Discussion / Debate point - Are we still inside the 08 crash Matrix

robut

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Markets might look calm, but they are behaving abnormally

If you find a paywall just copy the headline to google search and directly click the first link to this article that results. Headline is - Markets might look calm, but they are behaving abnormally

The pessimistic view is years of ultra-loose monetary policy have made investors so complacent that they are mis-pricing risk.( from top of article - byline )
But what is more striking — and alarming — is that equity valuations are far from the only bizarre feature of today’s markets. If you peer into the weeds of global finance, you will see peculiarities sprouting all over the place.

Consider credit. These days, pundits often wail about the rising risks attached to corporate debt. A survey from Bank of America Merrill Lynch shows that 42 per cent of asset managers now think that developed world companies have borrowed too much money— beating a previous 2008 peak of 32 per cent.

No surprise there, perhaps: corporate borrowing has indeed soared, amid numerous leveraged buyouts and mergers, and almost half of all US corporate bonds issued this year carry a risky rating of triple B-plus, triple B or triple B-minus. What is startling is that investors are not running scared. Instead, demand for risky debt is so high that the spread between safe and hazardous corporate debt (bonds rated triple A and triple B respectively) is a wafer-thin 50 basis points. In 2012 it was 200bp.
The Fed is raising rates, inflation is edging up and the US government will sell lots more debt in the coming years, due to tax cuts and rising budget deficits. But the US term premium has been zero in recent months. More peculiar still, JPMorgan calculated that the global yield curve has recently inverted for the first time since 2007.
A third oddity is the lack of correlation between currencies and interest rates differentials. Derivative prices currently suggest that investors expect to see a widening gap between US, European and Japanese interest rates. Citigroup calculates that the spread between projected overnight rates for dollars and euros is 250 basis points, up from 25 basis points in 2016 and 100 basis points last year.
So I wonder, did we ( the world ) ever actually get out from under the 08 crash but instead are still in THE MATRIX ( the movie :D ) so to speak & papered over it, extended and pretended. Then peppered it with liberal QE ( Quantative Easing ) so now the economies, markets and banks are like drug addicts on this QE, heavily reliant on it plus low interest rates?

A good analogy would be that the patient is still on life support. We never cured the patient who would actually instantly die / crash if taken off that life support?

Please now, this is for the purposes of a good debate here amongst P.IErs .. i am not politically point scoring, no agenda .. your considered thoughts please? And not just about Ireland, also europe, world economy ..
 
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mr_anderson

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The effects of the crash were considerably eased by massive government borrowing.
This went so high that the EU dictated that we now include hookers & coke in calculating (i.e. boosting) our GDP.

Prostitution and drugs accounted for €1.258bn to the country’s economic activity last year, according to the Central Statistics Office, which is refusing to divulge how it estimates the economic impact of illegal activity.

The Government has been forced to revise how it accounts for economic activity following a new regulation from the EU Commission requiring all member states to include the ‘black market’ in their final tally.
https://www.irishexaminer.com/ireland/sex-and-drugs-help-add-euro12bn-to-gdp-274271.html

This was the kind of 'massaging of figures' tactic that would have been the punchline of jokes only a few years previous.


Always be very, very sceptical of government statistical reporting when they result in graphs such as this ...




https://tradingeconomics.com/ireland/government-debt-to-gdp

The debt hasn't gone away, you know.
 

PO'Neill

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Markets might look calm, but they are behaving abnormally

If you find a paywall just copy the headline to google search and directly click the first link to this article that results. Headline is - Markets might look calm, but they are behaving abnormally









So I wonder, did we ( the world ) ever actually get out from under the 08 crash but instead are still in THE MATRIX ( the movie :D ) so to speak & papered over it, extended and pretended. Then peppered it with liberal QE ( Quantative Easing ) so now the economies, markets and banks are like drug addicts on this QE, heavily reliant on it?

A good analogy would be that the patient is still on life support. We never cured the patient who would actually instantly die / crash if taken off that life support?

Please now, this is for the purposes of a good debate here amongst P.IErs .. i am not politically point scoring .. your considered thoughts please?
Politically we are still feeling the effects of it as it undermined FF who had dominated Irish politics for nearly 80 years before it. FF are on the slow, terminal decline which of course they'll deny, but if the polls are anywhere accurate then FF are not making any traction nor wouldn't as they prop up FG. After the next General Election to get their snouts in the trough it would be seismic if FF have to accept that they are never going to be the major force they once were and go into govt as the minority party to the other cheek of the same ar$e FG. Whether it's with Michael Martin or not is something to ponder if he'll accept that he will be the first leader of FF not to be Taoiseach. With time SF will overtake FF just like they did to the SDLP in the north.

Outside of politics there the property bubble has caused huge psychological stress with families losing a member to suicide or mental breakdown. Such is the cruelty of the low life filth that mismanage this state.
 

SPN

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In 2008 a bubble burst.

The proper response would have been to re-set back to normal (somewhere about 2003 levels of economic activity), but this would have up-ended pretty much every democratic society and cause all sorts of political, social and economic hardship.

So the powers that be blew up a new, artificial, bubble to create a floor under the bust and limit the structural damage.

This artificial bubble it is run by the Central Banks and is designed to maintain stability.

The downside is that it is still a bubble, and it will eventually burst.

The eventual burst will be bigger, and the strutural damage caused by the current artificial bubble will mean that the destructive power of the burst will be orders of magnitude greater than it needed to be.

I hope it doesn't happen within my lifetime.
 

brughahaha

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Markets might look calm, but they are behaving abnormally

If you find a paywall just copy the headline to google search and directly click the first link to this article that results. Headline is - Markets might look calm, but they are behaving abnormally









So I wonder, did we ( the world ) ever actually get out from under the 08 crash but instead are still in THE MATRIX ( the movie :D ) so to speak & papered over it, extended and pretended. Then peppered it with liberal QE ( Quantative Easing ) so now the economies, markets and banks are like drug addicts on this QE, heavily reliant on it plus low interest rates?

A good analogy would be that the patient is still on life support. We never cured the patient who would actually instantly die / crash if taken off that life support?

Please now, this is for the purposes of a good debate here amongst P.IErs .. i am not politically point scoring, no agenda .. your considered thoughts please? And not just about Ireland, also europe, world economy ..
Well in Ireland you'd never know we were still heavily indebted (and the figures are being massaged , ala Greece and Italy)..Meanwhile everyone complains about the dire public services forgetting the the Government are hoovering up every Euro possible for the repayments ...... The media is afraid to discuss it , in fact even mention it for fear of creating a "populist" backlash and everyone pretends we're having another boom.
BTW it suits the EU to massage the figures as it means hilariously we pay a bigger bill to the EU whilst still paying off the Bondholders debt that they saddled the Irish taxpayer with ...no wonder they swan around like peacocks .....

I thought we'd get about 8-10 years out of the current cyclical boom bust , but with Brexit , less than 5 ........

But its ok Paddy is happy to push the can down the road and like last time pretend "the fundamentals are sound" ......:roll: (this site being an excellent weather gauge of the level of denial and stupidity out there....huge)

https://www.irishtimes.com/business/economy/ireland-s-national-debt-rose-to-198bn-last-year-1.3399240
 

Watcher2

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The effects of the crash were considerably eased by massive government borrowing.
This went so high that the EU dictated that we now include hookers & coke in calculating (i.e. boosting) our GDP.



https://www.irishexaminer.com/ireland/sex-and-drugs-help-add-euro12bn-to-gdp-274271.html

This was the kind of 'massaging of figures' tactic that would have been the punchline of jokes only a few years previous.


Always be very, very sceptical of government statistical reporting when they result in graphs such as this ...




https://tradingeconomics.com/ireland/government-debt-to-gdp

The debt hasn't gone away, you know.
Exactly. Its multiples of what it was before the 08 crash. We are not the only ones either.
 

robut

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Well in Ireland you'd never know we were still heavily indebted (and the figures are being massaged , ala Greece and Italy)..Meanwhile everyone complains about the dire public services forgetting the the nGovernment are hoovering up every Euro possible for the repayments ...... The media is afraid to discuss it , in fact even mention it for fear of creating a "populist" backlash and everyone pretends we're having another boom.

I thought we'd get about 8 years out of the current cyclical boom bust , but with Brexit , less than 5 ........

https://www.irishtimes.com/business/economy/ireland-s-national-debt-rose-to-198bn-last-year-1.3399240
Yip .. €200bn debt for such a small economy and the media have all but buried any discussion on same. I think the main line passed out to the public on that debt is "Ah shur dont worry about it .. the promissory note sorted that, kicked out til after 2052. Shur by then it probably will be inflated away" .. or something similar.
 

Watcher2

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And there is talk of interest rates rising next year in Europe. The US has already increased rates twice in the recent past. The day of low interest rates are very much at an end. Wait till they got up to normal levels. Our repayments will skyrocket because of the massive pile upon which the interest rates are charged.

I used bang on about it and got the usual poo pooing from the shills. There was/is nothing to see apparently.
 

robut

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And there is talk of interest rates rising next year in Europe. The US has already increased rates twice in the recent past. The day of low interest rates are very much at an end. Wait till they got up to normal levels. Our repayments will skyrocket because of the massive pile upon which the interest rates are charged.

I used bang on about it and got the usual poo pooing from the shills. There was/is nothing to see apparently.
I actually heard it will be toward end of THIS YEAR?

Whatever about our national debt repayments going up, dont forget it also rises TRACKER RATES. Many people on the current low tracker rates are only just about servicing them, so expect many more possible defaults, distressed mortgages as ECB & therefore tracker mortgage rates rise?
 

brughahaha

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And there is talk of interest rates rising next year in Europe. The US has already increased rates twice in the recent past. The day of low interest rates are very much at an end. Wait till they got up to normal levels. Our repayments will skyrocket because of the massive pile upon which the interest rates are charged.

I used bang on about it and got the usual poo pooing from the shills. There was/is nothing to see apparently.
Wouldn't worry about it ..this place is what it must have been like in the early 00's if you dared say property cant keep rising forever.... Similar refusal to countenance any other narrative and massive group think
Check out the Brexit threads for numerous posters but 1 voice and aggressive rejection of any other view point

Site very much a FG and further right bastion at this stage
 

fat finger

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The economy is like a man who felt unwell in 2008 and goes to the doctor and the doctor says smoking 40 fags a day isn't doing you any good at all so the old man agrees it's time for a change and ups his dose to 80 fags a day instead and now ten years on he's feeling worse than ever but tells himself these fags have to start working eventually I'll be grand in the morning
 

PBP voter

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Wouldn't worry about it ..this place is what it must have been like in the early 00's if you dared say property cant keep rising forever.... Similar refusal to countenance any other narrative and massive group think
Check out the Brexit threads for numerous posters but 1 voice and aggressive rejection of any other view point

Site very much a FG and further right bastion at this stage
It's frightening to see all the idiots thinking Leo is doing a great job on Brexit.
Even the Shinners think it.
 

robut

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When the next recession hits, central banks in the US, Japan and Europe simply won’t have the tools to fight it

Nicholas Spiro says the global economy is looking shaky amid escalating trade tensions, but the worse news is that the monetary policies already in place to stimulate demand and the explosion in public indebtedness will severely limit policy actions to fight a downturn

.... Policymakers in advanced economies had plenty of weapons in their armouries to help revive growth in the wake of the 2008 financial crisis. Since then, however, they have been running out of ammunition due to the quantity and variety of non-conventional monetary policies introduced to stimulate demand and – just as importantly – the explosion in public indebtedness which, according to the IMF, has surged to its highest level since the second world war.

On the monetary front, leading central banks are caught between a rock and a hard place. On the one hand, years of aggressive quantitative easing have severely distorted asset prices and led to overstretched valuations in bond and equity markets, adding impetus to recent measures to start unwinding quantitative easing.

... At a conference in Portugal this week organised by the European Central Bank, the heads of the big three central banks warned of the dangers posed by a trade war. What should really concern them, however, is how many bullets they have left to fight the next recession.
 

robut

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Central Bankers Shouldn’t Have to Rescue Democracy

Elected leaders waffled during the financial crisis. Their credibility, and the institutions they represent, haven’t recovered.
However, the problem limiting the ability of rich democracies to intervene in a crisis run deeper than a lack of leadership. Government debt levels have soared to almost 90 percent of gross domestic product in the euro area and more than 100 percent in the U.S., which severely limits the room to boost spending and cutting taxes during a future recession. Of course, this doesn’t mean that politicians cannot intervene if the necessity arises. However, they still need the crucial support of their central bankers, who will need to slash interest rates and, perhaps, restart their program of quantitative easing to keep borrowing costs low.

So the power of central bankers is here to stay. When the next crisis hits, politicians — even those with popular mandates — will depend more than ever upon the whims of unelected technocrats.
 

APettigrew92

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I hope it doesn't happen within my lifetime.
I think you've collectively summed up the FF/FG/LAB response to the potential ramifications of their "remedy" work.
 

brughahaha

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It's frightening to see all the idiots thinking Leo is doing a great job on Brexit.
Even the Shinners think it.
Coveney on with Brian Dobson this morning essentially saying , that if the UK doesn't agree to break up the UK by having Northern Ireland in a different customs union , then there can be no trade deal

Dobson didnt ask what were to me 3 obvious questions.
Do you really think thats likely ?
What about the GFA ?
And if that happens , the EU will be delighted but its our economy Simon thats screwed ?

But no apparently all our eggs are in the "Break up of the UK" Basket ....madness
 

SPN

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I think you've collectively summed up the FF/FG/LAB response to the potential ramifications of their "remedy" work.
It is all political parties, in all countries.

Even yesterday we had Pearse calling for more borrowing and spending - at the top of the economic cycle. Bonkers stuff.

If we had reined in the original bubble in 2003 it would have meant hundreds of thousands of job losses and pay cuts for the insiders.

If we rein in the current bubble today it will mean hundreds of thousands of job losses and pay cuts for the insiders.

There is no good time to fix the problem whenever you have an election coming up.

Fixing problems písses people off.

Píssed off people vote for the "whatever you're having yourself" brigade.

And it will all end in tears.
 

shiel

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Coveney on with Brian Dobson this morning essentially saying , that if the UK doesn't agree to break up the UK by having Northern Ireland in a different customs union , then there can be no trade deal

Dobson didnt ask what were to me 3 obvious questions.
Do you really think thats likely ?
What about the GFA ?
And if that happens , the EU will be delighted but its our economy Simon thats screwed ?

But no apparently all our eggs are in the "Break up of the UK" Basket ....madness
Well we can always have Irexit and rejoin the UK?
 


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