Interesting parallels from 1999?

[touchring]

Originally Posted by bwhhisc

Election years are always interesting, but that will come and go. The economy is a worldwide problem, price increases at the wholesale level are pretty much on the rise now worldwide, passing down to consumers at the retail level.

The cost of moving goods all over the world has skyrocketed with increased shipping costs from port to port, doubling of fuel, hiked insurance, double cost for fuel to truck from port to distribution centers. Time for the entire world, not just the US to adjust to the "new" economy.

The worldwide problem is the property/real estate bubble. Inflation is a by-product which happens when the Feds try all means to delay the inevitable deflationary collapse, giving funds enough time to divest out into commodities, driving up the price of oil.

Some land prices gone up as much as 100 times in China over the last 10 years (yes, as profitable or even more profitable than domaining). The bubble in Beijing is bigger than the one in Miami. The luxury condo bubble in Singapore is serious. Supply is going to exceed demand by maybe half once all the condos are built.

Property prices goes up, it also comes down. It will end once Manhattan prices goes back to 2003 levels. The only difference worldwide is the proportion of banks in each country that are still standing when the market bottoms.

[Rubber Duck]

Originally Posted by bwhhisc

Election years are always interesting, but that will come and go. The economy is a worldwide problem, price increases at the wholesale level are pretty much on the rise now worldwide, passing down to consumers at the retail level.

The cost of moving goods all over the world has skyrocketed with increased shipping costs from port to port, doubling of fuel, hiked insurance, double cost for fuel to truck from port to distribution centers. Time for the entire world, not just the US to adjust to the "new" economy.

Well it is tough at the moment in Spain, Germany and the UK, but there is little evidence that the authorities in these places are manipulating the figures.

A core inflation rate that doesn't include Food and Fuel, give me a break.

It is abundantly clear that because most of this mess started in the US, the problem there has to be at least as bad as most other places. To listen to the official statistics and much of the commentary, you might be fooled into thinking that it is the only place which is immune.

The bottom line is there is much of US industry which just ain't going to make it. I think you can pretty much bet the bank that at least one of the US big three is going to the wall. And I am not talking takeover, as it is pretty much clear there is no value in the companies as going concerns. The receiver might get a little bit for some of the sites and perhaps some of the brands, but that is about it.

Even in the software industry, it is very difficult to see where MS goes from here. They may not be going to the wall but increases in the share price have been eluding them for years and now they seem more lost than ever.

The US is facing a major structural adjustment. It is going to get a lot worse before it gets better. Fear, however, is preventing those at the top admitting how bad it might get. This stops Wall Street collapsing in the short-term, but does little to allow real change to be implemented.

[Rubber Duck]

Originally Posted by touchring

The worldwide problem is the property/real estate bubble. Inflation is a by-product which happens when the Feds try all means to delay the inevitable deflationary collapse, giving funds enough time to divest out into commodities, driving up the price of oil.

Some land prices gone up as much as 100 times in China over the last 10 years (yes, as profitable or even more profitable than domaining). The bubble in Beijing is bigger than the one in Miami. The luxury condo bubble in Singapore is serious. Supply is going to exceed demand by maybe half once all the condos are built.

Property prices goes up, it also comes down. It will end once Manhattan prices goes back to 2003 levels. The only difference worldwide is the proportion of banks in each country that are still standing when the market bottoms.

Mercifully in the UK the amount of new housing brought on stream has been very low. This has been largely due to a bureaucratic log jam. Government would not builders build what they want and builder would not build what the government wanted which was lots of low cost housing. Even in a major speculative collapse there is still going to be a fundamental shortage of housing in the UK.

[clipper]

Glad to see you here, D.

Originally Posted by Rubber Duck

It is abundantly clear that because most of this mess started in the US, the problem there has to be at least as bad as most other places. To listen to the official statistics and much of the commentary, you might be fooled into thinking that it is the only place which is immune.

I feel that most of the commentary here (in the US) is that this is a domestic problem, not a worldwide problem.

Quite the contrary, I see it as a global problem, due to the wide distribution of US assets. The wealth of every major Western country depends on the stability of the banking system and the US Treasury. (Excluding: Cayman, Guernsey, Jersey, Switzerland, Lux, and Austria, all of whom have unique banking designations, which represent a small portion of the wealth of all amjor Western nations).

Your assertions, while mostly correct, are flawed in the assumption that the bad debt has mostly stayed safely in the US. Fact is, every bank in the world is holding US debt in some form (gov't, corporate, or asset-backed), and all debt is now slowly unwinding.

The official US statistics are clearly manipulated to benefit the financials, as they are (were) the source of US economic prosperity and wealth since the degradation of the American worker started in 1981.

The appointees (Fed, Treasury) feel that they can manipulate the numbers long enough to ride out the storm by:
1. keeping asset prices inflated (interest rates low);
2. opening borrowing facilities and decreasing duration for more and more types of institutions;
3. maintaining a minimum of alarm in official statements and testimony;

The thing that nobody knows is, how much AAA-rated junk are the banks carrying on their balance sheets?

There has been an endless stream of writedowns and sell-offs since those two Bear Stearns funds collapsed last June, and every writedown, every issuance of preferred security, has been accompanied by assurance that this is the end of the bad news for the financial institution in trouble.

It's worked, so far.

Fed borrowings have been able to stave off a total meltdown, so far. The question is, what's bigger: the Fed's (and other central banks') reserve of Treasuries, or bank's bad bond holdings?

If it's the former, then the banks are going to get off fine; there may be more forced-marriages like Bear Stearns and JPM, but they'll survive in some form or another. Near-zero interest rate policies can hold off the meltdown indefinitely, provided there's enough in the central banks' coffers to stave off the meltdowns for long enough.

If it's the latter, there'll be blood in the streets. Increasing interest rates will kill the newly-minted paper-wealthy, and a vast re-distribution of wealth will take place.

I think this will be a global phenomenon, not a local one, but it's hard to know because our sources are so limited.

[clipper]

To get back on topic...

If the former, and the banking crisis can be staved off, then IDNs are going to be just fine, better than ASCII CCTLDs.

If it's the latter, then all businesses are going to feel it, but established sites geared toward higher-class surfers will fare better.

[touchring]

Originally Posted by clipper

The official US statistics are clearly manipulated to benefit the financials, as they are (were) the source of US economic prosperity and wealth since the degradation of the American worker started in 1981.

The appointees (Fed, Treasury) feel that they can manipulate the numbers long enough to ride out the storm by:
1. keeping asset prices inflated (interest rates low);
2. opening borrowing facilities and decreasing duration for more and more types of institutions;
3. maintaining a minimum of alarm in official statements and testimony;

There has been an endless stream of writedowns and sell-offs since those two Bear Stearns funds collapsed last June, and every writedown, every issuance of preferred security, has been accompanied by assurance that this is the end of the bad news for the financial institution in trouble.

It's worked, so far.

The market correctly assumes there will not be a lot more new bad debts. But what if the real estate market correction is only 50% through? Another 50% to go? How about the mega REITS defaulting on a few billions of real estate loans EACH?

In Japan, there's so much bad debt from real estate bubble burst, that it could not be erased even 20 years later.

[clipper]

Originally Posted by touchring

The market correctly assumes there will not be a lot more new bad debts. But what if the real estate market correction is only 50% through? Another 50% to go? How about the mega REITS defaulting on a few billions of real estate loans EACH?

In Japan, there's so much bad debt from real estate bubble burst, that it could not be erased even 20 years later.

Easy, sounds like you're pumping SKF

And, yes, I believe real estate has a lot more downside risk.

[Rubber Duck]

The real problem is that the Fed and the US Government have no money other than what they can print and borrow from the rest of the World. The rest of the World have been getting badly burnt and are becoming reluctant to lend. That is what the credit crisis is all about. Many are in so deep they don't really want to rock the boat, but if one big lender starts heading for the exit, then the rest will follow. The bottom line is that the US Governments AAA rating is bullshit. Government can and do default and the likelihood that the US will is building. If that happens, then when the pheonix rises from the ashes, the global pecking order is going to look a lot different than it does today.

Originally Posted by clipper

Glad to see you here, D.



I feel that most of the commentary here (in the US) is that this is a domestic problem, not a worldwide problem.

Quite the contrary, I see it as a global problem, due to the wide distribution of US assets. The wealth of every major Western country depends on the stability of the banking system and the US Treasury. (Excluding: Cayman, Guernsey, Jersey, Switzerland, Lux, and Austria, all of whom have unique banking designations, which represent a small portion of the wealth of all amjor Western nations).

Your assertions, while mostly correct, are flawed in the assumption that the bad debt has mostly stayed safely in the US. Fact is, every bank in the world is holding US debt in some form (gov't, corporate, or asset-backed), and all debt is now slowly unwinding.

The official US statistics are clearly manipulated to benefit the financials, as they are (were) the source of US economic prosperity and wealth since the degradation of the American worker started in 1981.

The appointees (Fed, Treasury) feel that they can manipulate the numbers long enough to ride out the storm by:
1. keeping asset prices inflated (interest rates low);
2. opening borrowing facilities and decreasing duration for more and more types of institutions;
3. maintaining a minimum of alarm in official statements and testimony;

The thing that nobody knows is, how much AAA-rated junk are the banks carrying on their balance sheets?

There has been an endless stream of writedowns and sell-offs since those two Bear Stearns funds collapsed last June, and every writedown, every issuance of preferred security, has been accompanied by assurance that this is the end of the bad news for the financial institution in trouble.

It's worked, so far.

Fed borrowings have been able to stave off a total meltdown, so far. The question is, what's bigger: the Fed's (and other central banks') reserve of Treasuries, or bank's bad bond holdings?

If it's the former, then the banks are going to get off fine; there may be more forced-marriages like Bear Stearns and JPM, but they'll survive in some form or another. Near-zero interest rate policies can hold off the meltdown indefinitely, provided there's enough in the central banks' coffers to stave off the meltdowns for long enough.

If it's the latter, there'll be blood in the streets. Increasing interest rates will kill the newly-minted paper-wealthy, and a vast re-distribution of wealth will take place.

I think this will be a global phenomenon, not a local one, but it's hard to know because our sources are so limited.

[Rubber Duck]

Originally Posted by touchring

The market correctly assumes there will not be a lot more new bad debts. But what if the real estate market correction is only 50% through? Another 50% to go? How about the mega REITS defaulting on a few billions of real estate loans EACH?

In Japan, there's so much bad debt from real estate bubble burst, that it could not be erased even 20 years later.

The market has yet to get its head around the problem.

First couple of quarters, markets assume that banks had come clean on their entire liabilities. It is now clear they are coming clean quarter by quarter and this will happen until the crisis is over. That could take years, by which time many of them are going to be insolvent. Even if the US Government puts itself in hock to save Fanny Mae, that won't prevent failure of some of the large investment banks, the three Motor Giants, much of the contruction industry and yes a good deal of the retail sector. The only way there will ever be enough money to go around is to print more!

The real problem is that the further the housing market sinks, the bigger everyone's liabilities become. That makes it harder for them to lend and that means further deflation of asset values. It is a viscous circle. The harder it gets, the harder it will get. There are only two solutions. One is inflate your way out of the problem, or the second is for everyone to cut right back until they can get their finances in order. Both will involve most people suffering severe hardship. And both will end the fantasy that the US is somehow more productive and more viable than just about any other economy on Earth.

Frankly, I think the US has decided to inflate its way out of the problem. And frankly that might be the lesser of two evils, but it will mean that the dollar decends to junk status. And it will mean that the party is over. High inflation destroys jobs and it destroys wealth. It is no panacea, and eventually the belt tightening will be necessary to get the Genie back in the bottle.

Paulson thinks or at least states that he thinks this will be over in two quarters. This is going to take a Decade to unwind, even if it is well managed. Screw it and we are talking a generation.

[alphamale]

I thought dnlocal was the place to catch up on all the worldwide financial whisperings (or the place to avoid if your interest was in domains)

nice seeing you here RD, but I do hope that all threads won't now be poisoned with financial woes drivvle... personally if I want that I can go read a million journals.