Global Financial Crisis

[Duckman]

I know we had a topic about this earlier about the US bail out but I had to mention this.

I'm sitting at work just now on my lunch reading about the Bank of England's report into the crisis and how much it's all costing us as tax payers.  I decided to have a look at the blog by the BBC's finanical editor to get the actual story broken down because he does a good job doing that.

Now this next bit actually took my breath away when I read it, see what you guys think:

"Today's tale is that we're careering into what looks like a pretty nasty global recession, which is causing capital to be withdrawn from all but the least risky economies, markets and business - and is mullering our wealth.

The number that stood out for me in the Bank of England's latest Financial Stability Report, which I would not recommend to those of a nervous disposition, is its estimate that £5,000bn has implicitly or explicitly been made available by central banks and governments since April 2008 to support wholesale funding by banks.

That is a genuinely big number. It's equivalent to about a sixth of the total annual economic output of the whole world.

So to put it another way, we as the taxpayers of the world are funding our banks to the tune of one-sixth of everything we produce.

Blimey, if I may be so bold.

It's the measure of the extent to which the private-sector banking industry has rather let us all down.

It also tells us something about the scale of the economic downturn we're facing."

Is it just me or is that one of the most shocking things you've ever read?  One sixth of the world's tax has been given to these fuckers already and still it's not going to fix it and still the markets tumble.  The biggest insurance company in the UK had 35% of its value wiped off in one month!

And the thing that pisses me off more than anything is that these people who caused this, the bankers and the executives who went nuts when times were good and make no plans for when times go bad, are going to swan off into the sunset with no recriminations and we are left holding the bag.

God damn it the world pisses me off!

Peace

Duckman

[Zombie Gunn]

That equates to about 18 trillion dollars, right? Amazing.

It doesn't take a genius to figure out that it doesn't take 18 trillion dollars to run ANY business. And that's assuming that the banks received no money through other means. Interest on loans? Fees? Returns on investments?

Something is seriously wrong here.

[Ally]

Personally this doesnt bother me TOO much...

Simple fact is, this global economic crisis actually helps some of us, im guessing everyone on here isnt in the 50k savings bracket, earnings maybe but does anyone on here have over 50k in savings in their bank account? If you do then this doesn't apply however...

For those of us who don't we are protected upto 50k savings, so thats ok. Secondly money is becoming tight so what do people eventually do? Stop spending, what do companies do when they realise people stop spending? Prices fall, during a recession? The fall drastically. This means we end up getting more bang for our buck, eventually the housing market will stabilise when people realise they have more excess cash because they have more money from things costing less so they can afford mortgages. Also lets not forget that the housing market REALLY got fucked over so prices will fall big time. You will probably, once things settle down, end up getting a house and selling it for 4 times what you paid for it in 10-20 years.

During the ecomomic crisis we've seen food prices drop, oil prices drop.

The reason its become so sensationalised is that the people WITH money have LOST money and they are the people in control of the media which is what we read and watch.

Am I pissed off that ive bailed out some fat cats at banks? Yes.
Are things going to get worse before they get better? Yes.

However the banks have had their kicks up the arse, it shouldnt and probably wont happen again.

Ive got loads to say and no energy to type....

[Zombie Gunn]

You're leaving out one key element of the economy: jobs

Let's just say that fatcat canoes sells 500 canoes a year. Well, nobody is buying canoes because their credit lines no longer exist because their bank doesn't exist. Yippee, at least this guy is out of debt, but he's also facing a mortgage payment that's 4x what it was 5 years ago. So, in short... That canoe trip is going to need to be canceled. Which means for every person out there in that situation, that's one less canoe being sold by fatcat canoes. So, fatcat lowers its prices. And since sales are down, they really don't need Ned hanging around stocking shelves, now do they?

Ned gets canned and goes on welfare, which works out quite nicely for him since now he doesn't have to work. Unfortunately the government has spent so much money keeping failboat banks afloat that now they need to make some budget cuts.

Scenario A: Republicans are in charge at this point and begin by cutting services, including welfare. This means that Ned can't get a job and can't get money from Uncle Sam either. Next spring, Ned will be crashing on your couch. Until your home forecloses, at least.

Scenario B: Democrats are in charge and rather than cutting services, they raise taxes on the rich. Ned keeps his comfy check from Uncle Sam and fatcat canoes sees their profit drop further. They decide to either sell the business to a wealthy oligarchy of chainstores or lay off more workers. Either way, either there will be more unemployed or the manufacturer of the canoes will be cut off at the legs because the chainstore imports all of their canoes from India.

At which point, you notice that there sure are a lot of bums panhandling on your way to work. And you might wonder why your taxes have gone up while at the same time, your city looks crappier because that subsidized check local governments get from the federal government has been frozen, indefinately.

You'll marvel at how cheap gas is at $2.00 a gallon amidst OPEC cutting production to make up for the drop. Finally, you arrive at work to see that the owners have closed shop without warning and your final check is in the mail. Woohoo, 3 day weekend! Or more.

[Duckman]

Also my Dad has savings of over 50K from his lump sum payment he received at retirement.  When my Mum retires in a few years they will have to live off that.

Nevermind the fact that his pension has been decimated by these fuckers using it to gamble on the markets and as they've lost it he might not get the full amount of money he's put away for during his 35 years of work.

This isn't something that only effects the rich, my family are far from rich.  This effects people who have worked their whole lives and are now finding out that thanks to some asshole trader or banker, everything they've worked for could be gone.

Never mind the fact that with this bail out taxes could also go up to keep this thing afloat.

Shit is hitting the fan, I don't think we can deny that any more.

Peace

Duckman

[Ally]

I tend to disagree, but i dont have time to put across my argument....will do later

[Brandon]

Ally, you are right, in a sense.

We have the poor people now that won't be affected. Now at least. This will cause the rich to fall to being poor, leading to an over whelming about of the poor. Meaning that eventually, it'll hit them too.

Things will go from bad, to worse, to Ok. From there, unless it gets fixed, it's only a matter of time before it gets much, much worse.

[Zombie Gunn]

I hadn't even thought about that aspect of it.  It's estimated that you need $1,000,000 to retire comfortably in America, without the aide of social security.  So, for everyone that was responsible with their money and are ready for retirement, guess they'll be losing all but $150,000 (FDIC insures up to 150k, not 50k.  this could change to 250k soon) which will only cover their retirement for the first 5 years.  Then, when social security crashes... what then?