Financial Crisis

[churchill]

Is Sheila C. Bair correct - i.e. that the S+L crisis was worse than the current one.

Yes there were far more failures then but I feel the damage

from this crisis is still much deeper and more far reaching than the S+L crisis- am i right ?

I did not know she said that & I'm surprised.

She always impressed me with having a firm grasp on the severity of the current situation.

But I do not see how in the world she can say that when the true depth of this one is yet to be found.

The S&L crisis was a storm in a tea cup compared to what we are seeing even so far IMHO

Look at what we know so far.....

Who was bailed & for how much...

although we know some of the banks it is obvious we dont know all & it is becoming apparent some are not even in the US.

What they did with that money......

While they get money for nothing or near so interest wise,,,,,

Credit as in Credit Cards while it still exists is getting downright insane.

With banks many of whom got the free ride now sending notices to folks who have been with them for over 15 years always on time payments etc.. Raise their interest rates to close to 30% also raise the minimum due.

Glad I carry no debt but feel for those folks as they were not intending to be defaulters yet those banks seem hel_l bent on pushing them into it.

Lending.... Tight if existent at all. Both commercial & residential levels.

Thank goodness for credit unions as they have been lending to some new home buyers recently & those have been able to get that 8k tax reduction for 1st time buyers.

But mainly I just dont see how Ms Bair or anyone for that matter can compare this to the S&L crisis given the fact we have yet to address the cause instead of just running to treat the symptoms

Citigroup's "Hail Mary Pass": How To Know Citigroup Is In Serious Trouble

Citigroup is in serious trouble. It's easy to tell by what they are doing.

http://globaleconomicanalysis.blogspot.com/

[Abrak]

If you think about it this banking crisis is bound to be more costly than the S&L crisis because the amount of debt in the US relative to GDP is roughly double this time around.

The S&L bank crisis was estimated to have cost about 3.2% of GDP. The IMF in its April 'Financial Stability Report' estimated that this one would cost the US around 13% of GDP.

[flying]

Citigroup's "Hail Mary Pass": How To Know Citigroup Is In Serious Trouble

Citigroup is in serious trouble. It's easy to tell by what they are doing.

That is just what I have been hearing from folks here & not Citi alone but BOA & Chase too.

If you think about it this banking crisis is bound to be more costly than the S&L crisis because the amount of debt in the US relative to GDP is roughly double this time around.

The S&L bank crisis was estimated to have cost about 3.2% of GDP. The IMF in its April 'Financial Stability Report' estimated that this one would cost the US around 13% of GDP.

Agreed I just dont see how it couldn't be

You know I am thinking it is more reporters than Bair linking the two for comparison based on number of closed S&L's versus Banks. But content of the two hardly compare. Even Bair has said they see 500 more banks failing. These are commercial banks so I would assume their risk exposure being much greater.

[flying]

Well here are some samples of credit card settlement offers folks in Californacation have been getting also the latest reassurance from Bair

[churchill]

Goldman Sachs Still Paid for Swaps on Redeemed Bonds

http://www.bloomberg.com/apps/news?pid=206...id=al5.EHL9NEBQ

[flying]

Ah yes........ Where else in the world could an employee refuse to disclose his/her duties to their employers

The White House is not going to allow the president’s newly created “czars” to testify before Congress.

Edited October 24, 2009 by flying

[sokal]

there are probably thousands of houses right now in the USA for under 50,000 dollars for sale due to foreclosures.

And just imagine how many there will be when we actually have credit contraction (interest rates go up)

[sokal]

As of last Tuesday, the US debt stood at $11.95 trillion...............

The Senate must soon increase the national debt limit to above $13 trillion — and Democrats are looking for political cover.

http://www.politico.com/news/stories/1009/28586.html

To me it is all one big Ponzi scheme.

I mean Thailand has so far accumulated US$20bn of additional foreign currency reserves this year (to about US$131bn). Now given that GDP is about US$250bn the increase in foreign exchange reserves for the full year will be approximately 10% of GDP. It is sort of like 1997 in reverse. Intervention effectively by the BOT to prevent appreciation. The more debt the USA piles up the more the BOT will end up buying.

To put things in perspective Thailand had about US$35bn of forex reserves before the run on the baht in 1997. And the general rule of thumb is that you should have forex reserves of at least 3 months imports so around US$35bn.

And when Bretton Woods 2 finally collapses the losses for Thailand will probably be US$25bn or 10% of GDP.

When the US was the biggest creditor and export nation on earth did it have a really weak currency ? Currency devaluation is a misguided ass backward keynesian policy.

[Naam]

Also.....

Nouriel Roubini: Big Crash Coming

Roubini: I don’t believe in gold. Gold can go up for only two reasons. [One is] inflation, and we are in a world where there are massive amounts of deflation because of a glut of capacity, and demand is weak, and there’s slack in the labor markets with unemployment peeking above 10 percent in all the advanced economies. So there’s no inflation, and there’s not going to be for the time being.

The only other case in which gold can go higher with deflation is if you have Armageddon, if you have another depression. But we’ve avoided that tail risk as well. So all the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense. Without inflation, or without a depression, there’s nowhere for gold to go. Yeah, it can go above $1,000, but it can’t move up 20-30 percent unless we end up in a world of inflation or another depression. I don’t see either of those being likely for the time being. Maybe three or four years from now, yes. But not anytime soon.

hmmmm...

[flying]

Without inflation, or without a depression, there's nowhere for gold to go. Yeah, it can go above $1,000, but it can't move up 20-30 percent unless we end up in a world of inflation or another depression.

Yeah I saw that too......

Then again I have seen gold move more than 20-30% without inflation or depression already

Plus remember I was & still am of the mind that we will in fact see a greater depression

Edited October 24, 2009 by flying

[Naam]

Without inflation, or without a depression, there's nowhere for gold to go. Yeah, it can go above $1,000, but it can't move up 20-30 percent unless we end up in a world of inflation or another depression.

Yeah I saw that too......

Then again I have seen gold move more than 20-30% without inflation or depression already

Plus remember I was & still am of the mind that we will in fact see a greater depression

i hope so as i like deflation.

[flying]

i hope so as i like deflation.

Then you should be happy with where you are

agree with FOFOA?

in the end we will have hyper-DE-flation in all things measured against gold,

and hyper-IN-flation in all things measured against dollars.

And on the inflation/deflation debate... Forget about it. For us savers, just focus on the dollar and gold. When you hear about a "dollar devaluation", what that means is an across-the-board price inflation based solely on PAST monetary inflation. That is the very definition of a dollar devaluation.

Edited October 25, 2009 by flying

[midas]

When Gordon Brown makes a statement like this which we all know cannot

possibly be achieved because UK is now facing a huge wave of strikes that

will hit productivity. It makes me wonder how many other bare faced lies

he has told the public.

PM: downturn over by Christmas

Gordon Brown yesterday staked his political reputation ( what reputation ) on a swift recovery from Britain's longest-ever recession, with a pledge that the downturn would be over by Christmas.

Following the surprise revelation that the economy shrank by 0.4 per cent in the third quarter of this year, the Prime Minister used his weekly podcast to deliver an upbeat forecast.

Mr Brown urged caution, but he said "the battle to stop this global downturn becoming a second great depression is being won". He added: "This isn't happening by accident. It is being won only by countries rejecting the protectionism which caused such damage in the 1930s in favour of co-ordinated action and intervention.

"My pledge to you is to make reform of the financial sector a reality and to see Britain's economy return to growth by the turn of the year."

http://www.independent.co.uk/news/uk/polit...as-1809149.html

[sokal]

Also.....

Nouriel Roubini: Big Crash Coming

Roubini: I don’t believe in gold. Gold can go up for only two reasons. [One is] inflation, and we are in a world where there are massive amounts of deflation because of a glut of capacity, and demand is weak, and there’s slack in the labor markets with unemployment peeking above 10 percent in all the advanced economies. So there’s no inflation, and there’s not going to be for the time being.

The only other case in which gold can go higher with deflation is if you have Armageddon, if you have another depression. But we’ve avoided that tail risk as well. So all the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense. Without inflation, or without a depression, there’s nowhere for gold to go. Yeah, it can go above $1,000, but it can’t move up 20-30 percent unless we end up in a world of inflation or another depression. I don’t see either of those being likely for the time being. Maybe three or four years from now, yes. But not anytime soon.

hmmmm...

So the US went broke on bailouts knowing it would only buy then 3 or 4 years ? Some of these economists are fcut in the head...

[AlexLah]

On a sidenote.......

http://www.nytimes.com/2009/10/25/business...rss&emc=rss

For those with a mortgage, ask for proof of claim. It was mentioned before here I believe (MERS).

[teletiger]

Mr Brown urged caution, but he said "the battle to stop this global downturn becoming a second great depression is being won". He added: "This isn't happening by accident. It is being won only by countries rejecting the protectionism which caused such damage in the 1930s in favour of co-ordinated action and intervention.

So.....slapping tariffs on tyres and pipes isn't protectionist? A word in Bambi's ear methinks. If he can get face time.

Regards.

[churchill]

What happens to the US$ if the Yuan is revalued ?

Lots of talk from the US of China being irresponsible - I expect they think the same of the US .

From the NY Times

The Chinese Disconnect

Senior monetary officials usually talk in code. So when Ben Bernanke, the Federal Reserve chairman, spoke recently about Asia, international imbalances and the financial crisis, he didn’t specifically criticize China’s outrageous currency policy.

But he didn’t have to: everyone got the subtext. China’s bad behavior is posing a growing threat to the rest of the world economy. The only question now is what the world — and, in particular, the United States — will do about it.

http://www.nytimes.com/2009/10/23/opinion/...amp;ref=opinion

Edited October 25, 2009 by churchill

[Abrak]

What happens to the US$ if the Yuan is revalued ?

Well what sort of happens under wildly optimistic assumptions is this.

The Yuan gets revalued up as do all other Asian surplus countries by say 25%.

As a result Asians find Western goods are cheaper and they buy lots more as well as investing in export industries becomes less attractive so they generally consume more and save less. Their surplus disappears and they have a deficit.

Meanwhile in the US demand for cheap US exports expands and demand for expensive imports contracts and investment becomes becomes more attractive than consumption. The country has a current a/c surplus.

So things were much as before the crises but Asian countries are paying their deficits with their US$4trn of accumulated reserves while the US is using its surplus to pay down some of its debts. Theoretically, growth rates are the same or even higher given additional room for Asian savings rates to fall.

Chapter 17: Economic myths and fairy tales

[12DrinkMore]

Mr Brown urged caution, but he said "the battle to stop this global downturn becoming a second great depression is being won". He added: "This isn't happening by accident. It is being won only by countries rejecting the protectionism which caused such damage in the 1930s in favour of co-ordinated action and intervention.

So.....slapping tariffs on tyres and pipes isn't protectionist? A word in Bambi's ear methinks. If he can get face time.

Regards.

Brown is talking a load of delusional nonsense.

Who was responsible for the massive devaluation of the GBP? Brown. Surely the biggest implementation of a protectionist policy, equivalent to raising, across the board, imported goods by 30% plus?

The man is quite clearly a liar.

[12DrinkMore]

What happens to the US$ if the Yuan is revalued ?

Well what sort of happens under wildly optimistic assumptions is this.

The Yuan gets revalued up as do all other Asian surplus countries by say 25%.

As a result Asians find Western goods are cheaper and they buy lots more as well as investing in export industries becomes less attractive so they generally consume more and save less. Their surplus disappears and they have a deficit.

Meanwhile in the US demand for cheap US exports expands and demand for expensive imports contracts and investment becomes becomes more attractive than consumption. The country has a current a/c surplus.

So things were much as before the crises but Asian countries are paying their deficits with their US$4trn of accumulated reserves while the US is using its surplus to pay down some of its debts. Theoretically, growth rates are the same or even higher given additional room for Asian savings rates to fall.

Chapter 17: Economic myths and fairy tales

Footnote to chapter 17:

Even with a revaluation of Asian currencies by 25%, everything the Asians need is already manufactured in Asia and so the price for the Asians in Asia, paying Asian currencies, will remain the same. But the increased prices of goods priced in Western currencies for Westerners will increase by 25%, resulting in even more recession and depression.

It will take much more than a 25% revaluation to swing the trade around, as 25% price increases on Asian manufactured goods will still not make it profitable to rebuild a competitive manufacturing industry in Farangland.

Oh dear oh dear, is there a win win solution? Or is it a one sided game now?

[sokal]

What happens to the US$ if the Yuan is revalued ?

Lots of talk from the US of China being irresponsible - I expect they think the same of the US .

From the NY Times

The Chinese Disconnect

Senior monetary officials usually talk in code. So when Ben Bernanke, the Federal Reserve chairman, spoke recently about Asia, international imbalances and the financial crisis, he didn’t specifically criticize China’s outrageous currency policy.

But he didn’t have to: everyone got the subtext. China’s bad behavior is posing a growing threat to the rest of the world economy. The only question now is what the world — and, in particular, the United States — will do about it.

http://www.nytimes.com/2009/10/23/opinion/...amp;ref=opinion

I don't read anything by that retard case.

[flying]

Rather large one.....Will this leave a stain on tomorrows market?

Who was it that said Commercial Real Estate was next to go?

Lender Capmark Financial Group Files for Bankruptcy

Capmark Financial Group Inc., the lender owned by Goldman Sachs Group Inc. and KKR & Co., among other companies, filed for bankruptcy protection after posting a second-quarter loss of about $1.6 billion.

Capmark is one of the largest U.S. commercial real estate finance companies, with more than $10 billion in originations, according to Moody’s Investors Service. The company, formerly known as GMAC Commercial Holding Corp., services more than $360 billion of debt.

Edited October 26, 2009 by flying

[Naam]

What happens to the US$ if the Yuan is revalued ?

Well what sort of happens under wildly optimistic assumptions is this. The Yuan gets revalued up as do all other Asian surplus countries by say 25%.

Chapter 17: Economic myths and fairy tales

reality shows Yuan is still pegged, other asian currencies up vs. USD.

[churchill]

Goldman Sachs Group Inc. a sterling bull !?

are they mad or long - manipulatuion ?

http://www.bloomberg.com/apps/news?pid=206...id=aqoJW.D730pA

[churchill]

S&P 500 Overvalued by 40%, Set to Fall, Smithers Says

"The economist also said banks such as Goldman Sachs Group Inc. will likely break up when they become subject to sliding- scale capital requirements that penalize them for being too large. Rising profits at financial institutions has largely been the result of shrinking competition in market-making, which has in turn provided banks with inside information on trading patterns, Smithers said.

“Market-making has become a doomsday machine,” Smithers said. “People are arrogant and think they can do wonders and they’ll be all too happy to split off. And you should raise the capital requirements until they do split off.”

http://www.bloomberg.com/apps/news?pid=206...id=ac1KaPxa0Bso

[teletiger]

Getting old in the UK. Well, good luck with that.

"Anger as secret court seizes £3.2bn from elderly"

http://www.thisismoney.co.uk/news/article....mp;in_page_id=2

Regards.

[lannarebirth]

Straight Talk in the Golden State:

http://globaleconomicanalysis.blogspot.com...egislature.html

[mommysboy]

Getting old in the UK. Well, good luck with that.

"Anger as secret court seizes £3.2bn from elderly"

http://www.thisismoney.co.uk/news/article....mp;in_page_id=2

Regards.

I have an elderly uncle with vascular dementia. You couldn't say he's seeing his time out, it's really pitiful, and yes very costly. It's a tough one but the NHS was never designed to cope with this and in truth now that I live in Thailand I understand the true cost of healthcare. Nevertheless they keep him going (against our wishes and what would be his own) with great healthcare in an expensive nursing home.

The money is not there- simple as that, and it never was, and never will be. In truth we should be paying 50% tax to a man.

The rules are there, I think the poor old souls are allowed 23000 pounds, thereafter their nursing home bills are claimed from pensions if any. Where there is a relative in any property no claim is made on that. naturally, if no relative is there, or someone acting in attorney, the Govt body will do it itself. What's wrong with that?

It's a low story for sure. But I'll allow the poster (who may be inexperienced or simply ignorant of the facts) the opportunity to get off his soapbox on this issue.

[billybonkers]

But I'll allow the poster (who may be inexperienced or simply ignorant of the facts) the opportunity to get off his soapbox on this issue.

How did you come up with that <deleted> mate? The poster posted a link to an article.

Billy

[sokal]

S&P 500 Overvalued by 40%, Set to Fall, Smithers Says

"The economist also said banks such as Goldman Sachs Group Inc. will likely break up when they become subject to sliding- scale capital requirements that penalize them for being too large. Rising profits at financial institutions has largely been the result of shrinking competition in market-making, which has in turn provided banks with inside information on trading patterns, Smithers said.

“Market-making has become a doomsday machine,” Smithers said. “People are arrogant and think they can do wonders and they’ll be all too happy to split off. And you should raise the capital requirements until they do split off.”

http://www.bloomberg.com/apps/news?pid=206...id=ac1KaPxa0Bso

That is already happening to ING. ING is being broken up as we speak but I highly doubt Lord Blankfien would allow that.