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  #861  
Old 11.02.2009, 14:30
JVC
 
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Hope so, as mentioned in post 236 that is where I put my spare cash.
Just keeping my fingers crossed that the safe deposit box is safe
Anyone got a fleet of Mini Coopers for sale?
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  #862  
Old 11.02.2009, 18:04
hoppy
 
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

Join the self-preservation society- here's how.

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  #863  
Old 11.02.2009, 21:34
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Join the self-preservation society- here's how.
Now I am really worried, burying gold in the garden.

Meanwhile in England;
From Times Online

February 11, 2009


The Governor of the Bank of England admitted today that the UK was in a "deep recession" and gave a strong signal that the Bank of England will begin "printing money" under a strategy of quantitative easing as soon as next month.

Marton
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  #864  
Old 11.02.2009, 22:11
hoppy
 
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

I am so fed up of hearing deep recession, what is the tipping point into depression?
In the US they just passed the stimulus bill, one person said that if they didn't it would push the world into a greater depression than the Great Depression.

One trade is doing a roaring business- the bars.

Um, I mean the drinking bars.
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  #865  
Old 12.02.2009, 15:09
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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...In the US they just passed the stimulus bill, one person said that if they didn't it would push the world into a greater depression than the Great Depression...
Many people are saying that, but history teaches us that precisely the opposite is true. FDR only prolonged and deepened the depression in the 30s through massive amounts of debt-based government spending. It looked good at first because he was propagandizing the idea that government was actually capable of solving the problem, when in fact it isn't. Before 1940, not once did unemployment fall below 14 percent. In May 1939, Treasury Secretary Henry Morgenthau testified:
"We are spending more money than we have ever spent before, and it does not work. ... I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. ... I say after eight years of this administration we have just as much unemployment as when we started ... and an enormous debt, to boot."
Relying on our ignorance of the past, Obama is embarking on exactly the same course of action. To expect different results is naïve at best, and insane at worst.
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  #866  
Old 12.02.2009, 19:06
hoppy
 
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

here's an interesting perspective concerning protectionism and the Great Depression:

http://www.nytimes.com/2009/02/11/op...1friedman.html

All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.”
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  #867  
Old 13.02.2009, 02:28
hoppy
 
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

Maybe this is why Credit Suisse have less debt than UBS?

Friday, 19 December 2008

Credit Suisse has hatched a cunning plan to avoid public condemnation over executive bonuses this year: it is going to pay top managers not in cash, but in the toxic mortgage assets that caused the credit crisis.


http://www.independent.co.uk/news/bu...t-1203709.html
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  #868  
Old 13.02.2009, 07:18
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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FDR only prolonged and deepened the depression in the 30s through massive amounts of debt-based government spending..... Obama is embarking on exactly the same course of action. To expect different results is naïve at best, and insane at worst.
Texaner, I know we disagreed about the recapitalization plan back in the Fall but I am in agreement with you on this. I was all for the recapitalization plan because the financial system was in melt down. But this fiscal stimulus package is more about politics than economics. I don't know if it will prolong the crisis but I don't think anyone is fooled that it'll be a quick fix. Anything which is sold as "better than doing nothing" doesn't inspire confidence in my book.

What matters isn’t spending on projects or even tax cuts or interest rate cuts. They are inefficient, won't necessarily jump start consumer spending and will only address the symptoms not the cause of this economic disease. They may save some jobs but they won't stimulate demand anywhere near enough to pull us out of recession fast. What matters is addressing what got us into this mess ie stabilizing the real estate market, cleaning up bank balance sheets and getting banks lending again. Those should be the key parts of the fiscal stimulus package but sadly it's where it's lacking.

This catastrophic economic slowdown is still a banking driven crisis and what's needed is a dramatic restructuring of the banking system and culture, including greater control over the banks (perhaps through nationalization), a debt guarantee plan and a bad bank to manage toxic assets. I'm not holding my breath. Watching the congressional committee's performance with the eight bank CEOs I was staggered by the politicians' naivity and lack of understanding and by the insincerity of the CEOs who did nothing but play lip service and go through the motions. Gordon Brown's approach leaves a lot to be desired but I think the UK is further along the right track here than the US. So is Switzerland. Unfortunately in terms of addressing this global crisis the tail can't wag the dog.
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  #869  
Old 13.02.2009, 16:25
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

I keep reading articles predicting that the US and the UK are going to have to start some "fiscal easing", ie effectively printing money. The latest I was just reading is in February's Accountancy magazine (p26 if anyone out there is lucky enough to receive it) which is suggesting that the best way for the UK government to use any newly printed cash is to buy houses off people who are likely to get repossessed at a modest discount, and then rent them back to the ex-homeowners. Seems like an interesting idea....

Obviously the variables make it difficult to predict, but all other things being equal, if the UK does start printing significant quantities of Sterling, is there any consensus on what impact a genuine fiscal easing policy might have on GBP:CHF exchange rates?

Cheers,
GS
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  #870  
Old 16.02.2009, 12:46
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

Every night, I pray to Mammon that it will make the GBP sink even further. Currently, it seems to be stuck in the 1.60's. In the past few days, every time an "expert" has predicted that it would go one way, it has gone the other.
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  #871  
Old 16.02.2009, 14:20
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Every night, I pray to Mammon that it will make the GBP sink even further. Currently, it seems to be stuck in the 1.60's. In the past few days, every time an "expert" has predicted that it would go one way, it has gone the other.
That's because right now it's range trading on sentiment not fundamentals. Makes for volatile mood swings!
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  #872  
Old 16.02.2009, 14:32
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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That's because right now it's range trading on sentiment not fundamentals. Makes for volatile mood swings!
Nothing new then

Once the BOE start printing money next month as they threaten then the Pound should fall (note use of word "should")

Marton
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  #873  
Old 16.02.2009, 15:18
Nev
 
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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all other things being equal, if the UK does start printing significant quantities of Sterling, is there any consensus on what impact a genuine fiscal easing policy might have on GBP:CHF exchange rates?
Cheers,
GS
Significant quantitative easing should be inflationary. Look up inflation in Wiki and it'll tell you it used to called "debasement of currency".....see where we're going with this?

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Nothing new then

Once the BOE start printing money next month as they threaten then the Pound should fall (note use of word "should")Marton
All true, but if, how far and how long depend on (1) what factors are already priced in - some risk of quantitative easing is already baked into sterling's value; (2) what factors weigh on the other side of the relevant pair -news coming out of Europe, Japan, US etc keeps going from bad to worse too; and (3) any intervention in FX markets by central banks like the SNB.

We had a bit of risk reversal last couple of weeks which helped strengthen the dollar and swiss franc but that looked like it was running out of steam until the same old, same old noise coming out of the G7 gave markets the risk jitters after the vague showing by Geithner.

I don't even try to predict sterling on a day by day basis anymore and anything north of 1.70 vs the swissie feels good to me.
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  #874  
Old 16.02.2009, 15:27
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Significant quantitative easing should be inflationary. Look up inflation in Wiki and it'll tell you it used to called "debasement of currency".....see where we're going with this?

All true, but if, how far and how long depend on (1) what factors are already priced in - some risk of quantitative easing is already baked into sterling's value; (2) what factors weigh on the other side of the relevant pair -news coming out of Europe, Japan, US etc keeps going from bad to worse too; and (3) any intervention in FX markets by central banks like the SNB.
Thanks Nev, that was my general feeling, but I'm no expert on these things and thought it would be good to get the views of those on here who really understand the situation.
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  #875  
Old 17.02.2009, 13:02
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

From todays' Times "Concerns grew today that the recession could push Britain’s economy into the grip of deflation as a key gauge of price pressures showed annual inflation tumbling to the lowest rate since 1960."

Anybody know how serious deflation would be in reality (I know the theories)? I mean are there real life examples that one could study?

Only example I know of is the electronics industry which has been in deflation for 30 years; people still buy computers, add on memory, Hard disks & TVs. Although they know next year the same thing will be cheaper or have more functions for the same price. I bought a tower computer for home use last year for around 800CHF; about 10/11 years ago the same thing but with less power & features was around 7,000 CHF.

Marton

Also from the Times; getting tough at the top "Japan’s Finance Minister has fallen on his sword and resigned amid growing public rage over what appeared to be drunken behaviour at last weekend’s G7 summit in Rome. "

Last edited by marton; 17.02.2009 at 13:04. Reason: add Japanese snippet
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  #876  
Old 17.02.2009, 15:56
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

Deflation isn't very common, at least deflation which is anything but temporary. The only real life example of long term deflation I can think of, and certainly experienced first hand, is the 10 year long deflation that Japan went through in the 1990s. During that period consumers cut back spending as asset prices fell and the economy went into recession then just stagnated. Rather than spending, consumers hoarded cash and hung onto their savings even after interest rates were eventually lowered close to zero. Companies cut back investment spending and eventually unemployment rose as companies struggled to raise productivity. Real estate, manufacturing, the construction sector and stocks were particularly vulnerable. There were maybe some "Japan specific" factors which made the impact of deflation worse there. The banks didn't write down non performing loans on their balance sheet and so delayed recapitalising. Companies were slow to cut back the workforce because of the tradition of lifetime employment and therefore didn't address productivity early enough. And China had just started to export cheaper goods to Japan which made homemade products less competitive.
I lived in Japan for part of this deflationary episode. It wasn't awful in the sense that there was mass unemployment, economic hardship and social unrest etc etc. For most people life went on. They just spent less and consumed less. Perhaps the biggest impact was psychological. Japanese felt less secure; less confident about the future. In the 70's and '80s you worked hard (six days a week) but in return your company looked after you. Once the Japanese decided that economic restructuring could no longer be put off this came to an end and in my view it was the cultural impact of this which affected Japanese the most.
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  #877  
Old 17.02.2009, 17:02
JVC
 
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

I haven't read the following article through yet, but the title looks promising:

Deflationary Lessons. What Japanese deflation did and did not do. (PDF file)
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  #878  
Old 17.02.2009, 19:19
Nev
 
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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I haven't read the following article through yet, but the title looks promising:

Deflationary Lessons. What Japanese deflation did and did not do. (PDF file)
Interesting article. Given there's not much in the way of precedent for sustained deflation it would be risky to draw parallels from one example - Japan - and extrapolate the similar consequences this time round if this crisis were to give birth to deflation elsewhere in the world. As I said, for the average guy on the street, the 1990s in Japan weren't that awful. But the average Japanese back then wasn't loaded up with debt and real estate. Sure Japanese consumers were attracted to high end designer labels as disposable income grew in the 1980s. But when the sh*t hit the fan, unlike the US and UK, the majority of Japanese didn't own real estate but rented and they were habitual savers rather than consumers of credit - frequently storing their cash in post office accounts. So Japan back then was a bit like Switzerland in terms of attitude to debt and home ownership. You saw people cut back on spending but you didn't see the daily spectre of home repossessions stalking the streets. As the UK and the US are learning, the impact of falling asset prices on individuals is much bigger when they own assets which have been financed by debt and the asset price falls below the level of the debt - the so called negative equity trap.
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  #879  
Old 17.02.2009, 20:28
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

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Interesting article. Given there's not much in the way of precedent for sustained deflation it would be risky to draw parallels from one example - Japan - and extrapolate the similar consequences this time round if this crisis were to give birth to deflation elsewhere in the world.
I agree

About "the so called negative equity trap..." somehow this is in the mind! I mean, as you mention, people who did not own their homes were happy to continue to pay rent; I assume the rents were not reduced in line with deflation or worst case in line with any perceived fall in property values??
At a time of deflation interest rates become low so the mortgage payments are (maybe eventually in some cases) reduced. So who cares if the mortgage one is paying is is based on an obsolete house value when it is a small payment anyway? Of course, it is an issue if you need to move house and have to pay off a mortgage which is considerably more than the current sale price. Anyway this probably only effects a small percentage of home owners (assuming deflation is around for 2/3 years)

It is also an issue for people who bought houses they could not afford in the hope the value would rise & they could benefit from this; gambling with the roof over your head is crazy - you would not bet the value on a poker table?

Marton
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  #880  
Old 17.02.2009, 20:47
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Re: Financial Crisis Bank News [was: How Safe is UBS?]

"The Securities and Exchange Commission said today that it has charged financier R. Allen Stanford and three of his companies with orchestrating an $8 billion investment fraud.
The SEC's complaint alleges that the fraud centered on a CD program in which Stanford International Bank promised "improbable and unsubstantiated high interest rates.""

Seems to be some links to Madoff but how much is not clearly stated in the news today.

Remember the old days when frauds were measured in millions? I wonder how many more of these there are waiting pop up into the light? One does have a certain lack of confidence in SEC governance, SOX & Basel 2.

Marton
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