[Archived] The End Of Global Capitalism?

[Billy Castell]

The Tories were the same in the 1980's too Phil. I bet there are a lot of people who'd like to do something else with that sword.

[colin]

I had BBC Radio 4 on tonight. (I know, saddo) There was a financial programme where the BBC was interviewing American lawyers about their moves to take the American bankers to court for fraud and mis-representing their accounts to all and sundry.

It will be interesting to see how this works out over the next few years or so. Barclays banks was implicated.

The thought of lawyers taking on bankers in courts rather echoes my feeling about Manchester Rowdies v Chelsea Oilers. I want them both to lose.

[philipl]

Well done, Jim/James/Doris/Victor! For once you have actually got something right*!

* If no-one else can actually pat you on the back (or will not want too by choice).. do it yourself - you deserve it!

I can say from first hand experience, Fred is an absolute tosser and the world will not be lost without him!

Philip, those CDS's are OTC, so there is no central clearing house! Can you please explain?

Agreed re Fred the Shred- just like in politics, absolute inadequates sometimes reach the head of corporations and cause havoc- Horton at BP was an example.

Seen the same thing repeated here.

[AussieinUk]

Seen the same thing repeated here.

DTCC and others, such as Swapswire are quite good. It’s a pity that many banks still in the market don’t use these guys. Btw - DTCC doesn't cover all products and is just a private corporation used for auto-matching confirmation and clearance.

Essentially, there still need to be a compulsory central repository, for all OTC deriv-based products.

[philipl]

DTCC and others, such as Swapswire are quite good. It’s a pity that many banks still in the market don’t use these guys. Btw - DTCC doesn't cover all products and is just a private corporation used for auto-matching confirmation and clearance.

Essentially, there still need to be a compulsory central repository, for all OTC deriv-based products.

Thanks for that- presumably the desire for a Bretton Woods 2 is to create precisely the global central repository you are talking about.

[dave birch]

Can anyone tell me if there's been a significant change in their life over the past few months?

[philipl]

Can anyone tell me if there's been a significant change in their life over the past few months?

Yes- a distinct up tick.

However, the big question for everybody is what the next few months will bring.

There really is (or was) an airline called Aeroshchit! Sorry, that rather appealed to my sense of humour.

[dave birch]

Interesting that philip, I haven't noticed a big downturn in my finances, primarily because I haven't sold anything. Yep, the super has taken a hit, but tomorrow is another day.

Banks here seem to be well balanced and still lending. Interest rates dropped 1%, pensioners got a pre christmas bonus, summer's coming. Panic merchants are starting to quieten down.

[jim mk2]

However, the big question for everybody is what the next few months will bring.

[

Glorious November 5, bonfires and the run-up to Christmas. Lots of snow hopefully. I love winter.

The big question is what the next 5 years will bring. A global recession is inevitable and the only hope is that the worldwide action taken in the past 7 days inspired by Gordon Brown will prevent a recession developing into a 1930s-style depression.

I don't think it will but the recession certainly won't be V-shaped, more of a long and drawn-out U.

[Paul]

Can anyone tell me if there's been a significant change in their life over the past few months?

Yep.....another child left home. Result!

To the question though the answer would be "no" but we did make a number of small economies at the beginning of the year. I'm being really careful on the electric and gas. Plus bought a chain saw to log up all the wood I have stored to use on the fire and multi-fuel burner. I reckon fuel costs are the one thing to watch this winter. Cancelled my gym membership but that has more to do with my determination to cycle more this winter.

Talking to the people who do our distribution they say very little is moving at the moment and the big push for Christmas has yet to begin, apparently this usually starts two weeks ago. On the other hand our September sales were an all time high for the month and October is looking good to at least hit budget.

[The1mattjansen]

With all the turmoil in the markets at the moment, they must be opportunities galore for someone to make a killing. It would be interesting to get the views on those 'in the know' and what exactly were they would put there money if they had a decent amount to chuck into the mixing pot at the moment.

Phillip?

[philipl]

I think the fall in extractive and processing companies is massively over done.

ENRC is now probably under half the price it should be for instance.

Even with the slump, a company making over a billion profit a year to be on a p/e of about 3.5 looks crazily low.

I know there is country risk as well as the threat of a long run recession but I think those companies have been hit far too hard.

I would avoid property, cars, consumer goods and hi-tech at the moment although individual companies with strong balance sheets and good product lines are going to be well placed to out live their competitors.

However, I would wait a little before diving in at the moment- confidence is fragile and if something happens the markets will drop like a stone (something could be anything from a sovereign default- Ukraine, Pakistan- to a terrorist outrage to Israel attacking Iran to George W making another speech on economics and so on).

[The1mattjansen]

I would have agreed with most what you've said there Phillip.

What about the banks though? They are all at peanut prices at the moment but having being backed by the governments they are surely 100% safe now and the remaining few will come back into massive profits soon enough. I can't help thinking that there is a lot of money in both the banking and resource markets.

[grizfoot]

I would have agreed with most what you've said there Phillip.

What about the banks though? They are all at peanut prices at the moment but having being backed by the governments they are surely 100% safe now and the remaining few will come back into massive profits soon enough. I can't help thinking that there is a lot of money in both the banking and resource markets.

Government said there won't be any dividends paid to any of the shareholders of banks that have been nationalised so that's probably why some of the banking shares look a bit unattractive at the minute. Although I agree some of the banking shares are incredibly low at the moment they are seemingly going to increase sometime but that may take indeed a while, the government are hopefully they will though as the keep claiming they will actually be making a profit on the money invested once the sell of their preference shares in the future. How far in the future that is remains to be seen.

[philipl]

I'd want to see how the interbank lending picks up, what happens to the hedge funds and how the derivatives business unwinds before backing the banks.

I am afraid that we are probably still only 50/50 that the banking crisis is under control now.

[jim mk2]

The rally on Monday and Tuesday on the back of the banking bail-out proved short-lived as I suspected and with FTSE and the Dow down 7 per cent today the stock market is waking up to the fact that the world is heading for a prolonged and potentially nasty recession.

The market has to adjust to falling profits over the next few years and has further to fall. Shares may appear cheap but they will get cheaper as profits fall. Still too early to buy yet.

[broadsword]

One day the markets are up, then they're down, then they crash, then they pick up and rally and then they're down again.

Up and down like a tart's drawers.

[colin]

One day the markets are up, then they're down, then they crash, then they pick up and rally and then they're down again.

Up and down like a tart's drawers.

Thank you Mr B. Pure poetry.

[Damage]

Look on the bright side........ at least we'll see an end to the proliferation of nail salons, tanning parlours and takeaways on our high streets. Assuming, of course, that they aren't just a front for money-laundering!

[yoda]

Look on the bright side........ at least we'll see an end to the proliferation of nail salons, tanning parlours and takeaways on our high streets. Assuming, of course, that they aren't just a front for money-laundering!

Last time I suggested that kind of thing goes on I got banned for a month,

look out

[philipl]

An explanation of derivatives and how to get to crazy numbers.

[neekoy]

Can anyone tell me if there's been a significant change in their life over the past few months?

Only at work, my company is American owned is hurting (Property Sector) we have just had our first wave of 'let go's' around 60 across the country.

If anything it only puts added pressure at work.

[Paul]

It may be the end of global capitalism but apparently not the end of inventiveness in the financial sector. Heard this one recently as a method for obtaining a 100% mortgage, supposedly no longer available in the general market.

Seller has a property on the market at £100k but cannot sell and is prepared to drop price by 10% to £90k. Buyer can only get a mortgae for 90% of property price and must have 10% deposit. Therefore simply dropping the price by 10% doesn't help the buyer as the mortgage provider still requires a 10% deposit. The seller maintains the house price at £100k agrees to "lend" £10k to the buyer who now has 10% deposit plus £90k to complete the purchase. After the purchase the buyer repays the £10k to the seller. End result is the seller has sold for £90k and the buyer has a 100% mortgage.

Exactly how this is worked out I don't know but it's apparently done by the solicitors and concluded at the time of the sale and is happening locally now.

[philipl]

If you are looking for a safe haven, this is now looking very serious. I know a City Lawyer and an insurance broker who have been working in this sector for a long time and both are doing extremely well.

[BuckyRover]

It may be the end of global capitalism but apparently not the end of inventiveness in the financial sector. Heard this one recently as a method for obtaining a 100% mortgage, supposedly no longer available in the general market.

Seller has a property on the market at £100k but cannot sell and is prepared to drop price by 10% to £90k. Buyer can only get a mortgae for 90% of property price and must have 10% deposit. Therefore simply dropping the price by 10% doesn't help the buyer as the mortgage provider still requires a 10% deposit. The seller maintains the house price at £100k agrees to "lend" £10k to the buyer who now has 10% deposit plus £90k to complete the purchase. After the purchase the buyer repays the £10k to the seller. End result is the seller has sold for £90k and the buyer has a 100% mortgage.

Exactly how this is worked out I don't know but it's apparently done by the solicitors and concluded at the time of the sale and is happening locally now.

That has been happening for a long time. I saw an article on moneysupermarket about to get this to work in your favour.