Tuesday, Sep 30, 2008
the message from government officials is that “the economy is dropping into the john.”
Telegraph: Bailout failure 'will cause US crash’
The financial system could face a meltdown of 1929 proportions unless US politicians succeed in their efforts for a $700bn rescue scheme,
Officials close to Paulson are privately painting a far bleaker portrait of the fragility of the global economy than that advanced by President George W Bush in his televised address last week.
One Republican said that the message from government officials is that “the economy is dropping into the john.” He added: “We could see falls of 3,000 or 4,000 points on the Dow [the New York market that currently trades at around 11,000]. That could happen in just a couple of days.
Posted by malct @ 12:44 PM (1068 views) Add Comment
16 Comments
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1. mark said...
no link.......
2. malct said...
thanks mark
odd?
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3094318/Bailout-failure-will-cause-US-crash.html
3. mark said...
moi Odd.. maybe..lol
4. Adrian said...
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3094318/Bailout-failure-will-cause-US-crash.html
"The financial system could face a meltdown of 1929 proportions unless US politicians succeed in their efforts for a $700bn rescue scheme"
Erm.. So if they do succeed then the meltdown will be much worse than 1929?? Ouch!!!
5. cornishman said...
Darling has just been on the radio re-asserting that they 'will do whatever is necessary' in the current crisis.
I can't help wondering if that is just waffle to keep the plebs happy - or whether, using hindsight in a month or two's time, we will see exactly what he means. I can't help but think that it is code for some hitherto un-used move. But what?
Anyone any ideas?
Chancellor Alistair Darling has repeated that the government will do whatever is required to protect financial stability.
6. malct said...
Darling also said on BBC yesterday, the day they were bailing out B&B something like
"we were right to bail out NR to stop the problem spreading to other parts of the banking industry"
honest - and they let him get away with it. - we they would wouldn't they
7. mark wadsworth said...
Cornishman, the politicians and commentators, and even some economists are presenting this as a stark choice between bail out/nationalisation (with huge cost/risk to the taxpayer) at one extreme; and allowing banks to fail (thus possibly leading to a domino effect and Depression) at the other.
Twaddle. They appear to have overlooked the merits and simplicity of the good old fashioned debt-for-equity-swap. (to which I linked a day or two ago)
8. paul said...
Let's be absolutely clear on this - even with the $700bn doled out to take assets off them, most banks still won't have enough money to continue in business - they've leveraged themselves to the hilt and then some.
Before Paulson, Goldman Sachs had $20billion in liabilities. While Hank Paulson was at Goldman Sachs, he made that over $100bn!!!! So that's over $100bn needed just for one bank. And that's just to clear down their debt overhang.
And Goldman's is one of the less exposed!!
I'm with Pelosi when she said (upon rightfully rejecting the bailout) "For the banks, the party is over. You will never have it as good as you did over the last 20 years".
9. indiablue19 said...
Numbers I've heard in relation to the USA mortgages alone - throwing 700 billion at an over 3 trillion dollars problem. Ring any bells? Some party, most of us didn't even get a cracker.
10. hash browne said...
@5
"Darling has just been on the radio re-asserting that they 'will do whatever is necessary' in the current crisis."
I keep hearing this talk from Darling & Brown and it kind of reminds me of a US Drama Series called 24 starring Keiffer Sutherland as Jack Bauer who on many occasions uses the phrase "whatever it takes". This phrase was usually followed promptly by a mass bloodbath....
...just a thought.
11. layers said...
@5 Cornishman - Interesting, I think you might be right that there's a code in there - just substitute 'depositors' for 'Banking VIs' and then I do believe he is doing everything he possibly can to look after them!
And can someone explain to me why it was a good decision to sell B&B's depositor accounts of some £30bn for £240milo to Santander (or there abouts), when cash is King - shouldn't have gone to a UK bank instead?
@hash browne - could be a lot closer to the truth! Everytime we hear 'them' saying they're doing all they can, all Hell breaks loose. Can't trust 'em.
12. cornishman said...
hash browne said "mass bloodbath...."
- it's something of that magnitude that worries me.
The way they are behaving, we could possible wake up on Thursday and find were in the Euro or something. It will probably be spun that they have taken exceptional powers and done it in the interest of stability to save the world. Heaven help us all.
@ malct - it's that 'doing what is right' which Brown and Darling use each time. The interviewer just accepts it - because it was right
13. cornishman said...
Mark w - you need to help me out with your link.
your accounting trick on your site shows that the company goes from minus4 to plus6 in assets. But since no new money has been put in - how can the company have any more money to 'spend'? Or doesn't it? Is it just that - a trick? Or was some money put in?
The accountant who gets the job at interview is the one who, when asked what 2 + 2 equals, answers "what would you like it to equal?" :-)
14. plato said...
cornishman
You are wise to be sceptical about this. Firstly a 'No' vote nowadays doesn't mean what it should. It opens the door for other more devious presentations to be put forward. The first being merely to 'Test the water'. Secondly without being cynical, the probability is its use as a 'smoke screen'.
I am particularly surprised today at the reaction of the Hang Seng and the the European markets,although all have taken quite a hit already in fairness and are well down from their highs. Nevertheless something seems amiss.
15. Davip said...
No "$700 billion bail-out"
No more payouts "extravagantly distributed to executives, employees and shareholders"
Drop in house prices "spreading across Europe"
No more BTL funding
Interest rate stability
Everything this author cites as a "problem" is simply a return to responsibility and is tremendously good news to the man and woman in the street, yet all this fool can suggest is that "...what is needed now is cheaper money", the cause of all this in the first place.
Clearly Mr Brummer has a substantial share and BTL portfolio. Let's hope the Americans keep their powder dry and this all falls apart.
Maybe next year I will finally be able to buy a house after 10 years of waiting. Sure, they'll be few mortgages (and just as few banks), and they'll ask me to confirm my deposit, ability to repay, and expect me to honour that debt. What's so wrong with that -- it's what the last generation had to do. Frankly, if house prices are 1/3 of what they are now, why should this be an issue?
16. indiablue19 said...
Davip said.......
Spot on. What's the tragedy in a return to a day's pay for a day's work, believable property prices and common sense? Maybe, for the high flyers, it's the part about having to work for it?