Market Wipeout
Nasty business, what more can we say?
Will there be more?
Oh yes, that much is certain.
Its interesting reading the analysis floating about the news agencies but few scratch the surface. When Fannie Mae got its recent bailout what few seemed to take notice of was that the bailout left the shareholders to be wiped out but underwrote the bond portfolio so was effectively quite useless to the American banking system. A big sign for foreign investors to flee US institutions and what is clear now is that those investors can read. Lehmans is only the next in line and many more are sure to fall as the rest of the world realises that US banking is broken. From our perspective in the UK lets just hope the BOE and the government can keep its nerve and hold interest rates whilst resisting the urge to prop-up any more UK institutions. Toxic debt has to bleed its way out just like any other poison or the patient won’t make it alive.
That Lehman’s memorabilia would go nicely with that BCCI desk set and cut glass ashtray I filched almost 20 years ago
Denninger’s analysis of the Lehman underwriting by the back door and other goodies is interesting to scrutinize. The US and by definition, the rest of us, could be in trouble.
I see no divergence between Denninger’s analysis and my own, I prefer to go into less detail and dislike the extensive use of bold-underline to make my point. My Father had an intense dislike of the US and foresaw the collapse of the banking system, the structural problems were evident in the ’70s and the only surprise is that its taken so long to arrive. The UK might have been able to withstand the shock-waves but the underclass, socialists/weak headed and immigrants stuffed us with a decade of Gordon Brown who has destroyed our economic base. Short of a miracle - its over.
Ah yes the great PFI deceit, don’t get me started on that!
Very similar, minus the underlining, which the Yanks are wont to do. So we now wait to see if the BOE et al do hold their nerve.
Could PFI be described as sort of another way to tax the public? A sort of long-term way?
Forgive me, I’m not so smart with the world of big finance. But that chart you posted with all the minus figures? They don’t look like mega-falls to me. Do they translate to e.g. a 4% fall in the value of shares across the board?
Indeed Debacle, its one way of looking at it. Or even the government’s version of the credit crisis which proves they are no smarter than anyone else - which is worrying because they are supposed to be the experts.
They represent the value of a selection of the top shares listed at the exchange and are thus an indication of gross value, a drop of 4% may not seem much but it’s a lot for one day. Its about nine months economic growth during a strong period of boom so a week of that sort of loss could be grim.
Thanks for the explanation, Wolfie. I understand the share price drop better now. Put that way, the fall is immense. I begin to see the light.
Pity our gvt didn’t though. For the last 10yrs I’ve been saying that the hell-for-leather credit push - or actually, debt encouragement - is not sustainable. Like most I initially thought that Brown knew what he was doing. Then I began to see young people up to their eyeballs in debt and some even going bankrupt. I realised that there was nothing more to the ‘Brown Prudence’ than avarice.
Commonsense - and good housekeeping - says that you can’t keep robbing Peter to pay Paul forever. Or is that too simplistic?
Ooops. What I forgot to say is that NuLab is looking more and more like one big asset-stripping project. Certainly not a national government. (Comes to something when you can dodgy deal in mortgages, get fired twice but get a lordship AND your old job back).