Financial Crisis

[AlexLah]

'We' tried to answer that in the "They say you should never" thread, but never really succeeded.

That's a whole lotta bum Yabaaa, I bet Naam likes that one

[12DrinkMore]

I have a theory that all women arent stick insects Alex heres one for you

Please don't post such 'orrible pictures. That is really scary. At least Alex does post aesthetically pleasing photos, which take my mind off the crisis for a moment.

[yabaaaa]

Wot crisis??? The only crisis i can see is if "she" sat on my face

[AlexLah]

Well, that is good to hear 12. I am making at least one human happy, ha ha ha.

More sweets are on the way.

Just wondering if they will delay publishing the results of the stress test a bit to later in the week. 24 April they (say they) will publish the method used so enough time to find out if it was another scam just like the scam of the nice profits suddenly made by those banks. Weird however that some guy named Turner claims to have the leaked results of the stress test, then later the announcement that the results are not in yet but somewhere last week banks were asked not to publish/talk about the results of the test. Are you kidding me? Whatever the results will be, I believe some blood will be flowing on WS.

Got some news from my home country where people are going to sue banks because some banks have provided loans to clients of sometimes up to 8 times annual salary, hmmmmm, first bragging with your big house and car and now crying because you are about to loose it. On the other hand there are some rules to protect customers against these practices so I am curious to see how that goes.

Anyway I have read some sites that claim that if you ask the bank for "The Note" when threatened with foreclosure, the bank has 60 days to provide it. If not the mortgage is cancelled. Some other tactic is discussed how to get rid of CC debt and it is just a matter of sending a few well written letters and poof debt is gone or at least they will not bother harassing you for it.

There are some very good sites that explain all of this but I am sure some peeps here will start flaming me because of mentioning

it..

[lannarebirth]

Fugly:

http://www.cnbc.com/id/30308959?slide=1

[AlexLah]

But Lana are those GDP numbers including the size/value of the financial sector (sorry not sure how to say that) and what is the size of the financial sector relative to real productive export and what is the size of import?

Have the US and UK for example not really been in a negative GDP for the last few years if you take out the financials and house equity.

Apologies for spelling errors.

[flying]

Fugly:

http://www.cnbc.com/id/30308959?slide=1

Wow sobbering............

Funny though when I saw USA I thought wow 95% good night!

Then I saw all the others

[AlexLah]

I think that CNBC presentation is BS.

Not anything to back up the numbers.

[lannarebirth]

But Lana are those GDP numbers including the size/value of the financial sector (sorry not sure how to say that) and what is the size of the financial sector relative to real productive export and what is the size of import?

Have the US and UK for example not really been in a negative GDP for the last few years if you take out the financials and house equity.

Apologies for spelling errors.

Based on % of 2008 GDP's alex:

http://en.wikipedia.org/wiki/List_of_count...y_external_debt

[AlexLah]

Sorry Lana, I just do not see the % from the financial sector contributing to GDP.

Where to find figures of real production of goods output and goods imported.

Sorry getting a bit confused.

[lannarebirth]

Sorry Lana, I just do not see the % from the financial sector contributing to GDP.

Where to find figures of real production of goods output and goods imported.

Sorry getting a bit confused.

Report back with your findings Alex.......or not.

http://www.google.co.th/

[Naam]

WASHINGTON (Reuters) - Banks and other financial institutions around the world will eventually need to write down assets by $4.1 trillion in order for global financial stability to be restored, the International Monetary Fund said on Tuesday.

In its Global Financial Stability Report, the IMF said U.S. institutions were about halfway through their needed write-downs, while their euro area counterparts are still lagging.

Banks will bear about two-thirds of the write-downs, which are coming on $58 trillion of debt originated in the United States, Europe and Japan, the IMF said.

It was the first time the IMF report had included losses on loans and related securities originated in Europe and Japan, which will total about $1.3 trillion.

The report said banks needed larger capital injections to weather the expected losses and restore investor confidence in the battered financial system.

Banks worldwide have so far raised about $900 billion in capital, about half of it through government rescue loans.

Jose Vinals, director of the IMF's monetary and capital markets department, said continued decisive and effective action to clean up banks' balance sheets is needed to restore confidence and economic growth.

"The deleveraging process is ongoing and high write-downs, together with market demands, will require financial institutions to hold more capital," he told a news conference.

"Some of these capital needs could be satisfied directly with a conversion of (government) preferred shares to common shares, or indirectly with government guarantees to cover losses," Vinals said.

It may be appropriate in some cases for governments to temporarily nationalize financial institutions, he said, but exit strategies need to be communicated ahead of time to markets.

IMF SEES LOSSES MOUNTING

The IMF said it now expects the deterioration in U.S.-originated assets to reach $2.7 trillion, substantially more than the $2.2 trillion it forecast in January. The sharp increase reflects losses mainly between October and January.

Just a year ago, the fund was heavily criticized for estimating losses of just $1 trillion on bank assets. "Sensibilities have changed. What seemed ludicrous now seems quite mild," the IMF's first deputy managing director, John Lipsky, said.

The IMF estimated that banks around the globe will need to write down about $2.8 trillion in loans and securities. So far, about one-third of that amount has been written down.

According to the fund, U.S. banks have written down about $510 billion in assets, putting them about halfway through the process of loan loss recognition. A further $550 billion in write-downs are expected over the next two years.

In the euro area, write-downs so far have totaled $154 billion, with another $750 billion expected through 2010. In Britain, bank credit losses have been $110 billion, with another $200 billion likely in 2009-10, the IMF said.

"Europe has recognized its exposure to U.S. toxic assets but still in the pipe, if you like, is the economic deterioration that is taking place in Europe through the loan book and also its exposure to emerging Europe, which is now in decline," said Peter Dattels, chief of the IMF's global markets monitoring and analysis division.

The IMF estimated potential write-downs by Western banks through their subsidiaries and cross-border holdings of securities in emerging markets could amount to $340 billion.

Since the start of the crisis, market capitalization of global banks has more than halved to $1.6 trillion from $3.6 trillion.

The IMF estimated banks could need additional capital of between $275 billion to $500 billion in the United States, about $125 billion to $250 billion in Britain, and about $375 billion to $725 billion in the euro area.

The IMF said the size of total credit losses could be lower if forceful and well-targeted actions are taken.

It said banks in the United States, euro area and Britain are expected to post losses through 2010 before returning to modest levels of profit.

It took a similarly long period for banks to recover during the Great Depression and in Sweden's banking crises of the early 1990s, the IMF said. However, it said current write-downs are likely to be more severe than during those episodes.

[cloudhopper]

Fugly:

http://www.cnbc.com/id/30308959?slide=1

Debt that cannot be repaid will not be. Looks very deflationary to me...

[Naam]

1. Debt that cannot be repaid will not be.

2. Looks very deflationary to me...

1. that goes without saying as it was never meant to be paid back. roll-over is the name of the game.

2. why? whatever sovereign debt was accumulated since "ancient" times has not been paid back (exceptions prove the rule) but rolled over and apart from Japan no deflationary signs anywhere.

[AlexLah]

Oi oi oi oi!

GDP calc, give big headache, stopped, have better things to do like go for a swim.

This is interesting piece of testimony, gives more headache........

http://zerohedge.blogspot.com/2009/04/too-...ig-to-save.html

[cloudhopper]

1. Debt that cannot be repaid will not be.

2. Looks very deflationary to me...

1. that goes without saying as it was never meant to be paid back. roll-over is the name of the game.

2. why? whatever sovereign debt was accumulated since "ancient" times has not been paid back (exceptions prove the rule) but rolled over and apart from Japan no deflationary signs anywhere.

By rolled over do you mean defaulted on or inflated away? Regardless of any sovereign debt issues however, there is enough of the regular financial kind worldwide that can never be repaid. I suppose it depends on how you want to define deflation, but in my view a fiat money base comprises both cash and credit (or debt!) and currently the total amount is decreasing despite governments efforts to create more. There are indeed signs of price deflation in many other places than Japan as reflected in CPI and commodity prices, not to mention real estate and other "assets". Countries that continue to devalue their currency can however see price increases of products imported from countries with stronger currencies despite decreasing demand and general price deflation. We saw this type of "stagflation" in the US in the mid 70s and we may see it again. Naturally I don't know but the Boy Scout motto applies now more than ever IMO...

[cloudhopper]

apart from Japan no deflationary signs anywhere.

Here's a sign for you - also check out Spain

http://www.guardian.co.uk/business/2009/ap...ns-rpi-negative

[Naam]

apart from Japan no deflationary signs anywhere.

Here's a sign for you - also check out Spain

CH, i never believed the blatant lies and tricks most governments use since decades when it concerns inflation and/or deflation. that in some countries deflation exists where property prices are concerned is a fact. deflation exists also on a y/y or q/q basis because energy prices fell. the bulk what the Bills, Bucks, Hanks and Joes (or their wives) in various countries need for a living does not show any inflation. adding a sofa set, a TV, or other goods which are purchased every few years, to the inflation calculation basket, swapping items or change the weighting is nothing but bullshitting people! if i'm not mistaken you live in Thailand. please ask your Mrs. how much deflation she has recently encountered when shopping.

by the way, an article from a british newspaper (march 2007) which is self-explanatory:

Inflation Basket. What's in it?

Its contents change once a year, providing an intriguing insight into British spending habits.

Among the updates announced yesterday was the addition of olive oil (replacing vegetable oil), and broccoli (replacing the unloved Brussels sprout).

Brie, the king of French cheese, was unceremoniously kicked out in favour of pro-biotic drinks. But GPS navigation systems were added, despite their tendency to guide drivers into canals.

Does it matter?

The make-up of the inflation basket can be hugely significant.

For example, the Office for National Statistics was criticised last year for not giving gas and electricity bills enough weight in the index. The weighting was boosted yesterday, but given the big utility bill cuts looming this year, you could argue things have swung too far the other way.

If statisticians fiddle with the basket too often, it could result in chaos.

[Naam]

By rolled over do you mean defaulted on or inflated away?

rolling over debt means issuing new debt to redeem the old one. conveniently, in most cases more new debt is issued than is necessary to redeem the old one thus building up a mountain of debt. default comes when debt service is unsustainable. dozens of countries defaulted, some of them two and three times in only a couple of decades.

hardly any country can afford to monetise its external debt because it is in a foreign currency. the only country which would be able to do so is the Greatest Nation on Earth™. the U.S. has no debt except denominated in US-Dollars. that applies of course only to the sovereign debtor and not to corporates.

[12DrinkMore]

By rolled over do you mean defaulted on or inflated away?

The debt is "rolled over" by issuing more debt to pay off the maturing debt.

The UK and US governments are very definitely printing more money by using devious means such as buying illiquid securities with newly printed or computer generated cash. With the amazing fractional banking multiplier, for every 1 Billion of purchases, the banks can then create some 10 Billion in extra debt. There is currently a humongous amount of new money being created, most of which seems to be disappearing into the banks to prop up their balance sheets and remain within the banking requirements for liquid holdings.

Price deflation is occuring in housing, but this is more of a correction back to sustainable levels, and other stuff which is not really necessary, for example cars and white goods. I think that a substantial reason for the price drops is to allow stock to be cleared and brought down to levels to match demand. Once this happens I can't see any further price falls. The CPI and RPI stats contain so many fiddle factors that they have become, IMO, simply government manipulated tools to justify policy decisions. This is evidenced by the real rate of inflation that we are suffering in terms of food and essential item prices, which are going up at well over 5%.

I am particularly annoyed at the gross dereliction of duty with the MPC.

http://www.bankofengland.co.uk/

The CPI is surging ahead at 2.9% and has remained stubbornly above the 2% target for a long time. The MPC's remit is to hold this to 2% by manipulation the interest rates. They do not have the mandate to reduce borrowing costs to help out the debtors. The interest rates should be raised. But Brown the Tyrant has taken over the decision making.

Countries that continue to devalue their currency can however see price increases of products imported from countries with stronger currencies despite decreasing demand and general price deflation. We saw this type of "stagflation" in the US in the mid 70s and we may see it again. Naturally I don't know but the Boy Scout motto applies now more than ever IMO...

An interesting phenomena here. With globalisation, everything produced, goods or food, is priced on the global market. So even if the national currency is devalued by 25% in the hope that exports will be stimulated, what if fact seems to happen is that the manufacturers will move the price up to world levels. So even "home grown" produce sold into the local market will experience price inflation. Why should a farmer selling wheat reduce his profits? I wouldn't, I would set my prices at the global level. Indeed, if I didn't, there would be international outcries about "price dumping".

The forecast for the "bottom" of the recession is generally being moved out to 2010. But by then we are possibly looking at 3,000,000 unemployables.

Your forecast of a prolonged period of no economic growth coupled with a dose of inflation in goods is almost certainly what the UK can look forward to. With the RPI now into negative territory, due to basically the cost of borrowing being reduced to zilch, the unions, employees and pensioners will not be seeing any raise in wages. The UK is going to suffer, Japan has been going through this for a decade, but they at least have high savings and an industry.

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

Just a few more hours and we will have the pleasure of hearing how Darling is going to pull a rabbit out from under his kilt to save the universe. (OH! That reminds me, what happened to the self proclaimed "Saviour of the Universe" Brown? He seems to have disappeared from the international scene, thank god)

Unfortunately the only things that Darling has up his kilt is a pair of withered prunes and a shrunken carrot.

"We are doomed, DOOMED, Mr Mainwaring, DOOMED" :D

[12DrinkMore]

I suppose the tendency is to search for reinforcement of one's own views and to ignore opposite views. So here is a reinforcement of my personal conviction that China/Asia is emerging as the world's dominant country/region

http://www.guardian.co.uk/commentisfree/20...wer-shift-china

The article is based on a decline of the USD and US hegemony. I would broaden that and include all Western nations. Globalisation, an unprecedented force, the effects of which are still not fully understood, means that every person and company is competing on a global scale. And if you are earning twenty times what a competitor(employee or company) in Asia is earning, but with the same productive result, then it is time to consider why you deserve so much more.

Globalisation equals Equalisation on a global scale. Unless the world economies descend into a protectionism war, which I do not believe is possible, as the manufacturing bases have moved out of the West into the East, there has to be a major balancing of wealth. It is already happening.

[12DrinkMore]

Well, now we have it.

The new "budget" from Our Darling.

http://www.independent.co.uk/news/uk/polit...rs-1672282.html

Yeah, well, we need some "tough decisions" but they are not being taken now. Usual BS.

And he is relying on a "rapid economic bounce back". Give me a break. There is no economist, nor even a single human being in the UK who believes that Labour or the Conservatives can offer a "bounce back". He is out of his tree.

And the bastard even increases taxes on the only pleasures left, fags and booze.

Drinkers and smokers will be hit with alcohol duties to go up by 2 per cent from midnight tonight, while there will be an increase in tobacco duty of 2 per cent from 6pm tonight.

I will never set foot in the UK again. The Brits have no spirit left, they are subdued, submissive and impotent.

[lannarebirth]

I suppose the tendency is to search for reinforcement of one's own views and to ignore opposite views. So here is a reinforcement of my personal conviction that China/Asia is emerging as the world's dominant country/region

http://www.guardian.co.uk/commentisfree/20...wer-shift-china

The article is based on a decline of the USD and US hegemony. I would broaden that and include all Western nations. Globalisation, an unprecedented force, the effects of which are still not fully understood, means that every person and company is competing on a global scale. And if you are earning twenty times what a competitor(employee or company) in Asia is earning, but with the same productive result, then it is time to consider why you deserve so much more.

Globalisation equals Equalisation on a global scale. Unless the world economies descend into a protectionism war, which I do not believe is possible, as the manufacturing bases have moved out of the West into the East, there has to be a major balancing of wealth. It is already happening.

It doesn't really matter if it's true or not but it's going to be the next big story to be sold. Stories draw money (think global warming). Money creates economic activity that reinforces the story for awhile.

Edited April 22, 2009 by lannarebirth

[12DrinkMore]

It doesn't really matter if it's true or not but it's going to be the next big story to be sold. Stories draw money (think global warming). Money creates economic activity that reinforces the story for awhile.

Sorry to disagree, but it does matter to those of us living here supporting ourselves on money earned over a working lifetime in the West. And I believe it is true. And there is nothing to be lost to consider the possibility of an major economic swing to the East over the next decade and how to protect yourself and wealth if it happens.

I cannot understand why a smiling and helpful girl in the Bangkok Bank cannot afford herself a car compared to her (unhelpful, fat and miserable) Western colleague who can take out a mortgage and run a car. It doesn't seem fair. But the pendulum will surely swing back.

Globalisation is taking place and YOU are competing with ANYBODY IN THE WORLD who can do the same job. And there are a lot of Asians prepared to work harder and longer for less.

[Chaimai]

And the bastard even increases taxes on the only pleasures left, fags and booze.

12D - surely you are not saying that you are against the Chancellor increasing taxes on drink, tobacco and the higher paid to support the economy ?

I thought that I read, a lifetime ago, that you applauded the Irish for the stance of "those who have more will pay more" (I will stand corerected if I am attributing that in error).

Another step in the direction of globalisation = equalisation theory ?

Remember, one man's pleasure is another man's cancer from passive smoking.

Edited April 22, 2009 by Chaimai

[lannarebirth]

It doesn't really matter if it's true or not but it's going to be the next big story to be sold. Stories draw money (think global warming). Money creates economic activity that reinforces the story for awhile.

Sorry to disagree, but it does matter to those of us living here supporting ourselves on money earned over a working lifetime in the West. And I believe it is true. And there is nothing to be lost to consider the possibility of an major economic swing to the East over the next decade and how to protect yourself and wealth if it happens.

I cannot understand why a smiling and helpful girl in the Bangkok Bank cannot afford herself a car compared to her (unhelpful, fat and miserable) Western colleague who can take out a mortgage and run a car. It doesn't seem fair. But the pendulum will surely swing back.

Globalisation is taking place and YOU are competing with ANYBODY IN THE WORLD who can do the same job. And there are a lot of Asians prepared to work harder and longer for less.

You sort of make my point. The standared of livingmay rise here, but only based on the story, which can create the reality, if the money starts flowing in. Let's get that Asia Bubble started. The sooner the better.

[Chaimai]

Globalisation is taking place and YOU are competing with ANYBODY IN THE WORLD who can do the same job. And there are a lot of Asians prepared to work harder and longer for less.

Yes, the Poles recognised that (the Asians before them) and successfully filled many jobs in the UK. The anarchic view was that they were taking jobs from the Brits.

I believe that even the Poles are now pissed off with Britain and are going home voluntarily !

[12DrinkMore]

12D - surely you are not saying that you are against the Chancellor increases taxes on drink, tobacco and the higher paid to support the economy ?

Surely you are joking??? Although I am in full support of any tax increase on tobacco, (I don't smoke), but to increase the tax on the only legal escape from the dreadful reality of living under the Tyrant Brown is going too far. Even here in Thailand they don't apply that to my Chang.

I thought that I read, a lifetime ago, that you applauded the Irish for the stance of "those who have more will pay more" (I will stand corerected if I am attributing that in error).

So far the Irish Government ave impressed me far more than any other government in this crisis. They are trying hard to deal with the problems, but have huge economic issues. At least they are admitting to them and doing something about it.

Another step in the direction of globalisation = equalisation theory ?

Remember, one man's pleasure is another man's cancer from passive smoking.

Now you have lost me. But nobody ever died from liver cirrhosis by drinking my beer.

[12DrinkMore]

Globalisation is taking place and YOU are competing with ANYBODY IN THE WORLD who can do the same job. And there are a lot of Asians prepared to work harder and longer for less.

Yes, the Poles recognised that (the Asians before them) and successfully filled many jobs in the UK. The anarchic view was that they were taking jobs from the Brits.

I believe that even the Poles are now pissed off with Britain and are going home voluntarily !

The devaluation of the Squib irritated them a bit, and then they discovered that they could earn more or less the same and live at home with their families. I would join them.

There are over 2,100,000 unemployables in the UK, really is this an issue? The lazy sods should start working on the 2012 Olympic Farsicle.

[Chaimai]

But nobody ever died from liver cirrhosis by drinking my beer.

Fair comment.

... and remember 3 things:- You are not setting foot in the UK again and not 1 penny of Darling's taxes touch your Chang. As my wife says "not your business" (any longer).

Oh, the 3rd one is that I haven't touched your Chang either - but I will get in touch when my stocks are exhausted.

Regards

Chaimai.

Edited April 22, 2009 by Chaimai