Global financial system implosion begins

[ymu]

45 million people. There just over 51 million people in England.

And 300 million in the US. They have about 5 times the population as the UK. The equivalent absolute number in poverty in the UK economy would be about 9 million. You'd need to check the definitions of poverty being used, but the rates are certainly comparable with those in the UK.

 

[yield]

And 300 million in the US. They have about 5 times the population as the UK. The equivalent absolute number in poverty in the UK economy would be about 9 million. You'd need to check the definitions of poverty being used, but the rates are certainly comparable with those in the UK.

For sure. I know the USA has a much larger population. I was surprised by the scale of it.

 

[ymu]

Poverty levels have been close to the 20% mark in the UK for a long time. Why is it surprising?

 

[yield]

Poverty levels have been close to the 20% mark in the UK for a long time. Why is it surprising?

It's horrifying.

 

[Giles]

It's horrifying.

Why is it "horrifying"? The bottom 20% in the USA are still probably better off than most people in the world. To look at most, of them, they sure are not starving.

Giles..

 

[yield]

Why is it "horrifying"? The bottom 20% in the USA are still probably better off than most people in the world. To look at most, of them, they sure are not starving.

Giles..

I'm not sure about that. The crowds of homeless in SOMA San Francisco and the beggars on most street corners. The queues outside Loaves and Fishes in Sacramento and the tent city that was nearby on the American River. All things I didn't expect to see in USA.

And here in the UK the current government seems determined to reduce our meagre social safety net.

 

[Jessiedog]

Why is it "horrifying"? The bottom 20% in the USA are still probably better off than most people in the world. To look at most, of them, they sure are not starving.

Giles..

True.

China thinks it still has just 10 million peeps living under the breadline.

But then China draws the "breadline" to mean having a family income of less than @ US$ 180:00 per annum.

By any "reasonable" measure (say US$ 2:00 per person per day,) there are still a good few hundred million souls living under the "breadline" in China.

By comparison, any western concepts of "poverty" or "breadline" are on a wholly and completely different scale.


Woof

 

[ymu]

True.

China thinks it still has 10 million peeps live under the breadline.

But then China draws the "breadline" to mean having a family income of less than @ US$ 180:00 per annum.

By any "reasonable" measure - say US$ 2:00 per person per day - there are still a good few hundred million living under the "breadline" in China.

By comparison, any western concept of "breadline" are wholly and completely on a different scale.


Woof

Of course, but then again, what are the cheapest rents in China? $2/day buys a lot more rice in China that it does bread in the US or UK.

The cost of living is related to the general level of wages. It's no picnic wherever you are, but $2/day - or $180/month - would be a helluva lot more serious in the UK than it would be in China right now.

 

[Prince Rhyus]

http://www.telegraph.co.uk/finance/...-social-explosion-from-world-jobs-crisis.html

Even the IMF is cacking its pants on this one.

Funny how they weren't so worried when their policies screwed up the societies of developing countries during the 1980s...

 

[Jessiedog]

Of course, but then again, what are the cheapest rents in China? $2/day buys a lot more rice in China that it does bread in the US or UK.

The cost of living is related to the general level of wages. It's no picnic wherever you are, but $2/day - or $180/month - would be a helluva lot more serious in the UK than it would be in China right now.

Nah, mate.


With all due respect; peeps living on welfare in the UK have roofs over their heads, they have TV's and fridges, they have education for their kids, they have healthcare, they have pensions, they have all kinds of shit.

Get a grip!

You seriously have no idea of "poverty" if you're trying to use "PPP" in this equation.

Think about it.

Really think about it, FFS!


Think about trying to house, feed, clothe, educate, medicate - with the GP and the hospital (for general healthcare and emergencies,) and save-for-a-a-rainy-day and save-for-pensions and future healthcare a family of six (grandparents, parets and kids,) on less than GBP 5:00 per week, anywhere on the planet.

There is very little (if any kind of) social welfare in the countryside here.

Don't be daft!



The poorest of families in the UK are 50 - 100 times better off than the best of the poor in China.

It's offensive that you seem unaware of the deprivation here - hundreds of millions.




Woof

 

[Dr Jon]

Top post Jessie.

Many people in UK have no idea that they actually live inside a bubble of luxury.

 

[ymu]

There's no doubt that £5/week for a family of six would be impossible anywhere in the world. It's considerably less than the absolute poverty level of $2/day/person (which is approx £58). Yes, I would agree, living on one tenth of the absolute poverty level is, by definition, impossible anywhere in the world. Where have I said otherwise?

The physical, economic and welfare infrastructure in the UK is much much better, and we are comparatively rich through wholesale theft of resources and cheap labour power elsewhere, there is no denying that and I did not deny it. There is no doubt that a larger proportion of the population in China are living in extreme poverty by comparison to the UK. There is a floor to the level of poverty in the UK for the majority, apart from for those who are unable to access benefits for whatever reason. Some kind of welfare system is a feature of all rich countries.

None of that means that $2/day or $180/month (or even £5/family/week) in China equates to exactly the same level of poverty as it would in the UK. This is Osborne's argument - that poverty must be measured in absolute terms because a relative measure goes up with the wealth of the country, as if poverty in the UK where the cheapest rents are hundreds of pounds a month, can be defined in the same absolute terms as in Ethiopia, where the cheapest rents are £10.

But don't worry Jessie. Once Osborne's had his way we will have no welfare state or minimum wage. The rich economies are tanking. BRIC will be getting cheap imports from us soon enough.

 

[Dr Jon]

.... BRIC will be getting cheap imports from us soon enough.

I doubt it.
We don't make anything any more - and have long lost the ability to do so. Just about all of our engineering / manufacturing capacity has been closed down and off-shored.

 

[ymu]

Sure. But once the money has moved to BRIC, we will have to make stuff to sell to the rich countries, or emigrate to where the work is. Fifteen years ago it was a "shocking fact" that Indian graduates were working in call centres. Now UK graduates are working in call centres. The US is already competing with Indian call centres on price, and Indian call centres are starting to recruit staff from Europe and the US. It won't be long before the global economic situation is reversed, the only question is how soon.

 

[Dr Jon]

Sure. But once the money has moved to BRIC, we will have to make stuff to sell to the rich countries, or emigrate to where the work is

I think that the downside of Hubbert's peak and the coming energy crunch will mean that the days of transporting manufactured goods around the world are over. Local sustainable manufacturing and agriculture are the only possible alternative.

 

[ymu]

Unlikely to be true. 80% of the energy used to produce food is in production, not transportation. It is unlikely that we will be unable to find solutions for large-scale transportation of goods even if we cannot sustain the luxury of personal transport in the future. Transport would have to become a great deal more difficult than it is now to make small-scale production as efficient in terms of energy use. Exactly the same arguments apply to the production of goods except that the driver is profit rather than energy. If you can screw over the workers in one country much more effectively than you can the workers in the intended retail country, then profits are higher as long as the cost of transport is lower than the difference in wages and capital costs.

 

[Dr Jon]

Hmmm... Is that 80% sunlight, or the energy used in fertiliser / pesticide dependent agriculture and the manufacture of processed foods?

I had a quick look around for energy audits of food production and only found this summary.

I suspect that we shall have to move towards cooperative food production along similar lines to the Cuban model.

 

[yield]

Chinese think tank warns US it will emerge as loser in trade war
Telegraph 14 Sep 2010

Ding Yifan, a policy guru at the Development Research Centre, said China could respond by selling holdings of US debt, estimated at over $1.5 trillion (£963bn). This would trigger a rise in US interest rates. His comments at a forum in Beijing follow a string of remarks by Chinese officials questioning US credit-worthiness and the reliability of the dollar.

-

"They are utterly wrong," said Gabriel Stein from Lombard Street Research. "The lesson of the 1930s is that surplus countries with structurally weak domestic demand come off worst in a trade war."

He described the implicit threat to sell Treasuries as "empty bluster" because Beijing's purchase of these bonds is a side-effect of its yuan policy. "Bring it on: it will weaken the dollar, which is what the US wants. The interest rate effect can be countered by the Fed."

"Some Chinese officials seem to believe that buying Treasuries underpins US public spending. In fact China's mercantilist policy is forcing the US to run large deficits against its own interest. China should be terrified of a trade war."

I wonder who's right? Still don't get the currency manipulation accusations against China. Japan is now doing the same thing.

Japan Yen Intervention Violates International Currency Accords, Dodd Says
Bloomberg 16/09/10

 

[ymu]

Hmmm... Is that 80% sunlight, or the energy used in fertiliser / pesticide dependent agriculture and the manufacture of processed foods?

I had a quick look around for energy audits of food production and only found this summary.

I suspect that we shall have to move towards cooperative food production along similar lines to the Cuban model

Thing is, it's much more efficient to have people living in dense urban areas with employment and facilities in close proximity. If you're going to have to transport food 50 or 100 miles, it's no great obstacle to transport it further. We will certainly see a drop in the amount of perishable fruit and veg flown over, and flowers too, but transport just isn't that big an obstacle.

 

[Jessiedog]

I wonder who's right?

Basically, at least at this point in time, Stein is right.

China is blustering.



Woof

 

[ferrelhadley]

Fannie and Freddie losses could go up to $400 billion

Taxpayer losses from the government seizure of failed housing finance giants Fannie Mae and Freddie Mac could reach nearly $400 billion, but likely won't top that level as some had feared, the firms' federal regulator said Wednesday.

The bailouts of the two former government-sponsored enterprises, which continue to keep the mortgage financing market afloat almost single-handedly, already have reached $148.2 billion as bad loans they purchased during the real estate boom continue to fail.

DeMarco said the government is pushing banks that made bad mortgages purchased by Fannie and Freddie to buy back the loans, offsetting some of the losses. The banks can be required to repurchase loans that default if they did not meet housing entities' underwriting standards by accepting false borrower information or appraisals, for instance.

Bet the government wont force them too repurchase all the substandard crap they sold. That would put us right back in October 08 right there.

Republicans continued to criticize the administration and congressional Democrats for not moving faster to end the bailout of Fannie and Freddie and to reduce the risk of further taxpayer losses. The administration faces a January deadline imposed by Congress for presenting a plan, and top officials have said there will be major changes.

I cant believe the Republicans are so suicidal as to pull the rug from under the housing market. Then again they do have to appease the teabaggers. Caught between the teabaggers and the vampire squid, lol.

Home Price Double Dip Begins

That's why, given the combination of the expiration of the home buyer tax credit and the increasing number of loans moving to final foreclosure, we knew that home prices overall would take a hit, but it would take a while.

Prices have been recovering since last Fall, largely thanks to the artificial stimulus of the $8000/$6500 home buyer tax credit. But prices were also benefiting from a slight bump in confidence in the housing market, fed by an apparent drop in the foreclosure numbers. In reality, the foreclosure numbers were dropping only because banks and states were delaying the process, as they tried to cram as many borrowers as possible into what we now know is a largely unsuccessful government-backed mortgage modification program.

Sellers on the market today have cut $29 billion off their collective home equity.

Foreclosure surge again.

the home price double dip is not only here, it is getting worse. RealtyTrac reported overnight that general foreclosure activity (i.e., default notices, scheduled auctions and bank repossessions) — were reported on 338,836 properties in August, a 4 percent increase from the previous month. One in every 381 U.S. housing units received a foreclosure filing during the month.

So we are back here again. All a little 06 on the housing front. Wonder how fully recapitalised those banks are.....

 

[ymu]

They're in massive trouble. US mortgage law is different from UK law, in one very good way. Here, if they repossess you they can sell the house cheaply and then demand the balance of the mortgage, despite the fact that they accepted the house as security and really that should be that - if they were too dumb to value the asset properly, it should be their problem. In the US, that is how it is. You can just drop your keys into the bank and walk away with a shit credit rating but no remaining debt on the house however much negative equity you had. House prices crashing means more people handing their keys in, means lower house prices means ... their banks are fucked.

I'm astounded that they could have been this stupid, given US law. What the fuck were they thinking?

 

[kyser_soze]

Plenty of cheap land in the US at the moment...somewhere, possibly on this thread, possibly another, someone linked to a couple of US estate agents flogging 5 bedroom properties for $500...

 

[ferrelhadley]

New house starts in the US.

How many tens of millions has the US added to its population since 1960?

 

[Giles]

Plenty of cheap land in the US at the moment...somewhere, possibly on this thread, possibly another, someone linked to a couple of US estate agents flogging 5 bedroom properties for $500...

Plenty of big houses going for US$500. The downside is that they are often in totally fuxated places like Detroit, where most people wouldn't want to live.

Giles..

 

[Jessiedog]

The Global Financial System......

The next twenty years are going to be extremely interesting.

I'm pleased that I've managed to establish a tiny place for myself in China.

I'm worried that I am already going to lose it.




Woof

 

[goebfwai]

The next twenty years are going to be extremely interesting.

At the tail end of this interview on BBC Hardtalk (23m:14s) a well known asset manager says:

"...stock markets in 20 years time may be no higher than they are today. I think house prices likewise." http://www.bbc.co.uk/programmes/b00tvsql

 

[ymu]

That was such a self-serving interview! I was screaming at the telly the whole time. Stupid self-satisfied lying cunt.

 

[Jessiedog]

That was Hugh Hendry, no?


I think he's quite sensible and I think it's entirely possible that (in the UK, Europe and the USA,) house prices and stock markets will bumble along at even lower levels than today for the next 10, 15 or twenty years.

Japan is a sobering lesson.


(What didn't you like about Hendry, ymu?)


Woof

 

[ymu]

He's right about the stock market and house prices, IMO - but he said that in the context of answering this (paraphrased as accurately as possible) question:

"You grew up in poverty and you're on record as saying that you saw law or accountancy as your ticket out. But don't you think it would be good if young people saw nursing or science as a good way out of poverty?" (In other words, why aren't socially useful jobs better rewarded.)

He was basically saying that these jobs will be seen as financially attractive because the economic system is fucked and bankers won't be able to make so much money in future ("but I'll eke out a living somehow"). It was a very self-serving answer, to divert from questions about his own profiteering.

He started off the interview with some weird hippy bollocks - he was very much trying to be the charming laid back not my fault I'm good at my job kinda everyman, lying through his fucking teeth about the value of hedge funds to the economy (hedging has some important functions, hedge funds do not). Just a load of self-serving wank basically.

Can you access iPlayer? If not, I might be able to put it up somewhere for you.