[Archived] The End Of Global Capitalism?

[philipl]

AussieinUk, the Icelanders won the tender to renew the Dock number 1 area in the heart of the historic Three Cities in Malta. I have now found out that they pulled out and a Maltese/Italian syndicate using Yoo Ltd of the UK (the Philippe Stark design company) now have the contract.

On a positive note, I see that Bank of America has reached legal agreement in the 11 States that Countrywide operated in on new terms for mortgages taken out before 31 December 2007. It eases the pressure on all mortgage-holders whilst reducing the proportion that are in default dramatically.

Hopefully that will be a model going forwards but it will only work if the financial crisis does not take the real economy down with it.

An interesting statistic I saw this morning is that after unwinding all the CDS's, CDA's and other inter bank trades and assuming the whole lot was a pile of crap, the net hit is the equivalent of 5% of one year's output of the combined economies of the USA, Europe, Japan and China.

If that is the case and there now is a bottom line valuation on the non-existant products the banks had been selling each other, then there is a basis from which the policy makers can realistically plot a way forwards.

[dave birch]

That's all very interesting Philip, but where are the quotes?

When you want to make a point, you give us a link to some tabloid. Why not now?

I'll give you some info.

On our (very small, but bigger than Malta) stockmarket, the heavens fell early doors, then people realised that things weren't that bad, and the indices improved, and then they shot through the roof when the RBA reduced rates by 1%.

Here, whilst the right wingers might be panicking, those with a bit of balls are hanging in there, and looking at potential bargains.

Our problems will come when the commodities market drops, give it a few months, but, we may have worked around that, by then.

[AussieinUk]

AussieinUk, the Icelanders won the tender to renew the Dock number 1 area in the heart of the historic Three Cities in Malta. I have now found out that they pulled out and a Maltese/Italian syndicate using Yoo Ltd of the UK (the Philippe Stark design company) now have the contract.

Thanks Philip

On our (very small, but bigger than Malta) stockmarket, .... the indices improved, and then they shot through the roof when the RBA reduced rates by 1%.

Big surprise on that dave, as I was caught a little short by the RBA, dropping the full 100bps. I honestly don't know of anyone who actually expected that. Good move though

[dave birch]

Aussie, it was the move BEFORE the rate drop that got me. It went through the floor and then picked up markedly and then whoosh.

But tomorrow is another day

[philipl]

That's all very interesting Philip, but where are the quotes?

When you want to make a point, you give us a link to some tabloid. Why not now?

I'll give you some info.

On our (very small, but bigger than Malta) stockmarket, the heavens fell early doors, then people realised that things weren't that bad, and the indices improved, and then they shot through the roof when the RBA reduced rates by 1%.

Here, whilst the right wingers might be panicking, those with a bit of balls are hanging in there, and looking at potential bargains.

Our problems will come when the commodities market drops, give it a few months, but, we may have worked around that, by then.

Here is the link Dave- Gerald Barker in The Times whom I find is generally one of the better and more accurate of their opinion writers.

He very much echoes the sort of sentiments you are expressing.

My view is that a global co-ordinated central bank cut of interest rates of say 0.5% at the same time would send a message that the authorities are capable of coming together and would massively restore confidence. It would undermine the belief that there are free one-way bets out there on central authorities competing between themselves in beggar my neighbour actions to put domestic fires out that are in reality now being fueled by a global contagion.

There are signs that markets are recovering slightly today but we are in a frenetic situation where bad news triggers big downers and recoveries are mostly hesitant or short-lived.

As for commodities, the top is completely off but the question is where the bottom might be. Mining stocks are dramatically down, the likes of Acelor Mittal have lost about 60% of their share value already. Oil has already dropped beyond its futures price as was pointed out yesterday.

[dave birch]

Philip, your use of the word "opinion" in your link says it all for me.

It's an opinion, that is all, nothing more nothing less. If I were bothered, I could probably find an "eminent" opinionator to give the opposite view.

If this "person" had some great wisdom, he/she would be making more money in some more lucrative field than journalism.

It's probably beacuase of the published opinions of people like this, that we , yes we, are experiencing the severity of the problem we are in.

No, I'm not diminishing the problems themselves, I'm wondering why they are as deep as they are. These journos are looking and seeing things that may not be as problematical as they make out.

[jim mk2]

If in doubt blame the messenger eh ?

Moronic.

Funny how newspapers are to blame for the excess and greed of bankers, the lies of homeowners who borrowed more than they could afford, the stupidity of consumers living on credit, the timidity of government unwilling to regulate to name only some of the many reasons why the global economy is in trouble.

RBS shares down another 20 per cent as I write : opportunity or danger ? It's up to you to decide but it's your responsibility and your fault if you lose money.

On the other hand, you could blame the press.

[jim mk2]

You have no inside information on RBS nor knowledge of their operations.. I'd be surpirsed that you can actually 'pick your nose', let alone picking the next bank that will collaspe..

RBS shares down 39 per cent in one day and the company rescued from collapse by the government. Ayyee thhennk yooo. Obvious to anyone who knows owt about the stock market.

Keep picking your nose convict boy.

Good news for savers and depositors is that NatWest and RBS banks are actually safer homes for your cash now than they were 24 hours ago thanks to the government bail-out.

The crunch gets crunchier.... and it's all the media's fault of course.

[grizfoot]

Nobody actually said it was the media's fault, just that the way the betray news stories could cause some people to panic. Today for example it was leaked to the media that leading UK commercial banks had asked the government for more credit which help contributed to the big losess in banking shares again today.

This UK bank bail-out announcement will be interesting tommorrow. I've heard it could be around £50bn, but it's anyone's guess what the amount will be. This will of course mean part-nationalisation of a number of UK banks, which in itself could stir up more issues.

[bazza]

Anyone with spare cash, use it to buy shares in RBS before they rocket up again and you'll make a killing.

[scotchrover]

Ok I may get stick for this of some members on the board however lets make one thing clear this problem we currently have is not all down to him.

Yes he maybe shouldn't he allowed the public borrowing to get out of control when the economy was in its 10 year boom (or 15) however this was the fault of people who knew they couldn't pay back the loan that they acquired. However this at the end of the day its a globel problem that was started by the US government and George Bushes right wing economic politics.

10years of economic stability has never ever been achieved in this country before (correct me if iam wrong) and this is mostly because of Mr Brown. this is also achieved by record employment levels and inflation that has been under control.

And for the Thatcher supporters on the board it was never achieved by her either.

Before these financial troubles we now face ourself with ever existed, Mr Brown was the best person incharge of the economy and still is. Look at the opposition, you have the tory toffs (ever one except 2 educated at oxford) that have never achieved economic stability for the 3 decades they where in power last time and have a shadow chancellor that has managed to come up with a 3 billion black whole in his shadow budget.

The last thing i will say is that we should follow the economic policy's of scandinavian countrys as they never seem to have any financial troubles even in these problematic times(not including Iceland)

[grizfoot]

Right Gordon Brown did indeed lead us to the longest period of economic growth and stability this country as ever seen. Some people would call this good management of the economy by him others would say our economic benfited from developing economies in China, Russia, ect. and hence was the main reason behind our good economic performance previous to this 'credit crunch'

My only qualm with Brown would be that he continued to work with a large budget deficit increasing government spending even when the economy was buoyant and growing (See graph below). Increasing government borrowing and debt along the way.

Now the time comes when the government has had to step in to rescue high-street banks (whether you agree with this or not is irrelavant). We are talking about billions of pounds now, all of which has to come from somewhere. Meaning even more government borrowing and the high possiblity of increased taxes come the next budget. But I agree you can't really blame Gordon for the situation the economy is in at the moment, it's more of a global thing brought on by the banks. However his heavy budget spending in hindsight looks like a mistake. I also agree he's probably a good man to be Prime Minister at the moment to deal with the current crisis with him having a greater understanding of the economy.

[philipl]

Philip, your use of the word "opinion" in your link says it all for me.

It's an opinion, that is all, nothing more nothing less. If I were bothered, I could probably find an "eminent" opinionator to give the opposite view.

If this "person" had some great wisdom, he/she would be making more money in some more lucrative field than journalism.

It's probably beacuase of the published opinions of people like this, that we , yes we, are experiencing the severity of the problem we are in.

No, I'm not diminishing the problems themselves, I'm wondering why they are as deep as they are. These journos are looking and seeing things that may not be as problematical as they make out.

IMF put the US banking loss at $1.4 trillion.

[dave birch]

Philip, All Ashley Seager does there is lift info from the IMF report.

He/she doesn't express an opinion like others, which is, imo, what reporters should do. They impart information and leave the reader to form their own opinion.

As an aside, there are plenty of countries (and eminent people) around the world that wonder what use the IMF is, other than to tell countries how to run their economies, and bail out those countries that they think will repay any debt to them.

[jim mk2]

Nobody actually said it was the media's fault, just that the way the betray news stories could cause some people to panic. Today for example it was leaked to the media that leading UK commercial banks had asked the government for more credit which help contributed to the big losess in banking shares again today.

Too late to panic for the poor souls invested in Icesave : the Icelandic govt has about £90m to cover investor assets of more than £3bn. Ho hum.

[AussieinUk]

RBS shares down 39 per cent in one day and the company rescued from collapse by the government. Ayyee thhennk yooo. Obvious to anyone who knows owt about the stock market.

Keep picking your nose convict boy.

Good news for savers and depositors is that NatWest and RBS banks are actually safer homes for your cash now than they were 24 hours ago thanks to the government bail-out.

The crunch gets crunchier.... and it's all the media's fault of course.

You weren't correct victor, you were proven wrong, by your claims last week, that the stock had fallen by 20% and then 9% - which was blatently false (and this was proven by my post)

You also stated that those with saving in Natwest, should pull thier money out.. again you have been proven wrong on this.

And now, you have even failed to mention correctly, why RBS has fallen so much today... this wasn't related to any money from the governement, it was the downgrade from S&P (first time for RBS since 98).

[AussieinUk]

Interesting article on UK banking sector - HSBC, RBS & Barclays (top three banks) face the most debt maturing, in at least 10 years. This effect will raise total borrowing costs. The six largest British banks (in total) have £54 billion of debt, to refinance by April next year (three times the amount from this time last year). HSBC, the U.K.'s biggest bank, and No. 2 RBS, each have about £11.5 billion pounds of debt due, while Barclays has £15.9 billion pounds maturing.

I believe, the UK treasury will inject close to £50 billion liquidity back into market today.. Spain has also pledged to spend up to $50 billion euros, to buy assets from its own troubled banks. Interestingly, the cost of borrowing (BBA LIBOR), overnight dropped from 6.8% to 5.23%. Money markets are still generally volatile, but the pressure has eased since yesterday.

It will be interesting to see how the market responds today (next few hours). There will either be very sharp rebound, or a small, steady dip. Currently, FTSE futures are slightly up overnight.

[dave birch]

Aussie, what do you reckon is causing the problem?

Confidence, imo, it's certainly not lack of liquidity from the central govs.

Following on from the sub prime fiasco, there's not much difference to before the S-Prime was known. I would have thought that that would have been taken into account by now?

From my perspective, I can see that things are starting to clear now, and that it would be a good time to get into the market for a medium/long term proposition.

Must add, that while property in Australia in some sectors has retracted it hasn't in all sectors, and rents have gone through the roof. That, and an unemployment rate of 4.1%, things aren't too bad here, yet.

[AussieinUk]

Aussie, what do you reckon is causing the problem?

Confidence, imo, it's certainly not lack of liquidity from the central govs.

Following on from the sub prime fiasco, there's not much difference to before the S-Prime was known. I would have thought that that would have been taken into account by now?

From my perspective, I can see that things are starting to clear now, and that it would be a good time to get into the market for a medium/long term proposition.

Must add, that while property in Australia in some sectors has retracted it hasn't in all sectors, and rents have gone through the roof. That, and an unemployment rate of 4.1%, things aren't too bad here, yet.

Dave, confidence is definitely a major factor, but I would have to include short term borrowing rates coupled with dramatic asset write-down. Banks are just not coming clean (in full) on total bad assets on the books and this is just prolonging the pain within the industry. They're hoping that markets will rebound to equilibrium and then stabilize. Those bad assets/loans being re-rated downwards by the rating agencies (sub-prime) have also had a negative effect on other classes of assets/loans. Banks want to quickly dumped these back into the market, while it is still liquid in some way. It's a huge spiraling effect, which is becoming ever more contagious. Lastly and most importantly, is the leverage factor... this was way too high, in some cases at 30-1.

Definitely agree with you on med/long term investment propositions, especially some of the blue chips.

Btw - I am currently buying another house in Oz at the moment and had to scratch Sydney of my prospective list, as the market was dropping enough, for my long term views.

[AussieinUk]

Should have also mentioned that some of the derivatives being approved internally, were absolutely rubbish. In most of those cases, legal & compliance depts just allowed these through without looking at total liability. Credit risk depts played some part in this, so they shouldn't go without some blame. I know of a few smart ar$e's, that would come up with a new product that really offered great upside, but no coverage on the downside.

For me, it's hard to predict, when the market in general, will start to develop some sort of consistent normality. It's going to take at least 3-6 months for these funding packages to 'kick in' from the lag.

[jim mk2]

And now, you have even failed to mention correctly, why RBS has fallen so much today... this wasn't related to any money from the governement, it was the downgrade from S&P (first time for RBS since 98).

RBS shares have fallen because of a funding shortfall and had to be part-nationalised by the govt.

I notice Sir Fred the Shred is expected to be be kicked out today which ought to give the stock a bounce if only for the short term.

Although £50,000 is guaranteed by the govt I repeat what I said ..... I wouldn't have any money in NatWest. As for Icesave it proves the old adage that if something appears too good to be true, it usually is.

Stock market down 3 per cent as I write ; once-in-a-lifetime bargains appearing for those who are brave.

[modes98]

I wouldn't have any money in NatWest.

I owe them money so if they went bust it would kind of help me! Same with MBNA, can someone take them down please

[philipl]

THe co-ordinated US, UK and ECB half point cut in interest rates which I advocated has happened.

Let's see if it has the desired affect.

[grizfoot]

THe co-ordinated US, UK and ECB half point cut in interest rates which I advocated has happened.

Let's see if it has the desired affect.

The important thing is that it wasn't just the UK that cut the interest rate it was the US and Europe as well in a collective cut meaning it should have more effect. It's a bold move as it could indeed just trigger more inflation hopefully that won't be case.

[philipl]

Good news if you were saving with Icesave or Kaupthing- ING have taken over those savings businesses but no doubt interest rates will fall to more normal levels.

Bad news for anyone else associated with Kaupthing; the UK arm of Kaupthing, the last remaining independent Icelandic bank has gone into administration taking Singer & Friedlander with it. That was a decent company.

The Lloyds takeover of HBoS is being re-negotiated and the partial nationalisation of RBS means cheerio to their Chairman and CEO.

Paulson in the USA is proving to be an absolute goon. He's only gone and predicted that several more banks and businesses will fail over the coming weeks- great way to sustain the confidence the interest rate cut was designed to bring back for inter-bank lending to begin to unstick itself!

Looks like UK tax-payers will find they are funding a UK equivalent of Paulson's toxic bank and US tax payers will have to stump up for an equivalent of the UK fund to buy equity in banks thus part nationalising them.