Financial Crisis

[AlexLah]

Sorry 12, just realised that you asked about dropping the Euro, mixed it up with getting out of Europe.

Anyway I have searched and searched but can't find the procedure of getting out of the Euro.

So I send Europecenter an e-mail with the question where such procedure is to be found.

So far no country has dropped the Euro yet. There were some rumours that Italy was considering it but no action.

And that one Trillion is nothing to worry about, the US has already commited something like 8 Trillion to save themselves.

[12DrinkMore]

Sorry 12, just realised that you asked about dropping the Euro, mixed it up with getting out of Europe.

Anyway I have searched and searched but can't find the procedure of getting out of the Euro.

So I send Europecenter an e-mail with the question where such procedure is to be found.

Wonder if they will reply, after all, WE are paying them. But with all the Eurolaws, there wil certainly be some rules. The Germans would not let that go past....

So far no country has dropped the Euro yet. There were some rumours that Italy was considering it but no action.

And that one Trillion is nothing to worry about, the US has already commited something like 8 Trillion to save themselves.

To save themselves? Who the fukc are "themselves"?

I think we already know, and it certainly isn't the peeps.

Edited April 2, 2009 by 12DrinkMore

[AlexLah]

The question of who are "They" we have been trying to answer in the "They say you should never thread" without succes.

You have some beer in the fridge?

[12DrinkMore]

Well, the result, I suppose.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

April 2 (Bloomberg) -- World leaders agreed on a regulatory blueprint for reining in the excesses that fed the worst financial crisis in six decades and pledged more than $1 trillion in emergency aid to cushion the economic fallout.

The Group of 20 policy makers, meeting in London, called for stricter limits on hedge funds, executive pay, credit-rating companies and risk-taking by banks. They also boosted the resources of the International Monetary Fund and offered cash to revive trade to help governments weather the economic and social turmoil.

Great but ...

They sidestepped the question of whether to deliver more fiscal stimulus in their own economies.

Sounds good

But now

The G-20 statement amounts to an effort to rewrite the rules of capitalism to address an integrated world economy that has outgrown the ability of individual governments to keep it in check. The group, which represents 85 percent of the world economy, devised a model for how finance should be regulated everywhere in a bid to prevent a repeat of the market turbulence which has roiled the world for almost two years.

Straight to Alex,

But what is this model, devised over eight hours? Come on, tell us, we need to know what we are paying out taxes for.

And I still still don't see any bankers being jailed. But now we can look forward to some still unknown body which is supposed to regulate the bastards who delivered us into this crisis. I wonder how many of the old bastards will be there?

I have no hope left. They are out to send us into penury and debt slaves for the rest of our and our childrens' lives.

Maybe the Taliban has a point, I could die in hope as a martyr or live in misery as a tax payer?

[12DrinkMore]

Well, I hate these bastards, and look how they see themselves

http://www.cityoflondon.gov.uk/Corporation...re/keyfacts.htm

But this seems all out of proportion (pity they don't provide up to date figures)

Financial services made a net contribution to the UK's export earnings of £24bn in 2006, a major share of which was generated within the Square Mile. It alone contributes nearly 4% to the UK's GDP, with London as a whole contributing 19%.

24 BILLION, IS THAT ALL???

<deleted>, we are up to TRILLIONS OF LOSSES. A few BILLION contribution, please go and sit in the corner and shut the fukc up.

The Square Mile is a vital asset to the British and European economies. Its markets are innovative, competitive and internationally focused. The best companies in the world do business in London because London is the place to do business best.

Please, just crawl away and have a wank under the covers, self serving <deleted>. We don't need or want you.

[AlexLah]

Interesting right?

Never knew that "The City" had their own government, police and such, it is an sort of independend city within a city, sort of like the Vatican.

Anyway I try to find out what the % is of the financial services on GDP for the UK.

I found that services in general is about 70% but that includes restaurants hotels and banking.

Where can I find that number?

[flying]

So you could say we have hit the bottom?

I just don't see any way we could even consider a bottom.

There has been zero resolution to restore any kind of faith.

The crystal ball my dog retrieved from Naam's yard says............

The market is doing a repetitive dance but soon enough the music will stop.

Many will be left looking for a chair that no longer exists.

Folks who say they see deals & a bottom still live in a comparative world that will not be re-visited in our lifetime.

Ok fido take this ball back to where you found it

[BEENTHEREDONETHAT]

So you could say we have hit the bottom?

I just don't see any way we could even consider a bottom.

There has been zero resolution to restore any kind of faith.

The crystal ball my dog retrieved from Naam's yard says............

The market is doing a repetitive dance but soon enough the music will stop.

Many will be left looking for a chair that no longer exists.

Folks who say they see deals & a bottom still live in a comparative world that will not be re-visited in our lifetime.

Ok fido take this ball back to where you found it

Fly

Are you saying that Naam does not have the balls to make this prediction.

[Naam]

i tend to agree with Flying. markets do not make economies. the outlook is still bleak but slightly better than a couple of months ago.

[midas]

So you could say we have hit the bottom?

I just don't see any way we could even consider a bottom.

There has been zero resolution to restore any kind of faith.

The crystal ball my dog retrieved from Naam's yard says............

The market is doing a repetitive dance but soon enough the music will stop.

Many will be left looking for a chair that no longer exists.

Folks who say they see deals & a bottom still live in a comparative world that will not be re-visited in our lifetime.

Ok fido take this ball back to where you found it

And wonder how people will feel about investing in Stocks

this time around if it takes another nosedive because

if you listen to CNBC and even Fox Business News - they are

certainly giving the impression the worst is over

[badge]

The consensus early last month that Stocks would continue down was palpable, so equity markets rallied. The stock market and the economy have a largely tenuous relationship; over time they can be said to correlate. Stocks tend to lead. In the same way Bills tend to lead base rates.

[badge]

http://newsimg.bbc.co.uk/media/images/45626000/jpg/_45626856_007112976-1.jpg[/]

"This do cost how much?" "$120,000,000.... HA HA HA"

Edited April 3, 2009 by badge

[Naam]

The consensus early last month that Stocks would continue down was palpable, so equity markets rallied. The stock market and the economy have a largely tenuous relationship; over time they can be said to correlate. Stocks tend to lead. In the same way Bills tend to lead base rates.

an academic statement. market bubble vs. economy 2000 and market bubble vs. economy 2006/7 (and a number of other periods) show exactly the opposite. using markets as an indicator in an unprecedented situation and globally uncharted territory is as good as throwing a coin.

[samuibeachcomber]

After this G20 meeting,do we know if they know what they are trying to do.Are they trying to cover every eventuality.Some govt. leaders(mainly europeans)want stricter controls over financial regulation i.e. hedge funds CDS's etc,plus salary caps and bonus caps for banking gurus,others like the USA and UK,do not want these stricter controls but want increased financial stimulus,so everyone seems to have agreed to weaken their positions to accomodate others,so that everyone is a winner but with weakened gains.

Do we want to return to the 70's where the unions ruled(particularly in the UK and Europe),do we want to go bank to a regulated banking/financial system,or do we want to still have what we've had,this global financial network?

One thing we can all agree on is that trust of these institutions has evapourated.

Why dont each govt. of there country,institute a govt. bank where strong regulation is applicable to just that bank,where savings in this bank are the only one's gauranteed,where interest earned on savings are more modest.I think the majority of people would be happy to opt for this.Allow all the other financial bodies do their own thing without regulation,knowing that if they fail there will be no tax payer bailout,and a warning notice posted that person or institutions that invest in these corporations will do so at their own risk,and let the dice fall where they may.Surely such govt. banks could find safe places to invest without the risk that we now know was the case this last year.

[AlexLah]

If this AIG supposed fraud get's proven.........

Have a read: http://www.ritholtz.com/blog/2009/04/aig-b...was-reinsurance

[lannarebirth]

If this AIG supposed fraud get's proven.........

Have a read: http://www.ritholtz.com/blog/2009/04/aig-b...was-reinsurance

It's not supposed fraud Alex, it's clearly fraud. To enter into contracts where you know you can't fulfill your obligations is fraud, plain and simple.

[Naam]

If this AIG supposed fraud get's proven.........

It's not supposed fraud Alex, it's clearly fraud. To enter into contracts where you know you can't fulfill your obligations is fraud, plain and simple.

i think probability plays a big role too LRB. applying your definition strictly would mean that all insurance companies conduct a fraudulent business practice as none of them has the resources to pay for all its contracts.

[lannarebirth]

If this AIG supposed fraud get's proven.........

It's not supposed fraud Alex, it's clearly fraud. To enter into contracts where you know you can't fulfill your obligations is fraud, plain and simple.

i think probability plays a big role too LRB. applying your definition strictly would mean that all insurance companies conduct a fraudulent business practice as none of them has the resources to pay for all its contracts.

That's true Dr. but there would appear to be inadequate reserves in this case and the risk model failed to take into account all known risks. It looks like they shopped for a risk model that allowed them to do what they wanted to do, rather than what they needed to do. Can't imagine why the stock is still trading.

http://online.wsj.com/article/SB122538449722784635.html

[stumonster]

I am not sure that this money pledged at the G20 meeting is going to help out

is there actually enough there to cover the bonuses and salary increases ?

[AlexLah]

That is not the point Stu.

The point is, do insurance company's have enough money to cover the risks that they insure?

Do Pension funds have enough money to pay out people that retire in the coming 20 years?

Does SS have enough money to help millions of people for the next 15 years?

Does the FDIC have enough money if 10, 20, 30, 40 or 50% of banks go bankrupt?

What you think?

[12DrinkMore]

Here's a long (and in part tedious) article centered around the value of the Dollar.

http://www.atimes.com/atimes/China_Business/KD01Cb01.html

But the closing few paragraphs are maybe pointers to where the mess is heading.

Worse yet, the efficiency that supporters of free-market fundamentalism claim to be inherent in the market system has turned out to be a mirage of a castle in the sky build by debt. It is a house of cards held together by systemic fraud. Wealth in market fundamentalism had not been created by honest work in recent decades, but by systemic manipulation of credit to turn risks into safety and debt into assets. From the central bank down to the average home owner, every participant in the market economy was abusing the false effect of unearned wealth as the miracle of finance capitalism. Many are now realizing that the Federal Reserve has been the biggest Ponzi scheme operator, not Bernie Madoff.

The fantasy mirage of debt capitalism has been brought back to earth fundamentally by the current unprecedented financial crisis to show that the US neo-liberal model of miracle growth and debt prosperity via free markets is unsustainable. As predatory dollar hegemony turns international trade into a process of spreading dollar denominated debt around the world, ending in sudden bankruptcy, prolonged depression and widespread resultant poverty, rather than one that achieves sustainable growth and solid prosperity, populist national politics will force all governments to refocus on orderly domestic development away from over-reliance of foreign trade, making the issue of exchange rates less relevant.

China is not the cause of the financial problems the US inflicted on itself and the globalized economy. In many ways, China has been a double victim of the misleading lure of the empty promise of easy prosperity promoted by the false prophets of US market fundamentalism, by holding down Chinese wages to compete in the export market and unwittingly shipping real wealth created by its workers for fiat currency that the US can print at will, money that cannot be used in China. China's trade surplus is not the reward of 19th century mercantilism because Chinese exports do not earn gold, only superpower fiat currency of no intrinsic value.

On the other side, US consumers who want to enjoy a good life without working are like Pinocchio, the wooden puppet who yearns to be a real boy as promised by the good fairy. But he is sidetracked by a boy named Romeo - nicknamed Candlewick because he is so tall and skinny; just the type of boy Pinocchio wishes to become - who lures him to go to the Land of Play, where everyone plays and eats candy all day long and never does any work. Pinocchio goes along with Candlewick and they have a wonderful time in the Land of Play, until one morning Pinocchio awakes with donkey ears. Belatedly, a mouse tells him that boys who do nothing but play and never work always grow into donkeys after the initial fun.

I think it is now the time for Asia, the wealth producing countries of the world, to be paid a realistic wage for what they do. Supporting the bullshit western financial industries and western debtors at the expense of prolonging poverty in Asia now seems totally unfair. Why should a worker toiling away in a car manufacturing plant in Asia producing a car that people want to buy be paid a fraction of the wages that some worker in Detroit producing a government subsidised unsellable product receives?

Edited April 6, 2009 by 12DrinkMore

[lannarebirth]

Starting to hear a lot more of the "F" word now; and rightly so.

http://www.pbs.org/moyers/journal/04032009/transcript1.html

BILL MOYERS: I was taken with your candor at the conference here in New York to hear you say that this crisis we're going through, this economic and financial meltdown is driven by fraud. What's your definition of fraud?

WILLIAM K. BLACK: Fraud is deceit. And the essence of fraud is, "I create trust in you, and then I betray that trust, and get you to give me something of value." And as a result, there's no more effective acid against trust than fraud, especially fraud by top elites, and that's what we have.

BILL MOYERS: In your book, you make it clear that calculated dishonesty by people in charge is at the heart of most large corporate failures and scandals, including, of course, the S&L, but is that true? Is that what you're saying here, that it was in the boardrooms and the CEO offices where this fraud began?

WILLIAM K. BLACK: Absolutely.

[AlexLah]

There seem to be a lot of talking but minimal action against the culprits. Imagine they would round up all of those involved.

It will never happen as the scam is way to big and too many people high up are involved plus the fact that they have thrown Trillions of Dollars and other toilet paper around to try and cover it all up.

12 you make a good point about salary differences between the West and East, I mean you can even compare Japan and Thailand or any other South East Asian country except Australia and Singapore in some cases. I have asked myself that same question many times and still do.

I think one of the reasons that the US outsourced so many of it's bizz is that maybe the US citizens did not earn enough money to be able to buy domestically produced stuff? I read some articles that say that within years, farmers will be the people that can afford driving expensive cars, now that would be something.

Imagine you are a just laid off worker that worked in the finance industry and you posses no real skills, what is such person going to do?

Will he/she end up trying to get a job as a cleaner or some other low payed job?

He/she could join the army as a last resort right? There is always a need for cannon fodder.

Last year I stated a scenario that 1 Million jobs got lost each month, and look, we are not far off (For the US that is).

After the G20 meeting again hope was feed to the people and you can see here and there people saying the worst is over, we just need the banks to loan money again.

My question is: To who and for what?

The people with a job are cutting on expenditures and save more.

Tax income is declining unless they invent other taxes (Like increasing the tax on cigarettes, or farting cow tax).

Banks are tightening rules on lending.

US does not invest in factories that produce goods that other countries want to buy (except for bombs and military stuff).

All this stimulus money is spend on what?

The sheople are led to the slaughterhouse and they won't realise it until the moment they feel a sharp blade against their throat.

Reliving their lives in seconds until the final darkness sets in.

[flying]

Starting to hear a lot more of the "F" word now; and rightly so.

http://www.pbs.org/moyers/journal/04032009/transcript1.html

Thanks good article.

I agree & feel the same as this...........

BILL MOYERS: To hear you say this is unusual because you supported Barack Obama, during the campaign. But you're seeming disillusioned now.

WILLIAM K. BLACK: Well, certainly in the financial sphere, I am. I think, first, the policies are substantively bad. Second, I think they completely lack integrity. Third, they violate the rule of law. This is being done just like Secretary Paulson did it. In violation of the law. We adopted a law after the Savings and Loan crisis, called the Prompt Corrective Action Law. And it requires them to close these institutions. And they're refusing to obey the law.

And this !

BILL MOYERS: And we have to know that, in order to know what?

WILLIAM K. BLACK: To know everything. To know who committed the frauds. Whose bonuses we should recover. How much the assets are worth. How much they should be sold for. Is the bank insolvent, such that we should resolve it in this way? It's the predicate, right? You need to know the facts to make intelligent decisions. And they're deliberately leaving in place the people that caused the problem, because they don't want the facts. And this is not new. The Reagan Administration's central priority, at all times, during the Savings and Loan crisis, was covering up the losses.

Actually the whole article is quite good isn't it?

Edited April 7, 2009 by flying

[Naam]

BILL MOYERS: And we have to know that, in order to know what?

WILLIAM K. BLACK: To know everything... You need to know the facts to make intelligent decisions

------------------------------------------------------------------------------------------------------------------------------------

right so! many rainy seasons ago i happened to be (due to a stupid decision as a youngster) in a country located not too far away from Thailand. whenever i (we) encountered strangers who wore a different uniform than us, we checked out the facts before we made any intelligent decision. major facts were:

1. where their AK47 loaded?

2. and if not did these strangers have ammunition to load them?

3. did the strangers represent any harm for me or my comrades?

we got this information making some small talk over a couple of drinks and then made intelligent and brilliant decisions based on facts:

-if the answer to qestion 1. and 3. was "yes"

and

-the answer to question 2. was "no" we...

...shot the strangers

[Naam]

All this stimulus money is spend on what?

"stimulus money" = huge amounts governments are handing out to non-deserving recipients enabling AlexLah, 12Chang, Flying, 5Whisky, 7½Vodka et al (especially Al) to bitch about thus avoiding excruciating boredom.

source: http://www.Naams_collected-bullshit.com

chok dee!

[lannarebirth]

I think Fitch did a little after the fact factfinding. They said it was "disconcerting at best".

http://www.rgemonitor.com/economonitor-mon...mbs_performance

I do agree with you Dr about the necessity to have facts. Some facts have been brought to light and are being ignored. Some are, with the help of the government, being suppressed. That's what I find disconcerting.

[Naam]

I think Fitch did a little after the fact factfinding. They said it was "disconcerting at best".

I do agree with you Dr about the necessity to have facts. Some facts have been brought to light and are being ignored. Some are, with the help of the government, being suppressed. That's what I find disconcerting.

i too find a lot what is going on extremely disconcerting LRB and i have expressed that. what i find useless and wasted time is to chew, swallow, regorge and rechew over and over again what has been mentioned and discussed ad nauseam. in my [not so] humble view discussions should much more concentrate on how we small fry can prepare and counter what is up against us in the future. but to discuss this one would need to extrapolate and pinpoint what exactly is waiting for us. on the latter the jury is still out, respectively a zillion jurors globally are discussing the implications 24/7 but agree to disagree. facit: hung jury.

[lannarebirth]

I think Fitch did a little after the fact factfinding. They said it was "disconcerting at best".

I do agree with you Dr about the necessity to have facts. Some facts have been brought to light and are being ignored. Some are, with the help of the government, being suppressed. That's what I find disconcerting.

i too find a lot what is going on extremely disconcerting LRB and i have expressed that. what i find useless and wasted time is to chew, swallow, regorge and rechew over and over again what has been mentioned and discussed ad nauseam. in my [not so] humble view discussions should much more concentrate on how we small fry can prepare and counter what is up against us in the future. but to discuss this one would need to extrapolate and pinpoint what exactly is waiting for us. on the latter the jury is still out, respectively a zillion jurors globally are discussing the implications 24/7 but agree to disagree. facit: hung jury.

Well, I'm really only trying to work the government angle here Dr. I always assume banks/brokers/dealers are operating a scam, so no revelations of fraud surprise me ever. It's the government coverup that's stuck in my craw and that's the thing I need to weigh in the LRB household. Gonna force me to make some decisions I'd rather not make. Some of which are sure to fare poorly. Oh well, it's been a nice run these past couple of years.

[12DrinkMore]

All this stimulus money is spend on what?

"stimulus money" = huge amounts governments are handing out to non-deserving recipients enabling AlexLah, 12Chang, Flying, 5Whisky, 7½Vodka et al (especially Al) to bitch about thus avoiding excruciating boredom.

source: http://www.Naams_collected-bullshit.com

"Oops! This link appears broken"

Oh dear, I was hoping for a GREAT website to relieve me of the utter boredom of this financial crisis. My life prior to this mess was, at least to me, very interesting. All was well with my finances, I was happily carefree about the future. But now I, and very many other, have no clue where it is heading and what the Elected Leaders of the Globe will perpetrate on us next, naturally in "our own best interests".

I too find a lot what is going on extremely disconcerting LRB and i have expressed that. what i find useless and wasted time is to chew, swallow, regorge and rechew over and over again what has been mentioned and discussed ad nauseam. in my [not so] humble view discussions should much more concentrate on how we small fry can prepare and counter what is up against us in the future. but to discuss this one would need to extrapolate and pinpoint what exactly is waiting for us. on the latter the jury is still out, respectively a zillion jurors globally are discussing the implications 24/7 but agree to disagree. facit: hung jury.

Absolutely. So here we go with a few ideas where it is heading, maybe you want to pop up some more?

- All those I speak with disagree with the rhetoric from Our Leaders, and are expecting a very difficult two years AT LEAST.

- Nobody is interested in taking out credit. Expenses are being reduced significantly and personal debt is being paid off asap.

- From conversations with holidaymakers here, the economic state in Sweden, Finland, Ireland, Germany, USA, UK is noticeably getting worse.

I get the impression that the rhetoric from Our Leaders is increasingly like generals urging the ignorant masses to go to war. We may not be heading into war, but to encourage already up to the hilt indebted consumers to take out more credit sounds like a call to commit mass financial suicide.

The refusal of the western consumer to consume on credit will be an interesting play to follow.

Ireland is the only country I have seen which is taking the drastic and necessary steps.

http://www.independent.co.uk/news/business...et-1664517.html

Unlike the UK, US and Japan, they cannot simply print more cash, so public service budgets have to be restricted, keeping the cost explosion under control. I find this very positive for the long term future of Europe. They will come out of it stronger.

China is, for the first time, making very loud noises about the USD and China's lack of status in G20 and the IMF. As China is the biggest creditor surely it will and must have much more to say in the future? There has already been an Asian "IMF" set up, and China is issuing it's currency in the form of swaps to several other countries. This will mean that the USD will become less significant to the world finances. The Middle East is also looking at introducing a new currency, which they will presumably require for payment of oil, further reducing the importance of the USD.

So I think that over the next five years there will be a significant shift in the balance of currencies.