[Michaelangelica]

People here are getting very nervous with banks putting up interest rates (0.2%)without any Reserve bank prompting. (Almost unheard of).

Quote

Australian banks under pressure over US subprime exposure
6 hours ago
SYDNEY (AFP) — Shares in Australia's top banks came under pressure on Thursday after a report put their exposure to the US subprime crisis at one billion dollars (884 million US).
. . .
The newspaper said that the four banks were part of a global syndicate of 40 banks that lent troubled US mortgage group Countrywide Financial 11.5 billion US dollars last year.

AFP: Australian banks under pressure over US subprime exposure

Quote

Sub-prime drama sparks a bank war
John Durie | January 10, 2008

THE sub-prime crisis has ignited open warfare among the big Australian banks for the first time since former CBA boss David Murray went on the warpath 14 years ago, chasing market share.

Now, his successor Ralph Norris is carrying the same torch. The fact that, in the past week, Australian banks have increased lending rates outside a normal Reserve Bank cycle shows the wheel has turned against the sector.
The banks are only making up some of the shortfall from increased funding costs by increasing lending rates and, in the process, are trying to grab market share to help minimise the costs further.

But, even though the latest Australian economic news looks good, the big bear coming out of the closet is not just shrinking margins but an inevitable increase in bad loan reserves, now that everyone has remembered risk comes at a price. Norris is about to launch a major new brand campaign, and his job has been made so much easier by ANZ's government relations bungle over its 20 basis point hike on variable home mortgage rates.

Sub-prime drama sparks a bank war | The Australian

Quote

Banks, UN warn of impending recession

Posted Thu Jan 10, 2008 7:37am AEDT

Another big investment company in the US is warning of an impending recession in the American economy, while the United Nations (UN) has warned US economic problems could trigger a world recession.

Goldman Sachs says the American housing and credit woes suggest the US economy "is falling into recession".

In a research note to. . .

Banks, UN warn of impending recession - ABC News (Australian Broadcasting Corporation)

SoI guess there is not much chance of *itybank dropping my credit card interest rate from 19.65%?

It would be great, would it not, to be in a business where you could not only increase your prices overnight but also the price of everything you have sold over the last 20 years? The banks have it made.
:twocents:
*Sh + tt or merde in French

[LaurieAG]

Michaelangelica said:

The banks have it made.
:twocents:
*Sh + tt or merde in French

Hi Michaelangelica,

I heard on the radio the other day that the global financial system doesn't really relate that much to the global economic system. But then what do you call the worlds biggest gambling establishment, that won't close down tables during big runs? (Brave or foolhardy)

So the masters of the perpetually expanding (financial) universe are starting to disappear down a black hole of their own making. Dubious foundations for a financial system let alone a basis for true science.

[Michaelangelica]

Yes larie, dubious indeed

Quote

Wall Street started the day with Merrill Lynch reporting that it lost $9.8 billion in the fourth quarter, mainly because of booking $15 billion in losses tied to soured home loans.
. . .
Harry Reid of Nevada, was irritated that Mr. Bush had abruptly decided to outline a plan on his own instead of developing a bipartisan package with Democrats. “

http://www.nytimes.c...s/18fed.html?hp
More tax cuts for the rich?

Wealthy may be next in line in US home crisis
Wealthy may be next in line in US home crisis - ABC News (Australian Broadcasting Corporation)


Welcome to Citibank

[Michaelangelica]

Seems too be getting worse?

Quote

"NYTimes. com News Alert" <nytdirect@nytimes.com>
to me

show details
04:12 (16 hours ago)
Breaking News Alert
The New York Times
Monday, January 21, 2008 -- 12:11 PM ET
-----

Stock Markets in Europe Plunge 7 Percent

Stocks fell steeply in Europe on Monday after sharp overnight
declines in Asia, reacting to fears that an American
recession was unavoidable and would crimp global growth. The
DAX index in Germany closed off 7.16 percent and the CAC 40
in France lost 6.83 percent. British stocks fared slightly
less badly; the FTSE 100 lost 5.48 percent. United States
financial markets are closed today; Canadian and Mexican
stocks were off sharply at midday.

Read More:
The New York Times - Breaking News, World News & Multimedia

-----
Visit our mobile site for the latest news:
The New York Times

[Qfwfq]

Tonight Asian markets plunged even worse. This morning European markets opened a bang lower and staggered back up to around yesterday evening. New York opened down and is still down, despite the FED's hefty 0.75% cut, Dow rose back to touch 12000 and is now staggering back under it (last minute's quote DOW-1.11% NSDQ100-2.43%). All talk is about recession, with mentions of the Great Depression. It has been obvious for a long while now.

[Qfwfq]

Dow creeping back above 12000 but still under Friday evening and I wonder how long the bargain hunting will last...

[Michaelangelica]

Quote

Panic easing on Aust share market

Posted 7 hours 35 minutes ago
Updated 5 hours 28 minutes ago
After 12 straight days of declines, local stocks have reversed some of the losses. (File photo)

After 12 straight days of declines, local stocks have reversed some of the losses. (File photo) (AFP: Greg Wood)

Panic on the Australian share market is easing after a move to ward off recession in the United States.

After 12 straight days of declines, local stocks have reversed some of the losses made in yesterday's freefall.

Panic easing on Aust share market - ABC News (Australian Broadcasting Corporation)
America sneezes and the world catches a cold.

I wish I had money enough to play this chess game.

[freeztar]

Qfwfq said:

All talk is about recession, with mentions of the Great Depression. It has been obvious for a long while now.

Yes, the "R"-word comes up a lot in conversations these days.
Your mention of the Great Depression got me thinking. I went to wiki and pulled up the article. In it, there's a great explanation of what FDR's chairman of the Federal Reserve believed caused the GD. It's an interesting, and scary, read if one tries to draw comparisons to our current situation.

Quote

As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation s economic machinery. [Emphasis in original.] Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped [Emphasis mine].

Great Depression - Wikipedia, the free encyclopedia

[Michaelangelica]

Sometimes Ii think the whole economic system is one big poker game.
With just as much testosterone.

One problem with recession is that it can be a self-fulfilling prophesy as people stop spending as they feel they may need their money if a recession comes. This, if enough people stop spending, is a good way to start a recession.

This NYT article is a brief summary of what is in the USA Government's 'stimulus package'.
http://www.nytimes.c...nyt&oref=slogin
(I guess this answers the question of this thread A-"very bad")
I found The NYT article more interesting for its list of what was not in the 'stimulus package'.

Quote

Quote

WHAT'S OUT

• --Permanent tax cuts: Republicans conceded that their top priority would have to be left out.
  
  
• --Unemployment insurance: Democrats wanted to extend benefits past 26 weeks.
  
  
• --Food stamps: A boost for benefits.
  
  
• --Medicaid: Democrats gave up on including Medicaid payments to states.
  
  
• --Low-income heating subsidies: Democrats are surrendering the fight to include them.
  
  
• --Infrastructure spending: Spending on transportation or repair projects already under way is off the table.
  
  
• --Republicans dropped their proposal to let businesses suffering losses now reclaim taxes previously paid.

You would think doubling food stamps would be the quickest way of stimulating the economy , rather than waiting for the bureaucrats to mail out a few million cheques. Money that people may, or may not, spend.
Food stamps would also go to the most needy in the society.

[freeztar]

Michaelangelica said:

One problem with recession is that it can be a self-fulfilling prophesy as people stop spending as they feel they may need their money if a recession comes. This, if enough people stop spending, is a good way to start a recession.

Indeed.

Quote

You would think doubling food stamps would be the quickest way of stimulating the economy , rather than waiting for the bureaucrats to mail out a few million cheques. Money that people may, or may not, spend.
Food stamps would also go to the most needy in the society.

The worry there is multifold. How many people receiving food stamps are legal citizens? What happens to the money once it gets spent? etc...

You should join in on the economic stimulus thread I started in the social science forum.

[Michaelangelica]

freeztar said:

Indeed.

The worry there is multifold. How many people receiving food stamps are legal citizens? What happens to the money once it gets spent? etc...

It doesn't matter, as long as the money is spent, and quickly.

Quote

You should join in on the economic stimulus thread I started in the social science forum.

OK we seem to have answered this question
There are still some big companies due to report to the market over the next three months. I would like to see what happens with them.

[Michaelangelica]

The USA economy in pictures.
Half a dozen interesting graphs.

Mostly reassuring?
BBC NEWS | Business | US economy at a glance

[Michaelangelica]

Quote

Credit Suisse writes down further $2.85 billion

February 19, 2008 - 8:23PM


Credit Suisse said on Tuesday it was writing down a further 2.85 billion US dollars (1.9 billion euros) worth of assets linked to the US housing market due to adverse conditions in the first quarter.

Credit Suisse shares plunged in opening trade on the Zurich stock exchange, down 6.7 percent at 52.90 Swiss francs.

The new writedown comes less than a week after Credit Suisse said it had broadly contained subprime losses in 2007, in contrast to its rival UBS which lost 18 billion US dollars through its exposure to the crisis.

Credit Suisse writes down further $2.85 billion - Breaking News - World - Breaking News

Quote

FBI continues sub-prime crackdown
February 15, 2008 - 6:10AM

The FBI recently opened two more investigations, bringing to 16 the number of corporations now being probed as part of its crackdown on sub-prime mortgage industry fraud, a bureau spokesman says.

FBI continues sub-prime crackdown - Breaking News - Business - Breaking News

[Michaelangelica]

Quote

Japan Economy Quakes Anew
As Yen Soars Against Dollar
Political Gridlock
Hits Tokyo Stocks;
An Upside for U.S.?
By YUKA HAYASHI and JOANNA SLATER
March 14, 2008; Page A1

The dollar's dive deepened, as it touched a low against the euro and, for the first time since late 1995, briefly bought fewer than 100 yen.

Japan Economy Quakes Anew As Yen Soars Against Dollar - WSJ.com

Lots of ripples this week.
Bush bailing out a massive bank. It seems to be just getting worse all the time.

Quote

Fed moves to bail out major US bank

Posted Sat Mar 15, 2008 4:06pm AEDT
Updated Sat Mar 15, 2008 8:38pm AEDT


The bail-out was the first of a major bank since the depression. (File photo) (Reuters: Lucas Jackson)

Shot of the Bear Stearns logo on the side of a building
* Video: Fed to bail out major US bank (ABC News)

The fifth-largest investment bank in the United States, Bear Stearns, has been given emergency funding to save it from collapse.

The amount has not been disclosed, but the rescue was carried out by another leading bank, JP Morgan, using short-term funds guaranteed by the US Federal Reserve.

Bear Stearns is in the category of investment bank regarded by regulators as too big to fail.

Fed moves to bail out major US bank - ABC News (Australian Broadcasting Corporation)
Banks seem to be immune to the pain and suffering they are causing people (peasants?) who merely want to put a roof over their heads

How long before they are more effectively regulated or even taken over by Government?
Bush could have bought Bear Stearns for what he is lending it (?)
How long can they continue to wreak such international havoc?

Quote

Home prices plunge across California

By ALEX VEIGA, AP Business Writer Thu Mar 13, 3:11 PM ET

LOS ANGELES - Median home prices plunged in many of California's most populous counties in February, with Southern California leading the slide with an overall drop of 17.9 percent compared to a year earlier, according to new housing data released Thursday.

Home prices plunge across California - Yahoo! News

Quote

When bankers say "this is unprecedented", what they mean is: "We've screwed up and we are trying to blame the markets for our own greed and stupidity."

The worst case scenario

Quote

Alternatively, the crisis might be a true collapse of the dollar, with co-ordinated action by the world's central banks to rescue it.

To make that effective, there would have to be co-operation from the Bank of China and I would like to see the central banks of India and Russia involved too.
That would be humiliating for the US and things have to get a lot worse for such a deal to be done.
The trick under these circumstances is to get the central banks to act in concert to steady the currency just at the moment when the markets are ready to turn.
Meanwhile, a botched attempt at a rescue would be more damaging than no rescue at all.

There are two big points here.

• One is that a US recession will have some knock-on effects for the rest of us.
  
• The other is that it is likely to be some months before calm returns.

Economic View: Budget? What Budget? America is reeling - Hamish McRae, Business Comment - Independent.co.uk
The EU has overtaken the USA as the world's biggest economy.

[DougF]

Quote

Moscow's Sinking Ship
In Russia, it is still business as usual. Even top executives remain sanguine. Even as the dollar fell below the Swiss franc for the first time ever and Bear Stearns disappeared, oil hit $111 per barrel and gold surpassed $1,000 per ounce. On top of continued inflows of petrodollars, Russia has hard currency reserves of more than $486 billion and a stabilization fund of roughly $156 billion. Why should anybody in Russia be concerned with an esoteric corner of the U.S. mortgage market?

People tend to think of the economy as a collection of isolated segments. There is the housing market and there is Wall Street -- and they have their place of employment, which has no link to the other two. Why, many Russians wonder, should the U.S. financial crisis affect their jobs, especially if it happens to be on the other side of the globe? It is as though a fire in the Konkovo district of Moscow forced an evacuation at the Metropolitan Opera in New York.


In reality, the modern economy is a single, seamless entity linked across national borders and nourished by the global financial system. We are probably witnessing the early stages of the crisis of the financial system, which will be felt everywhere around the world, from Astrakhan to Zurich and points in between.

<-->

The dollar is the world reserve currency, and when the Federal Reserve prints too many dollars, there is little foreign central banks can do to limit money supply at home. Americans paid dollars for imported goods and natural resources, which meant that the rest of the world also became oversaturated with liquidity. Much like the rest of the world, Russia experienced an explosion of lending. Russia's consumer loans rocketed over the past five years, from around $5 billion in 2003 to more than $100 billion last year.

<-->

A mortgage to a single mother in Wichita, Kansas, and a car loan to a hard-drinking plumber in Perm both stemmed from decisions made by U.S. central bankers in the first half of the 2000s. They were both weak links of the financial system. The only difference is that the U.S. subprime mortgage market was big enough to start a chain reaction that is dragging down world financial markets.

Price is the language in which markets communicate with market participants. By distorting the value of money, the Federal Reserve caused markets to send wrong messages. The bubble in the housing market boosted the U.S. economy by creating a construction boom. The ability to borrow against appreciating homes -- and the willingness by banks to lend -- stimulated consumer demand. To produce goods and services to meet inflated U.S. demand, China, India and other producers around the world began to invest, especially since investment funds were so cheap.

<-->

Investment is a good thing, but only if the goods and services it provides can recoup the value of investment. When there is overproduction, as seems to be the case now, additional investment is not only bad -- it is potentially catastrophic. When producers can't repay the money they have borrowed, they create additional problems for the financial system by slashing their prices and thus bringing down their competitors.

As for the trillions of dollars accumulated at central banks and sovereign funds around the world, including in Russia, there is something that should be kept in mind: Since mid-2007, world central banks have pumped hundreds of billions of dollars into their financial systems. In a financial crisis, money tends to flow like water in the desert sand.

The United States is not only the world's largest consumer, absorbing one-third of its resources, it is the linchpin of the world economy. The dollar is central to the global financial system. To hope that the rest of the world can survive a U.S. downturn unscathed is like saying that a high-stakes poker game can go on uninterrupted on the top deck of the Titanic while its hull is taking in water.

Moscow's Sinking Ship