Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: niceguy767 who wrote (19865)	4/21/2009 12:59:54 PM
From: axial	Respond to of 71456

1) It will take much, much more than the amount of earmarked funds (TARP etc) to restore any semblance of safety in the banks. They knew that long ago. The same sort of toxic assets are on the books in the EU and UK. Even now nobody knows the true extent of derivative exposure - and whether it's growing, shrinking, or static. ii) It is obvious now that Wall St. holds the government puppet strings. Many (inside and outside the US) accuse government of nationalizing banks, and socializing debt. You can easily find comments where people say the opposite - that government holds the puppet strings for banks. iii) The real estate debacle has now spread to the corporate real estate sector with 700 US malls having closed over the past 12 months. Predicted, and predictable last fall: check Mish's thread in October. ARM resets and mall failures: predicted, and they continue. People have stopped buying and begun saving. Nothing new here: it was obvious last year. iv) Job losses just keep growing and manufacturing keeps moving away. It's a recession: a global and economic crisis bigger than any in our lifetime. Maybe a depression. Globally job losses are growing, and many countries are repatriating work: look at France and Fiat, for example. These are all predictable consequences of economic and financial turmoil. To conclude that other countries are not aware of what's expected in such conditions is to conclude that other nations are blind. Even the most optimistic global commentators know there's still risk of a global crash. They knew it 6 months ago, and they know it now. They're all struggling to buy time, and using different ways to soften the blow. Germany objects to the US approach, but still has its own problems with toxic assets, debt and deficits. Ditto globally: the UK, EU, and other countries. Does that mean the US, and Obama administration have chosen the "right" course? No. His approval rating on economics has dropped from 71% to 67% and it's still falling. Globally, voters are ALL skeptical of political leaders in this crisis. The reason is simple: *nobody has the magic bullet. Nobody knows any easy way out.* If inflows to the US begin to dry up, there may be time to adjust with aggressive change. Does that mean the US will crash? It might, but it's not guaranteed. If it does, the rest of the world will go with it: nobody wants that. Jim

To: niceguy767 who wrote (19865)	4/21/2009 1:36:43 PM
From: axial	Read Replies (1) \| Respond to of 71456

Meltdown losses of '$4 trillion' The International Monetary Fund (IMF) has warned that potential losses from the credit crunch could reach $4 trillion (£2.75tn) and damage the financial system for years to come. It says that even if urgent action is taken to clean up the banking system, the process will be "slow and painful", delaying economic recovery. It says that banks may need $1.7 trillion in additional capital. And it warns that the cost of the bail-out will hit UK government finances. It estimates that the total costs of bailing out the UK banking will add 13.4% to total government debt, or around £200bn - compared to 12.1% in the US and 13.9% in Ireland. But a Treasury spokesman told the BBC that the IMF forecast was "very high" and took no account of the fees paid by the banks. He added that the Budget "will make a prudent provision for potential losses from banking interventions". Tory shadow chancellor George Osborne said the IMF figures showed the "potentially massive cost of Gordon Brown's utter failure to regulate the banking system". Rising bill One year ago, the IMF estimated that total losses from the credit crunch would be $1 trillion, which has been exceeded, showing how rapidly the financial meltdown has escalated. The IMF now says that banks are likely to lose $2.7 trillion, but other financial institutions such as insurance companies and pension funds are also now coming under strain. And it says that emerging market economies, which will need $1.8 trillion in refinancing next year, will be hard-hit by the collapse of cross-border lending, and it predicts that there will be no net private lending at all to developing countries this year. The report comes as the IMF and World Bank are beginning their spring meeting in Washington, after receiving a promise of $750bn in fresh funds agreed at the G20 summit. Policy response The IMF's latest Global Stability Report says that the banking system has not yet been stabilised, despite the billions of dollars spent by governments. But it warns that political support for further bank bail-outs is waning. It says that there may be "a real risk that governments will be reluctant to allocate enough resources to solve the problem" because the public has become "disillusioned by what it perceives as abuse of taxpayer funds". The situation especially difficult in the US, where Congress appears reluctant to allocate additional bail-out funds above the $700bn approved last autumn despite the inclusion of another $750bn in President Obama's latest budget proposal. The US Treasury has instead proposed a private-public partnership to buy up troubled assets underwritten by loans from the Federal Reserve. But the IMF comments that "uncertainty about political reactions may undermine the likelihood that the the private sector will constructively engage in finding orderly solution to financial stress." Deeper recession The IMF says that restoring the banking system so that it functions normally is likely to take several years, and this will make the recession longer and deeper than usual. But it warns that if policies are unclear or not implemented forcefully and promptly, "the recovery process is even more delayed and the costs, in terms of taxpayer money and economic activity, are even greater." It says that the worldwide recession has deepened the financial crisis. "Systemic risks remain high and the adverse feedback loop between the financial system and the real economy has yet to be arrested, despite the wide range of policy actions and some limited improvement in market functioning. Further effective government action - particularly geared toward cleansing balance sheets and strengthening institutions - will be required to stabilise the global financial system and to provide the foundation for a sustainable economic recovery." On Wednesday, the IMF will present its world economic forecast. It is expected to be the gloomiest for 60 years, with the world falling into a global recession, and an even sharper decline in output in the rich countries. news.bbc.co.uk Jim