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Global financial system implosion begins

All the predictatrons are saying that too. Septemberr through to November.

I guess we'll have to wait and see.
 
xes said:
Is a stock market crash imminent?
http://www.thestreet.com/story/10835851/1/hindenburg-omen-is-a-stock-market-crash-imminent.html
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Difficult to say. Markets often over-react - either over selling or over buying. That said, I think that the rapid 'recovery' in share prices after the stock market crashes of 2008-2009 probably wasn't supported by any fundamental improvement in the global economic outlook. All this quantitative easing money that was created will have found it's way in, inflating values, supporting the stock market among other things. The stock market is a strange beast compared to 80 years ago. A lot of shares tend to be administered now by proxies like pension funds, unit trusts, investment trusts etc, who have the day to day say as to whether to buy or sell, rather than individuals. This serves to remove an element of panic and a tendency for rapid sell offs etc. However, the institutions have invented automated share trading programs that sell off shares automatically if prices fall, so if they all trigger at once, gyrations can be rapid and large. It's said too that their exists some sort of semi secret crash suppression team in the corridors of power in Washington. Assuming it exists, exactly what levers they have to pull and what effect they can have remains unclear.
 
goebfwai said:
Difficult to say. Markets often over-react - either over selling or over buying. That said, I think that the rapid 'recovery' in share prices after the stock market crashes of 2008-2009 probably wasn't supported by any fundamental improvement in the global economic outlook.
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For owners of stocks in many cases it was. S&P 500 companies had a decent couple of quarters of profits. These were often driven by increasing efficiencies (ie. doing more with less people hence the jobs outlook) and trade with emerging markets. Also many of the worst affected industries like construction are poorly represented on indicies like the S&P and DJ. So from a shareholders perspective the recovery was real. Also the free money and low interest rates dished out to banks meant there has been a great deal of repairing of balance sheets and the like. Had the malaise been a little less serious then we could have seen a return to anemic growth without government stimulus. But in macro terms I agree the US economy and the global one is in the toilet. Finance sector bad debt has largely moved onto state balance sheets and they are where the real dark maelstrom lies ahead. The balance of trade issue between the developing and developed world has not gone anywhere and re-alignment of western economies to more accurately reflect their decline and the decline in what they should be earning is still on going, hence housing in the US and UK is still over valued and repossesions and right downs are still coming down the tracks like freight train. Pensions not being saved for, health care bills to steadily increase with agening populations, demographic changes..... its all still there.
 
xes said:
Who can enlighten me on the "hindenburg omen"? On a scale of 1 to 10, how much bollocks is it?

Is a stock market crash imminent?
http://www.thestreet.com/story/10835851/1/hindenburg-omen-is-a-stock-market-crash-imminent.html
Click to expand...
Zero hedge called two more of these over the past couple of days. Id take it with a massive pinch of salt but I am not really a fan of that kind of analysis. Im sensing a bit more acceptance (capulation to?) the "new normal" taking hold round the world. The stimulus has not bought enough jobs in the US to be self sustaining. Touch and go though if there is a big surge in hiring then things might even out a bit.

This place also missed IMF calling the US bankrupt.

QE2 now getting warmed up as well so the deflationists have another notch on their bedposts.

I seem to recall reading a few months back the M3 supply for US dollars had dropped by about a trillion dollars inpite of all the helicoptered cash..... I might try dig out that story although the M3 numbers are obviously no longer from the Fed so you have to rely on sources of various provenance. Oh gotta FT link on that now so its good.
 
More on the failing American middle classes

The Erosion of America's Middle Class

While America's super-rich congratulate themselves on donating billions to charity, the rest of the country is worse off than ever. Long-term unemployment is rising and millions of Americans are struggling to survive. The gap between rich and poor is wider than ever and the middle class is disappearing.

Ventura is a small city on the Pacific coast, about an hour's drive north of Los Angeles. Luxury homes with a view of the ocean dot the hillsides, and the beaches are popular with surfers. Ventura is storybook California. "It's a well-off place," says Captain William Finley. "But about 20 percent of the city is what we call at risk of homelessness." Finley heads the local branch of the Salvation Army.

Last summer Ventura launched a pilot program, managed by Finley, that allows people to sleep in their cars within city limits. This is normally illegal, both in Ventura and in the rest of the country, where local officials and residents are worried about seeing run-down vans full of Mexican migrant workers parked on residential streets.

But sometime at the beginning of last year, people in Ventura realized that the cars parked in front of their driveways at night weren't old wrecks, but well-tended station wagons and hatchbacks. And the people sleeping in them weren't fruit pickers or the homeless, but their former neighbors.

Finley also noticed a change. Suddenly twice as many people were taking advantage of his social service organization's free meals program, and some were even driving up in BMWs -- apparently reluctant to give up the expensive cars that reminded them of better times.

Finley calls them "the new poor." "That is a different category of people that I think we're seeing," he says. "They are people who never in their wildest imaginations thought they would be homeless." They're people who had enough money -- a lot of money, in some cases -- until recently.

"The image of what is a poor person in today's day and age doesn't fly. When I was growing up a poor person, and we grew up fairly poor, you drove a 10-year-old car that probably had some dents in it. You know, there was one car for the family and you lived out of the food bank," says Finley. "In the past, you got yourself out of poverty and were on your way up."
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although id be selling my beamer for a beat up station wagon :)

According to a recent opinion poll, 70 percent of Americans believe that the recession is still in full swing. And this time it isn't just the poor who are especially hard-hit, as they usually are during recessions.
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No, no no. The economists tell us otherwise, shurely shum mishtake?
 
Jobless Claims in U.S. Rose to Highest Since November

Claims for U.S. jobless benefits jumped to the highest level since November and Philadelphia-area manufacturing shrank for the first time in a year, indicating the economy may be slowing faster than forecast.

The number of unemployment claims unexpectedly shot up by 12,000 to 500,000 in the week ended Aug. 14, Labor Department figures showed today in Washington. The Federal Reserve Bank of Philadelphia’s general economic index turned negative in August, signaling contraction.

“There’s a red flag being waved right now that says ‘Danger,’” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Growth is going to slow in the second half and we might face something a little more ominous than that.”
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Fears intensified today that the US was heading for a double dip recession that could reverberate around the world after figures showed American home sales slumped twice as fast as expected last month to a 15-year low.

The Dow Jones industrial average fell through the psychologically important 10,000 level and the FTSE 100 was also down sharply as global markets were rattled by news that sales of previously owned US homes dropped by a record 27.2% last month. The gloomy numbers intensified worries in the UK that it could be headed for its own double-dip after a stark warning to that effect from a Bank of England policymaker.
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http://www.guardian.co.uk/business/2010/aug/24/us-home-sales-slump
 
magneze said:
That means that the outsourcing merry-go-round jumps to another country from India. Take yer pick there's a few.
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Well, yes. As I said, they'll be outsourcing to the US and Europe. Already are, in fact. From that article:

High unemployment levels have driven down wages for some low-skilled outsourcing services in some parts of the US, particularly among the Hispanic population.

At the same time, wages in India’s outsourcing sector have risen by 10 per cent this year and senior outsourcing managers based in the country command salaries above global averages.

Pramod Bhasin, the chief executive of Genpact, said his company expected to treble its workforce in the US over the next two years, from about 1,500 employees now.

“We need to be very aware [of what’s available] as people [in the US] are open to working at home and working at lower salaries than they were used to,” said Mr Bhasin. “We can hire some seasoned executives with experience in the US for less money.”

The narrowing of the traditional cost advantage is also spurring other Indian outsourcers to hire more staff outside India.

Wipro, the Bangalore-based IT outsourcing company, started to recruit workers in Europe, the Middle East and Africa during the global economic downturn. Suresh Vaswani, joint chief executive of Wipro Technologies, forecasts that half of his company’s overseas workforce will be non-Indians in two years, from the current 39 per cent.
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That's a highly optimistic view. More likely that the jobs will go further east where it's cheaper than the US, Europe & India.
 
magneze said:
That's a highly optimistic view. More likely that the jobs will go further east where it's cheaper than the US, Europe & India.
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You think we're gonna stay richer than ASEAN for much longer?

lol
 
yield said:
Where if not UK/USA for English language call centres? Kenya, Nigeria, Pakistan, South Africa?
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Yeah, SE Asia too - anywhere that English is a second language and the workforce are cheaper. Companies are scouring the world for cheaper staff, biggest expense for many of them. Funny how it's hardly ever the managers or accountants that seem to get outsourced though isn't it?
 
magneze said:
Yeah, SE Asia too - anywhere that English is a second language and the workforce are cheaper. Companies are scouring the world for cheaper staff, biggest expense for many of them. Funny how it's hardly ever the managers or accountants that seem to get outsourced though isn't it?
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I agree especially about the "managers and accountants" but as ymu said we'll see at least some in-sourcing.
 
Its quite weird having the sense that almost of of us are getting poorer by a large factor, and seeing plenty of data that may point strongly to this, but for the real impact not to have kicked in yet. I mean obviously those who have lost their jobs and failed to find new ones, or have been hit by low interest rates or stock market falls or any of the other stuff thats already bitten will be feeling the pain, but for those who have escaped relatively unscathed so far, well we've had our expectations for the future reduced before the reality actually hits home, and yet there is probably still much more expectation adjustment to come.
 
That's very bad news for the US isn't it? Their debt is only sustainable at all because everyone needs dollars to trade in, no?
 
ymu said:
That's very bad news for the US isn't it? Their debt is only sustainable at all because everyone needs dollars to trade in, no?
Click to expand...

That is true.


But with the Capital account still (nominally) closed in China, it'll be a good few years yet before the Yuan is a truly global (and hence reserve,) currency.

Woof
 
Scholars and Rogues has a fine nail head moment.

US house prices are still to high. Banks use these as a huge part of their asset books. If they have to write down more losses on this then they will also not be able to issue new loans. A credit crunch. We have done nothing to change this basic calculus.

The other big crisis like the East West trade imbalance, lack of jobs in the developed world and so on have gone no where.

The global economy is in one fucking ugly place.
 
House prices still seem to be the elephant in the room. Despite the fact they are still accepted as being 'very high' the knock on effects of this don't seem to have been discussed, or realised. I notice the banks are having to take on extra reserves of capital but im not sure how much difference this would make....
 
Poverty Rate In U.S. Saw Record Increase In 2009: 1 In 7 Americans Are Poor
huffingtonpost.com 11/09/10

Interviews with six demographers who closely track poverty trends found wide consensus that 2009 figures are likely to show a significant rate increase to the range of 14.7 percent to 15 percent.

Should those estimates hold true, some 45 million people in this country, or more than 1 in 7, were poor last year. It would be the highest single-year increase since the government began calculating poverty figures in 1959. The previous high was in 1980 when the rate jumped 1.3 percentage points to 13 percent during the energy crisis.
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45 million people. There just over 51 million people in England.
 
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