| Archive for Downsizer For an ethical approach to consumption |
| MarkS |
Dooomed! Dooomed I say! (part 37)http://news.bbc.co.uk/1/hi/business/7293663.stmDooomed! Dooomed I say! Is a public service announcement provider. |
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| Penny |
Ooops 
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| mochyn |
My hedges are totally self supporting. | ||||||||
| Rob R |
I'm not familiar with the 'verge of collapse' - is that a B-road? | ||||||||
| Calli |
I think its the grassy bit at the edge? |
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| mochyn |
Lots of the verges around here are collapsing. That's why it's a good thing the hedges are self supporting. |
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| vegplot |
Judith's OH had better look out otherwise he'll get the blame for it. | ||||||||
| judith |
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| Blue Peter |
Shall I be a party-pooper and say that this is very serious, and if it doesn't stop, we will be all doomed?
The finance system is in the middle of a vicious circle. Because of the credit crunch, banks balance sheets are full. Banks can only lend a certain multiplier of the amount of capital they have. Currently, they are all lent up. Because they can't lend, entities such as hedge funds which bought things with borrowed money are not able to do more business. Indeed as the price of assets which they hold fall, they can't even continue to do the business that they are doing. They thus fall, and their assets are sold which depresses the market and makes all assets cheaper which mens that banks' balance sheets are tightened still further. And so on, until the whole system implodes... Oh dear! Peter. |
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| vegplot |
In an anarchic, tongue in cheek way if the money market implode, seriously implode - big time - then those with mortgages will have no-one to pay back.  Theorectically, downsizers should have the least to fear. (p.s. I bought my 1st class honours economics degree from this online univeristy, dead cheap is was)
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| Treacodactyl |
Or would the value of house prices collapse, leaving people with mortgages with negative equity, rates rising and perhaps loans being called in? A lender might collapse but the debt is an asset that can be sold to someone else. Back to CCC, not all the $21bn has been wiped out, the banks have inherited some of the assets. |
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| Blue Peter |
I believe that Carlyle were leveraged 32 times. That is, they put in one pound and borrowed 32. As collateral for the loan, the banks had whatever they bought. The value of what Carlyle bought has fallen (for ease, say halved, so 33 is now worth 16.5), so it's not enough collateral. The banks asked for more, Carlyle couldn't pay, so the banks keep the assets. So the banks lent 32 and got 16.5 back. You can almost hear the air being sucked out of the banks' balance sheets. Peter. P.S. The figures are entirely for illustration, but I think that they capture of the gist of what has happened. |
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| MarkS |
I thought 'Dooomed!' sums it up quite well
On a serious note, I think that many people don't appreciate that all these things can and will have an impact on their own lives. I hear that the banks are expecting the credit crunch to be a significant issue for at least a couple of years. This is not just a blip. |
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| MarkS |
It is certainly likely that people on discounted rates will find that when they get to the end of the discount they cant move to get another cheap deal becasue the LTV is too high. That will lead to repos. |
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| vegplot |
Sorry, not made myself clear. If things were to go really, really bad there'd be no financial institutions left to pay back. If things get just really bad (just the one 'really') then many borrowers may l hope it goes the whole hog. As I say it is tongue in cheek. |
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| vegplot |
That would be a huge worry and one that is likely to happen than not. The banks will end up will an awful lot of real estate as assets. |
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| Treacodactyl |
I know it's tongue in cheek, I'm just wondering what would happen. I'd guess that while there's people alive someone would own the debt, that's life. Let's hope we don't find out... |
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| Blue Peter |
I just thought that the groundlings weren't taking the show seriously enough. People are making allusions to 1929, Peter. |
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| vegplot |
Indeed, let's not go there. It's going to get difficult for some though, especially those already stretched to their limit as MarkS says. I wonder how long before people with cash and assets start thinking about underground safety bunkers to safeguard their wealth against hoards of homeless and starving. |
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| MarkS |
If it gets that bad it still isn't good news, because you are talking about the collapse of western civilisation. It will be OK for BB and KinGi with the gun collections, but as for the reast of us.... |
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| vegplot |
I'm all right jack, I'll be raiding farms and homesteads along with BB and KinGi. It would certainly mean the collapse of western civilisation as we've grown comfortable with. |
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| Andy B |
This will very badly affect pensions, if it gets worse a lot of people about to retire will be in a very bad way! | ||||||||
| Treacodactyl |
Things seem to be changing almost daily so it's hard to keep up. A few weeks back they were saying the new fixed & discounted rates had dropped so the shock wasn't too bad. I think that's still the case but, as you say, it looks like the crunch is going to last a long time so the rates might start creeping up. Judging by the budget the Government is counting on things improving quickly so if things don't we could very well be in for trouble in the coming years. |
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| Blue Peter |
FWIW, a large American financial institution - Bear Stearns - has just gone all Northern Rock,
Peter. |
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| Brownbear |
We could start a Downsizer raiding collective. We need a little island and a boat, and a lot of ammo. I might pop down to my reloading locker later. |
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| Jamanda |
Lundy! | ||||||||
| Brownbear |
Too obvious. Others will think of it. Need some little gimpy place with a few caves and a rocky coast. Good conversationalists who can cook may be invited to join. Application fee: 1000 rounds of .308 Win. |
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| Andy B |
A friend of mine has just seen the value of his pension reduced by 15% | ||||||||
| Brownbear |
Which is why it's unwise to invest in one. Buy gold. |
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| Penny |
I do sometimes regret that Steve gave up his shotgun licence. |
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| bagpuss |
while it will be terrible for many people probably including some of us here didn't the western world recover from the great depression won't we also recover from this if it goes in a similar fashion? | ||||||||
| Blue Peter |
My guess is 'No'. 1929+ we had the great bonanza of easy fossil fuels before us; now, we are at about their peak. We will have less rather than more energy, so we will diminish rather than increase, Peter. |
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| Behemoth |
Wont other things have greater 'value'? | ||||||||
| crofter |
Or land. Or ammo. Or both. |
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| lily |
http://news.bbc.co.uk/1/hi/business/7296678.stm | ||||||||
| dougal |
Well, an hour ago, Bear Stearns went down.
Sold to JP Morgan for $2 a share. It was $30 or so on Friday night, $60 on Thursday. $100 before Christmas... so $2... 
And the US Fed cut rates by a quarter point 10 minutes ago. On a Sunday evening. 
And only a quarter point? ?? ??? żżż 
These are the "interesting times" of the proverbial curse. ADDED Downsizer is ahead of the BBC on this one, BTW... 
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