http://www.nytimes.com/2008/10/07/busin ... ref=slogin
France To Host EU Summit On Money Crisis
Europe's Money Crisis Deepens
A United Image, Battered by Reality
October 7, 2008
A United Image, Battered by Reality
By NELSON D. SCHWARTZ and CARTER DOUGHERTY
PARIS — European governments pledged Monday to safeguard bank deposits in a bid to stem financial panic, but they stopped short of a coordinated strategy to break the grip of a credit crisis that now threatens to set off a protracted recession across the Continent, sending markets tumbling on both sides of the Atlantic.
The lack of orchestration — despite pledges to the contrary from European Union officials Monday and a plea from the head of the International Monetary Fund to step forward with concrete plans — raised the prospect that the European Central Bank would need to help mop up the mess by cutting interest rates, a move hinted at by the E.C.B.’s president, Jean-Claude Trichet, last week.
“We’ve seen both at the national level and more importantly at the international level, that there’s no strategy,” said Richard Portes of the Center for Economic Policy Research in London, adding that “it reflects the underlying fact that individual governments don’t have a clear sense of where to go.”
The crisis that began in the United States has rapidly spun out of control in Europe, with television images of ministers rushing to bail out some of the largest banks and a succession of meetings in Paris over the weekend feeding a climate of fear that has dried up credit just as some economies head for recession.
With European stocks being hammered — the FTSE index of British stocks was down 7.9 percent, the DAX index of German stocks was down 7.1 percent and the CAC index of French stocks down 9 percent — finance ministers gathered ahead of a meeting in Luxembourg on Tuesday to address the crisis and discuss a sharp increase in the level of deposit insurance across all 27 European Union member states.
But other bold Europe-wide approaches to the crisis have not yet emerged. Earlier Monday, Germany ruled out contributing money to a pan-European effort, even as officials said they were considering a broad package to shield their nation’s banks.
Meanwhile, authorities in Austria moved to match Germany’s decision on Sunday to guarantee bank deposits, and Spain pledged to follow suit if a single euro-zone policy was not found soon. Denmark went further, announcing it would also guarantee loans that banks make to one another overnight as banks continue to recoil from doing business among themselves.
Farther away, Iceland, one of the world’s hardest-hit countries from the credit turmoil, fell deeper into crisis as the government halted trading in all financial stocks after the banking sector neared collapse.
The country suffered a fresh downgrade of its credit rating Monday after the government sought to assert sweeping new powers to intervene with troubled banks. Facing a cash squeeze as foreign investors withdraw their money, the government also urged its pension funds to repatriate money in an effort to reel in more cash.
That individual European governments continue to plot their own course in the crisis has not helped: Europe’s big cross-border banks find themselves trying to conserve capital and are cutting back on lending to local businesses.
In some cases, even loans within the same bank have been held up while trying to cross borders because different units enjoy varying degrees of state backing, according to one top European banker who spoke anonymously because of market concerns.
These bottlenecks have altered the thinking of analysts who thought the region might escape the worst, and raised pressure on the E.C.B. to cut interest rates — perhaps the only significant euro-zone tool to ease the credit crisis that has yet to be deployed.
“The fear in Europe is that a recession may be a protracted one,” said Holger Schmieding, chief economist for Europe at Bank of America. “I hope we won’t go there, but the mood is dark.”
Mr. Schmieding now expects the economies of Britain, Germany and France — Europe’s largest — to contract in the fourth quarter of 2008. For 2009, he predicts growth of just 0.4 percent among the 15 nations that use the euro, less than half what he was predicting six weeks ago. “There’s a realization that the credit crunch has hit Europe with a lag of one year, and that’s turning into a serious constraint on the economy for the next six months,” he said.
At the same time, governments seem to have different priorities for cross-border institutions that need help, like Fortis, which had large operations in Belgium, the Netherlands and Luxembourg.
While government and central bank officials in Brussels were eager to sell the Belgian units of Fortis to BNP Paribas of France, sealing a deal Monday, officials in the Netherlands nationalized Fortis’s Dutch unit on Friday, keeping what had once been ABN Amro’s local retail branches in Dutch hands.
In London, the British government appeared to be moving closer to a partial nationalization of the industry to avoid falling behind other European countries that have moved ahead with their own strategies. Speaking to the House of Commons Monday, the chancellor of the Exchequer, Alistair Darling, said the government “will do whatever it takes to ensure that we stabilize the banking system.”
“All practical options must remain open to us,” he added, but he gave no timetable for action.
Top European officials defended their case-by-case approach to easing the crisis at the national level in the absence of pan-European tools like a federal budget and single banking supervisor. They also implied that the American strategy, which included a rocky road to final approval of a $700 billion rescue package, was not foolproof.
“It strikes me that governments have lived up to their responsibilities,” Mr. Trichet said ahead of a meeting of European financial ministers in Luxembourg scheduled for Tuesday. “Who can say we did worse than on the other side of the Atlantic?”
Nelson D. Schwartz reported from Paris and Carter Dougherty from Luxembourg. Julia Werdigier contributed reporting from London and Judy Dempsey from Berlin.
Is the USA the only one having money troubles?????
Is the USA the only one having money troubles?????
"If America Was A Tree, The Left Would Root For The Termites...Greg Gutfeld."
-
Accountable
- Posts: 24818
- Joined: Mon May 30, 2005 8:33 am
Is the USA the only one having money troubles?????
Of course not. Gardeners in the UK, Ireland and Down Under have all said as much. What's that saying Scrat brought up? When America sneezes, the whole world catches a cold.
Is the USA the only one having money troubles?????
No, we are at the mercy of this problem as well, which is now going global not just the US. Asia is also getting hammered, and the Asians are withdrawing capital from Western banks like no-bodies business, the British banking system is coming under renewed attack today, and you may find the UK government taking very drastic measures by tonight.
Iceland is apparently going completely belly up, and I think the same thing would have happened where I live in Ireland if the government hadn't underwritten the entire banking system last monday. There will have to be an EU-wide solution to this problem, at least in the Eurozone, as its extremely serious and national governments don't seem able to deal effectively with it, as the capital markets are actually global.
What happens next is really at the mercy of events over the next days and weeks, but what is apparrent is that the US bailout isn't going to be nearly enough to stop the global system collapsing, and the EU, China, Japan, and every other major econonic power is going to have to co-ordinate with the US and get this thing under control somehow. Once thats done, then we can start the recriminations, and there are going to be lots of them I can assure you. I think the economic era we are used to is now well and truly over and we are entering a new age, what it is though, no one is quite sure.
Oh dear, what a mess.
Iceland is apparently going completely belly up, and I think the same thing would have happened where I live in Ireland if the government hadn't underwritten the entire banking system last monday. There will have to be an EU-wide solution to this problem, at least in the Eurozone, as its extremely serious and national governments don't seem able to deal effectively with it, as the capital markets are actually global.
What happens next is really at the mercy of events over the next days and weeks, but what is apparrent is that the US bailout isn't going to be nearly enough to stop the global system collapsing, and the EU, China, Japan, and every other major econonic power is going to have to co-ordinate with the US and get this thing under control somehow. Once thats done, then we can start the recriminations, and there are going to be lots of them I can assure you. I think the economic era we are used to is now well and truly over and we are entering a new age, what it is though, no one is quite sure.
Oh dear, what a mess.
"We are never so happy, never so unhappy, as we imagine"
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Is the USA the only one having money troubles?????
It's worldwide, which is why I find it hard to put total faith in the idea that deregulation of the banks led to all the problem. Each country does its own regulating, after all.
The toerags who thought up the scheme were never regulated in the first place, they're just fly-by-night dealers who dreamt up the scheme and packaged the materials. Buy today start paying in a few years is the easiest description of what they sold.
The banks which said yay, we'll have ten million dollars of that and another next month as investments, they've been regulated. Nothing raised eyebrows at their buying into the schemes.
Why not? Because the schemes were rated triple-A securities, that's why not. And the rating agencies aren't regulated either, they're private companies which are meant to be just plain trustworthy. And they screwed up hugely. They're my scapegoat of choice. If anyone wants a lynching.organized, they're the buggers to string up. Standard and Poors evaluators.
The toerags who thought up the scheme were never regulated in the first place, they're just fly-by-night dealers who dreamt up the scheme and packaged the materials. Buy today start paying in a few years is the easiest description of what they sold.
The banks which said yay, we'll have ten million dollars of that and another next month as investments, they've been regulated. Nothing raised eyebrows at their buying into the schemes.
Why not? Because the schemes were rated triple-A securities, that's why not. And the rating agencies aren't regulated either, they're private companies which are meant to be just plain trustworthy. And they screwed up hugely. They're my scapegoat of choice. If anyone wants a lynching.organized, they're the buggers to string up. Standard and Poors evaluators.
Nullius in verba ... ☎||||||||||| ... To Fate I sue, of other means bereft, the only refuge for the wretched left.
When flower power came along I stood for Human Rights, marched around for peace and freedom, had some nooky every night - we took it serious.
Who has a spare two minutes to play in this month's FG Trivia game! ... My other OS is Slackware.
When flower power came along I stood for Human Rights, marched around for peace and freedom, had some nooky every night - we took it serious.
Who has a spare two minutes to play in this month's FG Trivia game! ... My other OS is Slackware.
Is the USA the only one having money troubles?????
spot;1011130 wrote: It's worldwide, which is why I find it hard to put total faith in the idea that deregulation of the banks led to all the problem. Each country does its own regulating, after all.
The toerags who thought up the scheme were never regulated in the first place, they're just fly-by-night dealers who dreamt up the scheme and packaged the materials. Buy today start paying in a few years is the easiest description of what they sold.
The banks which said yay, we'll have ten million dollars of that and another next month as investments, they've been regulated. Nothing raised eyebrows at their buying into the schemes.
Why not? Because the schemes were rated triple-A securities, that's why not. And the rating agencies aren't regulated either, they're private companies which are meant to be just plain trustworthy. And they screwed up hugely. They're my scapegoat of choice. If anyone wants a lynching.organized, they're the buggers to string up. Standard and Poors evaluators.
I think your point about the rating agencies is well made, and I tend to agree.
The toerags who thought up the scheme were never regulated in the first place, they're just fly-by-night dealers who dreamt up the scheme and packaged the materials. Buy today start paying in a few years is the easiest description of what they sold.
The banks which said yay, we'll have ten million dollars of that and another next month as investments, they've been regulated. Nothing raised eyebrows at their buying into the schemes.
Why not? Because the schemes were rated triple-A securities, that's why not. And the rating agencies aren't regulated either, they're private companies which are meant to be just plain trustworthy. And they screwed up hugely. They're my scapegoat of choice. If anyone wants a lynching.organized, they're the buggers to string up. Standard and Poors evaluators.
I think your point about the rating agencies is well made, and I tend to agree.
"We are never so happy, never so unhappy, as we imagine"
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
-
SlipStream
- Posts: 17508
- Joined: Mon Apr 30, 2007 8:46 am
Is the USA the only one having money troubles?????
no, we're havin probs:-5
Is the USA the only one having money troubles?????
As an update to this thread, it seems that the UK Treasury is going to part nationalize the entire British Banking system in the morning in an attempt to stave off a complete collapse of the British banking and monetary system, such a thing has never happened before, and is something that the British Labour party wouldn't have dreamed of doing during the height of its more socialist-minded periods of the past. It is likely that several other European countries will have to follow suit.
In the US, the fed is now having to offer investment capital directly to companies, as the banks are still not providing capital to these companies, that means that the government is now acting as the conduit of the money supply as the private banks no longer can do this.
I think what this should outline starkly to people is that we are now into the complete breakdown in the system of laissre-faire capitalism so beloved of the Thatcher-Reagan generation in Britain and America. I honestly have to say that I had no idea one year ago that the Credit Crunch was going to turn into this scale of disaster, frankly, if I had, I would have made money on it somehow. But make no mistake this is a melt-down of the financial system, and these political ideologies based on the idea of free markets unfettered by mere state power. Whether the political impact on our socieities will be as profound as collapses in other long-cherished ideologies I don't know, but things are certainly going to be very different in the coming years.
In the US, the fed is now having to offer investment capital directly to companies, as the banks are still not providing capital to these companies, that means that the government is now acting as the conduit of the money supply as the private banks no longer can do this.
I think what this should outline starkly to people is that we are now into the complete breakdown in the system of laissre-faire capitalism so beloved of the Thatcher-Reagan generation in Britain and America. I honestly have to say that I had no idea one year ago that the Credit Crunch was going to turn into this scale of disaster, frankly, if I had, I would have made money on it somehow. But make no mistake this is a melt-down of the financial system, and these political ideologies based on the idea of free markets unfettered by mere state power. Whether the political impact on our socieities will be as profound as collapses in other long-cherished ideologies I don't know, but things are certainly going to be very different in the coming years.
"We are never so happy, never so unhappy, as we imagine"
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Is the USA the only one having money troubles?????
god no, they just complain more!:wah:
Life is just to short for drama.
Is the USA the only one having money troubles?????
Iceland's prime minister Geir Haarde has said the government turned to its "new friend" Russia for a £3bn loan because its traditional Western allies refused to help the collapsing banking system.
The Icelandic government announced on Tuesday morning that it would nationalise its second biggest bank, Landsbanki, and give a £400m loan to its largest bank, Kaupthing.
The krona, which fell 30pc yesterday, has now been pegged at 131 against the euro as an emergency measure and the stock exchange has banned short-selling of bank shares.
In an interview with The Telegraph, Mr Haarde said Landsbanki's foreign operations – including Icesave – had been separated from the domestic bank and it was likely they would be sold off. He said it was "every country for itself" in the worst crisis to hit Iceland for a decade. He would not deny reports that the government officials now controlling Landsbanki would allow Icesave to fail.
Mr Haarde said damage to Iceland's international reputation was "a risk we have to take".
Icelandic people will see a drop in their standard of living and the country will return to its traditional strengths in fishing rather than financial services, he added.
Iceland's near financial meltdown has been seen as the biggest yet faced by any country over its financial sovereignty in the 14-month-old credit crisis.
The Icelandic government announced on Tuesday morning that it would nationalise its second biggest bank, Landsbanki, and give a £400m loan to its largest bank, Kaupthing.
The krona, which fell 30pc yesterday, has now been pegged at 131 against the euro as an emergency measure and the stock exchange has banned short-selling of bank shares.
In an interview with The Telegraph, Mr Haarde said Landsbanki's foreign operations – including Icesave – had been separated from the domestic bank and it was likely they would be sold off. He said it was "every country for itself" in the worst crisis to hit Iceland for a decade. He would not deny reports that the government officials now controlling Landsbanki would allow Icesave to fail.
Mr Haarde said damage to Iceland's international reputation was "a risk we have to take".
Icelandic people will see a drop in their standard of living and the country will return to its traditional strengths in fishing rather than financial services, he added.
Iceland's near financial meltdown has been seen as the biggest yet faced by any country over its financial sovereignty in the 14-month-old credit crisis.
-
Accountable
- Posts: 24818
- Joined: Mon May 30, 2005 8:33 am
Is the USA the only one having money troubles?????
Galbally;1011750 wrote: I think what this should outline starkly to people is that we are now into the complete breakdown in the system of laissre-faire capitalism so beloved of the Thatcher-Reagan generation in Britain and America. Ecxept that there was/is nothing laissez faire about the system you refer to, as I've already explained around here somewhere.
Is the USA the only one having money troubles?????
Accountable;1012050 wrote: Ecxept that there was/is nothing laissez faire about the system you refer to, as I've already explained around here somewhere.
I have heard you make that comment before, could you outline in more specific terms what it is you think was the major part of government interference in the markets that has caused most of the major problems???
Oh the Japanese Stockmarket has crashed overnight, as have several other Asian stock markets, its hoped that the British government's part nationalization of its entire banking system, recapitalization of 50 billion sterling into the banks, and the availability of 200 billion sterling in loans may stop help the collapse in the value of British banking shares.
I have heard you make that comment before, could you outline in more specific terms what it is you think was the major part of government interference in the markets that has caused most of the major problems???
Oh the Japanese Stockmarket has crashed overnight, as have several other Asian stock markets, its hoped that the British government's part nationalization of its entire banking system, recapitalization of 50 billion sterling into the banks, and the availability of 200 billion sterling in loans may stop help the collapse in the value of British banking shares.
"We are never so happy, never so unhappy, as we imagine"
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Is the USA the only one having money troubles?????
I've just read what the UK Treasury has done overnight and I'm amazed at their cleverness. I think they've actually made UK banks rather attractive as a haven, they're certainly secured against collapse from this morning on. I can't see a down-side to what's been done and I can see a lot of non-UK business flocking into UK banks on the basis that they're now refloated, guaranteed and solvent again.
There's some clever heads in the Treasury.
Any bank that gets the runs can go cap in hand to the Treasury and be handed money without limit to tide them over. In exchange they stop paying more than a token shareholder dividend and staff bonuses and golden parachutes until they've paid it all back.
"For a fee" any UK bank can now offer a UK Treasury guarantee on any money it borrows from anyone anywhere in the world. That ought to make UK banks a very attractive place for other solvent banks to invest their assets since they're government-guaranteed to be retrievable and they'll earn interest.
The government cash in the crinkly-cash-for-stale-mortgage swap scheme has doubled from £100m to $200m, that's the toxic waste repository where nasty mortgaged properties can sit for years until the property values go back to what each mortgage claims it's worth.
It's rather pretty because it's none of it forced on the UK banks, they have to ask for any of it and if they ask they get their backsides birched in the process. Being city gents they'll enjoy that.
Bravo Alistair Darling and all his girls in the back office.
There's some clever heads in the Treasury.
Any bank that gets the runs can go cap in hand to the Treasury and be handed money without limit to tide them over. In exchange they stop paying more than a token shareholder dividend and staff bonuses and golden parachutes until they've paid it all back.
"For a fee" any UK bank can now offer a UK Treasury guarantee on any money it borrows from anyone anywhere in the world. That ought to make UK banks a very attractive place for other solvent banks to invest their assets since they're government-guaranteed to be retrievable and they'll earn interest.
The government cash in the crinkly-cash-for-stale-mortgage swap scheme has doubled from £100m to $200m, that's the toxic waste repository where nasty mortgaged properties can sit for years until the property values go back to what each mortgage claims it's worth.
It's rather pretty because it's none of it forced on the UK banks, they have to ask for any of it and if they ask they get their backsides birched in the process. Being city gents they'll enjoy that.
Bravo Alistair Darling and all his girls in the back office.
Nullius in verba ... ☎||||||||||| ... To Fate I sue, of other means bereft, the only refuge for the wretched left.
When flower power came along I stood for Human Rights, marched around for peace and freedom, had some nooky every night - we took it serious.
Who has a spare two minutes to play in this month's FG Trivia game! ... My other OS is Slackware.
When flower power came along I stood for Human Rights, marched around for peace and freedom, had some nooky every night - we took it serious.
Who has a spare two minutes to play in this month's FG Trivia game! ... My other OS is Slackware.
Is the USA the only one having money troubles?????
spot;1012249 wrote: I've just read what the UK Treasury has done overnight and I'm amazed at their cleverness. I think they've actually made UK banks rather attractive as a haven, they're certainly secured against collapse from this morning on. I can't see a down-side to what's been done and I can see a lot of non-UK business flocking into UK banks on the basis that they're now refloated, guaranteed and solvent again.
There's some clever heads in the Treasury.
Any bank that gets the runs can go cap in hand to the Treasury and be handed money without limit to tide them over. In exchange they stop paying more than a token shareholder dividend and staff bonuses and golden parachutes until they've paid it all back.
"For a fee" any UK bank can now get a UK Treasury guarantee on any money it borrows from anyone anywhere in the world. That ought to make UK banks a very attractive place for other solvent banks to invest their assets since they're government-guaranteed to be retrievable and they'll earn interest.
The government cash in the crinkly-cash-for-stale-mortgage swap scheme has doubled from £100m to $200m, that's the toxic waste repository where nasty mortgaged properties can sit for years until the property values go back to what each mortgage claims it's worth.
It's rather pretty because it's none of it forced on the UK banks, they have to ask for any of it and if they ask they get their backsides birched in the process. Being city gents they'll enjoy that.
Bravo Alistair Darling and all his girls in the back office.
Yes, the issue is that its all being paid for out of British Capital reserves, supplied by the Treasury, held by the bank of England and printed as Sterling, and what the markets may do is start prodding at underpinning of the British state itself, namely the currency, and Sterling is a relatively small global currency now compared to the Dollar or the Euro. I do think that they seem to be doing about the best thing they can do given the circumstances, the problem is that the markets are so savage at the moment that they may start testing the assumption that the British Government will go right to the wall with UK reserves to back up the banks, lets hope it doesn't come to that, its just hard to know at the moment as there are few precedents to what is happening.
There's some clever heads in the Treasury.
Any bank that gets the runs can go cap in hand to the Treasury and be handed money without limit to tide them over. In exchange they stop paying more than a token shareholder dividend and staff bonuses and golden parachutes until they've paid it all back.
"For a fee" any UK bank can now get a UK Treasury guarantee on any money it borrows from anyone anywhere in the world. That ought to make UK banks a very attractive place for other solvent banks to invest their assets since they're government-guaranteed to be retrievable and they'll earn interest.
The government cash in the crinkly-cash-for-stale-mortgage swap scheme has doubled from £100m to $200m, that's the toxic waste repository where nasty mortgaged properties can sit for years until the property values go back to what each mortgage claims it's worth.
It's rather pretty because it's none of it forced on the UK banks, they have to ask for any of it and if they ask they get their backsides birched in the process. Being city gents they'll enjoy that.
Bravo Alistair Darling and all his girls in the back office.
Yes, the issue is that its all being paid for out of British Capital reserves, supplied by the Treasury, held by the bank of England and printed as Sterling, and what the markets may do is start prodding at underpinning of the British state itself, namely the currency, and Sterling is a relatively small global currency now compared to the Dollar or the Euro. I do think that they seem to be doing about the best thing they can do given the circumstances, the problem is that the markets are so savage at the moment that they may start testing the assumption that the British Government will go right to the wall with UK reserves to back up the banks, lets hope it doesn't come to that, its just hard to know at the moment as there are few precedents to what is happening.
"We are never so happy, never so unhappy, as we imagine"
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Is the USA the only one having money troubles?????
With so many other juicy targets out there on the world's exchanges I don't see why any of the wolves would want to take on an entire Nation State, especially one which remembers the heady days of a well-run profitable Empire.
You say "paid for" but everything I listed is a profit centre. Apart from the Toxic Money Well.
Shall I tell you why these things work in the UK? It's because the politicians aren't trying to loot the Treasury and future tax revenue on behalf of their lobbyists and friends.
You say "paid for" but everything I listed is a profit centre. Apart from the Toxic Money Well.
Shall I tell you why these things work in the UK? It's because the politicians aren't trying to loot the Treasury and future tax revenue on behalf of their lobbyists and friends.
Nullius in verba ... ☎||||||||||| ... To Fate I sue, of other means bereft, the only refuge for the wretched left.
When flower power came along I stood for Human Rights, marched around for peace and freedom, had some nooky every night - we took it serious.
Who has a spare two minutes to play in this month's FG Trivia game! ... My other OS is Slackware.
When flower power came along I stood for Human Rights, marched around for peace and freedom, had some nooky every night - we took it serious.
Who has a spare two minutes to play in this month's FG Trivia game! ... My other OS is Slackware.
Is the USA the only one having money troubles?????
spot;1012257 wrote: With so many other juicy targets out there on the world's exchanges I don't see why any of the wolves would want to take on an entire Nation State, especially one which remembers the heady days of a well-run profitable Empire.
You say "paid for" but everything I listed is a profit centre. Apart from the Toxic Money Well.
Shall I tell you why these things work in the UK? It's because the politicians aren't trying to loot the Treasury and future tax revenue on behalf of their lobbyists and friends..
Yes, but for the 50 billion recapitalization to return a profit to the taxpayer, the banks will have to post profits at some point in the future, and of course the share value will have to start going up based on that. I am not saying it won't happen in the long term, it certainly should, provided the bottom doesn't fall out of the real economy, or that the City of London doesn't lose its preeminence in global finance. In which case yourselves and ourselves could be facing decades of empoverishment.
The problem of course with the real economy in the UK and here in Ireland as well is that an awful lot of it is based on massively inflated land values, and credit that has been leveraged on that land and property, there is going to be a significant collapse in property value, bank asset sheets, and a subsequent deleveraging. This of course also devastates the other main component of our economies, financial services, thereby becomming a viscious circle. Until the floor under the property bubble is reached, or allowed to be reached, the real economy won't be able to get going on a healthy sustainable basis again, the problem being of course that no one knows even now where the floor of that particular little problem is.
You see the basic problem behind this whole thing is this land asset bubble, all of the global financial wizardry of the last few years has been built on it, and now that the penny has dropped the panic is being caused by the realization that someone will have to bear the cost of it, principally the banks, which is why the world banking system is in such dire straits, now that governments have decided to take on the burden of the asset bubble collapse it is the governments that will bear much of the pain of that collpase.
Again, I am not saying that this is bad move by the UK treasury, what I am saying is that everything is seriously risky right now, and that the laws of unintended consequences may start to apply everywhere. I hope that you are right in your positive assessment of what will happen, and I think that in the long term you are probably right, but I do think that you may find the markets in their final throws of panic turning on governments themselves, never underestimate the power of the mob spot, or the speed with which events can quickly overwhelm institutions; thats the lesson of such events in the past.
You say "paid for" but everything I listed is a profit centre. Apart from the Toxic Money Well.
Shall I tell you why these things work in the UK? It's because the politicians aren't trying to loot the Treasury and future tax revenue on behalf of their lobbyists and friends..
Yes, but for the 50 billion recapitalization to return a profit to the taxpayer, the banks will have to post profits at some point in the future, and of course the share value will have to start going up based on that. I am not saying it won't happen in the long term, it certainly should, provided the bottom doesn't fall out of the real economy, or that the City of London doesn't lose its preeminence in global finance. In which case yourselves and ourselves could be facing decades of empoverishment.
The problem of course with the real economy in the UK and here in Ireland as well is that an awful lot of it is based on massively inflated land values, and credit that has been leveraged on that land and property, there is going to be a significant collapse in property value, bank asset sheets, and a subsequent deleveraging. This of course also devastates the other main component of our economies, financial services, thereby becomming a viscious circle. Until the floor under the property bubble is reached, or allowed to be reached, the real economy won't be able to get going on a healthy sustainable basis again, the problem being of course that no one knows even now where the floor of that particular little problem is.
You see the basic problem behind this whole thing is this land asset bubble, all of the global financial wizardry of the last few years has been built on it, and now that the penny has dropped the panic is being caused by the realization that someone will have to bear the cost of it, principally the banks, which is why the world banking system is in such dire straits, now that governments have decided to take on the burden of the asset bubble collapse it is the governments that will bear much of the pain of that collpase.
Again, I am not saying that this is bad move by the UK treasury, what I am saying is that everything is seriously risky right now, and that the laws of unintended consequences may start to apply everywhere. I hope that you are right in your positive assessment of what will happen, and I think that in the long term you are probably right, but I do think that you may find the markets in their final throws of panic turning on governments themselves, never underestimate the power of the mob spot, or the speed with which events can quickly overwhelm institutions; thats the lesson of such events in the past.
"We are never so happy, never so unhappy, as we imagine"
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
-
Accountable
- Posts: 24818
- Joined: Mon May 30, 2005 8:33 am
Is the USA the only one having money troubles?????
Galbally;1012239 wrote: I have heard you make that comment before, could you outline in more specific terms what it is you think was the major part of government interference in the markets that has caused most of the major problems???
Economic theory is not my forte. I nearly got a nosebleed trying to wrap my head around the general points. Here's what I posted before if it helps this conversation:
Accountable;996578 wrote: Okay, I got a little education last night, so I'm a little dangerous.
As I understand it:
In 1999 Fanny Mae and/or Freddy Mac changed their rules in an effort to increase home ownership among lower-income people (bad credit risk). They did it by selling securities backed by the risky loans. Now people can buy houses that they can't afford. Now lenders are free to take bigger risks because the gov't guaranteed they won't lose. That in and of itself was dumb, but didn't collapse anything.
In 2001, after 9/11, the Fed dropped interest rates in an effort to keep the economy from stalling. A good idea, if you believe it's the government's responsibility to manipulate the markets.
http://www.bankrate.com/brm/news/fed/ke ... -rates.asp
In 2004, Goldman-Sachs, Merrill Lynch, Lehman Brothers,Bear Stearns, and Morgan Stanley asked for special permission to increase the amount of money they could borrow from the Fed. Up until this time, they were limited to borrow $12 for every $1 they held in reserves. The SEC allowed that to increase to $40 for every $1.
Three different federal offices - Congress, the Federal Reserve System, and the Securities and Exchange Commission - in an effort to manipulate market forces, encouraged unwise risk-taking and removed the balancer of consequences.
The problem was not deregulation, but artificial acceleration. Had the gov't not tried to accelerate the economy, it would not have crashed.
~~~~~~~~~~~~~~~~~~~~~~~
The international connections and interdependencies are apparent but well beyond my level of understanding.
[quote=Galbally]Oh the Japanese Stockmarket has crashed overnight, as have several other Asian stock markets, its hoped that the British government's part nationalization of its entire banking system, recapitalization of 50 billion sterling into the banks, and the availability of 200 billion sterling in loans may stop help the collapse in the value of British banking shares.
Good luck to you.
Economic theory is not my forte. I nearly got a nosebleed trying to wrap my head around the general points. Here's what I posted before if it helps this conversation:
Accountable;996578 wrote: Okay, I got a little education last night, so I'm a little dangerous.
As I understand it:
In 1999 Fanny Mae and/or Freddy Mac changed their rules in an effort to increase home ownership among lower-income people (bad credit risk). They did it by selling securities backed by the risky loans. Now people can buy houses that they can't afford. Now lenders are free to take bigger risks because the gov't guaranteed they won't lose. That in and of itself was dumb, but didn't collapse anything.
In 2001, after 9/11, the Fed dropped interest rates in an effort to keep the economy from stalling. A good idea, if you believe it's the government's responsibility to manipulate the markets.
http://www.bankrate.com/brm/news/fed/ke ... -rates.asp
In 2004, Goldman-Sachs, Merrill Lynch, Lehman Brothers,Bear Stearns, and Morgan Stanley asked for special permission to increase the amount of money they could borrow from the Fed. Up until this time, they were limited to borrow $12 for every $1 they held in reserves. The SEC allowed that to increase to $40 for every $1.
Three different federal offices - Congress, the Federal Reserve System, and the Securities and Exchange Commission - in an effort to manipulate market forces, encouraged unwise risk-taking and removed the balancer of consequences.
The problem was not deregulation, but artificial acceleration. Had the gov't not tried to accelerate the economy, it would not have crashed.
~~~~~~~~~~~~~~~~~~~~~~~
The international connections and interdependencies are apparent but well beyond my level of understanding.
[quote=Galbally]Oh the Japanese Stockmarket has crashed overnight, as have several other Asian stock markets, its hoped that the British government's part nationalization of its entire banking system, recapitalization of 50 billion sterling into the banks, and the availability of 200 billion sterling in loans may stop help the collapse in the value of British banking shares.
Good luck to you.
Is the USA the only one having money troubles?????
I have been looking a bit more indepth at the British plan, and I think that in general Spot is right, its a good plan based on where we are at now with global finance. HM Treasury is to be commended on at least attempting something novel and bold. I suppose my pessimism comes from the current febrile state of the global markets, which seem to be in no mood for optimism right now.
I think that what should happen now is that the other major EU, or indeed the entire Eurozone as a whole should consider doing something similar on a continental scale, as at this stage of this thing, only massive, massive government intervention is going to stop a collapse globally. The British seem to have realized this, my own government have done something similar, but without the recapitalization part (mostly because I suspect our public finances are so poor that we can't afford to do it).
The US needs also to do something quickly, as the bailout plan does not address some of the main issues, and seems as much ideological as practical, and when the house is on fire you don't argue about water conservation, thats for the morning after. Next week a lot of these "credit default swaps" things are going to come up, and thats going to be scary time, they need to have something better in place by then.
I think that what should happen now is that the other major EU, or indeed the entire Eurozone as a whole should consider doing something similar on a continental scale, as at this stage of this thing, only massive, massive government intervention is going to stop a collapse globally. The British seem to have realized this, my own government have done something similar, but without the recapitalization part (mostly because I suspect our public finances are so poor that we can't afford to do it).
The US needs also to do something quickly, as the bailout plan does not address some of the main issues, and seems as much ideological as practical, and when the house is on fire you don't argue about water conservation, thats for the morning after. Next week a lot of these "credit default swaps" things are going to come up, and thats going to be scary time, they need to have something better in place by then.
"We are never so happy, never so unhappy, as we imagine"
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.