Where did all the money go?

KaRl

The global financial pyramid scheme explained[^]

When they kick at your front door How you gonna come? With your hands on your head Or on the trigger of your gun?

R Giskard Reventlov

Interesting perspective. Everyone seesm to know what the problem is and how it came about and who is to blame. I don't see any sensible, stable solutions coming along: perhaps I've missed the point or not understood properly. Oh well: like everyone else (with any sense) I've battened down the hatches and will wait out the looming storm.

me, me, me

Lost User

You ask "Where did all the money go?"? There wasnt any moey. It was all credit based on ever increasing house values. There never was any value behind the electronic money that was spent, and now, has to be paid for by something of real value: Blood, tears, pain.

Morality is indistinguishable from social proscription

Lost User

Just read the article. Yes, its bang on. The apparant wealth is created by fast moving cash. Its one of the reasons economies like the US and UK like to tax saving rather than spending, it helps keep the cash flowing. What the UK and US have to do is gradually ease house prices down over a period of say 10 years (OK, that figure is a stab in the dark but probably reasonable) so that house prices remain constant at digit values but are erroded by inflation and at the same time tightening up on lending. But they also have to get the cash circulating again. With the confidence gone though, I dont see any clear way for the US and UK to avoid a massive ecconomic collapse (internally) over the next few years. How this impacts other countries will be seen, but China is going to be (already is) hammered. Other countries with tighter lending laws will be less effected internally, although due to the international nature of the banking system will be afected. Note though that not all banks bought into the (what is now) toxic debt. HSBC being a notable example. Its going to be ugly, the next few years. But for the UK and US, I can only se massive devaluation of their currencies and a going back to a manufacturing-exporting modelas the way foreward.

Morality is indistinguishable from social proscription

Dalek Dave

Not just UK/US. China is in trouble, Spain is going third world and France and Greece look very dodgy in the Medium Term. Trouble is who will pay for the debts of Other European Countries? Answer - UK and Germany. But the pound is deflating (good for our exports) and Germany is in political quicksand, with 70% wanting withdrawl from the Euro and over 50% wondering about withdrawl from EU. If UK and Germany pull, EU finished, rest of Europe goes 3rd world like Spain. (Spain in Trouble[^])

------------------------------------ "Your manuscript is both good and original. But the part that is good is not original, and the part that is original is not good." Dr Samuel Johnson

KaRl

Dalek Dave wrote:

If UK and Germany pull, EU finished

Nah, if UK pulls, EU is saved.

The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread Fold with us! ¤ flickr

Lost User

Greece has had enhanced problems since it adopted the Euro. If UK withdraws from the EU this would be good news for our Parliamentary Supremacy but possibly bad news for business considering the levels of trade that exists between UK and the continent. However, with the loss of UK membership and other fees, the rest of Europe will find their membership and other fees having to rise. That will please the French no end. Regarding China, although they are suffering, they are IMO best placed to be the cause for change that will lead the world out of this financial mess, but don't expect a quick fix. To rely upon the Americans to do that job might be wishful thinking especially if America turns to protectionist policies as EU are currently concerned with.

Dalek Dave

Ka?l wrote:

if UK pulls, EU is saved

Really? And who will pay for it?

------------------------------------ "Your manuscript is both good and original. But the part that is good is not original, and the part that is original is not good." Dr Samuel Johnson

Pierre Leclercq

Dalek Dave wrote:

with 70% wanting withdrawl from the Euro and over 50% wondering about withdrawl from EU.

You mean some german people are wondering about that? Where do you get this information from? To me it does not make too much sense. Remember this: http://www.cepr.org/pubs/Bulletin/dps/dp297.htm[^] The deutschemark zone is still alive and well... Maybe the uk should have sided with the euro earlier? Also, Germany has received generous funding from Europe for reunification, so why would they consider Europe a bad thing?

Dalek Dave wrote:

Trouble is who will pay for the debts of Other European Countries? Answer - UK and Germany.

And by the way, stop whining, France is also a net contributor to Europe's budget. But maybe you have a nostalgy of times when Europe was teared down by senseless wars? Really, Europe is a good thing, and Brits should learn about solidarity rather than dodging around. Ireland shoud avoid being badly influenced by this kind of attitude too. After receiving generous funding from the EU, and financing their growth on the back of other European countries by doing fiscal dumping, they spitted on it by saying No to the Europe. They tried to play it clever, but US companies are now pulling back, and Ireland is facing dark days. I think, so far, France has been doing good, this is an area where they have been acting consistently and honestly over a long period of time. I think this is time to move ahead with building a stronger and healthy Europe that will shelter its citizen from disasters caused by greed, egoism and dishonesty. Really, UK should stop playing a double game, and simply accept it belongs in Europe.

You can't turn lead into gold, unless you've built yourself a nuclear plant.

Pierre Leclercq

Dalek Dave wrote:

And who will pay for it?

So you want to lower your rebate? http://en.wikipedia.org/wiki/UK_rebate[^]

You can't turn lead into gold, unless you've built yourself a nuclear plant.

Dalek Dave

Our rebate has gone! Keep up lad, Blair gave that away 2 years ago, and even then it was only £2 Billion a year. We still pay over £50 Billion!

------------------------------------ "Your manuscript is both good and original. But the part that is good is not original, and the part that is original is not good." Dr Samuel Johnson

Pierre Leclercq

Richard A. Abbott wrote:

However, with the loss of UK membership and other fees, the rest of Europe will find their membership and other fees having to rise

The savings would be ridiculous compared to the harm done to the british economy. I have read that countries participating in the free euro zone have seen their trade exchange multiplied by 5 on average. So this would not be wise for the uk to withdraw from Europe.

Richard A. Abbott wrote:

That will please the French no end

Just keep in mind France and UK have a very long, and very tightly intertwined history. France was glad to welcome the link between UK and the rest of Europe when the tunnel under the channel was dug. Not to mention the funding done on the back of small investors grossly deprived from their savings (most of them were French). So now US are on the brink of turning protectionists and are shutting down their generous trade roads, I am sure the other European countries consider UK a part of Europe.

You can't turn lead into gold, unless you've built yourself a nuclear plant.

Pierre Leclercq

Dalek Dave wrote:

Our rebate has gone!

Oh poor you! Well, this rebate has gone on since 1984, and it was paid by other member of the EU. Just see that France alone was paying 1.6 billions euros every year for this rebate.

Dalek Dave wrote:

We still pay over £50 Billion!

Well see this: http://www.touteleurope.fr/fr/organisation/budget/recettes/presentation/comparatif-contribution-par-etat-membre-au-budget-2008.html[^] France is contributing 16.95% of the European budget, compared to 11.41% for the UK. And still, I think this is good to keep on building Europe, and I am quite annoyed by those who do not want to pull their weight.

You can't turn lead into gold, unless you've built yourself a nuclear plant.

Lost User

Dalek Dave wrote:

China is in trouble

China is fucked. 20 million new unemployed due to the crunch. 20 million. That is stagering.

Dalek Dave wrote:

Spain is going third world

The construction boom on the past years has certainly died. I dont know for sure what the spanish lending laws are like though so I cant comment on the effect of tight credit on their economy.

Dalek Dave wrote:

France and Greece

France is a lot LESS dodgy looking than the UK. Believe me, I live there.

Dalek Dave wrote:

Trouble is who will pay for the debts of Other European Countries? Answer - UK and Germany

The UK couldnt pay for a cheap holiday in Brighton right now.

Dalek Dave wrote:

But the pound is deflating (good for our exports) and Germany is in political quicksand, with 70% wanting withdrawl from the Euro and over 50% wondering about withdrawl from EU. If UK and Germany pull, EU finished, rest of Europe goes 3rd world like Spain.

I have been mooting a German withdrawal form the Euro for some time. They have had a heavy bill. But the ONE strength of Europe, and the one thing that will save it is the Euro? Why? As the dollar slides off the plate, and sterling too, there is one safe, massive, backed up by centuries of stability based on trade, that other countries can buy for foreign reserves. And thats the Euro. In sumary, its time to get of your high horse. The UK is fucked. It is nothing. It is finished. Time to accept that fact.

Morality is indistinguishable from social proscription

Dalek Dave

Pierre Leclercq wrote:

Where do you get this information from?

Read Stern[^]

------------------------------------ "Your manuscript is both good and original. But the part that is good is not original, and the part that is original is not good." Dr Samuel Johnson

Lost User

Like I said, "bad news for business considering the levels of trade that exists between UK and the continent", and my remark regarding the French was more tongue-in-cheek. But you and I agree that any American protectionism will be bad news for all and Europe will need to have a robust response. Presently, EU without UK participation is unthinkable no matter what CP Member Matthew Faithfull and his UKIP say.

KaRl

Dalek Dave wrote:

Really?

Absolutely. Since 1973 UK brought nothing positive to the Union. It is an obstacle rather than a driving force.

Dalek Dave wrote:

who will pay for it?

The net contribution of UK is €2.75bn. I don't think EU would collapse without this money.

The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread Fold with us! ¤ flickr

Oakman

fat_boy wrote:

In sumary, its time to get of your high horse. The UK is f***ed. It is nothing. It is finished. Time to accept that fact.

Interesting. If I am reading this right, every SB-er who lives in France - even an ex-pat like you - seems to need to believe that the UK is going down for the last time, but that new French Empire (aka EU) is somehow going to be untouched by the global crisis. Yet Reuters has just reported a record low euro zone business and consumer confidence and says that the euro zone economy is sinking deeper into its first recession. Why the disconnect?

Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

Lost User

Oakman wrote:

Why the disconnect?

I know businesses in the UK do better in general, they have easier employment laws, one of the big burdens the Eurozone has. But, the ease of lending pushed house prices up in the UK beyond all reasonable values. Now the bubble has burst a large part of the UK populaiton is facing negative equity of around £50,000 plus. Add this to an average credit card debt of around £15,000 PER PERSON, and IF the banks dont start lending, but instead start forclosing, then the debt level per capita will be so high it wil take the UK ten years before the populace are capable of spending money on anything except food and clothes. Then unemployment. It is rising massively. And the impact on the internal business structure (ie that services home customers) is going to be catastrophic further adding to the unenployment levels and speeding the downturn. House prioces in the UK are, at a reasonable estimate, were least 40$ overvalued. They have corrected by 20% already. And theres lots of downside still to go. The UK is hanging by a thread over a pit of ecconomic and hence social collapse the like of which will shock the world when the thread snaps. Which is what it will do by october. Unless the banks are forced to lend.

Morality is indistinguishable from social proscription

Dalek Dave

Oakman wrote:

Why the disconnect?

One word - FEAR!

------------------------------------ "Your manuscript is both good and original. But the part that is good is not original, and the part that is original is not good." Dr Samuel Johnson