global financial crash yay!

RobJC

Check your weapon
In the Banking sector, most of the 10 top tier got caught out believing the hype of packaging good debt with bad (CDO) to make a fast buck - the trend for the last 5 years has led to huge returns (and huge rewards for those who did it), but that now has come to a crunch. Most banks have taken it on the nose (in some cases to the detriment of their staff to shore up their 3rd Q results)) and the "message" is that it will benefit the banking sector if they are clever enough exploit the market. This is the usual profit -annoucing bluster, and no one in the sector believes that we are out of the woods in any sense. Whether it leads to a big bang, who knows, but we should care - anyone welcoming it must either be self-sustainable or mad.

Government have also lived off this trading method as well, down to local/council level (as seen by the Northern Rock debacle - which is why the BoE had to bail them out).

There is a lot to run in this story yet.
 

vimothy

yurp
In the UK - I think that the US credit-crunch, naturally impacting on UK lenders (through their diversified portfolios), will lead to rising mortgage rates, a fall in house-prices and probably collapse in the buy-to-let market.
 

3underscore

Well-known member
The problem with any of the banks announcing losses right now is that it is conjecture. They are announcing losses on assets that they cannot price, cannot sell, and are merely guessing at what their value is as best they can. Each bank will be pricing differently, and every bank will be wrong. The credit markets are closed, and they are teetering on every bit of news that comes out. The US is pretty much likely on the way into a recession, and it would be a weird change of history if it doesn't drag others in with it. People experienced enough to know are marking this back to being comparable to 1990 rather than 1998. It is really bad right now.

At the same time you have petrochina as the biggest market cap firm in the world on the base of some very weird, protectionist small percentage IPO. You have oil at $97. You have commodities booming, You have SWFs looking to pour money into everything. You have hedge funds and (especially) Private Equity firms over capitalised. There are many things that could turn this around, but as delinquencies on loans begin to seep into credit cards and housing negative equity sets in, it isn't pretty.

For NR, they had no problem other than a market on which they depended closing up on them. The assets they have are good quality, but you can't sell anything in that market unless it is through a state guarantor (FanMae, FredMac - that's it) and that doesn't exist in the UK.

CDO's and CDOsq were something that was a symptomatic bad of the SWFs and seek for earning money in a non-volatile market. Many people were responsible, but it was dependent upon one thing. Housing prices went up. And for the first ever time, the whole US (bar NY) ha correlated to one on housing declines. A big house of cards.
 
N

nomadologist

Guest
I'm glad I put money on the fact oil would go above $100 a barrel before the end of the year!!

Vim, nothing is going to take care of the coming energy crisis.

Those towelH**** are going to have all the power. We'll be kissing Iran's ass within a couple of months.
 

vimothy

yurp
I'm glad I put money on the fact oil would go above $100 a barrel before the end of the year!!

Vim, nothing is going to take care of the coming energy crisis.

Maybe not, but you have to admit that, after adjusting for inflation, the price of oil has hardly risen at all over the last few decades.

Those towelH**** are going to have all the power. We'll be kissing Iran's ass within a couple of months.

It shouldn't worry you, though. America only gets about 10% of its oil from the Mid East.
 
N

nomadologist

Guest
Maybe not, but you have to admit that, after adjusting for inflation, the price of oil has hardly risen at all over the last few decades.



It shouldn't worry you, though. America only gets about 10% of its oil from the Mid East.

This is wildly untrue. ADJUSTED for inflation, oil prices are still $15-10 higher than they were during the energy crisis during the mid-70s.

The whole point is that our oil reserves have run out. It's Iran and Putin all the way. Luckily Iran has a huge natural gas reserve that we'll probably tap out, too.
 

gek-opel

entered apprentice
5 minutes after Bush's bomb drop....I thought they already had, actually.

I wasn't sure of that- though allegedly when they do it will create more pressures on the Dollar as currency and thereby push the American economy ever closer to oblivion (hence necessitating the invasion?)
 

vimothy

yurp
This is wildly untrue. ADJUSTED for inflation, oil prices are still $15-10 higher than they were during the energy crisis during the mid-70s.

So?

oilprices.jpg


Prices are down on their 1980 high, the peak of $95 per barrel.

If we exclude the spikes caused by geopolitical events, real oil prices have followed a downward trend from the mid-1970s until the late 1990s.

Now look at the last couple of years. Starting in 2003, crude prices climbed from $30 to around $45 by the end of 2004. Since the beginning of 2005, they have gained another 50%. This may be related to the second war in Iraq and the general political situation in the Middle East. But note that even after the recent run-up, a barrel of oil costs about the same as in mid-1982, when prices were going down.​

In his challenging 1981 book The Ultimate Resource, Simon showed that resource prices had generally decreased over time. The relative price of oil (in terms of other goods) has fallen by perhaps as much as two-thirds between the 1860s and today. During the same period, the price of oil in terms of salaries has decreased by more than 90%.​

http://www.mises.org/story/1892
 

vimothy

yurp
5 minutes after Bush's bomb drop....I thought they already had, actually.

It kind of has - Iran currently receives most of its cash for oil in Euros and other (non-dollar) currencies. It really wants to set up an oil bourse, i.e. an exchange (like NYMEX and IPE) which trades in Euros. I don't think that it's something that can be acheived overnight, and this stuff was still at the rumour stage in 2006.

EDIT: Iran Oil Bourse, wikpedia entry
 

crackerjack

Well-known member
I wasn't sure of that- though allegedly when they do it will create more pressures on the Dollar as currency and thereby push the American economy ever closer to oblivion (hence necessitating the invasion?)

'Ere ya go.

As of October 3, 2007, Iran currently receives non-dollar currencies for 85% of its oil exports with euros composing 65% and yen 20%. Iran is currently planning on moving the remaining 15% of dollar denominated oil exports to other currencies such as the United Arab Emirates dirham.[2]

http://en.wikipedia.org/wiki/Iranian_Oil_Bourse

and from today's Guardian
The pound climbed to $2.10 for the first time since 1981 this morning, boosted by speculation that China was preparing to shift its foreign reserves out of dollars.

http://business.guardian.co.uk/story/0,,2206584,00.html
 

crackerjack

Well-known member
I don't really know how significant it is. At a guess, I'd say quite but not very, if only because those predicting it means the death of America tend to sound like they're making a wish.

Anyone here who knows what they're on about (3underscore? robjc?) care to enlighten us?
 
N

nomadologist

Guest
So?

oilprices.jpg


Prices are down on their 1980 high, the peak of $95 per barrel.

If we exclude the spikes caused by geopolitical events, real oil prices have followed a downward trend from the mid-1970s until the late 1990s.

Now look at the last couple of years. Starting in 2003, crude prices climbed from $30 to around $45 by the end of 2004. Since the beginning of 2005, they have gained another 50%. This may be related to the second war in Iraq and the general political situation in the Middle East. But note that even after the recent run-up, a barrel of oil costs about the same as in mid-1982, when prices were going down.​

In his challenging 1981 book The Ultimate Resource, Simon showed that resource prices had generally decreased over time. The relative price of oil (in terms of other goods) has fallen by perhaps as much as two-thirds between the 1860s and today. During the same period, the price of oil in terms of salaries has decreased by more than 90%.​

http://www.mises.org/story/1892

You get your information from extremely biased sources.
 
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