The global economy is set for a year of recession and then low growth until 2012, economists at the World Economic Forum in Davos have said. .... Speaking at a panel taking stock of the state of the economy, Stephen Roach - chairman of Morgan Stanley Asia and long-time prophet of the economic downturn - said one could not "overestimate the dangers the world economy faces in 2009". The global economy was likely to shrink this year for the first time since World War II, he said, and nobody on the panel or in the audience was prepared to contradict him. .... Mr Roach said that after 2009, global growth would be anaemic at around 2.5% in the three years to 2012, which prompted one well-known economic commentator, Martin Wolf of the Financial Times, to accuse him - probably only half-jokingly - of "optimism" and "getting soft in his old age". ....
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Subject: Re: The Great International Depression of 2008 & Beyond / Thu Jan 29, 2009 11:52 am
Mike highlights and links some newspaper articles that are pertinent to the troubled world economy
*100,000 jobs lost in the world in one day
*ING bank not doing badly - disclosure of its 28bn "illiquid" debt to the markets believed to be a major factor
*Iceland coaltion collapses - Ger Haarde suffering from cancer of the oesophagus
*4bn Canadian stimulus package for education and Green projects
*Newspaper article by Channel 4 chairman - "Why I fear the West's luck has run out" - radical redistribution of wealth on the cards, homes will not rebound in value, not a brief hiatus, bailouts will need to be stopped, interest rates will need to be put up once Chinese and Saudi capital doesn't come to low interest rate blocs.
*FT article : "Inflation can be your friend" - "Pay and save" - Not hyperinflation though - do our governments know when to stop though?
*No free 50k jet for Citigroup - Geithner says NO.
*The mini-war between China and the US over the Chinese currency ... Subject of DAVOS - IMF and World Bank want co-ordinated plan by world governments instead of isolated efforts by individual governments.
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Subject: Re: The Great International Depression of 2008 & Beyond / Thu Jan 29, 2009 12:30 pm
There was a class programme about the 1929 crash on BBC last night. Anyone see it ? Half of America were buying stock 'on margin' ie borrowing upto 90% of the cost of buyin the shares. It was an awful mess. Even Hoover and Churchill lost a fortune on it .
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Subject: Re: The Great International Depression of 2008 & Beyond / Thu Jan 29, 2009 12:38 pm
Just like people here were borrowing up to 100% to buy investments in "prime" one bedroom apartments in places like Kildare or North Wexford with no public transport facilities.
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Subject: Re: The Great International Depression of 2008 & Beyond / Thu Jan 29, 2009 12:49 pm
EvotingMachine0197 wrote:
There was a class programme about the 1929 crash on BBC last night. Anyone see it ? Half of America were buying stock 'on margin' ie borrowing upto 90% of the cost of buyin the shares. It was an awful mess. Even Hoover and Churchill lost a fortune on it .
Watched most of it. It was uncanny the number of parallels with the present crisis - "don't worry we're in a global economy now", the dirty dealings in the banks, the president's assurances that the fundamentals were sound, etc.
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Subject: Re: The Great International Depression of 2008 & Beyond / Thu Jan 29, 2009 1:55 pm
EvotingMachine0197 wrote:
There was a class programme about the 1929 crash on BBC last night. Anyone see it ? Half of America were buying stock 'on margin' ie borrowing upto 90% of the cost of buyin the shares. It was an awful mess. Even Hoover and Churchill lost a fortune on it .
Getting a loan to buy shares ??? Throwing no money after bad. When there's a frenzy of that then it's not a good sign - people overestimate growth by so much - by how much is the question perhaps and then that doesn't happen and you are left either with debts or assets that can't be shifted. In the Independent below they reckon there's 2trillion of toxicicity still to hit our shores in the shape of those Option ARMs and Alt-As
Quote :
Global economy set to grind to a halt over $2trn of bad assets
THE global economy will slow close to a halt this year as more than $2 trillion of bad assets from the US help sink economies from Russia to Britain, the International Monetary Fund (IMF) said.
Britain will suffer the worst contraction among the leading the Group of Seven nations with the IMF predicting its economy would shrink 2.8pc this year -- more than twice the slump it forecast in November.
Globally, the IMF expects virtually no growth this year, in the worst performance since World War II. This compares with estimates of world growth of 2.2pc in its report three months ago.
It now expects US gross domestic product to contract 1.6pc, the euro area by 2pc and Japan by 2.6pc.
Global growth this year will come to a "virtual standstill," said Olivier Blanchard, the IMF's chief economist. "We need stronger policy on the financial front."
Meanwhile our brother the "Wallstreet Pro" is railing against bailouts in "we've been robbed". Despite the *** EXPLICIT LANGUAGE *** he rattles off a lot of info on bond sales, unemployment figures, money supply. Listen towards the end where he asks what wealth has been created in America in the past twenty years - he concludes that there only was that which the tech bubble brought plus inflated house prices. Is there anything else indeed?
Subject: Re: The Great International Depression of 2008 & Beyond / Sun Feb 01, 2009 12:06 pm
And now for something a bit more realistic....
Max Keiser's Show "The Oracle" which airs on BBC predicts what the trends will be over the coming year and in part 3 below he asks designer John Paul Gaultier for tips on what to wear during a recession plus his assistant Stacey finds the encouraging statistic that Monty Python video sales have been affected by the free content available online - they've increased by 23,000% !! That must be a generational thing ..
Subject: Re: The Great International Depression of 2008 & Beyond / Sun Feb 01, 2009 5:11 pm
Your Wallstreet Pro is right that average US incomes haven't gone up for 30 years - but the division of wealth between rich and poor in that time has become much more skewed.
This goes with the figure that Putin gave last week for market losses that have wiped out 25 years of Wall Street profits: does anyone know if that is correct?
Its becoming clearer and clearer that the financial system just doesn't work. It has been pumped up full of fictitious, unbacked credit a few times since the crisis of the early 70s and every time has fallen back harder. At the same time, our global ability and capacity to produce food, provide services and manufacture has gone up and up.
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Subject: Re: The Great International Depression of 2008 & Beyond / Mon Feb 02, 2009 7:57 pm
What happens if Obama's Stimulus Package doesn't get through the Senate ???
Reginald says the $819bn stimulus package is in the Senate now and it has gotten BIGGER - it's over $900bn I notice our own exch exchequer borrowing has gone up to €16.5bn from €15bn - anyone else notice that?
He also talks about a blackout at the Superbowl which lost out on advertising this year - two premium slots weren't taken during the ad breaks .. ?
he provides msnbc, yahoo, daily mail, bloomberg etc. links for the following --> GOP leaders doubt stimulus bill will pass Senate
Glaxo 'to slash thousands of jobs' in UK (10,000 ???)
IBM cuts 1,400 sales jobs
Violent clashes in Russia as angry protesters call for Putin to resign over economy
Obama sees many troops back home in a year
Caterpillar laying off 2,110 more workers
U.S. Consumer Spending Falls for Sixth Straight Month
Netanyahu says Iran will not get hands on nukes
Russian newspaper mourns another murdered reporter
IBM To Open Center, Bring New Jobs To Dubuque
GM dumps its jobs bank
State budget halts work at California School for the Deaf in Riverside
Subject: Re: The Great International Depression of 2008 & Beyond / Tue Feb 03, 2009 1:22 am
D.Harry wrote:
EvotingMachine0197 wrote:
There was a class programme about the 1929 crash on BBC last night. Anyone see it ? Half of America were buying stock 'on margin' ie borrowing upto 90% of the cost of buyin the shares. It was an awful mess. Even Hoover and Churchill lost a fortune on it .
Watched most of it. It was uncanny the number of parallels with the present crisis - "don't worry we're in a global economy now", the dirty dealings in the banks, the president's assurances that the fundamentals were sound, etc.
I saw most of it, and at the time, had the same reaction; but now I wonder. That bubble was the gen. public discovering shares; this one was real estate. That bubble bursting didn't coincide with an energy spike that made the better informed question the fundamentals of our way of life. The technology (ticker tape) in 1929 couldn't keep up with the frantic selling, this crisis has been slow mo all the way, with the stock markets (exception: our own Iseq) lagging the debt crisis by a good few months. However, this time the news is reported and magnified, in real time, as the brown stuff hits the fan, amplifying the fear. Some real movement on the energy front might help reassure people that improvement is on the way.... sustainability. Meanwhile, Roosevelt's publication (in 1933) of the status of the banks helped to calm things down; some sort of proper disclosure and clean up would help us move on. The problem, however is the current valuation of illiquid assets....which will, however, still be worth something, indeed a lot, in the future. So we want answers yesterday, and won't get them until tomorrow.
Is it worse or better than 1929?? No idea, but it is certainly different. My crystal ball sees a huge expansion in economics PhDs as unemployed financial types try to find answers for the mess (and, perhaps, someone or something to blame).
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Subject: Re: The Great International Depression of 2008 & Beyond / Tue Feb 03, 2009 1:26 am
Anyone watch Panorama this evening?
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Subject: Re: The Great International Depression of 2008 & Beyond / Wed Feb 04, 2009 9:54 pm
Subject: Re: The Great International Depression of 2008 & Beyond / Sun Feb 08, 2009 1:01 pm
McCain in the Senate is here enumerating all the bailouts and packages and stimulii and it seems like it's amounting now to a few trillion instead of what everyone thinks will be passed - 820bn. He reckons the word 'bi-partisanhip' is being thrown around in an 'orwellian' fashion with regards this Bill as two Republican senators were swayed behind closed doors.
178 Republicans and 11 Democrats voted against it, he says. (how many of each in the senate?)
He says if $827bn is used in creating between 1.3 million and 3.9million jobs at the low and high ends that amounts to between $636,000 and $212,000 per job . He thinks he's fleshed out a lot of pork-barrelism in the list of projects proposed and he believes it contains NO PROVISION for the future generations who will shoulder this 3 trillion debt.
"If this legislation is passed, it'll be a very bad day for America".
Subject: Re: The Great International Depression of 2008 & Beyond / Thu Feb 12, 2009 3:47 am
California to start state layoffs this Friday.
California budget crisis may force massive layoffs
OAKLAND, California (Reuters) - California Gov. Arnold Schwarzenegger will notify up to 20,000 state employees on Friday their jobs will be eliminated if lawmakers fail by then to balance the budget by closing a shortfall of more than $40 billion, a spokesman said on Tuesday.
The cuts would fall mostly on employees with low seniority in departments funded by the state's general fund, whose revenues have plunged in recent months because of the housing downturn, rising unemployment and the sharp pullback in consumer spending. http://www.reuters.com/article/domesticNews/idUSTRE5197Z220090210
They're about to start printing sterling like there's no tomorrow
I know the conventional wisdom is that this will cause inflation, possibly of the runaway variety, and devalue the currency.
But what happens if and when the US, EU, UK and Japan all start doing this at once?? Where will the currency traders go??
Interesting question. Can't help thinking it's going to boil down to native manufacturing, consumption, local availability of oil and other raw materials - especially oil. It could progress to a scenario of stagflation with rising prices but continued layoffs and muted demand. I've a feeling it will hinge a lot on oil prices again. Has anyone noticed the cost of petrol rising? I'm sure it went up a penny or two around here recently.
If everyone starts printing then these figures should stay the same only extra zeroes will start to appear after the current figures. So we'll be getting 70, 700 and then 7000 pounds stg for 10/1000/10,000 dollars. A tasteless Hershey bar will cost $100 and a pint of milk £100. Economies will progress surely towards what they can produce locally. Ireland and the UK should return to a much higher level of trade than they've had up to now. Stuff will go more local.
Subject: Re: The Great International Depression of 2008 & Beyond / Thu Feb 12, 2009 1:54 pm
You could be right; on the other hand, there may just be less inflation than we surmise if everyone is at it. But you are right on the local availability of natural resources stuff. Which is why we need more windfarms/tidal installations and less of the bank bailouts. Let's face it, I don't see them increasing lending by much. Gordon Brown's 2 rounds of recapitalisation doesn't seem to have worked in that regard.
Re the oil prices, I'm flummoxed. Our petrol station has raised the price of petrol from 94c to 103c in the last few weeks (and it is usually cheaper than some of the other nearby places).... however, the price of Brent crude is still in the mid 40s and West Texas intermediate is in the 30s. And WTI always used to be a bit higher than Brent...until last summer.
Why are we paying more for oil, again??? The factors this time have to be local.
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Subject: Re: The Great International Depression of 2008 & Beyond / Thu Feb 12, 2009 1:58 pm
It must be a winter thing where local consumption is up - remember the 8c that went on in the budget too. 94c was rock bottom and equivalent to 86c last autumn, which is as low as it has been in living memory. I'd hope it'll fall back over the next month or two, but who knows, maybe OPEC will stiff us all again? You're right about the windmills of course, but for now my car still runs on dinosaur juice.
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Subject: Re: The Great International Depression of 2008 & Beyond / Thu Feb 12, 2009 2:46 pm
The 8c levy did push the price up, however, a month ago at my local station, the price was down at 94c again. However, it has since gone back up to 103c. No levies that I can think of in the 4 weeks and the price rise has been gradual; a cent every few days.
Since the price per barrel hasn't changed, why are we being stiffed for this??
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Subject: Re: The Great International Depression of 2008 & Beyond / Thu Feb 12, 2009 2:50 pm
Is it the little bit of extra VAT that kicked in or some sneaky carbon tax?
Here it went from 94c to 101 in some places in a month. Is there a reason for this? Who could we ask?
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Subject: Re: The Great International Depression of 2008 & Beyond / Thu Feb 12, 2009 2:53 pm
It's rising in the States too ... good thing or bad?