The world financial crisis II

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Michelle
The world financial crisis II

Continued from here.

 

Wall Street, RIP - by Duncan Cameron

 

Ward

Hyundai shortens workweek

Perhaps a universal 4 day work week would help solve the current production /consumption /environmental/ crisis.

NorthReport

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

NorthReport

Just absurd.

 http://www.theglobeandmail.com/servlet/story/RTGAM.20090106.wrequities07/BNStory/Business/

 

Is it a breakout, or fake out?
A bear market mauling cut the TSX in half in 2008. Quietly, stocks are climbing again on positive momentum, rising more than 20 per cent. Is it a breakout? Or just another fake out?

 

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

NorthReport
NorthReport
NorthReport

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=

Fidel

Michelle wrote:

Continued from here.

 

Wall Street, RIP - by Duncan Cameron

 

Quote:

Wall Street was where hugely successful family-held companies came to transform themselves into limited liability public corporations. Investment banks sold newly minted corporate shares to pension funds and wealthy individuals. While the former owners, the family, walked away rich, the investment banker made out like a bandit, taking a portion of the share issue proceeds for itself, then charging the eventual buyers of shares a fee as well.

What does Duncan Cameron mean by "limited liability"? Surely these capitalists could be held liable all this while for losses and damages incurred by their own bad decision making?

Doug

Pretty self-explanatory -

http://clusterstock.alleyinsider.com/2009/1/porn-producers-ask-for-a-5-billion-bailout

 

Now everyone has their hand out...among other things.

NorthReport

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.

peskyfly1

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

NorthReport

There are just way too many crooks out there waiting to steal your money.

Anyone who has any investments connected to the stock market, which means most of us (think Canada Pension Plan, whatever) is hooped.  At least you can control you own personal investments, and give yourself a chance by avoiding the stock market for the rest of your life.

NorthReport

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.

 

Pension Losses Will Devour Corporate Earnings
Consulting firm Mercer reports pension plans have suffered their steepest one-year drop in 20 years, and companies are squeezed for cash to make up the shortfall

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

Jobs: Big December Loss Coming
The December jobs report, out Jan. 9, should show more massive payroll declines as the U.S. economy continues its downward spiral

 

Doug

The Bank of England cut the benchmark
interest rate
to the lowest since the central bank was founded
in 1694
as policy makers tried to prevent the credit squeeze
from deepening Britain’s recession.

http://www.bloomberg.com/apps/news?pid=20601087&sid=avTXAfm9.vhM&refer=home

 

ElizaQ ElizaQ's picture

 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.  

 

 

saga saga's picture

It ought to be no surprise that the demise of the
paradigm on which he has staked his entire political and economic
outlook should leave Stephen Harper bewildered. Surely a very good
reason for Canadians to put him out to pasture.

http://rabble.ca/blogs/bloggers/james-laxer/stephen-harper-stock-market-tipster-par-excellence

 
hahaha

 

Fidel

Radical cheap: $1,000 homes

Quote:

The real estate market is so awful that buyers are now scooping up homes for as little as $1,000

panhead

"There are just way too many crooks out there waiting to steal your money. "

 

The real crooks hold shop in the 'Federal' Reserve and their banking mogul pals. The money was essentially valueless to begin with, way before the present crisis hit the fan. What was it, something like a real value of 17 cents to one dollar?

The real problem is fiat currency.

NorthReport
NorthReport

I'm not quite sure what was great about it.

Keep what hard earned money you have in cash, and before too lomg you will be buying cars and houses for 1/2 the price they once were.

 

Surprise rise in US jobless raises spectre of Great Depression

 

http://business.timesonline.co.uk/tol/business/economics/article5484682.ece

 

 

 

Fidel

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.

NorthReport

We're hooped.

Harper has already given away the store by all the defence contracts he has handed out since he became prime minister. We have no money left now to create manageable deficits.

These bailouts are more silliness. Why is some poorly-managed sector bailed out by the rest of us?  Why are they more special than the rest of us?

And some people think Vancouver or Calgary or Toronto are immune to the laws of supply and demand. On what basis? These overpriced housing markets are going to crash and burn because people cannot purchase them at their current prices and live within their means.  

And just wait until BCers realize how much they have been had financially by these freaks who brought us the 2010 Olympics. 

We have been living a dream, on borrowed time. It is now time for us all to pay the piper. 

NorthReport

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.

 

ijunk

NorthReport wrote:

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.

Note that corporations are a product of the state, not capitalism.  I'd argue that the free market is actually undermined by limited liability protection. Here's a good article on the subject:

http://www.lewrockwell.com/rozeff/rozeff28.html

Fidel

ijunk wrote:
NorthReport wrote:

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.

Note that corporations are a product of the state, not capitalism.  I'd argue that the free market is actually undermined by limited liability protection. Here's a good article on the subject:

http://www.lewrockwell.com/rozeff/rozeff28.html

Quote:
There is another way to look at this. These effects are bounded in size by what it costs for the parties to obtain limited liability privately. Suppose there is no limited liability. The owners of the company could buy insurance against damage claims beyond a deductible determined by market value

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?

NorthReport

A good example of how corporations protect their owners from their own stupid decisions is this company Millennium Development Corporation that is the developer for the Olympic Village. Who are these people and why are they allowed to keep their identity secret? Why do we not know who they are? Is it because they are connected to Premier Campbell or Prime Minister Harper? Apparently Millennium is owned by the Armeco Group. These people have at least two other major projects going on in BC, one in West Vancouver, and one in Nanaimo. Why doesn't Gregor Robertson grab these other properties if he can and hold them untill Millennium delivers financially what it said it was going to do for Vancouver? 

This Olympic financial nitemare that is about to be unleased on the poor citizens of Vancouver and BC will be our 2010 legacy. Thanks a lot.

Before this is over the Sullivan/Ladner/Christy Clark NPA will be so discredited that they will change the name of this municipal party in Vancouver. 

Hoodeet

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

 

Hoodeet

follow-up.  Sorry. The previous post was poorly phrased.  I meant to suggest that people with pension fund managers and the like, forward these discussions to them.  I  routinely send Pam Martens and Michael Hudson pieces from counterpunch.org to mine and they claim they're reading them --whether they can afford to absorb any of it without giving up altogether is another matter.

Hoodeet

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

Phred

I'm expecting a nice rally around the time Obama is finally sworn in.  Long term, you can't go wrong with alt energy stocks especially solar!

 CSIQ is my pick!

NorthReport

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. 

Phred

The stock normally hovered in $28 - $35 dollar range. When Q2 results were expected to be better than ever, that stock climbed up to $50 for a brief period of time before sinking back to it's normal level.  They had also announced some major contracts around that time too which helped boost it.

It's quite low right now (as pretty much any stock is) BUT it has a very good balance sheet.  Plenty of cash in the bank (CASH not credit), lots of equity, contracts signed for the coming year and a supply of silicon is secured too.

The current price is still SO undervalued!

NorthReport

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

NorthReport

Wow, another great buying opportunity, the TSX is only down around 300 points today, and how many more thousand people are going to lose their jobs this week!

Fidel

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

Quote:
As we already explained in GEAB N°28, the crisis will affect in different ways the different regions of the world. However, and LEAP/E2020 wishes to be very clear on that aspect, contrary to the dominant stance today (coming from those experts who denied the fact that a crisis was coming up three years ago, who denied that it was global two years ago, and who denied the fact that it was systemic six months ago), we anticipate that the minimum duration of the decanting phase of the crisis is 3 years (1). It shall be finished neither in spring 2009, nor in summer 2009, nor at the beginning of 2010. It is only towards the end of 2010 that the situation will start stabilizing again and improving a little in some regions of the world, i.e. Asia and the Eurozone, as well as in countries producing energy, mineral and food commodities (2). Elsewhere, it will continue; in particular in the US and UK, and in all the countries depending on their economy, were the duration could approximate a decade. In fact these countries should not expect any real return to growth before 2018.

 

The Bish

panhead wrote:

The real problem is fiat currency.

Personally I favour the elimination of currency in the long term, but in the short term, what would you suggest as a reasonable alternative?  You wouldn't seriously suggest a return to the gold standard, would you?

Quote:
These bailouts are more silliness. Why is some poorly-managed sector
bailed out by the rest of us?  Why are they more special than the rest
of us?

It depends.  Why should we bail out the auto industry?  Because the number of jobs that would be lost if it went out of business would be enormous.  Now, I personally would suggest that a better solution would be to spend that money on a program that would hire those people to work on "green" infrastructure projects once they lost their jobs, but clearly the government has to do something.

As for the banks, I think it's pretty clear why they needed to be bailed out.  First of all, a number of major banks were going to go under in the U.S., which leads to a run on deposits.  Because banks actually have most money in the market in terms of loans, they can't actually give people their money.  Thus the bank goes completely out of business and everyone loses their money.

Further, the commercial paper market was about to collapse.  I don't have time right now to go into much detail about it, but the gist of it is that many companies use short term loans to finance their operating expenses, including payrolls.  If the banks go under, employees don't get paid, companies can't pay suppliers, etc.

So to me, there's no question as to why we're bailing out the banks.  There are a number of other important questions though, the two most important being:

1. Why the fuck was there no regulation on derivatives like credit default swaps?
2. Why do we live in an economic structure in which corporations and banks are so tremendously important that no matter what they do the tax payer is on the hook for saving them?

Though, I suppose nationalising the banks would be another option, but that is still essentially a form of bail out.

Ward

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.

Fidel

The Bish wrote:

Though, I suppose nationalising the banks would be another option, but that is still essentially a form of bail out.

Unlike the US Federal Reserve bank, Canada's central bank is already nationalised. It's not used to carry public debt though like it was from 1938 to mid 1970's. It could be used for better purposes. We could stop borrowing from foreign lenders at high interest rates and finance infrastructure and vital social spending spending at near zero interest. And raise bank reserve requirements similar to Keynesian money  management in India and China. Bay Street greed and special interests prevent the two big business parties from pursuing most popular economic and political agendas though. As Linda McQuaig said, the political impotence is self-imposed in Ottawa. It's not real impotence as they would have us believe.

The Bish

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.

NorthReport

The TSX is down close to 350 points this morning so far. Must be another buying opportunity or more realistically, it probably isn't.

How does Soros make his money? By shorting the financial system I believe. When a system thrieves on BS, shorting the market is probably the best thing to do, don't you think?

Phred

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

NorthReport

I just heard a rumour that the international funding for the twinning of the Port Mann Bridge has fallen through, however I would be very surprised if Campbell would admit to it or stop the project before May 13, 2209. That will teach them to go non-union.

Fidel

The Bish wrote:
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.

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.

Doug

The party is definitely over when building projects in Dubai are in trouble.

Nakheel, the state-owned developer of Dubai's palm-tree shaped islands, said on Wednesday it would halt work on a kilometre (3,281-feet) tall tower for a year in the Gulf's trade and tourism hub.

The planned skyscraper, part of the 140 billion dirham ($38 billion) Nakheel Harbour & Tower project announced in October, would be the world's tallest tower once completed. The project includes 40 high-rises.

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSLE18816220090114

Fidel

Nortel files for bankruptcy

One-time jewel in the crown of corporate Canada falls from grace. Nortel was lots of very talented people led by incompetent CEO's and CFO's for too long, and struggling within an overall economic system that just doesnt work. Capitalism is a monumental failure.

 

 

NorthReport

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?  

Phred

Not to mention a bad habit of cooking the books!

Doug

Deflation in progress in the US:

This morning the BLS reported that Consumer prices in December fell ( - 1.0 %) on a non - seasonally adjusted basis.  Inflation for the entire year 2008 was +0.1%!  (meaning I have officially won my bet wtih Bonddad).  In the last 5 months, prices have fallen ( -  4.4 %), or at an annual rate of ( - 11.0%)!
    Yesterday, the
Producer Price Index showed the first annual decline since 1950. In the last 5 months of the year, producer prices fell (-8.2%), the biggest collapse since the Great Depression.  The day before that, import prices fell the most in its 26 year history.
    This is the worst deflation since the Great Depression.  To make matters worse, in addition to losing nearly 2 milliion jobs in the last 4 months, we may be on the cusp of a wage-price deflationary spiral as there are increasing reports of companies imposing wage cuts on their workers.

http://www.dailykos.com/storyonly/2009/1/16/81223/5999/707/684745

This is very much not a good thing. Once deflation starts, it's hard to get out. In addition to the usual reasons in a recession why firms and individuals might choose to not spend their money, deflation adds the excellent reason that if you wait, the price of something will be lower.

Doug

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.

NorthReport

Actually deflation is the best possible outcome for the Vancouver housing market bubble. Looks like at one developer has dropped the price of some condos by 40%. Once one does it, all the rest will follow. This market has a big long drop coming - as if working people can afford to live in this city any more..

NorthReport

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.”

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