Financial Crisis

[Chaimai]

12D - I just found this one as well ! :-

http://current.com/items/89525338/zimbabwe..._in_history.htm

[Chaimai]

ha ha ha ha , cool!

12 fully drunk and goes to bed before 12, great, that's the way to do it!

Alka Seltzer in the morning, eat some scrambled eggs, toast and sausage and you will be fine.

I think he has gone to bed still logged in

Perhaps another bottle of Chang first thing in the morning would do the job ?

[flying]

I really wish it were possible for us all to do something. Some alternative to it all. Something that just abandons them & their whole game. We still need an alternative to this totally corrupted & corruptible system.

Personally I am getting off the merry go round as much as possible in these next years. What other choice is there?

Leave the fiat based system for all savings..

Own assets.. Own your home.. Save in precious metals

Basically same here but like I said I wish there was a way for all to leave it & in that way crush it. Start Over

[Naam]

I feel I'm being mildly chastised for not entirely understanding how these derivatives worked? When I said " how will our financial system cope with what is to come "? -I am making an assumption that this debt will somehow at sometime need to be dealt with? I am sorry if my assumption about this is wrong, but this is the amount quoted in Lana's article?

nothing wrong with asking questions Midas. but in german we have a proverb that says "it's the sound that makes the music". your question sounded definitely suggestive and leads to the negative assumption that "there is something to come with which the system cannot cope". as an indirect proof for this assumption you compare the two figures 1 tr and 596 tr.

and again your afore-mentioned posting contains an assumption which on its own gives a completely wrong and negative impression to the interested but not fully informed reader. i refer to "debt... need to be dealt with". Lanna gave (both he and me did that before) a short and clear definition of "derivative". in essence most derivatives are not lopsided debts but contractual obligations between two or more parties. some are simple, others are extremely complicated.

perhaps i am too strict rendering a "judgment". but because i consider most of your inputs and logical conclusions as worthwhile to read and digest i use for you another yardstick than for some of the clowns who walk (post) among us you might take this as a compliment but it's only a factual statement.

[midas]

I feel I'm being mildly chastised for not entirely understanding how these derivatives worked? When I said " how will our financial system cope with what is to come "? -I am making an assumption that this debt will somehow at sometime need to be dealt with? I am sorry if my assumption about this is wrong, but this is the amount quoted in Lana's article?

nothing wrong with asking questions Midas. but in german we have a proverb that says "it's the sound that makes the music". your question sounded definitely suggestive and leads to the negative assumption that "there is something to come with which the system cannot cope". as an indirect proof for this assumption you compare the two figures 1 tr and 596 tr.

and again your afore-mentioned posting contains an assumption which on its own gives a completely wrong and negative impression to the interested but not fully informed reader. i refer to "debt... need to be dealt with". Lanna gave (both he and me did that before) a short and clear definition of "derivative". in essence most derivatives are not lopsided debts but contractual obligations between two or more parties. some are simple, others are extremely complicated.

perhaps i am too strict rendering a "judgment". but because i consider most of your inputs and logical conclusions as worthwhile to read and digest i use for you another yardstick than for some of the clowns who walk (post) among us you might take this as a compliment but it's only a factual statement.

Naam

I have always understood that derivatives are similar to the payment of

insurance premiums, but one would assume they would be calculated using

preconceived risk parameters?

Your statement that " derivatives are not lopsided debts but contractual

obligations between two or more parties " makes an assumption these

particualar contracts that have caused so much trouble were entered into

( 1 ) having calculated the risk based on " sound commercial principles "

and

( 2 ) that regulatory authorities were fully aware and approved

the risk assessment parameters for these instruments totalling 596 tr. ?

All we know is the subject matter of an incalculable number of these contracts

seem to be underwriting " toxic assets "which cant even be properly valued ?

As Lanna quite correctly alluded to in his subsequent reply,

and using his words " there is NO TRANSPARENCY ".

so how can anyone either now or in the foreseeable future

know how many of these contractual obligations will

indeed result in a " lopsided debt "- whether small, large or enormous?

[Naam]

Naam

I have always understood that derivatives are similar to the payment of insurance premiums, but one would assume they would beI calculated using preconceived risk parameters?

by far not all of them are insurance premiums and that applies to "credit derivatives" too.

Your statement that " derivatives are not lopsided debts but contractual obligations between two or more parties " makes an assumption these particualar contracts that have caused so much trouble were entered into

( 1 ) having calculated the risk based on " sound commercial principles "

yes, to a lot of them this applies. but there is a certain percentage which were issued under different economic circumstances. at that time it looked like the risk assessment was justified. that todays environment proves the contrary is a different story. and not to forget the derivatives which (in my opinion) were issued with based on "let's do it. even if it turns out to be a wrong decision nobody will take away our bonuses."

and

( 2 ) that regulatory authorities were fully aware and approved the risk assessment parameters for these instruments totalling 596 tr. ?

nobody said so, and here again the unjustified mentioning and applying "condemnation" of the total sum of derivatives.

All we know is the subject matter of an incalculable number of these contracts seem to be underwriting " toxic assets "which cant even be properly valued

correct!

As Lanna quite correctly alluded to in his subsequent reply, and using his words "there is NO TRANSPARENCY" so how can anyone either now or in the foreseeable future know how many of these contractual obligations will indeed result in a " lopsided debt "- whether small, large or enormous?

thanks for argueing my case Midas. indeed nobody can presently know what part of derivatives are toxic and what part is harmless "every day run of the mill". can we therefore agree that it's useless

[thaidrew]

Well I know you guys do not like this publication but at least it gives a layman's view of what is actually happening under our noses and why gold has started to take off like there is no tomorrow.

Definitely time to drag out some more long necks. (Aussie for beer). Enjoy

http://www.telegraph.co.uk/finance/comment...e-meltdown.html

[lannarebirth]

PBS documentary aired today:

http://www.pbs.org/wgbh/pages/frontline/meltdown/view/

[AlexLah]

I read a very simple explanation somewhere that actually was told by a banker.

This guy was giving a presentation somewhere and someone from the audience asked him if he could explain what happened.

Someone opened his can of premium tuna and inside there was rotten fish.

You know a while ago there was this guy starting to sell these fancy looking can's with premium tuna and many people liked them so they bought and some resold again, bussiness was booming. Untill we heard that story of the guy that opened a can. So now there are lot's of people with cans with rotten fish. Some do not even dare to open them for the fear of also having rotten fish.

Curious which countries are going to blow up, maybe Austria, Ireland, Spain, Portugal, Greece?

[samuibeachcomber]

I read a very simple explanation somewhere that actually was told by a banker.

This guy was giving a presentation somewhere and someone from the audience asked him if he could explain what happened.

Someone opened his can of premium tuna and inside there was rotten fish.

You know a while ago there was this guy starting to sell these fancy looking can's with premium tuna and many people liked them so they bought and some resold again, bussiness was booming. Untill we heard that story of the guy that opened a can. So now there are lot's of people with cans with rotten fish. Some do not even dare to open them for the fear of also having rotten fish.

Curious which countries are going to blow up, maybe Austria, Ireland, Spain, Portugal, Greece?

from all the reports it sounds like most of eastern europe are going to default,most of the debt held EU banks.

[Chaimai]

You know a while ago there was this guy starting to sell these fancy looking can's with premium tuna and many people liked them so they bought and some resold again, bussiness was booming. Untill we heard that story of the guy that opened a can. So now there are lot's of people with cans with rotten fish. Some do not even dare to open them for the fear of also having rotten fish.

Curious which countries are going to blow up, maybe Austria, Ireland, Spain, Portugal, Greece?

Iceland should quickly recover - they have loads of fresh fish.

[colibra]

perhaps you might add to your list of blow ups the USA and UK.

So my brainy friends I have gotten my head around the derivities and default swaps and that they were passed around from one bank or lender to another. Is it true that at each transaction point there would be a premium paid to an insurer. If not than the underlying cause would have been bad loans to over inflated properties or companies who cannot pay due to the economic times. To many loans default and a falling values of the equity behind them. With no one really knowing whats in the package of loans they hold as equity. So know one wants to loan as they might be getting a stinky old can of rotting fish. please correct me where i'm wrong yours truely neophite.

Or maybe someone just messed with the money supply.

[AlexLah]

If you want to know a bit more how these funny financial instruments are used an d what they are, go here: http://www.youtube.com/user/khanacademy

And indeed big hedge funds and investors were pulling their money out on how ironic, 11-9-08. On 15-09-09, Congress had this meeting where was told that the financial system was on the brink of collapse. what followed was the big crash of the stockmarket. So now people are asking for their money (derivatives) and banks and other institutes need to find out which cans have rotten fish and which have not. It is expected that a second wave of rotten fish will be discovered soon and Geitner is desperately looking for Trillions of dollars more to cover positions and make banks solvent again. Similair story in EU, UK, East Europe, well I guess almost worldwide.

The interesting part will be how this madnes is going to be stopped, you can't keep on pumping money in the system hoping that one day it all will be fine.

Something has to explode....

[12DrinkMore]

Well, I survived and back with more GREAT news from the UK

Britain could be stripped of its prized AAA credit rating as a result of the Government's latest bank bail-out, potentially jeopardising any economic recovery, according to rating agency Standard & Poor's.

http://www.telegraph.co.uk/finance/newsbys...arns-SandP.html

Bye bye GBP. won't be easy to borrow from external sources now, will it Brown? OMG does this mean you have to defile even more pristine paper with your WORTHLESS pounds?

And, although not directly related

http://www.telegraph.co.uk/news/newstopics...allowances.html

How on earth did this utterly unimpressive woman achieve the position of home secretary? Maybe to make Brown seem more imposing??? :D

Listen to her " I sought advice..". Come on, if she had to seek advice, then she KNEW that her case was BORDERLINE. But <deleted> it's only 110,000 Quid. A mere drop in the vast ocean of billions that Brown is costing the country.

Bring on the Thatchers, Merckles and my AK47.

I am thinking of changing my moniker to 12Kill

[ArranP]

Well, I survived and back with more GREAT news from the UK

Britain could be stripped of its prized AAA credit rating as a result of the Government's latest bank bail-out, potentially jeopardising any economic recovery, according to rating agency Standard & Poor's.

http://www.telegraph.co.uk/finance/newsbys...arns-SandP.html

Bye bye GBP. won't be easy to borrow from external sources now, will it Brown? OMG does this mean you have to defile even more pristine paper with your WORTHLESS pounds?

And, although not directly related

http://www.telegraph.co.uk/news/newstopics...allowances.html

How on earth did this utterly unimpressive woman achieve the position of home secretary? Maybe to make Brown seem more imposing??? :D

Listen to her " I sought advice..". Come on, if she had to seek advice, then she KNEW that her case was BORDERLINE. But <deleted> it's only 110,000 Quid. A mere drop in the vast ocean of billions that Brown is costing the country.

Bring on the Thatchers, Merckles and my AK47.

I am thinking of changing my moniker to 12Kill

Who is Philip Aldrick ?

[shochu]

apparently, there is a huge sucking sound of a big player amassing dollars.

if i had to guess -

eastern europe BUT more probably switzerland on the brink of bankruptcy thanks to a bad bank - would u have thought this even yesterday?

u can try and find some news on it as it is kinda big news right now!

[midas]

apparently, there is a huge sucking sound of a big player amassing dollars.

can you say where you heard this ?

if i had to guess -

eastern europe BUT more probably switzerland on the brink of bankruptcy thanks to a bad bank - would u have thought this even yesterday?

u can try and find some news on it as it is kinda big news right now!

I have done but nothing as yet ! Can you give more information ?

[midas]

See how this Financial Crisis is changing society.....................what a world ....................

road rage..........now we have supermarket line rage...........

Innocent father killed in queue-jumping row

An angry shopper's queue-jumping row with another customer ended with an innocent father being killed in a supermarket, a court heard today.

Antonette Richardson, 37, was so incensed after being accused of pushing in she rang her boyfriend and summoned him to the Sainsbury's store <deleted> ?!!!

http://www.independent.co.uk/news/uk/crime...ow-1625608.html

Edited February 18, 2009 by midas

[stumonster]

apparently, there is a huge sucking sound of a big player amassing dollars.

if i had to guess -

eastern europe BUT more probably switzerland on the brink of bankruptcy thanks to a bad bank - would u have thought this even yesterday?

u can try and find some news on it as it is kinda big news right now!

The idea that any available money will be buying US debt issuance which will mean other nations will not be able to raise capital is an interesting one.

also one of the comments left at the end of the blog accusing the IMF of propping up a country ( Latvia ) so the banks and elites could move their money out at favourable exchange rates.

http://blog.atimes.net/?p=601

and another 50 billion dollar scam has surfaced in the americas

US authorities are scrambling to find $50 billion of assets connected to Allen Stanford, the missing Texan cricket impresario, as the fallout from his alleged fraud ripples across the world.

Mr Stanford boasted of having customers in 140 countries. Panicked investors in the Caribbean and Latin America rushed on banks to withdraw their savings from institutions linked to his financial empire. Many left empty-handed.

and this statement does not auger well

The FBI is convinced that the two huge frauds are just the tip of the iceberg. John Pistole, the Deputy Director of the FBI, told politicians on Capitol Hill last week that the agency was investigating 530 corporate fraud cases, including 38 directly related to the current economic crisis.

http://www.theaustralian.news.com.au/busin...1-36418,00.html

[midas]

The FBI is convinced that the two huge frauds are just the tip of the iceberg. John Pistole, the Deputy Director of the FBI, told politicians on Capitol Hill last week that the agency was investigating 530 corporate fraud cases, including 38 directly related to the current economic crisis.

Stanford missing, investors rush banks

" Callers to the numerous Stanford offices across the US were greeted with a recorded message: “This office is temporarily closed. Have a great day.”

I would rather people be honest with me than listen to that insincere trash....like " we shafted you so fukc off "

[samuibeachcomber]

we have nothing to worry about(reports in the telegragh,daily mail)gordon brown says britain could be on the road to economic recovery in a few months if the world govts. take on board his economic recovery plans in unison.

Further more world economists see great hope in china being able to lead the world out of recession with there economic stimulus package,so sit back and enjoy.

Frankly i'm not sure who china are going to sell to in the short term,maybe domestic consumption,but are there enough chinese with jobs and money to buy?i dont know.i think the world needs to chill out and stop panicking,let the cards fall where they may.

[AlexLah]

No worries all, it will all be dealt with. And tommorow is just another one of those day's.

Please do not take out your money from the banks, it is all save there, save, very save, extremely save........

Please also do not ask for your money invested in stocks and stuff, it is all perfectly save......yes!

Pensions you ask? They are all fine, no worry.

[shochu]

Switzerland threatened with bankruptcy

Posted by Edward Harrison on Tuesday, 17 February 2009

17

Feb

In an interview with Swiss daily Tagesanzeiger, a well-known economist has warned that Switzerland risks bankruptcy, if the recent market turmoil centering on Eastern Europe is not contained quickly. At issue are loans made in Swiss francs to Eastern European debtors. With many countries in the region falling into depression, currencies and asset prices are plunging. Therefore, debtors domiciled in Eastern Europe are increasingly expected to have difficulty with mounting foreign debt loads — and that spells trouble for Switzerland.

Below is my translation of the Tagesanzeiger article.

Switzerland threatened with bankruptcy

Swiss banks have given billions of credit to Eastern Europe - now the customers cannot pay back the money. Switzerland is threatened with the fate of Iceland, says economist Arthur P. Schmidt.

In countries such as Poland, Hungary and Croatia, the Swiss franc has become an important currency. Thousands of households and small firms took out loans in Swiss francs, and not in the national currency zloty, forint, or kuna because of lower interest rates. In Hungary, 31 percent of all loans are in Swiss currency. Amongst household loans, they are almost 60 percent.

Borrowers in distress

Now, the financial crisis has ended the era of cheap credit. As a result, Eastern European currencies are falling. At the end of September, one had to pay 46 francs for 100 Polish zlotys. Today it is 30 francs. That means more and more borrowers are having problems with interest payments and repayment. So the question is what effect this has on the Swiss financial marketplace. One who sees a dark future for Switzerland is economic expert Artur P. Schmidt. He believes that the Swiss franc is in danger because of the loans in Eastern Europe.

In Poland, Hungary and Croatia, the Swiss franc has become an important foreign currency - the dollar, so to speak, of Eastern Europe. Thousands of households and businesses have franc loans. Why?

The rapid growth in many countries of Eastern Europe was stimulated through loans in Swiss francs. Swiss banks and offshore institutions loaned the local banks francs, which passed the francs onto their customers. The loans were attractive because borrowers pay interest rates much lower than required for loans in local currency.

Now, this system has been shaken?

Yes, the system has only worked as long as the exchange rate between the franc and the currencies were reasonably stable. But that is not currently the case. For example, the Hungarian forint and Polish zloty have lost over a third of their value against the Swiss franc in recent weeks. Because of the devaluations of the national currencies, the debt to Switzerland has increased by more than one-third. Many of the Eastern European countries have serious payment difficulties, and are virtually bankrupt.

What does this mean for Switzerland?

It is likely that a significant proportion of the total 200 billion U.S. dollars of Eastern European loans were issued in Swiss francs. According to a report by the Bank for International Settlements worldwide franc loans equivalent to around 675 billion U.S. dollars are in circulation - which was about 150 billion directly from Switzerland, 80 billion of Great Britain and about 430 billion U.S. dollars through offshore financial centres. How many of these loans have gone bad is not known. But even if the failure rate is 20 percent, the banks would lose a lot of money.

Is the federal government going to intervene now?

If the banks require a massive writedown of such loans, above a certain magnitude, the government must intervene. This is already happening via the Swiss National Bank. In Poland, it has made several billion francs available to the local central bank so that Polish banks can cover the loans. At the same time, the Swiss National Bank inquired by the European Central Bank whether it could borrow money in an emergency. This is a clear warning sign that the Swiss franc could be under huge devaluation pressures in the near future.

Swiss banks were too careless in their lending in Eastern Europe?

Yes, indeed. Many bankers wanted to earn a lot and neglected the risks. The National Bank is also at fault as it did not intervene. In addition, the regulator and the politicians completely failed.

What Switzerland must do now?

Now, the possible losses caused by these loans must be made transparent. Above all, all of the Eastern European risks must be fully disclosed. Together with the loan losses from UBS and Credit Suisse, the entire writedown for Switzerland could exceed the Swiss gross domestic product.

That is to say?

Switzerland, like Iceland, is threatened with a potential national bankruptcy. One consequence would be that the Swiss currency could fall massively in value — possibly even crash. Another would be that Switzerland’s credit rating would be massively downgraded. That would be a trauma for the country: Switzerland was always as a stronghold of stability. The franc could become an unstable soft currency. Then Switzerland would perhaps be forced to abandon the franc and take on the euro.

This article fills in a lot of gaps for me. Two weeks ago, I happened to catch another post in the Swiss press about the Swiss government issuing debt in U.S. Dollars. In my post “Why are the Swiss now issuing debt in U.S. Dollars? I asked an open question as to why the Swiss were issuing debt in dollars. No one knew and I had yet to hear a satisfactory answer to this question.

However, my post also pointed to central bank swap lines between Switzerland and a number of countries in Eastern Europe as a related event. The Tagesanzeiger article makes clear that these swap lines are needed due to Eastern European exposure to loans in Swiss Francs. I expect the U.S. dollar swap lines and dollar debt issuance are related - as are the Euro swap lines with the ECB - for liquidity in case of emergency.

These machinations are a testament to the continued fragility of the global financial system. The interconnectedness across currencies and countries is staggering. One domino falls and the whole global financial system is at risk.

Welcome to the dark side of globalisation.

[update - 18 Feb 2009 730PMEST]: The Berlingske Tidene, a Danish newspaper is now covering this story. Here is the link, if you speak Danish:

Schweiz truet af stats-bankerot - Berlingske Tidene

And Willem Buiter has some words to say about this crisis that are of a similar nature. He suggests capital controls are coming to Eastern Europe:

The return of capital controls - Willem Buiter

Sources

SNB schliesst Swap-Abkommen auch mit ungarischer Zentralbank - Money Cab Finance News

Der Schweiz droht der Bankrott - Tagesanzeiger

[JimsKnight]

Who'd of thought the supposed masters of finance and money acumen would be in deep sht a few months back?

It's pretty shocking.

[samuibeachcomber]

perhaps the swiss banks will have to raid their customer deposit boxes to offset this debt!

[churchill]

Switzerland threatened with bankruptcy

Posted by Edward Harrison on Tuesday, 17 February 2009

17

Feb

In an interview with Swiss daily Tagesanzeiger, a well-known economist has warned that Switzerland risks bankruptcy, if the recent market turmoil centering on Eastern Europe is not contained quickly. At issue are loans made in Swiss francs to Eastern European debtors. With many countries in the region falling into depression, currencies and asset prices are plunging. Therefore, debtors domiciled in Eastern Europe are increasingly expected to have difficulty with mounting foreign debt loads — and that spells trouble for Switzerland.

Below is my translation of the Tagesanzeiger article.

Switzerland threatened with bankruptcy

Swiss banks have given billions of credit to Eastern Europe - now the customers cannot pay back the money. Switzerland is threatened with the fate of Iceland, says economist Arthur P. Schmidt.

In countries such as Poland, Hungary and Croatia, the Swiss franc has become an important currency. Thousands of households and small firms took out loans in Swiss francs, and not in the national currency zloty, forint, or kuna because of lower interest rates. In Hungary, 31 percent of all loans are in Swiss currency. Amongst household loans, they are almost 60 percent.

Borrowers in distress

Now, the financial crisis has ended the era of cheap credit. As a result, Eastern European currencies are falling. At the end of September, one had to pay 46 francs for 100 Polish zlotys. Today it is 30 francs. That means more and more borrowers are having problems with interest payments and repayment. So the question is what effect this has on the Swiss financial marketplace. One who sees a dark future for Switzerland is economic expert Artur P. Schmidt. He believes that the Swiss franc is in danger because of the loans in Eastern Europe.

In Poland, Hungary and Croatia, the Swiss franc has become an important foreign currency - the dollar, so to speak, of Eastern Europe. Thousands of households and businesses have franc loans. Why?

The rapid growth in many countries of Eastern Europe was stimulated through loans in Swiss francs. Swiss banks and offshore institutions loaned the local banks francs, which passed the francs onto their customers. The loans were attractive because borrowers pay interest rates much lower than required for loans in local currency.

Now, this system has been shaken?

Yes, the system has only worked as long as the exchange rate between the franc and the currencies were reasonably stable. But that is not currently the case. For example, the Hungarian forint and Polish zloty have lost over a third of their value against the Swiss franc in recent weeks. Because of the devaluations of the national currencies, the debt to Switzerland has increased by more than one-third. Many of the Eastern European countries have serious payment difficulties, and are virtually bankrupt.

What does this mean for Switzerland?

It is likely that a significant proportion of the total 200 billion U.S. dollars of Eastern European loans were issued in Swiss francs. According to a report by the Bank for International Settlements worldwide franc loans equivalent to around 675 billion U.S. dollars are in circulation - which was about 150 billion directly from Switzerland, 80 billion of Great Britain and about 430 billion U.S. dollars through offshore financial centres. How many of these loans have gone bad is not known. But even if the failure rate is 20 percent, the banks would lose a lot of money.

Is the federal government going to intervene now?

If the banks require a massive writedown of such loans, above a certain magnitude, the government must intervene. This is already happening via the Swiss National Bank. In Poland, it has made several billion francs available to the local central bank so that Polish banks can cover the loans. At the same time, the Swiss National Bank inquired by the European Central Bank whether it could borrow money in an emergency. This is a clear warning sign that the Swiss franc could be under huge devaluation pressures in the near future.

Swiss banks were too careless in their lending in Eastern Europe?

Yes, indeed. Many bankers wanted to earn a lot and neglected the risks. The National Bank is also at fault as it did not intervene. In addition, the regulator and the politicians completely failed.

What Switzerland must do now?

Now, the possible losses caused by these loans must be made transparent. Above all, all of the Eastern European risks must be fully disclosed. Together with the loan losses from UBS and Credit Suisse, the entire writedown for Switzerland could exceed the Swiss gross domestic product.

That is to say?

Switzerland, like Iceland, is threatened with a potential national bankruptcy. One consequence would be that the Swiss currency could fall massively in value — possibly even crash. Another would be that Switzerland’s credit rating would be massively downgraded. That would be a trauma for the country: Switzerland was always as a stronghold of stability. The franc could become an unstable soft currency. Then Switzerland would perhaps be forced to abandon the franc and take on the euro.

This article fills in a lot of gaps for me. Two weeks ago, I happened to catch another post in the Swiss press about the Swiss government issuing debt in U.S. Dollars. In my post “Why are the Swiss now issuing debt in U.S. Dollars? I asked an open question as to why the Swiss were issuing debt in dollars. No one knew and I had yet to hear a satisfactory answer to this question.

However, my post also pointed to central bank swap lines between Switzerland and a number of countries in Eastern Europe as a related event. The Tagesanzeiger article makes clear that these swap lines are needed due to Eastern European exposure to loans in Swiss Francs. I expect the U.S. dollar swap lines and dollar debt issuance are related - as are the Euro swap lines with the ECB - for liquidity in case of emergency.

These machinations are a testament to the continued fragility of the global financial system. The interconnectedness across currencies and countries is staggering. One domino falls and the whole global financial system is at risk.

Welcome to the dark side of globalisation.

[update - 18 Feb 2009 730PMEST]: The Berlingske Tidene, a Danish newspaper is now covering this story. Here is the link, if you speak Danish:

Schweiz truet af stats-bankerot - Berlingske Tidene

And Willem Buiter has some words to say about this crisis that are of a similar nature. He suggests capital controls are coming to Eastern Europe:

The return of capital controls - Willem Buiter

Sources

SNB schliesst Swap-Abkommen auch mit ungarischer Zentralbank - Money Cab Finance News

Der Schweiz droht der Bankrott - Tagesanzeiger

Perhaps the Eastern Europeans or the Swiss will have to sell their Gold Reserves ?

[midas]

Yep, It’s a Depression

Gordon G. Chang - 02.11.2009 - 3:39 PM

This Saturday, Dominique Strauss-Kahn said the world’s advanced economies are “already in depression.” “The worst cannot be ruled out,” the chief of the International Monetary Fund declared. That assessment is consistent with the increasingly dire pronouncements from President Obama, who now talks about a “profound economic emergency.”

Undoubtedly, both of them came out with their gloomy statements so they could get what they wanted — more resources for lending in the case of the IMF and passage of the stimulus bill for the American president. Yet that does not mean they are wrong.

Many analysts shy away from categorizing the downturn in stark terms. They say, for instance, that economic indicators are not nearly as bad as they were in the 1930s. Of course, they’re right, but that is only because we are in the initial stages of the crisis...................

http://www.commentarymagazine.com/blogs/in...1?cp=1#comments

Edited February 19, 2009 by midas

[AlexLah]

Here a linky to an interesting clip. This Brzezinski guy almost sound human, but listen and look at him carefully and you will hear and see he actually is afraid there will be a war between the classes and therefore suggest that the riches set up some kind off voluntary donation fund so that at least some bread can be bought for the now poor when this insanity really takes off. And yes he and his family are upper class.

And Midas, you are not allowed to use the D word, it is Downturn, Slowdown. cooling economy, stuff like that.

Never mention that D word, it is in the TV forum rules.

[midas]

Here a linky to an interesting clip. This Brzezinski guy almost sound human, but listen and look at him carefully and you will hear and see he actually is afraid there will be a war between the classes and therefore suggest that the riches set up some kind off voluntary donation fund so that at least some bread can be bought for the now poor when this insanity really takes off. And yes he and his family are upper class.

And Midas, you are not allowed to use the D word, it is Downturn, Slowdown. cooling economy, stuff like that.

Never mention that D word, it is in the TV forum rules.

Alex

I just thought a bit of scaremongering would wake people up in the afternoon.

But this stuff about Switzerland just shows how people on this thread who have said " it's only a recession " or " it happened

in Iceland .... but that's a special case " are not seeing how big this really is.( and Chaimai has never answered my question as

to why Iceland is a special case in his opinion?) We really dont know what is coming next ?

Now then Chaimai what have you got to say about all this ?

Before you answer think if it coulf happen in Switzerland, why could it not happen in the UK?

Alex,that video of Brzezinski is worrying. I think the potential for riots happening more frequently

is the most " scary " scenario of all because people can be like animals if they desparate.

And Dominique Strauss-Kahn also warned about riots on BBC World just this morning.

Edited February 19, 2009 by midas

[Naam]

comparing Switzerland or Austria with Iceland is like comparing chocolate icecream with som tam. it is correct that the country Iceland is on the brink of bankruptcy, not caused by its greedy banks (which are already bankrupt) but based on own misconceptions and present inability to service the national debt.

the mortgages in Eastern Europe by austrian and swiss banks are not the debt of the countries Austria and Switzerland. i am not saying that bankruptcies of domestic banks do not affect a country but one has to differentiate between the two issues. anything else is unfounded scare mongering.