Is the current financial turmoil a surprise?
Discussion
and should we have one super thread about it?!
There appear to plenty of experts on here, is the situation we find ourselves in a surprise or did you all know it was just around the corner but due to the money coming in were too scared to put the collective brakes on?
Is it possible to 'reset' the markets? After all, if every institution could be affected why not just start again?!
I know it's a simplistic way to look at it but surely it couldn't be any worse than what could potentially happen?
There appear to plenty of experts on here, is the situation we find ourselves in a surprise or did you all know it was just around the corner but due to the money coming in were too scared to put the collective brakes on?
Is it possible to 'reset' the markets? After all, if every institution could be affected why not just start again?!
I know it's a simplistic way to look at it but surely it couldn't be any worse than what could potentially happen?
I've seen it comming for a long time. But if you want to buy a house (I did), then you have to pay the prices and take the debt (I did). So I imagine it being similar in the banking sector- you must make large profits year on year or risk falling behind and having your stock fall behind your rivals, which in turn puts you at risk of being taken over by a bank/institution making more spectacular profits. No matter that these profits are made on the back of unsound business- we live in the now, and few of your shareholders are going to turn down a large hostile takeover bid if the right price is offered.
Out of curiosity- is there a time limit you have to hold onto your shares/stocks, or can you sell them on within minutes? It strikes me-* that much of the alleged driving up of oil prices by speculators and the run on HBOS, etc would have been much smaller problems if you had to hold onto your shares/stock for a year before selling.
-* I trained as a fishmonger at seventeen and would sometimes wrap fish in the Financial Times, hence my peerless understanding of world economics.
Out of curiosity- is there a time limit you have to hold onto your shares/stocks, or can you sell them on within minutes? It strikes me-* that much of the alleged driving up of oil prices by speculators and the run on HBOS, etc would have been much smaller problems if you had to hold onto your shares/stock for a year before selling.
-* I trained as a fishmonger at seventeen and would sometimes wrap fish in the Financial Times, hence my peerless understanding of world economics.
Edited by glazbagun on Wednesday 17th September 23:01
Well it was fairly obvious that house prices couldn't go on going up. It also became clear to me after the AOL/Time Warner merger that a number of these big deals were on a flawed basis, and I have been highly sceptical about the banks profits figures for some time.
However not many people will have precdicted that it was all going to go pear-shaped so quickly and in such a big style.
In my opinion the real problem with all this is that a relatively small number of people (compared to those who have been stuffed by it) got us into this mess and many of those are sitting on a firtune they have recieved in bonuses etc. In the meantime the rest of us have seen values of pensions, houses, endowments fall through the floor, and seen our taxes used to bail out financial institutions who cocked up.
It is of course possible that those who got the bonueses etc invested it in their companys stock in which case they'll have lost a lot of it!
I have never really understood how these deals have been so financially viable, and indeed some timeso ago there was a big thread on here about it. The basic response from the likes of NorthernBoy was that I didn;t understand. It appears that I did understand it was those that were doing the deals that didn't!
However not many people will have precdicted that it was all going to go pear-shaped so quickly and in such a big style.
In my opinion the real problem with all this is that a relatively small number of people (compared to those who have been stuffed by it) got us into this mess and many of those are sitting on a firtune they have recieved in bonuses etc. In the meantime the rest of us have seen values of pensions, houses, endowments fall through the floor, and seen our taxes used to bail out financial institutions who cocked up.
It is of course possible that those who got the bonueses etc invested it in their companys stock in which case they'll have lost a lot of it!
I have never really understood how these deals have been so financially viable, and indeed some timeso ago there was a big thread on here about it. The basic response from the likes of NorthernBoy was that I didn;t understand. It appears that I did understand it was those that were doing the deals that didn't!
Every man and his dog in the housing market and financial sector have been pursuing money at whatever cost, essentially acting like it's a one-way market. It doesn't take a genius to figure that one day it's all going to come tumbling down.
What annoys me is that there must have been loads of people who have caused a lot of this mess who will get away with it. I would quite like to see lengthy jail terms for many of the culprits who have acted irresponsibly, whether they be the traders or the people that made the lending/policy decisions that allowed many sub-prime people to borrow. Additionally I'd also like to see restraints on bonuses, but that would need to be worldwide to be effective so it won't be happening. Of course they'll complain that it's the free market and governments shouldn't interfere, but that's only until they need rescuing or need more money put into the system. The moral hazard needs to be removed IMO.
What annoys me is that there must have been loads of people who have caused a lot of this mess who will get away with it. I would quite like to see lengthy jail terms for many of the culprits who have acted irresponsibly, whether they be the traders or the people that made the lending/policy decisions that allowed many sub-prime people to borrow. Additionally I'd also like to see restraints on bonuses, but that would need to be worldwide to be effective so it won't be happening. Of course they'll complain that it's the free market and governments shouldn't interfere, but that's only until they need rescuing or need more money put into the system. The moral hazard needs to be removed IMO.
johnfelstead said:
I'm just surprised it has taken so long to happen. We don't have the prospect of a WW to get the world order re-established and old finances forgotten about, so it's going to be very interesting to see what happens in the next few years and who is the big winner from this mess.
China, Singapore and the Petro-dollar boys. The U.S. will be in hock to them all for the next generation.The previous recession (circa 2001) wasn't deep enough to correct, and was artificially smoothed. Not just banks and governments, but general attitudes about wealth creation and value. This time we get some (if not all) of this time, what was left of last time, and perhaps a bit more.
Edited by dilbert on Thursday 18th September 01:23
I think a lot of people saw this coming. Many on PH and elsewhere knew house prices would plummet, interest rates would rise, unemployment would rise. The whole economic miracle that Gordon Brown took credit for was based on massively over-optimistic valuations of almost worthless derivatives. Bad lending that (hopefully) will never happen again. A junior guy in my office, mid 30's, says he has £1.6 Million of mortgages, WTF how did that happen?
I've seen many on here who said they sold their BTL properties last year, and I would have done the same. He hasn't, so I imagine someone else will foot the bill.
Many probably got 5 or 10 year fixed rate mortgages when they were still cheap. Many thought property would fall 30% minimum. Search PH.
Only the bankers, estate agents and car dealers were in denial, IMO...
I've seen many on here who said they sold their BTL properties last year, and I would have done the same. He hasn't, so I imagine someone else will foot the bill.
Many probably got 5 or 10 year fixed rate mortgages when they were still cheap. Many thought property would fall 30% minimum. Search PH.
Only the bankers, estate agents and car dealers were in denial, IMO...
raf_gti said:
Is it possible to 'reset' the markets? After all, if every institution could be affected why not just start again?!
You seem to be thinking of these 'markets' as entities. They aren't. If I buy a bad steak at a Farmers' Market, I cannot (usefully) sue 'The Market'; it is just a lot of sellers in the same place. Exactly the same thing is happening in "the Stock Market". You cannot 'reset' it, it never was an 'it'.
Zod said:
Wrong, Timmy
There have been PHers posting (Not just me) for a long time about how incomes would have to rise if we where to avoid a price collapse in the housing market so in a sense they did predict the correct outcome, of course no one can time markets or they'd be very rich so the timing was out.
Edit: Except for that twit the other day who said he could read minds
, he’d just be able to read all the traders minds and figure out what was going to happen. I have no idea why he’s running a talent agency with a gift like that 
.Edited by speedy_thrills on Thursday 18th September 01:48
Timmy35 said:
Zod said:
Wrong, Timmy: most saw it coming, but nobody ever thought it would be close. It was always in a future too distant to worry about.
He asked if it was a suprise. Not whether it's timing or speed had been. Different question would have received a different answer.The problem is that bubbles rarely end like that.
There were certainly a couple of surprises:
US sub-prime is actually a global problem.
Emerging market growth can't bail out US domestic decline forever.
For everyone saying "I told you so" or "I saw it coming" fair enough but the harder call is getting the timing right.
If you had called a collapse in financial shares in 2006 and shorted say Morgan Stanley you would have lost 100% of your money before being right.
walm said:
Timmy35 said:
Zod said:
Wrong, Timmy: most saw it coming, but nobody ever thought it would be close. It was always in a future too distant to worry about.
He asked if it was a suprise. Not whether it's timing or speed had been. Different question would have received a different answer.The problem is that bubbles rarely end like that.
ked some time ago. Zod said:
Wrong, Timmy: most saw it coming, but nobody ever thought it would be close. It was always in a future too distant to worry about.
Everyone saw it coming, but very very few saw HOW it would come (US subprime causing a global credit shortage).Edited by Maxf on Thursday 18th September 09:43
Timmy35 said:
walm said:
Timmy35 said:
Zod said:
Wrong, Timmy: most saw it coming, but nobody ever thought it would be close. It was always in a future too distant to worry about.
He asked if it was a suprise. Not whether it's timing or speed had been. Different question would have received a different answer.The problem is that bubbles rarely end like that.
ked some time ago. Gassing Station | The Pie & Piston Archive | Top of Page | What's New | My Stuff