Ready for the next financial crash?

[DonPeffers]

August  2007 Northern Rock started to get into serious financial difficulty.  https://www.theguardian.com/business/2017/aug/02/day-credit-crunch-began-10-years-on-world-changed

French bank BNP Paribas announced it was freezing the assets of hedge funds that were heavily exposed to the US sub-prime mortgage market. The writing was on the wall for Northern Rock from the moment the markets turned sour on 9 August 2007. For three days in the middle of September 2007, queues formed outside branches of the former building society – the first run on a UK high street bank since the 1860s. The Labour Government nationalised Northern Rock.

In Feb 2008 financier Jon Moulton explained in a 60 minute C4 TV program that the public would be hearing a lot more about CDOs (collateralized debt obligations) and how stretched the Banks were   http://www.channel4.com/news/articles/dispatches/how+the+banks+bet+your+money/1563152.html

Lehmann Brothers collapsed Sep 2008 setting off the Worldwide crash.

Today   07 Dec 2018  https://www.bbc.co.uk/news/business-46472578   Big Short investor bets against UK banks.

An investor who predicted the 2008 financial crisis has revealed he is betting against the UK banking system. Steve Eisman, known for appearing in The Big Short, said he had bets against three UK banks, though he declined to name them. (Steven Eisman is an American businessman and investor known for having shorted collateralized debt obligations, thereby profiting from the collapse of the US housing bubble in 2007-2008. Wikipedia.)

During the 2008 financial crisis, Mr Eisman worked for a hedge fund called FrontPoint Partners, and his bets against financial markets reportedly led the company's assets to double to $1.5bn. He now works for Neuberger Berman, with investment strategies that include positions in the UK and the US.----------------------------------------

With a financial crash happening usually about every 10 years there is one due and what better time than after 29 March 2019 Brexit deadline and with a bitterly divided country ready to blame each other rather than the financial system which allows 'shorting' in the first place?

Start getting your supplies of tinned baked beans in now---we know Mrs May has.

 

 

[Steve (sdh2903)]

What a cheery post to start the weekend. 

 

[Thrustyjust]

The last thing my wife would ever want to feed me is tins of beans.................... I suspect it will keep the boiler running with its ' output' though 

[Steve (sdh2903)]

Well in times of austerity tj, any free fuel is welcome eh!

[CarbonWest - Chris Broster - Bristol & Bath AO]

Hmmmmmmm winter project turns into Mad Max Westy - instead of Carbon bits, start adding spiky bits and Boudecia Wheel Hubs?

[Thrustyjust]

38 minutes ago, Steve (sdh2903) said:

Well in times of austerity tj, any free fuel is welcome eh!

There's fuel and there's potential nuclear volatility is a different and nigh on planet threatening potential league apart 

[Alan Cutler (Adge) - Dorset AO]

Beans are one of the few veg I can manage (you don't want to know!), not without consequences though. Might have to change the boiler from oil to gas .

On a serious note, never understood (apart from it's a means of making obscene amount of money, if correct!) what it means when they say "betting against something" in financial market terms. Sure they don't just walk in a bookies and place bet, or do they?

It's a whole different world from the one us mere mortals inhabit. I'll stop there before I get censored for my "comments"!

[Thrustyjust]

7 minutes ago, AdgeC said:

Beans are one of the few veg I can manage (you don't want to know!), not without consequences though. Might have to change the boiler from oil to gas .

 

Its almost brussel season @AdgeC. That can cause the earth to stall in its rotational mass 

[jonjh1964]

Adge,

I'm short

Jon

(in financial terms if you're 'long' you own the stock and if you're 'short' you don't but you've already committed to selling it to someone else for an agreed price in the future = simples)

[Alan Cutler (Adge) - Dorset AO]

45 minutes ago, Thrustyjust said:

Its almost brussel season @AdgeC. That can cause the earth to stall in its rotational mass 

Cut out the middle man like I do, and put them straight in the bin (recycling of course!). Double win, saves trees from being needed for Loo rolls as well .

47 minutes ago, jonjh1964 said:

(in financial terms if you're 'long' you own the stock and if you're 'short' you don't but you've already committed to selling it to someone else for an agreed price in the future = simples)

So these "business?" men, have committed to selling certain stock for a price, and hope their scaremongering will drive down the price, ready to pounce and buy, they hope at its lowest (coniving barstewards!). Or have I got that wrong.

Hope they lose as well as win, somehow think I know the answer though .

[McFrancis]

A short seller has to borrow some stock (shares) say from a pension company. The pension compay wants to keep the shares long term. When the short seller borrows the shares they will pay a bit to the pension company, and promise a date when the pension company will get them back. At this point the pension company is happy as they have a bit of extra cash for doing nowt. 

The short seller can now sell the shares to someone else.  Now comes the scary bit, they have to hope that the price will drop before they have to buy them back from another source. It can fail sometimes in spectacular style.

Porsche famously turned over the hedge funds by owning all the devalued VW stock. 

https://www.telegraph.co.uk/finance/newsbysector/transport/3281537/Porsche-and-VW-share-row-how-Germany-got-revenge-on-the-hedge-fund-locusts.html

[jeff oakley]

It is strange that a few people can make this happen. In the UK the banks will never be allowed to fail and people with up to £85k in any one banking group have their money protected by the government so the chances of a Northern Rock are much less than before, IMHO.

What is happening is that these people who short hope to create a financial opportunity for them and do not care about the rest of the population.. It is a bit like having a grey hound that is very fast but you keep entering it in races after feeding ot so it cannot run, then you train it and get low odds, due to past performance and you clean up massively with bets everywhere as no one thinks you have a chance. Shorters do the same, create a picture that isn't true and sit back and watch.

With normal shares they never reflect a true value. Look at Ted Baker or Phillip Green, both got massive negative press, both see shares slide in company, sales drop a bit then everyone forgets and back we go to buying from the people we loath.

For the individual it is great for everyone else it is not, but that is the world we live in. Is there a crash coming, yes as there is a perfect storm gathering. Brexit, too many who have over extended themselves on cheap credit with PCP deals on cars etc. The signs are there, big business failures, have increased as companies in the EU ratchet up the pressure to take advantage of our pitiful position in the negotiations over Brexit at home and abroad. The trade wars Trump is starting but whatever happens we will survive as we always do.

Like in the States there are "Preppers" who are stockpiling food and drugs just incase, there is a guy at work who was telling us all what he had done. When I pointed out we all know where he lives, where his stockpile is and if we are starving we will steal it from him, wasn't so smug.

My advice is carry on and try not to worry at least in the UK you will get treated for malnutrition and stress if the worst happens.

[DonPeffers]

Surely training has already started with Universal credit and no money for 6 weeks (I think it's recently been adjusted to 5 weeks).

08 Dec 2018  https://www.bbc.co.uk/news/uk-england-london-46484217   Grenfell Tower MP calls for Universal Credit launch delay. 

MP Ms. Emma Dent Coad whose seat is home to Grenfell Tower has urged the government to delay next week's launch of Universal Credit in the area, saying it could leave survivors without income at Christmas.

The USA Preppers have guns, unlike most UK ones.

Ex-Goldman Sachs man Bank of England Governor Mark Carney and his colleagues have already provided an assurance to private commercial Bank Goldman (among others) of emergency liquidity via B of E in the event of a crisis  https://www.independent.co.uk/news/business/comment/mark-carney-sends-goldman-sachs-an-early-invitation-to-the-next-bailout-party-10463118.html 20 Aug 2015.

Will there be enough money left to honour the £85k FSCS protection pledge?   Get those printing presses ready.

ALTERNATIVELY----- ECJ says on 10 Dec 2018 UK can cancel Brexit and we just go on as if we had experienced the 'Bobby Ewing dead' episode of soap Dallas.

[corsechris]

From my simplistic viewpoint, it baffles me that any of the financial shenanigans that appear to drive our economy are legal.

But of course, the people making the money own everything, including “the establishment” anyway, so they can carry on regardless just squeezing all they can out of us drones.

Shorting - sell something you don’t own, talk it down until it crashes then buy it back once the price had dropped.

[Blatman]

There is a recession coming because as mentioned the cycle is about every 10 years, except austerity may play a part so it may not be as bad as predicted as pricing, interest rates, wages etc have been depressed for quite a long time

What will happen is that Brexit will get the blame no matter what deal or no deal we end up leaving with and I'm for a no deal WTO exit. We are net importers of stuff. We are the 5th biggest economy in the world and we have money to spend. WTO says we can buy from anywhere we choose, the EU says we can't. If we can buy "Product X" from anywhere maybe we can buy it cheaper than we could by following EU rules. This could help lessen the effects of any recession as we may be able to keep the price of goods down.

Democracy in action...