When will the next worldwide financial crisis happen? Could 2007 happen again?

Cina

My friend just bought a PS4 using his Christmas dole bonus.

We are doomed to make the same mistakes, of course it'll happen again.

Dohnjoe

ygolometsipe wrote: »

I think it's not an "if" but a when. Nothing got fixed since 2008 a few minor slaps on banker bonuses but that's it.

A lot has been fixed. There have also been pretty sweeping changes (still on-going) to banking across the world as a result of the 2007 FC. Regulations have tightened up significantly.. a lot of stuff that banks could do in 2006/2007 they simply can't do now

It wasn't a recession or an isolated or domestic crash - it was a world event on a a par with 1929, real edge of the abyss stuff

Can a systemic crash occur on that scale again? indeed, but despite the size of the 2007 crash and considering how unprepared and over-leveraged the world was - it still took the US only two and a half years to pull out of it

topper75

SEPT 23 1989 wrote: »

The only reset after the printing machine last throw of the dice has failed is war

Mass youth unemployment across Europe

Perfect

Yes but by the time the youth offer 8000000 euromarks for a gun, the price will have doubled. Thus preventing war.

Wanderer78

irlcncrk wrote: »

Interesting idea but I wouldn't/don't have any confidence in our politicians/civil servants ability to work/manage share portfolios.

I could be completely wrong, but from my limited view of things they're not very proactive with "our" ownership of the banks.

They put NAMA in place to manage the whole property mess, maybe they just should have scuttled Anglo and refinanced the rest and left banks to manage their own property debts.

Always like listening to DMcW view of things. Sadly the lads/lassies on Kildare St didn't/don't, and I can't see that changing anytime soon.

yea i can understand where you're coming in regards confidence but we have to try something, we cant keep taxing the public for our every need and leave large corporations walk away with massive profits. i understand they create a large amount of our employment amongst other things, but just like michael hudson explains very well how the fire sector(finance, insurance and real estate), is parasitic on society, i believe this is what's happening in our corporate sector. dmcw posted his radical idea in the financial times some time ago and got a very positive response from them, saying this is a very good solution, so maybe this is what we need to do!

our politicians are following fundamentally flawed economic theories and principles, largely from the chicago school of thought and the washington consensus, whereby theories and principles such as neoliberalism and neoclassical theory are king and are failing us badly. according to yanis varoufakis, many euro group leaders realise that their approach to dealing with the problems that have arisen since the crash, will simply not work. this has the potential to collapse the eu and cause widespread recession possibly even a depression.

i personally believe we re in desperate need of a public banking system in ireland, at least this would give a public option and some sort of protection from the greater economy. i believe our nationalised banks have never truly been working for the public because of the above mentioned issues, i.e. there has always been an entity of our banks preparing for re-privatisation, hence their outcome, amongst other things of course.

Train Dragon

Cina wrote: »

My friend just bought a PS4 using his Christmas dole bonus.

What the hell? How much is a Christmas Dole bonus these days?

josip

No matter how many economic "cycles" we go through the distribution of wealth becomes more and more unequal.
Only significant war disrupts this pattern.
Sorry.

Didas

Train Dragon wrote: »

What the hell? How much is a Christmas Dole bonus these days?

85% of their weekly dole payment. So typically 160 for over 25's and 85 for under 25's. Must have been a PS2 he bought :rolleyes:

Train Dragon

tonygun wrote: »

85% of their weekly dole payment. So typically 160 for over 25's and 85 for under 25's. Must have been a PS2 he bought :rolleyes:

I was thinking that. Unless he combined it with his normal week of Dole and blew the lot.

Wanderer78

josip wrote: »

No matter how many economic "cycles" we go through the distribution of wealth becomes more and more unequal.
Only significant war disrupts this pattern.
Sorry.

you do have a fair point but we have to try prevent this at all costs as with modern day weapons, you d have to wonder if we d survive. i feel theres an 'intellectual revolution' occuring, but its taking time for the ideas from these movements to come to the forefront.

daheff

Phoebas wrote: »

If you look at this graph you can see that its currently higher than its ever been, and after every crash it has recovered and become stronger than its ever been. And that's not an indication of an impending crash - look at the pretty much uninterrupted growth in the 80s and 90s.
If you want to see a crash on the scale of the recent one, you need to go back to maybe the 70s oil crisis and then back again to the great depression.

I wouldn't be looking at the stock market for anything but very general trends.

Take a look at the Nikkei (Japan) -not all markets will recover and become stronger after a bust

It had a high of almost 40,000 in 1989...its hovering around the 19,000 mark now

nelly17

McWilliams had a good article on the indo today about how Italy is likely to go tits up next year, and again the whole issue of contagion will arise

Train Dragon

nelly17 wrote: »

McWilliams had a good article on the indo today about how Italy is likely to go tits up next year, and again the whole issue of contagion will arise

I knew I hadn't dreamt the whole Italian banks thing. Thanks for the confirmation.

Wanderer78

Train Dragon wrote: »

I knew I hadn't dreamt the whole Italian banks thing. Thanks for the confirmation.

ellen brown has been writing about the problems in the italian banks for some time now. shes very quirky, highly criticised and can be conspiratorial from time to time, much to the annoyance to her colleagues at the public banking institute, but id still recommend her work.

Train Dragon

Question: if things do go slightly tits up again, will we see sanity coming back to the Irish property market?

Dohnjoe

Train Dragon wrote: »

I knew I hadn't dreamt the whole Italian banks thing. Thanks for the confirmation.

I work in the industry, the Italian bank situation has been known about for quite awhile now and we are watching it closely. It's definitely an issue considering recent events, but not what we would call significant in terms of global instability

People have a tendency to jump into threads like this predicting all sorts of scenarios, usually in line with their world views and/or popular misconceptions

The Big Short is a good film, I enjoyed it, but it's still Hollywood. Like I mentioned in a previous post, a large systemic crash could potentially happen again, but the industry (and world) is far more prepared than we were in 2007.

diomed

When things seem normal we are in a boom.
Things seem normal now.

The Dow Jones Index (DJIA) was 6,547.05 on 9th March 2009.
Today, 7th December 2016, the DJIA is 19,251.78, a rise of 194%
I expect the market to drop by about 45% to ~10,600.

The 1974 crash was big (and largely forgotten). The FTSE went to 146. Now it is 6,869.

ScumLord

The bottom line is what goes up, must come down. Capitalism depends on infinite growth which is obviously hitting a wall these days as we scrape the bottom of the earth's natural resources barrel.

The other thing is that there are people who make a lot of money from recessions, Everything becomes very cheap for people with money and you can be guaranteed they are sitting waiting for the next one to hit, if not actively trying to make it happen.

Wanderer78

Dohnjoe wrote: »

but the industry (and world) is far more prepared than we were in 2007.

id only have faith in that statement if something like the glass steagall act was reenacted

Wanderer78

Train Dragon wrote: »

Question: if things do go slightly tits up again, will we see sanity coming back to the Irish property market?

this might give you an indication in what some people are thinking about our housing crisis, a major cluster fcuk if you ask me:

https://soundcloud.com/irishtimes-politics/irelands-permanent-housing-crisis

ygolometsipe

Dohnjoe wrote: »

A lot has been fixed.

I understand your point about regulation but think about this.

In the movie, they explain Synthetic CDO's

SCDO's are just another type of derivative.

"The derivatives market is, in a word, gigantic, often estimated at more that $1.2 quadrillion. Some market analysts estimate the derivatives market at more than 10 times the size of the total world gross domestic product, or GDP.27 May 2015"

http://www.investopedia.com/ask/answers/052715/how-big-derivatives-market.asp

You can ignore the "estimate" because its bull****, no one is able to calculate the total derivatives market its impossible.

This is only a small part of the pie, because when you add-in shadow banking
aka the ability to take out a loan without any loan backed security.

"The 26.3 trillion yuan ($3.9 trillion) worth of WMPs outstanding have emerged as key cog in China's so-called shadow banking system as investors often expect to be reimbursed for on any losses on the WMPs banks manage — an expectation that could weigh on the lenders if the products begin to sour."

https://www.bloomberg.com/news/articles/2016-09-07/four-fresh-worries-about-china-s-shadow-banking-system


Now in layman's terms a derivative is simply a contract that gets (derives) its value from something else. That something else is called an underlying.

So if you think about the world derivatives market, its possible that its all a stack of ****.

I could have created a financial product in 2007 and sold derivatives based on 10 year prediction. Someone else could have sold insurance on those products and someone else could have sold another product that doubles the loss if another unrelated product, say oil falls in value.
(Note: not all derivatives are bad, most are in fact vital)

Couple this with algorithmic trading and Trumps promise to repeal the
Dodd-Frank act

I will point out, I am not an expert so take my views with a large spoon of salt... oddly in my view the strongest economy in the next 5 years will be the EU.

Train Dragon

Wanderer78 wrote: »

this might give you an indication in what some people are thinking about our housing crisis, a major cluster fcuk if you ask me:

https://soundcloud.com/irishtimes-politics/irelands-permanent-housing-crisis

I managed to last 5 mins with that. The audio equivalent of watching paint dry.

wakka12

trying to predict an economy long term is like trying to predict weather long term, just too many variables that constantly change to gauge any accurate prediction

4068ac1elhodqr

The next reset will be likely caused by a force majeure event, either from an external/unknown source or entirely synthetic.

Any single country's economy tanking, would have only limited lasting impact.

With a population of 7,469,858,943 (at this moment) and decent private housing only available at x8 the average salary in most countries, somethings gotta give.

Many of the trashier tabloids appear very keen for Estonia to kick off W3 any day now judging by their daily repetitive articles on this theme.

Train Dragon

Henley Wide Valve wrote: »

Many of the trashier tabloids appear very keen for Estonia to kick off W3 any day now judging by their daily repetitive articles on this theme.

Dont wars usually create money rather than destroy?

4068ac1elhodqr

Train Dragon wrote: »

Dont wars usually create money rather than destroy?

Post-event they do, for some sectors of the industrial complex (historically). But the capability of today's opposing (groups of) superpowers are a different ball game altogether from WW2, as shown by hyped up sectors of the media.

Supervolcanoes, asteroids and a H5N8 type flu would also be much more severe than some unstable G10/20 middleweight economy such as Ita/Spa crashing.

Super-Rush

tonygun wrote: »

85% of their weekly dole payment. So typically 160 for over 25's and 85 for under 25's. Must have been a PS2 he bought :rolleyes:

You'll get a PS4 in Argos for €290 these days.

Train Dragon

Henley Wide Valve wrote: »

Post-event they do, for some sectors of the industrial complex (historically). But the capability of today's opposing (groups of) superpowers are a different ball game altogether from WW2, as shown by hyped up sectors of the media.

Supervolcanoes, asteroids and a H5N8 type flu would also be much more severe than some unstable G10/20 middleweight economy such as Ita/Spa crashing.

That's strange. I read and heard more than once that America needs to go to war every 20 years to keep it's economy from collapsing.

Dohnjoe

Train Dragon wrote: »

That's strange. I read and heard more than once that America needs to go to war every 20 years to keep it's economy from collapsing.

I've also read and heard more than once that man didn't land on the moon

There's a lot of quackery and nonsense on the internet, some of it dressed up very well. Asking about anything to do with world finance (or anything) on After Hours will get you After Hours style answers

I would suggest the financial or economics forum, the answers will likely be less dramatic and doomsday-esque, but more likely closer to the truth

ScumLord

Train Dragon wrote: »

Dont wars usually create money rather than destroy?

Only if your America. Even in WW2 they were raking it in before they joined the war by selling munitions.

They would lose money by being in direct conflict, but they usually stay in the background feeding weapons to one or both sides and only step in if one side looks like it might win.

Grayson

Dohnjoe wrote: »

I've also read and heard more than once that man didn't land on the moon

There's a lot of quackery and nonsense on the internet, some of it dressed up very well. Asking about anything to do with world finance (or anything) on After Hours will get you After Hours style answers

I would suggest the financial or economics forum, the answers will likely be less dramatic and doomsday-esque, but more likely closer to the truth

The thing is though that the US does spend a ridiculous amount of money on arms. Compared to every other country in the world it's a ridiculous amount. I'm not saying the have to go to war but it's not an unreasonable conclusion. Not as bat sh1t crazy as not landing on the moon at any rate.