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 The Great International Depression of 2008 & Beyond /

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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 12:29 pm

At its most basic yes you should allow failures to go to the wall, however it is not quite as simple as that in practice. When something is a key part of the national infrastructure allowing it to fail can cause far more harm than good, Eircom would be an example of this as would a proportion of our banking system... difficult thing is working out what proportion scratch
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 12:50 pm

I think it would be worthwhile to look at examples of places that have defaulted, and how they dealt with it. I remember reading a reference to a Latin American country that had defaulted and it had not been the end of the world for them.

Our biggest problem is that we have chosen to have a fiscal crunch in the middle of a deflation.
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 1:08 pm

The problem is the bailouts are first and foremost saving the various bond holders and the many counter parties to various swops etc. The problem is not really sub prime but the manner by which the financial institutions have conducted their affairs. It is the 'sophisticated' tolls they employ. To me what they have done is a deliberate attempt at evading whatever regulation there is and deliberate fraud. It was at best irresponsible trading. The only way these people will learn is if they experience the outcome of their actions and are pursued for criminal activity. In addition we need to ensure that this NEVER happens again, but I am dismayed at the lack of interest in effective regulation. (say it all)

In country after country people's money is being poured in to bail out these rouges. Utterly pointless. Imagine for one moment that these funds went into sound business or projects, imagine the boost that it would give to the economy.

With regards the ghost estates etc, you are looking at this the wrong way round. They are assets whose value should be allowed to drop until they find a market. They may be someone's loss, but they could be someone else's gain and that person will have lower outgoings and will be more competitive. You can now go out and buy shares at a price that is affordable what is wrong with that? (I would wait a bit yet, not due to value but questions as to which businesses will survive).

What Ireland needs is a bout of inflation to correct wages and currency down. That cannot happen unless the ECB wakes up to reality. A Euro that is overly strong will destroy the economy of Europe and be a political disaster. Britain will come out of this recession well ahead of Ireland. How long that recovery will last is another matter. Brown has bleed the UK of every spare penny in his term as chancellor. He has significantly increased public expenditure to a level that is unsustainable.

People worry about inflation, I look forward to it. It penalises those who do not make use of their money, deflation rewards them. Deflation encourages you to sit back and wait and do nothing.


johnfás

What has Anglo got to do with essential national interests? You only need one solvent bank in Ireland in the short term. It would have been very easy to take a different path that would have been a bit chaotic for a while, but in all probability the country would already be in a stronger position as the loses would have went to where they should be bore and the country would not be burdened with responsibilities that are not of its making. If the government had behaved a lot more aggressively with regards accountability and regulation and keep its nose out of Banking beyond sending in receivers, Ireland could have been seen as a good place to invest. But then again, we are talking about FF. Smoke, mirrors and deals are their modus operandi.
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 1:09 pm

How much of it depends on the kind of investment you want to keep in your country though? You might be prepared to make footballs in a country which has recently defaulted but would you really want to put your core business there and your cash? That is the kind of investment Ireland has been seeking to attract in recent years, and I would posit, though admittedly from a position of ignorance, that a State's financial wellbeing is far more important in attracting this sort of investment than is necessarily the case for economies with a different focus.

Beyond which, if you look at most of the major focuses of study on debt default they tend to be countries such as Argentina (2002) or Mexico in the 1980s. Bear in mind these countries have populations of over 40 million and over 100 million respectively. Argentina is one of the world's largest agricultural exporters as well as holding fairly significant natural resources including oil reserves and other mining commodities.

Consequently there are a couple of things we can gleam from Argentina's vital statistics, they have a large population and thus the potential to generate domestic demand for consumption and secondly, as a major exporter, particularly of raw materials, put simply they have what other countries want and irrespective of their debt or a default they will, in the absence of trade sanctions, be able to shift these goods and thus generate significant income.

First, Ireland does not have the domestic economy to really rely on it for a true economic recovery. Secondly, what does Ireland have that the rest of the world wants? Unless we can come up with that answer we aren't in much of a position to shun the international investment community.


Last edited by johnfás on Mon Mar 09, 2009 1:14 pm; edited 1 time in total
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 1:13 pm

Squire wrote:

johnfás

What has Anglo got to do with essential national interests?

I don't think Anglo was an essential national interest and from a layman's point of view I would have let it go bust. That said, I'm no expert on the Irish banking system so I would defer to those with better knowledge than my own to have a better conceived opinion on that issue. However, the fact remains that there is a strong possibility that there is no solvent bank in this country and we cannot afford to let them all fail, so I would hazard that the notion of letting any business which has failed go to the wall is not a one size fits all solution. If the entire Irish banking system came crashing down, it would not be short term chaos, it would quite simply bring most Irish businesses down the drain with it. A single incident brought those World Trade Centres down in New York within a couple of hours in 2001, its replacement won't be finished until 2011, some 10 years later.
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 1:27 pm

cactus flower wrote:
I think it would be worthwhile to look at examples of places that have defaulted, and how they dealt with it. I remember reading a reference to a Latin American country that had defaulted and it had not been the end of the world for them.

Our biggest problem is that we have chosen to have a fiscal crunch in the middle of a deflation.

I believe China once defaulted and in the 80s Brazil. Another approach is to print money and effectively default by that means. There is a question that needs to be asked in Europe and in ALL countries. It is about how a local region, that cannot compete, can adjust to be competitive. People blame the Euro and say Ireland cannot devalue and apply easement, but if the unit was Ireland then Mayo may be out of sync with Dublin. Same problem. There has to be a way of making the financial success of a region more flexible, more accountable to local wishes.

In Britain they have some scheme for redistributing tax take, but if the tax regime crucifies the region in the first place this is just inefficient. It is a subject that needs more consideration. I think you need very powerful local democracies with tax raising powers and cooperation centrally only where necessary. Ireland is a small country, but if you consider your own mental map and ties I would imagine for most people the country is greater than that series of more common associations. For many Munster or Ulster may be a more effective model of perceived interest.

The current system of administration in Europe is muddled and does not serve everyone's best interests.

johnfás

If there is no solvent Bank take one over when it goes into receivership and not before! It would have been a bit of a rough ride but right now the country would be a lot stronger.
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 3:37 pm

Something interesting in one of the UK papers this weekend (Sat Guardian, I think). They had a graph showing the decline in house prices last year and 2007 in Europe as a whole (including the Eastern fringes and Iceland).

Interestingly, Estonia, the UK and France (in that order) showed bigger declines in house prices than ourselves. What was scary about the graph was that all of these showed gains for 2007 and vast losses for 2008. We had a small loss in 2007 and a bigger one last year.

There are a few things that are really worrying me about our next door neighbour:
the high drop in house prices last year and an overall drop in the amount of outstanding mortgage debt (I don't think this has happened to us yet). I need not mention the quantitative easing. I also don't understand why our admittedly dodgy banking system is getting a bigger rap than the UK's.... let's face it, they went into this recession 6-12 months after us, but already they've bailed their banks out to a much higher % than us, with more to come. Unlike our relatively simple "lent too much to the developers, now trying to flog the site/houses" scenario, their losses seem currently primarily to do with subprime and other toxic derivatives. There are also few records on the hedgies and their losses. However, given the size of their housing slump and the fact that UK banks aren't shy about repossession, I'd say those UK banks are going to find they have at least some of our property loans issues on their hand fairly sharpish. And as for the US, well, no comment

So why are WE getting a bad rap?? Well, our banks did put out a lot of dodgy loans. But they largely avoided subprime and at least most of the loans are backed by collateral that will appreciate in value with time. Maybe a lot of time. However, I am still of the opinion that at least some of the flak is coming from those who think if they themselves throw stones, no-one will realise that they themselves are living in glass houses.

We are being unfairly treated (as JP Morgan and Trichet at least seem to have half way realised.

To make my case again, AIB did just declare a profit, while themselves and BoI will benefit in terms of market share from the pullout/lower investment levels of foreign retail banks. I know it was just recapitalised, but so were Lloyds Group and RBS and this does not appear to have prevented them from making really stonking losses. And yes, I know the losses haven't all been declared, but if anyone thinks the foreign banks have been fully upfront about their gambling losses.....think again!!

Let's start fighting back, lads. We need more backbone. The lying banks and crony capitalists/politicians are alive and well in other capitals also

I will leave the final word to Paul Krugman's latest book on depression economics.... every country/region with a problem (Argentina and Latin America in the '80s, Asia in the 90s, Japan for the last 10 year) has been accused of crony capitalism. He thinks that while this may have been a factor (and is probably a factor everywhere), the real problem lies with the fact that investors lose confidence in, and pull money out of peripheral/small/emerging economies much, much faster than they panic in places like the UK and US, leading to downward spirals. Now, such a spiral is affecting everyone, to varying degrees.

The enemies are fear itself, and debt.

For anyone who thinks foreign governments are squeaky clean in comparison with ours..... go read the weekend's Guardian and Observer on the subject of Binyam Mohammed

Those guys make FF look like the Vienna Boys Choir. At least they aint rampin'up the WMDs and torturing people. And then allegedly lying about the torture.....the Observer said that, I'm merely repeating it!
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 3:42 pm

Quote :
I will leave the final word to Paul Krugman's latest book on depression economics.... every country/region with a problem (Argentina and Latin America in the '80s, Asia in the 90s, Japan for the last 10 year) has been accused of crony capitalism. He thinks that while this may have been a factor (and is probably a factor everywhere), the real problem lies with the fact that investors lose confidence in, and pull money out of peripheral/small/emerging economies much, much faster than they panic in places like the UK and US, leading to downward spirals. Now, such a spiral is affecting everyone, to varying degrees.


Enjoyed your post expatgirl. Started a thread somewhere about the advantages and disadvantages of living on an island recently - peripherality and size certainly can leave a place exposed when the tide is going out. There are times they can be an advantage too.
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 4:17 pm

Good post expat girl.
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 4:26 pm

Expat

I have little good to say about Brown and new Labour, but comparing Dublin with the Queen of naked capitalism (The City) or the King (New York) is a pointless exercise. There are trillions moving out of both! The overall trading activity in these centres is collossal. If either completely implode we will enter a new dark age.

Many Banks throughout the world are showing profit or have a strong long term asset base. The problem generally is lack of trust, lack of transparency etc. and no apparent will to address this matter. In Ireland one of the problems is lack of diversity and over reliance on overseas investment. The Banking problem is now as much to do with perceptions of the ability of the Irish economy to recover.
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 4:42 pm

Actually, while I'm at it, I just thought of some more examples of New Labour lies and spin.... bear in mind these are the people who are currently being lauded in some circles for "leadership" at the moment

i) my ex boss in the UK was a lovely bloke, but a somewhat establishment type who had previously worked in the South East and had friends who had worked at Aldermaston (the nuclear missile manufacturing facility). Ended up at a party talking to a lady who had been involved with radiation safety there.... they had already doubled their staffing a year before Parliament "debated" whether or not to go for a new version of Trident. The bill for this will be about 70billion.

ii) similarly where I lived in Wales was not, economically, the west of London by any stretch of the imagination. British army recruiters therefore found it fertile ground. Friends of mine who knew people in the armed "fawces" were aware of the fact that the troops were being shifted to "Eye rack" a good year before Parliament and TB officially "decided" to go in there.

The fact that the Tory opposition could be relied upon to support any military initiative was no doubt a great comfort to them

DO YOU GUYS REALLY BELIEVE our government are more mendacious than that lot??

They may be a disaster, but they aren't that bad.

Most importantly, do you think the UK (or US for that matter) is likely to be more truthful about financial matters than they are about...oohh, lets say ... extraordinary rendition??

Think again, people. We in Ireland need to stop staring at our own navels and thinking our Government is the sole source of our misfortunes. They are one of the sources, but only one. Our own glorious national inferiority complex is currently making us our own worst enemies in terms of international perception, but as I said earlier, international perception is mostly coming from the rest of the Anglozone, who wish to distract attention from their own unholy messes and who would love to see Bad Things Happen to the Euro (because it is, among other things, major competition for them)
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 5:19 pm

expat girl wrote:
So why are WE getting a bad rap?? Well, our banks did put out a lot of dodgy loans. But they largely avoided subprime and at least most of the loans are backed by collateral that will appreciate in value with time. Maybe a lot of time. However, I am still of the opinion that at least some of the flak is coming from those who think if they themselves throw stones, no-one will realise that they themselves are living in glass houses.

We are being unfairly treated (as JP Morgan and Trichet at least seem to have half way realised.
All good points well made.
We are getting a bad rap, mostly out of London & on very little evidence, because the Brits badly need someone to be worse off than themselves.
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 5:24 pm

tonys wrote:
All good points well made.
We are getting a bad rap, mostly out of London & on very little evidence, because the Brits badly need someone to be worse off than themselves.

You can add to that as well, they don't like our corpo tax rate (well, neither do the rest of the EU, and the US as well), and they, unlike Frau Doktor Merkel, would also really like it if we were not so integrated with the Europeans. So that means some at least don't like any sort of prospect that we could vote in Lisbon. Chances are they are, and have been, up to things on that front. Which is why we really need SIPO to make sure they know where ALL Lisbon campaign funds are coming from
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 5:47 pm

tonys wrote:
expat girl wrote:
So why are WE getting a bad rap?? Well, our banks did put out a lot of dodgy loans. But they largely avoided subprime and at least most of the loans are backed by collateral that will appreciate in value with time. Maybe a lot of time. However, I am still of the opinion that at least some of the flak is coming from those who think if they themselves throw stones, no-one will realise that they themselves are living in glass houses.

We are being unfairly treated (as JP Morgan and Trichet at least seem to have half way realised.
All good points well made.
We are getting a bad rap, mostly out of London & on very little evidence, because the Brits badly need someone to be worse off than themselves.

Congratulations tonys - your 1000th post ! cheers cheers cheers
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Mon Mar 09, 2009 6:05 pm

cactus flower wrote:
tonys wrote:
expat girl wrote:
So why are WE getting a bad rap?? Well, our banks did put out a lot of dodgy loans. But they largely avoided subprime and at least most of the loans are backed by collateral that will appreciate in value with time. Maybe a lot of time. However, I am still of the opinion that at least some of the flak is coming from those who think if they themselves throw stones, no-one will realise that they themselves are living in glass houses.

We are being unfairly treated (as JP Morgan and Trichet at least seem to have half way realised.
All good points well made.
We are getting a bad rap, mostly out of London & on very little evidence, because the Brits badly need someone to be worse off than themselves.

Congratulations tonys - your 1000th post ! cheers cheers cheers
Thank you.
It goes to show, the market for quality is never dead.
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Tue Mar 10, 2009 9:38 pm

Broad-based rally across all industries today on the Dow according to Bloomberg. This could be on the strength of Citigroup having posted a good quarter this quarter in a good number of quarters.

If this is some of the start of the upturn, it's hardly down to the success of one bank although with all this talk of 'systemic' going around you wouldn't know ...




Quote :
Stocks Post Best Rally of 2009 on Improving Citigroup Outlook

March 10 (Bloomberg) -- Stocks around the world staged the biggest rally of the year after Citigroup Inc. said it was having its best quarter since 2007, spurring speculation the worst of the banking crisis is over. Treasuries and gold fell.

Citigroup jumped 33 percent as Chief Executive Officer Vikram Pandit wrote in an internal memorandum that the bank, which reported five straight quarterly losses, was profitable in the first two months of 2009. JPMorgan Chase & Co. climbed 19 percent and Bank of America Corp. surged 25 percent as Federal Reserve Chairman Ben S. Bernanke urged an overhaul of financial regulations. Germany’s Deutsche Bank AG and UniCredit SpA, Italy’s biggest bank, added more than 11 percent.

“If we’re not at a bottom, we’re a pretty close,” said Michael Binger, Minneapolis-based fund manager at Thrivent Asset Management, which oversees about $60 billion. “It’s time to start putting money into stocks. Stocks are cheap and worldwide stimulus will eventually help lift earnings.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aTNQp5zWy9qQ&refer=home
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Wed Mar 11, 2009 10:04 am

How far behind the U.S. is Ireland? It's way too inclement here to do this though:


http://www.youtube.com/watch?v=ANz10-Hi4wk
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Thu Mar 12, 2009 12:44 pm

Quote :
China's trade surplus plunges as exports fall

CHINA’S TRADE surplus, so long a stumbling block in relations with Europe and the US, plunged in February as exports fell by a record amount, putting Beijing under pressure to boost domestic consumption to prop up the world’s third-largest economy.

At the same time, capital spending accelerated sharply with the help of some good old-fashioned pump-priming in the shape of the government’s massive stimulus package. The trade gap narrowed to $4.8 billion (€3.75 billion), about an eighth of the amount in the previous month, the customs bureau said.

Exports tumbled nearly 26 per cent from a year earlier, while imports were down 24 per cent. The drop in exports is the steepest since records began in 1993.

...

At the same time, there are some early signs of recovery – lending is on the rise, as is power consumption, while the main stock exchange, the Shanghai Composite Index, has registered gains of 20 per cent this year. Cement and steel output rose 17 per cent and 2.4 per cent, respectively, in the first two months, and car sales topped 800,000 in February for the first time in eight months.

http://www.irishtimes.com/newspaper/finance/2009/0312/1224242738736.html
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PostSubject: Re: The Great International Depression of 2008 & Beyond /   Thu Mar 12, 2009 4:36 pm

GE loses triple AAA rating from Standard & Poors

Quote :
By Rachel Layne

(Corrects to say S&P in headline and first paragraph.

March 12 (Bloomberg) -- General Electric Co. and its finance arm lost the AAA rating from Standard & Poor’s for the first time since the 1956 as a global recession sapped earnings and exposed potential risks.

The downgrade to AA+ with a “stable” outlook affects long-term debt, S&P_ analysts said in a statement today.


http://www.bloomberg.com/index_americas.html

http://machinenation.org/forum/viewtopic.php?&f=8&t=1653&start=0
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