Global Market Crash?

[joebudda]

We will see in the next few months if the Royal Bank of Scotland (Scotland's central bank) is correct.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/18/cnrbs118.xml

The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.

"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.

Hold on tight, we might be in for a bumpy ride.

 

[FilM]

We will see in the next few months if the Royal Bank of Scotland (Scotland's central bank) is correct.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/18/cnrbs118.xml


Hold on tight, we might be in for a bumpy ride.

Well I'm holding off buying shares for the moment even though there's some very attractively priced companies out there right now, as I don't see the price of oil going down and this will be a major driver of a recession.

The only countries that I can see weathering this are the Chinese due to their huge capital reserves and those that supply them with raw materials like Brazil and Australia, and the major producers of oil or gas like the middle east and Russia.

 

[Panzerkamfwagen]

The Chinese won't survive a worldwide recession because no one will have money to buy their stuff.

 

[GodGunsAndGlory]

JoeBudda, I thought you were smart on this subject. People from Central Banks are idiots.

 

[Suomipoika]

JoeBudda, I thought you were smart on this subject. People from Central Banks are idiots.

How big % of the world population is the kind of folks whom you would not mock as "idiots"? Are you then perhaps the kind of noble, spirit-filled representative of Jesus Christ whom these "idiots" should take as their example? Are they gonna "see Christ" when they see GodGunsAndGlory? Is your life and behaviour the "5th Gospel" that will help turn the hearts of these "idiots" to Jesus?

Matthew 5:21--->

"But I say unto you, That whosoever is angry with his brother without a cause shall be in danger of the judgment: and whosoever shall say to his brother, Raca, shall be in danger of the council: but whosoever shall say, Thou fool, shall be in danger of hell fire"

Well, technically speaking you, GodGunsAndGlory, are not calling these people (pretty much all others than yourself) "fools", you are calling them "idiots". Is that so much better as to not "earn you hell fire"? Remember, GodGunsAndGlory, "it is easier for Heaven and Earth to pass away than for on stroke of the law to become void" as you so solemnly proclaimed. So how is it, what is your stance on this elaboration by Jesus on these strokes of the Law concerning murder in Matthew 5?

 

[FilM]

The Chinese won't survive a worldwide recession because no one will have money to buy their stuff.

To a certain extent, but they can probably avoid a recession by continuing to invest heavily in basic infrastructure such as roads, rail and energy, which will provide projects for companies and employment. This will be the main driver of their economy with flow on effects to the rest of their economy.

They certainly have enough money for several years of investment. By the time they show signs of slowing growth the rest of the world should be picking up and require their goods again.

 

[LonesomeTexan]

To a certain extent, but they can probably avoid a recession by continuing to invest heavily in basic infrastructure such as roads, rail and energy, which will provide projects for companies and employment. This will be the main driver of their economy with flow on effects to the rest of their economy.

They certainly have enough money for several years of investment. By the time they show signs of slowing growth the rest of the world should be picking up and require their goods again.

We'll simply trade roles with China. We'll become the third world exporting nation while China buys up the stuff we produce. This is a good thing. It's about time we stop living on borrowed money and consuming, and start producing wealth and saving it. The last 30 years we've had a FIRE economy. You can't shuffle papers around forever and think you're creating wealth. You have to produce it.

 

[joebudda]

My take for this instability is a direct result of the world using the US dollar as its reserve currency. And the instability of the US dollar is causing these types of "shock waves" across the world.

I will bet that this will be the straw that breaks the camels back, meaning I predict we will see a withdraw from the US dollar around the world. The US dollar being the world reserve is the only thing that it holding the US dollar afloat right now, I believe. So if we start seeing this exodus from the dollar we should expect to see the dollar fall even faster then we are seeing now. The dollar will be worthless around the world, and the instability on the world scale will not settle down until something stable is used as an anchor, and it wont be the US dollar I presume.

So what we should start seeing is the Fed begging the other world banks to "work together" in some way to soften the blow to the US dollar. But it is really in the best interest for the rest of the world to get out of the US dollar ASAP before it sinks their economy as well.

 

[WorldIsMine]

It's best to let the dollar become devalued so that further distortions and disruptions in the economy don't result. Just as in the Great Depression, falling prices and wages are not just a result of the way government has screwed up the economy, they are part of the solution.

 

[GodGunsAndGlory]

How big % of the world population is the kind of folks whom you would not mock as "idiots"? Are you then perhaps the kind of noble, spirit-filled representative of Jesus Christ whom these "idiots" should take as their example? Are they gonna "see Christ" when they see GodGunsAndGlory? Is your life and behaviour the "5th Gospel" that will help turn the hearts of these "idiots" to Jesus?

Matthew 5:21--->

"But I say unto you, That whosoever is angry with his brother without a cause shall be in danger of the judgment: and whosoever shall say to his brother, Raca, shall be in danger of the council: but whosoever shall say, Thou fool, shall be in danger of hell fire"

Well, technically speaking you, GodGunsAndGlory, are not calling these people (pretty much all others than yourself) "fools", you are calling them "idiots". Is that so much better as to not "earn you hell fire"? Remember, GodGunsAndGlory, "it is easier for Heaven and Earth to pass away than for on stroke of the law to become void" as you so solemnly proclaimed. So how is it, what is your stance on this elaboration by Jesus on these strokes of the Law concerning murder in Matthew 5?

Jesus is speaking of unrighteous anger and is not saying you cannot call someone a fool, because if he did, he is sinner, which our Lord does not sin.

You really should learn to interpret what you post, because I can't count how many times you have done this and you have totally misinterpreted the verse. Which btw you wrote the wrong one, its verse 22 not 21.

Also, please read what you are trying to say I'm wrong on, because you are the wrong one, because the way you are interpreting murder in the heart would contradict how you interpret adultery in the heart.

 

[Nathan Poe]

We'll simply trade roles with China. We'll become the third world exporting nation while China buys up the stuff we produce. This is a good thing.

What is it we produce again?

 

[Suomipoika]

So it's "dogmatically correct" to call 90% of the world population "idiots". Now I must have heard it all.

 

[FilM]

My take for this instability is a direct result of the world using the US dollar as its reserve currency. And the instability of the US dollar is causing these types of "shock waves" across the world.

I will bet that this will be the straw that breaks the camels back, meaning I predict we will see a withdraw from the US dollar around the world. The US dollar being the world reserve is the only thing that it holding the US dollar afloat right now, I believe. So if we start seeing this exodus from the dollar we should expect to see the dollar fall even faster then we are seeing now. The dollar will be worthless around the world, and the instability on the world scale will not settle down until something stable is used as an anchor, and it wont be the US dollar I presume.

So what we should start seeing is the Fed begging the other world banks to "work together" in some way to soften the blow to the US dollar. But it is really in the best interest for the rest of the world to get out of the US dollar ASAP before it sinks their economy as well.

Globally banks have been slowly withdrawing from the US dollar for the last two or three years. There's been a lot of management by central banks to ensure the fall is slow, as a run on the dollar would do no one any good.

I wonder if there will be some tipping point, where one significant player will sell off a large portion of their US dollar holdings and the rest will see it as a signal and dump theirs as soon as possible before their holdings significantly drop in value. It happened a few years ago, where a minor Korean bank sold a not-insignificant portion of their US dollars and the dollar dropped by 1% as others followed. Now this was only a small Korean bank and only a proportion of their holdings. What if a bank like HSBC or one of the larger Japanese banks does it?

The major difference between us and other countries whose currency significantly devalued, like Argentina of a few years back, is that our debt is in our own currency so if our dollar drops, we still only have to pay back the original amount (unlike Argentina whose debt was in USD and when their currency halved, their debt essentially doubled).

 

[GodGunsAndGlory]

So it's "dogmatically correct" to call 90% of the world population "idiots". Now I must have heard it all.

False witness, where did I say 90% of people were idiots.

European conservatives who oppose the leftist idiots running and destroying Europe are very smart people.

 

[mindlight]

We will see in the next few months if the Royal Bank of Scotland (Scotland's central bank) is correct.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/18/cnrbs118.xml


Hold on tight, we might be in for a bumpy ride.

Banks may well be more pessimistic than the rest of us though even that makes little sense. The big 4 in the UK have enormous profits and have taken most of the write offs of the bad debts of the last few years in their stride. The worst is already over in that respect. Even the English economy remains strong in its basic fundamentals despite years of labour party mismanagement. We have the hope of change at the next election

China, India and Russia continue to boom and much of Europe e.g. Eastern Europe and Germany especially are not as vulnerable to the bubbles of bad credit as others make out. Maybe we are watching the rapid economic transition to a more multipolar world - what's happening here is a power shift from dollars to Euros and yuan. America is not as important as it used to be when it comes to world recessions even it remains militarily supreme.

Why do these big crisis's always seem to happen in American election years (last big one was at end of Clinon era), all the rich liberals and East coast newspapers in US support Obama and the Europeans (not vulnerable to their electorates this year) are happy to play along talking the Republicans out of power due to "poor management of the economy". So we have a bunch of doom and gloom intellectuals writing about the end of the world when actually its just a dark side prayer for Obama and his liberal values. Perhaps these rich liberal guys overestimate their own self importance or perhaps they stand for a worthy cause. Maybe this is the real question.

Why are some very big and important people trying to talk us into a recession?

Is Obama worth me having to pay more for my mortgage this year than last?

Have to say no really - he stands for abortion on demand , gay marriage and the kind of religious pluralism that will only undermine the true strength of Americas foundations. He represents weakness and retreat in the Middle East when a strong voice is needed there. He represents the aspiration for a European approach in America when America really needs to remain that city on a hill which Europeans need to aspire to without buying in to everything it says for themselves. Hes acquired a chip on his shoulder about race from some really suspect pastoral friends when what America needs is racial healing. He has too much experience of Islam and too little of Christianity. He has too little experience of actual leadership while McCain has proven himself in the worst of circumstances and comes from a family of leaders.

 

[joebudda]

Amusing.

It has noting to do with Republican or Democrat.
What we are seeing now has been in the making for about century because of the monetary system.

.

 

[Gremlins]

JoeBudda, I thought you were smart on this subject. People from Central Banks are idiots.

Well luckily for Joebudda, RBS is *not* a central bank; the Royal Bank of Scotland, along the other banks in its group (Nat-West, Bank of Ulster) is just a plain old investment bank. Scotland uses the pound sterling, so its central bank is therefore the Bank of England. The pre-union central bank, originally responsible for the old Pound Scots, was the Bank of Scotland, whose main role nowadays is to print Scottish versions of Sterling banknotes.

A rather large chunk of my money is in RBS group; I certainly hoped they're more competant than you give them credit for, but given how they've recently had to beg the shareholders for money (they'd broken the British laws stipulating that a bank must actually have wealth equal have a certain percentage of the money it has lent out, so needed some quick cash).

 

[mindlight]

Amusing.

It has noting to do with Republican or Democrat.
What we are seeing now has been in the making for about century because of the monetary system.

.

I am happy to admit it might not be a bunch of rich American liberals who turned off the credit sometime in the last few years (the fall in the dollar has ben reducing their power over the last few years afterall) but then who did. With all that oil money floating around looking for investments and all the Chinese reserves , German and Japanese savings one would have thought the world would be awash with credit right now. Instead the money has been turned off and everyone is suddenly talking about bad debts. So who turned the taps off? Serious question but I am not sure anyone who really knows the answer is talking about it.

I hate decisions made in dark smokey rooms.

Of course it might be simply because America has been living beyond its means for the last 10 years and now suddenly investors are looking for less exposed borrowers to lend to. But even that requires a new lending policy and a new focus of when and whom to lend to.

The money is still out there so where is it going if not to the USA anymore? If America is no longer the premium destination for surplus credit who is? This represents an interesting shift in the world of finance.

 

[TheNewWorldMan]

Have to say no really - he stands for abortion on demand , gay marriage and the kind of religious pluralism that will only undermine the true strength of Americas foundations. He represents weakness and retreat in the Middle East when a strong voice is needed there. He represents the aspiration for a European approach in America when America really needs to remain that city on a hill which Europeans need to aspire to without buying in to everything it says for themselves. Hes acquired a chip on his shoulder about race from some really suspect pastoral friends when what America needs is racial healing. He has too much experience of Islam and too little of Christianity. He has too little experience of actual leadership while McCain has proven himself in the worst of circumstances and comes from a family of leaders.

Obama is underwhelming, to be sure, but the problem I have with McCain is he's "business as usual," and business as usual isn't going to cut it. The bedrock assumptions that McCain's generation could take for granted--cheap oil, a bipolar world with America's economic dominance unquestions--are fading into history. We're headed for a multipolar world, and the U.S. economy is going into steep decline relative to the rest of the world. McCain, having already committed to permanent war in Iraq--is going to try and find military solutions to this. There aren't any, and trying to bully the world and start other wars (i.e., Iran) is likely to only hasten our economic fall.

What we need now is an end to the Iraq war, across-the-board spending cuts, modest tax hikes from the upper-middle class on up, and interest rates to go up about 3%. "But this will kill the economy," you say? It probably will hurt it, yes. But there are fundamental imbalances that need to be corrected. Economic correction is usually a painful process. Yes, we would be looking at a 4 to 7 year recession, if not a "mini-depression." The housing market would crater...we'd probably be looking at a 20 to 30% decline in housing prices.

 

[mindlight]

Obama is underwhelming, to be sure, but the problem I have with McCain is he's "business as usual," and business as usual isn't going to cut it. The bedrock assumptions that McCain's generation could take for granted--cheap oil, a bipolar world with America's economic dominance unquestions--are fading into history. We're headed for a multipolar world, and the U.S. economy is going into steep decline relative to the rest of the world.

Obama is underwhelming.

CHEAP OIL - is not a safe assumption for the future and despite McCains talk of energy self-sufficiency this has yet to become a serious policy initiative for him.

BIPOLAR WORLD:
The world is currently militarily unipolar and economically multipolar. The shift is towards a more multipolar military balance of power but the Americans have a colossal lead and with NATO in tow remain dominant for the foreseeable future.

US RELATIVE ECONOMIC POWER
Its declining in relative terms vis a vis India and China but is still the one to beat. Even when China achieves absolute parity in GDP it will lag in per capita terms.

MIDDLE EAST :-

McCain, having already committed to permanent war in Iraq--is going to try and find military solutions to this. There aren't any, and trying to bully the world and start other wars (i.e., Iran) is likely to only hasten our economic fall.

The strong man approach is the only one to take in the Middle East and without the real prospect of perseverance even this approach will fail. This is the big question of whether American can finish what it has started. If it does not I fear for the future of us all as the problems which spawned 911 have still not been fully resolved. The Middle east remains an open sore in world politics and cannot be simply walked away from as 911 demonstrated.

What we need now is an end to the Iraq war,

You need to win this war and then hand over to the Iraqis. You are beginning to do this. The last phase need not be as expensive as the previous ones have been.

across-the-board spending cuts, modest tax hikes from the upper-middle class on up, and interest rates to go up about 3%. "But this will kill the economy," you say? It probably will hurt it, yes. But there are fundamental imbalances that need to be corrected. Economic correction is usually a painful process. Yes, we would be looking at a 4 to 7 year recession, if not a "mini-depression." The housing market would crater...we'd probably be looking at a 20 to 30% decline in housing prices.

Interest rates need to come up cause of global inflation. Your budget deficit is not unmanageable and its a domestic decision to cut spending or lower taxes. I like the low tax example of America. Cutting external oil consumption will sort out a large chunk of your trade deficit.

America is no longer a sufficient enough economic force to outweigh the growth coming in India and China and Europe although it can still dent that. As in Britain people have been living beond their means for a few years but the underlying strengths of both economies remain. Certain sectors may experience a more rapid slow down than others as with the last mini recession in 2000 with telecoms and internet startups. Now over exposed mortgage companies and housing construction I suppose.