Casualties of the Financial Crisis
Great graphic depicting the size of various bailouts around the globe, from 2007-08:
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click for ginormous graphic
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Excerpt:
"Barely a week after Europeans rebuffed American pleas to join in their bailout of the banking system, Europe now faces a financial crisis almost as grave as that in the United States — demonstrating how swiftly this contagion is spreading around the world.
In the last two days, governments from London to Berlin have seized or bailed out five faltering banks. In Ireland, where rumors of panicked withdrawals from banks spooked the stock market, the government has offered a two-year blanket guarantee on all deposits and bank debt.
Asia has been less buffeted by the turmoil, though a brief run on a bank in Hong Kong last week brought back dark memories of June 1997, when speculation against the Thai currency sparked a financial crisis that fanned rapidly across Asia, and later to Brazil and Russia.
Economists see a parallel between these two crises a decade apart: once creditors panic and begin to pull out their holdings, the underlying health of banks — or entire countries — no longer matters a great deal. In a global financial system, national borders are porous."
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Source:
The U.S. Financial Crisis Is Spreading to Europe
MARK LANDLER
NYT, September 30, 2008
http://www.nytimes.com/2008/10/01/business/worldbusiness/01global.html
Thursday, October 02, 2008 | 11:30 AM | Permalink
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Comments
In that vein, that borders no longer matter in this banking crisis.....it seems to me in the deflationary times that are to come (IMO)...that currencies "values" could change as countries battle with the ongoing economic crisis...
e.g. Russia, today news is that oil output keeps falling...will Russia be tempted to try something in the next 12 months that would debase the ruble?...and if you bought instruments denominated in the ruble, might your money be on fire once again...
just wondering...
Posted by: Bruce in Tennessee | Oct 2, 2008 11:42:53 AM
Is there a good reason Fannie and Freddie aren't on the chart?
Posted by: Namazu | Oct 2, 2008 11:52:50 AM
Please consider calling or faxing your House representative regarding today's vote on the Bailout. List of contacts at Mish's site:
http://globaleconomicanalysis.blogspot.com/
Posted by: Business Man | Oct 2, 2008 11:54:48 AM
Sorry, I missed it.
Posted by: Namazu | Oct 2, 2008 11:58:24 AM
Is there a reason the workers who have lost their jobs are not on that chart?
Posted by: ELS | Oct 2, 2008 12:14:06 PM
Bernie Sanders is one of the few who should remain in office. Forward this video to your rep. Demand that Paulson is removed from office. Paulson will be most interested in concealing his crimes rather than implementing viable solutions.
http://www.youtube.com/watch?v=CWMkbJ_FmwU
Posted by: Michael Blomquist | Oct 2, 2008 12:14:07 PM
That Katie Couric is a meanie. Why does she keep asking Sarah questions that Sarah can't answer?
So what if Sarah can't answer them. In school, half the kids couldn't answer the teacher's questions!
I wish Sarah was Prezident and not MacCain.
Posted by: A Concerned Citisen | Oct 2, 2008 12:26:58 PM
Jerry Bowyer finally admitted yesterday that subprime is not contained.
Stay tuned for more of his cutting-edge predictions.
Posted by: DL | Oct 2, 2008 12:28:17 PM
my 2 cents: the dollar boost (rush into treasuries) is living on borrowed time. iau is a better etf than gld; but i prefer the miners now. the financial system will be inflated out of this panic. there is a lot of cash sitting on the sidelines, where will it go? the ecb did the right thing...
Posted by: karen | Oct 2, 2008 12:36:50 PM
Looking at that great chart you linked confirms one of my suspicions. The Marxists are gloating right now and they ARE PILING ON.
They invented a bank, put out a press release saying it collapsed and watched the market go down 2%.
Dusseldorfer Hypothekenbank is a ‘made up’ name. Totally fictitious. It’s a commie Mad Magazine stunt. Hypotheken-Bank means a “hypothesis of a bank”… hypothesizing the existence in reality of an abstract concept.
It’s a sick commie joke where they are saying even the abstract concept of ‘banking’ in a capitalist world is doomed to failure.
Posted by: TG Randini | Oct 2, 2008 12:43:04 PM
"Europe now faces a financial crisis almost as grave as that in the United States"
ALMOST as grave? What are they smoking? The Spanish property crash is going to make ours look like a Sunday picnic, and Eurobanks are leveraged to a level that would make Bear Stearns blush. Almost as grave. Feh.
Essentially, the European continent had a housing bubble that exceeded ours, except for Germany - where the banks all took on foreign MBSs to chase returns.
European banks were gaming the system with swaps, many written by AIG, to inflate their capital reports.
"Almost as grave". You wish, buddy.
Posted by: Jim D | Oct 2, 2008 12:49:38 PM
What this says to me (again) is that globalism, like Friedmanism, is not actually rational due to the human element. The Asian currency crisis crushed S Korea, which was more sound than we were or are. But they were swept up in it to the benefit of multinationals that bot up a number of iconic S Korean businesses. Ultimately, human beings are tribal and perhaps a careful, systematic pulling away (just a bit) from globalism, and turning moe toward our tribal rather than multinational corporate interest is in order. In the last decade almost no one in this country has actually prospered. So of what benefit is the system that gives us that? To be clear all I am talking about is a slow unwinding of some of the overstretched globalism and a bit of self interest. You think the European Union isn't about to be shaken to its foundation by tribal interests? Different sovereign nations with very different interests under a universal governing system will not maintain unity. And why should they? Because the masters of The New World Order say so?
Posted by: Scott in Chicago | Oct 2, 2008 1:01:05 PM
Jim D, one question, have you ever been to europe?
Posted by: karen | Oct 2, 2008 1:10:28 PM
Scott in Chicago,
I fear you may be right in thinking a move toward tribalism might be part of the aftermath of the current problems. It was just that sort of tribalism that turned a nasty downturn in 1930 into a crippling depression finally ended with a devastating war.
Posted by: Estragon | Oct 2, 2008 1:15:18 PM
Karen,
I am in GLD and take your point about IAU -- which miners do you prefer? TIA!
Posted by: t*sphere*monk | Oct 2, 2008 1:19:29 PM
Europe's crisis is much more significant and systemic. That schadenfreude we saw now looks a lot like fear.
Posted by: bdg123 | Oct 2, 2008 1:20:12 PM
What a mess Europe has become... American Capitalism has spread like a cancer across the globe... Not against it, just against our particular flavor of it.
For all you smart folks: What is the best currency hedge against the eventual decline of the dollar?
IMO, since everyone has pretty much decoupled from the gold play, gold is nothing more than a precious/industrial metal anymore. In a down economy, less jewelery, less electronics (plating), less of everything it's used for these days...
And as mentioned above, the Euro is probably toast... so,
Who didn't buy our crap paper, who's gonna shine? New Zealand maybe? scary
Posted by: lauteus | Oct 2, 2008 1:20:36 PM
Please, American capitalism gave you the money to buy that PC to post your response. Europe's problems are their own. Quit blaming the U.S. for all of the problems that are going to develop around the world.
The entire world's wealth emanates from one source - the U.S. American capitalism is both the heart(economy) and the brain(our financial system). Wall Street's scheme is over but I can assure you that American finance is far from dead. And, American capitalism will once again rule the world.
There is nothing wrong with capitalism.
And, no I'm not some uber bull. I wrote of almost everything that is now coming to pass while everyone else was partying in the street.
Posted by: bdg123 | Oct 2, 2008 1:37:35 PM
t*sphere*monk, (that was hard to type!)
sorry, i hesitate to name preferences... i've owned so many over the years, anyway. I avoid south african ones, myself. I seem to favor Canadian based ones. GDX, the gold etf is looking beat up right now. CEF is actual gold and silver in a vault in canada if you like that idea. RGLD is a royalty company...
i currently own GDX, IAG, and NXG; but that's not an endorsement as all are currently in the red for me.
(also, USAGX in an IRA)
Posted by: karen | Oct 2, 2008 1:41:59 PM
@lauteus-
Don't be too sure that the buck is going to get hammered anytime soon. The world never got to that decoupling point, and money is now flowing back into the dollar. We may be sick, but we are less sick than most of the rest of the world. EU will have to cut rates eventually, which will further erode the EURO. China will devalue the renminbi in order to boost exports in a slowing world economy. Brazillian REAL might (Hey I said might) be a place for future value, but that's a stretch.
@Estragon-
No doubt. Bush is like Hoover, but with an preposterously expensive and unecessary war on his hands; a war fought for wealth and resources. The Friedmanites have bankrupted us, and much of the world. This administration has screwed the pooch sideways. People being people, the tribes will huddle up.
Posted by: Scott in Chicago | Oct 2, 2008 1:45:22 PM
@bdg123-
Really? There's NOTHING wrong with capitalism? Wow. Wait, double wow!
Posted by: Scott in Chicago | Oct 2, 2008 1:47:58 PM
At the doctor's office this morning skimming the September 15 Business Week.
Article about Cox wanting to scrap GAAP for IFRS. Hmm... where do ya think that idea stands now?
Posted by: Transor Z | Oct 2, 2008 1:54:19 PM
Thanks, Karen! I'm mostly a lurker, but always keep an eye out for your posts. The preference of Canada over SA is well-taken.
GDX is getting hammered today!
Posted by: t*sphere*monk | Oct 2, 2008 1:56:15 PM
Scott, it's easy for people to post from the cheap seats. American capitalism has been around since before you were born and it will be here long after you are dead. Everytime a situation like this develops, someone like you comes out of the woodwork to scream that the world is coming to an end. And, we will need to take our medicine but it's easy to be brilliant when an ugly environment is staring you in the eye.
Posted by: bdg123 | Oct 2, 2008 2:04:53 PM
@bdg 123:
I agree with you there is nothing wrong with capitalism. 100% correct.
...however, with UNFETTERED capitalism, I might have a little more difficulty. Too much relaxing, and boom, your capitalistic muscles have atrophied...
Posted by: Bruce in Tennessee | Oct 2, 2008 2:08:49 PM
