The Economic Crisis

[VonMushroom]

The Economic Crisis of 20xx

The first visible symptoms of the current economic crisis started to show in sub prime based loans in the US. The financial devastation proceeded from sub primes to CDOs and other "financial instruments of mass destruction" and soon covered the whole world in an unprecedented economical disaster. The complete fallout of the disaster has not yet fallen down on us. Almost all governments are increasing their spending like madmen to support the whimpering and faltering banking sector. As a consequence, public debt has risen to all-time highs and will continue to do so in the years ahead. The US alone is expected to increase it's debt by more than a trillion (that's million millions) dollars per year for the next ten years. For the sake of fairness, or equal madness, or out of fear, almost every other government is following the lead. It's hard not to notice this crisis when the interlinkedness of the monetary systems, currencies and trade is the blood running in the veins of our societies. In a nutshell almost everyone's in the same boat.

So far 10-30 trillion dollars worth of wealth has disappeared in the wake of this crisis depending on whom do you ask the estimate from. The numbers are mind-boggling. It is said that the crisis is much worse than the one that started on 1929. The level of indebtness is higher than ever on national level. No-one really expects these debts to be paid back by the good taxpaying citizens of the western countries.

Some institutions believe that the worst is already over and we're already on the start of a speedy recovery. Others aren't convinced. For a bystander it's really difficult, or maybe impossible, to really know what's going on in the economy.

That's a lengthy introduction into the topic and thanks for reading it. Please post your thoughts and links to online resources regarding the issue. Here's one of my favorite "bearish" sites:
http://www.leap2020.eu/English_r25.html

br, VM

[VonMushroom]

The world is soon going to need Zimbabwean methods for covering all the debt with... MORE debt! A grand idea, eh? We simply need a couple of new prefixes for the dollar amounts. Yotta of dollars ought to fix the crisis!

[devogue]

I got all of my liquid cash...

a) out of the banks
b) out of sterling

...in the first part of this year.

I pumped it all in to blue chip wine, my reasoning being that...

a) there is only a finite amount of the world's greatest wines
b) no matter how bad things get there will always be rich people
c) rich people will always want nice things.

I paid £22,000 for five cases of wine, the immediate "buy back price" from the brokers I bought from was £18,000, but in the last 8 months prices have risen steadily to the point that if I sold my wine tomorrow I would get £22,500 and it's beginning to really pick up in price now. By the end of next year I expect it to be worth £30-35k.

There is no CGT liability because the wine is seen as a depreciating asset. I remember being terrified about putting all of my eggs in one basket, but I've worked in wine long enough to know that I will be okay. If anyone needs any advice drop me a PM.

As for the overall situation, I can see things getting nightmarishly worse before they get better - the full consequences of QE in the UK have yet to be seen.

[Gawdzilla Sama]

The US had about 20 depressions and recessions during the 1800s. We survived them all.

[VonMushroom]

The US had about 20 depressions and recessions during the 1800s. We survived them all.

Aye but this is a global systemic crisis. It's not about US alone. The world has never encountered anything like this one before.

[Gawdzilla Sama]

The US had about 20 depressions and recessions during the 1800s. We survived them all.

Aye but this is a global systemic crisis. It's not about US alone. The world has never encountered anything like this one before.

Erm, "Black Friday"?

[VonMushroom]

I pumped it all in to blue chip wine, my reasoning being that...

a) there is only a finite amount of the world's greatest wines
b) no matter how bad things get there will always be rich people
c) rich people will always want nice things.

Not bad. Not bad at all. Plus:
... d) having your wealth tied in material assets instead of currency you're better protected against inflation or devaluation.

[klr]

The US had about 20 depressions and recessions during the 1800s. We survived them all.

Aye but this is a global systemic crisis. It's not about US alone. The world has never encountered anything like this one before.

Erm, "Black Friday"?

Indeed. We're still here, no?

[VonMushroom]

The US had about 20 depressions and recessions during the 1800s. We survived them all.

Aye but this is a global systemic crisis. It's not about US alone. The world has never encountered anything like this one before.

Erm, "Black Friday"?

Do you mean the black friday of 1989? This one: http://en.wikipedia.org/wiki/Friday_the_13th_mini-crash

The case of 1989 wasn't a "global systemic crisis" although it was a global crisis indeed. Since then we've also had the techno-bubble in the turn of the century. Those both were asset bubbles where the international monetary system itself, although already bloated and loaded with the seeds for a systemic crisis, was still quite functional.

My personal bet is that this crisis is another kind of a beast. Earlier we've been able to print more money and slowly inflate the economy out of the harm's way but it seems the trick doesn't work anymore:


Edit: you probably meant this black friday I think: http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

[Gawdzilla Sama]

Bart, Black Friday is generally accepted at the start of the Great Depression, Oct., 1929.

[VonMushroom]

The US had about 20 depressions and recessions during the 1800s. We survived them all.

Aye but this is a global systemic crisis. It's not about US alone. The world has never encountered anything like this one before.

Erm, "Black Friday"?

Indeed. We're still here, no?

Quite so. The world doesn't probably come to an end but terribly many people will be jobless. Let's simply hope we're not going to be hit by that train. There's probably a recovery ahead but it's probably not as speedy and easy as economic optimists would like it to be. My bet is that we're probably talking about years or even decades of slow recovery.

[Feck]

Ah the Finest hour of Economics .Like a row of parrots, lots of talking but no real thought .And as for the Markets and the City that's just a load of thieves passing a bag of other peoples money around and taking a handful every time they get the bag .The world was too busy grasping for the latest fashions to realize that we were on our knees with our asses in the air just waiting to get Fucked .Our economies can only work by Growth ,this is not sustainable .

[VonMushroom]

Bart, Black Friday is generally accepted at the start of the Great Depression, Oct., 1929.

As you can see the term is used in conjuction with more than one depression. The economic crisis of 1990s started with the event that was called as "Black friday" as well. Strangely enough it was a friday the 13th. Irony perhaps? That's when Warren Buffet's investment company set his eyes on Coca Cola company and a little while later bought a sizable chunk of the enterprise. A fine deal no doubt.

But yeah, you're right in the sense that the 1929 event is the most well known one. The classic.

[VonMushroom]

Ah the Finest hour of Economics .Like a row of parrots, lots of talking but no real thought .And as for the Markets and the City that's just a load of thieves passing a bag of other peoples money around and taking a handful every time they get the bag .The world was too busy grasping for the latest fashions to realize that we were on our knees with our asses in the air just waiting to get Fucked .Our economies can only work by Growth ,this is not sustainable .

I think you're on the right track there. Please go on I'm listening!

[Feck]

Ah the Finest hour of Economics .Like a row of parrots, lots of talking but no real thought .And as for the Markets and the City that's just a load of thieves passing a bag of other peoples money around and taking a handful every time they get the bag .The world was too busy grasping for the latest fashions to realize that we were on our knees with our asses in the air just waiting to get Fucked .Our economies can only work by Growth ,this is not sustainable .

I think you're on the right track there. Please go on I'm listening!

No it makes me angry and upset .