Ckicken Little Sez...

[gregybn]

International experts foresee collapse of U.S. economy

Hmmm... and the wider implications are... (in Thailand, let alone everywhere else)???

"...Now the bad news pops up everywhere.

Harry Koza in the Globe and Mail quotes Bernard Connelly, the global strategist at Banque AIG in London, who claims that the likelihood of a Great Depression is growing by the day.

Martin Wolf, celebrated columnist of the U.K.-based Financial Times, cites Dr. Nouriel Roubini of the New York University's Stern School of Business, who, in 12 steps, outlines how the losses of the American financial system will grow to more than $1 trillion - that's one million times $1 million. That amount is equal to all the assets of all American banks.

Every day now, thousands of people all over the U.S. and Great Britain are walking away from their homes - simply mailing their house keys to the banks - as housing bailout plans fail.

With unemployment growing, the next phase will hit commercial real estate making the financial institutions the unwilling owners not only of quickly depreciating houses, but also of empty strip malls and even larger shopping centres.

The next domino to fall will be credit card defaults, and after that... who knows? There are so many exotic funds out there, with trillions of dollars in paper - or rather computer-screen money - all carrying assorted acronyms, and all about to disintegrate into nothingness. Over the next couple of years, scores of banks that have thrived on these devices, based on quickly disappearing equities, will fail.

The most frightening forecast so far comes from the Global Europe Anticipation Bulletin (GEAB). Its prediction is quite specific.

This think tank has it pegged precisely. Here are its very words:

"The end of the third quarter of 2008 (thus late September, a mere seven months from now) will be marked by a new tipping point in the unfolding of the global systemic crisis.

"At that time indeed, the cumulated impact of the various sequences of the crisis will reach its maximum strength and affect decisively the very heart of the systems concerned, on the front line of which (is) the United States, epicentre of the current crisis.

"In the United States, this new tipping point will translate into - get this - a collapse of the real economy, (the) final socio-economic stage of the serial bursting of the housing and financial bubbles and of the pursuance of the U.S. dollar fall. The collapse of U.S. real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down."

The report goes on to say that we are entering a period for which there is no historic precedent. Any comparisons with previous situations in our modern economy are invalid.

We are not experiencing a "remake" of the 1929 crisis nor a repetition of the 1970s oil crises or 1987 stock market crisis.

What we will have, instead, is truly a global momentous threat - a true turning point affecting the entire planet and questioning the very foundations of the international system upon which the world was organized in the last decades.

The report emphasizes that it is, first and foremost, in the United States where this historic happening is taking an unprecedented shape (the authors call it "Very Great U.S. Depression").

It continues to predict that, although this crucial event is global, it will be the beginning of an economic 'decoupling' between the U.S. and the rest of the world. However, non 'decoupled' economies will be dragged down the U.S. negative spiral.

Concerning stock markets, the GEAB anticipates that international stocks would plummet by 40 to 80 per cent depending where in the world they are located, all affected in the course of the year 2008 by the collapse of the real economy in the U.S. by the end of summer.

The European authors of this report - it appears simultaneously in French, German and English - state that they simply and without prejudice try to describe in advance the consequences of the ominous trends at play in this 21st-century world, and to share these with their readers, so that they can take the proper means to protect themselves from the most negative effects.

So there you have it. Three reports from three different sources, all well regarded, and all pointing to a disastrous fall-out from our monetary moves."

Edited March 4, 2008 by gregybn

[barrella]

Interesting read.

All I have to say is, "lets see what happens".

[LivinLOS]

Nice !! As all my personal bets are to financially benefit from those kind of developments then that would become highly profitable, in fact even the appearance of the possibility of these type of things helps.

Of course the social implications would be horrendous but hey, thats why being long xanex and ammunition is a play

[GuestHouse]

What's up, not enough bad news in the world that we have to start making more up?

The US and its ecconomy has a long history of reinventing itself. I see no reason to believe it will not continue to do so.

[stanny]

Will this mean 10-15 bath = $1? Woo, I can finally visit Vegas.

[egg6447]

any brits or yanks out there that know anyone that HAS POSTED THERE KEYS AND WALKED AWAY, WHAT UTTER BULL KEY.

[midas]

What's up, not enough bad news in the world that we have to start making more up?

The US and its ecconomy has a long history of reinventing itself. I see no reason to believe it will not continue to do so.

I have to disagree with you ! It is hard to deny that the US economy seems to be unravelling.

Are there any more Bear Stearns type situations to come ? I would bet on it !

[ilyushin]

I just returned from the US. It is truly in bad shape. I don't think it will come out of this slump for at least 2 years. It will rise out of the ashes of the Bush Administration and economic decay to still be a leader, but less than ever before.

People are doing some really strange things back there now. Worse days ahead, but when the storm clears opportunity waits. Jump on the tide and ride the upswing.

[midas]

I just returned from the US. It is truly in bad shape. I don't think it will come out of this slump for at least 2 years. It will rise out of the ashes of the Bush Administration and economic decay to still be a leader, but less than ever before.

People are doing some really strange things back there now. Worse days ahead, but when the storm clears opportunity waits. Jump on the tide and ride the upswing.

ilyushin I would love to share your optimism but how can you possibly say it will still be a leader when it rises

out of the ashes ? the average American has zero personal savings, the education system in the U.S. is totally

shot to pieces, the US is no longer the innovative country it used to be. And even if something big came along

to rescue it, this time what will stop that innovation from being undertaken in China or India ?

Lets face it the only thing that has kept the economy going all this time is the consumer spending money

shopping ! You can hardly expect that to last forever ! What else has America got - you tell me ?

[Jingthing]

any brits or yanks out there that know anyone that HAS POSTED THERE KEYS AND WALKED AWAY, WHAT UTTER BULL KEY.

I know people whose house is worth less than their note. I know people who are in the process of filing bankuptcy. I know there are more foreclosed houses on the US market than I have ever seen in my lifetime. It is a really good time to buy foreclosed houses, so if you have the cash, thats the silver lining. The unemployment rate which is officially stated at 5 percent is an illusion. Millions and millions stopped looking years ago and are not counted in the statistics. The real rate is more like 10 percent.

Edited March 16, 2008 by Jingthing

[midas]

any brits or yanks out there that know anyone that HAS POSTED THERE KEYS AND WALKED AWAY, WHAT UTTER BULL KEY.

I know people whose house is worth less than their note. I know people who are in the process of filing bankuptcy. I know there are more foreclosed houses on the US market than I have ever seen in my lifetime. It is a really good time to buy foreclosed houses, so if you have the cash, thats the silver lining. The unemployment rate which is officially stated at 5 percent is an illusion. Millions and millions stopped looking years ago and are not counted in the statistics. The real rate is more like 10 percent.

But that is assuming you are " at or near the bottom " of the market and accoring to Economist Nouriel Roubini

" “There is now a rising probability of a "catastrophic" financial and economic outcome in the US ".

Sounds to me that sitting on the sidelines is a better bet right now because you dont know where the

bottom will be ?

[Robski]

How can the US continue a prolonged and expensive war if the economy collapses?

It may be more than just a financial crisis the US is facing.

[midas]

How can the US continue a prolonged and expensive war if the economy collapses?

It may be more than just a financial crisis the US is facing.

Aha ! may be just may be this got something to do with why that Admiral resigned

last week regarding Bush's policy on Iran ? may be they see the only way out

as starting another war with Iran ?

[Robski]

I was thinking more along the lines that a failing economy would create pressure on the armed services and their role both finacialy and politically, which may bring about a premature withdrawl in Iraq creating massive problems in the future.

I believe that Iraq is a mess, but would hope that whatever the cost the US would stay until the situation is stabilised whenever that may be.

[midas]

I was thinking more along the lines that a failing economy would create pressure on the armed services and their role both finacialy and politically, which may bring about a premature withdrawl in Iraq creating massive problems in the future.

I believe that Iraq is a mess, but would hope that whatever the cost the US would stay until the situation is stabilised whenever that may be.

WASHINGTON -- The cost of the Iraq war could top $2 trillion after factoring in long-term healthcare for wounded US veterans, rebuilding a worn-down military, and accounting for other unforeseen bills and economic losses, according to a new analysis to be presented today in Boston.

Source The Boston Globe

[Etrigan]

Every day now, thousands of people all over the U.S. and Great Britain are walking away from their homes - simply mailing their house keys to the banks - as housing bailout plans fail.

Bullshit is as bullshit does!

Does the OP work for the Sun?

[futureexpat]

I'm not disagreeing that the US economy is in serious trouble but this is a poorly written, sensationalist article based on extremely flawed data and anecdotal evidence. Here's just one example:

Martin Wolf, celebrated columnist of the U.K.-based Financial Times, cites Dr. Nouriel Roubini of the New York University's Stern School of Business, who, in 12 steps, outlines how the losses of the American financial system will grow to more than $1 trillion - that's one million times $1 million. That amount is equal to all the assets of all American banks.

There are several US commercial banks that have well over $1 trillion in assets each. The top 3 US commercial banks alone have a total of over $4 trillion in assets. If they really meant all US banks (not just commercial banks), the assets held by banks is even greater.

US commercial banks

Are these flaws from Dr. Nouriel Roubini's research, "celebrated columnist" Martin Wolf or the writer of the article? Regardless of who is responsible for such a glaring error, it calls into question the rest of the article's findings, not to mention there are some other problems with the data, or lack of, that the article is based on.

Chicken Little indeed.

[lannarebirth]

edit for bad math error prior to coffee.

Edited March 17, 2008 by lannarebirth

[teej]

I was thinking more along the lines that a failing economy would create pressure on the armed services and their role both finacialy and politically, which may bring about a premature withdrawl in Iraq creating massive problems in the future.

I believe that Iraq is a mess, but would hope that whatever the cost the US would stay until the situation is stabilised whenever that may be.

WASHINGTON -- The cost of the Iraq war could top $2 trillion after factoring in long-term healthcare for wounded US veterans, rebuilding a worn-down military, and accounting for other unforeseen bills and economic losses, according to a new analysis to be presented today in Boston.

Source The Boston Globe

War with Iraq is a disaster. EVERYBODY is feeling the effects now. Staying at war "whatever the cost" could/will result in deeper economic problems, and the effects are now global and significant in every way imaginable.

LivinLOS, so you are short "The World?" That's great and all if that's your strategy, but if everything plays out the way you've "bet," the "world" may not be such a nice place to live anymore, however much money you may have at the end. Take for instance, the fact that I am wealthy NOW, and yet I also feel less safe while traveling around the LOS as petty robberies become murders, etc (. Do I have the means to build an impenetrable fortress? Yes. Would I want to live in an environment in which such a fortress was necessary? No.

Just my 2 cents.

[midas]

I was thinking more along the lines that a failing economy would create pressure on the armed services and their role both finacialy and politically, which may bring about a premature withdrawl in Iraq creating massive problems in the future.

I believe that Iraq is a mess, but would hope that whatever the cost the US would stay until the situation is stabilised whenever that may be.

WASHINGTON -- The cost of the Iraq war could top $2 trillion after factoring in long-term healthcare for wounded US veterans, rebuilding a worn-down military, and accounting for other unforeseen bills and economic losses, according to a new analysis to be presented today in Boston.

Source The Boston Globe

War with Iraq is a disaster. EVERYBODY is feeling the effects now. Staying at war "whatever the cost" could/will result in deeper economic problems, and the effects are now global and significant in every way imaginable.

LivinLOS, so you are short "The World?" That's great and all if that's your strategy, but if everything plays out the way you've "bet," the "world" may not be such a nice place to live anymore, however much money you may have at the end. Take for instance, the fact that I am wealthy NOW, and yet I also feel less safe while traveling around the LOS as petty robberies become murders, etc (. Do I have the means to build an impenetrable fortress? Yes. Would I want to live in an environment in which such a fortress was necessary? No.

Just my 2 cents.

Very well said teej. It's amazing how some people think of nothing but making more money

even when the Titanic is sinking ! There comes a point when you start to ask yourself

what would happen in a meltdown - could law and order break down completely ?

that's the scary part. Look at what happened after Katrina - people behaved like

animals. And we already have more than enough other geopolitical problems

without this mess in the financial markets

[AFKAFSinLOS]

.......

Every day now, thousands of people all over the U.S. and Great Britain are walking away from their homes - simply mailing their house keys to the banks - as housing bailout plans fail.

.....

Ah. So that's why I keep finding keys in my mailbox evey morning. I guess the UK postal system hasn't got any better than it used to be. Always sending things to the wrong place. I guess it's a little better than Thailand though, where people would be stealing the keys from the mail instead.

Seriously. Get real. Who mails their keys back to the bank on repossession...

Edited March 17, 2008 by AFKAFSinLOS

[LivinLOS]

I was thinking more along the lines that a failing economy would create pressure on the armed services and their role both finacialy and politically, which may bring about a premature withdrawl in Iraq creating massive problems in the future.

I believe that Iraq is a mess, but would hope that whatever the cost the US would stay until the situation is stabilised whenever that may be.

WASHINGTON -- The cost of the Iraq war could top $2 trillion after factoring in long-term healthcare for wounded US veterans, rebuilding a worn-down military, and accounting for other unforeseen bills and economic losses, according to a new analysis to be presented today in Boston.

Source The Boston Globe

War with Iraq is a disaster. EVERYBODY is feeling the effects now. Staying at war "whatever the cost" could/will result in deeper economic problems, and the effects are now global and significant in every way imaginable.

LivinLOS, so you are short "The World?" That's great and all if that's your strategy, but if everything plays out the way you've "bet," the "world" may not be such a nice place to live anymore, however much money you may have at the end. Take for instance, the fact that I am wealthy NOW, and yet I also feel less safe while traveling around the LOS as petty robberies become murders, etc (. Do I have the means to build an impenetrable fortress? Yes. Would I want to live in an environment in which such a fortress was necessary? No.

Just my 2 cents.

Very well said teej. It's amazing how some people think of nothing but making more money

even when the Titanic is sinking ! There comes a point when you start to ask yourself

what would happen in a meltdown - could law and order break down completely ?

that's the scary part. Look at what happened after Katrina - people behaved like

animals. And we already have more than enough other geopolitical problems

without this mess in the financial markets

Makes no difference what anyone wants.. It simply boils down to 'if that happens is it better to become very rich when it happens or to not be very rich' ??

Even if the world does become a less nice place to live, I am sure it will be much worse to be in that same world with less money ?? I dont make the rules, just play the game.

[lannarebirth]

Bought $XAU puts today. We'll see.

[Robski]

Makes no difference what anyone wants.. It simply boils down to 'if that happens is it better to become very rich when it happens or to not be very rich' ??

Even if the world does become a less nice place to live, I am sure it will be much worse to be in that same world with less money ?? I dont make the rules, just play the game.

Very true, if you are very rich or indeed very poor it won't make too much difference, recessions are just like elections!

The long term consequences are much graver than ever they were in previous recessions for the US at least.

And if reactionary politics force an American withdrawl from Iraq before it is stabilised, the consequences for all our futures could be catastrophic.

For the US it could be the end of an era, for the rich it's just another gravy train coming over the horizon.

[MrPaddy]

I have a fail safe solution.

China should buy America.

[teej]

^^^ Hmm China 1.3 trillion (possibly more) in USD reserves.... US 1 trillion deficit.... If JPMorgan can buy BearStearns at 2$ a share I say give it a shot!

In my yahoo mailbox there was a link to an article named something like "How to destroy a country in 5 years." The country in reference was Iraq, I expected it to be an article about the USA. What a mess. I feel for those who have just been obliterated recently.

Lannarebirth, you're a Volitility Man, you must have paid a hefty premium for those puts. How bout selling some calls to cover some of the cost? If I were still on the floor, I'd be selling Volatility left, right and center. Just something to consider (I have no factual basis for my advice, tis just how I would have done the trade).

Robski, just curious, what makes you believe that an American withdrawl from Iraq could be catastropic? Not being argumentative, just wondering why you think it would be so. The cost of the War has played a significant hand in blowing out the world's financial markets IMO. Just my 2 cents.

[Robski]

I recently read 'Fiasco, the American military adventure in Iraq' by Thomas E. Ricks.

More a cronology than a critique (the citicism virtually writes itself), it's a very enlightening book about the situation in Iraq.

There were two or three key events where the US could have secured Iraq, but they dropped the ball.

The situation there is very unstable, but there is a possibility that a concerted long term effort could stabilise the region.

Without this sustained effort the area will disintegrate into a catastrophe even worse than that which is already occuring.

The implications are obvious, a failed state, civil war, international conflict between neighbouring states and a training ground for further and posibbly greater Islamic terrorism. The psychological effect of the US being seen to be beaten would ignite feelings throughout the whole middle east.

Furthermore the financial and political cost of having to return to the region to finish the task after a premature withdrawl would make the cost of todays conflict seem minor in comparison.

This is not an anti US rant.

I am concerned, as I'm sure many in the US miltary and government are, that financial pressure will cause a political kneejerk reaction that will be catastrophic in the long term.

Please read the book it's extremely insightful and I'm sure you will enjoy it.

http://www.puffincatalogue.co.uk/lo/press/...;catalogueId=20

The paperback edition was £14.

[bartender100]

any brits or yanks out there that know anyone that HAS POSTED THERE KEYS AND WALKED AWAY, WHAT UTTER BULL KEY.

This has contributed to personnel debt in Britain reaching £1.3 trillion (an average of £30,000 for every adult in the UK). More than eight million Britons are in serious debt—a quarter of whom are struggling to make their repayments.

According to Inside Housing, “almost one in ten of England’s most marginal homeowners are spending more than three quarters of their income on mortgages. More than 19,000 householders with a disposable income of £1,000 are using all of it to pay off their mortgage. Nearly 400,000 people spend 75 percent of their salary”. In 2007, 24,000 householders were classified as “homeless at home” because of their appalling living conditions—making a total of 143,000 households over the last four years.

ONE house is repossessed every 12 minutes in the UK, as mortgage holders give up on becoming homeowners.

Official figures predict that in 2008, 124 homes will be taken back a day — a total of 45,000.

[Maestro]

…Three reports from three different sources, all well regarded, and all pointing to a disastrous fall-out from our monetary moves.

When quoting news articles or text from web pages it is considered essential to cite the source for copyright reasons. Please give the sources of the text in your post, other wise this topic will have to be deleted.

--

Maestro

[LivinLOS]

any brits or yanks out there that know anyone that HAS POSTED THERE KEYS AND WALKED AWAY, WHAT UTTER BULL KEY.

This has contributed to personnel debt in Britain reaching £1.3 trillion (an average of £30,000 for every adult in the UK). More than eight million Britons are in serious debt—a quarter of whom are struggling to make their repayments.

According to Inside Housing, “almost one in ten of England’s most marginal homeowners are spending more than three quarters of their income on mortgages. More than 19,000 householders with a disposable income of £1,000 are using all of it to pay off their mortgage. Nearly 400,000 people spend 75 percent of their salary”. In 2007, 24,000 householders were classified as “homeless at home” because of their appalling living conditions—making a total of 143,000 households over the last four years.

ONE house is repossessed every 12 minutes in the UK, as mortgage holders give up on becoming homeowners.

Official figures predict that in 2008, 124 homes will be taken back a day — a total of 45,000.

While I dont know if she sent the keys back.. I do know that the landlord on my mothers seaside cottage recently went underwater (requiring a move from my mother).. Over a year or so only a couple of uninterested people came to look at the price it was offered, the rent wouldnt cover the increased mortgage, and now the value is well under the purchase price..

Then once my mother moves out there is no hope for them to make the mortgage when they couldnt even make the shortfall.. Its wiped out the owner and the house is going to the bank. If it wasnt a second home the 'keys would be in the mail'.. As it is and as thier owners own home is probably tied into the debt thier retirement just got a whole lot nastier.

Buy to let a booming business..