Worldwide financial crisis

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Hubsu
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Re: Worldwide financial crisis

Postby Hubsu » Thu Oct 09, 2008 12:26 pm

Grieg wrote:Like many people these days you assume that it must be one extreme or the other whereas in reality the stock market (and the economy) spends the majority of it's time not at those extreme ends but slowly gaining or losing ground. The cycles are normal and natural.


Actually, deep inside, I share the same optimism. Similar but only domestic crisis was seen at the US a couple of decades a go. The lessons learned lasted a few years. This time the crisis is global tho, but nonetheless, like last time, we probably end up back to the growth track eventually.

But then there's the other side as well. I wouldn't call what happened in Iceland as "normal". It might be natural to the system to behave like it did, but it sure went from the other extreme to the other in a quick fashion. The same root cause and instruments that almost bankrupted Iceland is milling in the US and in the EU as well. What happened to Iceland will happen here as well. Only that remains is how bad of a hit it will be in the end.

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Re: Worldwide financial crisis

Postby Hubsu » Thu Oct 09, 2008 12:33 pm

TISO wrote:Seems Russians are helping Iceland which does couse some concern in the US:
http://www.ft.com/cms/s/0/d49ace36-94d1-11dd-953e-000077b07658.html?nclick_check=1


The extremes would be that nothing will happen geopolitically or that Iceland becomes Russia's new unsinkable aircraft carrier near UK and the US. With a rather big confidence I can say that the truth lies somewhere in between :)

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Re: Worldwide financial crisis

Postby Grieg » Thu Oct 09, 2008 12:38 pm

Hubsu wrote:
Grieg wrote:Like many people these days you assume that it must be one extreme or the other whereas in reality the stock market (and the economy) spends the majority of it's time not at those extreme ends but slowly gaining or losing ground. The cycles are normal and natural.


Actually, deep inside, I share the same optimism. Similar but only domestic crisis was seen at the US a couple of decades a go. The lessons learned lasted a few years. This time the crisis is global tho, but nonetheless, like last time, we probably end up back to the growth track eventually.

But then there's the other side as well. I wouldn't call what happened in Iceland as "normal". It might be natural to the system to behave like it did, but it sure went from the other extreme to the other in a quick fashion. The same root cause and instruments that almost bankrupted Iceland is milling in the US and in the EU as well. What happened to Iceland will happen here as well. Only that remains is how bad of a hit it will be in the end.


I don't see any significant comparisons with Iceland and the US. Iceland is an abberation. When the assest of the banks are ten times the country's GDP it's like one analyst described it...a huge motor attached to a tiny buggy. Iceland's overheated economy based on banking has been long overdue for a major correction.
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Re: Worldwide financial crisis

Postby Grieg » Thu Oct 09, 2008 12:40 pm

TISO wrote:Seems Russians are helping Iceland which does couse some concern in the US:
http://www.ft.com/cms/s/0/d49ace36-94d1-11dd-953e-000077b07658.html?nclick_check=1


It seems to me that Russia has it's own economic problems to deal with. With trading having to be suspended nearly everytime their financial market opens.
The rush to invest foreign capital in Russia has slowed to a trickle.
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Re: Worldwide financial crisis

Postby TISO » Thu Oct 09, 2008 12:44 pm

It seems that US and EU effecively said they can go f....themselves the NATO undeclared ASW ship up north known as Iceland now got Russians to give them financial help. Officialy no military or other strings are attached but Iceland is one of the founder nations of NATO. This is a good strategic (in geopolitical sense) move by the Russians. Poeple tend to remember when someone helped them when shit hit the fan and they also remember who told them to f..k off in the same situation. Next time when US and UK tries to bring Russia isolation on the NATO summit Russians will have friends there.

Grieg yes Russians have problems coused by falling oil prices, but rush to invest capital anywhere right now is just not there anymore.
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Re: Worldwide financial crisis

Postby Hubsu » Thu Oct 09, 2008 12:56 pm

Grieg wrote:I don't see any significant comparisons with Iceland and the US.


Then we agree to disagree.

I thought that "US/EU's overheated economy based on banking has been long overdue for a major correction." and that the correction is happening at the moment.

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Re: Worldwide financial crisis

Postby Grieg » Thu Oct 09, 2008 1:15 pm

Hubsu wrote:
Grieg wrote:I don't see any significant comparisons with Iceland and the US.


Then we agree to disagree.

I thought that "US/EU's overheated economy based on banking has been long overdue for a major correction." and that the correction is happening at the moment.


Of course the US/EU economies are experiencing a correction also...back to the normal cycles mentioned..but there the similarities end IMO.
Banking assets ten times the country's GDP doesn't impress you? Or a current account deficit four times the US? Interest rates around 16%?
I'm not saying the US/EU isn't going to experience some pain. If people keep their heads there is no need to panic and make the situation far worse than the economic fundamentals warrant. If the herd instinct is to panic and flee and no government action is able to stem the tide then a worldwide crash of epic proportions may be the result. It is certainly a possibility.
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Re: Worldwide financial crisis

Postby Hubsu » Thu Oct 09, 2008 1:37 pm

Grieg wrote:Of course the US/EU economies are experiencing a correction also...back to the normal cycles mentioned..but there the similarities end IMO. Banking assets ten times the country's GDP doesn't impress you? Or a current account deficit four times the US? Interest rates around 16%?


I think that you think that I mean that the US and EU will suffer an identical crisis with identical outcome that Iceland is currently suffering. Of course that isn't the case. I probably misunderstood you also, so I have to ask: do you think shaving off 40% of the US stock prices in a year is normal and that it isn't solely based on banking in the USA & owner greed?

Flimsy "through-the-internet-communication" at work plus the usual stuff with the cultural differencies on thinking, I suppose. Internet arguments should always happen face-to-face :)
Last edited by Hubsu on Thu Oct 09, 2008 2:07 pm, edited 2 times in total.

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Re: Worldwide financial crisis

Postby Hubsu » Thu Oct 09, 2008 1:42 pm

Woho, double post.

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Re: Worldwide financial crisis

Postby Grieg » Thu Oct 09, 2008 2:30 pm

Hubsu wrote:
Grieg wrote:Of course the US/EU economies are experiencing a correction also...back to the normal cycles mentioned..but there the similarities end IMO. Banking assets ten times the country's GDP doesn't impress you? Or a current account deficit four times the US? Interest rates around 16%?


I think that you think that I mean that the US and EU will suffer an identical crisis with identical outcome that Iceland is currently suffering. Of course that isn't the case. I probably misunderstood you also, so I have to ask: do you think shaving off 40% of the US stock prices in a year is normal and that it isn't solely based on banking in the USA & owner greed?

Flimsy "through-the-internet-communication" at work plus the usual stuff with the cultural differencies on thinking, I suppose. Internet arguments should always happen face-to-face :)


Perhaps. God knows I'm no expert on international finance. I see a disconnect though between valuation of stocks in corporations ( which should ideally represent the financial health of the company) and the financial troubles of overextended banking concerns. Those who take on too many bad debts should pay a price for doing so but that doesn't mean one should throw out the baby with the bath water. By that I mean that even though they deserve to pay the penalty for their poor business decisions we cannot allow an entire industry to go under. Not when that industry is vital to the entire system. Our capitalist system cannot function without credit (as I'm sure you know). Some creditors can be allowed to sink but the credit system cannot.
The US has a large and diversified economy and many of those stocks represent healthy corporations whose fundamentals have not changed (except for their reduced access to credit). Iceland does not posses a large and diversified economy. Banking and fishing are pretty mcuh it AFAIK.
I guess what I'm trying to say is that the fundamentals will still be there after the correction in the US but the fundamentals were never there for Iceland.

ps...I'm not sure what you are referring to when you say owner greed?
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Re: Worldwide financial crisis

Postby Hubsu » Thu Oct 09, 2008 3:55 pm

Grieg wrote:ps...I'm not sure what you are referring to when you say owner greed?


The usual stuff about the increased amount of bad loans that end up hurting healthy businesses. Overheating economy that generates huge short term profits but end up causing severe problems in the long run. Just what happens in the normal economical cycle. Personally I am favor for some market control. Just like the US law that was put after the 1990 bank crisis but taken away 1994 that forced the loan giver take some responsibility for the collection of the loan.

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Re: Worldwide financial crisis

Postby wooden major » Fri Oct 10, 2008 6:25 am

you mean the icelandic bank meltdwn is about financial banks ? ...silly me , i thought they were talking about snow banks melting ...now i see what all the fuss is about .

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Re: Worldwide financial crisis

Postby Grieg » Fri Oct 17, 2008 7:25 pm

TISO wrote:Seems Russians are helping Iceland which does couse some concern in the US:
http://www.ft.com/cms/s/0/d49ace36-94d1-11dd-953e-000077b07658.html?nclick_check=1



http://news.yahoo.com/s/nm/20081017/ts_nm/us_financial_iceland

REYKJAVIK/MOSCOW (Reuters) – Russia is not yet convinced it should make a loan to Iceland to help dig it out of a financial crisis, a Russian source said on Friday.

But as the island ran down more of its meager foreign reserves, Iceland said it hoped its biggest bank, Kaupthing, would next week be able to re-open its Luxembourg branch to pay back Belgian and Luxembourg depositors.

Two weeks after a banking collapse destroyed the value of its economy and currency, Iceland has still to decide whether to go to the International Monetary Fund (IMF) for help.

Prime Minister Geir Haarde said a decision was still expected within a week. In the meantime, talks with Russia this week on a loan have not yet led to a deal.

"At the current moment, we do not yet have enough reasons to give them credit," a senior Russian government source told Reuters. "We did not refuse. We are continuing the talks."
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Re: Worldwide financial crisis

Postby Skua » Sat Oct 18, 2008 12:37 am

Iceland has been offered financial assistance from Norway, but has so far not decided to make use of it. Whoever made the rather silly notion that their allies through the last 60 years have told them to f**k themselves should probably reconsider what their perseption of the world is based on. Iceland will get the help they need, but they have to take some responsibility themselves as well.

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Re: Worldwide financial crisis

Postby Skua » Sat Oct 18, 2008 11:27 am

Iceland has now accepted a 3.4 billion Euro loan from Norway and Denmark. It is worth noticing that they have accepted a loan almost ten times that amount from Russia though, a loan which the Russians probably will use as a lever to get Iceland to work for them in the dispute about the Northern areas. Iceland has brought their financial situation upon themselves, but we should perhaps have offered them more, undeserving or not, to keep them out of the Russian claws.


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