Global financial system implosion begins

[hipipol]

Pure hubris. It stems from failing to recognise that the complexity of the global financial system has arisen through self organisation--we didn't design it, it evolved. That means it affects us but we can't control it, at least not through "global governance".

What we *can* do is accept some basic protocols at country level and implement them in each of the major financial systems. You could mandate 100% banking reserves and eliminate fractional banking, run a zero growth 0% interest system and allow banks only to make a profit from intermediary functions, introduce a fixed pricing system, and all that stuff. But you would have to ask people to say cheerio to the illusion of plasma TVs voluntarily rather than wait for them to disappear through violence, and that is probably unlikely.

Sukuk anyone?

 

[gosub]

wot like in Dubai

 

[hipipol]

wot like in Dubai

Not quite

The ref was to Islamic Finacne in general

 

[Falcon]

Saxena wealth management fund on CNBC discussing how it is positioning its portfolio to benefit from irreversible global oil production decline, commencing in 24 months.

The market collapse will occur when the proportion of the market that has accepted it exceeds a critical threshold. I'd argue that, with it being discussed as a wealth management tool in a straight business piece, rather than as a weird theory with the usual balanced "expert opinion" trotting out complacent kant, that moment is upon us.

(Youtube)

 

[A Dashing Blade]

Saxena wealth management fund . . .

Who? Some tin-pot operation with a gift of self-publicity tbh.

 

[hipipol]

Who? Some tin-pot operation with a gift of self-publicity tbh.

Never fucking heard of them either

Its amazing how crappy most of the talking head experts are on the main TV channels - they use some spiv from a retail forex bookie to explain the recent behaviour of the Euro for example.

If they statement is form Julius Baer re ncapital protection I'll listen, these twats.....well it might as well just talk to the mirror it has as muich weight

 

[Dr Jon]

Saxena is a regular contributor on Kitco's comment page.

 

[A Dashing Blade]

Saxena is a regular contributor on Kitco's comment page.

That home page just fills me with confidence that they are a reputable operation

Right, lets pull the guy's bio out from Bloomberg . . .

1999 - 2001 Independent Financial Advisor for Richmond Asset Management
To quote from the current "Careers" part of their website . . . "Candidates would need to be self funding during the first month and would have the opportunity to earn commission. The successful candidates will have the
opportunity of selling investments and financial services in sales of a range of products across Asia and Australia."

2001 - 2005 President, Tyche Group Ltd - seems to be some sort of insurance broking / IFA specialising in aircrew ("We have been very successful in assisting many of the Aircrew at Cathay Pacific to make the best of their remuneration package".

2005 - date CEO/Money Manager Puru Saxena Wealth Management - 1) named the company after himself 2) no Bloomberg email a/c listed 3) company name has "Wealth Management" in it's name indicating private client rather than institutional 4) fails to disclose assets under management on web-site.

Pound to a pinch of pishit, that cv says "chancer"

 

[Dr Jon]

That home page just fills me with confidence that they are a reputable operation

Been going since 1977, now one of the biggest precious metal suppliers in the world. Dodgy as fuck, obviously.

 

[A Dashing Blade]

Been going since 1977, now one of the biggest precious metal suppliers in the world. Dodgy as fuck, obviously.

Er . . . no they're not, they're one of the larger internet-based precious metal retailers. Looking at the website wrt gold for example, they appear to concentrate on the gold coin market.

Dodgy as fuck they may not be, but anything concentrating on the retail (ie Joe Punter) market is, by and large, more interested in turning over volume and therefore have a vested interest in puffing up the market.

I genuinely havn't looked but would be surprised if you could find a "Sell" recommendation on their website for any product that they "trade".

Any "research" on that web-site should be plastered with extreme wealth-warnings imo.

Actuaklly, scrap that, they are dodgy as fuck, it took about 3 minutes googling to dig up some dirt . . . .

 

[Falcon]

The issue isn't who is talking on the piece. It's who isn't. This is one of the first routine business segments on prime TV incorporating peak oil that hasn't had the mandatory talking head discounting it as a "theory". It connects backward into what the researchers for the program are now looking at, and forward into the momentum of awareness in the financial community.

 

[mack]

The Dow has just taken a severe swan dive

 

[teqniq]

You gotta laugh you just gotta:-

The confusion over prices in a dramatic half-hour of trading will alarm regulators. One report said a bank's computer had attempted to sell $16bn of shares instead of $16m. An inquiry is inevitable.

from the Grauniad

 

[goebfwai]

I was flitting between news channels at the time - BBC 24, Sky - and ended up watching the fall live on CNN. All of the channels were covering the latest developments in the Greek imbroglio (some street skirmishes or something). One moment the Dow was showing the same but relatively stable 200-300 point drop. Within the space of a minute or so it had doubled to 450 and doubled again to a 900 drop plus (roughly 9%) within the same space of time. Extraordinary. There is a story on Forbes.com about how certain large percentage trades (those where prices moved over 60% before/after? 240pmUS) were being cancelled on yon NASDAQ thingymy which may explain how it ended up closing only a 'mere' few hundred down. Who knows? The pound has also plummetted 2.5% against the dollar. In after hours trading gold is up roughly 2% in dollar terms and about 4% in pound terms.

 

[Barking_Mad]

LOL

Jobs up 290,000; jobless rate rises to 9.9 pct.

WASHINGTON – More confident employers stepped up job creation in April, expanding payrolls by 290,000, the most in four years. The jobless rate rose to 9.9 percent as people streamed back into the market looking for work.

The hiring of 66,000 temporary government workers to conduct the census helped overall payroll growth last month. However, private employers — the backbone of the economy — boosted jobs, too. They added a surprisingly strong 231,000 positions last month, also the most since March 2006, the Labor Department reported Friday.

"Clearly companies have a newfound confidence in the future of the economic recovery and on the part of their own business prospects," said Joel Naroff, president of Naroff Economic Advisors. "The broadbased job gains are an indication that businesses are feeling more comfortable about expanding their work forces," he said.

The unemployment rate rose from 9.7 percent in March to 9.9 percent in April, mainly because 805,000 jobseekers — perhaps feeling better about their prospects — resumed their searches for work.

 

[TopCat]

Stock markets continue their slide this afternoon.

 

[Falcon]

I expect we are going to see some announcements from the UK government in the next few days about what their plans are:

Clarke said there was now a growing threat of a credit ratings downgrade for the UK.

'Ahead of the election we saw the risk of downgrade at close to 50 percent. On the basis of the election outcome as it looks now, a downgrade looks to be the most likely outcome,' he said.

Brian Hilliard, UK economist at Societe Generale, would seem to agree: 'The markets have been patient with the UK but time is running out fast. There could easily be an attack on the pound and on UK government securities if the markets sense deadlock in the political negotiations.'

The key issue for investors and the ratings agencies is addressing Britain's record deficit. The UK needs to sell more than £185bn of gilts this fiscal year at a time when the Bank of England is no longer buying gilts for its quantitative easing programm. With the sustainability of the AAA credit rating is in doubt, selling that debt could become more difficult.

That makes the passage of any emergency budget particularly important, not to mention the initial market reaction to it.

Market analysts have been saying that a broad coalition might prove more capable of fiscal tightening than a minority government. But the election result leaves parliament so finely balanced that even putting that together looks relatively difficult.

-- Serious threat to UK's credit rating, thisismoney 7th May

They are going to have to break silence now on the unsustainable level of public sector spending. Half of the £700 billion public sector budget is benefits (30%), health (15%) and education (10%) - the next biggest is debt interest (6%) and then not enough to make much difference. They need to find £42 bn to cover this year's debt interest and anything less than that as capital repayment hardly touches the sides. Can't see them getting more than a few billion net tax receipts from tax increases with the contraction in revenues elsewhere. So £70 billion (10%) savings from public sector seems the minimum. £200 billion saving would bring us back to where we were in 2005. My guess is they'll leave education but bring the benefits, pensions and the NHS back into reasonable limits.

Of course, in our country, anything less than a 3% increase is seen as robbery, and any cuts will bring Athens onto our streets and leave the credit rating agencies distinctly unimpressed.

 

[mears]

This was a real tough week on all equity markets. Gold rising, US dollar rising, Euro falling, oil falling and and world stock market volume rising. This was the same scenario playing out in 2008-2009.

I don't think we are heading for another economic meltdown however. Northern Europe will probably bail out their Euro colleagues in Greece, Portugal and Spain.

 

[A Dashing Blade]

. . My guess is they'll leave education but bring the benefits, pensions and the NHS back into reasonable limits.

I'll make you 3% income tax hikes across the board, 10-15% overall cut in public spending and 20% VAT.

 

[Jessiedog]

They really should re-instate something like the Glass-Steagall act all over the world and split off what I would call the "boring but vital" High Street banks that Joe Public uses to keep his savings, pay his bills, get loans for cars, homes and small businesses etc, from the high-risk "casino" part of banking.

And then legally prevent those "boring but vital" banks from then getting involved in anything much more complex than the plodding but necessary work of taking deposits, paying direct debits and cheques, running ATMs, and making loans.

At least that way, if an investment bank overreaches themselves, its a bunch of city boys that lose their jobs and money, which, although serious, could be treated like any other larg-ish business failing, rather than having single entities that cannot be allowed to fall whatever the cost of bailing them out.

Will various govrnments have the balls to do something like this?

That would certainly be interesting, but I rather think that the horse has already shot its bolt.



Woof

 

[Jessiedog]

And meanwhile in China, things are already beginning to unwind.

What "engine of growth" will the "global village" rely upon now to drive "prosperity"?


This'll go well.





woof

 

[Falcon]

I'll make you 3% income tax hikes across the board, 10-15% overall cut in public spending and 20% VAT.

That's plausible.

 

[goebfwai]

It's easy to forget, but it's not just hung parliament horse trading going on this weekend...

Euro crisis forces tempo. Human contact softens ideology.
[UPDATE 1245: European Commission finalising proposal right now. Britain's position: no contribution to 60bn stabilisation fund, but not opposed. Opposed to EMF says Treasury. Not clear whether the 600bn proposal equivalent to quantitative easing is in the Commission draft]http://www.bbc.co.uk/blogs/newsnight/paulmason/2010/05/euro_crisis_forces_tempo_human.html

Osborne sounded out by euro finance ministers
1131am
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/05/osborne_sounded_out_by_euro_fi.html

THE DECLINE OF THE WEST [?]
http://globalguerrillas.typepad.com/globalguerrillas/2010/05/the-decline-of-the-west.html

 

[ferrelhadley]

Breaking support

Commentary: Most technical analysts are poised to turn bearish after today

Stocks' big drop today is sending the market below several major technical support levels.

If the market doesn't recover by the close, most technical analysts who haven't already turned bearish will finally do so.
As of mid-day trading in New York, for example, the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 10,222, -222.04, -2.13%) is below its close on May 7, the day after the infamous "Flash Crash" that saw an intra-day decline of nearly 1,000 points. The May 7 close, of course, marked the low -- until today -- of the correction that began from the April highs.

Dow down again by just off off 3% mid afternoon.
Thats down for 6 days. Everyone and their granny is saying it is on sovereign debt fears yet one of the biggest debtors the US is seeing a flight to the dollar.

Maybe its the first wiff of the ending of government cash to keep the European economies afloat and the dawn of realising that the welfare queens on wallstreet need to get of state support.

Jobless unexpectedly poor in the US.

The number of people applying for unemployment benefits shot up 25,000 in the latest week, indicating continued weakness in the U.S. job market, government data showed.

Initial jobless claims rose to 471,000 in the week ended May 15, the highest level in a month, the Labor Department reported Thursday.

Uber bear talks down China.

Are we back to the new normal again?

 

[xes]

24 experts warn of 2010 meltdown
http://investmentwatchblog.com/here...nspredictions-as-they-have-been-collected-by/

I've no idea how good these "experts" are, but it makes for some interesting reading.
Also, this guy http://www.businessinsider.com/dow-...rica-by-the-end-of-the-year-2010-5#ixzz0oOVmc
“When an 86 year old guy who has been writing about the markets for 50+ years tells you something, it pays to listen.”

Time to prepare.

 

[ferrelhadley]

I've no idea how good these "experts" are, but it makes for some interesting reading.

Kunstler is a serial doomer who was long on millenium bug and short on sense. La Rouche is a Judophobic conspiracy nut. Schiff has been calling doom on the US economy for about a decade now. I dont recognise the other names as being worth much.

Now this is a name to recon with.

ROUBINI: 20% Market Selloff Coming. Roubini has been more right than almost anyone else on this. His analysis also tends to be quite dry and lacking political rhetoric unlike many others.

PIMCO's Gross: Markets exhibiting "flight to liquidity"

Bill Gross head of PIMCO also made alot of good calls on this crisis including buying Fannie and Freddie just before the government bailed them out saying he thought the government had to bail them out.


More homeowners choose to default on loans
This is a story that has been burning since the 2007 crisis in subprime, people just stopping paying mortgages. Basically in many areas the banks are not foreclosing due to the house not being worth the effort when they put it on the market, people living in the house keeps area values up, people living in the house keeps the house intact (US houses are made of wood and rot is a big problem in wetter areas) and the courts being too clogged up.

For one, there's a contagion effect: As more people watch their friends or neighbors choose to default, the more it becomes a viable option for homeowners who may otherwise wait years just to return to a positive equity position in their properties, said Sam Khater, senior economist for CoreLogic, a provider of consumer, financial and property information. The volume of foreclosures on the market today is also chipping away at the stigma that used to come with defaulting on a home loan.

Smell the fear.

 

[ferrelhadley]

I like graphs.

http://research.stlouisfed.org/fred2/series/MULT

In monetary economics, a money multiplier is one of various closely related ratios of commercial bank money to central bank money under a fractional-reserve banking system.[1] Most often, it measures the maximum amount of commercial bank money that can be created by a given unit of central bank money. That is, in a fractional-reserve banking system, the total amount of loans that commercial banks are allowed to extend (the commercial bank money that they can legally create) is a multiple of reserves; this multiple is the reciprocal of the reserve ratio, and it is an economic multiplier.[2]

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

Now you can kick off a bunfight about what this means, wether it is short term hoarding by the banks and will result in a serious inflationary rebound when they start lending again or if it means that the US government is running out of options to generate inflation. To 3 generations brought up on the problem in economics always being inflation, deflation seems impossible. Perhaps it is, it may even be probable that in a fiat currency system deflation is impossible as it tends to afflict those backed by spicie or bullion......

But it does give you something to chew on.

 

[goebfwai]

US Senate approves sweeping reforms of Wall Street: "The US Senate has passed a bill providing the most sweeping overhaul of financial regulations since the 1930s." http://news.bbc.co.uk/1/hi/business/10134766.stm

Wonder if Clegg and Cable plan anything similar in Britain?

 

[spring-peeper]

Since this is on global finances....

Have any of you heard about the proposed bank tax that is supposed to be discussed at the next G8/G20 meetings?

From what I've gleaned, the idea is to put a tax on the banks and use it as a reservoir of types to ensure that sufficient funds are available to bail out the financial sector should problems happen again.

It's a nice idea - if your banks failed and you had to bail them out.

Ours didn't - our only real expense (from an Ontarian view point) was bailing out the auto industry.

Our prime minister is on a mission to stop the global bank tax. He thinks that our banks performed well and shouldn't be penalized by adding extra taxes. As a consumer, I know this tax will be paid for by increasing my banking costs.

To date, the only country that seems interested in helping to stop this global tax is India.

After reading some of the German comments, I think that they will be pushing for the tax. iirc - the US is in favour of the tax.

If any of the economic experts on this board could comment on this, I'd appreciate it. I keep reading the documentation on the issue, but I have always found that U75 explains it better.

Anyone???

 

[ferrelhadley]

Have any of you heard about the proposed bank tax that is supposed to be discussed at the next G8/G20 meetings?

From what I've gleaned, the idea is to put a tax on the banks and use it as a reservoir of types to ensure that sufficient funds are available to bail out the financial sector should problems happen again.

The horses have gotten into the paddock, grown wings, flown the to the moon and evolved into a super race that is now nuking our economy from orbit and our glorious leaders are discussing wandering down to the stable to see if the barn door needs locking.



When they pull their fingers out their collective arses and try to actualy work out what is going on, then they can start getting some bright ideas on what to do. Plan A was: no need to worry house prices are showing their true value. Plan B was: The sub prime crisis is contained. Plan C was: This is only a financial sector crisis and wont affect mainstreet. Plan D was: CHRIST FUCK GIVE THE BANKERS ALL THE MONEY THEY NEED QUICK MAKE IT STOP HEEEEEEEEEEELLP!!!!!!!! I am not sure which plan we are on now as they have been bailing out like mad and hey presto the fundamental issues have not yet been resolved.
The value of housing throughout the west is still too high.
The amount of write downs absorbed by banks and other financial institutions to cover the coming losses have been too low.
The stock market is massively over valued (check P\E ratios)
The bulk of the population has massively under saved for 30 years now and needs to save like mad from now till they meet eternity.
The worlds pension plans both state and private are defacto bankrupt, even given moderate growth let alone the falls we are due to see.
That whole 'race to the bottom' and all that that the smelly anti globalisation crusties were bitching about over Levellers tracks back in the late 90s.... it happened. We have had 20 years of wage deflation in the west without the emerging economies raising incomes to take up the consumption slack. They slack was taken up by the bubble in house prices creating artificial collateral to borrow against and a vast boom in consumption funded by borrowing and no savings.......... them chickens, they is a coming home to roost.


Oh and lots more shit about the wealthy no longer contributing to taxation and so on and on and on and on and on......

Most of it has been mainstream discourse for years and in the case of pensions and loss of the western middle class decades.



Now this tax, this is going to fix what again?

Did I mention peak oil and mitigation of climate change?