IMF - World economy at risk of another financial crash


HarshBuzz

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Reading it now.

It's a study of the bleedin' obvious. Consider such gems as:

There was a doubling in the number of families who had difficulty making ends meet between the time the child was 9 months old in 2008/09 and the time the child was 5 years old in 2013 (from 12% to 25%). The figure had dropped to 12% by 2017-18 when the Study Child was 9.
Wow! Findings in line with decline and recovery! Who would have guessed?

Levels of financial stress in the families of 9-year-olds were much higher in one-parent families than two-parent families (27% vs. 10% had difficulties making ends meet).
Well, that is truly amazing!

Children in one-parent families were the most likely to live in households with low levels of income and maternal education. They were twice as likely as those in two-parent families to have mothers in the lowest education category (18% vs. 9%) and were nearly three times as likely to be in the lowest family income group (43% vs. 15%).
Again, truly insightful!

I'm so glad my tax Euros go to fund research and analysis of this quality. :rolleyes2:
 
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Can anybody explain to me if the stock market collapses how that will effect most people who do not have shares- is it basically a case that interest rates will rise and that will be the biggest blow? All of these companies big and small who have taken on enormous debt in the last decade should be let burnt as far as I am concerned if it comes to it particularly if the alternative is that the rest of us who do not have shares or have not taken on huge debt would suffer big consquences.
Economy works on CONFIDENCE, remove that and people stop doing things.

A single Share price collpasing really is no big thing as happens all the time, 60% of them then whole market collpases and people sell and move money into safe options like Gold.

Performance of share price has zero impact on ability of a company to continue its day to day existence provided company has not got mega debt that banks start to become worried about whether they will be paid.

Example use an Airline................... owes £2 billion, worth £14 billion on stock exchange, share price £14 where was £25 1 year ago, has cash of £0.5 billion if required and its debt is @ 0.5% over 10 years and it makes £1.2 billion in profit.
Issued share capital of £500 million. Doesn't pay an annual dividend.

Now generates positive cash of £500 million, needs to repay £200 million in loan and £10 million in Int per year.............. no reason to call in loans as they are serviced.
What it can do is buy back shares and pay a special (not guaranteed) dividend per year........... shares become worth more.

Key point is 1.) can service debt 2.) has enough cash to cope with market downturn 3.) can reduce costs easily to survive.
In event of closing company the company would only need to pay the value of issued share capital (£500m not share price) to shareholders.

Basically as long as a company is making profit, generating positive cash flow, had manageable debt then can survive a downturn.
 
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Ok so Stock market collapses ................... big impact is Pension funds, shareholdings etc as magically your pension that was worth £300,000 is now worth £75,000. No issue if you are 39 and 25 years to retirement but if 65 and retiring may be an issue.

Market is flooded with debt that companys cannot service and Private equity / Hedge Funds etc have bought up loads of businesses, borrowed and cut costs (asset stripped) to justify investment. Problem now is there is not much more cost it can take out.

Interest rates going up will not help as many companys will head to the wall, additionally burden will be on Mortgage holders, unsecured debt and others................ where they are over leveraged (borrowed).

Problem since 2008 is low / no inflation so prices have not gone up massively and with that inflation it would reduce value of debt assumming no new debt.

Now the GOOD NEWS.............. in 2008 when market collapsed I was very keen to point out that
1.) continue to pay your mortgage
2.) pay down debt (secured / unsecured) that ultimately you would not lose out subject to having kept job / income................... even a lower income.
Amazingly those who did that have benefitted as individual debt is way less than 2008 and country has paid off billions per year of debt. Think has dropped from €144 billion to €85 billion, CSO publish the stats.

Due another correction and that is because Govt debt is unsustainable................ UK 90% of GDP / US 106% etc etc.
Ultimately public spending with have to drop considerably.
 
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It seems very presumptuous to me of Fine Gael repeatedly saying that the Irish economy is sustainable (e.g I remember Leo Varadkar saying that the decision in the last budget to increase welfare by €5 a week would not be reversed and the decision was sustainable) when we are so dependent on corporation tax.
Welfare spending in Economy is not sustainable, neither are Public sector wages and the inefficiencies in the Health service........
problem is ALL are huge vote losers and unless world economy fell into a 1929 style depression with a Govt of National Unity they will never be tackled.

Of €50 Billion in receipts, €8.2 Billion was in CT and some of that relates to tax laundering.

https://www.finance.gov.ie/wp-content/uploads/2018/01/annual-taxation-report.pdf

Not sustainable in any way shape or form.
 

robut

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Data reveals an economic downturn in Europe is far closer than you think

If there's a consensus among economists it is that while economic growth in the Eurozone will be slower this year, we are still not headed for a recession.

The same goes for the global outlook, absent some huge shock.

Yet there is clearly something amiss with the global economy, the tepid, yet long-lived recovery from the 2008 crisis has created millions of jobs worldwide, but done so without putting upward pressure on wages, which economic theory suggests should have happened.

By the same token, rising employment rolls should push up inflation, yet it has remained stubbornly stuck.

That suggests that the effects of the crash are still with us. You can see this clearly in our own household accounts that show, despite the recovery in headline economic numbers, we are still depositing more than we borrow even with the lowest interest rates in history.
And whether it is Brexit, budget and banking concerns in Italy, the 'gilets jaunes' protests in France, new car emissions tests hitting the mighty German export machine, or tightening credit in the United States thanks to rising interest rates from the Federal Reserve, it is abundantly clear that all is not well.

"What's more, the ready availability of domestic explanations means there is a risk of complacency about whether there is something more fundamental going on at a global level," said Ms Redwood.

So, the likelihood is for more negative headlines and the best plan of action is probably to prepare for the worst.
Pretty hard hitting .. pulls no punches .. Is 2019 going to be interesting to say the least?
 
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Pretty hard hitting .. pulls no punches .. Is 2019 going to be interesting to say the least?
Brexit in Europe
US - China trade war
Iran sanctions
Continuing sanctions on Russia by EU (Farming cost €30 billion plus)
South African Govt seizure of productive farms

All point to the same thing and it is a recession, some countrys will manage better than others.

I expect Ireland to be badly hit because it is an open economy where we gain massively in the upswings but lose badly in the downswings


My worry on this is that elements in the US are seeking a war, driven on by media on false premise that a US election was interfered with. Zero evidence but that is now irrelevant as that will be excuse for a conflict.

US Debt has reached such an unsustainable rate that US is in danger of imploding.

War is economic theft so I can see US using this as an excuse to state that Sovreign debt will be cancelled to certain countries as part of this. I also fully expect that currencies will be manipulated massively as a mean of doing this.

It is no surprise than Russia has exited US Treasuries from holding $173 billion at one point to so little now it doesn't get tallied as before. Not unsurprisingly they have switched into Gold, GBP. Euros and Remnibi.

China has offloaded $200 billion in T Bills and dropped $60 billion in year to end of Oct 18 and has continued to do so. China gold holdings are officially stated as 1843 tonnes, in reality it is believed to be closer to 30,000 tonnes by some.
Could China actually have 30,000 tonnes of gold in reserves? | Gold Eagle

US has always just printed more $$$ but Russia / China / Iran / India / Brazil are using national currencys for settlement of trade rather than all dollar. This is going to get worse in next couple of years.
 

Lumpy Talbot

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Quite fascinating in a sort of horrific way watching economic over the past twenty years. I do remember following it before to the extent that if there was an interest rate rise then other indicators would move as they should in response to that policy decision.

In the last decade in particular we've seen massive amounts of currency printed and hurled into quantitative easing programmes to inject liquidity into fairly moribund economies and yet response where noted at all has been sluggish to say the least. And strangely enough where you'd expect such printing press economics to act as a devaluation on a currency it doesn't seem to have that effect.

Something is broken somewhere in the engine. When Belgium popped up as the single largest holder of US debt a few years back on economic indicators and measurements around the world it only reinforces for me the slightly surreal element of economics seen in the last twenty years.

I suspect there is a lot of smoke and mirror style operations going on in various dark corners of the debt and currency markets at sovereign level.

I've basically stopped believing the usual indicators about ten years ago and have been watching with some bemusement since. I don't think anyone even understands global economics any more. I had a view that they could be understood up to about twenty to thirty years ago but too many indicators just don't make sense. It is like being in the cockpit of a plane or the bridge of a ship with instrumentation affected by a magnetic storm, dials untrustworthy.

Anyway. I'm not worried about it as if it is as fake as I think it all is then we can relax a bit because the fakery is bound to continue :)
 

toughbutfair

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We are just as susceptible as in 2006. People are thick. This time I don’t have my savings in Irish banks as we cannot afford another bailout.
 
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