Nouriel Roubini Oct 9, 2008
The US and advanced economies’ financial system is now headed towards a near-term systemic financial meltdown as day after day stock markets are in free fall, money markets have shut down while their spreads are skyrocketing, and credit spreads are surging through the roof. There is now the beginning of a generalized run on the banking system of these economies; a collapse of the shadow banking system, i.e. those non-banks (broker dealers, non-bank mortgage lenders, SIV and conduits, hedge funds, money market funds, private equity firms) that, like banks, borrow short and liquid, are highly leveraged and lend and invest long and illiquid and are thus at risk of a run on their short-term liabilities; and now a roll-off of the short term liabilities of the corporate sectors that may lead to widespread bankruptcies of solvent but illiquid financial and non-financial firms.
On the real economic side all the advanced economies representing 55% of global GDP (US, Eurozone, UK, other smaller European countries, Canada, Japan, Australia, New Zealand, Japan) entered a recession even before the massive financial shocks that started in the late summer made the liquidity and credit crunch even more virulent and will thus cause an even more severe recession than the one that started in the spring. So we have a severe recession, a severe financial crisis and a severe banking crisis in advanced economies
Read on...
When Peacenik looked at the Globe and Mail this morning it occurred to him that the Harper government has been downplaying the seriousness of this crisis in the hopes of getting re-elected. Canadian stocks are down 30.6 percent since Jan. 1. General Motors is down 80.9 percent since Jan. 1. This is a global crisis and Canada is part of it. The policies that led to this crisis, Reaganism, deregulation, Bushenomics, globalization, Cronyism and corruption have been embraced and defended by Harper. Harper put his re-election ahead of the welfare of the country. Wake up people! Peacenik says vote Liberal. Whoever wins will inherit a mess, but at least the Liberal party still believes in a social safety net. Peacenik is going off grid for the long weekend to practice survivalism. Peacenik hopes the skills he practices aren't needed. Have a good weekend.
The US and advanced economies’ financial system is now headed towards a near-term systemic financial meltdown as day after day stock markets are in free fall, money markets have shut down while their spreads are skyrocketing, and credit spreads are surging through the roof. There is now the beginning of a generalized run on the banking system of these economies; a collapse of the shadow banking system, i.e. those non-banks (broker dealers, non-bank mortgage lenders, SIV and conduits, hedge funds, money market funds, private equity firms) that, like banks, borrow short and liquid, are highly leveraged and lend and invest long and illiquid and are thus at risk of a run on their short-term liabilities; and now a roll-off of the short term liabilities of the corporate sectors that may lead to widespread bankruptcies of solvent but illiquid financial and non-financial firms.
On the real economic side all the advanced economies representing 55% of global GDP (US, Eurozone, UK, other smaller European countries, Canada, Japan, Australia, New Zealand, Japan) entered a recession even before the massive financial shocks that started in the late summer made the liquidity and credit crunch even more virulent and will thus cause an even more severe recession than the one that started in the spring. So we have a severe recession, a severe financial crisis and a severe banking crisis in advanced economies
Read on...
When Peacenik looked at the Globe and Mail this morning it occurred to him that the Harper government has been downplaying the seriousness of this crisis in the hopes of getting re-elected. Canadian stocks are down 30.6 percent since Jan. 1. General Motors is down 80.9 percent since Jan. 1. This is a global crisis and Canada is part of it. The policies that led to this crisis, Reaganism, deregulation, Bushenomics, globalization, Cronyism and corruption have been embraced and defended by Harper. Harper put his re-election ahead of the welfare of the country. Wake up people! Peacenik says vote Liberal. Whoever wins will inherit a mess, but at least the Liberal party still believes in a social safety net. Peacenik is going off grid for the long weekend to practice survivalism. Peacenik hopes the skills he practices aren't needed. Have a good weekend.
