Casualties of the Financial Crisis
Great graphic depicting the size of various bailouts around the globe, from 2007-08:
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click for ginormous graphic
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Excerpt:
"Barely a week after Europeans rebuffed American pleas to join in their bailout of the banking system, Europe now faces a financial crisis almost as grave as that in the United States — demonstrating how swiftly this contagion is spreading around the world.
In the last two days, governments from London to Berlin have seized or bailed out five faltering banks. In Ireland, where rumors of panicked withdrawals from banks spooked the stock market, the government has offered a two-year blanket guarantee on all deposits and bank debt.
Asia has been less buffeted by the turmoil, though a brief run on a bank in Hong Kong last week brought back dark memories of June 1997, when speculation against the Thai currency sparked a financial crisis that fanned rapidly across Asia, and later to Brazil and Russia.
Economists see a parallel between these two crises a decade apart: once creditors panic and begin to pull out their holdings, the underlying health of banks — or entire countries — no longer matters a great deal. In a global financial system, national borders are porous."
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Source:
The U.S. Financial Crisis Is Spreading to Europe
MARK LANDLER
NYT, September 30, 2008
http://www.nytimes.com/2008/10/01/business/worldbusiness/01global.html
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October 2nd, 2008 at 11:42 am
In that vein, that borders no longer matter in this banking crisis…..it seems to me in the deflationary times that are to come (IMO)…that currencies “values” could change as countries battle with the ongoing economic crisis…
e.g. Russia, today news is that oil output keeps falling…will Russia be tempted to try something in the next 12 months that would debase the ruble?…and if you bought instruments denominated in the ruble, might your money be on fire once again…
just wondering…
October 2nd, 2008 at 11:52 am
Is there a good reason Fannie and Freddie aren’t on the chart?
October 2nd, 2008 at 11:54 am
Please consider calling or faxing your House representative regarding today’s vote on the Bailout. List of contacts at Mish’s site:
http://globaleconomicanalysis.blogspot.com/
October 2nd, 2008 at 11:58 am
Sorry, I missed it.
October 2nd, 2008 at 12:14 pm
Is there a reason the workers who have lost their jobs are not on that chart?
October 2nd, 2008 at 12:14 pm
Bernie Sanders is one of the few who should remain in office. Forward this video to your rep. Demand that Paulson is removed from office. Paulson will be most interested in concealing his crimes rather than implementing viable solutions.
http://www.youtube.com/watch?v=CWMkbJ_FmwU
October 2nd, 2008 at 12:26 pm
That Katie Couric is a meanie. Why does she keep asking Sarah questions that Sarah can’t answer?
So what if Sarah can’t answer them. In school, half the kids couldn’t answer the teacher’s questions!
I wish Sarah was Prezident and not MacCain.
October 2nd, 2008 at 12:28 pm
Jerry Bowyer finally admitted yesterday that subprime is not contained.
Stay tuned for more of his cutting-edge predictions.
October 2nd, 2008 at 12:36 pm
my 2 cents: the dollar boost (rush into treasuries) is living on borrowed time. iau is a better etf than gld; but i prefer the miners now. the financial system will be inflated out of this panic. there is a lot of cash sitting on the sidelines, where will it go? the ecb did the right thing…
October 2nd, 2008 at 12:43 pm
Looking at that great chart you linked confirms one of my suspicions. The Marxists are gloating right now and they ARE PILING ON.
They invented a bank, put out a press release saying it collapsed and watched the market go down 2%.
Dusseldorfer Hypothekenbank is a ‘made up’ name. Totally fictitious. It’s a commie Mad Magazine stunt. Hypotheken-Bank means a “hypothesis of a bank”… hypothesizing the existence in reality of an abstract concept.
It’s a sick commie joke where they are saying even the abstract concept of ‘banking’ in a capitalist world is doomed to failure.
October 2nd, 2008 at 12:49 pm
“Europe now faces a financial crisis almost as grave as that in the United States”
ALMOST as grave? What are they smoking? The Spanish property crash is going to make ours look like a Sunday picnic, and Eurobanks are leveraged to a level that would make Bear Stearns blush. Almost as grave. Feh.
Essentially, the European continent had a housing bubble that exceeded ours, except for Germany – where the banks all took on foreign MBSs to chase returns.
European banks were gaming the system with swaps, many written by AIG, to inflate their capital reports.
“Almost as grave”. You wish, buddy.
October 2nd, 2008 at 1:01 pm
What this says to me (again) is that globalism, like Friedmanism, is not actually rational due to the human element. The Asian currency crisis crushed S Korea, which was more sound than we were or are. But they were swept up in it to the benefit of multinationals that bot up a number of iconic S Korean businesses. Ultimately, human beings are tribal and perhaps a careful, systematic pulling away (just a bit) from globalism, and turning moe toward our tribal rather than multinational corporate interest is in order. In the last decade almost no one in this country has actually prospered. So of what benefit is the system that gives us that? To be clear all I am talking about is a slow unwinding of some of the overstretched globalism and a bit of self interest. You think the European Union isn’t about to be shaken to its foundation by tribal interests? Different sovereign nations with very different interests under a universal governing system will not maintain unity. And why should they? Because the masters of The New World Order say so?
October 2nd, 2008 at 1:10 pm
Jim D, one question, have you ever been to europe?
October 2nd, 2008 at 1:15 pm
Scott in Chicago,
I fear you may be right in thinking a move toward tribalism might be part of the aftermath of the current problems. It was just that sort of tribalism that turned a nasty downturn in 1930 into a crippling depression finally ended with a devastating war.
October 2nd, 2008 at 1:19 pm
Karen,
I am in GLD and take your point about IAU — which miners do you prefer? TIA!
October 2nd, 2008 at 1:20 pm
Europe’s crisis is much more significant and systemic. That schadenfreude we saw now looks a lot like fear.
October 2nd, 2008 at 1:20 pm
What a mess Europe has become… American Capitalism has spread like a cancer across the globe… Not against it, just against our particular flavor of it.
For all you smart folks: What is the best currency hedge against the eventual decline of the dollar?
IMO, since everyone has pretty much decoupled from the gold play, gold is nothing more than a precious/industrial metal anymore. In a down economy, less jewelery, less electronics (plating), less of everything it’s used for these days…
And as mentioned above, the Euro is probably toast… so,
Who didn’t buy our crap paper, who’s gonna shine? New Zealand maybe? scary
October 2nd, 2008 at 1:37 pm
Please, American capitalism gave you the money to buy that PC to post your response. Europe’s problems are their own. Quit blaming the U.S. for all of the problems that are going to develop around the world.
The entire world’s wealth emanates from one source – the U.S. American capitalism is both the heart(economy) and the brain(our financial system). Wall Street’s scheme is over but I can assure you that American finance is far from dead. And, American capitalism will once again rule the world.
There is nothing wrong with capitalism.
And, no I’m not some uber bull. I wrote of almost everything that is now coming to pass while everyone else was partying in the street.
October 2nd, 2008 at 1:41 pm
t*sphere*monk, (that was hard to type!)
sorry, i hesitate to name preferences… i’ve owned so many over the years, anyway. I avoid south african ones, myself. I seem to favor Canadian based ones. GDX, the gold etf is looking beat up right now. CEF is actual gold and silver in a vault in canada if you like that idea. RGLD is a royalty company…
i currently own GDX, IAG, and NXG; but that’s not an endorsement as all are currently in the red for me.
(also, USAGX in an IRA)
October 2nd, 2008 at 1:45 pm
@lauteus-
Don’t be too sure that the buck is going to get hammered anytime soon. The world never got to that decoupling point, and money is now flowing back into the dollar. We may be sick, but we are less sick than most of the rest of the world. EU will have to cut rates eventually, which will further erode the EURO. China will devalue the renminbi in order to boost exports in a slowing world economy. Brazillian REAL might (Hey I said might) be a place for future value, but that’s a stretch.
@Estragon-
No doubt. Bush is like Hoover, but with an preposterously expensive and unecessary war on his hands; a war fought for wealth and resources. The Friedmanites have bankrupted us, and much of the world. This administration has screwed the pooch sideways. People being people, the tribes will huddle up.
October 2nd, 2008 at 1:47 pm
@bdg123-
Really? There’s NOTHING wrong with capitalism? Wow. Wait, double wow!
October 2nd, 2008 at 1:54 pm
At the doctor’s office this morning skimming the September 15 Business Week.
Article about Cox wanting to scrap GAAP for IFRS. Hmm… where do ya think that idea stands now?
October 2nd, 2008 at 1:56 pm
Thanks, Karen! I’m mostly a lurker, but always keep an eye out for your posts. The preference of Canada over SA is well-taken.
GDX is getting hammered today!
October 2nd, 2008 at 2:04 pm
Scott, it’s easy for people to post from the cheap seats. American capitalism has been around since before you were born and it will be here long after you are dead. Everytime a situation like this develops, someone like you comes out of the woodwork to scream that the world is coming to an end. And, we will need to take our medicine but it’s easy to be brilliant when an ugly environment is staring you in the eye.
October 2nd, 2008 at 2:08 pm
@bdg 123:
I agree with you there is nothing wrong with capitalism. 100% correct.
…however, with UNFETTERED capitalism, I might have a little more difficulty. Too much relaxing, and boom, your capitalistic muscles have atrophied…
October 2nd, 2008 at 2:14 pm
Bruce,
I couldn’t agree more. And, I’ve harped on this for years. Unfettered capitalism leads to an environment that seeds the discontent of socialism.
October 2nd, 2008 at 2:24 pm
@bdg123: I don’t have a problem with capitalism just a problem with what the american system has devolved to… this isn’t the forum to debate that, however, my original question was: How to protect the ‘wealth’ that it has generated? I’d like to buy more computers with what I have today, not what I expect to earn tomorrow… :)
Since the global systems cannot decouple from the current economic situation, I’d just like to try to find out how I can…
October 2nd, 2008 at 2:29 pm
FWIW , peep should listen to bdg123..
and, not associate the two, they’d do well by reading some mises.org
October 2nd, 2008 at 2:32 pm
Posted by: lauteus | Oct 2, 2008 2:24:36 PM
wake up, pal. we’re all on the same Web.
October 2nd, 2008 at 2:37 pm
@bdg123-
Cheap seats? Not me, brother. My money has been and remains, firmly where my mouth is. I have been long gold (physicals and futures) since 1998, and short S&Ps since March…double short actually via SDS. This has appeared in prior posts. I trade for a living, and have since 1979. Our system has been rottong for some time now. The supply-side nonsense isn’t capitalism; it is a product of same, and it is a wildly flawed model that benefits very few.
Now, I do not know where your seats are, but mine aren’t cheap, and my ongoing critique of how our form of capitalism has devolved into a ponzi scheme can be measured in decades…two of ‘em, but decades nonetheless.
So I ask you, what’s your story?
October 2nd, 2008 at 3:09 pm
Wow, this is the kind of chart you would see over 30 years, and it only covers 2 monhts. We are indeed living in crazy times. I can only imagine what a year end timeline would look like….
October 2nd, 2008 at 3:57 pm
To the person who asked if I’d been to Europe (karen):
Yes, I lived there for three years, and have been back about once a year since. But why is that relevant?
Ireland is certainly experiencing a property bubble – Dublin looked like Pheonix for building, last time I was there. London’s little better.
And the adverts for mortgages in those two countries would make Countrywide blush at their brashness.
Though the best crazy building I’ve seen has been in China, followed by the Goa coast in India. Both areas are shortterm overbought, at best, and massively bubbled, at worst. I vote for worst, based on other evidence.
Haven’t been to Spain in 10 years, but the pictures I’ve seen of the property construction there are stunning, and the figures are stunning to. My French friends who live on the southern coast tell me it’s little better there.
So, karen, why is it relevant if I’ve been to Europe?
October 2nd, 2008 at 5:54 pm
If two consecutive quarters of negative growth mean a recession. By which matrix do we measure a depression? And can they be graded…. Depression, Deep Depression, Great Depression etc..
October 2nd, 2008 at 7:06 pm
bdg123 | Oct 2, 2008 1:37:35 PM
I agree that things are ok (for me). We are whinning and paying all this attention for a reason. Worry. Balance is out of wack.
What song by the Eagles goes “once your down thats where you’ll stay … the streets have no pity”? Thank God that line isn’t totally true either.
October 3rd, 2008 at 12:45 am
“Jerry Bowyer finally admitted yesterday that subprime is not contained.
Stay tuned for more of his cutting-edge predictions.”
ROFLMAO!!
Dude! ’cause of you, my screen is sprinkled with tea.