City Fears Of 'great Depression Mark II'

[The Masked Tulip]

Leading City experts have started raising the prospect of "Great Depression II" amid worries that the European economic crisis could trigger a deeper bout of chaos.

Markets on both sides of the Atlantic dipped to fresh lows as fears surrounding the fate of the euro project transmuted into worries about the wider global economic system.

Bill Gross of bond fund Pimco said that hedge funds were starting to liquidate their positions in a bid to preserve their capital – a worrying "mini relapse" towards 2008 territory.

Andrew Roberts, head of European rates strategy at RBS, said "Great Depression II" could now be approaching, adding: "It now has potential to speed toward its conclusion; a European $1trn package which does little and political panic tells you we are about to reach the end of the road. The world should be discussing deflation, not inflation."

Although the rush to safety stems originally from the euro's difficulties this week and German efforts to ban short-selling on its banks, fears that the episode may evolve into a deeper economic crisis were bolstered by fresh data. The European Commission produced "flash" data showing consumer confidence falling from a 23-month high of -15 in April to a seven-month low of -17.5 in May. Howard Archer, of INS Global Insight, said: "This is clear evidence that the deepening and spreading eurozone debt crisis... is now weighing down appreciably on consumer confidence. This is a very worrying – if hardly surprising – development."

In the US there was a surprise 25,000 increase in jobless claims to 471,000 in the week ending May 15. The deterioration in the employment picture, coming hard on the heels of Wednesday's drop in inflation, underlined worries that the US is exposed to a possible global double-dip recession.

Mr Gross said investors were now being frightened off by worldwide "fiscal tightening momentum", adding that markets were facing "a mini-relapse of a flight to liquidity as hedge funds and other leveraged positions are liquidated to preserve capital".

One worry is that European leaders are not sufficiently behind the $1 trillion bail-out fund they announced, in collaboration with the International Monetary Fund, last week. A second fear is that other indebted countries could soon be exposed.

One rumour abounding on Thursday was that a major rating agency will soon have to downgrade Japan's credit score, potentially bringing the world's second-biggest economy into the spotlight.

http://www.telegraph.co.uk/finance/markets/7746884/City-fears-of-Great-Depression-Mark-II.html

Thank goodness the stoic British Public are doing they best to save the World from inflation by pushing up house prices!

Sadly, I think headlines such as 'Great Depression II' mean nothing to most Brits - that and the fact that the headline is not in a tabloid.

[Bloo Loo]

reporters of city views forget that they are all trading today, now.

they have no interest in the future more than an hour ahead.

you dont have 10trn in trades every day because people are holding.

[The Masked Tulip]

reporters of city views forget that they are all trading today, now.

they have no interest in the future more than an hour ahead.

you dont have 10trn in trades every day because people are holding.

What does this mean?

[Guest theboltonfury]

It is the job of the city to have a 'view'.

This view only ever coincides with how their trading sheet is looking.

edit - silly spelling.

Edited May 21, 2010 by theboltonfury

[Bloo Loo]

What does this mean?

the point i was making was the same as the Bolton fury.

traders are only interested in the next trade...this is the city view.

tommorrow is as far away as the Sun explodes as far as they are concerned.

[VeryMeanReversion]

"Leading City experts have started raising the prospect of "Great Depression II" amid worries that the European economic crisis could trigger a deeper bout of chaos."

When we say it, we are a bunch of doomsters. When someone in the city says it, they are an expert.

I think the difference is in the range of foresight. The problem with having it is that you look wrong almost all the time. By the time you are right, everyone else has caught up and still thinks you are an idiot.

Of course, I may still be an idiot but that's not the point.

VMR.

[lowrentyieldmakessense(honest!)]

one more deflationary scare and then boom

Daddy Bear was early

[papag]

What does this mean?

It means precisely this

During the forthcoming cultural and social armageddon - where the blooded wasteland burns and the fetid stench of death stalks the remnants of civilization - please remember to adhere to current Health and Safety regulations. And dont tell jokes about Ginger people Pakistanis or one eyed leaders who caused all this.

[Dave Spart]

"Leading City experts have started raising the prospect of "Great Depression II" amid worries that the European economic crisis could trigger a deeper bout of chaos."

When we say it, we are a bunch of doomsters. When someone in the city says it, they are an expert.

VMR.

I am currently in the City reading this thread.

What does that make me?

(Lights blue touch paper, runs away)

[kilroy]

one more deflationary scare and then boom

Daddy Bear was early

waaaaay too early.

Oh, and it won't be a scare, it will be deflation

Edited May 21, 2010 by kilroy

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

This story has gone viral - all over the bloody place.

Lead story on Yahoo too.

Everyone in my office is talking about it. Yikes.

[VeryMeanReversion]

This story has gone viral - all over the bloody place.

Don't worry, HPC'rs have head their shots, we have become immune. I hope to pick over the carcasses of the debt junkies when the virus works its way though the population.

VMR.

[lowrentyieldmakessense(honest!)]

waaaaay too early.

Oh, and it won't be a scare, it will be deflation

never happened with a paper currency - of course it could be different this time

[Alan B'Stard MP]

never happened with a paper currency - of course it could be different this time

You sure about that?

[Confounded]

never happened with a paper currency - of course it could be different this time

I would class Japan as having a modern deflationary depression and that has been going for 20 years and they have a paper currency.

All pure fiat currencies eventually meet their demise, the exact point they die appears to be the critical point. Given Japan's fiscal state they could well be the show piece for what is to come to the west, and as you I expect it to be hyperinflationary.

We may follow shortly afterwards or the flow of money to the West from the East (China may have a 1970's style period of high inflation at the same time) may mean we have to wait a similar period of time before our inflation arrives.

Impossible to call when but while the downside risks far out way missing the exact start of the hyperinflation upside, waiting and seeing has to be the best policy.

[the coming storm]

Leading City experts have started raising the prospect of "Great Depression II" amid worries that the European economic crisis could trigger a deeper bout of chaos.

Markets on both sides of the Atlantic dipped to fresh lows as fears surrounding the fate of the euro project transmuted into worries about the wider global economic system.

Bill Gross of bond fund Pimco said that hedge funds were starting to liquidate their positions in a bid to preserve their capital a worrying "mini relapse" towards 2008 territory.

Andrew Roberts, head of European rates strategy at RBS (LSE: RBS.L - news) , said "Great Depression II" could now be approaching, adding: "It now has potential to speed toward its conclusion; a European $1trn package which does little and political panic tells you we are about to reach the end of the road. The world should be discussing deflation, not inflation."

The FTSE 100 flirted briefly with the 5,000 point mark, eventually finishing the day down 84.95, or 1.7pc, at 5073.13, while the French CAC 40 index was 2.3pc lower and Germany's Dax (Xetra: news) dropped 2pc. The S&P 500 and the Dow Jones (news) index both suffered their sharpest one-day falls in more than a year. The S&P fell 3.9pc to 1071.59, while the Dow closed 3.6pc lower at 10,068.01.

The falls in share prices coincided with increases in the price of government bonds in Germany, the US and much of the developed world as investors sought a safe haven. German 10-year bund yields consequently hit a record low, while in the UK gilt yields dropped to the lowest level since early last December.

Although the rush to safety stems originally from the euro's difficulties this week and German efforts to ban short-selling on its banks , fears that the episode may evolve into a deeper economic crisis were bolstered by fresh data. The European Commission produced "flash" data showing consumer confidence falling from a 23-month high of -15 in April to a seven-month low of -17.5 in May. Howard Archer, of INS Global Insight, said: "This is clear evidence that the deepening and spreading eurozone debt crisis... is now weighing down appreciably on consumer confidence. This is a very worrying if hardly surprising development."

In the US there was a surprise 25,000 increase in jobless claims to 471,000 in the week ending May 15. The deterioration in the employment picture, coming hard on the heels of Wednesday's drop in inflation, underlined worries that the US is exposed to a possible global double-dip recession.

Mr Gross said investors were now being frightened off by worldwide "fiscal tightening momentum", adding that markets were facing "a mini-relapse of a flight to liquidity as hedge funds and other leveraged positions are liquidated to preserve capital".

One worry is that European leaders are not sufficiently behind the $1 trillion bail-out fund they announced, in collaboration with the International Monetary Fund, last week. A second fear is that other indebted countries could soon be exposed.

One rumour abounding on Thursday was that a major rating agency will soon have to downgrade Japan's credit score, potentially bringing the world's second-biggest economy into the spotlight.

[Guest Noodle]

More tea, Vicar?

[The Masked Tulip]

This ruddy Depression II is taking so long to arrive that it is getting ruddy depressing...

[_w_]

never happened with a paper currency - of course it could be different this time

[Fishfinger]

I am currently in the City reading this thread.

What does that make me?

(Lights blue touch paper, runs away)

One of the street cleaners?

You work in one of the innumerable fast food outlets?

Big issue seller?

[lowrentyieldmakessense(honest!)]

I would class Japan as having a modern deflationary depression and that has been going for 20 years and they have a paper currency.

falling asset prices

- the purchasing power of their paper currency, against everday items, has continued to fall during those twenty years