Bank Losses=$1.6 Trillion
A Swiss Newspaper got a hold of a confidential memo from Bridgewater Associates, one of the world’s largest hedge funds.
The global financial crisis could lead to losses of 1.6 Trillion dollars for financial institutes, according a report in the Swiss Sunday newspaper SonntagsZeitung. It quoted a confidential study by the hedge fund Bridgewater Associates as saying losses for banks holding risky assets could be four times greater than the 400 billion dollars previously estimated.
The hedge fund expressed doubts that the financial institutes would be able to drum up enough funds to cover the losses, something it said could exacerbate the crisis.
The only reason we are not hearing about this is because the Banks refuse to “mark to market” their derivatives. My guess is this means that a lot of hedge fund money is still going short on the financials.
don’t forget that up to now we have mostly seen losses on real estate loans–wait till corporates start to default and consumers don’t pay back credit card loans– equally large–prehaps larger–
don’t forget that up to now we have mostly seen losses on real estate loans–wait till corporates start to default and consumers don’t pay back credit card loans– equally large–prehaps larger–
Somewhere I was reading a theory that the main thing sustaining the current economy, other than over leveraged credit on all levels, have been the bubbles: internet, housing. When one bursts, it critical to an economy based on Ponzie schemes to get the next one rolling.
All the more reason for the Congress critters who want to get re-elected to revoke the tax cuts and plunge the money into alt energy. I know they would screw it up with pork projects, and general bad management, but it could delay the inevitable for a few years. And all Oz would be happy again blowing bubbles.
Unless a scenario like that comes along, a general panic (based on news like Bank Failures) seems inevitable.
Somewhere I was reading a theory that the main thing sustaining the current economy, other than over leveraged credit on all levels, have been the bubbles: internet, housing. When one bursts, it critical to an economy based on Ponzie schemes to get the next one rolling.
All the more reason for the Congress critters who want to get re-elected to revoke the tax cuts and plunge the money into alt energy. I know they would screw it up with pork projects, and general bad management, but it could delay the inevitable for a few years. And all Oz would be happy again blowing bubbles.
Unless a scenario like that comes along, a general panic (based on news like Bank Failures) seems inevitable.
@Ken -
Yep.
See “The Next Bubble: Priming the markets for tomorrow’s big crash:
Priming the markets for tomorrow’s big crash
By Eric Janszen
http://www.harpers.org/archive/2008/02/0081908
@Ken -
Yep.
See “The Next Bubble: Priming the markets for tomorrow’s big crash:
Priming the markets for tomorrow’s big crash
By Eric Janszen
http://www.harpers.org/archive/2008/02/0081908
Eeekk!! He says it in a way that makes it even worse sounding than I imagined, “Our economy is in serious trouble. Both the production-consumption sector and the FIRE sector know that a debt-deflation Armageddon is nigh, and both are praying for a timely miracle…”
“debt-deflation Armageddon”….
Any body done or know of any research on the best ways to weather another Great Depression???
Who knows, maybe the 30′s will become known as the “The lesser Great Depression”, and the teens “The Greater Great Depression”.
Eeekk!! He says it in a way that makes it even worse sounding than I imagined, “Our economy is in serious trouble. Both the production-consumption sector and the FIRE sector know that a debt-deflation Armageddon is nigh, and both are praying for a timely miracle…”
“debt-deflation Armageddon”….
Any body done or know of any research on the best ways to weather another Great Depression???
Who knows, maybe the 30′s will become known as the “The lesser Great Depression”, and the teens “The Greater Great Depression”.
Ken,
Take a deep breath and watch the dollar ease against the Euro and other major currencies. Our standard of living is likely to gradually decline for a few years while we adjust to altered circumstances. I’m not sure there’s any good reason to panic unless your life savings are invested in FIRE securities
Inflation is heating up around the world as central bankers avoid facing up to the end of their vendor financing scheme with their drug addicts (US consumers). Inflation in developing economies will make the US look safe and predictable by comparison, keeping the pace of our decline moderate.
With a more rational administration in Washington and G8 leaders all weakened by their unpopularity, the US may get a fresh shot at showing some leadership.
You have expressed concern that FDIC could make this recession *worse*, but I think that’s backwards. If FDIC had been in place in 1930, the bank crack up would have been considerably less devastating. FDIC might get stressed and add to our inflation, but that will moderate the ‘drama’ rather than exacerbate it. Think of it as the ultimate “just-in-time” stimulus package — that 100 grand the bank shredded for you? We taped it back together for you!
Ken,
Take a deep breath and watch the dollar ease against the Euro and other major currencies. Our standard of living is likely to gradually decline for a few years while we adjust to altered circumstances. I’m not sure there’s any good reason to panic unless your life savings are invested in FIRE securities
Inflation is heating up around the world as central bankers avoid facing up to the end of their vendor financing scheme with their drug addicts (US consumers). Inflation in developing economies will make the US look safe and predictable by comparison, keeping the pace of our decline moderate.
With a more rational administration in Washington and G8 leaders all weakened by their unpopularity, the US may get a fresh shot at showing some leadership.
You have expressed concern that FDIC could make this recession *worse*, but I think that’s backwards. If FDIC had been in place in 1930, the bank crack up would have been considerably less devastating. FDIC might get stressed and add to our inflation, but that will moderate the ‘drama’ rather than exacerbate it. Think of it as the ultimate “just-in-time” stimulus package — that 100 grand the bank shredded for you? We taped it back together for you!
I admit I’m overly fearful of a major depression because things are shaping up for a major shake out in the way America does business, and the level of debt is unprecedented. Part of me wants to believe that the ruminants of the New Deal that the neo-cons haven’t managed to undermine may well be able to moderate the impact enough to make it more like Japan and Britain weathered through.
But, the level of debt is going to play a role that folks using traditional assumptions could well be fooled by. People like to assume they have got it covered: i.e. we’re smarter than that other crowd was back then, but they thought that too. It’s an important part of how the cycle is allowed to swing past “damned uncomfortable” to get “disaster” end of consequences.
I am one of those highly anxious guys, who all my life has been more tuned to what could possibly go wrong, rather than being able to just enjoy life. So, yep, I’m inclined to see disasters with less than Cressandra accuracy. The problem is that just when you think Malthus was wrong, you realize that the population has gotten so large that he’s operating on a micro-management level (a little Pol Pot here, a little Dufar there, a little Iraq here, a little major flooding in the corn belt there) and the larger collective shrugs it off.
But catastrophic events are still possible to people who think they are immune, and finding a new way into a Depression that Keynesian economics can’t counter is as possible as a Katrina, or the next pandemic flu.
I admit I’m overly fearful of a major depression because things are shaping up for a major shake out in the way America does business, and the level of debt is unprecedented. Part of me wants to believe that the ruminants of the New Deal that the neo-cons haven’t managed to undermine may well be able to moderate the impact enough to make it more like Japan and Britain weathered through.
But, the level of debt is going to play a role that folks using traditional assumptions could well be fooled by. People like to assume they have got it covered: i.e. we’re smarter than that other crowd was back then, but they thought that too. It’s an important part of how the cycle is allowed to swing past “damned uncomfortable” to get “disaster” end of consequences.
I am one of those highly anxious guys, who all my life has been more tuned to what could possibly go wrong, rather than being able to just enjoy life. So, yep, I’m inclined to see disasters with less than Cressandra accuracy. The problem is that just when you think Malthus was wrong, you realize that the population has gotten so large that he’s operating on a micro-management level (a little Pol Pot here, a little Dufar there, a little Iraq here, a little major flooding in the corn belt there) and the larger collective shrugs it off.
But catastrophic events are still possible to people who think they are immune, and finding a new way into a Depression that Keynesian economics can’t counter is as possible as a Katrina, or the next pandemic flu.
I’m someone interested in trends. I am no economist. I don’t have a great deal of debt, nor do I own my own home. I used to think I was a loser because I didn’t live a “flash” lifestyle or own a flash home. Now, I think I’ll be a whole lot better off than my more outwardly affluent friends. In many ways today is reminiscent of post WWI Germany. I may be an alarmist, but I will not be surprised if the US is cornered into making war on economies with sovereign-based assets, rather than war in your cities – there is no profit in that.
I’m someone interested in trends. I am no economist. I don’t have a great deal of debt, nor do I own my own home. I used to think I was a loser because I didn’t live a “flash” lifestyle or own a flash home. Now, I think I’ll be a whole lot better off than my more outwardly affluent friends. In many ways today is reminiscent of post WWI Germany. I may be an alarmist, but I will not be surprised if the US is cornered into making war on economies with sovereign-based assets, rather than war in your cities – there is no profit in that.