Frank8

A Guardian Black Monday?

19 posts in this topic

http://www.guardian.co.uk/business/2011/sep/23/stock-market-rout-eurozone-crisis

Guardian seems to be declaring a Black Monday.

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Download your own Eurozone rescue package here:


[img]http://img.brothersoft.com/screenshots/softimage/e/euro_printer-4105-1.jpeg[/img]

;)

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[quote name='Kilham' timestamp='1316825734' post='3127408']
Download your own Eurozone rescue package here:


[img]http://img.brothersoft.com/screenshots/softimage/e/euro_printer-4105-1.jpeg[/img]

;)
[/quote]

What a waste of paper and ink! Edited by Unemployed Again Youth

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OHMIGOD!

It's not all fixed ?

They didn't have it under control all along ?

I'm shocked I tell you, shocked!

My faith in the abilities of the Central Banks to resolve this temporary 4 year crisis has been suddenly and inexplicably ripped away from me. I just don't get it :(





:lol: :lol: :lol:

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Black Monday, maybe not. Black 12 months coming up, virtually a certainty. The problem and its vast scale have not even been grasped. Politicians simply don't get it.

[quote]
The chancellor said Europe needed to show that it had enough firepower to convince the markets it was getting ahead of the curve, and made it clear that the €440bn European Financial Stability Facility needed to be beefed up. "I am not sure it is adequate," Osborne said.
[/quote]

I like George, but can he use a calculator? ( Or Merkel and Sarko?). The EFSF is already obsolete, designed to take care the small countries only. What about Italy and Spain? Last time I checked the ECB are buying €10+ billion a week! of these bond alone. Even with this huge intervention Italian 10 year bonds are yielding 5.5%+, which is probably unsustainable. There is also the matter of Greece, Portugal and Ireland. Even if the EFSF was quadrupled it would not be enough. As it is, if it only has €440bn it will barely last 6 months.

It gets worse though, a second recession is clearly coming. Italian and Spanish data has been pancaking. The PMI surveys indicate a significant economic contraction taking place over the last couple of months and accelerating downwards. Banking stress and unemployment will increase all over Europe over the next 12 months. Deficits and debts are certain to rocket as the European economy contracts.

Even Germany and France are now on the border line of recession, new order levels indicate contraction in the whole EZ by the end of Q4.

The European economy is entering a debt / deflation spiral which will be near impossible to escape. Where is growth meant to come from?

Need I even mention the US...

Truly a grim economic outlook, the closest modern equivalent would be the 1930's.

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It look like it's going to be game on now.

A debt jubilee is the only way to sort this out and then enact balance budget legislation globally.

That won't happen, they'll end up trying to print like mad, fudge a bit more, hope and just generally make the crisis even worse.

We should have bit the bullet with Lehman and purged the system, instead we got the bankers troughing at the taxpayer table.

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[quote name='Kilham' timestamp='1316825734' post='3127408']
Download your own Eurozone rescue package here:


[img]http://img.brothersoft.com/screenshots/softimage/e/euro_printer-4105-1.jpeg[/img]

;)
[/quote]

The denominations don't go up high enough, they need to start with the 1m euro.

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[quote name='Kilham' timestamp='1316825734' post='3127408']
Download your own Eurozone rescue package here:


[img]http://img.brothersoft.com/screenshots/softimage/e/euro_printer-4105-1.jpeg[/img]

;)
[/quote]

Don't they have a e1bn option ? At E500, it will take hell lots of paper...

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[quote']
Obama urges France and Germany to move quickly to find a solution to the eurozone crisis, [b]while UK chancellor George Osborne claims Britain is 'ahead of the curve'[/b].
[/quote]

:lol: :lol: :lol:

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Can someone explain in baby steps why equities a fcuked?

We now have a governmental level debt problem. Which will be solved by either printing or by austerity. But even a bit of austerity isn't going to make vodafone or shell go bust.

I have this naive believe that in 20 years time people will still be burning oil and using mobiles and rdsb, vod, ulvr et al will still be chucking out divis (to me). If there is a rout on Monday, surely a buying opportunity?

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[quote name='justthisbloke' timestamp='1316854811' post='3127517']
Can someone explain in baby steps why equities a fcuked?

We now have a governmental level debt problem. Which will be solved by either printing or by austerity. But even a bit of austerity isn't going to make [b]vodafone or shell go bust.[/b]

I have this naive believe that in 20 years time people will still be burning oil and using mobiles and rdsb, vod, ulvr et al will still be chucking out divis (to me). If there is a rout on Monday, surely a buying opportunity?
[/quote]

Here's my crude summary:

Defaults by countries will bankrupt the banks. The govenrment then needs to create more money to keep them afloat.
This devalues the existing currency and makes everyone poorer. Therefore we all spend less and companies suffer. Wages remain low, comnpanies go bust etc. etc.

Also the countries having defaulted are seen by markets as a bad bet for future loans, so the cost of loans goes through the roof. We borrow money just to keep going, so GB, EU, USA are now in trouble unable to borrow more ot having to pay massive amounts in interest to just maintain the status quo.

So country fecked, private business fecked, banks propped up and therefore not lending to each other or anyone else, wages stagnant at best, unemployment increases, spending decreases vicious circle repeats.

EDIT: they don't need to go bust, but losing money or not making as much as before means less dividends and company is also worth less, therefore shares are worth less. Edited by Redcellar

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[quote name='justthisbloke' timestamp='1316854811' post='3127517']
Can someone explain in baby steps why equities a fcuked?

We now have a governmental level debt problem. Which will be solved by either printing or by austerity. But even a bit of austerity isn't going to make vodafone or shell go bust.

I have this naive believe that in 20 years time people will still be burning oil and using mobiles and rdsb, vod, ulvr et al will still be chucking out divis (to me). If there is a rout on Monday, surely a buying opportunity?
[/quote]

Here's my understanding.

Take a bank. THe equity capital is the difference between the assets, and liabilities. In simple terms the 'assets' are loans to customers, and the liabilities are businesses and peoples' deposits. If the assets go bad you've still left with the liabilities so equity capital (lliability to shareholders/owners) takes a hit both on capital and future incomes*. Remember last time banks (I think HBOS, and Lloyds) tried private capital raising before the governments stepped in (Brown said he saved the world). Remember the short sellers being blamed!

*It's likely that the impairment charge increases over the expected wiping out the div's.

There was a moral hazard but it seems now likely that banks will be recapitalized by the state? I've not heard much talk about private capital.

Who is going to come in and help Greece? Edited by Ash4781

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[quote name='eric pebble' timestamp='1316835597' post='3127422']
You have to admit though.....

It is all BLOODY scary.....

:blink: :unsure: :angry:
[/quote]
Not if you are a banker ... show time.

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I saw Osborne interviewed yesterday and he said "The Eurozone is at the epicentre of a debt crisis".

He is like a thief being pursued by Police and when they catch up to him, he points and says "He went down that street" and they believe him and run off where he is pointing.

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[quote name='salamander' timestamp='1316829935' post='3127413']
OHMIGOD!

It's not all fixed ?

They didn't have it under control all along ?

I'm shocked I tell you, shocked!

My faith in the abilities of the Central Banks to resolve this temporary 4 year crisis has been suddenly and inexplicably ripped away from me. I just don't get it :(





:lol: :lol: :lol:
[/quote]

If there is one lesson one should have learnt from the past few years it is that Central Banks can create inflation. At will.

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Morgan Stanley down 10% today.

I just posted this good news on the first Black thread I came across.

I see reggie middleton is claiming to be hunting the squid. Things are looking up.

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[quote]Obama urges France and Germany to move quickly to find a solution to the eurozone crisis, [b]while UK chancellor George Osborne claims Britain is 'ahead of the curve'[/b].
[/quote]

Just ahead of the U-bend?

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