Australian (ASX) Stock Market Forum

The Global Financial Crisis

Jump to new
MrBurns said:
No one will finance it, in fact China might start asking for some back it's all about confidence building now they're starting to run out of bullets. Confidence wont pay off the debt or put food on the tables of the unemployed though.
Click to expand...

Obi Wan Benwankee and his henchmen tried to pull the ol' con(fidence) trick over the world economies running up to Mid 2008. Look what happened since. :eek:

Now, having run out of most of their ammo, they are banking EVERYTHING on one last, big CON trick. :(

Frankly, I wouldn't trust the spit that dribbles off his bottom lip, let alone what passes for soothing words... :cool:
 
CanOz said:
Finally,some good to come out of a conservative banking system.

http://www.bloomberg.com/apps/news?pid=20601109&sid=afWw27XA56jM&refer=home

I wonder if that will be reflected in the currency?:)

CanOz
Click to expand...
The problem with the Canadians is that they are riding on the past commodities blip, much like Aus. We, & they, are only just beginning to catch up with the rest of the world with the downturn ie the increasingly large bulk sackings? Their trade with the US has fallen sharply.

I think it's a cruel joke to play on all those first home buyers - sucker them in then be forced to sell in 6 months time.

Now this report is really depressing, pardon the pun? There is still a glut of housing to purge before they get close to the bottom?

Manufacturing and housing in the US collapsed in January, government reports showed, as the Obama administration unveiled new proposals to stem what may become the worst recession in the postwar era.
The Federal Reserve’s industrial production index dropped 1.8% to 101.3, the lowest level in more than five years, the central bank reported today in Washington. Housing starts plunged 17% to an annual rate of 466,000, the fewest since records began in 1959, Commerce Department data showed.
General Motors has asked for new loans and said it plans to cut 47,000 more jobs worldwide as sales plunge, while builders struggle to trim the glut of homes propelled by the surge in foreclosures. President Barack Obama pledged $275 billion in a program that includes cutting mortgage payments and encourages loan modifications to keep Americans in their homes.
“The recession news could hardly have been worse,” said Roger Kubarych, chief US economist at UniCredit Global Research in New York. “There is no evidence whatsoever that the US downturn is close to bottoming, whether in hard-hit manufacturing or in the housing sector.”
Click to expand...

http://business.theage.com.au/busin...sing-starts-plunge-20090219-8bmv.html?page=-1
 
What drug's are these journo's & economist's on? Unemployed comes in 'better than expected"??? Previous months revised to even worse figures? Good enough reason as any to BUY!?

WASHINGTON (MarketWatch) - American workers were hammered again in March with large job losses, pushing the total number of jobs lost since the recession began to 5.1 million, the Labor Department reported Friday.


U.S. nonfarm payrolls fell by 663,000 in March, close to expectations, while the unemployment rate jumped to 8.5% as expected from 8.1%. Payrolls in previous months were revised lower by a total of 86,000.
January's revised job loss of 741,000 was the worst since 1949. In February, 651,000 jobs were lost.
In the past six months, 3.7 million jobs have been lost, or 2.7%, the second-largest percentage loss in 50 years.
Click to expand...


http://www.marketwatch.com/news/sto...x?guid={CF54164C-6F7B-4501-B6FB-D7D1C8D710B9}
 
Don't listen to anything these government officials have to say. They caused the problem in the first place, then they come and say they can fix it. They've got absolutely no idea. Helicopter Ben coming out and saying we will see a recovery in the second half is an joke. They should be sent to jail because of all their damn lies.

w
 
http://zerohedge.blogspot.com/2009/03/exclusive-aig-was-responsible-for-banks.html

AIG was responsible for bank's Jan & Feb Profitability

These companies are disgracful, the claims the Citi, Bank of America etc. were profitable in the start of the year are true, but because of one off cash injections by AIG.

These "one off profits" helped cause this market rally. This then allows the banks to sell more expensive equity to investors because they can sell the line that equity markets are improving.

These blokes truely are criminals and should be behind bars. w.
 
Sorry about so many posts, but the Baltic dry index is down quite a bit. Of course it hasn't been mentioned though on the tv or papers .... chart enclosed.

"whereas CNBC would chirp every 5 minutes when the Baltic Dry was up, up and away beginning in January, very little attention has been brought to the fact that the BDIY has dropped over 31% over the past month... but nobody cares about the "China factor" anymore, as the US can brave the depression, er, recession (sorry, Cramer corrected me) on its own."

BDIY.gif
 
The 20 Grand a hour (G20) is going spend $250 B to get shipping going again which will be good for OZ the Japs can sail over and pick up un-sold Toyota's and Datsun's and take them back and we can claim under the revised banking laws we are now exporting cars to Japan and our GDP is up so the markets will rise.
 
William K. Black​
Assoc. Professor, Univ. of Missouri, Kansas City; Sr. regulator during S&L debacle
Posted March 28, 2009 | 05:12 AM (EST)


The Two Documents Everyone Should Read to Better Understand the Crisis


As a white-collar criminologist and former financial regulator much of my research studies what causes financial markets to become profoundly dysfunctional. The FBI has been warning of an "epidemic" of mortgage fraud since September 2004. It also reports that lenders initiated 80% of these frauds.1 When the person that controls a seemingly legitimate business or government agency uses it as a "weapon" to defraud we categorize it as a "control fraud" ("The Organization as 'Weapon' in White Collar Crime." Wheeler & Rothman 1982; The Best Way to Rob a Bank is to Own One. Black 2005). Financial control frauds' "weapon of choice" is accounting. Control frauds cause greater financial losses than all other forms of property crime -- combined. Control fraud epidemics can arise when financial deregulation and desupervision and perverse compensation systems create a "criminogenic environment" (Big Money Crime. Calavita, Pontell & Tillman 1997.)

The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence. To understand the crisis we have to focus on how the mortgage fraud epidemic produced widespread accounting fraud.

Don't ask; don't tell: book profits, "earn" bonuses and closet your losses
The first document everyone should read is by S&P, the largest of the rating agencies. The context of the document is that a professional credit rater has told his superiors that he needs to examine the mortgage loan files to evaluate the risk of a complex financial derivative whose risk and market value depend on the credit quality of the nonprime mortgages "underlying" the derivative. A senior manager sends a blistering reply with this forceful punctuation:

Any request for loan level tapes is TOTALLY UNREASONABLE!!! Most investors don't have it and can't provide it. [W]e MUST produce a credit estimate. It is your responsibility to provide those credit estimates and your responsibility to devise some method for doing so.
Fraud is the principal credit risk of nonprime mortgage lending. It is impossible to detect fraud without reviewing a sample of the loan files. Paper loan files are bulky, so they are photographed and the images are stored on computer tapes. Unfortunately, "most investors" (the large commercial and investment banks that purchased nonprime loans and pooled them to create financial derivatives) did not review the loan files before purchasing nonprime loans and did not even require the lender to provide loan tapes.

The rating agencies never reviewed samples of loan files before giving AAA ratings to nonprime mortgage financial derivatives. The "AAA" rating is supposed to indicate that there is virtually no credit risk -- the risk is equivalent to U.S. government bonds, which finance refers to as "risk-free." We know that the rating agencies attained their lucrative profits because they gave AAA ratings to nonprime financial derivatives exposed to staggering default risk. A graph of their profits in this era rises like a stairway to heaven [PDF]. We also know that turning a blind eye to the mortgage fraud epidemic was the only way the rating agencies could hope to attain those profits. If they had reviewed even small samples of nonprime loans they would have had only two choices: (1) rating them as toxic waste, which would have made it impossible to sell the nonprime financial derivatives or (2) documenting that they were committing, and aiding and abetting, accounting control fraud.

Worse, the S&P document demonstrates that the investment and commercial banks that purchased nonprime loans, pooled them to create financial derivatives, and sold them to others engaged in the same willful blindness. They did not review samples of loan files because doing so would have exposed the toxic nature of the assets they were buying and selling. The entire business was premised on a massive lie -- that fraudulent, toxic nonprime mortgage loans were virtually risk-free. The lie was so blatant that the banks even pooled loans that were known in the trade as "liar's loans" and obtained AAA ratings despite FBI warnings that mortgage fraud was "epidemic." The supposedly most financially sophisticated entities in the world -- in the core of their expertise, evaluating credit risk -- did not undertake the most basic and essential step to evaluate the most dangerous credit risk. They did not review the loan files. In the short and intermediate-term this optimized their accounting fraud but it was also certain to destroy the corporation if it purchased or retained significant nonprime paper.

Stress this: stress tests are useless against the nonprime problems

What commentators have missed is that the big banks often do not have the vital nonprime loan files now. That means that neither they nor the Treasury know their asset quality. It also means that Geithner's "stress tests" can't "test" assets when they don't have the essential information to "stress." No files means the vital data are unavailable, which means no meaningful stress tests are possible of the nonprime assets that are causing the greatest losses.

The results were disconcerting
A rating agency (Fitch) first reviewed a small sample of nonprime loan files after the secondary market in nonprime loan paper collapsed and nonprime lending virtually ceased. The second document everyone should read is Fitch's report on what they found.


Fitch's analysts conducted an independent analysis of these files with the benefit of the full origination and servicing files. The result of the analysis was disconcerting at best, as there was the appearance of fraud or misrepresentation in almost every file.


[F]raud was not only present, but, in most cases, could have been identified with adequate underwriting, quality control and fraud prevention tools prior to the loan funding. Fitch believes that this targeted sampling of files was sufficient to determine that inadequate underwriting controls and, therefore, fraud is a factor in the defaults and losses on recent vintage pools.


Fitch also explained [PDF] why these forms of mortgage fraud cause severe losses.


For example, for an origination program that relies on owner occupancy to offset other risk factors, a borrower fraudulently stating its intent to occupy will dramatically alter the probability of the loan defaulting. When this scenario happens with a borrower who purchased the property as a short-term investment, based on the anticipation that the value would increase, the layering of risk is greatly multiplied. If the same borrower also misrepresented his income, and cannot afford to pay the loan unless he successfully sells the property, the loan will almost certainly default and result in a loss, as there is no type of loss mitigation, including modification, which can rectify these issues.

The widespread claim that nonprime loan originators that sold their loans caused the crisis because they "had no skin in the game" ignores the fundamental causes. The ultra sophisticated buyers knew the originators had no skin in the game. Neoclassical economics and finance predicts that because they know that the nonprime originators have perverse incentives to sell them toxic loans they will take particular care in their due diligence to detect and block any such sales. They assuredly would never buy assets that the trade openly labeled as fraudulent, after receiving FBI warnings of a fraud epidemic, without the taking exceptional due diligence precautions. The rating agencies' concerns for their reputations would make them even more cautious. Real markets, however, became perverse -- "due diligence" and "private market discipline" became oxymoronic. These two documents are enough to begin to understand:

- the FBI accurately described mortgage fraud as "epidemic"

- nonprime lenders are overwhelmingly responsible for the epidemic


- the fraud was so endemic that it would have been easy to spot if anyone looked


- the lenders, the banks that created nonprime derivatives, the rating agencies, and the buyers all operated on a "don't ask; don't tell" policy


- willful blindness was essential to originate, sell, pool and resell the loans


- willful blindness was the pretext for not posting loss reserves


- both forms of blindness made high (fictional) profits certain when the bubble was expanding rapidly and massive (real) losses certain when it collapsed


- the worse the nonprime loan quality the higher the fees and interest rates, and the faster the growth in nonprime lending and pooling the greater the immediate fictional profits and (eventual) real losses


- the greater the destruction of wealth, the greater the (fictional) profits, bonuses, and stock appreciation


- many of the big banks are deeply insolvent due to severe credit losses


- those big banks and Treasury don't know how insolvent they are because they didn't even have the loan files


- a "stress test" can't remedy the banks' problem -- they do not have the loan files


1 "Mortgage Fraud: Strengthening Federal and State Mortgage Fraud Prevention Efforts" (2007). Tenth Periodic Case Report to the Mortgage Bankers Association, produced by MARI.



http://www.huffingtonpost.com/william-k-black/the-two-documents-everyon_b_169813.html
 
Someone sent me this , there's a bit of truth in it.


A Boss Who Tells It like It Is

Date: 4 February 2009


To All My Valued Employees,
I am being taxed to death and the government thinks I don't pay enough. I have state taxes, Commonwealth taxes, Property taxes, GST, Payroll taxes, Workers compensation, Taxes on taxes. I have to hire an accountant to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a cheque to the Australian tax Office for $288,000 for quarterly taxes. You know what my "stimulus" cheque was? Zero, Zip, Zilch.

What is Kevin 07 Rudd doing with all my taxes? He's giving them away to people who don't work as hard as me, to people who have never worked and have no intention to, deliberately single mums breeding more drones, recent migrants legal & otherwise plus their huge extended families. They are told to spend, spend, spend - the very thing that got us into trouble in the first place!. Go out and buy that you-beaut widescreen TV for say $2000 of
which $1,750 goes to China, Taiwan, South Korea, Singapore & Malaysia where all the bits are made or assembled, the remaining $250 keeps the salesperson & delivery guy in a job for another day & pays a franchise fee to Harvey Norman. As we hardly manufacture anything in Australia any more virtually all the money spent on manufactured goods keeps overseas workers in jobs much longer than any locals.

Now, to cap off mere financial incompetence, Rudd has risen to mind boggling levels of truly monumental stupidity by borrowing about 40 billion dollars every year from foreigners, we don't have the savings here!....... to GIVE AWAY!!!!. The State Labor governments have all been grossly mismanaged, even QLD & WA are in trouble despite the good mining boom years, NSW is effectively bankrupt & VIC is not far behind, SA & TAS are reverting to basket case status. The infrastructure funds are a thinly disguised bailout to incompetent Labor mates in the States but at least that will employ Australians, however inefficiently.

Rudd has blown what we thought of a huge multi-billion dollar surplus in one hit, in just one year!. But borrowing to give people $950 to spend on goods that will employ Asians mostly?, that will make our current account deficit worse and create a HUGE DEBT that will have to be repaid by us, our kids and our grandkids. Taxes will have to go up drastically for decades to pay for all this - there is no other way. Rudd's cure is going to be vastly more painful than the illness, unemployment is still expected to increase by 500,000 by the end of the March quarter 2010. Bringing forward the next tax cuts would reduce that to 350,000 and if we were to spend stimulus money productively on pipelines, bridges, hospitals, rail systems etcetera instead of wasting it on $950 gifts we'd have to better off and have more people in jobs.

Rudd wants to emulate Obama's huge spending spree without realising that we simply can't do that. The US dollar is the world's reserve currency, they can print money and it will still be worth a dollar, but if we print 30% more money, which is effectively what borrowing does, our $A will be worth 30% less which makes everything we import be it petrol or TV's 30% dearer and so. Rudd plans to do this for four years to the tune of $200 billion! .... Despite Rudd often referring to Turnbull as the (wealthy) Merchant Banker, Rudd, or at least his wife, has many more millions than Turnbull and his family, most of it from Liberal Government training programs ironically. We'd be better off if Ms Rein was running the country, her husband's ego is such that he'd never listen to her unfortunately, at least they will still be sitting pretty when it all goes pear shaped.

Turnbull is right about Tax Cuts, it has been proven over & over again in all Western democracies that for all tax brackets, for every $1 of tax cut the multiplier effect is $3 - now that's a stimulus!. That stimulus happens each year, every year because it's a gift that keeps on giving as the saying goes. Give away $1 and that's it - spent $1 no multiplier effect, this or any other year. Once Rudd borrows & gives it away forget about tax cuts for a decade - think higher taxes, higher GST until we repay the huge debt burden he's creating. This is not rocket science! it's real, as opposed to Rudd's fairy's at the bottom of the garden approach to ruining the economy.

Rudd's hero is Gough Whitlam, for those who are old enough to remember, Whitlam came within a whisker of sending Australia bankrupt and the country was saved from financial disaster by the Governor General, Sir John Kerr dismissing his government. The Greens & Independents, being the populists that they are, will pass Rudd's so called stimulus with minimal changes. We are going to be lumbered with this very bad mistake. Let's hope that Ms Quentin Bryce will likewise act with courage and conviction before Rudd looks like losing the plot completely and takes us down with him.

The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business?, or the single mother sitting at home pregnant with her fourth child by the latest unemployed layabout who won't pay child support, waiting for her next welfare cheque? Obviously, government feels the latter is the economic stimulus of this country.


Here is what many of you don't understand .... to stimulate the economy you need to stimulate what runs the economy. Had the government suddenly mandated to me that I didn't need to pay taxes, guess what? Instead of depositing that $288,000 into the Canberra black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it now.

When you have a comatose man on the verge of death, you don't defibrillate and shock his thumb thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of Australia and always has been. To restart it, you must stimulate it, not kill it. But the power brokers in Canberra believe the poor of Australia are the essential drivers of the Australian economic engine. Nothing could be further from the truth and this is the type of change you can keep.

So where am I going with all this?

It's quite simple.

If any new taxes are levied on me, or my company, my reaction will be swift and simple. I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your 4WD and your child's future. Frankly, it isn't my problem anymore.

Then, I will close this company down, move to another country, and retire. You see, I'm done. I'm done with a country that penalises the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship. There will be many, many more small & medium sized businesses that do the same and between us we employ 60% of all Australians in work and produce 68% of GDP (more when
China is not paying top dollar for everything we mine). Fewer people paying taxes mean higher taxes. Much higher taxes for the remaining taxpayers who have no choice but to work. Countries like China are thrifty, have all the money, and will own all the mines and a lot more because we will have no choice but to sell them the family farm to pay our debt. That's business - whether it's mine or the Country's.

So, if you lose your job, it won't be at the hands of the economy; it will be at the hands of a politician that swept through this country changed its financial landscape forever. If that happens, you can find me sitting on a beach, retired, and with no employees to worry about....

Signed,

Your boss
Click to expand...
 
Another disturbing trend is emerging, although initially it would appear to be a good one, until you delve deeper into the facts.

SHANGHAI, April 8 (Reuters) - China's iron ore imports surged to a new record in March, its transportation ministry said on Wednesday, the latest sign of tumbling spot prices and relatively strong domestic demand in the world's largest steel producer.
China imported a record 51 million tonnes of iron ore in March, preliminary data from the ministry showed, taking total purchases in the first quarter to 130.5 million tonnes, up 18 percent from a year earlier.
Click to expand...
So far so good - looks like demand is picking up?? Then the rest -

The import surge, just when global iron ore demand is expected to contract for the first time in more than a decade, reflects a recovery in production at Chinese steel mills, spurred by the government's economic stimulus package.
China is the sole global producer which is increasing output, although Beijing is aiming now to curb production by 8 percent this year as massive overcapacity -- amounting to the total annual production of second-ranked Japan -- threatens recovery.
Click to expand...
CN_IRNORE0409.jpg


So there could not only be sharply lower iron ore prices this year but a glut of finished product as well? This could have implications for BHP, RIO and the Aus indexes, making the recession more prolonged than economists have guessed?
 
Uncle Festivus said:
Another disturbing trend is emerging, although initially it would appear to be a good one, until you delve deeper into the facts.

So far so good - looks like demand is picking up?? Then the rest -

CN_IRNORE0409.jpg


So there could not only be sharply lower iron ore prices this year but a glut of finished product as well? This could have implications for BHP, RIO and the Aus indexes, making the recession more prolonged than economists have guessed?
Click to expand...

Chinese are gaming by trying to pump up their stockpiles so they can screw RIO/BHP/Vale down on the contract prices and volumes.

Good article on theage.com.au about it today actually
 
moneymajix said:
William K. Black​
Assoc. Professor, Univ. of Missouri, Kansas City; Sr. regulator during S&L debacle
Posted March 28, 2009 | 05:12 AM (EST)


The Two Documents Everyone Should Read to Better Understand the Crisis
Click to expand...

Here’s an interview with him. It explains how the ceo's of banks created this mess for their own profit. It’s amazing that this amount of fraud can go on to this extent
 
Are the record car sales in China an indication the worst of this economic down cycle is over!

12.04.2009 07:29 AM

The China Association of Automobile Manufacturers reports that the country's auto sales hit a monthly record of 1.11 million vehicles in March, spurred by tax cuts and rebates for small car purchases.

The official Xinhua News Agency cites the association as reporting late last week that sales rose 5 per cent in March from a year earlier.

It was the third month in a row that China's monthly auto sales have exceeded those in the United States, mainly due to plunging demand among recession-shocked American consumers.
Click to expand...

Genuine, affordable, big ticket item sales or just consumers duped into debt (again).
 
Interesting results from the Bill Moyers interview with William K. Black (posted earlier on this thread).



Geithner, Paulson named in $200 billion lawsuit
AIG-related case claims they violated shareholders constitutional rights

--------------------------------------------------------------------------------
Posted: April 10, 2009
10:45 pm Eastern

© 2009 WorldNetDaily



A $200 billion lawsuit filed on behalf of shareholders of American International Group has been amended to include Treasury Secretary Tim Geithner, former Treasury Secretary Henry Paulson and former Securities and Exchange Commission Chairman Christopher Cox as defendants.

The case, filed earlier by a public interest law firm, Freedom Watch USA, is on behalf of shareholders of AIG who have watched the value of the company plummet by some $214 billion.

The class action lawsuit filed in federal court in Los Angeles is a "wide reaching" claim that will do what Congress cannot, said Freedom Watch USA founder Larry Klayman.

"The American people, not the compromised ruling elite in Washington, D.C., have begun a second American Revolution to take the country back from the con men on Wall Street, and on Pennsylvania Avenue – who under successive administrations played a central role in the meltdown of the U.S. financial system and economy," Klayman said.

The amended complaint now alleges that the additional defendants violated the constitutional rights of the shareholders by denying them the right to their property, the shares themselves.

"The inspiration for this amendment was information disclosed by University of Missouri professor William K. Black on the Bill Moyers' PBS television show last Friday, where he implicated these government officials in a massive cover up of the banking scandal, mostly for the benefit of Goldman Sachs, the former employer of both Paulson and Geithner, in which they held a significant financial interest," Klayman reported.

"As for Cox, his reckless and intentionally impotent oversight at the SEC is the basis for the claim against him," he said.

Klayman noted that under precedent established by the U.S. Supreme Court, U.S. vs. Bivens, the defendants can be named as individuals, as well as officials.


http://www.worldnetdaily.com/?pageId=94539


:p:
 

Similar threads

Uncle Festivus
When will the Great Financial Ponzi end?
2 3 4
Replies
69
Views
4K
divs4ever
divs4ever
Derrick Kow
  • Article
Bullish Signals Emerge: Market Liquidity Set to Flow into the Crypto Web3 Space
Replies
2
Views
1K
Dona Ferentes
Dona Ferentes
ducati916
August 2024 DDD
2 3 4
Replies
75
Views
19K
ducati916
ducati916
Garpal Gumnut
Reasons to be cheerful on the Global Economy
2
Replies
21
Views
2K
frugal.rock
frugal.rock
ducati916
April 2024 DDD
3 4 5
Replies
98
Views
8K
ducati916
ducati916
Top