Economic recession on the way?

[cHodAX]

Stock markets looking very wobbly after massive losses yesterday, £77 billion wiped off the FTSE 500 value alone. U.S. Federal Bank slash interest rates by 3/4 of a percent which has only ever happened twice before in history and many insiders are saying this is a panic move that will not stop the impending recession.

Your thoughts?

 

[Mey]

Just the January blues, will blow over. I reckon anyway.

 

[preacherboy]

Ye blame Brown, he will be known for the recession the ripple effect will be endless think the price of condoms will go up+ another billion things unemployment will go up, banks will stop lending,but hay atleast we will still have FH

 

[Raven]

Just the January blues, will blow over. I reckon anyway.

And you work in a bank?

Its all to do with the housing market and lack of consumer confidence in the dollar, therefor their lack of spending. It will get worse before it gets better. The American economy is on the skids which is effecting the global economy, house prices are dropping in the UK which is nice for me since I am planning on buying in a years time, not nice for those that have paid heavily inflated prices though.

Good time to snap up some cheap shares or dollars!

 

[Lamp]

Yes, there will be an economic recession in the UK
Recession in the US
Global credit crisis
Interbank borrowing crippled
£79bn wiped off the stock market
Lowered consumer spending
Pressure for the Bank of England to reduce interest rates

I've worked in banking for 15 years. This has all the classic signs of an impending recession

 

[crispy]

Hysteria is what makes economy go bad

Do as me and use all your money and keep the wheels running

 

[Mey]

We will just have to reinforce our links with the indian/asian markets. I still maintain it'll blow over, it's just fear selling atm. Great time to invest imo lol!

 

[Lamp]

Its not fear selling, you donut.
There's a global credit crisis.

Why would you want to reinforce links with the Indian Markets ? Indian debt markets are worthless, their equities are restricted and useful for writing equity linked swaps to hedge (say) exposure to credit derivatives and long equity positions.

What asian markets ? Tokyo ? You think they can secure risk-free credit ?

If anything, its China and the Saudis who hold the cash, and who are bailing out the investment banks. But since the US economy is prevalent, when they suffer, we all suffer.

 

[Himse]

Im not really sure how the stock markets actually work

So no idea.

 

[Lamp]

Im not really sure how the stock markets actually work

So no idea.

The markets basically work on 2 things
(1) Confidence
(2) Revolving interbank credit

Both have been zerod. £79 billion being was wiped off the value of shares yesterday - this doesn't happen under stable market conditions. We're in for a rough ride.

 

[crispy]

I bet this happens because the dollars is so shitty these days - aint it because they kinda just print money in the US to fund their wars?

 

[Lamp]

3/4 pt reduction of US interest rates
The US economy is in trouble

 

[Raven]

Partly, though the banks have fucked them selves up (again) by over lending to people who can't pay it off in a million years, now its come down to repo time they aren't getting nearly as much as they lent because the house prices are also falling. You have people stuck with mortgages that are far more than the value of their house and far more than they can afford to repay.

 

[Binky the Bomb]

Kill more dinosaures, use there carcasses for petrol, economy saved.

 

[Rookiescot]

Its the same old ..... these financial institutions only make money when they are actually moving shares.
If the economy is stable. Everyone is sitting on their investments. Ergo these clowns make no money.
BUT !!!
If they can get a flap on because someone farted in Botswanna or the financial market (i.e. Banks) overplayed their hand then thats what they will do.
Reallity is that the banks got caught out. All that means is they should make less profit this year.
Is that what will happen? Shit no.
Tossors should be dragged from their offices and shot in the street.

 

[cHodAX]

Nice posts Lamp, good to have a reasoned opinion on the matter.

 

[Lamp]

Its the same old ..... these financial institutions only make money when they are actually moving shares

You couldn't be more wrong. You obviously know nothing about investment banking. Example:

What happens when you hedge a long equity position with an equity linked swap, or you cover the coupon on a non-zero rated bond by synthetically washing the interest rate through the structure of an asset swap ?

You don't need to move shares to make money.

Couldn't be bothered to respond to the rest of your thread. It wasn't worth it.

 

[Rookiescot]

You couldn't be more wrong. You obviously know nothing about investment banking. Example:

What happens when you hedge a long equity position with an equity linked swap, or you cover the coupon on a non-zero rated bond by synthetically washing the interest rate through the structure of an asset swap ?

You don't need to move shares to make money.

Couldn't be bothered to respond to the rest of your thread. It wasn't worth it.

All I need to know is that its the working man who pays for your industrys fuck ups.
Anyway ... do us all a favour and explain your post. Enlighten us to the ways you effectively steal money.
Synthetically washing? You read that in a book or hear it in a meeting?
Try talking English rather than the corporate speak you assholes in red braces seem to think makes you look clever.

 

[Jeremiah]

If they can get a flap on because someone farted in Botswanna...

Dont forget, that fart will also push the oil prices up and we'll all need to pay extra for petrol due to the volatile level of methane available.

 

[Lamp]

All I need to know is that its the working man who pays for your industrys fuck ups.
Anyway ... do us all a favour and explain your post. Enlighten us to the ways you effectively steal money.
Synthetically washing? You read that in a book or hear it in a meeting?
Try talking English rather than the corporate speak you assholes in red braces seem to think makes you look clever.

No, didn't read it in a book or hear it in a meeting. I've been an investment banker for 15+ years. The terms can be quite bewildering to anyone outside the financial markets industry, true.

A bond pays a coupon. Suppose hedge fund is holding convertible bonds, but wants to get them off its balance sheet. What it does is calls an investment bank to arrange a convertible asset swap. The hedge fund sells to the investment bank the bonds in return for which the investment bank sells to the hedge fund an American Call Option on the bonds. This entitles the hedge fund to get the bonds back onto its balance sheet whenever it wants. They simultaneously undertake an interest-rate swap, where the bank pays to the hedge fund a fixed amount to represent the coupon of the bonds, and the hedge fund pays to the investment bank a floating amount, representing the premium under the American Call Option.

The synthetic wash occurs when the trading entity of the investment bank passes (or replicates) the bonds, interest-rate swap, and the call option to a corporate client (known as the Buy Side). They make a massive profit in washing the bonds through to the client. Pefectly legal, and it ensures the investment bank doesn't carry the convertible bonds on its balance sheet.

No shares moving. Plenty of cash. Just one small example.

Oh and I don't wear red braces, LOL

 

[Marc]

Thought you were a solicitor lamp?

 

[Fafnir]

Nah just wait until the US goes to war with Iran or North Korea then we will have an economic boom again

 

[Lamp]

Thought you were a solicitor lamp?

Nah. Started off in law then moved into investment banking. More money

 

[cHodAX]

Nah. Started off in law then moved into investment banking. More money

Cash whore! Share the wealth biatch!

 

[Lamp]

Cash whore! Share the wealth biatch!

OK. PM me your full name and address

 

[Fafnir]

OK. PM me your full name and address

Don't Papa Cho or he will come and sell your arse...

 

[Lamp]

Why sell, when you can lease it out, still keep the asset, and use the rent income to invest in another arse ?

 

[Chronictank]

US i think will have one
We wont feel it as much in the UK because our housing market is strong (there is still a shortage of houses so there will always be demand, in contrast in the US there are too many houses and not enough demand)
There will be a effect but there wont be a recession in the UK

 

[Imgormiel]

Omg ?!!!?!! not one of you knew about this from 14 months ago. Jeez guys pay attention. The fact of the matter is that investment banking is bearing the brunt of it when actually faith in Vlad's ass has failed us all. He lost his constipation!

No seriously, alot of the economists are pointing to bad banking, particularly in the states. But the real issue has been us as a global population meaning that we have a habit of not paying debt. Banks make money, and thus the irresponsibility has been intwined. There's some behavourism involved here if you think about it. But as Archimedes said what goes up must come down. Brown's philosophy of sustainable economical growth despite it's virtues is flawed.

Economics has never worked this way. But in the same breath, he's right. If you can catch the symptoms early you can do something about it, which in the Uk was never something the conservative government did with economic policy. They always lived dangerously and made cuts to compsensate their own errors. Usually at the cost of Joe Public.

This model doesn't work. Thus in England/Uk the bank of England got the economic rights to how this country is run in certain cirumstances.

I believe that Brown's policy has always erred on damage limitation with a small piece of growth because there is no room for margin of error because he doesn't have the reigns on the UK economy.

As for the global economy. Well, get used to it, things are going to change massively in the next 50 years. While peeps moan at developing countries like India and China. Global warming with eventually curb us all. It will no longer be thought of as expand massively for short term = long term economic gain.

I don't believe that crap about global war because of shortage of supplies ie water etc that was said in the past. I believe that the issue of yes and i hate to say it, how green and economically efficient a country is will show how things will prosper. The less things affect them by wasting on repair and expenditure of rebuilding and keep on rebuilding till things climatically get better via the environment, the more people will have room to move economically but in a new zietgeist that was much different from any previous economic climate.

When an economic market indulges in sloth, sooner or later it will fall due to its own complacency. But this one is set to run and run. We have mostly got used to a stable economic climate. Now it's gonna get rough for a while. How much no one knows. But face it with a fearless face, don't be complacent and it will be a whole lot easier.

 

[Amildin]

US i think will have one
We wont feel it as much in the UK because our housing market is strong (there is still a shortage of houses so there will always be demand, in contrast in the US there are too many houses and not enough demand)
There will be a effect but there wont be a recession in the UK

US should totally give us some houses then, bastards.