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Credit crisis explained (interesting visuals)


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EnI

EnI

Piston Pioneer
Very simple & effective 2-piece visual explaining the essence of credit crisis. I hope the author will also make Part 3 - How the crisis effects the consumers, and the real sector.

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You can see how f.... up the situation is. Huge debts, no money at all. We need a new financial system ASAP. Based on new rules, and new platform.

The current platform & rules are ruined & failed. Can't be revitalized at all.
 
Amazing stupidity to loan money without down payments and checked history..
In sweden its impossible..to loan money if ur financial situation is ****** up..
The gov sees to that..

Now in the US its obviously driven by greed so this is what you get..
 
EnI said:
What if it's already too late? :t-hands: :eusa_thin
Click to expand...

It isn't. Nationalisation of banks and stimulus packages are the keys of recovery. Credit makes the world go around, it's something we all rely on for university studies, car purchase, mortgages, starting up business and even running a business. Current banks aren't giving anyone a nickel which puts the entire economy on a hold with decreasing economic activity. Therefore our governments are the bodies we can rely on to kick start the economy.

Last Friday I had a chat with a hedge fund manager and he said that there is some very stormy weather ahead. During the second half of last year the crisis was a fact and I think that 2009 will be the year when the ripples of the credit crisis trickle down to normal consumers. Not until early 2011 will we see economic growth across the western world.
 
Nationalization / "bad bank" won't solve the liquidity / solvency problem.

It will just ease the banks of bad assets. Nothing more.

Governments would need to invest LOTS of money in those nationalized banks to make the work properly again.

I'm afraid many countries around the world have no enough money do so.

OK, some banks without bad assets will gain better ratings again - and be able to get fresh money from other investors.

But ... before that new rules & regulations are needed - to prevent such situations as we face today. Rules & regulations affecting banks, funds, insurance companies, rating agencies / companies etc

Otherwise there still won't be enough trust to ease the credit crunch.

But the bomb is ticking ... with no easy money demand is down sharply - in almost every industry & segment around the world, and the real sector is in peril - not being able to get new loans to refinance old loans, or to get fresh money to reorganize the company to adapt to new situation in the markets.

I'm afraid this crisis is going to be long and deep ... and many companies / sectors won't survive it. And there will be huge social problems - huge masses of unemployed people, more poverty etc. In the end all can lead to some quite radical changes in financial & economic systems.

I just hope this crisis will be used to start ET revolution (ET= eco-tech). This will give the much needed boost to the economy - and help to solve other issues as well (new energy solutions, less pollution etc).

I hope this crisis will force us to rethink our consumeristic lifestyle.

Otherwise such crisis would repeat in the next decade - even more devastating & leading to even more radical consequences.


*****

Perhaps it's time to declare war on greed & vanity, and to support sustainable solutions instead. :t-cheers:
 
I'm aware the liquidity is a major issue, especially when trillions of "virtual money" in the form of speculative value in stocks, bonds, funds and properties have evaporated. This is particularly true for mortgages as they are only worth as much as the demand. If there is minimal demand demand, a house in Ohio might not be worth more than a family house in Bosnia.

Nationalising banks wouldn't not only allow governments to get the lending starting but it would allow for strict legislation that will prevent history from repeating itself. Sadly there is no easy way out, and many governments will either have to print more money or borrow from other countries which will potentially be in the same boat.
 
^

Therefore a new "Bretton Woods" - Ver 2.0 agreement is needed - to set up new global monetary system.

But I doubt US in interested in that - since the Bretton Woods and later the Smithsonian agreement and the all the other agreements (eg. trade agreements under WTO) etc were designed to cater US interests & dominance around the world (also eg. via IMF & WB etc).

BW 2.0 would mean a new distribution of (monetary / financial) influence / power around the world - meaning US losing their dominance and becoming equal to other economic powers.

Therefore this crisis is also a huge political issue - not just an economic one. On a global level.

It's up to G20 to do something, and find some an agreement to end up this crisis (with administrative actions) quickly before it ever worsens.
 
Imhotep Evil said:
>
^ What finally ended the effects of the Great Depression was WWII.

So what would be an equivalent solution ?!
Click to expand...


1.) WWIII

2.) immediate implementation of a new global monetary & financial system agreement + economy focused on sustainability, with possible eco-tech revolution.

3.) some temporary measures which will ease the crisis, and bring back the pre-crisis state - with some corrections ... but that will just postponed the economic collapse - but perhaps some time will be bought to negotiate new agreements mentioned in previous paragraph ... bringing the more proper & lasting solution


#1 - I hope it won't happen - since I'm sure everybody knows nobody can win it. and the aftermath would be horrible - since I'm sure nuclear power would be used

#3 - good but not good enough

#2 - best but politically almost impossible - it's quite utopian ... since such agreement would mean a new economic power distribution ... and I'm sure some countries (especially US) are definitely not interesting in giving up their dominant position


Perhaps the time line will be: #3 without agreement, followed by #1, and then finally #2
 
How greedy and vain of me to want a BMW! I should be ashamed. ;)
Back to ol' Subaru for me then...

Just pulling socks EnI...
 
If greed and vanity is what got us into a crisis worst than 1929's, then Gordon Gekko was wrong - greed doesn't necessarily work.

d5b5b92a7bafbf319af056422677f6d3.webp
 
Don't know if this fit here but anyway here it's.

Geneva Auto Show: BMW’s Reithofer Optimistic

Posted by: Jack Ewing on March 03

The way BMW CEO Norbert Reithofer tells it, he first got an inkling a downturn was in the works when he visited a number of U.S. dealers in September 2007. “They slapped us on the shoulder and said, ‘Enjoy 2007, because 2008 isn’t going to be so good,’ “ Reithofer told BusinessWeek.

Reithofer doesn’t claim to have foreseen how brutal the downturn would turn out to be. But the early warning from the U.S. contributed to a decision to begin cutting costs early in 2008. By eliminating jobs held by temporary workers and other measures, BMW cut $630 million in labor costs. The company reduced costs of materials and took steps to preserve cash.

BMW also cut production, so that the Munich-based carmaker ended 2008 with only 4,000 more cars on hand than it had sold, avoiding the unsold inventory that has burdened competitors. “We have inventory absolutely under control,” Reithofer maintains.

The ebullient Reithofer now believes that BMW is in good shape to weather the crisis. It was able to book restructuring costs before the crisis hit full force, rather than absorbing them now in the midst of a catastrophic market. “We did the right things in 2008,” he says.

To be sure, Reithofer stops short of confirming predictions by some analysts that BMW will manage a profit in 2009—which would be no small feat in the current climate. “No CEO plans to make a loss,” he quips. But he adds that the macroeconomic situation is too unstable to make serious forecasts. (In the quarter ended September 30, BMW net profit fell 63% from a year earlier to $374 million.)

Reithofer does venture one prediction, though: that the U.S. economy will rebound faster than Europe’s. That would be good news for BMW, which sells more cars there than anywhere else. “Maybe I’m too optimistic but I believe the U.S. will emerge faster than Europe. In the U.S. people adapt more quickly,” he says.
Click to expand...

Geneva Auto Show: BMW?s Reithofer Optimistic - BusinessWeek
 

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