Well that’s it – the FTSE 100 is back down where it was at the moment of crisis that precipitated the ECB €750 bank bail-out. The French Bourse is nearly there and Frankfurt not far behind. The Italian index has dropped 800 point today. They are selling everything at the moment.
So, €750 Billion for NOTHING!
Don’t dare tell me, ‘Oh but it would have been so much worse if we hadn’t done it.’ Says who? Someone who would have lost money that day? A financial expert who has been assuring us for a year or more that we were already in recovery?
US jobless figure out half an hour ago report unemployment jumped 25000 last month. GO recovery GO!
Asian shares are at new lows. Most of them back at July 09 levels. And falling fast.
US futures (what people are going to buy at when the market opens) are all down a lot. Below recent support levels. Which in English means they are expecting what one trader just described a few minutes ago as ‘carnage’ on Wall Street. The could drop below the levels of last weeks crash. If they do, say the traders I read, there is no bottom to look to for support. Its a free ride into the dark from there down. Let’s hope we don’t get there today.
Talking of losses and Wall Street an old villain from the first act of this whole crisis, Ambac – one of the US monoline insurers – has just had its CDS go up vertically. Which means the cost of insuring its debt is now in orbit. About time. But if they suddenly can’t be insured, who else? and why now?
If the Euro dips badly again today then strap on those incontinence trousers!
Dear Mr. Golem XIV, my favourite financial guru, I really look forward to a verification of your suspicion about the Spanish issue (no pun intended).
Can it be verified? The ECB published its purchase of dodgy debt for the preceeding week, so maybe for this week also?
And the strerilization; is it still only seeking deposits?
Can the transaction be traced, so that we can state as a matter of fact that the Spanish issue has ended up at ECB?
I absolutely adored your info about the Italians' banning of the mark to market accounting rules. Of all pathetic measures to take! Is this really true?
But in any case it reminded me about your enthusiasm form a while back about Germans proposing to force write-downs of real estate values on hedge funds. Accounting cannot affect the real world – either way.
Dear Mr Eirik,
I know it does seem too daft for words, but it really is true about the Italians.
It reminds me of a joke.
A bunch of Ostriches milling around in the desert waiting. On the horizon a cloud os dust appears. The ostriches become nervous as the cloud approaches.
The dust cloud is being kicked up by a magnificent specimen of an Ostrich running at full tilt.
As the cloud of dust is within a few hundred yards of the other birds they suddenly can bear it no longer and stick their heads firmly in the sand.
The lone Ostrich stops – panting – puzzled. Looks around and cries out, "Where is everyone!"
I don't think we'll be able to trace the actual bonds but we should still be able to make an informed appraisal of this week's purchases.
Thanks for all your comments.
Golem, Totally off topic but I read an interesting piece in the London Evening Standard by Anthony Hilton:
http://www.thisislondon.co.uk/markets/article-23835581-a-slippery-slope-as-oil-calls-the-shots.do
What he has dug up is a scary scenario where the price we pay for commodities is unrelated to normal supply and demand. Now this can be the case for lots of reasons but for oil mucking around like this has dire
consequences.
So, the upshot of this piece of news is that there are other 'bad' things going on in the financial world that if they come together in some 'perfect storm' with the stuff you have alert us to, then we are well and truly f**ked!
What would happen if, hypothetically, the world unanimously decided to default on its debt?? Since the only money in the markets is subjective speculation, isn't this an option?
Forgive in advance my ignorance.
Liam,
Every one could. but would they?
More likely scenario is that somebody falls over and knocks the house of cards down inadvertently.
What would happen is a vast amount of paper and electronic wealth would simply disappear. Most of that wealth is owned by the wealthy. This isn't a guess its just a function of the fact that most of the wealth of any kind is owned by the wealthy – hence being called the 'Wealthy'.
Given that they would cease to be wealthy they have every reason to exaggerate how much other people would lose. And exaggerate they do. Pensions – think of the pensions they cry, with mock concern.
Actually pensions would suffer less than they are GOING to under the current situation. But that is a whole other hive of hornets (Do hornets have hives?)
But I think you sense is pointing you in the right direction. The root problem is, we have a global currency which the banks created for themselves (debt backed securities and derivatives), which out of pure greed they promptly debased. An act of monumental stupidity whose entirely predictable consequence they have spent two years trying to avoid.
Default is going to happen but now in a more uncontrolled and violent fashion OR the world is going to be ground into debt subservience for the pleasure and profit of a single financial class.
Personally I vote for option number one.
IanG interesting. A perfect storm may unfold as early as tomorrow. A single vote in Germany tomorrow could trigger it as could a few other things all lining up in for freaky Friday if ever there was one.