Is the world heading into recession?

watterinja · 27-02-2009, 01:53 PM

I'm beginning to see the whole Stock-Market fiasco as one big Casino, fueled by dishonest snake-oil-salesmen, thieves & charlatans.

That is NOT wealth creation...

**Rural Surin** · 27-02-2009, 02:31 PM

Originally Posted by Loy Toy

Mr. Bloomberg said we are so nuff said!

Fcuk I should of brought gold!

Can't eat gold LT.

**Rural Surin** · 27-02-2009, 02:33 PM

Originally Posted by watterinja

I'm beginning to see the whole Stock-Market fiasco as one big Casino, fueled by dishonest snake-oil-salesmen, thieves & charlatans.

That is NOT wealth creation...

....wealth created by imagery. Hocus Pocus, nothing up my sleeve.

**Butterfly** · 27-02-2009, 02:43 PM

Originally Posted by watterinja

I'm beginning to see the whole Stock-Market fiasco as one big Casino, fueled by dishonest snake-oil-salesmen, thieves & charlatans.

it's a poker game where the table is a mix of professional players, petty criminals, and amateurs.

**Rural Surin** · 27-02-2009, 02:45 PM

Originally Posted by Butterfly

Originally Posted by watterinja

I'm beginning to see the whole Stock-Market fiasco as one big Casino, fueled by dishonest snake-oil-salesmen, thieves & charlatans.

it's a poker game where the table is a mix of professional players, petty criminals, and amateurs.

And they're all bluffing with 'poker faces' in hand.

watterinja · 27-02-2009, 02:46 PM

^ Agreed. It is not a safe place to invest savings - only one's play money.

I have always said this.

**baldrick** · 27-02-2009, 02:53 PM

was that report of forged stock certs just the tip of the iceberg ?

**Spin** · 27-02-2009, 04:06 PM

This is agood for a laugh, mind you it is on the arse-wipe website CNBC

Half of Bankers Would Quit UK If Bonuses Capped

Half of British bankers would consider leaving the country if a cap were put on their cash bonuses, a survey showed on Friday.

The poll by jobs website eFinancialCareers.com found that 49 percent of British-based bankers would consider voting with their feet such a limit to their income were introduced. That figure rose to 71 percent among financiers with six to ten years experience.

"Were bonuses to be capped unilaterally in the UK, the country would run the risk of an exodus of top financial talent," said John Benson, chief executive of eFinancialCareers.

However, the number of alternative locations in which to work has shrunk dramatically as the credit crisis has hit hiring and pay around the world.

"(That) 71 percent (of people with six to 10 years experience) would move abroad I don't doubt, given the opportunity. That last word is the operative word," said Shaun Springer, who heads recruitment firm Napier Scott.

"If you could tell me of the areas that could harbour those skill sets (of bankers), please let me know -- I'll be flying out there."

U.S. President Barack Obama this month set a $500,000 cap on executive pay at state-backed banks -- pocket money on Wall Street before the crisis.

European banks are also under pressure to curb bonuses, especially those that have taken government help, and many have cut them.

Thirty-three percent of bankers polled said they believed caps on cash bonuses are the most likely change to be implemented over the next year and 39 percent support such caps.

The poll was conducted between Feb. 16 and Feb. 20, with 888 financial professionals responding.

source

This is my favourite bit...

"Were bonuses to be capped unilaterally in the UK, the country would run the risk of an exodus of top financial talent,"

Is that a promise or a threat, hopefully a promise.
Two small problems:
1. If they were talented the world would not be in serious trouble right now
2. If they leave England, where the fuck are they gonna go and lead their reckless coke-snorting banking lives? Iceland? Estonia? New York?

Give me a foking break, these fuckers should shut up and just be happy that there isnt anybody with the balls big enough to start throwing them in jail.

**Spin** · 27-02-2009, 04:13 PM

Sweden in recession

Swedish Economy Shrank 4.9% in Fourth Quarter From Year Earlier

Feb. 27 (Bloomberg) -- Sweden’s economy contracted for a second consecutive quarter in the three months ended December as demand for its exports slumped because of the global economic slowdown.

Gross domestic product contracted an annual 4.9 percent, adjusted for the number of working days, following a revised 0.1 contraction in the previous quarter, Statistics Sweden said today. The median forecast of 14 economists surveyed by Bloomberg was for a 2.1 percent contraction. GDP shrank a seasonally adjusted 2.4 percent from the previous quarter, marking the third consecutive three-month period of falling production.
story

**Butterfly** · 27-02-2009, 05:29 PM

Originally Posted by Spin

Half of Bankers Would Quit UK If Bonuses Capped

I guess that wouldn't be a bad thing after all,

**Spin** · 27-02-2009, 07:48 PM

Anybody want any Citi shares? Going cheap! 1.19$ same price as they were about 25 years ago

Bailed out and the street aint liking it one bit....

Citigroup Gets Third Bailout as Government Plans to Raise Stake

government will raise its stake in Citigroup Inc. in the third attempt to bail out what was once the world’s biggest financial institution.

The plan will involve the Treasury Department converting as much as $25 billion of preferred shares into common stock, the Treasury Department said in a statement today. The government said it will make the swaps only if private holders agree to the same terms. The U.S. doesn’t immediately intend to inject additional money after channeling $45 billion to the New York- based company last year.

“This gradual step-by-step process doesn’t work, or has not worked so far,” said Marino Valensise, chief investment officer of London-based Baring Asset Management Ltd., who helps oversee about $30 billion for clients.

Citigroup Chief Executive Officer Vikram Pandit is trying to bolster confidence after his bank’s stock price sank to $1.95 last week -- the lowest price in 18 years. The government is supporting the company, which had 200 million customer accounts in more than 100 countries at the end of last year, because of concern its failure might roil already weak global markets.

Federal Reserve Chairman Ben S. Bernanke said Feb. 25 he wants to avoid nationalizing Citigroup and other large banks in a way that would wipe out shareholders and leave the U.S. in full control. Bernanke said the government might end up owning a “substantial minority” of the bank.

more here

Dan · 27-02-2009, 10:09 PM

Originally Posted by Spin

This is my favourite bit...

"Were bonuses to be capped unilaterally in the UK, the country would run the risk of an exodus of top financial talent,"

Is that a promise or a threat, hopefully a promise.
Two small problems:
1. If they were talented the world would not be in serious trouble right now
2. If they leave England, where the fuck are they gonna go and lead their reckless coke-snorting banking lives? Iceland? Estonia? New York?

Give me a foking break, these fuckers should shut up and just be happy that there isnt anybody with the balls big enough to start throwing them in jail.

I agree. It's like listening to those cunts at the CBI. Whenever anyone suggested that companies making squillions of pounds a year should offer to the Exchequer something more than their fingernail scrapings, they also squeal about how uncompetitive the business environment is and how all the companies will instantly decamp to Southern Namibia or Waziristan of some such place. Fucking pricks. I was, however, cheered to see that the British police are predicting a summer of violent demonstrations so we can always hope (forlornly) that these fuckers will be hanging from the lampposts some time soon.

**Butterfly** · 27-02-2009, 11:01 PM

Originally Posted by Spin

Anybody want any Citi shares? Going cheap! 1.19$ same price as they were about 25 years ago

they should nationalize the fucking bank with no compensation for investors, I think that would send a nice message to investors and the board,

**Spin** · 28-02-2009, 02:18 AM

The Worst Bailout Decision Yet more AIG nonsence.

-The latest rescue of AIG may include a bailout for the credit bears
-If so, this would give them additional fuel for attacking the financial system
We read about a bailout decision yesterday that we view as the worst decision the government has made in this crisis. We became so sick to our stomach that we had to go for a walk after we read it.
That’s saying a lot. We’ve detailed how the Fed has had 3 FOMC meetings where they’ve had to reverse course within just a few days. We’ve written how the government stopped Bear from defaulting, yet let Lehman go, causing a 21st century-style run on the bank. We illustrated how the FDIC abruptly stopped making bondholders whole, causing yet another downward spiral. Yet, yesterday’s news story was far worse than that.
And we’re not even talking about the 3rd rescue of Citi, which was formally announced this morning. This puts it ahead of the 2 rescues of Fannie and Freddie, though it lags the champion of serial rescues (RBS). This week, the Fed Chairman calmed the equity market by saying the government does not intend to nationalize banks now, but those same words caused the bond market to freak out because they mean the government will continue to be reactive, and not proactive; acting only after the credit bears have made money. Yet, yesterday’s news story was also far worse than that.
We Are Going To Bail Out the Credit Bears!!!!!!!!
The story that got us so flustered, so disgusted, so angry was the one with the Bloomberg headline “AIG Rescue May Include Credit Default Swap Backstop.”
It turns out that AIG is such a basket case that they may be going back to the Feds for help for a 3rd time. But if this story is correct, our government will explicitly backstop the CDS’s that AIG wrote.
This would be an enormous guarantee. That’s bad enough. But it effectively means that we will be mortgaging our children’s future to bail out the very people who’ve bet against this country!!!
Now there’s nothing wrong with shorting, and CDS’s are not the cause of the problem. The problem is that this country took on too much debt. But CDS’s, which have effectively allowed for the leveraged naked shorting of credit, have vastly intensified the problem.

While there is nothing wrong with shorting, every investor who bet against this country via CDS’s knew they were taking on counterparty risk; only large, sophisticated investors were allowed to play in this market. If this backstop goes through, we will be using government money to make sure that these bears get massive payoffs. Why?
Now the rationale for rescuing AIG (and any of these firms) is that things would be worse, and we risk financial collapse, if they failed. That is a legitimate argument.
But from a practical standpoint, the S&P lost more than 25% of its value in the 11 months before AIG was rescued. It is down more than 35% in the 6 months since AIG was rescued, and the corporate bond market was hit so badly that it is pricing in 600 on the S&P.
We fail to see how things could get much worse, especially since stocks are likely to eventually get to 600 anyway, which is an argument for just letting AIG go.
A more important argument for letting AIG fail is that the people who’ve bet against our country would be crushed. While letting AIG fail would likely cause more panicky selling in the stock market, this would be nothing we haven’t seen before. Only the bear community would be significantly damaged in the process this time and that might thus create THE bottom.
A few weeks ago, we heard that a TV commentator went ballistic over the fact that some homeowners might get a bailout, and this received a lot of attention in the media. That is nothing compared to this proposed bailout of the very people who’ve bet against the U.S.

We rarely express our personal views on public policy as we’ve just done, but there are a couple of reasons we’ve done this.
First, our hope is that someone, somewhere, reads this and stops this proposal in its tracks. It’s one thing to bet against the U.S.; it’s another to expect future generations to bail out and pay off on that bet.
Second is to express the investment meaning of this. If this CDS bailout happens, it will provide the credit bears with fresh capital to stage bear raid after bear raid, just as they’ve continually forced governments to incrementally nationalize RBS and Citi.

The Fed Chairman unwittingly gave the credit bears the OK this week to stage round after round of credit attacks, implying that the government would only act after the bears had made money.

source

The implications of the government agreeing to backstop the credit default swap are scary from the viewpoint of once you start, where do you stop.

**robuzo** · 28-02-2009, 07:32 AM

Michael Lewis Interview | Steve Eisman
Steve Eisman would pay Goldman Sachs (NYSE: GS) and Deutsche Bank (NYSE: cPanel®) X% of the principle amount a year, say 10% or 8%. In exchange, if the subprime mortgage pool goes bad, Deutsche Bank or Goldman Sachs has to pay Steve Eisman the whole principle. So, if he is betting on, as he did, say $500 million of subprime mortgages, and he wants to short them, he pays $5 million a year to do that, but if all of a sudden they go bad, they have to pay him $500 million. I don't know; those numbers aren't exactly right, but in any case, that is the idea.
So, he shorted the subprime mortgage market by picking the best things to short. And what is amazing is that these firms created this casino in these bets, and that casino is bigger than the original market. So when you look at what is going on now and you are mystified why the Treasury and the Fed and whoever else is throwing money at them, is throwing $150 billion at AIG (NYSE: AIG) to prevent it from going down and you ask why is an insurance company getting $150 billion in this crisis? What is that about? Well, what that's about is that Goldman Sachs, having taken Steve Eisman's side bet, turned around and laid it off on AIG. And AIG foolishly, essentially, ensured the subprime mortgage market. So, what the Treasury is doing is paying off AIG's bad debts to Goldman Sachs, so the money goes to AIG just so it can go to Goldman Sachs, so it can go to Steve Eisman.

**robuzo** · 28-02-2009, 07:35 AM

Excellent article on AIG here:
The Beautiful Machine
The Beautiful Machine
Greed on Wall Street and blindness in Washington certainly helped cause the financial system's crash. But a deeper explanation begins 20 years ago with a bold experiment to master the variable that has defeated so many visionaries: Risk.

----
Basically, the clever bastards outsmarted themselves.

Dan · 28-02-2009, 08:23 AM

Picked this one up from the peakoil forum:

Feb. 27 (Bloomberg) -- When Berlin resident Simone Klostermann returned from vacation and couldn’t find her Mercedes SLK, she thought it had been towed. Police told her the 35,000- euro ($45,000) car had been torched.

“They’d squirted something flammable into the car’s engine block in the gap between the windshield and the hood,” said Klostermann. “The engine was completely destroyed.”

The 34-year-old’s experience isn’t unique in the German capital. At least 29 vehicles were destroyed in arson attacks this year, most of them luxury cars, according to police. The number is already about 30 percent of the total for 2008. The latest to go up in flames was a Porsche, on Feb. 14, two days after a Mercedes was set alight in a public car park.

Bloomberg.com: Exclusive

Not quite the People's Court but from little acorns...

**Butterfly** · 28-02-2009, 09:10 AM

Originally Posted by robuzo

The Beautiful Machine

^^ yes, nice read, I quite like the history of such deals

it has always been about risk and risk management, without them there wouldn't be any need for derivatives, and some non-derivatives financial products would simply disappear because no way to cover certain risk

Risk management has contributed greatly to sustainable growth of companies, if it goes away, sustainable growth will no longer be achievable for those companies, and they will be exposed to more chaos than they already have.

watterinja · 28-02-2009, 10:24 AM

Time to convert to a single world currency & single financial oversight. Stiff jail-time to the rogues & lifetime ban from further financial dealings.

**lom** · 28-02-2009, 10:58 AM

Originally Posted by Butterfly

it has always been about risk and risk management, without them there wouldn't be any need for derivatives, and some non-derivatives financial products would simply disappear because no way to cover certain risk

I would consider it to be a good thing if derivatives disappears completely.

Originally Posted by Butterfly

Risk management has contributed greatly to sustainable growth of companies, if it goes away, sustainable growth will no longer be achievable for those companies, and they will be exposed to more chaos than they already have.

Companies should only grow in their natural pace by reinvesting their profits.
Little money to reinvest = small growth.
Injecting external money (loans for instance) into a company will only cause a cancer growth.
It is equal to injecting steroids into a 5 year old in order to make him a teenager within a few month.
The chaos we have now in the economical markets is because companies are on steroids.

**Norton** · 28-02-2009, 11:29 AM

Originally Posted by lom

Companies should only grow in their natural pace by reinvesting their profits.

As with all things, the most elegant and effective solutions lie in simplicity.

Individuals need to adhere to the same "rule".

watterinja · 28-02-2009, 11:53 AM

Originally Posted by lom

Companies should only grow in their natural pace by reinvesting their profits.
Little money to reinvest = small growth.
Injecting external money (loans for instance) into a company will only cause a cancer growth.
It is equal to injecting steroids into a 5 year old in order to make him a teenager within a few month.
The chaos we have now in the economical markets is because companies are on steroids.

Very good analogy. Excellent.

**Panda** · 28-02-2009, 04:10 PM

You got to remember that a lot of the money lent to companies to advance their business didn't really exist in the first place. It only existed on paper and in the hope that the companies DID produce real products of some worth to justify the creation of the paper money. Certainly a case of putting the cart before the horse, but works quite well as long as the sales/productivity keeps expanding in line with the money supply. The solution when the system hits a glitch as it has now is to print more money and devalue its worth against real goods and services (which is in fact the only true measure of wealth in the real world).

The whole world has come to a point now where the value of its paper money has got to undergo an adjustment to put it back in line with things of real value.
Unfortunately, inflation and the subsequent reduction in our purchasing power for labour is the price we all have to pay for things to get back into balance.
And printing more paper money and borrowing more to devalue its worth against real goods and services is the best way to do that. Its an adjustment we had to have and its going to happen no matter what governments do to keep the bubble alive. Bottom line is that we are all going to work a bit harder for less in the future to pay for the excesses of the past. There will be winners and losers in the readjustment. For the most part, the working class majority will be the losers. Which can be a bit of a problem for governments who rely on votes in a democracy. So basically, the politicians lie to us while getting on with business.

**Whiteshiva** · 02-03-2009, 10:27 AM

Originally Posted by lom

Companies should only grow in their natural pace by reinvesting their profits.

And how would you then go about starting up a company?

Originally Posted by lom

Injecting external money (loans for instance) into a company will only cause a cancer growth.

Most companies manage their debts without problems, and so do most people. Giving and receiving credit is what makes the system work - remember most companies fail because of liquidity problems, not because they are unprofitable. Remove the access to liquidity, and more healthy firms will fail.

Eliminating loans will simply not work, think about it - you would not even be able to get money from an ATM, because once you do so, the bank that holds your funds is now indebted to the bank issuing the cash. In fact, even the use of paper money is a loan - it is only a guarantee that the state will honour the value of the bank notes.

So, short of a barter economy loans and credit is here to stay. One could argue that they should be better regulated, but eliminated - no chance.

**Butterfly** · 02-03-2009, 10:57 AM

Originally Posted by lom

I would consider it to be a good thing if derivatives disappears completely.

then you can expect may existing financial products to disappear or perform very badly, mutual funds, ETFs, Money Market etc... maybe not a bad thing at the end.

Originally Posted by lom

Companies should only grow in their natural pace by reinvesting their profits.

Easier said than done. It's a competitive world out there in case you didn't notice, slow growth is a death sentence, banks wouldn't lend you, and competition will eat you slowly if you don't outpace yourself. It's really a Death Race.

Originally Posted by lom

The chaos we have now in the economical markets is because companies are on steroids.

Actually it's not companies, but Demand that is inflated. We expect more, we demand more, and we want more, and all at bargaining prices, and if this wasn't enough we demand constant innovations from those same companies. They are under a lot of pressure.

Originally Posted by Whiteshiva

remember most companies fail because of liquidity problems, not because they are unprofitable. Remove the access to liquidity, and more healthy firms will fail.

Amen !!!

Originally Posted by Whiteshiva

Eliminating loans will simply not work, think about it - you would not even be able to get money from an ATM, because once you do so, the bank that holds your funds is now indebted to the bank issuing the cash. In fact, even the use of paper money is a loan - it is only a guarantee that the state will honour the value of the bank notes.

Very good example. concrete and simple. People forget all the innovative products we are using today and takes for granted. Take away the source of such products, and we will have nothing left. Doing a transfer to Thailand to pay for your whores would take months if it wasn't for derivatives (currency swaps) and credit (cash advance).

Thread: Is the world heading into recession?

Thread Tools

Display

The Downfall of AIG's 'Beautiful Machine'

Thread Information

Users Browsing this Thread

Posting Permissions