Is There A Light At The End Of The Global Financial Crisis Tunnel?

[thailandlover]

Do you feel that things are progressing towards, if not a solution, at least a betterment of the economic situation? Or are things still tumbling along in a seeming out of control willy-nilly fashion?

For me, I am not sure. Factories keep closing here in Thailand, unemployment is still very high in the US, I don't trust the corporate sector to do what's right, merely what benefits them the most.

I'd be curious as to what others think? Is it getting better? Worse? Same?

[flying]

I'd be curious as to what others think? Is it getting better? Worse? Same?

For myself I think it has only just begun....barely

The reason it has taken longer than expected is Government intervention/propping up.

The printing of dollars has caused a small delay of the inevitable.

Many ran to the dollar sensing a safe haven. That idea has ran its course & now the dollar will start to turn downward as well it should have long ago.

The true economic situation will begin shortly.

This is just my opinion & I really hope it is way off base.

[mommysboy]

Do you feel that things are progressing towards, if not a solution, at least a betterment of the economic situation? Or are things still tumbling along in a seeming out of control willy-nilly fashion?

For me, I am not sure. Factories keep closing here in Thailand, unemployment is still very high in the US, I don't trust the corporate sector to do what's right, merely what benefits them the most.

I'd be curious as to what others think? Is it getting better? Worse? Same?

I've been running a small mail order business for a few years. Things were dreadful for a few months but lately a little better from US, and now UK is showing signs of stirring. But Thailand is only just in to recession and I'm glad I'm not dependent on trade here. I also feel that it will face a protracted recession due to dramatic loss of trade and tourism , and poor leadership. Just my take.

[cloudhopper]

With total outstanding global debt far exceeding the money to repay it there will be massive debt repudiation at every level from JSP's credit card to commercial/residential RE to corporate to sovereign. Any improvement in living standards supported by unrepayable debt will reverse and decline. It will not end until the debt level is reduced to a level that can be serviced by surplus capital. Exponential phenomena are often difficult to see manifest until the very late stages e.g. a pond scum that doubles it's coverage every day and takes 100 days to cover the pond will not even be noticed until day 90 something. So that light is an oncoming train and it sounds like this:

http://www.youtube.com/watch?v=dwbBxxML6iM

[flying]

So that light is an oncoming train and it sounds like this:

http://www.youtube.com/watch?v=dwbBxxML6iM

LOL

thanks I had not heard that in a loooong time

I thought for sure you were linking this though....

[johna]

The crisis will be over as soon as the banks have used all the money the government gave them to consolidate their positions. i.e. buy up their weaker competitors etc.

[hhgz]

"Do you feel that things are progressing towards, if not a solution, at least a betterment of the economic situation?"

There is an ebb and flow, and nothing is forever. Over the past several months, the SET has increased over a third, and so has the DJIA. Individual stocks (Dell and Apple, for example) have increased by 50%. Only a nincompoop would draw a line between two points and assume that's an accurate extrapolation for the future. Many TVers will criticize that the bounce to the indices and stocks that I mentioned might not last forever, and that doesn't matter. If you made 30-50% over the past 6 months, you could sell those investments, and sit back and relax.

[Jingthing]

A lot of this global meltdown was a crisis in confidence, a psychological problem. A corner has been turned on this. People are not freaking out anywhere. I give all the credit to President Barack Hussein Obama, who most likely will become one of the greatest American presidents (yes it is early, but so far, so good).

Edited May 11, 2009 by Jingthing

[teacup]

There is always light at the end of the tunnel.

That is ….when consumer confidence returns and people start spending.

[midas]

A lot of this global meltdown was a crisis in confidence, a psychological problem. A corner has been turned on this. People are not freaking out anywhere. I give all the credit to President Barack Hussein Obama, who most likely will become one of the greatest American presidents (yes it is early, but so far, so good).

A crisis in confidence................ caused by a crisis of trust

I don't consider any so-called recovery means anything unless there is meaningful

evidence of a restoration in trust and honesty in business and in public office.

[Jingthing]

The panic has stopped. That is the start.

[BEENTHEREDONETHAT]

I have wondered the same thing about the light at the end of the tunnel. Will be glad to answer that just as soon as I find the tunnel.

[Chinavet]

The current rally seems to be driven by the idea that the worldwide banking system's collapse is no longer imminent. Also, values fell so far, so fast, it is reasonable (in March) there was good long term value in many stocks. But the current exuberance?

Most investors seem to believe that a return to 2007 level of worldwide trade is just around the corner (the light), along with the demand for commodities, etc. That would require a western world with near full employment overspending on unrealistic volumes of credit and investing in house of cards leveraged financial instruments, again.

China is spending more on infrastructure and that gives a little boost to commodity demand. But that economy suddenly developing a huge growth in middle class consumer spending that will create demand and 'pull' other economies up, no way.

There currently seems to be good indications we have narrowly missed a visit to the dark ages, but with much uncertainty and probably several more substantial shocks to come, anything much more than some consolidation seems to me, to be driven by hope and speculation, as opposed to who is likely to build what and sell where?

I believe the light at the end of the tunnel will be seen in a few years. When the USA starts to manufacture great new products again. When (average) Chinese believe enough in their own system and laws to invest their hard earned savings into SME's with confidence, to provide goods and services to each other. When they import more to feed their own domestic consumption.

When substantially more container ships are moving, loaded. Not before.

A crisis in confidence? A very very justified one. The only significant actions to rectify confidence so far, is printing money and providing credit to the same players.

[Naam]

The current rally seems to be driven by the idea that the worldwide banking system's collapse is no longer imminent. Also, values fell so far, so fast, it is reasonable (in March) there was good long term value in many stocks. But the current exuberance?

exuberance existed -and still exists- on the downside, especially financial assets (shares and subordinated bonds). the last two months provided excellent opportunities and profits of 100% and more.

[Chinavet]

The current rally seems to be driven by the idea that the worldwide banking system's collapse is no longer imminent. Also, values fell so far, so fast, it is reasonable (in March) there was good long term value in many stocks. But the current exuberance?

exuberance existed -and still exists- on the downside, especially financial assets (shares and subordinated bonds). the last two months provided excellent opportunities and profits of 100% and more.

Naam, I don't disagree. I acknowledge the rally and have bought and gained from stocks in the past months. But it is no secret, especially the financial asset gains are driven by the printing press, not an upsurge in real business and increase in trade. There is some latent demand from solid businesses that have been denied credit for a while, but they represent areas of stability, not growth. Yes, there is exuberance with Bulls and Bears, but I don't think the question was about the stock market, it will as always follow the herd. Me too I hope.

But I think the end of the tunnel means - oil rigs in demand, new mines being commissioned to meet demand, shortage of labor, new manufacturing plants, demands on shipping. I see nothing to make me believe we will see these headlines anytime soon, not a hint of it. Most real industries are at best reporting a slowing rate of decline.

I hope I'm wrong, I'm a natural optimist.

[Naam]

Naam, I don't disagree. I acknowledge the rally and have bought and gained from stocks in the past months. But it is no secret, especially the financial asset gains are driven by the printing press, not an upsurge in real business and increase in trade. There is some latent demand from solid businesses that have been denied credit for a while, but they represent areas of stability, not growth. Yes, there is exuberance with Bulls and Bears, but I don't think the question was about the stock market, it will as always follow the herd. Me too I hope.

But I think the end of the tunnel means - oil rigs in demand, new mines being commissioned to meet demand, shortage of labor, new manufacturing plants, demands on shipping. I see nothing to make me believe we will see these headlines anytime soon, not a hint of it. Most real industries are at best reporting a slowing rate of decline.

I hope I'm wrong, I'm a natural optimist.

no CV, you are not wrong and i agree with your statement in the earlier posting "I believe the light at the end of the tunnel will be seen in a few years".

[sanmiguel]

A lot of this global meltdown was a crisis in confidence, a psychological problem. A corner has been turned on this. People are not freaking out anywhere. I give all the credit to President Barack Hussein Obama, who most likely will become one of the greatest American presidents (yes it is early, but so far, so good).

Yes he has been good at making the really hard decisions such as borrowing never before seen amounts of money for every year he's in office and going on a spending spree, not that hard a decision.

When he really needs to make actual hard decision like major cuts in public spending and to agree a far more even trading platform with BRIC and Far Eastern countries. In this he has failed, and he doesnt seem interested in succeeding in this.

This is what needs doing in the UK our economies are in a very similar state, just we know Gordons clueless.

Edited May 11, 2009 by sanmiguel

[sanmiguel]

For myself I think it has only just begun....barely

The true economic situation will begin shortly.

This is just my opinion & I really hope it is way off base.

Agreed.

[sanmiguel]

exuberance existed -and still exists- on the downside, especially financial assets (shares and subordinated bonds). the last two months provided excellent opportunities and profits of 100% and more.

I bet you werent so clever in the 16 months prior to this or are you one of those gamblers who only lets on when he wins.

Edited May 11, 2009 by sanmiguel

[sanmiguel]

With the tax tsunami due within the next 2 years, in every major economy, long term growth will be slow when it does turn round.

[mommysboy]

For myself I think it has only just begun....barely

The true economic situation will begin shortly.

This is just my opinion & I really hope it is way off base.

Agreed.

There's a big price to pay, greatly increased tax burden and reduced public spending. But the main explosion has happened and has passed. It could have been much worse.

Regarding Thailand, I rather think the metaphor is proving to be a bit like a set of teeth depicted in a cartoon figure such as Wily Coyote in fixed grin mode, which at first exhibits barely a crack but ends in total disintegration.

I'm glad I'm over the worst (I think) of the western meltdown, and not particularly subject to what is to come in Thailand.

It may be severe.

[mommysboy]

With the tax tsunami due within the next 2 years, in every major economy, long term growth will be slow when it does turn round.

This is a big worry for sure. Whatever plans you make, make it with this in mind.! But at least there will be a recovery. The 2 major instigators in the severity of the credit crunch were USA/UK but you can accuse neither of sittting idly since then, and this is why there will not be a 30's style crash in my view.

Big price though.

And I don't think Thai's still think that this will blow over in a few months and that ther will be an abundance of $, ponds and roubles, there won't!!!

[old wanderer]

I just returned from Thailand today.... I have had a substantial amount of money in several Thai banks for the past 2 years....

I for one do not see any light at the end of the tunnel. Therefore I took steps to protect what I had...

1. Bought 3 pieces of property that work with what we already own.

2. Bought gold at China Town in the form of 5 and 10 baht ingots...(Was more than a little surprised when I was offered a guaranteed buy back at my purchase price). For myself getting the pitiful interest of the bank account, with the possible devaluation of multiple currencies, I simply was not comfortable at my age to just let it all ride. Feel a lot better now, and naturally the wife set all these little gold bars out on the bed and played with them....Security...I can handle my own. (Also no tax burden if I sell at a profit, or just as needed).

[flying]

A lot of this global meltdown was a crisis in confidence, a psychological problem. A corner has been turned on this. People are not freaking out anywhere. I give all the credit to President Barack Hussein Obama, who most likely will become one of the greatest American presidents (yes it is early, but so far, so good).

LOL.........

Yes I am sure there was a loss of confidence when those holding millions & millions of assets found they were worth next to nothing. aka" Toxic

But since it was purely a psychological problem maybe all these banks etc are closing their doors too soon? It was all just a head fake?? This list goes back to 2000 ...please note how many were in 2009 of that list....all in their heads?

http://www.fdic.gov/bank/individual/failed/banklist.html

Yes people are not freaking out anywhere.....The US citizens have just bought more weapons & ammunition in three months than both the China & India Armies would need to outfit every soldier.

Your right though I do also give a lot of the credit to The new Prez with his more of the same old tactics.

Hey did you know the only recent Prez that had a lower first 100 days rating was Clinton?

President Obama enjoys approval ratings of about 62 percent*. Other president approval ratings after 100 days are similarly high: Carter 76 percent, Reagan 83 percent, G. H.W. Bush 65 percent, Clinton 55 percent, and G.W. Bush 63 percent. So President Obama’s ratings are solid but not necessarily skyrocketing and leaving a hole in the roof.

Of course rushing in & bombing Pakistan & planning next to march into Afghanistan will not help his ratings.

I just mention what I consider the big drawbacks,,,,,

Other mention a lot more..

http://www.nypost.com/seven/04252009/posto...6177.htm?page=0

Edited May 11, 2009 by flying

[flying]

.Security...I can handle my own. (Also no tax burden if I sell at a profit, or just as needed).

Freedom !!!

Actually I see many more doing what you have done in the near future.

Meaning if the dollar continues to fade many will rush to buy tangibles like land.

As for gold........I like it too

[sanmiguel]

For myself I think it has only just begun....barely

The true economic situation will begin shortly.

This is just my opinion & I really hope it is way off base.

Agreed.

There's a big price to pay, greatly increased tax burden and reduced public spending. But the main explosion has happened and has passed. It could have been much worse.

Regarding Thailand, I rather think the metaphor is proving to be a bit like a set of teeth depicted in a cartoon figure such as Wily Coyote in fixed grin mode, which at first exhibits barely a crack but ends in total disintegration.

I'm glad I'm over the worst (I think) of the western meltdown, and not particularly subject to what is to come in Thailand.

It may be severe.

But in the US Obamas raising public spending for his entire term, as is Gordon Clown in the UK, more debt for the taxpayer so the government can waste, sorry wisely spend our money ... spending to get out of debt, print money and huge infation is their way of reducing debt .. all at the expense of prudent savers such as myself.

I think certain poorer nations that rely on exports will be affected as its just basic economics that the US and UK need to start producing more goods to create jobs, the Mcdonalds service sector economy cant be relied upon and something needs to be done about it, hence IMO a more evenly balanced trading relationship with these protectionist countries which will cost them jobs, and our 2 nations are 2 of Thailands biggest trading partners.

In the UK unemployment is currently 2 million, even the govt who underestimate eveything say ti will hit 3.2 million thats far from being past the worst of it, manufacturing is one of the answers to this hence taking back jobs from the Far East, through equal free trade agreements.

Many banks are as good as insolvent as it was shown last week, they cant lend to fund start up businesses let alone certain long standing ones, so job creation is a long way off.

Also the speak from Obama's govt that this is in the worst case scenario for the banks to go insolvent cynically makes me wonder if they know something theyre not letting on.

Maybe i just need to say "Yes we can" a few more times to believe the black man with the near perfect marketing strategy .... If theyd made Bob the Plumber (whatever he was called) President then that would have been real change ... liberals i shyt em.

Edited May 11, 2009 by sanmiguel

[flying]

Also the speak from Obama's govt that this is in the worst case scenario for the banks to go insolvent cynically makes me wonder if they know something thier not letting on.

Folks like this in their prime of years,wealth, family etc dont just go & hang themselves. When the worst is over.

http://www.nytimes.com/2009/04/23/business/23freddie.html

I can say with certainty he knew something still has to surface. Obviously he thought it bad enough to take an early exit in spite of the things & folks he left behind.

So I would agree with you that there is much more to come.

Edited May 12, 2009 by flying

[BEENTHEREDONETHAT]

It is interesting to note that all of the states with the exception of Virginia (I think) are not allowed by law to borrow money for their budget. So that means they have no choice but to raise taxes or cut services, or both.

With the huge increases in the Fed spending and the drop in state income due to so many unemployed and reduction in sales tax, property tax and others the states are in a real tough spot. Needless to say it is the average tax payer who is going to be picking up the bill.

[flying]

It is interesting to note that all of the states with the exception of Virginia (I think) are not allowed by law to borrow money for their budget. So that means they have no choice but to raise taxes or cut services, or both.

With the huge increases in the Fed spending and the drop in state income due to so many unemployed and reduction in sales tax, property tax and others the states are in a real tough spot. Needless to say it is the average tax payer who is going to be picking up the bill.

Boy you nailed that one !

California Sales taxes were $452 million lower (-50.9%) than last April, and personal income taxes were down $5.7 billion (-43.6%).

http://sco.ca.gov/Press-Releases/2009/05-09summary.pdf

[cloudhopper]

It is interesting to note that all of the states with the exception of Virginia (I think) are not allowed by law to borrow money for their budget.

I'm afraid that this is far from correct (look up BONDS) and repaying the interest and principal of all the debt that has funded state spending sprees is becoming a huge part of state budgets. Look for massive defaults on municipal, state and federal debt that cannot, therefore will not, be repaid. BTW there is a good review of various state predicaments in today's Automatic Earth blog. Also note that BHO's latest (federal) budget requires borrowing almost 50% of what will be spent - does anyone think that can possibly be repaid - ever?

Edited May 12, 2009 by cloudhopper