Wall Street Crashing?

Discussion in 'Current Affairs, News and Analysis' started by ABrighter2006, Sep 15, 2008.

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  1. Whichever way this plays out, over the coming days - some of the biggest names in investment banking and insurance are watching their sub-prime liabilities, come home to roost.

    In the last months of the Bush administration, what state the economy for the incoming administration? As the Fed now considers the counterparty maze, in order to work out, where all of this money isn't - what impact is Wall's Street's current headlines, about to wreak on the City of London?

    New York Times: After Frantic Day, Wall St. Banks Falter

    Remember, the value of your investment, can plummet, as well as fall.
     
  2. And they still don't think we've seen the worst. Paulson reckons another big player will fail... its all damage limitation now.

    Reform of Bankers pay seems to be the biggest area for change so that this mess don't show up again in the future. The real question is will the lessons be learned? Probably not i reckon, these things seem to happen once in a lifetime, odd that.
     
  3. Never mind Gold, I can see the price of Ammo going through the roof, (no pun intended)!

    Stock up on water, beans, whisky, coffee and logs, this could be a long and hard fought winter.. :cry:
     
  4. I would agree.

    Given Lehman Brothers, filing for Chpt 11, I wonder how quickly people here will realise that nearly 5000 people in the city are currently being briefed on how bleak their future is.

    Then, I would guess that we'll witness any number of pension funds and similar players, start to tell their customers, that their pension / investment vehicle has had something of a multi-vehicle pile-up. The emergency services, in the shape of Alastair Darling, Gordon Brown and the FSA will rush to the scene, arms flailing, mouths agape - and do nothing.

    Does HMG have any bonds with Lehman Brothers?
     
  5. Biped

    Biped LE Book Reviewer

    1930's anyone?

    So, who fancies massive devaluation of currencies, massive poverty, starvation and some little jumped fella with a moustache coming to er, save the day?
     
  6. What interests me is the US govt's decision that Lehmann will not feature for a public money bailout. Why not? I'd like to see the detailed reasoning behind why one pack of swindlers gets off the hook thanks to taxpayers but another set doesn't....could be very instructive.
     
  7. Hyperinflation isn't it? Paying for a loaf of bread with a wheelbarrow full of cash etc.
     
  8. At least as government employees we should be relatively protected from wage cuts and the like, enabling us to pounce on the weak, buy up vast quantities of cheap property and become rich beyond our wildest dreams.

    Or be employed imposing martial law as society breaks down and gangs of chavs go feral.
     
  9. And I wonder how many of the newly jobless bankers will miss their mortgage payments as a result...
     
  10. FFs all this couldnt have come at a worse time...I'm desperate to sell my house and get rid of the responsibillity as im on me own now and can barely afford it now, but if I put it on the market now it could take a year or may not sell at all.
    Dunno what to do.. chance it or not..? cos lets face it the waves from this wall street crash are gonna be felt here probably harder than most places cos I dont think the UK are strong enough to fight this shite.
    Brown has left us open and all within one year of office, so what now?
     
  11. Not stepping in is the right thing - they need to reasset 'moral hazard'.

    They had to step in for Fanny and Freddy as they both had an implicit government guarantee... And even without this, if they hadnt, the whole US housing market (even the non sub prime stuff) would have tanked.

    Lehman was a second rate bank, that went long structuring transactions in poor quality property deals. they got it wrong so should be allowed to fail. It's called capitalism.....
     
  12. Not an easy decision, but if you want to exit the house market then price your property below market value and take a relatively small hit now. If you hang on, and become increasingly desperate to sell, then your loss is likely to be much more severe.

    Long-term trends put house price to average earnings at a ration of 4:1, indicating an average house price of £100K. We are currently at an average price of £175K - you can do the maths yourself, and if the market over-corrects, the £100K level is likely to be breached.

    If you can comfortably hang, however, then do it. You haven't made a loss until you liquidate the asset and over the long-term house prices will regain an upward momentum.
     
  13. Not being in the financial world myself I was wondering how bad the current situation is in relation to the early nineties, late seventies etc.

    Is what is happening typical of the "shakedowns" that happen every 15 years or so or is this indicative of something else?

    As I say I'm no expert but I cannot help feeling that we had equal levels of gloom re currency/property/stocks etc in the early nineties? I also feel that those who have been prudent (both on a macro and micro level) will emerge relatively unscathered?

    Fingers crossed.
     
  14. Biped

    Biped LE Book Reviewer

    What now, certainly for the UK is that it could VERY easily go HORRIBLY t1ts up.

    If we have another Northern Rock, the gobment will have to go the same way as the US - there is NO money left in the kitty to bail out another failing bank - and we may yet have another one. So, when the first British bank goes to the wall, then it will start crashing down big-time.

    If the gobment had not sold our gold cheap, and if it hadn't spent all the money we had PLUS borrowing billions and billions more, then it might be in a healthy enough position to assist.

    The fact is, the gobment can't afford to reduce taxes to help us out, it can't borrow more money (well, it can, but it will hold back our economy for many, many more years until the tax payer has paid it all back), it has no reserves of gold or cash to do anything with, it hasn't got money to keep paying the 100,000+ extra civil service workers on the books, let alone give them pay rises (watch out for strikes) etc etc etc.

    AFAIK, the gobment, short of borrowing billions more, has nothing with which to help the economy - IT is responsible for failing to keep a reign on the financial markets, and for allowing the housing market to get out of control. Before anyone says it's a free market - the gobment is exactly that - GOVERNMENT of the economy, the people, the country. If it fails to see the writing on the wall, and fails to take action in good time to prevent events such as are happening now, there is no point in it being there.

    The fact that banks were allowing people to borrow 7-8 times their salaries, the fact that the electorate was in debt to the tune of over 1 trillion pounds and thus, incredibly susceptible to even the slightest downturn in the economy was clear for all to see. The gobment KNEW this, it KNEW the risks and it failed to take any action, even though that would have staved off this train wreck. Why did they not take action? Well, because the chancellor of the exchequor at the time (Gordon Brown) was too busy riding the tax gravy train, too busy spending money on stupid, ill-conceived and short-sighted 'utopian' projects while raking in the stamp duty and VAT from thousands of dodgy mortgages.

    One simple law would have certainly helped the UK economy from being so susceptable to dodgy UK (not US) mortgages: A law that limited the mortgage one could get to 4 times one's annual salary MAXIMUM, and the banning of self-certification mortgages without concrete financial evidence of one's ability to pay.

    With some measures in place and some back-up money in the system, this country would not be on such a knife-edge, and would not necessarily be as badly affected by a US downturn/crash.

    As the US crash unfolds, the rest of the world markets are going to suffer too, but none so badly as the UK. As the US economy crashes, other countries will suffer a downturn, or even recession, but the UK will go down worse than just about anyone else, and more likely deeper than the US - ostensibly the cause of the global downturn.

    Simply put, the policies of this government and its failure to act when the writing was on the wall 5-6 years ago means the UK is likely to be the very worst casualty of a global recession.

    Good news folks - there isn't any.
     
  15. Thanks for the heads up