Here we go again - banking crisis 2.0?

[kwerk]

when there is so much more to be critical about with regard his latest theories.

Such as? Where do you see the required growth coming from to maintain the current standard of living in Europe/UK?

And don't just say "stimulus". Where would the stimulus money come from? Debt? Who will pay off the debt, and how will they pay it off?

These guys?

 

[Castiel]

Such as? Where do you see the required growth coming from to maintain the current standard of living in Europe/UK?

And don't just say "stimulus". Where would the stimulus money come from? Debt? Who will pay off the debt, and how will they pay it off?

These things go in cycles, economies are dynamic, they do not just rely on a single area of growth, they react to consumer demand, new and emerging markets, restructuring and so on.....that is not to say that consistant growth is always sustainable, as we have seen it is not, but it also doesn't mean that the world is suddenly going to go bust either.

As for the current standard of living, well that is entirely subjective and differs from nation to nation and region to region.

Debt is not necessarily a bad thing, it is unstructured, unmanaged debt that is bad and at the end of the day, if it came to pass that global economies were collapsing then that debt would either be written off and defaulted on a'la China, Iceland etc or restructured in some way.........sometimes debt is simply devalued to such an extent to be virtually worthless and ultimately nobody wins if global economies collapse.

 

[StriderX]

These things go in cycles, economies are dynamic, they do not just rely on a single area of growth, they react to consumer demand, new and emerging markets, restructuring and so on.....that is not to say that consistant growth is always sustainable, as we have seen it is not, but it also doesn't mean that the world is suddenly going to go bust either.

As for the current standard of living, well that is entirely subjective and differs from nation to nation and region to region.

Debt is not necessarily a bad thing, it is unstructured, unmanaged debt that is bad and at the end of the day, if it came to pass that global economies were collapsing then that debt would either be written off and defaulted on a'la China, Iceland etc or restructured in some way.........sometimes debt is simply devalued to such an extent to be virtually worthless and ultimately nobody wins if global economies collapse.

Circles tend to be broken, especially when you allow your capitalism to turn into a corporatism, which in turn breaks politics itself, making it more or less irrelevant...other than being a pain in the ass now.

Consumer demand and the industrial supply, is a fact of life, i cannot argue against it, however that is not how our economy is structured, there are loads of unwanted and needless things in between, as well as on top of it all.

This idea that infinite money and resources exists, is starting to become an annoyance and you can only hide it in complicated mathematical equations for so long before its reality smashes the economy into the ground, like it did when the American housing system collapsed, due to hubris in a system (derivatives) around investing in people who could never pay the loans back.

 

[Castiel]

Circles tend to be broken, especially when you allow your capitalism to turn into a corporatism, which in turn breaks politics itself, making it more or less irrelevant...other than being a pain in the ass now.

Yet that is nothing that cannot be altered, corporatism (which depending on how it is structured is not necessarily a negative thing) can be regulated, the problem that I see is not one of a broken system but one where the system is being mismanaged to service the greed of the few at the expense of the many.....this will not last, as it has never lasted in any civilisation or society before ours.

Consumer demand and the industrial supply, is a fact of life, i cannot argue against it, however that is not how our economy is structured, there are loads of unwanted and needless things in between, as well as on top of it all.

Hence I mentioned restructuring.....not that I think what you are saying is entirely true, it is something that should considered with regard how we structure our economy and how we diversify our economy so that no single failure has undue impact on it.

This idea that infinite money and resources exists, is starting to become an annoyance and you can only hide it in complicated mathematical equations for so long before its reality smashes the economy into the ground, like it did when the American housing system collapsed, due to hubris in a system (derivatives) around investing in people who could never pay the loans back.

Money is infinite, money is a idea rather than a resource.....we ultimately decide the value of money and what criteria that value is based on. Resources are not always infinite or sustainable, so we diversify and innovate to compensate.

The fallacy is in the idea that any of these problems or debts are insurmountable, they simply are not......we created the system, we can dismantle it, rebuild it, redesign it, abandon it, change it, redefine it or what we decide to do with it.........the only question is, how much pain and where will it be targeted.....

 

[StriderX]

I just don't see how we can fix this mess without the vested interests, the power and pride of the ruling classes against the anger and embarrassment of the rest, turning into some pointless civil war...after all one could take the view that governments were just the barrier in between and the fact that people are disillusioned now. (turnout at elections)

Lets say that you have two pieces of wood and are trying to make a fire in the woods, but it is always raining (politics), someday its going to stop and the fire will begin.

(I know a bit far in thought, but its hardly like it hasn't happened before.)

I just don't think humanity is enlightened enough to not solve this without violence.

 

[Castiel]

I doubt it is in the best interests of those vested interests to see large scale societal collapse, which I why I disagree with you.

 

[StriderX]

I doubt it is in the best interests of those vested interests to see large scale societal collapse, which I why I disagree with you.

Of course, however that does not mean it wont either.

We shall see.

 

[kwerk]

These things go in cycles, economies are dynamic, they do not just rely on a single area of growth, they react to consumer demand, new and emerging markets, restructuring and so on.....that is not to say that consistant growth is always sustainable, as we have seen it is not, but it also doesn't mean that the world is suddenly going to go bust either.

As for the current standard of living, well that is entirely subjective and differs from nation to nation and region to region.

Debt is not necessarily a bad thing, it is unstructured, unmanaged debt that is bad and at the end of the day, if it came to pass that global economies were collapsing then that debt would either be written off and defaulted on a'la China, Iceland etc or restructured in some way.........sometimes debt is simply devalued to such an extent to be virtually worthless and ultimately nobody wins if global economies collapse.

Sounds a bit vague.

Right now it's all being subsidized by Chinese workers, like the ones at Foxconn who keep jumping off the roof of the factory because their life is so ****. Somebody somewhere actually has to build the ipads and harvest the food and sew the clothes.

If a default happens A. those workers/owners wont be getting paid anymore and B. they wont be investing what they already have back here anymore. That's why they are starting to put the eggs in Africa's basket. They are going to do the same thing to Africa that we did to them, while we're left peeing in the wind.

http://www.bloomberg.com/news/2012-05-09/china-investment-stops-buying-europe-debt-on-crisis-concern-1-.html

Then the next step is obviously YOU working at Foxconn to make the stuff yourself.

So far they have postponed it by promising to make your grandkids work at Foxconn. It's getting to the point where it's becoming obvious this is a fantasy.

Default (under what ever fancy name they are going to call it) is a done deal IMO.

 

[kwerk]

As for societal collapse, think back to the riots last summer. Now imagine that instead of simply wanting free trainers they are rioting because their benefits are no longer turning up.

What might that be like?

 

[The Halk]

I've re-read the thread since Kwerk came in, and I should probably apologise to him.

Kwerk, I've probably treated your posts as I would someone who is intentionally trolling, or who is posting with malice. I don't think it's the case. I think you're wrong, and so wrong that I just don't want to take the time to take things apart and put them back together - I don't think it'd be fruitful, nor do I think you'd listen. I think it'd be like trying to talk to David Icke. However I do think that at least in this thread you believe what you're saying and you're trying to back it up as best as you can. I don't think you do a good job, you make massive leaps of faiths and believe that x = y therefore z. You seem to believe what's essentially a conspiracy theory. My frustration is that you can't reason someone out of a position they didn't reason themselves into.

 

[Totality]

So legitimate losses, not hiding debt. And they still made $800m. Stop scaremongering.

Havent read the whole thread, but can't see where the article says they made $800m? It says they lost $800m in total after other gains were put against the 2bil loss?

Overall, after accounting for other gains, losses at JPMorgan's chief investment office (CIO) are estimated to come in at $800m in the second quarter.

 

[kwerk]

I've never once suggested there is a conspiracy. I don't know where you got that from.

Complete ineptitude by the government and many bankers? Yes.
Conspiracy? No.

 

[kwerk]

Everything was going great until crisis 1.0 right?

Then someone realized "hey these people dont have a hope in hell of paying off these mortgages!". Things started falling apart. The government steps in and bails out the system with more debt. Where did the debt come from though? It's just a promise to tax citizens in the future, that's all it is.

Things are going OK again for a while. Now people are like "wow these governments don't have a hope in hell in paying this debt off!". We already got to that point with Greece and Iceland. There are many more waiting to be next. Spain and Italy's bond rate just started creeping up. Norway and China are stopping buying this stuff (euro debt).
http://www.cnbc.com/id/47358827

Just look around at everyone you know. What do they do for a job and where does their income ultimately come from? Public sector worker? Benefits? Pensioner? Stocks? Government contractor? Someone who relies on those people as customers?

Where is that "wealth" coming from? Government debt (promises of taxing people in the future) bought by people who actually do the labour or have natural resources (i.e. China/germany/norway).

That income is not sustainable. No amount of hopeless optimism will make it keep working.

Not a conspiracy, simple facts.

So the JPM trade is a not a big deal really, it's the sovereign debt you should worry about. That's were JPMs money came from anyway via QE.

 

[kwerk]

That government debt is just the same as the people who were buying $800,000 houses on a $50k salary, along with some vague and hopelessly optimistically promise to do more work and earn more money later, after the adjustable rate reset. We saw how that worked out.

The time to do the 'more work' is coming up.

I dont think I can explain it any easier and apparently nobody can formulate an argument to dispute what I'm saying.

 

[Mercenary Keyboard Warrior]

Havent read the whole thread, but can't see where the article says they made $800m? It says they lost $800m in total after other gains were put against the 2bil loss?

key is they talk about the second quarter (which ends in June)

Your confusing Q1 and Q2

 

[Mercenary Keyboard Warrior]

That government debt is just the same as the people who were buying $800,000 houses on a $50k salary, along with some vague and hopelessly optimistically promise to do more work and earn more money later, after the adjustable rate reset. We saw how that worked out.

The time to do the 'more work' is coming up.

I dont think I can explain it any easier and apparently nobody can formulate an argument to dispute what I'm saying.

Im not sure I follow exactly what your saying half the time so its hard to argue.

BUT, I tell you one thing I would bet my last $ that rather than see a massive total collapse they would simply allow a stonking great inflationary bubble to massively reduce the effective debt and asset values.

Debt is only a problem based on its relativity to income, if you reduce that ratio massively it kind of fixes the issue. The big issue from the inflation is becoming uncompetative globally, look at how even the rapidly growing economies such as China and India are desperate to control inflation. They see their price advantage being eroded if they allow domestic inflation to remain significantly higher than the west.

 

[kwerk]

BUT, I tell you one thing I would bet my last $ that rather than see a massive total collapse they would simply allow a stonking great inflationary bubble to massively reduce the effective debt and asset values.

We already had a somewhat inflationary bubble from all the QE. The banks used it to speculate on food and commodities and we ended up with the Arab Spring.

If they inflate again the way Greece wants, giving money directly to people instead of banks, it will do the same thing. Food prices go up, everything go up. It's not that much different from deflation in terms of quality of life. You're either getting paid 1/2 what you used to or stuff is costing 2x what it used to. Same effect really.

The amount of austerity that is required to try to fix things is HUGE. Like 50% cuts. And it only MIGHT work. The longer they postpone it, the less likely it would work.

No matter what quality of life is going to drop for 99% of people.

Not to mention there would be no new debt if they inflated away the old debt. Nobody would buy it anymore. That would equate to insta-austerity.

 

[kwerk]

William Hague is on the right thought track, even though he's a complete ***. He should have said work harder AND longer AND get paid less though.

That's pretty much all the UK can do, print money, devalue, start exporting, work harder, longer and for less, and consume less. They are lucky they never switch to the euro because they still have that option to devalue. Oh yeah AND they probably have to raise taxes AND make public sector cuts.

http://www.telegraph.co.uk/news/politics/william-hague/9262219/Work-harder-William-Hague-tells-Britons.html

 

[Mercenary Keyboard Warrior]

We already had a somewhat inflationary bubble from all the QE. The banks used it to speculate on food and commodities and we ended up with the Arab Spring.

How on earth do you link those things together.

Arab spring due to QE in the UK, are you serious?

The majority of the inflationary bubble was not due to QE really it was due to raw commodity prices for lots of things being higher.

I work in an industry that is susceptible to a lot of these raw material (food based) and they are nothing to do with QE I can tell you that for a fact the vast majority have been due to crop issues due to adverse weather.

Its supply and demand not QE thats been causing the issues, a lot of the things you would claim are speculated on are not, they are advance contract purchased.

 

[singularity]

We already had a somewhat inflationary bubble from all the QE. The banks used it to speculate on food and commodities and we ended up with the Arab Spring.

If they inflate again the way Greece wants, giving money directly to people instead of banks, it will do the same thing. Food prices go up, everything go up. It's not that much different from deflation in terms of quality of life. You're either getting paid 1/2 what you used to or stuff is costing 2x what it used to. Same effect really.

The amount of austerity that is required to try to fix things is HUGE. Like 50% cuts. And it only MIGHT work. The longer they postpone it, the less likely it would work.

No matter what quality of life is going to drop for 99% of people.

Not to mention there would be no new debt if they inflated away the old debt. Nobody would buy it anymore. That would equate to insta-austerity.

The debt can never be repaid and is growing at a much faster rate than, the economy (this can be said to be true for several major economies)
So in the end these economies will either default or get swamped by interest payments and then default.
The timing of default is very important the longer it takes, the bigger the problem.
The defaulting of a significant European economy will cause chaos in the financial industry which will have a knock on effect on most other industry.
Without real growth through productivity gains, there can be no recovery, productivity gains can not happen with high basic costs, energy, housing, taxes, etc. However greater debt and QE cause these costs to rise, Reducing the public sector and hence increasing unemployment also causes these costs to rise, globalisation and the growth of large hitherto small economies also causes the costs to rise, a shortage and lack of access to natural resources causes these costs to rise,
Productivity can be helped by long term investment in research and developement and harvesting I.p., the UK is hopeless at doing this and would rather sell everything it has.

The unregulated derivatives market is a whole different ball game.