Global financial system implosion begins

[yield]

Russian prime minister Vladimir Putin calls for end of dollar stranglehold
The Telegraph. 29 Jan 2009

Mr Putin said the leading powers should ensure an "irreversible" move towards a system of multiple reserve currencies, questioning the "reliability" of the US dollar as a safe store of value. "The pride of Wall Street investment banks don't exist any more," he said.

I doubt that Beijing and Riyadh will allow that to happen but it's interesting to hear talk about moving away from one global reserve currency.

Run on the U$ dollar anyone?

 

[Crispy]

Cynicus reckons it'll happen inside 3 months.

 

[Jessiedog]

Cynicus reckons it'll happen inside 3 months.

Aye!





Woof

 

[goebfwai]

This article in the FT by George Soros makes interesting reading.

"...the bankruptcy of Lehman has had the same shock effect on the behaviour of consumers and businesses as the bank failures of the 1930s, the problems facing the administration of President Barack Obama are even greater than those that confronted Franklin D. Roosevelt...The bursting of bubbles causes credit contraction, the forced liquidation of assets, deflation and wealth destruction that may reach catastrophic proportions. In a deflationary environment, the weight of accumulated debt can sink the banking system and push the economy into depression. That is what needs to be prevented at all costs."

http://www.ft.com/cms/s/0/49b1654a-ed60-11dd-bd60-0000779fd2ac.html

 

[Barking_Mad]

Personal bankruptcies hit new record

http://www.guardian.co.uk/business/2009/feb/06/bankruptcy-ivas-insolvencies

 

[Barking_Mad]

Subprime - The USA's victims



Yes, people in America living in tents at the side of the road. I'd point out this was March last year.......

 

[Barking_Mad]

And from October last year - Reno, California.

 

[Barking_Mad]

Living in Our Vans - also Oct 08

Since the beginning of the mortgage crisis one and a half million Americans have lost their homes. With banks repossessing their houses, many have been left no other option than to move into their cars.

The streets of California are now filled with people who call their car their home. Jennifer Clement, explains, "The estimated value of our house went to 120,000 U.S. dollars within a month. After losing all the money, we literally landed on the street and were forced to live in our caravan". It is a vicious circle: Without a job - no home. Without an apartment - no job.

 

[goebfwai]

Essential reading regarding the stark precipice the economy stands at from Nobel Prize winning economist Paul Krugman, writing in yesterday's New York Times.

"...we may well be falling into an economic abyss, and that if we do, it will be very hard to get out again. It’s hard to exaggerate how much economic trouble we’re in. The crisis began with housing, but the implosion of the Bush-era housing bubble has set economic dominoes falling not just in the United States, but around the world.

Consumers, their wealth decimated and their optimism shattered by collapsing home prices and a sliding stock market, have cut back their spending and sharply increased their saving — a good thing in the long run, but a huge blow to the economy right now...And exports, which were one of the U.S. economy’s few areas of strength over the past couple of years, are now plunging as the financial crisis hits our trading partners.

It’s no wonder, then, that most economic forecasts warn that in the absence of government action we’re headed for a deep, prolonged slump. Some private analysts predict double-digit unemployment. The Congressional Budget Office is slightly more sanguine, but its director, nonetheless, recently warned that “absent a change in fiscal policy ... the shortfall in the nation’s output relative to potential levels will be the largest — in duration and depth — since the Depression of the 1930s.” Worst of all is the possibility that the economy will, as it did in the ’30s, end up stuck in a prolonged deflationary trap.

We’re already closer to outright deflation than at any point since the Great Depression. In particular, the private sector is experiencing widespread wage cuts for the first time since the 1930s, and there will be much more of that if the economy continues to weaken...It’s time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation’s future at risk. The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge."

http://www.nytimes.com/2009/02/06/opinion/06krugman.html?_r=1&partner=rssnyt&emc=rss

 

[RhymnRzn]

The whole crisis is perpetuated by men using feigned speeches, all to make merchandise of men. They say they want to enable the credit markets to make loans, and create jobz, but they really are laying in wait that they may further their own mischievous cause.

 

[mears]

I was just in Florida and it was scary. Florida is really ground zero for the global economic crisis. Inflated housing prices fuelled by easy subprime loans bundled together and sold to sucker financial institutions around the world. As long as the price of housing kept going up the game was safe for the homeowners, mortgage companies, banks and other assorted financial institutions. Prices of houses start falling and the game is up and the pain starts.

I think the banks need to be capitalized by the government if they want the cash. But if you accept further bailout money executive pay must be limited. Also governments around the world need to fight home foreclusure to stop the bleeding. The supposedly brillant Wall Streeters blew it this time, many will have to now seek a new line of work.

I think this to will pass. I don't believe a US housing crisis will throw us into a worldwide depression.

 

[butchersapron]

Didn't Obama kill you?

 

[butchersapron]

I was just in Florida and it was scary. Florida is really ground zero for the global economic crisis. Inflated housing prices fuelled by easy subprime loans bundled together and sold to sucker financial institutions around the world. As long as the price of housing kept going up the game was safe for the homeowners, mortgage companies, banks and other assorted financial institutions. Prices of houses start falling and the game is up and the pain starts.

I think the banks need to be capitalized by the government if they want the cash. But if you accept further bailout money executive pay must be limited. Also governments around the world need to fight home foreclusure to stop the bleeding. The supposedly brillant Wall Streeters blew it this time, many will have to now seek a new line of work.

I think this to will pass. I don't believe a US housing crisis will throw us into a worldwide depression.

This post is a joke btw isn't it?

 

[mears]

I don't know, you tell me big boy.

 

[butchersapron]

You don't know? You wrote it. OK

Yes it is, it is a joke.

 

[mears]

You don't know? You wrote it. OK

Yes it is, it is a joke.

Over 45,000 posts, are you kidding me?

You still leading the counter revolution in Eastern Europe?

 

[butchersapron]

Over 45,000 posts, are you kidding me?

You still leading the counter revolution in Eastern Europe?

You did write it though. So is it a joke or not. You seem confused.

Are you a socialist now?

 

[mears]

You did write it though. So is it a joke or not. You seem confused.

Are you a socialist now?

Of course I am not a socialist. But sometimes you have to react to events in real time and not hold onto a stern ideology.

And as we know from our knowledge of economics and history, command, communal economies like Mao's China, the Soviet's Russia, Cuba, north korea, cambobia and all of eastern europe was a disastorous experiment - so we don't want any of that.

 

[butchersapron]

You're a socialist. mears is now a socialist.

You shallow pig fucker with no real poltics

 

[Barking_Mad]

Of course I am not a socialist. But sometimes you have to react to events in real time and not hold onto a stern ideology.

And as we know from our knowledge of economics and history, command, communal economies like Mao's China, the Soviet's Russia, Cuba, north korea, cambobia and all of eastern europe was a disastorous experiment - so we don't want any of that.

Well, at least you didnt spend all that time defending the worst administration in US history.

And for your information, the alternative to reckless, feckless, greedy, nbridled Capitalism needn't be the polar opposite.

I know in your binary world its the alternative, but outside your box there is another world.

 

[goebfwai]

I don't think there can be any doubt that the world economy is on the verge of a prolonged slump of unparrelled proportions. The beginning of it has taken root incredibly quickly. It's not going to blow over overnight. Wishful thinking is not just going to make it go away. The rigor mortis that set in within the banks, wave after wave of financial scandals and multi-billion dollar frauds, the collapse in lending, international trade and the consumer rug that is being pulled out from under businesses and people's jobs. Several financial weapons of mass destruction have been unleashed in quick succession.

Question is what steps can raise the now Lazarus economy back from the dead? What will resuscitate an economy that has sustained such shocks?

 

[Divisive Cotton]

There's some great quotes in this New York Times article:

It’s Not Just the Money, It’s the Mind-Set

 

[mears]

Well, at least you didnt spend all that time defending the worst administration in US history.

And for your information, the alternative to reckless, feckless, greedy, nbridled Capitalism needn't be the polar opposite.

I know in your binary world its the alternative, but outside your box there is another world.

I have never advocated unbridled capitalism, this crisis is due in large part to failure of government regulators.

I hope the governments at some point will sell their positions in the banks, I hope for better enforcement of the financial markets and banking systems. I hope banks will not become nationalized in this ordeal.

 

[mears]

Countries turning in and withdrawing from international organizations such as the World Bank and IMF will make matters worse. Governments must fight the drum beat of isolationism - protectionism among their citizens that always sprouts its ugly head in economic crisis. We need to remember our lessons from the great economic depression of the 1930's.

 

[goebfwai]

Very interesting NYT article. It is so true that psychology comes into this a lot. It set me thinking, when a storm of nature comes along you can't control it or stop it, people just need to take preventative and protective measures to minimise the damage, and dust themselves down in the aftermath and re-build. This is what people have been doing for thousands of years. When a man-made financial storm happens, people need to try and develop the same mindset. But there is a real danger that people's reactions go into overdrive, which is understandable as unlike a storm of nature where you know when it has ended, in the current scenario nobody knows or has any confidence when current economic 'storm' conditions will pass.

Problem is when that individual and family level protectionism goes into overdrive and aggregates, translating on to local, regional and national levels. In a globalised free-trade economy, things can then start to become very tribalised in comparison to the old climate of things. It is in times of resource scarcity or even the psychological perception of resource scarcity the thin veneer of civilisation you get in a time of plenty starts to wear off and chip around the edges. The thing that people need to fear most in their reactions to a severe recession is fear itself. What's going on in the economy is a bit like people in more ancient times aware that there would be a bad harvest that year cutting back and hoarding so they would have enough to see them through till next years harvest comes. Problem now is people look at what is happening and see worrying signs of a bad 'economic' harvest for a number of years and that has a very severe effect in a consumer driven economy, as people at many income/wealth levels both re-organise and de-couple their expenditure.

Wealth/capital is only truly worth something when it's working and is circulating, being put to constructive positive good and alleviating poverty and want. All the monetary wealth in the world is worth nothing if economies unravel to such an extent that there is little left to buy because manufacturing and retail closures reach such heights, and things deteriorate and collapse in other areas and levels.

People who can truly afford it might want to do their bit and try a bit of 'retail therapy' and help the world spend it's way out of recession. The wealthier will need to look to the traditions of philanthropism of the past and see what can be done. Aiming to be the richest corpse in the cemetary isn't going to do them or current world problems much good. When Carnegie started giving away all his wealth towards the end of his life he endowed hundreds of libraries worldwide. The transformative effect that had for education and advancement was tremendous. When I was a lad I benefitted greatly from the Carnegie library we had in our community. We could really do with some initiative like that today. Bill Gates seems to have been doing a lot in Africa. Maybe with the Chinese becoming big players in Africa now he will re-focus his philanthropism on the west.

 

[RhymnRzn]

People who can truly afford it might want to do their bit and try a bit of 'retail therapy' and help the world spend it's way out of recession.

That seems like miserable counsel to me. Why not just redeem brothers straightway?

 

[Dr Jon]

Two interesting pieces I spotted on AlterNet:

It's Not Going to Be OK

Plunder and Blunder; How the 'Financial Experts' Keep Screwing You

 

[kropotkin]

I have never advocated unbridled capitalism, this crisis is due in large part to failure of government regulators.

I hope the governments at some point will sell their positions in the banks, I hope for better enforcement of the financial markets and banking systems. I hope banks will not become nationalized in this ordeal.

You utter, utter liar.
For your entire time on these boards you have defended and prosletized a textbook neoliberal free-market fundamentalism of low government intervention and unbridled market forces.
You have consistently pushed this theory, and now you pretend that this is not your position.

Amazingly duplicitous.

So now it emerges that your politics were nothing but pretension, and beneath them were no real beliefs. Did you ever buy it?

 

[mears]

You utter, utter liar.
For your entire time on these boards you have defended and prosletized a textbook neoliberal free-market fundamentalism of low government intervention and unbridled market forces.
You have consistently pushed this theory, and now you pretend that this is not your position.

Amazingly duplicitous.

So now it emerges that your politics were nothing but pretension, and beneath them were no real beliefs. Did you ever buy it?

That is complete nonsense. I believe in tax cuts, free trade and small government. I believe we need a stimulus package here in the states but nothing at the size we are looking at, maybe 500 billion.

Leaders need to get credit flowing through the system. Banks need to lend to each other. Governments need to recapitalize banks. Corporations and small business need access to short term credit. I would hope the US government sells its stakes in banks after the storm blows over. But if the idiot bankers need my taxpayer dollars right now I want restrictions like pay limits.

Welcome to the real world.

 

[gorski]

"Real" world - I love that... In Nazi Germany "real" was too sur-real to mention...

Welcome to the "real" world your like-minded twats created and now all the rest should suffer for it.

Yeah, get "real" and drop the bullshit "theory" and conscience-less praxis!!!

If it were any good this wouldn't have happened!!! The system itself wouldn't have allowed the conscience-less bastards to be able to do this, at least nowhere near to this extent!!!

Indeed, wake up and smell the - coffee? Nope! More like "shit" your like-minded lot dropped us into!!!