I think that we are now discovering how true the saying 'money is the root of all evil' actually is.

Hate to be a pedant but it's actually "For the love of money is the root of all evil:" 1 Tim 6.10

A subtle difference, me thinks

Moss

Subtle but significant, methinks!

I think that we are now discovering how true the saying 'money is the root of all evil' actually is.

Hate to be a pedant but it's actually "For the love of money is the root of all evil:" 1 Tim 6.10

A subtle difference, me thinks

Moss

Subtle but significant, methinks!

Significantly subtle thinksme

Moss

I think that we are now discovering how true the saying 'money is the root of all evil' actually is.

Hate to be a pedant but it's actually "For the love of money is the root of all evil:" 1 Tim 6.10

A subtle difference, me thinks

Moss

Subtle but significant, methinks!

Significantly subtle thinksme

Moss

Aye, that's a fact!

And there was me thinking that Tim was the speaking clock (why is he stuck at ten past six btw....... at the third stroke)

Not to worry, my buddies, the Dow Jones just opened this Monday morning with something like a 400 point upward surge. Oh, great! Up from 8,440 at Friday's close. The high was 14,168 last October. We ended last week where we were in May 2003.

But it ain't over. We are now rape victims who reported to the rape crisis center, to be helped by....our rapists.

But it ain't over. We are now rape victims who reported to the rape crisis center, to be helped by....our rapists.

Rather graphic, but pretty much on the button

Moss

So the US "Sub-Prime" mortgage problem has evolved into a world-wide financial crisis.

The US approves a 700 billion "bail-out" package to buy "risky" investments from the financial institutes, and another 250 billion to buy shares in some of those same institutes.

"When the fleshed-out proposal was passed by Congress and signed into law Oct. 3, Treasury Secretary Hank Paulson's plan was to use the money to buy "toxic" mortgage-related securities weighing down banks and clogging the flow of credit to business and consumers."

Because they had so much money tied up in "toxic" mortgages, they couldn't afford to lend out even more money !

"Then two weeks ago the Bush administration changed course and decided to invest $125 billion directly into some of the nation's biggest banks to restore confidence into the financial system and get capital flowing more quickly."

Essentially giving them more money to lend to people that can't afford it in the first place.

"Now the Treasury is pouring another $125 billion into small and medium-sized banks, but some analysts contend the program has been transformed to a much more grandiose undertaking that will essentially weed out the weak banks from the strong."

Some of those institutes are using their "bail-out" funds to do what ? Buy other banks and expand their current enterprise. Government tax dollars being used to expand the same businesses that caused the problem in the first place. The kicker is, the government gets to decide which banks qualify for bail-out funds and which don't. Those favoured get the $$, those not favoured become targets for take-overs.

But it doesn't stop there. Many of these institutes bundled up those "risky" investments, and sold them to other international institutes around the world apparently. Now many other countries are having to fund their own "bail-outs", and even the International Monetary Fund (IMF) is granting "bail-out" loans to places like Hungary and the Ukraine (amongst others).

Meanwhile, stock markets around the world are plummeting. If various controls weren't in place (i.e. halting trading if the market experiences a drop of 550 points), the sharp slides would have become vertical drops.

You know it's bad when OPEC cuts oil production and the price per barrel still drops. I hope a lot of those speculators that drove the price so high earlier have lost their shirts and won't be back in the markets any time soon.

So what is the total cost of this "sub-prime" melt-down ? Far more than the trillion dollars the US government has committed (so far).

And what's to stop it from happening again in the near future ? It doesn't appear that any of the financial institutes that created this mess are being punished in any way. It does appear that they are being rewarded instead !

By off-loading their "risk" on the government, and then getting bail-out money to expand their businesses (and clearing the way for them to lend out even more), there doesn't appear to be any incentive for them to do things differently in the future.

Black Monday has turned into Black October. It may turn in to Black 2008 and even Blacker 2009.

The guts of a piece in the Telegraph the other day.

The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.

Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.

“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.

Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria – the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down – and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.

The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.

They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom – a sum that vastly exceeds the scale of both the US sub-prime and Alt-A debacles.

Austria’s bank exposure to emerging markets is equal to 85pc of GDP – with a heavy concentration in Hungary, Ukraine, and Serbia – all now queuing up (with Belarus) for rescue packages from the International Monetary Fund.

Exposure is 50pc of GDP for Switzerland, 25pc for Sweden, 24pc for the UK, and 23pc for Spain. The US figure is just 4pc. America is the staid old lady in this drama.

Amazingly, Spanish banks alone have lent $316bn to Latin America, almost twice the lending by all US banks combined ($172bn) to what was once the US backyard. Hence the growing doubts about the health of Spain’s financial system – already under stress from its own property crash – as Argentina spirals towards another default, and Brazil’s currency, bonds and stocks all go into freefall.

Broadly speaking, the US and Japan sat out the emerging market credit boom. The lending spree has been a European play – often using dollar balance sheets, adding another ugly twist as global “deleveraging” causes the dollar to rocket. Nowhere has this been more extreme than in the ex-Soviet bloc.

Hans Redeker, currency chief at BNP Paribas, says there is an imminent danger that East Europe’s currency pegs will be smashed unless the EU authorities wake up to the full gravity of the threat, and that in turn will trigger a dangerous crisis for EMU itself.

“The system is paralysed, and it is starting to look like Black Wednesday in 1992. I’m afraid this is going to have a very deflationary effect on the economy of Western Europe. It is almost guaranteed that euroland money supply is about to implode,” he said.

A grain of comfort for British readers: UK banks have almost no exposure to the ex-Communist bloc, except in Poland – one of the less vulnerable states.

The threat to Britain lies in emerging Asia, where banks have lent $329bn, almost as much as the Americans and Japanese combined. Whether you realise it or not, your pension fund is sunk in Vietnamese bonds and loans to Indian steel magnates. Didn’t they tell you?

Maybe, as I am here, I could go cap in hand to those Vietnamese bond holders. I'm sure they'll show a little sympathy after all it's my <deleted> money.

^^ Or dark as night decade!