Monday, Jul 21, 2008
Mainstream apocalyptic (thats normal) stuff from Ambrose
Telegraph: The global economy is at the point of maximum danger
It feels like the summer of 1931. The world's two biggest financial institutions have had a heart attack. The global currency system is breaking down. The policy doctrines that got us into this mess are bankrupt. No world leader seems able to discern the problem, let alone forge a solution.
Posted by holding out @ 09:42 AM (972 views) Add Comment
16 Comments
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1. gardeniadotnet said...
"No doubt the rescue of Fannie Mae and Freddie Mac - $5.3 trillion pillars of America's mortgage market - stinks of moral hazard. The Treasury is to buy shares: the Fed has opened its window yet wider. Risks have been socialised. Any rewards will go to capitalists."
Nice work if you can get it.
2. paul said...
he does make an interesting point though -
"When Norway's banks fell below critical capital levels in the early 1990s, the Storting authorised seizure. Shareholders were stiffed."
This is, actually, the only answer. Banks are answerable only to shareholders, therefore if shareholders choose not to exercise some discipline over the banks, the banks deserve to fail, and the shareholders to get nothing.
When you stop and think about it, it is the only answer.
3. gardeniadotnet said...
Most banks can't be allowed to fail.
The only way out is to provide an unlimited amount of money to keep the financial system propped up for a little while longer.
4. inbreda said...
Then nationalisation - with shareholders getting nothing - is the only answer.
5. gardeniadotnet said...
>Then nationalisation - with shareholders getting nothing - is the only answer.
People will want their money from the banks first.
Uh oh. The banks don't have it.
6. sold 2 rent 1 said...
"True "mean-reversion" would imply debt deflation on such a scale that would, if abrupt, threaten democracy"
"If we are lucky, America will start to stabilise before Asia goes down. Should our leaders mismanage affairs, almost every part of the global system will go down together. Then we are in trouble."
Calleman's "fifth night" destruction lasts until 13 Novrmber. We should see the "big crash" between now and then.
7. Handle_it said...
Let's not forget that the banks actually conjure all this money pretty much out of thin air. I think it's probably better to stop wondering why the “banks”aren't allowed to “fail”. The label of bank is misleading. Of course smaller banks will be allowed to seemingly face up to capitalism.However, the notion that banks should be allowed to fail is delusion essentially because it implies that something is able to supersede its position of power.
8. handle_it said...
Let's not forget that the banks actually conjured all of this money pretty much out of thin air. I think it's probably better to stop wondering why the “banks”aren't allowed to “fail”. The label of bank is misleading. Of course smaller banks will be allowed to seemingly face up to capitalism.However, the notion that banks should be allowed to fail is delusion essentially because it implies that something is able to supersede its position of power.
9. Planning4acrash said...
S2R, Gold is up this morning, your correction at 920 seems a bit low. I see the 950-60 as the buying opportunity, your thoughts? Also, I found out that any coins except sovereigns and brittania's are liable for capital gains tax. However, are you still liable for income tax if you swap your gold for fiat at a later date?
10. Stevo said...
I feel sorry for the bank security gaurds, as when all the bank robbers start, holding up kids for there dinner money, they will all get laid off.
11. titaniccaptain said...
What about deflation? any real signs of that yet? and if so how bad will it get?
12. sold 2 rent 1 said...
P4AC,
If oil takes another tumble, it could drag gold down with it - to 920??? - we shall see.
Cheers for the tax info on sovereigns.
But there is also a case to hold some Canadian Maples too because of the purity.
I take it you never watched the "monatomic gold" video - still one day eh!!!
TC,
"What about deflation?"
The inflation mask is still on, only when the oil crash is complete will deflation reveal itself to the mainstream economists.
13. gardeniadotnet said...
>only when the oil crash is complete will deflation reveal itself to the mainstream economists.
Isn't hyperinflation more likely, due to the vast increase in money supply necessary to bail-out the banks?
14. Planning4acrash said...
Garden, we will see a hyperinflationary depression, followed by a deflationary depression. The fall of Indymac and the other two mac's guarantee it. This aint pretty m8.
15. shipbuilder said...
I don't see where hyperinflation is going to come from. We're in a credit crunch and lending is at a long time low. No matter what money the central banks are pumping, it can't be more than that loaned over the last 10 years. The last graphs posted here showed a downturn in money supply growth.
As for a depression, I think that's still a bit early to call. I have to say it - and i'm known as a doom-monger amongst my friends - I think we're getting a bit carried away again here.
Let's be honest, none of us knows how this will turn out, so there are no guarantees or safe bets.
This site used to be the voice of common sense when the market was on the rise - let's not start believing our own hype.
16. Planning4acrash said...
I have been thinking more about this. What you see is inflation and deflation at the same time. Inflation of the currency, whilst goods prices actually deflate relative to real stores of wealth like Gold. This lets prices rise, whilst demand falls. So, if you were paid in gold or have your savings in gold, things will get cheaper. Shame that we aren't paid in gold!!