World Financial Crisis Part 5

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NDPP

On Contact: Coming Unrest With David North

https://youtu.be/PwUMsrb905k

"David North, Chairman of the World Socialist Web Site's International Editorial Board, discusses the capitalist crisis in the US."

Mr. Magoo Mr. Magoo's picture

The usual stuff you can read on WSWS in three minutes, but now you get to watch it for 27 minutes.

SeekingAPolitic...

I am short on time, we headed for a bad time indeed.  Can I tell when I no idea, but I tell when the unmasking of our debt global situation occurs?  There some extremely powerful people that believe the business cycle is no longer with us.  The business cycle is the boom and bust cycle in capitalism, for me this is primarily law of capitalism.  A recession is coming it be big one, the reason the world is not hard recession is the world central bags injecting money/debt into the global system. When that support from US,Japan,Europe, China ends will go into recession.  

I have be somewhere in 45 minutes, but when I get back I will talk mechanics of recession as I see them.

SeekingAPolitic...

I remember as a young man after university bouncing around 2 to 3 years working at certain factories.  Let describe I saw.  

Year 1- My friends and most were buying new cars some were buying homes this a younger crowder and new people to factroy environment.  I noticed older generation somewhat less likely spend like younger crowd.  They saw the strikes and layoff, they rode the business cycle multiple times for the most.  They were less likely spend but after of goods times, wages raises, etc caution was naturally curtailed.

Year 2.   Press reports were talking about credit was getting harder to abtain, interest rate were going up.  At that point I had no idea what bond market was.  And the significance of bond rates going up.  But I feeling the economy was slowing.  I felt that is was a good time to go back to school and able to get federal government retraining program in hand.  But I know those people I said goodbye to, those with low seniority would gone in 8 months to 18 months will be on layoff.  For many they would face hardship and debt collecters will be calling.  This the end of the of that business cycle and cycle will start again.

A recession would come.  For me to mechanics of cycle can be described as the action of a rubber band.  Need sleep. More later.

iyraste1313

The Collapse of the ETF market this week (95%!!!).....this is the derivative trade based on volatility in the stock markets....Not only is this huge....it is the defining factor heralding the collapse of the global financial bubble....
I recall people wondering when my sold called imminent collapse theory would be realized...well it´s now happened...and as the collapse of the subprime mortgage derivative trade in 2007 ushered in the economic chaos of 2008 requiring over 23 trillion to stabilize the system, this time the effect will be short and without the reserves of the global banking system to stabilize. The Central Banks tried to adjust their rates for such a scenario as this...but they´ve run out of time! The fix is now in....maybe a few months to a year to percolate through the economic system...

Now is the time to prepare...politically!!!

NorthReport

Even a dead clock is right twice a day. Stock markets go up, stock markets go down. Comparatively speaking life is a piece of cake in North America, and those complaining about it here, need to spend some time living elsewhere, to realize how good we have it here. 

SeekingAPolitic...

NorthReport wrote:

Even a dead clock is right twice a day. Stock markets go up, stock markets go down. Comparatively speaking life is a piece of cake in North America, and those complaining about it here, need to spend some time living elsewhere, to realize how good we have it here. 

I heard similar from you NR about clock/watch, after searching I found my rebuttal.   Oldie but a goody.

Wed, 2017-05-24 03:04

(Reply to #10)

SeekingAPolitic...

 

 

NorthReport wrote:

 

And how many years have we been hearing this now?

After all even a stopped watch tells the correct time twice a day!

 

 

That is certainly good question, but I will split your question to into 2 parts.  Its dependent on your economic belief.

1.Do you question the existence of capitalist business cycle(recession and boom).  This is standard fare for even capitalist economists.  Look up the business cycle in a google search.

a.  I believe in the business cycle  >>>>>  Jump question 2.

b.  I don't beleive in the business cycle.  A recession can be kept at bay for a indefinite time.  History seems to agrue agaisnt this point of view.  Refer to article below.

http://www.marketwatch.com/story/current-us-economic-recovery-may-end-up...

The chart in article is very powerful exhibit for existence of the business cycle.  When article was written the US was in the 84th month economic expansion.  That means the US in the 94th month expanison today.  3rd longest expansion in the history of the US, in 2019 the US would break the record of 120 months expansion.  Can the US set a record, I not idea.  But that is not the important question, the fact is a recession is coming.  Be it 6 months from now or 6 years from it will happen.

Question 2.  How bad will the recession be.  This debateable.  My personal thoughts on the matter are buttrested by 2 factors.

a.  Debt-  Generally speaking during during a recession debt is destroyed. For example a business or individual go thru bankrupcty, you as indivudual or business which effectively nullify claims ago you.  This of course does happen to everyone but most people buckle down and spend less and try to pay debt off.  If people are losing there jobs and business are closing it makes one naturally wary of spending.  The interesting thing is once you go thru belt tightening and/or bankrucpty you are ready to spend ago and partcipate in the business cycle.  Claims are agaisnt are gone and you get a free start as a cog again it the capitilist cycle.  From the capitalist point of view you have capacity to borrow again and spend again.  Much better than weighted downed by debt which curtails spending.  If things get out of hand a depression is possible.  And the cycle repeats itself. Leverage up and Leverage down followed by Leverage up.

I went thru narrative that is clinical in nature, but process on human beings is one of struggle and pain. 

b.  Government response-  Generally speaking modern governments want to stay in power so they try temper the effect of the cycle above.  Monteray response means that the central back will intervene agaisnt the cycle but lowering rates and print money.  To jumpstart the economy.

In the old days there fiscal reponse(Kenyism), direct spending or tax cuts into the economy by the government.  This still used by the governments but oppossed by conservative thinkers.  And off course buffers like EI and varoius welfare schemes saidly these ideas have been effectively demonized by the right as useless spending.  But in a captialist system they used to provide 1) A buffer to the magnatude of develaging and 2) A scheme of social control to keep the status quo going, desperate people in a democracy can hinder the smooth operation of the capitalist system.  Keep those nasty thoughts of class and where you begin in the economic order in check.

3.  I have talked about the American economy why is this revelant for Canada.   While the US effectively can resist a recession in Canada can not resist a American recession.  The US economy is still largely indepentent of the effects of the world on it.  Last time I checked the US imported 15 of its GDP and exported 10 of its GDP.  Canada has a much more globalized economy with 33 to 36 of the tied to GDP with exports and imports.  With 75 of the exports going to the US.  Its getting really late, so the US buys arounds 25% of other yearly prodcution(GDP).  The important thing is a US recession will drag canada into the mess.

iyraste1313

Even a dead clock is right twice a day. Stock markets go up, stock markets go down. Comparatively speaking life is a piece of cake in North America, and those complaining about it here, need to spend some time living elsewhere, to realize how good we have it here. ...

...this is kind of amusing, as I do live outside Canada in a so called thrird world country...and I can assure you that the people I work with in the tens of thousands are well prepared for the financial implosion to come......

of course you missed the point...I was not talking re markets so much as the collapse of the derivative trade holding up the system!

iyraste1313

 

Swan Song Of The Central Bankers, Part 1: Last Week Wasn't A Mistake

Profile picture for user Tyler Durden

by Tyler Durden

Tue, 02/13/2018 - 10:21

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Authored by David Stockman via Contra Corner blog,

Last week's twin 1,000 point plunges on the Dow were not errors. Instead, these close-coupled massacres, which wiped out $4 trillion of global market cap in two days, marked the beginning of a bear market that will be generational, not a temporary cyclical downleg.

What hit the casino wasn't an air pocket; it was a fundamental change of direction, signaling that the three decade long central bank experiment with Bubble Finance has now run its course.

iyraste1313

Financial Times; Higher bond yields fail to arrest an ever-weakening dollar

...this means an inflationary trend in the States, what with their deindustrialization/ globalization, import export deficit with China...forcing continued higher bond and treasury rates, mortgage rates and increasing corporate debt...it`s called checkmate for the financial system

NorthReport
iyraste1313

January Pending Home Sales Crash Most Since 2010 by Tyler Durden Wed, 02/28/2018 - 10:09

After New- and Existing-Home-Sales have already disappointed, Pending Home-Sales just collapsed too (to the lowest since Oct 2014) to confirm January was a bloodbath for the real estate market.

Pending Home Sales plunged 4.7% in January (massively below the 0.5% expected rise in sales) - this is the biggest drop since May 2010.......

.....what with increasing mortgage rates, central bank rates (US) due to inflationary pressures, (waiting for the trade wars with China and massive inflationary effects!)...this is just a taste!

The collapsing real estate market will blow up the economic system!

NDPP

So the answer to this oligarchial problem is war. Preparations, especially a massive pre-war propaganda/ demonization campaign are well underway. Many  'progressives'  that should be opposing are enthusiastically  onboard or 'keeping their heads down', (a particular speciality of the Canadian contingent). As billions more in precious public resources are allocated towards this war-effort, expect the awful reak of collaboration and complicity to only grow. 

iyraste1313

So with the trade wars beginning, (meaning increasing inflationary effects throughout the economics, meaning increasing rates everywhere, increasing bankruptcies everywhere!), the VIX indicator way up...(meaning the ETF derivative index based on gambles on volatility etc.), the Japanese Central bank preparing to end its Quantitive Easing, expect further cataclysm in the markets today and going forward...we are sleepwalking to disaster here! Surely someone up there is aware?

NDPP

Of course they are... That's why the Bank of Canada sold off all of its gold reserves recently. 'Stupid is as stupid does.' 

Trump Launches Trade War

http://www.wsws.org/en/articles/2018/03/02/trad-m02.html

"US President Donald Trump has taken a major step toward launching an international trade war by slapping a 25 percent tariff on steel imports and 10 percent on aluminum..."

Colonizing The Western Mind

https://www.counterpunch.org/2018/03/02/colonizing-the-western-mind/

"On the left, the ruling ideology might be described as neoliberalism, a particularly vicious form of imperial capitalism that, as would be expected, is camouflaged in the lineaments of humanitarian aid and succour." 

Mr. Magoo Mr. Magoo's picture

Quote:
That's why the Bank of Canada sold off all of its gold reserves recently.

Yes, prior to this they held 100 million in gold reserves, or approximately 3.5 days of Toronto's budget alone.

That's right.  Enough gold to run Toronto for four days and three nights.

NDPP

Yes, they went from sweet f**k -all  to nothing. As previously stated. Stupid. 

And Then There Was None: Canada Sells Its Gold

http://bmg-group.com/canada-sells-its-gold/

"Canada, bucking an international trend that has seen central banks become net buyers of gold since 2010, has sold off all its official gold holdings. This is unprecedented. Canada now stands as the only G7 nation that does not hold at least 100 tonnes of gold in its official reserves." ( In 1965 it had over 1,000 tonnes. At $1,685.00 per ounce, you figure it out.)

Mr. Magoo Mr. Magoo's picture

That must be a terrible setback for all those monetary-reform k00Ks who lost their minds when governments shifted from gold currency to fiat currency.

Me, I'm just glad they didn't opt for "tulip currency".  Gold was mentioned in the Bible, so it must be special.  And, it can be used for plating the connectors on an HDMI cable!  Then you can charge double for that cable, and stimulate our economy!

iyraste1313

Where Will It Stop?": Libor Spread Blows Out Beyond Eurocrisis Highs, Central Banks Intervention AwaitedThis morning's 3M USD Libofixing jumped higher for the 27th consecutive session, rising to 2.2018% the highest since December 2008. 

Compalceny abounds! Let´s see...at Total Financial and Non finacial debt now at 500% of GDP in the States...a rise of rates to 5% would mean that 1 of every $4 GDP must be paid in debt...will it go up to 100% before people pay attention?

100% means of course no income neither for corporates, nor people...maybe people can learn to eat their credit notices?

NDPP

Don't worry, we are assured by US media that Trump's new economic advisor Larry 'Kuddles' Kudlow, who replaced the Goldman Sach guy before him, and admitted to a $100,000 a month coke habit in his past and who considers Trudeau 'a leftwing crazy guy', has a plan and will fix all...When it all falls it'll go fast and it looks like that time is close.

Global Capitalism: Cut Taxes, Deport Immigrants, Impose Tariffs 

https://youtu.be/LHB19zORjeU

Richard Wolff, Prof of Economics

iyraste1313

eutsche Bank (DB) dropped 13% this week to a 15-month low. DB is now down 28% y-t-d. European banks (STOXX) sank 5.0% this week. Hong Kong (Hang Seng) Financials were down 4.9%. Japan's TOPIX Bank index fell 3.3%. In the U.S., banks (BKX) were slammed 8.0%, the "worst loss in two years." The Broker/Dealers (XLF) fell 7.3%.

....trouble is brewing in the derivatives trade...which will take down the system!

The system broke now over 2 months ago...its consequences picking up steam...expect bigger and bigger disruptions!

progressive17 progressive17's picture

looks like a good time to buy!

Pondering

If the entire monetary system collapsed it wouldn't change the amount of actual wealth available in the world but it will not be permitted to collapse. It didn't collapse 10 years ago either. The wealthy are wealthier than ever before. CEO salaries are soaring to reward them for their excellent work. Unemployment is low. Banks are making larger profits than ever before. 

Personal debt is high in Canada but as long as the worker bees stay on the treadmill and interest rates are kept down there is no problem. 

This is all propaganda to keep the general public afraid to push for raises or demand good working conditions. 

The biggest threats to the financial establishment are the new currencies first created by individual communities and now cryptocurrencies. 

Everything else is to frighten us into submission. 

progressive17 progressive17's picture
Michael Moriarity Michael Moriarity's picture

Or, from a few musical generations earlier, Art for Art's Sake.

Mr. Magoo Mr. Magoo's picture

Quote:
he biggest threats to the financial establishment are the new currencies first created by individual communities and now cryptocurrencies.

Cryptocurrencies are just Digital Tulips.  There's no law against speculating in tulips.

NDPP

The Network of Global Corporate Control (2011)

http://lanl.arxiv.org/pdf/1107.5728

"The structure of the control network of transnational corporations affects global market competition and financial stability. We present the first investigation of the architecture of the international ownership network, along with the first computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions. This can be seen as an economic 'super-entity' that raises new important issues both for researchers and policy makers..."

iyraste1313

Finally, going back to the current level of Libor, whether the reason for its sharp move is systemic or technical remains irrelevant in the context of the big picture: what is relevant as we said over a month ago, is that over $300 trillion in debt instruments which reference Libor, are now paying far more in interest than they used to, with the double whammy being the sharp spike higher, which adds to the pain from the move. Furthermore, the fact that the move wider in both Libor and Libor-OIS has been far longer than all of the so-called experts predicted, suggests that the tightening in monetary conditions is far greater than the prevailing level of the S&P suggests. Indeed, one look at the stock price of Deutsche Bank, or the blow out in bank CDS confirms this......from zerohedge

people can choose to deny reality if they so wish...there are just too many indicators out there now, that the global financial system has broken...the 2007 to 9 financial crisis, where debt levels were a fraction of today, where interest rates were high enough to promote serious financial reflationism, will feel like  a picnic in comparison as to what is to come...if you've made your preparations with your communities, fine...if you've remained in complacent denial and apathy...good luck

NDPP

On Contact: The Coming Collapse of the American Economic System, With Richard Wolff

https://youtu.be/0i1T72jfoWA

Chris Hedges and economist Richard Wolff discuss the coming economic collapse of the USA.

iyraste1313

China Slaps Tariffs On US Imports Including Pork, Nuts And Wine.......

one more move to increasing inflation...forced increases to the market rates...increasing bankruptcies for the most indebted...a collapsing house of cards

iyraste1313

Subprime Auto Bubble Bursts As "Buyers Are Suddenly Missing From Showrooms".....from zerohedge

....all coming down like a house of cards.....the weakest links first....

epaulo13 epaulo13's picture

Canada’s Five Giant Banks Ought to Be Nationalized, Not Bailed Out

Canada’s banking system is on the edge of a crisis, once again, with a collective debt of $1.8 trillion — and the public will be on the hook for most of it, sooner than most think.

Last week, the Bank for International Settlements (BIS) revealed that Canada, Hong Kong and China’s banking systems are the world’s most at-risk of a severe crisis. BIS joins the International Monetary Fund, Moody’s and S&P Global Ratings in warning record-high consumer debt could tank Canada’s “five giants” in the case of a downturn. The Bank of Canada’s Senior Policy Director, Gino Cateau, calls such debt the Canadian economy’s “key vulnerability.” The post-2008 lending surge, which boosted consumer spending to keep the economy afloat, has driven many to the edge of insolvency. Ipsos, for example, found 52 per cent of Canadians are $200 from bankruptcy by the end of an average month.

We’ve seen this before. Leading up to 2008, Canadians had about the same debt-to-income ratio as Americans. And, when the recession struck, Canada’s five giants faced insolvent borrowers and the federal government bailed them out. Most of the money came from the Canada Mortgage and Housing Corporation, which bought loans that soured, but total support peaked at $114 billion. At around seven per cent of Canada’s 2009 GDP, Canadian Centre for Policy Alternatives economist David Macdonald notes, it would’ve been cheaper to buy most of the banks.....

iyraste1313

Russell Napier: The Rising Dollar Will Trigger The Next "Systemic Banking Crisis" by Tyler Durden

The crack in the system, as I´ve proposed in previous messages, this past february...forcing the US Fed to begin ending its quantitative easing......and with growing trade imbalances and rising deficits in the USA has been forcing up the treasury and bond rates...this has been forcing up the price of the US dollar...now putting into jeapordy, all countries high in debt in US dollars... 

This past week showed increasing signs of the collapsing global financial system, what with huge increases in Emerging Nations rates to slow their collapsing currencies......not to forget their banking systems high in US dollar debt...likewise in deep systemic crisis....

The system of globalization is going down with the spreading panic in global finanical circles....

 

iyraste1313

There ought to be a new thread...as the crisis has now fallen into collapse......

May 10 - Financial Times (Robin Wigglesworth): "The investor withdrawal from emerging markets accelerated over the past week, with equity funds suffering their worst outflows in nearly a year and bond funds losing money for a third week running - the longest streak of withdrawals since late 2016… EM equity funds had outflows of $1.6bn in the seven days to May 9, the first weekly outflow since February and the biggest since August 2017… Fixed-income funds focused on the developing world saw their outflows accelerate. Investors withdrew $2.1bn from EM bond funds, the third consecutive week of outflows and the worst one since February. EM debt funds have now suffered outflows of more than $4bn since mid-April."

Argentina, Turkey definitely are now in panic mode....Brazil, Malaysia suffering serious decline in their currency and bond yields...the collapsing EM or emerging market countries inevitably has to infect the core countries of the western financial system...this is now happening...it´s a deck of cards, one collapsing onto the next...and the timing seems to be gaining speed! 

iyraste1313

The S&P 500 Index slumped as health-care and tech shares retreated. The Treasury selloff sent note yields to 3.07 percent. Higher rates sap demand for equities that have been on a tear for two weeks. Upbeat retail sales data fueled bets the Fed may raise rates three more times this year, pushing Bloomberg’s dollar index to its 2018 high. Emerging-market equities dropped the most since March. Gold fell below $1,300 an ounce for the first time since December.

Investors grappled with trade, growth, and geopolitical worries as a risk aversion spread across assets. Rising yields, a stronger dollar and sliding stocks are fast becoming a familiar and uncomfortable cocktail for investors. Now violence in the Middle East, the U.S.-China trade spat, uncertainty on Italy’s government and global growth concerns are helping cement the prevailing sentiment.....

...uncertainty re Italy is fueling the financial stress there...a familiar story? as nations move to greater autonomy anti globalization governments, likewise their finances will be jeapordized aka Argentina, now with failing currency and interest rates at 40%...

iyraste1313

Brazil Central Bank Intervention Fails As Real Rout Accelerates...from zerohedge

​....the crisis of the major emerging markets continues to grow...the core economy financial counterparties, must be taking a big hit right now (Deutchebank!!)

Sean in Ottawa

I do not think there is clarity here even as the warning signs are more dire. The US stocks are not in full retreat and there is a significant likelyhood that this will not happen before a sudden crash. Only with this crash will it be clear what is happening globally. This is a very dangerous position especially as the politics in the leading economies are so far off the rails.

iyraste1313

Clarity?

"I would recomend you panic"...peso pounded, lira lashed, rand routed as Emerging Markets crash...(from zerohedge)

whatever may be presently tried to keep the EM markets from crashing...they are no longer working.......all is connected.....the counterparties of the core financiers here must take the losses...this is what is clear....and it is the EM markets that will take down the system...that also is clear!

This is pessimistic? Only if we are not preparing the alternative, building community, alternatives to money systems, alternative horticulture, energy production, collectivist solutions for our needs, built on municipalism, yes!!

Sean in Ottawa

iyraste1313 wrote:

Clarity?

"I would recomend you panic"...peso pounded, lira lashed, rand routed as Emerging Markets crash...(from zerohedge)

whatever may be presently tried to keep the EM markets from crashing...they are no longer working.......all is connected.....the counterparties of the core financiers here must take the losses...this is what is clear....and it is the EM markets that will take down the system...that also is clear!

This is pessimistic? Only if we are not preparing the alternative, building community, alternatives to money systems, alternative horticulture, energy production, collectivist solutions for our needs, built on municipalism, yes!!

Yes, the cliff is getting closer with no clarity in the signals we get as we approach it. This is precisely why crashes happen.

Markets are not indicating how dangerous things are. This is in part due to the fact that wealthy poeple may believe they can game the system enough to escape the pain when it comes. They are wrong.

NDPP

Russia Dumps Half of its US Treasury Bonds

https://on.rt.com/97qj

"Russia has held a major selloff of US Treasury bonds, dumping some $47 billion worth of papers..."

NDPP

The Global Economy - What Lies Beneath? (and vid)

https://www.rt.com/shows/renegade-inc/429387-global-economy-business-trade/

"Stock markets are near all-time highs, bankers are taking big bonuses once again, and America is shaping up for the mother of all global trade wars...What could possibly go wrong? 

Is the global economy back to 'business as usual' after the great financial crisis? Or is our intuition telling us something different? What is really going on in the markets and the wider global economy? 

Host Roger Ashcroft is joined by investor, hedge fund manager and author of Planet Ponzi, Mitch Feierstein."

iyraste1313

Global contagion from the collapse of Emerging Markets!

In fact, as Bloomberg reports, outflows from U.S.-listed exchange-traded funds that invest across developing nations as well as those that target specific countries totaled $2.7 billion in the week ended June 15, the most in over a year and more than seven times the previous week.

....as I warned recently, the counterparties in "our" financial system will be hit first!

But the situation is far more grave, generally, globally.......we are now into the 4th month of a global financial collapse....a several hundred year system doesn't turn to dust and chaos overnight...but the crisis is reaching the homefront now! Argentina, Turkey, Brazil, now Mexico, the peripheral Eastern and southern European countries...but above all China....its major corporations facing defaults on their loans what with a lack of access to more finance capital, above all from the Chinese shadow banking system...and now facing a trade war! Checkmate!

Scary stuff!

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