lolo-m

The great international crisis swindle...
« on: July 26, 2009, 07:20:42 AM »
"It's the effect of the international crisis".
That's the new excuse to justify the closing of factories in all the richest countries, while relocating into poorest countries to reduce production costs... But do they think about the loss of consumers ? If a "rich" become poor because he lost his job, how can he buy cheaper thing made by poorer poeple ? If there's no more consumer, how can you sell anything ?

I'm just tired of hearing every day the same thing : crisis...
Hard to be a punk... But sometimes you have to...


JohnRoberts

Re: The great international crisis swindle...
« Reply #1 on: July 26, 2009, 11:23:14 AM »
"It's the effect of the international crisis".
That's the new excuse to justify the closing of factories in all the richest countries, while relocating into poorest countries to reduce production costs... But do they think about the loss of consumers ? If a "rich" become poor because he lost his job, how can he buy cheaper thing made by poorer poeple ? If there's no more consumer, how can you sell anything ?

I'm just tired of hearing every day the same thing : crisis...
World trade is down huge since the credit crisis, and there is risk of deflation like back in the 30's (because of over-capacity).  Protectionism just diminishes world trade even more. If we don't avoid a deflationary spiral it could feed on itself and get a lot worse.

If consumers were willing to pay the higher prices, for goods from western factories, there would be no problem keeping those factories busy, the unfortunate reality is that consumers enjoy paying less for decent quality goods made in less expensive regions of the world. This is not a new trend or pattern, but now is indeed an unusually difficult time for everybody.  A lot of small factories in China went out of business almost immediately and they are now showing signs of recovery, but that too is being pumped up by (Chinese) government stimulus.

I believe we have survived the worst of the crisis but we are far from past the effects of this. An unfathomable amount of wealth evaporated over night. It will take years for these dislocations to work through the entire economy.

JR
Don't only half-ass tune your drums. Visit https://circularscience.com to hear what properly "cleared" drums sound like.

smallbutfine

Re: The great international crisis swindle...
« Reply #2 on: July 26, 2009, 12:06:32 PM »
Yeah, lolo, agreed totally!
Lot's of possibilities for the big companies to move their solidly contracted workers into time-limited contractor positions, with fire-and-re-hire strategies, outsourcing, dumping wages, and other nasty things.
Unfortunately lots of modern employment law comforts have been successively dropped over the last years here in Germany.(dismissal protection, limitation of time-work agencies, private instead of governmental employment agencies now take the task etc etc...)
I saw on TV that the french workers are not as patient with their managements as our german 'sheep' - resulting in some more drastic forms of protest.
And I guess that is totally OK to signalize that there are limits for socially unacceptable management glitches and profit-oriented decisions .... at least in european democratic systems....
One should be aware of the political results and learn from historical situations like 1919/1923 in Germany.
(Yes there were times when even brave german workers took guns to change political and economical conditions in a democratic republic.)
Our political leaders unfortunately seem pretty helpless in times of economical globalization. Lots of decisions have been made much too late and/or were simply wrong in the actual crisis.
The next years will show the results for sure (inflation and following second crisis)....

Kind regards,
Martin

 
« Last Edit: July 26, 2009, 12:08:21 PM by smallbutfine »
"In the past we suffered from crimes, today we suffer from laws."
Tacitus

www.audiomh.de

lolo-m

Re: The great international crisis swindle...
« Reply #3 on: July 26, 2009, 01:23:44 PM »
The thing we all have to think is : what creates the actual crisis ? Stock speculation. How does this work ? Someone buy stocks to sell them at a higher price. What is the effect of this system ? Big companies leader have got as only goal to make poeple think their company will make more and more money to make stock price upper. What is the easiest way to make poeple think that ? Firing workers. On an other hand, I can't admit that speculation can be the most interresting way to make money. We are in a crasy system where poeple make more money with stock trade than with work... And all our governments are trying to save such a system...

I do remember the record crisis. Major companies were making huge benefit selling their records at undecent prices. But technology bring to the world the web and peer2peer... The Major didn't admit they could make a little less money with records and youth start to download freely more and more... And now they don't wanna pay for records anymore, habbit has been taken... A few years later, records companies found new ways to make money (phone ringings, mp3 legal download...) so they started to sell their records at a lower price but it was too late, records won't be bought as they were... What do I mean ? To make money isn't a bad thing IMO, but not to be able to find other way to do some money when market changes is the problem.

Back to the actual crisis. We're (our governments) trying to save the system and never think about changing for another system. What will happen ? Exactly the same thing in a few years. If work (production of goods, production of value add-on) is not paying more than speculation, this crisis won't be the last...


I saw on TV that the french workers are not as patient with their managements as our german 'sheep' - resulting in some more drastic forms of protest.

Yes, it smells latent revolution here... Poeple are angry, they do not trust in our president anymore (and they're right not to trust him), and the crisis is the excuse to close factories doesn't satisfy them...
For exemple : french CONTINENTAL factories were meant to close in a few years, but they closed them as soon as the crisis excuse showed its uggly face. They were meant to be closed because there was more benefits made with some foreign factories, not because they were not making money... And here is the real problem : the stock owners wants more benefit every minute to sell their stock more than they bought them...
Hard to be a punk... But sometimes you have to...

ENS Audio

Re: The great international crisis swindle...
« Reply #4 on: July 26, 2009, 01:55:33 PM »
You guys are dead on...but maybe we should as Hank Paulson, Larry Summers, and our Tresury Secretary
Timmay Geithner.  Through trying to understand the gibberish of what many banking/economic gurus have been saying these fellas have a lot to do with what is going on right now and as common sense would dictate "who are the winners? and who are the losers?" CitiBank???...DING DING!!!

Also just to look at this from another angle, possibly the "Money Wizards" that represent the US banking system as in attempt of "self preservation" did a few tricks and BANG intentionally crashed much of the world markets to preserve the value of the US Dollar and why do I say that??  There was big noise a few years back about how the US Dollar was going down and some "Nations" in particular were going to start using the Euro...well it could be the bankers in the US decided to "counter" in a game of "economic warfare" and we even went as far as to sign a few "blank checks" to the Chinese!!!!HA!!!

I do not believe the Chinese will sacrifice their economy to destroy ours...it looks like this US vs China trade policy is more like "Mutually Assured Destruction" Policy the US and China are locked into.  If China was able to dump our T-Bills and to do it unscaved, wouldnt they have done so already???

All in all I see a new world war brewing on the horizon........howabout you?? :-\

smallbutfine

Re: The great international crisis swindle...
« Reply #5 on: July 26, 2009, 11:02:38 PM »
Yeah some good points mentioned here!
Who is the winner?
'The money is not disappeared, someone else has it.'(Philippe Baron Rothschild)
Actually some guys raised their boni with buying critical funds. Not unusual, but they bought with money they did not have actually - yes 'virtual money'.
Like playing roulette with chips they did not pay...
The funds did not have real countervalue. But as long as everybody buys, there's always enough money flow into the funds....
again as you might guess it is 'virtual money' nobody has ever earned or any countervalue....
Kinda dangerous practise, but interestingly totally legal....
Now when the money flow stops the highly rated funds are worthless within a day- crash.
Is it dangerous? Sure. Is it totally critical? NO!
Interestingly this happens like three times a week in the commodities futures market (top value stocks becoming totally worthless)
So one might ask, what the problem actually is.
As crazy as it sounds until here, the real problem is that politics and economics did not react upon warning voices from the real business experts, the signs of the crash could have been seen since 2004.
But nobody wanted...
And with proper decisions it could have been dealt with. But simply nobody did.
Politics trusted more in the self-regulation of a market that is quarter bonus oriented, where no manager is accountable because he takes a fat golden handshake and leaves his position right before the outcome of his actions become visible....or just stays in position and insists on the correctness of his decisions and asks his country to pay the bill for the gamble loss...and  (you might guess) HIS QUARTERLY BONUS.

And the politicians pay. Even the boni. Sometimes even without the slightest monetary sanction.
(Just an actually discussed issue in my home state Schleswig-Holstein, where a bank manager got 2.670.000 Euros for the actual year thru improper channels despite country and state official decision to sanction the income to poor 500.000 Euros.)

(Well, for gods sake, at least the bill is not payed from politicians wages, but from ours...if we did not loose the job in the meantime. So it's not too hard a decision, right?)

Well, this is not the way it's handled at the commodities futures market...
Why are our politicians that uninformed, misleaded and incompetent to recognize simple analogies, one might ask?
When everything already went wrong, how could it be that they just do 'something' instead of a sincere analysis and proper action in analogy of things that are known to work for ages?

Sorry for the rant. But makes me feeling upset every time I think about it.
Maybe the warning people were underrepresented on the tv screen or something... :P

IMHO it's not only a US originated ssue. Or a US/China/EU/SouthAsia issue. It's a global systems issue that politics has completely failed to deal with.

Kind regards,
Martin

BTW in the roman empire a senator had to show up 40 yrs of continuous widespread education and personal developement as well as practial political competence.
I guess we are a little bit falling behind nowadays...
« Last Edit: July 26, 2009, 11:16:55 PM by smallbutfine »
"In the past we suffered from crimes, today we suffer from laws."
Tacitus

www.audiomh.de

deuce42

Re: The great international crisis swindle...
« Reply #6 on: July 27, 2009, 08:21:57 AM »

BTW in the roman empire a senator had to show up 40 yrs of continuous widespread education and personal developement as well as practial political competence.
I guess we are a little bit falling behind nowadays...

Nice one - I like that. I shall remember this when I am angered by those self styled machiavelli's on TV who loosely call themselves "politicians" under the delusion that this label ascribes them some sort of nobility or intelligence. 

JohnRoberts

Re: The great international crisis swindle...
« Reply #7 on: July 27, 2009, 11:38:17 AM »
Yeah some good points mentioned here!
Who is the winner?
'The money is not disappeared, someone else has it.'(Philippe Baron Rothschild)
 
Kind regards,
Martin

I gave this a lot of thought... Where did all that wealth go? It couldn't vanish over night, could it?

Well, yes in fact,  that wealth that was based on bubble asset prices did go away overnight. People were both buying and selling homes at prices inflated well beyond their true value by ever increasing future expectations. When the market adjusted down, all that paper wealth vanished.

During this wild ride up, the entire (world) economic system enjoyed prosperity, as people spent this ethereal housing wealth on consumer goods. This fake wealth filtered down to every part of the economy. When the music stopped, the bill came due for all the real spending that occurred. 

The financial services industry that was making all these lair loans, dried up with many people losing jobs. Later as the hyped up consumer spending dried up the rest of the economy contracted.

There are not a bunch of fat cats sitting around counting all this money, the majority of it was spent by homeowners who enjoyed at least a short term benefit from it. Now we need to work through the hangover of spending like drunk sailors. I wish we could sober up our congress who haven't stopped spending money they don't have.

JR

Note: There are perhaps a small handful of "smartest guy in the room" investors who bet the other way when the vast majority was piling into the shaky derivatives and bundled mortgages. Like individuals who sold their homes at the peak and rented. They did very well, but are not really responsible for the problem. I for one don't find the home buyers completely blameless. They were gambling on future even higher prices, and lost. It's a shame that this expanded to hurt the entire world economy, but everybody was helped by the good times before the music stopped. The majority of people who profited from this are now in pain.

Note2: In our original constitution Senators were nominated by the state legislature. It was only in a later amendment that they were elected by popular vote. The senate is supposed to be our upper more thoughtful deliberative body.
Don't only half-ass tune your drums. Visit https://circularscience.com to hear what properly "cleared" drums sound like.

smallbutfine

Re: The great international crisis swindle...
« Reply #8 on: July 27, 2009, 08:37:51 PM »
Thanks for the words on the american part of the story.
In fact not the complete world economy prospered from those bad funds actually.
I guess the biggest phantom profit was made by fund managers / bankers who traded those funds all over the world in huge amounts.
The snowball effect turned into a avalanche of invalid profit. Banks around the world gambled with them, from money they did not have.
Unfortunately some of the very essential banks on wall street and in europe. Banks that hold main money reserves for their countries governments.
Their loss of all banks  is real.
As were the boni and wages of the top managers that were based on the phantom profit amount.Their personal wealth is still real and has grown most while the perpetuum mobile was moving.
So they were the real winners and guilty (morally) of the loss of the others (small people. The solid banks. Governments.)
I hope this has consequences in laws...

Kind regards,
Martin
"In the past we suffered from crimes, today we suffer from laws."
Tacitus

www.audiomh.de

ENS Audio

Re: The great international crisis swindle...
« Reply #9 on: July 29, 2009, 01:19:13 PM »
Thanks for the words on the american part of the story.
In fact not the complete world economy prospered from those bad funds actually.
I guess the biggest phantom profit was made by fund managers / bankers who traded those funds all over the world in huge amounts.
The snowball effect turned into a avalanche of invalid profit. Banks around the world gambled with them, from money they did not have.
Unfortunately some of the very essential banks on wall street and in europe. Banks that hold main money reserves for their countries governments.
Their loss of all banks  is real.
As were the boni and wages of the top managers that were based on the phantom profit amount.Their personal wealth is still real and has grown most while the perpetuum mobile was moving.
So they were the real winners and guilty (morally) of the loss of the others (small people. The solid banks. Governments.)
I hope this has consequences in laws...

Kind regards,
Martin


And what seems interesting is hearing the same words "bailout" being applied in the situtation with Iceland and with the economic situation in E.EU (Poland, Romania, e.t.c) arent they asking the banks and taxpayers in your country to bail them out??  I really hope that it doesnt get any worse for you folks over there :-\


JohnRoberts

Re: The great international crisis swindle...
« Reply #10 on: July 29, 2009, 01:47:11 PM »
Yes, all the world economies were affected by this, and most countries drank from the cup while the wine was sweet.

Iceland was the poster boy for what can happen when banks use too much leverage.. Good for Iceland while the music was playing, bad when it stopped. But even the Iceland banks attracted depositors from GB and elsewhere with their above market interest, so that pain was shared.

Yes, there was also a housing boom in Eastern Europe fueled by easy mortgage credit. Other nations benefitted indirectly as all these new homes used lumber and copper.

Let me be the first to accept blame for these derivatives being an American invention, but we (the world) has suffered from bubbles as long as we have had markets, and probably always will. If it wasn't this it would be water, or who knows what will be next.

What's different now is the remarkable linkage between economies all around the world.

JR
Don't only half-ass tune your drums. Visit https://circularscience.com to hear what properly "cleared" drums sound like.

SSLtech

Re: The great international crisis swindle...
« Reply #11 on: July 29, 2009, 02:13:23 PM »
Those boring Norwegians...

Seriously though, that's what it takes; frugality. You may not get quite so drunk while everyone's giddy with perceived wealth, but you don't get sick when the world suffers a hangover, either.

Keith
"A waist is a terrible thing to mind"
Quote from: PRR
Ah, but that was 1999; we don't party like that any more.

lolo-m

Re: The great international crisis swindle...
« Reply #12 on: July 29, 2009, 02:49:18 PM »
Mortgage credit was a part of the problem, not the problem. The problem is the use of the system.

What's a stock ? A part of a society which gives you money from the benefits. The system isn't bad as is (except for the reasons I gave in earlier post) but investors are not planing to perceive a part of the benefits. They buy stocks to sell them, nothing more. So they buy what we call in french some wind, thinking it will become gold... I'm not really sure it's a good way to use the system  ::)...

Just to laugh :
One of the big boss of the CAC40 (french equivalent of DOW JONES) is a french record owner of the wages loss. He lost 70%... But don't be afraid he still have 1.300.000 € per year to feed his children  :D... And TV try to make us cry for them...
« Last Edit: July 30, 2009, 02:37:26 PM by lolo-m »
Hard to be a punk... But sometimes you have to...

JohnRoberts

Re: The great international crisis swindle...
« Reply #13 on: July 29, 2009, 03:07:21 PM »
Those boring Norwegians...

Seriously though, that's what it takes; frugality. You may not get quite so drunk while everyone's giddy with perceived wealth, but you don't get sick when the world suffers a hangover, either.

Keith

Being a net exporter of oil may have some slight influence on their economy.. :o

We are finding natural gas under every rock these days, but NG is not a fungible as oil, yet. We seem to be artificially limiting use of our local resources. Perhaps good for the distant future when oil becomes really precious, if we haven't melted first.  ;D

Our saving rate is way up and all the economists are complaining because they want more consumer spending.. I think the increased savings rate will be good long term.

JR
Don't only half-ass tune your drums. Visit https://circularscience.com to hear what properly "cleared" drums sound like.

JohnRoberts

Re: The great international crisis swindle...
« Reply #14 on: July 29, 2009, 03:24:51 PM »
Mortgage credit was a part of the problem, not the problem. The problem is the use of the system.

What's an auction ? A part of a society which gives you money from the benefits. The system isn't bad as is (except for the reasons I gave in earlier post) but investors are not planing to perceive a part of the benefits. They buy auction to sell them, nothing more. So they buy what we call in french some wind, thinking it will become gold... I'm not really sure it's a good way to use the system  ::)...

Just to laugh :
One of the big boss of the CAC40 (french equivalent of DOW JONES) is a french record owner of the wages loss. He lost 70%... But don't be afraid he still have 1.300.000 € per year to feed his children  :D... And TV try to make us cry for them...

This is sounding like the joke about 10 blind men trying to describe an elephant... If I was blind I'd try to stay away from elephants.  8)

Indeed it is described as a credit crisis, but as has been discussed at length in other threads the net result of the derivative instruments that allowed easily bundling and reselling of mortgages, was that it created an incentive to write low quality mortgages since they could be passed up the chain and resold into the black hole of hungry world markets willing to buy these instruments. This lack of accountability at the lower levels of banking drew people into home ownership who really couldn't afford the homes they bought, but with liar (undocumented) loans they could. This put upward pressure on home prices which created a bubble in pricing. Existing home owners took out too easy to get second mortgages based on this unrealistic inflated home value, and spent that money on real goods that rippled through the world economies and caused a false boom in employment and prosperity. People bought and traded on the bet that home prices would go up to the sky. Bubbles always burst and this was no exception.   

The manifestations of this sudden withdrawal of easy credit, and write down of all real estate based assets has caused huge economic displacements all around the world. This was not just some rich fat cats selling crap paper to other fat cats, this distortion of credit and home assets and temporary (false) economic boom it created, touched every corner of world economies.

Of course I could be wrong... but I'm staying away from the back of the elephant, I've been to the circus.  :o

JR
Don't only half-ass tune your drums. Visit https://circularscience.com to hear what properly "cleared" drums sound like.

lolo-m

Re: The great international crisis swindle...
« Reply #15 on: July 30, 2009, 02:36:37 PM »
Sorry but my poor english doesn't help me to know if you understood my thought or not  ;D... Also I corrected my post with the proper english word (I hope)...
Hard to be a punk... But sometimes you have to...

SSLtech

Re: The great international crisis swindle...
« Reply #16 on: July 30, 2009, 04:38:38 PM »
Quote from: JohnRoberts

... If I was blind I'd try to stay away from elephants.  8)


...so long as one still has a sense of smell, it shouldn't be too tricky! ;)

 ;D

-A good friend of mine had a regular contract to clean elephant-dung out of Penny & Giles faders, for Ringling Bros/Barnum & Bailey... That's a job that REALLY pays well. (people sometimes try to undercut the price, but they NEVER want to do the job a second time!)

Keef
"A waist is a terrible thing to mind"
Quote from: PRR
Ah, but that was 1999; we don't party like that any more.

JohnRoberts

Re: The great international crisis swindle...
« Reply #17 on: July 30, 2009, 10:12:36 PM »
P&Gs remind me of a good military weapon... clean out the crud, and they're ready to rock and roll...

JR
« Last Edit: July 30, 2009, 11:30:41 PM by JohnRoberts »
Don't only half-ass tune your drums. Visit https://circularscience.com to hear what properly "cleared" drums sound like.

smallbutfine

Re: The great international crisis swindle...
« Reply #18 on: July 31, 2009, 02:48:16 AM »
hehe, if it is too good to be true, than it most probably is not true.
Thank god we have had enough solid banks in germany that did not invest in those papers...
...but we are still shocked about those who did and who were considered solid and conservative and down to earth.

But well, we are in the heart of Europe, that more and more is consolidating its markets...
'Niemand ist eine Insel' - (nobody is an island) - means that we do in the end pay up for the near bankrupt countries in some way (and so do Great Britain and France) to hold up an EU minimum standard.
And therefore we will be forced to lower our own western european standard that we originally planned to establish in complete europe esp eastern europe. (wealth and social standards)
The european 'union', as desireable it is as an idea, will make a hughe step backwards in the mind of the people, like 'globalization' has much more of a negative smack of unlimited hardcore-capitalism....

Please note Germany has a 'social market economy system' as of our Constitution. The 'social' part (governmental regulation of economy and society where it is needed with the least possible limitation of freedom) has to be fighted for nowadays. Because international companies try to blackmail our countries with the drawback of money and labour everyday...the dark side of globalization.

Kind regards,
Martin
"In the past we suffered from crimes, today we suffer from laws."
Tacitus

www.audiomh.de

sodderboy

Re: The great international crisis swindle...
« Reply #19 on: July 31, 2009, 02:14:48 PM »

What's a stock ? A part of a society which gives you money from the benefits. The system isn't bad as is (except for the reasons I gave in earlier post) but investors are not planing to perceive a part of the benefits. They buy stocks to sell them, nothing more. So they buy what we call in french some wind, thinking it will become gold... I'm not really sure it's a good way to use the system  ::)...


Huh?  A stock is ownership in a company.  Nothing more, nothing less.  A market is where stocks are bought and sold.

Futures were created originally to reduce the risk of the price fluctuation of commodities.  Options and derivatives have a similar function for stocks and other investments.  These all are also bought and sold in markets.  Many people buy these to hedge other investments.  Others speculate and gamble on the future.  If you want to hedge exposure in a 100 million dollar portfolio, you might buy some derivatives for a million.  Others will buy 30 million worth and get burned if they are wrong.  None of this stuff- stocks, metals, mortgages, tulips, carbon credits, whatever, is wind until about the last 1/4 of the game.   Then the bubble bursts.

People have always speculated.  The ability to take risk is one of our human gifts.  We would still be running into our caves away from the full moon if we did not have this trait.
Usually excessive risk injures the single risk-taker.  In the financial world, investors have out-sourced their investment responsibilities to financial institutions and it is possible for a single person to put millions at risk, a la (I know some french) Nick Leeson.

Now, credit is frozen because we had politician-made global credit warming that was allowed to get so hot that it super-nova'ed and now we are in a credit ice age.  Now we have to reduce politician-made global government credit warming we can restore health to our financial world.
In the US the politicians on both sides took the risk for different reasons, and flamed this warming without regard to the ultimate costs.  Now they are telling us that we need more of their programs to get us out of this ice age.

It was a crisis, and it is getting milked for all it's worth.
ENOUGH!
Mike


 

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