Global financial system implosion begins

[A Dashing Blade]

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) Two more years
2) Wrt stock/bond markets . . . one more downeard lurch to come if EEurope starts to implode economically => one or more Euroland banks going down & Austria seriously getting in the shit.
3) Nope.

 

[kyser_soze]

1) Two more years
2) Wrt stock/bond markets . . . one more downeard lurch to come if EEurope starts to implode economically => one or more Euroland banks going down & Austria seriously getting in the shit.
3) Nope.

That was a 2 part question - are you saying no the packages won't work, or it's not throwing good money after bad?

 

[Divisive Cotton]

1) Two more years

Two more years before we hit rock bottom - the house price decline will continue over a full ten year stretch

 

[goebfwai]

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) When you've got such substantial drops in economic growth in different countries around the world so quickly, certainly looks like a global recession of at least a year or two MINIMUM. If you leave aside the technical, academic measurements of recession though, it may well feel like a recession for most people for as much as FIVE years. If resource depletion (oil, fresh water, food), climate change factors worsen and an escalating series of resource wars kick off then it could last longer - perhaps feeling like a decade to all intents and purposes - but then again war is actually both a destroyer and a stimulator of economic growth (as well as a destroyer of lives), which is why it is my hope that energy and direction is put into the global fight against adapting to climate change, rather than each other/other countries!

2) probably a bit further to go

3) Could work eventually, it's hard to say. I think stimulating people's eroded confidence in the future, could be more if not equally important to any stimulus bill.

 

[Sunray]

Japan has just imploded.

46% drop in exports in 1 month is catastrophe. Its going to be hard for any large company to put the breaks on with such force, supply contracts are for more than a month.

People have stopped buying.

I think the lending stimulus that they are trying to push through has missed its zenith. Who is going to borrow when the world is heading for rack and ruin. Unfortunately the world economy is based on the fractional banking system so it requires people to borrow. Get it into place but this cannot be dealt with by single Governments. I think the best that any government can do is fight the bush fires as best it can.

http://news.bbc.co.uk/1/hi/business/7909248.stm

 

[Crispy]

indeed

 

[Bob_the_lost]

Jesus.

 

[Sunray]

Thats like one of those comedy graphs you see in cartoons.

 

[Jessiedog]

indeed

Shit!



D'you have a 20, 30 or 50 year chart for comparison, Crispy?


(Sorry to be lazy.)





Woof

 

[Crispy]

Can't find one. That one's straight from the BBC.

 

[Crispy]

Here's one that goes back a few more years. Bear in mind that this one shows rate of change, not total exports. Integrating under the curve is an exercise for the reader

and bear in mind we're now another 10% points below the lowest mark on this chart. With plenty more space to fall, no doubt.

 

[Jessiedog]

Here's one that goes back a few more years. Bear in mind that this one shows rate of change, not total exports. Integrating under the curve is an exercise for the reader

Cheers, Crispy.



Apples and oranges, tho'.

I was hoping for one to compare with the previous chart over a longer period. T'would be interesting to put the current decline into a longer timeframe (even given Japan's relative lethargy over the last decade + ).





Woof

 

[Crispy]

ffs. I can find japanese exports of upright or grand pianos to china since 1994, but nothing generic

 

[Sunray]

 

[SpookyFrank]

3) Could work eventually, it's hard to say. I think stimulating people's eroded confidence in the future, could be more if not equally important to any stimulus bill.

A lovely thought, if only the stimulus packages weren't robbing the future blind and thus making it so confidence won't be any use to anyone because they'll all be too busy looting. You can't buy confidence, but you can bankrupt a country in the attempt.

 

[goebfwai]

Things are so bad that Roubini has coined the term "stagdeflation" - a combination of stagnation, recession and deflation – to describe the situation when four forces begin operating: a slack in goods markets, a "recoupling" of the rest of the world with the US recession, a slack in labour markets, and a sharp fall in commodity prices. Given the need for such dire terms, it will obviously take a fair bit of time and wide-ranging policy action to drag us out of it. "Technically speaking, recession is going to continue all the way to the end of this year and next year, even if there is a technical recovery of growth to positive. Whether there will be a recovery in 2011 is not something that we can take for granted either - it depends very much on the policy actions to be undertaken. There is a meaningful chance of an L-shaped Japanese-style stagnation or even depression – I would not rule that out."

http://businessneweurope.eu/story1470/INTERVIEW_Prophet_of_doom_sees_worse_times_ahead

 

[Kid_Eternity]

1) Two more years
2) Wrt stock/bond markets . . . one more downeard lurch to come if EEurope starts to implode economically => one or more Euroland banks going down & Austria seriously getting in the shit.
3) Nope.

If you don't think the stimulus stuff is going to work what makes you think this is going to last two years?

 

[Wolveryeti]

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) Until 2011

2) Definitely.

3) They are going to have little effect because they are primarily addressing the symptoms, not the causes of the depression. Buying junk, trying to reflate the housing market, getting banks to lend without directing the lending, will all perpetuate what caused the crisis (bad lending, misallocation of resources).

A corner will only be turned once consumption starts occuring on the appropriate scale in the countries that have the real money - China, perhaps India. The flipside of this is the West starting to produce something these countries want to buy.

If I was Gordon Brown, arranging a summit with these countries to coordinate a transition of their economies from export-led to consumer would be a much higher priority than a lot of the shit he has been mucking around with (VAT cuts, mortgage holidays etc)

 

[Sunray]

Germany has been selling great stuff to China for years.

All the high tech stuff and cheap good like bbq's were manufactured using German equipment. All those electronics good were manufactured using Japanese equipment.

These economies are being even harder hit than ours because nobody is buying anything.

I think pushing the technical ability of this country is worth doing.

 

[Jessiedog]

ffs. I can find japanese exports of upright or grand pianos to china since 1994, but nothing generic

Meanwhile some numbers coming out of China (no link, sorry, it's from the SCMP).

Twenty million migrant workers lose their jobs in manufacturing and cionstruction.

January exports down 18% y-o-y.

January imports down 43% y-o-y.

Investment in the property sector industrial/commercial/residential, dropped to zero late last year.

Steel production in 2008, down 20% from 2007.

Electricity consumption in 2008, down 10% from 2007.



Ouch!


Woof

 

[Fruitloop]

I reckon the whole notion of coming out of the recession, if by that you mean returning to the sort of situation we've had over the last ten years or so in the West, is probably misguided. It seems unlikely to me there will be any return to that kind of economy here in the foreseeable future.

 

[g force]

Indeed..but the Japan model is interesting in that while you can get positive economic growth it doesn;t translatae as you say to a return to anything like 2004/05 growth. What happens is the growth steadily increases but without ever getting back to previously seen levels.

So while we may technically be out of a recession at the end of 2010, it won;t mean a sudden return of hundreds of thousands of jobs...there won't be massive investment in the UK it will be far more piecemeal than that and only in specific industries.

 

[London_Calling]

'growth' was always Gordon Brown's mantra, his entire focus as Chancellor.

I think even the mainstream was starting to become concerned at the wider cost of that focus; a million economic migrants, new housing estates appending to every town, over-crowded roads and transport, more runways, more airports, greater corporate influence over public policy and privacy, the greater the need for two-incomes per household, less and less family time, debt . . . the more the ecoonomy grew the poorer seemed the quality of life

It really would be helpful if society used this little setback to review the costs and benefits relating to unquestioned 'growth', as well as define exactly what aspects of it - at this point in the economy's development - are beneficial and which are not.

 

[g force]

Indeed....my biggest fear though - speaking for personal experience having worked on a tidal energy project - is that over the last few years there are companies making massive strides in renewabale energy...wind, tidal, traditional wave, solar (as in get the unit cost down to a decent/affordable level). Now is the time to accelerate that investment but funding is already starting to be cut off meaning we could see some amazing stuff not being developed to it fullest that could be a huge benefit to soceity overall.

Instead we get a third runway at Heathrow...whooppee fucking do.

 

[A Dashing Blade]

If you don't think the stimulus stuff is going to work what makes you think this is going to last two years?

Gut feeling, nothing more. But note I'm talking about two years till it bottoms out, then I would guess another 2 -3 years of flatlining so call it 5 years in round numbers before the start of a pick-up.

(this in the context of how I see financial markets developing, which, to cut to the conclusion, ends in fragmentation and, paradoxically in the current political climate, the creation of numerous small hedge-funds in which big banks have equity stakes.)

 

[kyser_soze]

Giant breadlines form in US

 

[Wolveryeti]

It struck me recently that this is another one you could lay at the door of the wonderful IMF.

One consequence of the draconian 'rescue' packages they offered the victims of the 1997 banking crisis was a desire in Asian countries to never be placed in a position of need again - hence developing export-led economies based heavily around saving, and in particular, hoarding large amounts of foreign currency. This money has found its way back to the West, inflating the bubble which has just burst.

 

[A Dashing Blade]

. . . hence developing export-led economies . . .

They'd been following that path since the late 80's

 

[Wolveryeti]

Yeh. But the point is, their mode of development was weird, kind of even Soviet - making mostly everything to export, saving a ridiculous percentage of earnings, thus choking off any avenue of potential domestic demand. The IMF had a role to play in all this. Government scrimping on social security (because of the aversion of turning to the IMF) leads to a high savings rate in the general population.

 

[Sunray]

Massive domestic demand in Japan could be stoked by simply legislating for the 48 hour working week and 25 days a year holiday and really enforcing it.