Is a global recession on the way?

Discussion in 'Current Affairs, News and Analysis' started by hong_kong_fuey, Aug 10, 2007.

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  1. "Analysts say the crisis could make it harder for banks, firms and consumers to get access to loans and cash.

    If this persists, it could lead to a global recession."

    BBC News

    Let's hope we manage to ride this one out. Doesn't it all have an inevitability about it, though?
  2. Sub-prime markets have collapsed. European/Asian/Australian Central Banks are pouring $billions into trying to avert the coming train-wreck. Most Septics are drowning in debt, the housing markets have collapsed and a massive credit/liquidity crunch is imminent.

    China owns $1.4 trillion of the US national debt and can squeeze whenever it likes.

    What's the problem??

  3. Simple, we get the fallout.
  4. Along with

    Followed by;

    We're all doomed, doooomed I tell ye!
  5. Ahh! the 70's again, joy
  6. IMHO recent stock prices,anticipating private equity buyouts,are totally divorced from reality.Bankers selling each other CDOs(Collaterised Debt Obligations) look more like 'pass the parcel' every day.There needs to be some adjustment(and pain) for equity prices to return to reality.They are/were about 20% overpriced.
  7. 8O Great timing, heres me starting a job paid in us dollars next month 8O
  8. Ah, there is an old saying:

    Bad numbers are harder to add up than good ones.

    A lot of grief yet to come out and over the pond the Regulators are making sure that the big Wall Street firms might not have "forgotten" to mark down some of their own assets and if so are doing so at the right rate.

    Warren Buffet proved right again as ever.
  9. Which is probably why he is worth US$52.4 billion and I'm not. :)
  10. Bring it on! Hopefully us squddie types will then be able to afford a house in the country we serve! :wink:
  11. So is it time to start buying shares?
  12. I hope that's the case, too. But considering 40% of new build properties have gone to economic migrants in the past ten years, and that a large percentage of social and 'affordable' housing has been bought by lettings agents who rent to economic migrants, then the hopes of a fundamental housing market price correction seem far fetched. Demand will continue to outstrip supply. Nearly 3million work permits have been given to immigrants since 2002. This figure does not include non-working family members. It also does not include the illegal immigrants who have moved here since 2002. There is a shortage of housing, full stop.If the economy does enter recession the people most likely to have their homes repossessed are young first time buyers and those who have secured credit on the value of their homes. These properties will then be targeted by the lettings agents to continue the cycle. Economic migrants tend to rent. So, even if they lose their jobs their rent and council tax will be paid for by the State, therefore, limiting the impact on house prices that a recession will make. It's important to consider the fundamental driving force that is the buy to let sector.
  13. And for those of us that do own houses?
  14. Not yet. Give it a while.

    However I can give you a hot tip, sent to me this very afternoon, concerning an investment product that will be right up your alley:

    Investment Dealers Inc

    yesterday announced their newest structured finance product, Constant Obligation Leveraged Originated Structured Oscillating Money Bridged Asset Guarantees (COLOSTOMY BAGS)

    Designed to accommodate the most sophisticated investment strategies, Colostomy Bags contain the residual senior equity risk of Structured High Interest Tranch Securities (SHITS) and are leveraged to an infinite level through the innovative use of derivatives.

    "It is an actively managed, unlimited liability, open ended investment with no maturity date, which pays LIBOR plus 5,000 and has no correlation to traditional investments" said a spokesman for Investment Dealers Inc. who engineered the product.

    "It's based on a CDO structure, but it's designed to default BEFORE
    the first coupon payment, which you'll agree has no correlation with stodgy
    traditional investments and is a perfect fit for portable alpha scams, er,

    Following the default, each month more leverage is added to the
    structure to pay for the coupon and the Dealer's fees which are set at 80%.

    "We feel the fees are reasonable, given the adrenaline rush you'll get each month attempting to mark these."

    The Colostomy Bags carry a world first AAAA rating, based on the rating agencies opinion that they are even safer than Treasuries. "You can't use traditional credit analysis to value these babies, no sir-ree" said a spokesman for a well known rating agency. "Just like Icelandic Banks, we give them the highest rating because you just know that the Fed will always be there bail out all the hedge funds who buy these things...remember, just like Long Term Capital?

    And the best part is, the beauty of this structure is that because the loss given by any default must be NEGATIVE, by extension we feel that the CDS will trade through as equivalent to Treasuries."

    Inhaling deeply on a fat herbal cigarette, he continued:

    "We've been tinkering with our model, which served us well for Enron and the alternative telecoms companies in '02, and our stress testing shows that the probability of loss in the senior tranche is close to zero."

    The model, constructed of a wishing well, Joseph Jett's trading blotter, a Gordon Gekko action toy and drawings of pretty Unicorns then collapsed in a heap. "It requires further fine tuning but the concept is sound" he said.

    This afternoon an investor, huddled on the windowsill outside his office, said he remained deeply optimistic about his holding of Colostomy Bags but was a bit concerned with the 95% decline in value on the first day they traded.

    "We've taken a bit of a haircut on these but I'm waiting to see the first servicer report, which should arrive in a few months. At first I was annoyed that the dealer who sold them to me yesterday refused to make a market in them today, but that makes my job easier since I'm not tempted to sell."

    We located a hedge fund manager at a due diligence meeting in the VIP Lounge of Score's. He said he was doubtful of the structure at first but was dared into buying it by a fixed income salesman whom he still owed a big favour to after having provided some lavish and exotic entertainment as well as posting bail for him.

    "He said to me, 'What's wrong with you, Mutha, its quadruple A rated. Just buy it: what are you, a pussy?' He also said it was going into 'an index', although he didn't say which one, but I felt that I had to buy it. Good enough for me, bro'."
  15. Purely from an uninformed novice's point of view, isn't it due for a recession yet?

    1987, 1998, 2007???

    They seem to come every decade or so?