Countries going bankrupt.

[david dissadent]

Are we all Keynsians now?
Link

Nov. 9 (Bloomberg) -- China announced a 4 trillion yuan ($586 billion) stimulus plan to spur expansion in the world's fourth-largest economy, helping sustain global growth as the U.S., Europe and Japan teeter on the brink of recession.

The funds, equivalent to almost a fifth of China's $3.3 trillion gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council said today on its Web site. China will adopt a ``pro-active fiscal policy'' and pursue a ``moderately loose'' monetary policy, it said.

``We have long-awaited this stimulus plan,'' said Ken Peng, an economist at Citigroup Inc. in Shanghai. ``The measures may stimulate domestic demand, but they won't prevent China's economy from slowing further as the global economy is certainly in a recession.''

China is taking steps to bolster its economy, the biggest contributor to global expansion, less than a week before Premier Wen Jiabao goes to Washington for talks with world leaders on ways to address the economic slump. People's Bank of China Governor Zhou Xiaochuan said yesterday boosting spending at home is the best way China can help.

At a glance I cant fault this planning. It seems to be the responsible economic thing to do, will provide benefit to the poorer parts of the nation and infrastructure spending is normaly a good thing. How it works out in reality is another matter though.

 

[Dr Jon]

Last time I was talking to my mate from BoE, he was saying that Pakistan is basically a failed state. A worrying trend which is set to continue, I fear.

The world economy is based on the assumption of perpetual growth. A notion which, on a planet of finite resources, is fundamentally unsustainable, You can keep the illusion going for some time, until you hit the hard limits to growth. My mate admitted to me recently that the whole world economy is essentially like a massive juggling pattern, which becomes less and less feasible as more balls (debts) are added. Most of the "record growth" of recent years is actually debt. Well it is now, anyway.
It was possible to keep all this debt in the air whilst oil and other resources were in plentiful / increasing in supply. Now reality is dawning and it's impossible to maintain the growth illusion any longer. It was belief in this illusion which kept the trick working and the balls in the air for so long.

The challenge now is to put as many balls (eggs?) down in an orderly manner, or pass them to other jugglers and stop the pattern from collapsing completely in a big mess.

I could always tell it was a load of balls...

 

[david dissadent]

Last time I was talking to my mate from BoE, he was saying that Pakistan is basically a failed state. A worrying trend which is set to continue, I fear.

Things are very grim, they are having regular power cuts that affect the ability of there industries to operate at a profit, so they are losing industry to other nations inspite of the cheapness of there labour. And as they lose industry they lose money to pay for feul and the likes. Its in a very precarious position that country.

 

[gorski]

Someone here suggested, not so long ago, that even the US might need a shot in the arm, from - no less than the IMF, under its "usual terms and conditions".... What fun!!!! No more shots in the arm for the US banks and similar shisters...

 

[darkfibre]

I was wondering how Iceland's doing...

The collapse came so fast it seemed unreal, impossible. One woman here compared it to being hit by a train. Another said she felt as if she were watching it through a window. Another said, “It feels like you’ve been put in a prison, and you don’t know what you did wrong.”

http://www.nytimes.com/2008/11/09/world/europe/09iceland.html

 

[hipipol]

Pakistan, Ukraine, Bulgaria, Romania, etc, etc

The Austrians are bailing out a fair no of Eastern European banks at the mo, mainly cos it owns them all, but soon I expect the govts of those countries will turn to the IMF for "help"

Poor fucks

 

[elbows]

Dont be surprised if the UK has to turn to the IMF within the next few years. It might not happen, but there have ben a number of reports from the EU and IMF which suggest that Britain is going to be the developed nation most affected by the crisis.

 

[gorski]

Pakistan, Ukraine, Bulgaria, Romania, etc, etc

The Austrians are bailing out a fair no of Eastern European banks at the mo, mainly cos it owns them all, but soon I expect the govts of those countries will turn to the IMF for "help"

Poor fucks

Indeed, there was an article with those names recently:

Osim Hrvatske, kako navode analitičari Stratfora, kandidati za "prvu zonu udara" finansijske krize su Rumunija, Bugarska, Srbija i baltičke zemlje.

Izrazitu zabrinutost stvara problem gubitka likvidnosti, koji bi u krizu mogao uvući italijanske, austrijske, grčke i švedske banke, dominantne na tim tržištima, dodaje se u izveštaju.

Ekonomista Đorđe Đukić smatra da sve nabrojane zemlje u izveštaju nisu u istoj ekonomskoj situaciji i da nije dobro donositi jedinstveni zaključak o tome kako finansijska kriza može da utiče na svaku od njih.

On je ocenio da će se u Srbiji u sledećoj godini na udaru naći pre svega preduzeća, koja će cenu platiti kroz visoke kamatne stope, a to će dodatno uticati na recesione tendencije.

http://www.b92.net/biz/vesti/srbija.php?yyyy=2008&mm=11&dd=04&nav_id=327004

It also mentiones Greek, Italian and Swedish banks, dominant on those markets, which will get into difficulties, it is expected, more than others, in the present situation...

Count in the Baltic countries, Croatia and Serbia, albeit all different cases... Their companies are expected to start having to pay high interest rates which will exacerbate the recession tendencies...

 

[darkfibre]

Dont be surprised if the UK has to turn to the IMF within the next few years.

Hence Brown and Mandy slipping off last week to rattle the IMF tin at the Saudis.

So which countries are not going bankrupt, then?

 

[Dr Jon]

So which countries are not going bankrupt, then?

Peru Unscathed

 

[darkfibre]

Peru Unscathed

Ah! A shining example for us all.

Anyone got any more?

 

[hipipol]

Some good news from Bagdad

 

[darkfibre]

The world banking crisis won't affect us, our market is sealed off from the outside.

Fail.

Is that it?

 

[david dissadent]

Russia joins the watch list

Russia is now lurching towards a major economic crisis, experts predicted today, following news that the price of oil had slumped to under $50 a barrel.

The collapse in the value of oil was likely to have several catastrophic consequences for Russia including a possible devaluation of the rouble and a severe drop in living standards next year, they warned.

With oil prices tumbling, and his own credibility at stake, Russia's prime minister Vladimir Putin today insisted that the country's economy was still robust.

 

[david dissadent]

Add Iran to the list. It has about $60 billion in foriegn currency reserves, some of which it allegedly converted to gold. And as the price of oil has cratered it is running through those reserves. I cant find a source for the burn rate, but once it runs out of dollars it will be in the insane position of not having enough petrol and diesel. This is because it has to import alot of its finished oil product, lacking a strong domestic refining capacity. UG99 has been reported in the country as well so its wheat crop may take a big hit as well. There have already been reports of widespread demonstrations and protests at the state of the economy.

"Iran running out of petrol, this is blasphamy, this is madness!"

"Madness?.......... this............ is........ BAD ECONOMIC MANAGEMENT."

 

[Barking_Mad]

Belgium Government Collapses

Belgium sought a new leader on Monday to steer it out of a political and economic crisis, although there was little sign that rival parties could agree who should take the top job.

Belgium plunged into its third political crisis in a year on Friday when Prime Minister Yves Leterme's government collapsed due to a Supreme Court report on political meddling in a legal case over the rescue of stricken bank Fortis.

Austrian Banks require up to $5.9bn

Austrian banks may tap investors for as much as 4.5 billion euros ($5.9 billion) in capital as they try to escape dividend restrictions and a new price tag imposed by regulators for state capital injections.

Conditions agreed between Austria's finance ministry and the European Commission mean banks need to complement any state capital with money from private investors ready to subscribe under the same terms if they want to avoid those rules.

Erste Group Bank (ERST.VI), which had broken the ice and asked for 2.7 billion euros ($3.6 billion) in October, on Friday said it would now wait until next year before making a decision whether to draw the money and might tap the markets as well.

Ireland to put £4.6bn into its banks

IRELAND'S government is reportedly planning to inject a total of around 5 billion (£4.6bn) into its three main banks in the first phase of re-capitalisation.

The move would involve an effective nationalisation of Anglo Irish Bank, which has been at the centre of a loans scandal, and significant investment in Allied Irish Banks (AIB) and Bank of Ireland, the two biggest financial institutions, according toADVERTISEMENTreports.

It was suggested the government would put 1bn into Anglo Irish in return for a stake of up to 80 per cent, and invest 2bn each into AIB and Bank of Ireland.

Private investors would be invited to subscribe for 1bn of new shares in each of the two big banks, and if these shares were not taken up then the government would undertake to buy them, bringing its total outlay to 7bn.

An official announcement from the Irish government is expected early this week.

Last night the three banks refused to comment on the possible funding measures.

French Government raises 26bn

Meanwhile, a spokesman for the French government said yesterday that it cannot rule out further measures to boost the nation's ailing economy on top of the 26bn stimulus package already unveiled.

The French cabinet signed off on the aid package on Friday as fresh statistics showed France was heading for deep recession in the coming months. Luc Chatel said: "We believe in this stimulus plan because it has scale."

In Germany, chancellor Angela Merkel said the German government would take a further step in January to boost the economy after passing a stimulus package two weeks ago that was widely criticised as insufficient.

 

[Barking_Mad]

Swiss Bank UBS has up to $6bn in Madoff's Ripoff

The Swiss banking giant UBS, already hit hard by the global finance crisis, is facing new problems connected to the collapse of Bernard Madoff's private US investment fund, the firm confirmed Monday.

UBS spokeswoman Tatiana Togni, answering a question about the involvement, said UBS had brokered access to the fund if clients asked for the contact, but did not directly recommend it.

She did not give details about the amount of capital involved.

All told, Swiss investors had put about 6 billion dollars into Madoff's investment fund, the daily Neue Zuercher Zeitung reported Sunday.

Russian Banks Close

MOSCOW, Dec 19 (Reuters) - Russia's central bank said on Friday it has withdrawn the operating licences of three more banks, Setevoi Neftyanoy bank, ZelAK bank and Baltkredobank, citing their lack of liquidity.

The central bank has now withdrawn around 15 banking licences since the end of August as mistrust and liquidity crisis hit Russia's 1,000-plus banking sector.

Before the crisis, Russian banks lost licences mainly due to accusations of money laundering.

Friday's licence losers were unable to meet creditors' demands, provided unreliable reports to the regulator, the central bank said.

 

[kyser_soze]

Ah, and not 5 minutes ago the Russians were getting all beary about building up the army, the 'new balance' in relations with the EU, specifically...altho that's causing problems with particular reference to Germany...

 

[Barking_Mad]

Ukraine GDP to shrink by 4.0%

The World Bank predicted a sharp recession in Ukraine next year with GDP falling 4.0 percent, according to a statement issued on Tuesday, against a July forecast of 4.5 percent growth.

It also cut its forecast for this year's growth to 2.3 percent of gross domestic product from a previous forecast of 6.0 percent and last year's growth of 7.6 percent.

It raised its inflation forecast for this year to 22.8 percent from 21.5 percent previously predicted and 16.6 percent in 2007. It cut its forecast for inflation next year to 13.6 percent from 15.3 percent.

Please! Start Lending cries Canadian PM

Canada's Finance Minister Jim Flaherty on Thursday had stern words for the nation's banks: start lending, now.

"We expect the banks to provide adequate credit in Canada," Flaherty told a press conference in Saskatoon in western Canada.

The government has purchased more than 75 billion dollars (63 billion US) worth of risky mortgages from Canada's banks in recent months to free up funds for lending to Canadians.

But Canadians say the banks are hoarding cash to safeguard their balance sheets, and their too cautious lending is further choking an economy that is entering a recession.

Turkey has potential for economic collapse in 2009 - Roubini

There are about a dozen emerging economies that are on the verge of a potential financial crisis in 2009 including Turkey, New York University Professor Nouriel Roubini, one of the first to warn about the U.S. housing bust, said in an interview with Financial Times on Tuesday.

The year 2009 will be an economic stagnation and recession year for most of the global economy with deflationary pressures and a likely severe global recession, Roubini told FT adding that the return to positive economic growth would not be seen before 2010.

Emerging countries were another source of stress for the global economy, he also said.

"There are about a dozen of them that are on the verge of a potential financial crisis: Latvia, Estonia, Lithuania, Hungary, Bulgaria, Romania, Turkey, Ukraine in emerging Europe . . . Pakistan, Indonesia or [South] Korea in Asia," he said.

Turkey, facing a large financing shortfall in 2009 after the global crisis battered its markets and caused a sharp economic slowdown, had third-quarter economic expansion of 0.5 percent -- below a median forecast of 0.75 percent -- down from the revised growth of 2.3 percent in the second quarter.

The county is expected to sign a stand-by or a precautionary stand-by deal with the International Monetary Fund, whose support helped it recover from a financial crisis in 2001 to record economic growth around 7 percent, before slowing sharply in recent quarters.

"Places like Ecuador that just defaulted. Argentina and Venezuela in Latin America. Some of these countries could get in trouble and there could be contagious effects to other financial markets in other emerging markets," he said adding that this credit loss was going to spread from mortgages to commercial real estate, to credit cards, to auto loans, to leverage loans, to industrial and commercial loans.

Roubini, one of the first to warn about the U.S. housing bust had earlier told that recession in the United States would last 18 to 24 months.

 

[Barking_Mad]

Detroit

Unemployment in Detroit is 21.6 per cent and 90,000 more jobs are expected to be lost in 2009 as a result of restructuring after federal loans to the “big three” motor manufacturers: Ford, Chrysler and General Motors.

 

[Barking_Mad]

Governor of Bank of Spain warns of 'total financial meltdown'

The governor of the Bank of Spain on Sunday issued a bleak assessment of the economic crisis, warning that the world faces a "total" financial meltdown unseen since the Great Depression.

- Meltdown akin to Great Depression
- Lack of confidence total: bank chief
- Economic recovery could be delayed


"The lack of confidence is total," Miguel Angel Fernandez Ordonez said in an interview with Spain's El Pais daily.

"The inter-bank (lending) market is not functioning and this is generating vicious cycles: consumers are not consuming, businessmen are not taking on workers, investors are not investing and the banks are not lending.

"There is an almost total paralysis from which no-one is escaping," he said, adding that any recovery - pencilled in by optimists for the end of 2009 and the start of 2010 - could be delayed if confidence is not restored.

Ordonez recognised that falling oil prices and lower taxes could kick-start a faster-than-anticipated recovery, but warned that a deepening cycle of falling consumer demand, rising unemployment and an ongoing lending squeeze cannot be ruled out.

"This is the worst financial crisis since the Great Depression" of 1929, he added.

Ordonez said the European Central Bank, of which he is a governing council member, will cut interest rates in January if inflation expectations go much below two per cent.

"If, among other variables, we observe that inflation expectations go much below two per cent, it's logical that we will lower rates."

Regarding the dire situation in the United States, Ordonez said he backs the decision by the US Federal Reserve to cut interest rates almost to zero in the face of profound deflation fears.

Central banks are seeking to jumpstart movements on crucial interbank money markets that froze after the US market for high-risk, or subprime, mortgages collapsed in mid 2007, and locked tighter after the US investment bank Lehman Brothers declared bankruptcy in mid-September.

 

[david dissadent]

Mexico at risk of becomeing a failed state.


Cantrells collapse has been rather frightning as its production has been droping at something like 17% per year. given that till recenently it was the worlds third largest producing field and a relative new super giant it is kinda scary. But that and the global down turn and the drop in price of oil means that Mexico is in a world of hurt.

The possibility of a failed state on Americas border is realistic. However Id think it is more likely to go into a sort of martial law and comand economy.

 

[yield]

Slightly closer to home.

'Run on UK' sees foreign investors pull $1 trillion out of the City
Independent. 7 March 2009

Paranoia that the UK could follow Iceland into effective national insolvency and jibes about "Reykjavik on Thames" will find an unwelcome substantiation in these statistics – which also show that stricken British banks are having to repatriate similar sums back to Britain. This is scant consolation for the authorities, however, as it means the UK and sterling are, like some emerging markets and currencies, suffering from a flight of capital. By contrast some financial centres and currencies – notably the US dollar and the Swiss franc – are enjoying a boost as "safe havens" in a troubled world.

 

[Poi E]

Pakistan will probibly get a bailout as no one wants to see a nuclear state starve. .

Won't help them anyway. Funny how they exported a lot of the Taleban ideology to Afghanistan and now it is coming back to haunt them.

 

[david dissadent]

Won't help them anyway. Funny how they exported a lot of the Taleban ideology to Afghanistan and now it is coming back to haunt them.

I guess it depends on who 'them' is. For those seeking a more secular and democratic Pakistan yes its a nasty bit of blow back. But for those in the military and security services seeking an Islamist millitary government Id say its working rather well, other than the collapsing economy.

Before they started exporting Jihad to Afgahnistan they were exporting it to India and Indian Kashmire.

 

[Poi E]

I guess it depends on who 'them' is. For those seeking a more secular and democratic Pakistan yes its a nasty bit of blow back. But for those in the military and security services seeking an Islamist millitary government Id say its working rather well, other than the collapsing economy.

Before they started exporting Jihad to Afgahnistan they were exporting it to India and Indian Kashmire.

Yes, you're right. Lovely bunch, the ISI.

Guess the last stand for secular liberalism will be made in Lahore before the whole place is consumed. Nice town

 

[david dissadent]

Could Japan default?

The rocketing cost of insuring against the bankruptcy of the Japanese state is telling us that the model has smashed into the buffers. Credit default swaps (CDS) on five-year Japanese debt have risen from 35 to 63 basis points since early September. Japan has suddenly decoupled from Germany (21), France (22), the US (22), and even Britain (47).

This is still a pretty low risk though, but high for a major economy.

The IMF expects Japan's gross public debt to reach 218pc of gross domestic product (GDP) this year, 227pc next year, and 246pc by 2014. This has been manageable so far only because Japanese savers have been willing – or coerced – into lending for almost nothing. The yield on 10-year government bonds has been around 1.30pc this year, though they jumped to 1.42pc last week.

But this debt needs to be servesed and either government income massively increased or spending cut, either will massivly harm the domestic economy.

"The debt situation is irrecoverable," said Carl Weinberg from High Frequency Economics. "I don't see any orderly way out of this. They will not be able to fund their deficit. There will be a fiscal shutdown, a pension haircut, and bank failures that will rock the world. It is criminally negligent that rating agencies are not blowing the whistle on this."

No just 'freedom of speech'.

The Great Recession has eaten up 27pc in tax revenues. Industrial output is down 19pc, even after the summer rebound; exports are down 31pc; the economy is 10pc smaller today in "nominal" terms than a year ago – and nominal is what matters for debt.

Telegraph

"Old news is old" sort of thing, but its another reminder that Japan never really recovered from the 90s deflationary crash. Its population timebomb is the worst in the world and it has often been suggested that the same population problem that caused Japanese deflation is causing US deflation.


This is the changing demographic.

Europe and the US will slowly head towards something similar although imigration will stave of the worst of that and China is a decade or so behind, but again raising people out of poverty will probibly offset the one child policy demographic problem.

If Japan were to default it is still a long way off but they have had 20 years of an economic crisis they have never really found a solution too.