How close are we to economic meltdown

[ONEDUNME]

Every day I think we have reached the bottom of the pit. Or to paraphrase old Winston's - maybe not the end, maybe not even the begining of the end
but at least the end of the beginning.

I've never been convinced that the US bailout would be the panacea but I did hope that it might at least dry up all the endless diarrhoea and act of some kind of line in the sand so that the world (or most of it) might start to journey on the long and fragile pathway to recovery.

Not to be, it seems. Every day the situation gets worse. And this is just the tip of the iceberg. IF we ever reach the stage when everyone is in agreement that the worst is over, we can expect the reverberations to shudder down the food chain to us suckers in (what the US politicians call ) "Main Street" and we can expect a kicking for the next two years or so.


This is the latest assessment from the BBC's Richard Peston -who seems to have had a pretty good handle on what's happened so far along the way.

BBC NEWS | The Reporters | Robert Peston


How close to capitulation?

• Robert Peston
• 6 Oct 08, 03:47 PM

Blimey it must be serious.
Every European Union leader has signed up to the following statement:
"All the leaders of the European Union make clear that each of them will take whatever measures are necessary to maintain the stability of the financial system - whether through liquidity support through central banks, action to deal with individual banks or enhanced depositor protection schemes.
"While no depositors in our countries' banks have lost any money, we will continue to take the necessary measures to protect both the system and individual depositors. In taking these measures, European leaders acknowledge the need for close coordination and cooperation."
So the mayhem of uncoordinated statements and actions over the past few days by the governments of Germany, Denmark, Sweden, Ireland and Greece was simply an accident.
They're all back on the same hymn-sheet today.
Investors seem underwhelmed: the FTSE 100 index is tumbling and shares are currently almost 8% lower.
If sustained this would make it the third worst fall in the history of the FTSE 100 index.
Does this mean we're close to that fabled moment in stock markets - the point of capitulation - when investors lose all hope and dump their stock at any price?
According to the theory, there can be no sustained recovery until the markets are in the clutches of utter despair.
Not everyone subscribes to the pseudo-economic psycho-babble.
But it certainly looks hairy out there.
Update 17:35
Today was when no one could be under any illusion that the global banking crisis is primarily a North American phenomenon.
There's a mess in Europe too, because European banks were also seduced over the preceding few years into lending too much to cheaply to consumers and businesses.
In the past 24 hours, we've seen bank rescues in Belgium, Luxembourg and Germany, and an attempted rescue of an entire economy, that of Iceland.
We've also had the worrying spectacle of apparent disunity among the governments of Europe, with Germany, Denmark, Sweden and Spain all taking unilateral steps to reassure their savers - which risked destabilising banks in other countries.
And when EU government heads then issued an emergency joint statement promising to collaborate more closely, curiously that served to spook investors even more - presumably because it underlined the fragility of the banking system.
What's also prompted high anxiety among investors and bankers is the mounting evidence that the crisis in financial markets is causing a severe economic slowdown.
And when there's a collision of a financial and economic downturn, well the consequence can be painful - because rising unemployment leads to more loans going bad which further weakens our banks.
So the Chancellor's plan to strengthen our banks by injecting taxpayers money in the form of new capital is also an economic recovery plan

[ONEDUNME]

We're going to see the effects manifest themselves in many different ways over the next year. Iceland is in the shit because they've ridden the wave of the over inflated interest bubble - And I'm talking about the country not the frozen food company.

An early indicator that people are beginning to take this shit deadly seriously.

New car registrations fall by 21%

New car sales are down for the fifth month in a row New UK car registrations fell 21% in September, the Society of Motor Manufacturers and Traders (SMMT) has announced. This is the fifth consecutive month that the SMMT has reported falls in new car sales. In further evidence that the current financial crisis is hitting the wider economy, year-to-date registrations are down by 7.5%. The SMMT is urging the government to take action to restore confidence. The figures are particularly disappointing given that September is typically a bumper month for new car sales - it usually accounts for 17% of the annual total

[ONEDUNME]

Watch for the "for sale" signs in a street near you. It won't be a sign of confindence that the good times are back. The first sellers will be the ones who can see negative equity looming and realise that they just can't afford to keep paying a mortgage worth more than the house so they panic and try to get rid before the prices get even lower.

[ONEDUNME]

Not to mention some of the "Buy" to let people bailing out.

Also keep an eye out for the "sold" signs. There may be one or two around about January/February time.

If we're lucky.

[Seen]

WHY DON'T THEY JUST PRINT MORE MONEY????

[kompressaur]

I don't know whats going on in the world ODM but ive never been so skint. I blame it on the price of drink and cigarettes and the ease of which it is to gamble these days. I think i am in recession. The only good thing for me out of all this is that my landlord needs tenants in his houses as he cant sell any of them.

at Seen

[kompressaur]

Just reading that bank shares have went down again at the weekend. Intersting piece here on how this slump compares with other slumps
Stock markets: A short history of boom and bust | This is Money

It was the recession in the late 90's that affected how i am today. It was back then i would look for alternatives to work etc

[Winrew]

Well, the credit crunch hits us at the end of the month when the wife becomes unemployed. Time to tighten the belt. I will have to start working overtime which i am loathe to do , tough on my part but shit happens.

[Winrew]

Anyway, off to the gatehouse as the pizzas have landed .

[Punter]

Well i'm shitting it, i'm on a contract where they dont even have to give me any notice, i could turn up for work one day just to be told to fuck off and work has definately slacked off over the past two months. I'm just hoping they dont do it before Xmas.

[ONEDUNME]

Well good luck there Kop.

I don't know if it's just me but I get the impression that just before Christmas seems to be the time that companies give out most of the "bad news" about lay offs, closures contract losses etc etc.

It's almost as if they begrudge their workers enjoying a christmas or something.

[ONEDUNME]

BBC NEWS | Business | Iceland acts to avoid bank chaos


Iceland's parliament has passed emergency legislation to try to salvage the country's banking system.
In a televised address to the nation, Prime Minister Geir Haarde said the legislation would help the island avoid national bankruptcy.
Iceland will also offer an unlimited guarantee for all bank customers' savings accounts.
The moves come after trading in six of Iceland's biggest banks and financial firms was temporarily halted.
Banks dominate Iceland's economy, leaving the island of just 300,000 people heavily exposed to the global credit squeeze.
Under the legislation, Iceland's financial regulator will have wide-ranging powers to dictate a bank's operations and could even force it to merge with another company or declare bankruptcy.
The bill will also allow the government to take over housing loans held by the banks and put in a government fund.
National bankruptcy
"We were faced with the real possibility that the national economy would be sucked into the global banking swell and end in national bankruptcy," Mr Haarde said. "The legislation is necessary to avoid that fate."

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We need a Europe-wide statement from all Governments that all savings will be protected. Otherwise, money will be moving banks so fast that it will just add to the panic and until the situation is more stable, no bank is going to risk lending any fucker anything.

[Bigkegman]

Originally Posted by Winrew

Well, the credit crunch hits us at the end of the month when the wife becomes unemployed.

Wife got paid of end of July

She's had loads of interviews and no luck but she's temping just now and has another interview for the job she's doing just now but shes been working for the last 3 weeks and they've still never sorted out a contract or took any bank details so dont know when she's getting paid for the work shes already done

but

[Punter]

Originally Posted by ONEDUNME

Well good luck there Kop.

I don't know if it's just me but I get the impression that just before Christmas seems to be the time that companies give out most of the "bad news" about lay offs, closures contract losses etc etc.

It's almost as if they begrudge their workers enjoying a christmas or something.

I dont think it is just you ODM, i have been laid off at the end of November before (about 8 years ago). I didn't even get the £350 xmas bonus that the permanant staff got, i'd been there 20 months as a temp too.

I see a headline yesterday that experts estimate over one million people will lose their jobs through closure next year. If thats the case then it's time to send our european friends home i think.

[keemanan]

Not the end of the beggining IMO, it all began with the banks not lending to eachother and Northern Rock giving out 125% mortgages.
The knock is the bitch though , no cnut will be buying cars, doing extensions, booking holidays , having their gardens done, buying flat screeen TV's etc