Global financial system implosion begins
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Barking_Mad
Non sibi sed omnibus
pinkychukkles
Feed Your Head
There's a bit at the end of JK Galbraith's book The Great Crash, 1929 where he basically says that the nature of bubbles is such that there's no incentive for anyone who is a position of influence, to say that there's a bubble. By doing so, you would only invite opprobrium upon yourself by pricking the bubble; or in today's globalised world if you tried to rein it all in in your country, all the investment money would just flee to another country with dire consequences for where you are. Essentially, by saying anything you would effectively be writing your own P45 as everyone would blame you for calling time on the rising market, (aka an unsustainable bubble) therefore you just play the game and pretend all is good until it all dissolves of it's own accord (and is a substantially bigger bubble as a result).
Kaka Tim
Half Arsed and Slapdash till I Die
Its the case of the 'greater fool'. Yes investor might well know that a market is unsustainable, but they risk buying into it becasue they feel they'll be able to sell on your investment before the music stops. And shouting that its all a house of cards doesn;t serve the interests of anybody who is making money out it.
The investors of the likes of lehman borthers, HSBC etc got their fat bonus payments whilst the going was good and can now sit back and enjoy their fraudlently obtained riches whilst the rest of us get royally fucked up the arse.
pinkychukkles
Feed Your Head
Yep - that's pretty much what the present system of capitalism facilitates via the boom and bust cycle which, despite Gordon's superhuman powers that enable him to 'save the world', he hasn't abolished. How he must regret that, I think it will be his 'Chamberlain' moment...
Soros sees no bottom for world financial "collapse"
Reuters. Feb 21, 2009
More hysterical journalism. So then the demise of the American Empire.
Reuters. Feb 21, 2009
More hysterical journalism. So then the demise of the American Empire.
Sunray
Its sunny somewhere.
I was watching Newsnight the other day and the EU banks have pushed into Eastern European countries, now owning 99% of the banks in the region.
There is no country in Eastern Europe that has less than a 1 in 5 chance of failure. The Ukraine is teetering on the edge and is expected to default very soon, with a 90% chance.
The combined total of debt lent to Eastern Europe is in excess of 1 trillion euros. If they start to default it will cause a wave of bank failures across Western Europe and may well bankrupt some of those countries because (as the man in that excellent Bloomberg TV clip above says) some of the banks are too big and therefore too expensive for the countries they are in to save. Ireland banks have liabilities of more than five times Irelands GDP.
Its looking increasingly likely that Germany, France and other EU countries will all have to chip in to save the banks in neighbouring countries. Otherwise it will mean the end of monetary union. You want to see a shock to the financial system, I think that would be the beginning of the end.
There is no country in Eastern Europe that has less than a 1 in 5 chance of failure. The Ukraine is teetering on the edge and is expected to default very soon, with a 90% chance.
The combined total of debt lent to Eastern Europe is in excess of 1 trillion euros. If they start to default it will cause a wave of bank failures across Western Europe and may well bankrupt some of those countries because (as the man in that excellent Bloomberg TV clip above says) some of the banks are too big and therefore too expensive for the countries they are in to save. Ireland banks have liabilities of more than five times Irelands GDP.
Its looking increasingly likely that Germany, France and other EU countries will all have to chip in to save the banks in neighbouring countries. Otherwise it will mean the end of monetary union. You want to see a shock to the financial system, I think that would be the beginning of the end.
Barking_Mad
Non sibi sed omnibus
European-banks-may-need-16.3-trillion-bail-out-EC-dcoument-warns
The articles original title/http hasn't been changed.
As has been said before though, the Telegraph is eurosceptic.
...
Edit to add:
World Trade Collapsing, Over-leveraged Bankrupt European Banks
Feb 14, 2009
Partisan coverage I'm sure but interesting to read...
elbows
Well-Known Member
The Eastern Europe fears are not just the Telegraph foaming at the mouth, it hit the news this week because the World Bank said the EU needs to do much more:
http://www.businessweek.com/globalb...?chan=globalbiz_europe+index+page_top+stories
http://www.businessweek.com/globalb...?chan=globalbiz_europe+index+page_top+stories
elbows
Well-Known Member
James Howard Kunster's latest blog post is worth checking out. I doubt very much (from his last paragraph) that extra bank holidays during the crisis over and above the ones there are already could be seriously on the cards. They have enough as it is already surely. Certainly an advance in nationalisation for certain US banks look likely.
http://jameshowardkunstler.typepad.com/clusterfuck_nation/2009/02/presidents-day.html
http://jameshowardkunstler.typepad.com/clusterfuck_nation/2009/02/presidents-day.html
Sunray
Its sunny somewhere.
Newsnight Fri 20th Feb from about 13min in, its on the iPlayer.
There's a rumour doing the rounds among financial sorts in this neck of the woods:
As we know, currently, China is the largest holder of US$ in the world (foriegn currency reserves). China has about US$ 2 trillion in the bank of which about half is held in US$ (mostly US Treasuries).
The US is currently cranking up its issue of debt in order to finance the "bailouts" and try to keep the economy stimulated. Pretty much every govt. is doing the same thing - everyone is trying to raise money through debt and there just aren't that many peeps in the market with the kind of cash needed to mop up this newly-issued govt. debt.
The US desperately needs China to keep buying Treasuries, if it stops or, god forbid, it starts selling what it holds, the US will be in deep DEEP trouble.
Meanwhile, the US government is very good at investigating people, tracking their movements, their communications, their assests and their bank accounts.
So ...... the theory goes, that ......
The US has made it clear to the leadership of China (quietly,) that it (the US govt.) has assembled a detailed list of the huge number of senior Chinese ministers/officials throughout the country that hold cash and assests overseas and the details of the value and whereabouts of each officials' holdings and assets.
And it has made it even clearer that, should China stop buying US Treasuries, the list will very quickly be made very public.
Given the delicate state of China's economy (20 million migrant workers have just lost their jobs in Guangdong Province in the south and been sent back to their villages; six million fresh university graduates every year looking for work and lucky to get jobs as cleaners/chambermaids, etc,) and given the deep-seated loathing that the populace holds for corrupt officials, the publication of such details would lead to massive, nationwide, social unrest - with a real danger of the collapse/disintigration of the Chinese Communist Party.
I don't doubt that China will continue, at least for the forseeable future, to purchase newly-issued, US Treasuries - even if it is gradually selling down its existing stock (very quietly, so as not to send the value of these assets plummeting, as would surely happen if word got out that China was unloading).
Very conspiratorial!
Woof
As we know, currently, China is the largest holder of US$ in the world (foriegn currency reserves). China has about US$ 2 trillion in the bank of which about half is held in US$ (mostly US Treasuries).
The US is currently cranking up its issue of debt in order to finance the "bailouts" and try to keep the economy stimulated. Pretty much every govt. is doing the same thing - everyone is trying to raise money through debt and there just aren't that many peeps in the market with the kind of cash needed to mop up this newly-issued govt. debt.
The US desperately needs China to keep buying Treasuries, if it stops or, god forbid, it starts selling what it holds, the US will be in deep DEEP trouble.
Meanwhile, the US government is very good at investigating people, tracking their movements, their communications, their assests and their bank accounts.
So ...... the theory goes, that ......
The US has made it clear to the leadership of China (quietly,) that it (the US govt.) has assembled a detailed list of the huge number of senior Chinese ministers/officials throughout the country that hold cash and assests overseas and the details of the value and whereabouts of each officials' holdings and assets.
And it has made it even clearer that, should China stop buying US Treasuries, the list will very quickly be made very public.
Given the delicate state of China's economy (20 million migrant workers have just lost their jobs in Guangdong Province in the south and been sent back to their villages; six million fresh university graduates every year looking for work and lucky to get jobs as cleaners/chambermaids, etc,) and given the deep-seated loathing that the populace holds for corrupt officials, the publication of such details would lead to massive, nationwide, social unrest - with a real danger of the collapse/disintigration of the Chinese Communist Party.
I don't doubt that China will continue, at least for the forseeable future, to purchase newly-issued, US Treasuries - even if it is gradually selling down its existing stock (very quietly, so as not to send the value of these assets plummeting, as would surely happen if word got out that China was unloading).
Very conspiratorial!
Woof
kyser_soze
Hawking's Angry Eyebrow
There's a rumour doing the rounds among financial sorts in this neck of the woods:
As we know, currently, China is the largest holder of US$ in the world (foriegn currency reserves). China has about US$ 2 trillion in the bank of which about half is held in US$ (mostly US Treasuries).
The US is currently cranking up its issue of debt in order to finance the "bailouts" and try to keep the economy stimulated. Pretty much every govt. is doing the same thing - everyone is trying to raise money through debt and there just aren't that many peeps in the market with the kind of cash needed to mop up this newly-issued govt. debt.
The US desperately needs China to keep buying Treasuries, if it stops or, god forbid, it starts selling what it holds, the US will be in deep DEEP trouble.
Meanwhile, the US government is very good at investigating people, tracking their movements, their communications, their assests and their bank accounts.
So ...... the theory goes, that ......
The US has made it clear to the leadership of China (quietly,) that it (the US govt.) has assembled a detailed list of the huge number of senior Chinese ministers/officials throughout the country that hold cash and assests overseas and the details of the value and whereabouts of each officials' holdings and assets.
And it has made it even clearer that, should China stop buying US Treasuries, the list will very quickly be made very public.
Given the delicate state of China's economy (20 million migrant workers have just lost their jobs in Guangdong Province in the south and been sent back to their villages; six million fresh university graduates every year looking for work and lucky to get jobs as cleaners/chambermaids, etc,) and given the deep-seated loathing that the populace holds for corrupt officials, the publication of such details would lead to massive, nationwide, social unrest - with a real danger of the collapse/disintigration of the Chinese Communist Party.
I don't doubt that China will continue, at least for the forseeable future, to purchase newly-issued, US Treasuries - even if it is gradually selling down its existing stock (very quietly, so as not to send the value of these assets plummeting, as would surely happen if word got out that China was unloading).
Very conspiratorial!
Woof
Heh, if it's true (and there's no reason to think that it doesn't contain more than a whiff of truth) it's a great piece of brinkmanship. The only thing that doesn't ring true about it is that it's unecessary - China and the US are like two drunks supprting each other; if one falls the other goes with them.
Barking_Mad
Non sibi sed omnibus
This video snippet dates from November 2008, but the picture painted (i.e. oil prices at $30, eastern European banking crisis, commodity prices dropping off a cliff) sounds a lot like the present day.
Brad Setser's Nightmare Scenario
[The full video is at: http://www.cfr.org/publication/17769/ ]
Brad Setser's Nightmare Scenario
[The full video is at: http://www.cfr.org/publication/17769/ ]
Jessiedog> Surely the Chinese would clamp down on any spreading of this information should it be released itno the public sphere by US intelligence?
I'm sure they can't stop everyone, but I would have thought a bit of brutallity and ramping up their Great FireWall of China, would probably put a lot of people off looking too hard?
I'm sure they can't stop everyone, but I would have thought a bit of brutallity and ramping up their Great FireWall of China, would probably put a lot of people off looking too hard?
gorski
customised free radical
gosub
~#
CFP active sonar perhaps?
I'm not convinced its that crash, I was going to say it depends on how far ahead the future is mortgaged,
but thinking about it logically 20 years seems rational so will be really tight, that's under 3*7
I need not be that crash, but if its not addressed, then if this is,as Greenspan called it "a once in a century event"
then that one would be akin to say what plague was to the dark agesA couple of perspectives on Germany and the EUro
Abrose Pritchard in the Telelgraph
and
Sebastian Dullien and Daniela Schwarzer on Project Syndicate
Sunray
Its sunny somewhere.
Not for me, sadly...
Just checked again, its still there. Do you not have a decent ISP or computer or something?
http://www.bloomberg.com/apps/news?pid=20601039&sid=aQYMYvlz.Lkw&refer=home
Makes some reference as does the above links.
gorski
customised free radical
Ha, it works, actually: http://news.bbc.co.uk/2/hi/programmes/newsnight/7906036.stm
Roundtable discussion on the economy on ABC News with Roubini, Krugman and others:
http://abcnews.go.com/Video/playerIndex?id=6932460
http://abcnews.go.com/Video/playerIndex?id=6932460
Divisive Cotton
Now I just have my toy soldiers
http://news.bbc.co.uk/1/hi/business/7908810.stm
As other contributors have noted attention will shift more over to Eastern Europe in the coming months as the extent of their debt starts to impact on the Western economies...
A few questrion I'd be interested to hear your responses on:
1.) How much longer do you think this recession will last?
2.) Do you think we have much furtehr to go before we hit the bottom, is it still a long drop yet?
3.) Are the stimulus bills going to work, or simple be throwing good debt after bad?
1.) How much longer do you think this recession will last?
2.) Do you think we have much furtehr to go before we hit the bottom, is it still a long drop yet?
3.) Are the stimulus bills going to work, or simple be throwing good debt after bad?
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