirees at about the same time (Japan in the 90s the US now).

Fiscal stimuluses do work and have worked in the past. The Marshall plan was one such Keysian intervention that worked, well worked a miricle. America had a huge amount of money and factories going idle as the war wound down, Europe was a poor shattered wreck. The US pumped money in Europe and they bought American goods with the money and built there own factories to make there own goods. Instead of a new overcapacity depression hitting the west in the 40s, the most properous era of growth in its history. It came to an end with the collapse of Bretton Woods and the recessions of the 70s when Keynes went out the window and in came the Chicago school types led by Friedman.

To be fair though it has probibly failed more than it worked.

 

[david dissadent]

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.

Economics is probibly 30% science, 30% intuition and 40% luck, but Id recon there is alot they can and have done to mitigate the depth or length of the crash, or at least that is what many people will say. Others will say that the freemarket is the only thing that works and let it fall with no government intervention.

 

[goebfwai]

What's amazing to ponder is the ramifications of what the Conservative response would have been, to let market forces prevail, let all the banks fail, with an even bigger domino effect of business failures, evictions, repossessions, unemployment, hunger, poverty and deprivation than is being seen now.

P.S. Just been reading the article below. Now there's an idea. Why doesn't the government just send all the managers of the newly nationalised & part nationalised banks out into the shopping centres of villages, towns and cities up and down the country and throw money like confetti into the air? Perhaps worth a try!

‘Helicopter Ben’ confronts the challenge of a lifetime
By Martin Wolf

http://www.ft.com/cms/s/0/d049482c-cb8f-11dd-ba02-000077b07658.html?nclick_check=1

 

[Badgers]

Another company looking shaky

My heart goes out to these noble workers and their families

 

[goebfwai]

This line from Charlie Bean at the BofE raised a smile
""What we need is Augustinian consumers who will be economically responsible in the medium term, but don't rush to become virtuous overnight".

Fresh warning on banks capital
http://www.ft.com/cms/s/0/a60fc972-cca3-11dd-acbd-000077b07658.html?nclick_check=1

Retailers suffer worst trading conditions for 25 years
http://www.telegraph.co.uk/finance/...er-worst-trading-conditions-for-25-years.html

Financial crisis: Free money coming your way
(I'll believe it when I see it!)
http://www.telegraph.co.uk/finance/...ancial-crisis-Free-money-coming-your-way.html

 

[Crispy]

Chrysler have shut down all production for a month - all factories have stopped and workers are to come back on Jan 19th!

http://money.cnn.com/2008/12/17/autos/chrysler_shutdown/index.htm

(they will be paid, just not fully)

 

[8ball]

I've not quite figured out yet how the solution to people spending money they didn't have is for them to spend more money that they don't have.

This is basically down to a mismatch between the amount of cash out there and the amount of 'stuff', isn't it?

 

[A Dashing Blade]

I've not quite figured out yet how the solution to people spending money they didn't have is for them to spend more money that they don't have.

Govt Policies<==========================================>Reality

conspiracy alert for the future, the Govt's gonna inflate all consumer debt away. You heard it here first.

 

[Bob_the_lost]

Govt Policies<==========================================>Reality

conspiracy alert for the future, the Govt's gonna inflate all consumer debt away. You heard it here first.

Wonder if that'll include my student loan, somehow i doubt it.

 

[panpete]

This goth/emo globalstyle is a bit of a stale genre now, no?

 

[slaar]

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

They also have a lot of monetary options left, not through interest rates but through dropping money into the economy:

http://www.rgemonitor.com/roubini-m...hile_the_global_economy_enters_stag-deflation

Wonder if that'll include my student loan, somehow i doubt it.

And yes, if this does work and then kicks off a major bout of inflation, student loan debt will be deflated just as much. But right now it's debt deflation looking most likely in the short-run, which will make debt more onerous.

 

[Bernie Gunther]

Hey slaar, nice to see you around !

 

[goebfwai]

Hunger mounts in the US
By Tom Eley
20 December 2008
http://www.wsws.org/articles/2008/dec2008/hung-d20.shtml

British economy sinks like a stone
By Jean Shaoul
18 December 2008
http://www.wsws.org/articles/2008/dec2008/ukec-d18.shtml

 

[8ball]

Govt Policies<==========================================>Reality

conspiracy alert for the future, the Govt's gonna inflate all consumer debt away. You heard it here first.

I think you could be right there.

And I wasn't actually being sarcastic with my post - my knowledge of economics isn't that great so I was wondering if maybe there actually was something to their plan.

I guess not . .

 

[elbows]

They also have a lot of monetary options left, not through interest rates but through dropping money into the economy

Yes I didnt realise that at the time, but in recent days Ive read some stuff about 'quantitative easing'. I originally read about it on the FT website but I think Robert Peston covered it a few days ago too:

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/12/deflation_or_inflation.html

That article is also talking about deflation or inflation, which is sort of the big question. Deflation is the big nightmare at this moment, but obviously inflation was the big fear until quite recently, and many think it will come back to get us again in a few months or years.

 

[A Dashing Blade]

Yes I didnt realise that at the time, but in recent days Ive read some stuff about 'quantitative easing'. I originally read about it on the FT website but I think Robert Peston covered it a few days ago too:
. . .

'quantitative easing' is the new buzz-word for printing money. That's it.

 

[goebfwai]

Bernard Madoff: One of world's biggest charity foundations forced to shut
There are also reporting that a philanthropic couple have lost $145 million and the foundation of a Holocaust survivor and Nobel laureate reported losing $15.2 million, nearly all of its assets.
http://www.telegraph.co.uk/finance/...ggest-charity-foundations-forced-to-shut.html

 

[elbows]

A telegraph article that talks of civil unrest, protectionism, the peaking of globalisation, with plenty of examples and a bit of history thrown in:

http://www.telegraph.co.uk/finance/...are-beginning-to-tumble-across-the-world.html

 

[elbows]

The interesting spectacle of people protesting in Russia about some protectionist tax on car imports:

http://news.bbc.co.uk/1/hi/world/europe/7794560.stm

I guess greater global interdependency means that protectionist measures are more likely to cause domestic protests as well as cheering these days?

 

[Crispy]

"Good evening. I'm here to say: We're going to take steps to protect local manufacturing!"

*whispers*

"Ah, well, what I mean to say...."

 

[Barking_Mad]

I mean, really....they had no clue. not a jot.

The Bank of England did not understand the severity of economic problems before the current financial crisis, its deputy governor says.

Sir John Gieve told the BBC that the Bank knew "crazy borrowing" was taking place and the price of houses and other assets was rising unsustainably.

But the Bank thought this problem was less serious than it turned out to be, he said in an interview for Panorama.

http://news.bbc.co.uk/1/hi/business/7794604.stm

And from Robert Peston's blog

We didn't think it was going to be anything like as severe as it's turned out to be... Why didn't we see that it was so serious? I think that's because we, perhaps, we hadn't kept pace with the extent of globalisation. So the upswing here didn't involve the big increases in earnings and consumption and activity which we saw in previous booms. We saw the credit, we saw the house prices, but we did see a fairly stable pattern of earnings, prices and output.

 

[goebfwai]

Britain's job 'bloodbath'
Cabinet minister issues stark warning of carnage for private and public sectors as employers delay huge redundancies until the new year
http://www.independent.co.uk/news/uk/home-news/britains-job-bloodbath-1207378.html

Archbishop of Canterbury warns recession Britain must learn lessons from Nazi Germany
http://www.telegraph.co.uk/news/new...ain-must-learn-lessons-from-Nazi-Germany.html

 

[Barking_Mad]

A must read article on the printing of money, debt and a grim conclusion.

Even as I am writing this article, the UK government is sinking into bankruptcy. I am not a conspiracy theorist, in that I do not believe there is any grand plan to create a new world order. However, I do believe that individuals and governments do occasionally conspire to deceive the public.

I actually believe that, at this moment in time, there is a conspiracy. That conspiracy is not the result of a great master plan, but is the result of the ongoing incompetence of government, and is a desperate attempt to hide that same incompetence. Over the last ten years, the UK economy has effectively been supported by borrowing, and without that borrowing it is collapsing. The government does not want to admit to the public just how bad the situation actually is and, as a result, they have come to the point at which they are resorting to ever more desperate measures.

I believe that what we are witnessing is an appalling conspiracy. I believe that the government is planning to use printed money to finance the banking system, and as a quid pro quo, the banking system will finance the government borrowing with the printed money. The repeal of the provision of the 1844 Act is an attempt to cover up the actions of the government. If I am right, we do indeed have a conspiracy.

The most tragic part of all of this is that the conspiracy, the idea of printing money, will just make the final catastrophe even greater.

he goes on....

And the consequence, like all Ponzi schemes, will be a collapse, and then the dominoes will start to topple. The US will be next. The bubble of the value of the $US is set for collapse, and only a false confidence in the $US will continue to support it. When the UK Ponzi scheme collapses, it will take the US with it. As I stated, when the UK is seen to be built on foundations of sand, the same question will be asked of the US....

http://cynicuseconomicus.blogspot.com/

 

[david dissadent]

Link

Japanese exports down 27%. I am wondering how much of this is due to lack of credit being available, how much is an over reaction of people tightening there belts and how much is due to the loss of notional wealth (things like housing prices). I dont have an answer.

 

[elbows]

I dont have an answer either, but in the case of Japan the rise of the Yen has been a factor hurting their exports.

 

[shagnasty]

But hasen't protectioning started already bail out of american car makers .sweden giving money to volvo and saab.Talk that gm and land rover jaguar in britain seeking government money

 

[Jessiedog]

Link

Japanese exports down 27%. I am wondering how much of this is due to lack of credit being available, how much is an over reaction of people tightening there belts and how much is due to the loss of notional wealth (things like housing prices). I dont have an answer.

Aye!


And last month's exports to the USA down 33% year on year.




Batton down the hatches peeps, this is going to get much worse.





Woof

 

[Jessiedog]

But hasen't protectioning started already bail out of american car makers .sweden giving money to volvo and saab.Talk that gm and land rover jaguar in britain seeking government money

Yer.


All the pundits are going on about the possibility of "protectionism" and the dangers thereoff, as if protectionism is onlyn about tarriffs and other import barriers.


Massive subsidies to domestic commerce/industry don't seem to count, but have precisely the same effect.





Woof

 

[Johnny Canuck3]

Is this the Chicken Little thread?