Depression greater than 1929 a possibility

[Julia]

What is the general opinion of the G20?

Hard to tell, given they have not come out with any specific results of their intelligent discussions.

Perhaps that it was fun to get together, have a bit of a chat, and resolve most importantly to do it all again in eighteen weeks.

All up, really inspires confidence in the populace, does it not?

Let's hope that when Obama gets actively involved some of the grandstanding (notably from the Australian PM) might give way to some constructive planning.

 

[Ageo]

What is the general opinion of the G20?

To me it felt like a bucks party (Mr Bush was the buck finally leaving the high flying life) so they all got their talking about **** (which is what they all have been doing for so long) but of course it had to sound cool "G20" More like G20 the top 20 of worlds biggest gangsters getting together.

I cant see why they cant let all these major companies fail and let the market fix itself (as it always has).

 

[sinner]

Excerpts taken from (dear lord please forgive me for linking Jon Nadler)
http://www.kitco.com/ind/nadler/nov172008A.html

Full text: http://www.whitehouse.gov/news/releases/2008/11/20081115-1.html

1. We, the Leaders of the Group of Twenty, held an initial meeting in Washington on November 15, 2008, amid serious challenges to the world economy and financial markets. We are determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world's financial systems.

2. Over the past months our countries have taken urgent and exceptional measures to support the global economy and stabilize financial markets. These efforts must continue. At the same time, we must lay the foundation for reform to help to ensure that a global crisis, such as this one, does not happen again. Our work will be guided by a shared belief that market principles, open trade and investment regimes, and effectively regulated financial markets foster the dynamism, innovation, and entrepreneurship that are essential for economic growth, employment, and poverty reduction.

Root Causes of the Current Crisis

3. During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system. Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions.

4. Major underlying factors to the current situation were, among others, inconsistent and insufficiently coordinated macroeconomic policies, inadequate structural reforms, which led to unsustainable global macroeconomic outcomes. These developments, together, contributed to excesses and ultimately resulted in severe market disruption.

Actions Taken and to Be Taken

5. We have taken strong and significant actions to date to stimulate our economies, provide liquidity, strengthen the capital of financial institutions, protect savings and deposits, address regulatory deficiencies, unfreeze credit markets, and are working to ensure that international financial institutions (IFIs) can provide critical support for the global economy.

6. But more needs to be done to stabilize financial markets and support economic growth. Economic momentum is slowing substantially in major economies and the global outlook has weakened. Many emerging market economies, which helped sustain

the world economy this decade, are still experiencing good growth but increasingly are being adversely impacted by the worldwide slowdown.

7. Against this background of deteriorating economic conditions worldwide, we agreed that a broader policy response is needed, based on closer macroeconomic cooperation, to restore growth, avoid negative spillovers and support emerging market economies and developing countries. As immediate steps to achieve these objectives, as well as to address longer-term challenges, we will:

* Continue our vigorous efforts and take whatever further actions are necessary to stabilize the financial system. * Recognize the importance of monetary policy support, as deemed appropriate to domestic conditions. * Use fiscal measures to stimulate domestic demand to rapid effect, as appropriate, while maintaining a policy framework conducive to fiscal sustainability. * Help emerging and developing economies gain access to finance in current difficult financial conditions, including through liquidity facilities and program support. We stress the International Monetary Fund's (IMF) important role in crisis response, welcome its new short-term liquidity facility, and urge the ongoing review of its instruments and facilities to ensure flexibility. * Encourage the World Bank and other multilateral development banks (MDBs) to use their full capacity in support of their development agenda, and we welcome the recent introduction of new facilities by the World Bank in the areas of infrastructure and trade finance. * Ensure that the IMF, World Bank and other MDBs have sufficient resources to continue playing their role in overcoming the crisis.

Common Principles for Reform of Financial Markets

8. In addition to the actions taken above, we will implement reforms that will strengthen financial markets and regulatory regimes so as to avoid future crises. Regulation is first and foremost the responsibility of national regulators who constitute the first line of defense against market instability. However, our financial markets are global in scope, therefore, intensified international cooperation among regulators and strengthening of international standards, where necessary, and their consistent implementation is necessary to protect against adverse cross-border, regional and global developments affecting international financial stability. Regulators must ensure that their actions support market discipline, avoid potentially adverse impacts on other countries, including regulatory arbitrage, and support competition, dynamism and innovation in the marketplace. Financial institutions must also bear their responsibility for the turmoil and should do their part to overcome it including by recognizing losses, improving disclosure and strengthening their governance and risk management practices.

9. We commit to implementing policies consistent with the following common principles for reform.

* Strengthening Transparency and Accountability: We will strengthen financial market transparency, including by enhancing required disclosure on complex financial products and ensuring complete and accurate disclosure by firms of their financial conditions. Incentives should be aligned to avoid excessive risk-taking.

* Enhancing Sound Regulation: We pledge to strengthen our regulatory regimes, prudential oversight, and risk management, and ensure that all financial markets, products and participants are regulated or subject to oversight, as appropriate to their circumstances. We will exercise strong oversight over credit rating agencies, consistent with the agreed and strengthened international code of conduct. We will also make regulatory regimes more effective over the economic cycle, while ensuring that regulation is efficient, does not stifle innovation, and encourages expanded trade in financial products and services. We commit to transparent assessments of our national regulatory systems.

* Promoting Integrity in Financial Markets: We commit to protect the integrity of the world's financial markets by bolstering investor and consumer protection, avoiding conflicts of interest, preventing illegal market manipulation, fraudulent activities and abuse, and protecting against illicit finance risks arising from non-cooperative jurisdictions. We will also promote information sharing, including with respect to jurisdictions that have yet to commit to international standards with respect to bank secrecy and transparency.

* Reinforcing International Cooperation: We call upon our national and regional regulators to formulate their regulations and other measures in a consistent manner. Regulators should enhance their coordination and cooperation across all segments of financial markets, including with respect to cross-border capital flows. Regulators and other relevant authorities as a matter of priority should strengthen cooperation on crisis prevention, management, and resolution.

* Reforming International Financial Institutions: We are committed to advancing the reform of the Bretton Woods Institutions so that they can more adequately reflect changing economic weights in the world economy in order to increase their legitimacy and effectiveness. In this respect, emerging and developing economies, including the poorest countries, should have greater voice and representation. The Financial Stability Forum (FSF) must expand urgently to a broader membership of emerging economies, and other major standard setting bodies should promptly review their membership. The IMF, in collaboration with the expanded FSF and other bodies, should work to better identify vulnerabilities, anticipate potential stresses, and act swiftly to play a key role in crisis response.

Tasking of Ministers and Experts

10. We are committed to taking rapid action to implement these principles. We instruct our Finance Ministers, as coordinated by their 2009 G-20 leadership (Brazil, UK, Republic of Korea), to initiate processes and a timeline to do so. An initial list of specific measures is set forth in the attached Action Plan, including high priority actions to be completed prior to March 31, 2009.

In consultation with other economies and existing bodies, drawing upon the recommendations of such eminent independent experts as they may appoint, we request our Finance Ministers to formulate additional recommendations, including in the following specific areas:

* Mitigating against pro-cyclicality in regulatory policy; * Reviewing and aligning global accounting standards, particularly for complex securities in times of stress; * Strengthening the resilience and transparency of credit derivatives markets and reducing their systemic risks, including by improving the infrastructure of over-the-counter markets; * Reviewing compensation practices as they relate to incentives for risk taking and innovation; * Reviewing the mandates, governance, and resource requirements of the IFIs; and * Defining the scope of systemically important institutions and determining their appropriate regulation or oversight.

 

[Temjin]

Has anyone heard of the "alternative" non-conventional monetary policies that the US Federal Reserve would take if conventional measures fail to reinflate their economy?

http://www.usagold.com/gildedopinion/bernanke.html

More details on these "alternative" policies from the links in that article.

All these talk about deflation will definitely occur. But at the end of the day, it is all up to how far Ben & Co would take to fight it. Like fill bottles with cash and hide them in the mines was one.

 

[Glen48]

Volker and his mates are preparing for tent cities.

 

[MR.]

Exactly.... Rudd should be talking things up. Governments should have done more when they could. It is not the time now to warn people. Encouragement is what is needed.

Ah, yes, the glory days of Howard and Liberal deception, where you covered it all up, deny all freedom of information requests, smile and blame it all on the Asians or Muslims.

Yes, can see it now... Everything is wonderful citizens, ignore Iceland, Europe, USA, New Zealand... we Australia, and therefore completely and utterly immune. Go out and loan more, splash out this christmas - we've got the dole if you lose your job... she'll be right.

and then there's Rudd's mate Swany, everytime we see him he looks as if he's just **** himself.

It's really too late to be warning the population now.

For the population some will now make the hard decisions and others will hope things will be ok.

When I look back over the last 4 years I have kept 80% invested in cash deposits because of the level of personal debt and few appeared to be holding cash. What financial adviser (in the past) tells you to hold 80% in cash? As I am not a trader (should have been) I still lost some in the markets. So if I had 20% invested long term I was putting a 1 in 5 chance of continued growth.

Now it is all about unimployment. That is "the" factor to keep an eye on.

 

[arco]

Whoops....................

MACQUARIE Group's first-half net profit fell 43 per cent as the bank took a hit from the turmoil in global financial markets.

http://www.news.com.au/business/story/0,27753,24668444-462,00.html

 

[IFocus]

What is the general opinion of the G20?

I think the key thing was the lack of stress and urgency, seemed to be a feeling of no immediate threat, they will all go away and act in their own best interests as they see no motivation to act together.

Time will tell if the threat has receded

 

[Calliope]

It doesn't seem right that the world has to suffer the financial crisis for two months longer than necessary just because Obama cannot take the reins now.

It places an unfair load on Mr Rudd to have to take on this burden alone of leading the world out of depression.

 

[tech/a]

It doesn't seem right that the world has to suffer the financial crisis for two months longer than necessary just because Obama cannot take the reins now.

It places an unfair load on Mr Rudd to have to take on this burden alone of leading the world out of depression.

This is tongue in cheek isnt it!

 

[nunthewiser]

LOL no offense to anyone .BUT .geez has obama already got a superman cape tailored or should i lend him mine for when he steps in ?

You guys cant seriously be expecting everything to be fixed when he comes into power ?

 

[basilio]

No Obama doesn't have a superman cape but everyone sure as hell wants him to start flying.....

He does look really good. On the face of it he seems to be a person who could make good decisions and most importantly inspire confidence and create leadership.

Read something recently about the way that calm, confident ,decisive leaders can create very effective action in times of emergency. Can you see anyone else out there who could fill this void? And this situation is unraveling so quickly we need a circuit breaker.

 

[nunthewiser]

Totally agree obama the best man for the job BUT can only use the cards he has been dealt , he isnt the saviour of the financial world boys and girls .

BUT i believe he will build the U.S.A as a nation and make them stronger, big difference .

 

[MrBurns]

2 things about Obama, he seems ok but so did Rudd, he'll have a honeymoon period but it may be very short. we are yet to see if the deeds will match the words.

Also - He isnt President yet, only President elect, there will be plenty of nuts out there not wanting a black man to become President so this is a dangerous time for him, if anything happens it will be the last straw for the USA.

 

[Glen48]

Did some one else see were the Feds want to pump $$$ into helping car yards?
Spoke to a bloke who works for Holden they are selling 8 PM when it use to be 40PM

 

[sam76]

30 indicators of the coming great depression

America's credit rating may soon be downgraded below AAA

Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"

Congress has no oversight of $700 billion, and Paulson's Wall Street Trojan Horse

King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets

Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this year

AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers

American Express joins Goldman, Morgan as bank holding firms, looking for Fed money

Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states

State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt

State, municipal, corporate pensions lost hundreds of billions on derivative swaps

Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up

Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns

Fed also plans to provide billions to $3.6 trillion money-market fund industry

Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars

Washington manipulating data: War not $600 billion but estimates actually $3 trillion

Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs

Commodities down, resource exporters and currencies dropping, triggering a global meltdown

Big three automakers near bankruptcy; unions, workers, retirees will suffer

Corporate bond market, both junk and top-rated, slumps more than 25%

Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall

Unemployment heading toward 8% plus; more 1930's photos of soup lines

Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists

China's sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai

Despite global recession, U.S. trade deficit continues, now at $650 billion

The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities

Now 46 million uninsured as medical, drug costs explode

New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt

Outgoing leaders handicapping new administration with huge liabilities

The "antitaxes" message is a new bubble, a new version of the American
dream offering a free lunch, no sacrifices, exposing us to more false promises

 

[robots]

hello,

exactly, the joints a hole man forget about it

thankyou
robots

 

[Dowdy]

These post about Obama making the situation better are laughable.

Recession is unavoidable. Putting all these 'stimulus packages', billion dollar funds to prop up companies etc will turn it into a depression

 

[Beej]

The only thing I know for certain is that internet forums, and in particular threads like this, quickly fill up with a complete load of crap!



Beej

 

[noirua]

Is "depression" only an extended "recession" or are the words often attached "deep recession" or "deep depression", extended recession, short recession, just attempts to prevent one being seen as the other.

In the 1930's there was a depression with unemployment peaking at 32% and I suppose that was a deep depression as it went on for many years.

Japan has been in a recession on and off since 1987. This has been over an extended period but was never referred to as a depression. The Japanese DOW peaked at around 38,000 in 1986/7 and is still below 9,000 today. A type of recession brought about by an inflated index with PE Ratios around 40 -60 that could not carry on.
Banks artificially quoted values of their assets including shares at the peak prices and created a false situation.
When the collapse set in the Japanese saved their money and never really started spending at the same rate again.

Today we have an artificial market in Banks and everything interconnected with them. Trust has gone and may not return, in some countries, for 10 years or more.
Negative inflation, and interest rates down to 0% to 2%, may stay in place for up to 30 years, as in Japan.
All the artificial spending boosts from Governments will require higher taxes in 2,3,4 or 5 years time and will hold economies back.

Overall the world will be in recession with depression in parts of Europe, perhaps for more than 10 years. Africa will fall into a starvation situation as stronger economies keep money at home. Gradually countries will not put so much money with the IMF and protectionism in many disguised forms will take place. Commodity prices may not recover strongly ever again as alternative energies arrive over the next 10 years.