World Economic Crash Phase Ii?

[OlRedEyes]

Would like to see what the general feeling is from those who are reasonably informed on world economics, and old enough not to believe we are invincible.

My fear right now is that I get the feeling we are teetering on the edge of the real crash. After everything has been thrown at the financial crisis, the realization that the financial crisis will result in an economic crisis set in belatedly, and markets discounted what they optimistically hoped would be the following contraction. Now it seems, as I feared, that their optimistic view of most economies just slowing down is way off base. Even Japan has recorded a 3% contraction, and the Chinese and Indian economic predictions are being shown up as what they obviously were, pure hope.

When the markets realize it is all going south much further than hoped, the bottom may fall out completely. Time to stock up on baked beans and bully beef?

Then of course there's the problem of climate change. Now eventually it is starting to be recognized that the previous predictions are way too conservative. The economic impact, forgetting the social impact, of a rapidly changing climate, will wreak havoc on world economies.

What about the domino effect of all the above. Protectionism, social unrest, resource competition...

Methinks the next few weeks are critical.

Edited February 16, 2009 by OlRedEyes

[yabaaaa]

On the other hand the global warming could turn out to be "all hot air" and thats my feeling. If the world goes seiously "ti*s up" the last thing anyone will give a hoot about is global warming, treaties will go out of the window along with most other things.

[samuibeachcomber]

why not join this thread "end of the crisis".............you will find all the doomsday posts,conspiracy theory buffs,total loonies,smart <deleted> etc,and have some fun if you want to.

[Kf6vci]

Go to www.bloomberg.com and read articles on Japan's GDP falling by 12% and the UK's by predicted 3.3%.

Any data for Thailand?

This is frightening. And governments going into debt, handing tons of money to failed or weak companies will only weaken the whole system and prelong the suffering.

Like a supertanker needing several km to stop, this crisis cannot be stopped in a few months, irrespective of how many dollars the FED is printing or guaranteeing.

[thaijasmine]

On the other hand the global warming could turn out to be "all hot air" and thats my feeling. If the world goes seiously "ti*s up" the last thing anyone will give a hoot about is global warming, treaties will go out of the window along with most other things.

I agree with your second statement but I am sad that you dont believe the many scientists who are obviously worried ?

[cloudhopper]

Would like to see what the general feeling is from those who are reasonably informed on world economics, and old enough not to believe we are invincible.

My fear right now is that I get the feeling we are teetering on the edge of the real crash. After everything has been thrown at the financial crisis, the realization that the financial crisis will result in an economic crisis set in belatedly, and markets discounted what they optimistically hoped would be the following contraction. Now it seems, as I feared, that their optimistic view of most economies just slowing down is way off base. Even Japan has recorded a 3% contraction, and the Chinese and Indian economic predictions are being shown up as what they obviously were, pure hope.

When the markets realize it is all going south much further than hoped, the bottom may fall out completely. Time to stock up on baked beans and bully beef?

Then of course there's the problem of climate change. Now eventually it is starting to be recognized that the previous predictions are way too conservative. The economic impact, forgetting the social impact, of a rapidly changing climate, will wreak havoc on world economies.

What about the domino effect of all the above. Protectionism, social unrest, resource competition...

Methinks the next few weeks are critical.

IMO the current contraction will continue to accelerate but no idea in what form or to what conclusion, and it's going to be a very different world, with a new governance and currency, after it all finally collapses. All of the effects you mention will happen along the way and it's going to be especially bad in cities. I don't know how stocks are being valued with a negative P/E. Or the USS$? But with the almost universal suspension of normal accounting principles who's to say? I hope the time frame is at least months or years and not weeks as you suggest, but I've been getting into independence mode for some time now...

[britmaveric]

Remain positive and let the market do what its going to do. I think tinkering with it as done more damage then good.

As for global warming - all about dosh/control - one of the biggest hoaxes in history. Now does this mean we can't be environmentally conscious? Of course not, but lets not create doom/gloom for nought.

[tominchaam]

As long as printing new money is the solution to today’s problem I think we short-sighted will be ok. But long-sighted it might not only create hyper inflation but a crash that we have never seen before.

But to me it is more important to enjoy the living of today then to worry too much about what will come maybe 10 years ahead.

[Pakboong]

The cure for a depression is the depression itself.

[samuibeachcomber]

The cure for a depression is the depression itself.

like "a hair of the dog" cure for a hangover!

and while we are at it seeing as these govts. are giving so much money to the banking sector i would like some of the action too,it would take my depression away.

Edited February 17, 2009 by samuibeachcomber

[noahvail]

The cure for a depression is the depression itself.

Historically, the cure for a depression is war. With a 16-y.o. son back in the US, it's a scary scenario. And in the last draft - Vietnam - being premed like he plans to do, was of no help whatsoever to my friends. Fortunately, since I have dual citizenship he has another option open... but for the world's sake I hope it doesn't come to this.

[parryhandy]

The Most IMPORTANT Video You'll Ever See (part 1 of 8)

This lecture about population , energy, exponential function , steady growth , overpopulation, resources and simple arithmetic made over 5 years ago explains it all IMO .

If you can stick with it and watch all eight parts its really fascinating.

Agree with noahvail human nature means all roads lead to war...

In part 2 he talks about the human dilemma that is all the things we consider good are only adding to the long term problem eg clean air, medicine, peace, health and safety etc

Edited February 19, 2009 by parryhandy

[samuibeachcomber]

Remain positive and let the market do what its going to do. I think tinkering with it as done more damage then good.

As for global warming - all about dosh/control - one of the biggest hoaxes in history. Now does this mean we can't be environmentally conscious? Of course not, but lets not create doom/gloom for nought.

i dont know i dont think its a hoax,maybe the causes are a hoax,but you keep seeing pictures of the polar ice caps melting,glaciers in the himalayas etc,so somethings gotta be warming up and skewing the eco systems.

[grandpops]

Going to mean a new reality for many in the west.

Pre 1960's, working and having a good job was something to be thankful for. Now, having a job seams to be taken as a right, with rights to massive benefits, plenty of opportunities to "throw a sickie" when there is a football match on etc. Lots of opportunities for businesses to be sued out of business for some Politically Correct misdemeanor or not promoting some minority or other.

Flexible working, creches, dress down friday, paternaty leave, self certificating 5 days off on the sick, staff leaving the office to 4X4 deliver overweight kids the 500m to and from school twice a day, or any of a number of things unrelated to core business are a drain on productivity and resources. Try going to work to, well, knuckle down and work!! might make a difference IMHO

All the above are lovely rosy pipe dreams that should never have been brough into being.

Asia, I believe is better equipped to weather this situation. Not because it will be less bad here, but because many here have no culture of the nanny state and many of us expats worked in an era before mass political correctness took off.

Love it or hate it, we can't change it so why not enjoy the scenery here, the cheap food, excercise etc. and let the west reap what they have sown.

[JimsKnight]

If we fall off the edge it will be a wild and exciting ride for the singletons in some ways.

But the families with kids are the ones who will have it sht.

Being upwardly mobile and actually travelling to othe places to find work will become key (if you want to make decent money). For those bogged down in family grindstones and wives etc, they'll find it tough.

I'm putting off any notion of having kids/family til' I'm 40 at the rate the world is going t*ts up

[Pakeha]

I've heard about more redundancies this week than every week of the 'crisis' so far. Couple this with the US economic stimulshit package and I'm concerned.

Good time to start work on the vege garden

[Hairy]

The U.S. market is about to drop again. The reasons are pretty straightforward.

Geithner's bank bailout plan is nonexistent; a UK newspaper reported that the reason he was so vague about it at the big announcement news conference is because at the last minute, he changed his mind about what should be done. That's so utterly confidence-inspiring that it's a wonder there weren't riots.

The commercial real estate (CRE) crisis is just about to hit the headlines in a serious fashion. Companies that had lousy Christmas sales are going to have to cut back. Plenty of others have already gone bankrupt (Circuit City) or shut down many locations (Starbucks).

The peak of the alt-A mortgage resets is about to hit. Rates have been driven down by the Fed's market manipulation, but that doesn't really matter when people are so underwater on their mortgage that they can't refinance (or even "flip" the house), which was their whole plan to begin with. Most of these mortgages have initial "teaser" rates that are so low compared to the market rate that even though rates are low, people's monthly bills will shoot up anyway.

The bears are talking about near-term Dow targets as high as 6000 and as low as 2500. It doesn't really matter if the Dow only goes down to 6000, because if it hits there, the cascading effects will still wipe out a lot of people and drive the market down further. It's just a matter of how long.

Gold is interesting. People are so scared that they're buying it like crazy, and they don't want the "paper gold" in their stock accounts, they're paying huge premiums to anyone with gold coins available for immediate delivery, just so they can take the gold into physical possession.

[cclub75]

Go to www.bloomberg.com and read articles on Japan's GDP falling by 12% and the UK's by predicted 3.3%.

Any data for Thailand?

This is frightening. And governments going into debt, handing tons of money to failed or weak companies will only weaken the whole system and prelong the suffering.

Yes, for GDP report... see ThaiCrisis.

The GDP report for Q4 2008 should be published tomorrow.

But in any case, it's the past... We have already horrible data for Q1 2009... every where in the world (production, international trade are crashing etc.).

So, the really bad numbers will be printed... later.

Yes it is frightening. And it is healthy to be scared, it should be healthy. But all the morons will continue to call you "doom and gloom"... It's human behavior : the worst blind people are those who refuse to see.

[Naam]

But in any case, it's the past... We have already horrible data for Q1 2009... every where in the world (production, international trade are crashing etc.).

that's quite interesting. i was under the impression this is february and that Q1 2009 will last another five weeks.

note to myself: adjust calendar. it's already april, not february. Q1 data have been released

[AlexLah]

Jeeeeeeeez, April already?

Time flies.

[AA1]

Quote just received from my son who is a stock analyst in the Banking/insurance field!!

"Fronte praecipitium a tergo lupi....... . Literally translated this means we have a pack of wolves behind us and a precipice in front. The positive angle is to view the precipice as an uphill climb. ............................... Unfortunately in the markets this week the precipice has felt more like the edge of the Grand Canyon ........."

Does any more need be said!!!!!

[sendbaht]

Repet this a few times...."I learned to make money, save money, invest money and spend money in ways that I find rewarding and fun‏"

All is going to work out just fine!

[AlexLah]

How much money did he make in the last 2 years, if I may ask.

[cclub75]

But in any case, it's the past... We have already horrible data for Q1 2009... every where in the world (production, international trade are crashing etc.).

that's quite interesting. i was under the impression this is february and that Q1 2009 will last another five weeks.

note to myself: adjust calendar. it's already april, not february. Q1 data have been released

Jeez... Could you -for once- bring something to the debate ? Instead of being ironic ?

Yes I know Q1 will end on march 31... Ah ah ah ah, it is so funny.

My point : we have ALREADY data that give the shape of Q1.

Unless of course you think (like many people do) that the world is going to turn pink in less than 5 weeks, with the world economy going suddenly from darkness to light.

Stated like this, is it better for you ?

Edited February 22, 2009 by cclub75

[Lasic1]

The rampant rumors of the imminent decline of the USA are well, exaggerated. Firstly, the administration is aggressively attacking the weakened areas of the economy. You have to remember the main cause of the recession was sub-prime loans. This huge deficit is slowly grinding to the bottom and the upside will be lower interest rates for homeowners and more affordable housing that was based on too much speculation. Secondly, the first into recession will usually be the first out. Don't underestimate the brain power of the financial and economic experts in the USA. If their ingenuity and fancy financial products contributed to the current financial collapse they certainly are intelligent enough to devise financial remedies to get the country out of it. Thirdly, not all companies are doing badly and during difficult economic conditions, the stronger companies will replace the unprofitable ones. Exxon, McDonalds, Altria, IBM, Apple and Walmart are all doing fine as are the medical and consumer staple sectors. Forthly, the troops will be withdrawn from Iraq eliminating a huge source of the national debt and other areas of the budget as well will be streamlined. Look for signs of the recovery to start in late summer or early fall. As more newer and more efficient industries emerge, hiring will increase, credit will be restored and the housing industry will recover since housing will be needed for those who lost homes due to subprime loans.

The U.S. market is about to drop again. The reasons are pretty straightforward.

Geithner's bank bailout plan is nonexistent; a UK newspaper reported that the reason he was so vague about it at the big announcement news conference is because at the last minute, he changed his mind about what should be done. That's so utterly confidence-inspiring that it's a wonder there weren't riots.

The commercial real estate (CRE) crisis is just about to hit the headlines in a serious fashion. Companies that had lousy Christmas sales are going to have to cut back. Plenty of others have already gone bankrupt (Circuit City) or shut down many locations (Starbucks).

The peak of the alt-A mortgage resets is about to hit. Rates have been driven down by the Fed's market manipulation, but that doesn't really matter when people are so underwater on their mortgage that they can't refinance (or even "flip" the house), which was their whole plan to begin with. Most of these mortgages have initial "teaser" rates that are so low compared to the market rate that even though rates are low, people's monthly bills will shoot up anyway.

The bears are talking about near-term Dow targets as high as 6000 and as low as 2500. It doesn't really matter if the Dow only goes down to 6000, because if it hits there, the cascading effects will still wipe out a lot of people and drive the market down further. It's just a matter of how long.

Gold is interesting. People are so scared that they're buying it like crazy, and they don't want the "paper gold" in their stock accounts, they're paying huge premiums to anyone with gold coins available for immediate delivery, just so they can take the gold into physical possession.

[Naam]

But in any case, it's the past... We have already horrible data for Q1 2009... every where in the world (production, international trade are crashing etc.).

that's quite interesting. i was under the impression this is february and that Q1 2009 will last another five weeks.

note to myself: adjust calendar. it's already april, not february. Q1 data have been released

Yes I know Q1 will end on march 31... Ah ah ah ah, it is so funny.

My point : we have ALREADY data that give the shape of Q1.

it is indeed funny giving "Q1" data on feb 22 of the same quarter. if you want to make a point then do so and express yourself accordingly (as you did recently by calling others who do not share your views morons and idiots). if morons and idiots know when a quarter ends and complete data are available what does that make you?

illogical respectively false statements like yours are indicating a strong bias although in essence they may point to a most likely development.

[Naam]

Quote just received from my son who is a stock analyst in the Banking/insurance field!!

"Fronte praecipitium a tergo lupi....... . Literally translated this means we have a pack of wolves behind us and a precipice in front. The positive angle is to view the precipice as an uphill climb. ............................... Unfortunately in the markets this week the precipice has felt more like the edge of the Grand Canyon ........."

Does any more need be said!!!!!

not really, except i say to myself "fronte preputium.." (in front i have a foreskin)

[henryalleman]

last week there was an interresting discussion on Television aboiut the economical and financial crisis.

One historian said that the 1904 financial crisis took 15 years before recovering, the 1929 crash took the same amount if time and so did the 1976 oil crisis, so why it should be different now.

There was general consensus that the industry could recover in 1 or 2 years but the losses on the stock market and the financial crisis would take much longer;

Another interesting point was that countries who have an social security system will be better protected against deflation because there was a bottom line, while countries who didn't have such system the deflation could go on without stop. so more and more people will have no income and therefore could not spend and this will create even an more rapid deflation. so in fact a lack of a social security system would create a down spiral who can not be stopped.

So in this view countries like the US, China and Thailand are less protected against deflation.

But not all is bad. last week the 4 biggest employers in my country announced that they will hire 12000 extra jobs this year. And AUDI will raise there production with 47000 units of the model A3 this year. Due to the fact that the German government give a scrap premium to everybody who replace a 9 year old car by a smaller low emission car. France is planning to do the same.

Also the European labour unions, German and Flemish governments and the management of GM Europe have a business plan to make OPEL independent from GM America. They are prepared to give guarantees on loans up to 5 Billion Euro for this. This week they will be negotiating this in Detroit. Because the OPEL plants are profitable and have high performance and productivity and also have new models in the pipeline for 2010 and 2011. Some automotive production is coming back from Eastern Europe and Asia.

Edited February 23, 2009 by henryalleman

[Jimjim]

We're always on the precipice these days. It's all up to opinion and different strategies about predicting the future.

[tracker]

The big green print from lasic1: "Don't underestimate the brain power of the financial and economic experts in the USA"...

I'm afraid it is of no use with all that brain power. Since the government seems to think that printing more dollars is an option I think that they do not listen to those experts. I do not think that (any) government is stupid. They have their reasons I guess, but their actions are clear: they are not out to solve the problems of today. It's the opposite, they make them worse.

Personally, for me, it is clear. Power, greed and corruption is ruling today. It is not so difficult to come up with solutions for these problems. It is however, difficult to implement them with those in power today.

I do not know where this will end, but I am preparing myself for "hard times" to come.