The world financial crisis II

I am beginning to wonder if the entire global financial community is rotten to the core. Wall street has taught 'em well. Maybe staying completely away from the stock market is the best advice one can give anyone. I don't care what the bullshit artists (the financial pundits) say, this stock market freefall is going to impact on everyone's pension benefits.  Is ALCOA going bankrupct? What about IBM?

http://business.theglobeandmail.com/servlet/story/RTGAM.20090107.wsatyam0107/BNStory/Business/home 

India rocked by financial scandal at large computer company

How many more of these deaths will we see?

http://www.smh.com.au/news/world/business-leaders-drastic-way-out-of-crisis/2009/01/07/1231004078888.html

If you do still insist on investing in the stock market here is as close as possible to a full-proof way to make money.

Every time the stock market goes up for at least the next five years, consider it a great selling opportunity, and sell like crazy. Even short sell as much as you can, and you will come out a winner. If you go in the direct opposite direction from what all the press and financial pundits recommend, you are almost guaranteed to become rich.   

 By-the-way the TSX is down more than 300 points today so far.

http://investdb.theglobeandmail.com/invest/investSQL/gx.index_today?pi_symbol=TSX-I&pi_action=

Corporations were invented in the first place basically to allow owners who make stupid, unethical, or otherwise bad decisions to get away without have to pay the prioce for their nonsense, or they allow the owners to avoid paying their fair share of income taxes.

 That's what corporations do, they limit the liability of the owners. They are a scam, always have been, always will be.

just try and have a discussion with a big supporter of capitalism about whether or not corporations should actually exist, and listen to the bullshit that will be shoveled in your direction.

     There wiill be another stock market shock when all of the fourth quarter data comes in.

It's getting real ugly out there folks - you ain't seen anything like this before.

What was it that gave it away that perhaps we should not be putting our retirement income into the stock market? Whoever came came up with this brilliant strategy should be drawn and quartered as many million of people in North America are going to have their pension dreams destroyed in the not too distant future.

http://www.businessweek.com/bwdaily/dnflash/content/jan2009/db2009017_858862.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis

This should be good - these financial gurus are suggestioning we will have a recovery with many more millions out of work. Idiots.

http://www.businessweek.com/investor/content/jan2009/pi2009017_894787.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis

 Obama made his speech this am, laying out his plan to address the crisis and calling for action.   I expect that in the coming days and weeks there will be much commentary and disscussion about it in pundit world, news world and all over the intertubes. 

 Here's a link to the Kos blog that has links to the video and text of the whole thing, though I expect it will be all over the place in a few hours it's just easier to link to it all here.

 Obama's Economic Speech 

 I did watch it live but beyond just being amazed at hearing a guy who can actually speak and seem like he has half a brain I haven't got into thinking about the details or what it means.

  I did like the connection and vision he had around alternative energy infrastructure and connecting ecological issues with economic ones. That at least, was refreshing to hear from someone in his position. 

 I may get back to it later but I have to go shop for a new bathtub.  

Radical cheap: $1,000 homes

Another buying opportunity

http://investdb.theglobeandmail.com/invest/investSQL/gx.show_chart?pl_comp_id=&pl_errmsg=&iaction=Chart&pl_primary_listing=TSX-I&iaction=Chart&pl_additional_listing=0&pl_period=INTRA&pl_chart_type=+&pl_sh_movement=0&pl_long_movement=0

Galbraith said saavy investors of the 1920's and 30's thought similarly - that there were bargains to be had. As the stock shares of relatively viable and successful companies were halved and reduced to a fraction of that, bigger fish swallowed smaller fish whole. And then by the next 24 months, those share values declined even further. Things became a lot worse before they were better. Political conservatives still say it wasnt New Deal socialism which raised the US economy from the depths but world war. The thing of it was, money was spent and lots of it, both public and private in North America. Hitler's Nazis followed Keynes to a large degree with borrowing heavily and spending liberally on infrastructure and military. And those stick in the mud advocates of laissez-faire capitalism in North America were quickly ignored in favour of the fight against fascism. Military recruiters in the US and Canada said they'd never seen so many emaciated young men unfit for combat by the late 1930's. Keynesian-militarism was born aka upside-down socialism for the rich.

Ah, gee, what a surprise.  
  
Albertans with 'no equity left' going bankrupt: trustee

 http://www.cbc.ca/canada/calgary/story/2009/01/09/cgy-alberta-debt-bankruptcy.html

A month ago our federal government in collusion with the press were in denial about a recession.

All you had to do was walk down some streets in any city and see the boarded up construction sites to realize we were in deep do-do economically. 

It's just like the weather - if you want to know what the weather is doing you don't need someone to tell you - just look out the window.

It seems we have taken leave of our common senses.

Oh great, it could be a world of legal wrangling according to rightwing librarians and insurance companies. Isnt the most privatized and most insured health care in the US already the most expensive in the world and producing the lousiest national health statistics in a comparison of richest countries?

Is any of this reaching financial planners and fund managers who work within the system, handling our pensions?

And thanks for the very enlightening points being made in this thread.

Yea, that's quite the rally all right. 

Canadian Solar only droped about $50. in the past year. It might have dropped more but it basically couldn't, as it's stock was close to being worthless. 

I'll put my money on Buffett's million dollar bet any day of the week.

These mutual fund fees remind me of the absorbidant fees charged by the cell phone companies.

http://money.cnn.com/2008/06/04/news/newsmakers/buffett_bet.fortune/index.htm

Global systemic crisis – New tipping-point in March 2009: 'When the world becomes aware that this crisis is worse than the 1930s crisis'

I remember from my grade 10 latin classes 'pecu' was the word for money. Perhaps that's relevent if we are becoming a service economy.

I meant nationalising failing private banks.  To the best of my knowledge none of the major Canadian banks (CIBC, TD, etc.) came nearly as close as the American ones to failing, so this might never have been as much of an issue in Canada.  But it was the private banks I was talking about, not the central ones.

I'm scooping ouy NASDAQ:AREO, they have a really interesting product that sold like hot-cakes over the xmas season.

Canadians have already bailed out Canada's increasingly deregulated banks in the recent past big time. They've gambled away billions in oil and gas ventures in the 1980s and 90s and lost large with Canary Wharf in London. They wanted to be too big to fail, too, like their US counterparts. But pressure from the NDP and other groups helped stave off big bank mergers in Canada.  But youre right, this high risk mortgage fiasco only crept into Canada by a little, and the Harpers only put up about $200 billion to guarantee Canadian mortgages for US insurers creeping into Canada. herr Harper didnt brag it up to very many about that one though. 

But it's a good thing our own neoliberalized/hypnotized stooges were hesitant to privatize CMHC as was done with Fanny Mae and Freddie Mac in the U.S., for sure.

And thank goodness they've backed away from deregulation of power gen and distribution here in Ontario, Canada's largest economy. That was a big neoliberalized flop for us as well as California and several more US states, and Britain, too. Some of those ENRON crooks went into banking and finance on Wall Street after 2002 and were looking to spread wings into Ontario's power market at turn of the decade. Howard Hampton rode the two old line party leaders pretty hard when the ideology failed as he warned them it would. God help them in Alberta and BC if they stay the course with power deregulation. They'll be having to take out 2nd mortgages to pay their light bills.

If I understand correctly, the Port Mann Bridge expansion was a P3 - a Private/Public partnership. WTF are we doing borrowing money abroad to finance our Canadian infrastructure projects? Are our decision-makers nuts? Probably not. Bot off, more likely. How much longer are Canadians citizens going to accept geting hosed by our very own right wing governments?  

Not to mention a bad habit of cooking the books!

On the other hand, there could be too much inflation:

Zimbabwe is introducing a Z$100 trillion note, currently worth about US$30 (£20), state media reports.

Other notes in trillion-dollar denominations of 10, 20 and 50 are also being released to help Zimbabweans cope with hyperinflation.

http://news.bbc.co.uk/2/hi/africa/7832601.stm

I'm not sure that this actually helps anyone besides delaying the day wheelbarrows are required to go shopping, but there it is.

Enough BS from politicians, RE boards, economic gurus, and financial pundits, all of whom have a vested interest in projecting inflated housing values. Finally some basic common sense.  
  
Housing market 'rebound' unlikely, say local bloggers

http://www.thetyee.ca/Blogs/TheHook/Olympics2010/2009/01/15/market-levels-unlikely-rebound-bloggers/

Nonetheless, the folks over at Housing Analysis and condohype, two widely read local real estate blogs, seem to think there’s little chance market levels will “rebound” to 2007 levels anytime soon.

“What people are apparently still not getting is that a 'return to normal' does not mean returning to 2007,” reads a recent post on Housing Analysis. “It was 2003-2007 that is the anomaly; not 2008-09.”

According to the blogger, the rampant speculation that’s driven up real-estate prices for the last few years is gone for the time being – and unlikely to return anytime soon. The upshot is that $1000 per square foot pricing, the reported break-even point for the Olympic Village, is a fairly improbable scenario.

"Maybe speculators will return to the market and blow a new bubble. Could happen, but I doubt it will happen in the next few years," writes the blogger.

A recent post on condohype echoes similar opinions:

“I’m increasingly worried about the expectation of a 'bounce back' in the Vancouver real estate market…many people who are supposedly well informed aren’t getting the memo about the real estate decline.”

If you own property in Vancouver either sell it right away, or plan to hold onto it for 10 to 15 years, as Vancouver is going to experience an unprecented housing debacle, the likes of which have rarely been seen in our lifetimes.

http://futronomics.blogspot.com/

Olympic Sized Depression Hitting Vancouver  

Western Canada had a lot going for it during the recent credit boom. Not only were debt spigots open wide like nearly everywhere else in the world, pushing up asset prices along with them. But the provinces of BC, Alberta and Saskatchewan all had their own commodity booms at the same time, further fueling the demand for housing. In BC the mining (and to lesser extend forestry) industries underpinned a robust economy. In Alberta, the rising price of oil made previously uneconomical tar sands projects profitable. And in Saskatchewan, skyrocketing fertilizer, grain and uranium prices created their own boom in major cities.

More so than anywhere else, the boom story in Western Canada felt legitimate. So even if the rest of the world were to undergo a contraction of sorts, this region would be supported by it's "strong fundamentals." This relative feeling of safety provided the boom mentality even more fuel than elsewhere. Unemployment got as low as 3-4% in some areas, redefining what most economists thought was "full employment."

But Vancouver had yet one more factor providing wind at it's back. They had "won" the right to co-host the 2010 Winter Olympics with Whistler (a nearby ski resort town). The resulting inflow of foreign investment was going to put the city "on the map" in terms of major cosmopolitan international cities. Tokyo, London, New York, Milan, Vancouver. Yes. It was ordained. The International Olympic Committee had declared it so. The provincial government even began an advertising campaign with the slogan "The Best Place On Earth." Old license plates bearing "Beautiful British Columbia" are now exchangeable for new ones with the olympic logo and the new slogan - for a fee of course. All of this is symbolic of a peak atmosphere of social mood. People were made to feel extremely lucky just to be part of such a place. As such, property values needed to reflect this newfound prestige. And of course, "there is only so much land."

Or so went the story.

Unfortunately, Vancouver residents have been shocked to learn over the last few months that gravity does indeed apply to them also. Sure as the sun rises, boom has turned to bust. And perhaps nowhere in the world has it manifested so spectacularly as in Vancouver. Where social mood was highest; it has furthest to fall. Here are the recent happenings:

BC Legislature to be Recalled for Special Session

The B.C. Legislature will be recalled for a special session to deal with Vancouver's request for permission to borrow more than $450-million to complete the troubled Olympic Village project.



Without legislative action, the city would have to hold a referendum to approve the borrowing - an option Mayor Gregor Robertson said would cause costly delays in dealing with the situation.



"They need a tool right now that they don't have without a legislative amendment," the Premier [Campbell] said.



"We will bring that in as soon as it's drafted. We'll bring it in. We'll take it to the House, and hopefully it will pass as quickly as possible."



Mr. Campbell said he hopes members will get beyond "traditional politics" in order to deal with the matter.

Vancouver's Credit Placed On Watch Due to Olympic Village Project

An independent credit rating agency has placed Vancouver on a credit watch and may even downgrade the city's AA+ rating as a result of potential debt coming from the beleaguered Olympic Athletes Village project.



Standard & Poor's on Tuesday issued a bulletin about the city's finances, saying the impact on the city's debt could be significant if it borrows money to fund the remaining construction of the village.



"We believe that there's going to be an event in the next three months that will have a negative impact on the city's credit profile," Stephen Ogilvie, an analyst with the agency, told CBC News.

Nortel Woes Could Hurt Olympic Sponsorship

Nortel Networks was already financially flailing when it signed on as sponsor of the 2006 Winter Olympics in Torino, Italy.



It was laying off workers in 2007 when it became a major sponsor for the 2010 Games in Vancouver and struggling to stay afloat when its deal with the 2012 Summer Olympics in London was announced last July.



Now that the company has filed for bankruptcy protection from its creditors, Nortel's sponsorships at the next two Olympics could be in jeopardy.

Only through incredible incompetence or incredible arrogance could a struggling company think it is a good idea to spend millions on sponsoring a circus every few years.

The olympics in Vancouver-Whistler are turning out to be an unmitigated disaster. All of the planning going into the preparations assumed that economic expansion was a given. There was no contingency for a worldwide business slowdown. Surely, the economists they had hired assured them that no such thing had any statistical probability of occurring, and therefore wasn't worth planning for. This arrogance was prevalent regardless of numerous olympic experiences gone awry over the decades (the Montreal 1976 summer games had debts only repaid 30 years later, in 2006).

I'm guessing the attendance figures the olympic committee have assumed will also turn out to be wildly optimistic and revenue for the games and small businesses alike will turn out to be far lower than expected.

I'll give my readers two guesses as to who will be paying for this financial disaster, but you'll likely only need one.

Elsewhere, the global credit unwind and commodity collapse have real estate prices reeling in Vancouver. Vancouver is the former home of the TSX-Venture Exchange. It is the largest collection of junior mining exploration and development companies. Most of those companies are still based in Vancouver. During the commodity boom, these companies absolutely exploded in value. Very few of them actually made any money. But the prospect of finding a huge resource deposit was enough to give many of those companies significant value. Now, with commodity prices 70% lower and credit markets basically closed, many of these companies are gravitating toward zero. Cash in the bank is disappearing fast and without financing, they are essentially holding companies for mining permits that have little hope of ever being used. The wealth lost in the collapse of these shares has been exceptional, especially when you consider much of it is contained to one city.



During the boom, company executives, investor relations representatives, even secretaries were paid modest salaries plus stock options. The tremendous wealth effect this had was a contributor to Vancouver's housing boom. Now it too has all but disappeared.

In only 8 months, home prices have fallen 19%. And the massive amount of speculative supply that was bought in anticipation of flipping it post-olympics is awaiting the market for the spring. This has all the ingredients for a spectacular crash of epic proportions. Already, wise property developers are trying to front-run the market.

On Sale: $350M of Real Estate in Lower Mainland

A Vancouver real estate developer is making an unprecedented move to offer a liquidation sale of $350 million worth of its condominiums throughout the Lower Mainland.



The marketing strategy by Onni Group of Companies is aimed at selling off hundreds of condos in its inventory.



About 375 unsold condominiums in cities such as Richmond and New Westminster will be offered at 20 to 40 per cent off, a real estate insider told CBC News.

Only time will tell whether those discounts will be sufficient to draw enough buyers. Judging by the absolute collapse in social mood, I don't know where the buyers are going to come from. Nearly everyone who could come close to affording a condo (and many who couldn't, to be sure) already bought one in the fright campaign of run-away prices. "If you don't buy now, you'll never be able to afford one," was common advice.



Prices of nearly everything got so out of control, that there is no telling where the bottom is on this market. The chart above traces out some very clean Elliott Wave patterns, which would suggest prices are heading all the way back to their "Wave 4" trough of '98. That would be a 50% decline from the peak - surely even more for condos in super-speculative areas (the Olympic Village, for example). How will the forthcoming property tax hikes affect prices? Will the inevitable post-games service cuts by the city make Vancouver an undesirable place to live in the future?

We are once again confronted by a region that thought, "It's different here." It wasn't. It never is. Speculative booms precede busts, just as inhaling precedes exhaling.

I think Soros didn't do so well last year...

Is she related to Harper, a real estate broker, or a banker?

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5537245.ece 

Her optimistic predictions come on the eve of a grim forecast from the heavyweight Ernst & Young Item Club, warning that 2009 will see the biggest peacetime downturn in the economy since 1931. It predicts a 16% fall in house prices this year and a further 6% drop in 2010. “ The housing market remains in dire straits, starved of mortgage finance,” said Professor Peter Spencer, Item's economic adviser. “Although bargain hunters are active, there seems little reason to buy until house prices stop falling. We do not see that happening until the end of 2010.”

The Treasury will tomorrow announce

There's money in California just not money for the less privileged. Why isn't the governor taking a cut in pay as things are so bad. Disgusting.

------------------------------

Maybe there are too many cars on the road as it is. Why do we need more?

http://www.cbc.ca/cp/business/090115/b0115117A.html

Car sales drop ups urgency for budget fix to car leasing 

Is it because a majoriy of the po dont vote for Arnold?

A second UK bank bailout, and if that doesn't work - and the market seems presently convinced that it won't, with bank shares tanking -  it seems that many of the major banks will end up nationalized.

http://news.bbc.co.uk/2/hi/business/7837557.stm

Having watched the Chossudovsky posted by Fidel, which is now working again, http://www.globalresearch.ressourcequebec.com/Lecture/January_14-2009.ht... , I can recommend it as being well worth watching.

The first two minutes are some mumbling in (spanish?) and then an introduction.

Some of his points:

- War in the middle east related to the financial crisis
- oil companies, wall street, military-industrial complex, the biotech conglomerates, the media conglomerates are the pillars he identifies as the alliance of interests behind the current mess.
He also disparages his own profession of economics.
- He says market manipulation is done largely through the derivative trade, and that the manipulation renders economic theories of spontaneous change (i.e. business cycle) impossible. He says swings are due to speculative games and not economic fundamentals.
- He says though the real economic has been in a crisis for a number of years, says real economy and financial economy are in a symbiotic relationship.
- He mocked the use of GDP as the emperor of economic statistics, quote: "The real economy is absolutely shattered".
- Says we're dealing with a massive transfer of wealth resulting from speculative trades. "The large financial institutions appropriate wealth through the use of these instruments".
- He says we're moving to a new phase where there will be cannibalizing of large corporations as well, building on the previous cannibalizations of small and medium businesses.
- Bailouts are a cause of the crisis, not a cure.
- He believes the depression started in the 1990s and perhaps even in the 1980s.

His talk goes slightly more esoteric after the 30 minute mark, a lot of interesting history and analysis.

He mocked the Canadian approach, he says we are in a copy and paste mentality (lol), when it comes to Canadian and American financial regulations.

He says he's estimated the Afghan drug trade is worth between 150 and 200 billion a year !!!

"...I was told by [my] chief economic advisors that the situation we were facing could be worse than the Great Depression"

(from Dubya's last press conference.)

Tom Engelhardt comments on the denial of this information throughout the last months of Bush's administration.

If you want to survive financially get out of any North American stocks for the rest of your lives. And make sure your pension plan investors hear that mesaage as well. Yes there will probably be a little rally when Obama's stimulus kicks in, and then stocks will sink like a stone.

I'm just overwhelmed by all these buying opportunities. Today (Tuesday) was another one. But it seems that every day there is one of these wonderful purchasing opportunities, it is followed by an even better one the following day.

• 8,504.930
• -336.550
• -3.81%
• Vol: 271,032,156
• Last Trade: Jan 20, 2009 17:05:00 EST 

http://investdb.theglobeandmail.com/invest/investSQL/gx.index_today?pi_symbol=TSX-I&pi_action=

You can say that again, North Report. It's quite a drop.

Does Obama really mean to get down to business with the banksters?

According to this author a depression occurs by when we reach 25% unemployment.

In the USA now the unemployment rate is at 16-17% and rising. 

Another Great Depression

http://www.kitco.com/ind/Turk/turk_jan152009.html

Last week the US government announced that the unemployment rate rose this past December to 7.2% from 6.8% the month before.  The US economy lost 2.6 million jobs in 2008, of which 1.9 million were lost in the past four months.  Of these, 524,000 were lost in December alone.

Importantly, there are clear indications that employment will drop further. Companies have been cutting back on hours worked, which reached a record low in December of 33.3 hours per week. This measure is a leading indicator because companies first cut back on hours worked before they cut jobs. Also, layoffs are growing. The Wall Street Journal reports: “The new year has brought no letup on layoffs, as employers have already announced more than 30,000 cuts.”

The monthly unemployment report is prepared by the Bureau of Labor Statistics <http://www.bls.gov/news.release/empsit.nr0.htm>. It reveals that the number of unemployed has climbed over the past year by 3.6 million to 11.1 million, but the real numbers are much worse when looking through the government sugar-coating in these reports. As The Wall Street Journal explains it: “While the official unemployment rate is 7.2%, a different figure that includes discouraged workers who have dropped out of the labor force and those working part-time because they can't find full-time work hit 13.5% in December. That was nearly a full percentage point higher than in the previous month and up from 8.7% at the end of 2007.” 

While a 13.5% unemployment rate is shocking, the truth is even worse because the WSJ is still relying upon government reports. To get the unadorned picture, we need to turn to private economists, and I reply upon the work of John Williams of Shadow Government Statistics <http://www.shadowstats.com/>, who presents in his latest report the true picture of the dire unemployment situation: “During the Clinton Administration, ‘discouraged workers’ those had given up looking for a job because there were no jobs to be had were redefined so as to be counted only if they had been ‘discouraged’ for less than a year. This time qualification defined away the bulk of the discouraged workers. Adding them back into the total unemployed, actual unemployment, as estimated by the SGS-Alternate Unemployment Measure, rose to 17.5% in December from 16.6% in November.”

Unemployment is the key measure that signals whether or not a depression has begun, and by the SGS measures we are rapidly approaching the 25% unemployment rate usually mentioned as the most important signpost marking the depths of the Great Depression. That high rate of unemployment cut a wide-swath of misery through the American population.

Given the current 17.5% rate of unemployment, it would appear that I am not far off the mark to suggest that we have entered another Great Depression, and I am not alone in my thinking. Others who are more attuned to the economic situation see it the same way as I do.

For example, the following quote is from an OpEd piece by Nobel Laureate Paul Krugman that was published in The New York Times on January 5th: “The fact is that recent economic numbers have been terrifying, not just in the United States but around the world. Manufacturing, in particular, is plunging everywhere. Banks aren’t lending; businesses and consumers aren’t spending. Let’s not mince words: This looks an awful lot like the beginning of a second Great Depression.”

I cannot think of a more popular policy than shooting the bankers and nationalising the banks. It might even win Mr Brown an election. Come to think of it, it could also be the way to get us out of this mess.

http://www.ft.com/cms/s/0/a35c925c-e65f-11dd-8e4f-0000779fd2ac.html

Well, there you have it - from the Financial Times.