Europe heading into recession

[stongle]

If anyone has any interest in how Banks can game the system, iPlayer has a stoyville doc called Inside Lehman Brothers. It starts of a human interest story about several whistleblowers - but aroubd 40 mins gives an explanation of Repo105, and how they were able to shuttle balance sheet around and reduce their exposures.

This was mega business, but much of the underlying theory and practice still exists to this day. If you see how easy it is to beat the system - and have complicit regulators and central banks = big issues.

[loafer123]

The most egregious example was Barclays transferring assets, and staff, to Protium in the Cayman Islands in 2009.

How they got away with that I will never know.

[Digga]

stongle said:

If anyone has any interest in how Banks can game the system, iPlayer has a stoyville doc called Inside Lehman Brothers. It starts of a human interest story about several whistleblowers - but aroubd 40 mins gives an explanation of Repo105, and how they were able to shuttle balance sheet around and reduce their exposures.

This was mega business, but much of the underlying theory and practice still exists to this day. If you see how easy it is to beat the system - and have complicit regulators and central banks = big issues.

Just caught up with that on iPlayer. Thanks, very interesting and somewhat disgusting in the way the bank dealt with whistleblowers (there should be mandatory protection for genuine informants) and also minor employees who were spotting fraudulent mortgage activity.

[mike74]

Murph7355 said:

2 should happen.

But 4 is more likely

And what reward do the prudent, responsible, non-feckless, non-debt junkies get?

[smifffymoto]

How are us prudent savers being rewarded now,high interest rates?

[Murph7355]

mike74 said:

Murph7355 said:

2 should happen.

But 4 is more likely

And what reward do the prudent, responsible, non-feckless, non-debt junkies get?

Do you think the continued can kicking is benefitting you?

Get it spent and enjoy yourself rather than being miserable about not being rewarded

[housen]

smifffymoto said:

How are us prudent savers being rewarded now,high interest rates?

mmmm

some people like my very old colleague who has been trading interest rates since the 1980s says the market will correct itself and that rates will go back up to a level that will crash asset prices such as houses as there is no cheap lending.....he believed this so much he sold his house and had a plan to buy a similar house back cheaper .....since he sold the housing market where he lives has hit new higher highs .....he believes CASH will be king and you will have the pick of cheap assets soon ......BUT i believe in this rigged system the powers that are in place will never let a crash of assets happen with bringing rates back up....who would suffer the most ? the rich ? ...i could be wrong ....but like i said, people like you who have cash will be rewarded when and if this mega crash happens.

[smifffymoto]

When the crash happens the winners will people with no debt,not cash.

[SpeckledJim]

housen said:

smifffymoto said:

How are us prudent savers being rewarded now,high interest rates?

mmmm

some people like my very old colleague who has been trading interest rates since the 1980s says the market will correct itself and that rates will go back up to a level that will crash asset prices such as houses as there is no cheap lending.....he believed this so much he sold his house and had a plan to buy a similar house back cheaper .....since he sold the housing market where he lives has hit new higher highs .....he believes CASH will be king and you will have the pick of cheap assets soon ......BUT i believe in this rigged system the powers that are in place will never let a crash of assets happen with bringing rates back up....who would suffer the most ? the rich ? ...i could be wrong ....but like i said, people like you who have cash will be rewarded when and if this mega crash happens.

The market can stay irrational much longer than I can stay solvent. No point being right if I'm not right at the right time.

[anonymous-user]

SpeckledJim said:

The market can stay irrational much longer than I can stay solvent. No point being right if I'm not right at the right time.

That is the essence of why we have crashes. The person who calls out the issue when everyone else cracks on anyway, tends to lose their job long before the consequences of them being right hits.

[Digga]

SpeckledJim said:

housen said:

smifffymoto said:

How are us prudent savers being rewarded now,high interest rates?

mmmm

some people like my very old colleague who has been trading interest rates since the 1980s says the market will correct itself and that rates will go back up to a level that will crash asset prices such as houses as there is no cheap lending.....he believed this so much he sold his house and had a plan to buy a similar house back cheaper .....since he sold the housing market where he lives has hit new higher highs .....he believes CASH will be king and you will have the pick of cheap assets soon ......BUT i believe in this rigged system the powers that are in place will never let a crash of assets happen with bringing rates back up....who would suffer the most ? the rich ? ...i could be wrong ....but like i said, people like you who have cash will be rewarded when and if this mega crash happens.

The market can stay irrational much longer than I can stay solvent. No point being right if I'm not right at the right time.

Apropos of what Housen said, I knew a guy a few years back who was renting a house in our village because he said house prices were over-inflated and he'd sold one and was not going to buy another. (He was not over zealous or fanatical on that point, it's just what he was actually doing.)

This would be sometime up to 2012, which I know only because he got a brand new 997.2 GT3 RS at the time. His daily was a new C4S. he was most definitely not short of money (aside from the cars he had a very significant business interest) so was not renting out of necessity.

He was not even an acquaintance really, an acquaintance of a friend, but I do often wonder what he did in the end and what his current take would be.

[Shnozz]

smifffymoto said:

When the crash happens the winners will people with no debt,not cash.

I’m interested by what you mean by this? If a crash occurs then no debt is of course an advantage, but without cash, and the irony of lending usually being restrictive after a crash, then how can a winner prosper from such prudence if a crash occurs? They might be stable due to no debt, but to capitalise without capital?

[jshell]

Shnozz said:

smifffymoto said:

When the crash happens the winners will people with no debt,not cash.

I’m interested by what you mean by this? If a crash occurs then no debt is of course an advantage, but without cash, and the irony of lending usually being restrictive after a crash, then how can a winner prosper from such prudence if a crash occurs? They might be stable due to no debt, but to capitalise without capital?

Because in real terms it's harder to service debt in a rising interest scenario where much more depends on maintaining that debt?

[Shnozz]

jshell said:

Shnozz said:

smifffymoto said:

When the crash happens the winners will people with no debt,not cash.

I’m interested by what you mean by this? If a crash occurs then no debt is of course an advantage, but without cash, and the irony of lending usually being restrictive after a crash, then how can a winner prosper from such prudence if a crash occurs? They might be stable due to no debt, but to capitalise without capital?

Because in real terms it's harder to service debt in a rising interest scenario where much more depends on maintaining that debt?

But that assumes rates rise during a crash? I can't see that there is any wiggle room for them to rise now, particularly if there is a crash.

I appreciate jobs get lost and business goes South so having no debt takes away the risk of insolvency, but in terms of being a winner I would have thought that you have to have some mechanism to purchase in that crash (whether by cash or borrowing ability) in order to "win"? Otherwise having no debt just means you are less likely to go under during a crash than win?

[f1ten]

Will be interesting to see if we have a short January bull run on the stock market this time. My guess is eh no!

[smifffymoto]

Shnozz said:

jshell said:

Shnozz said:

smifffymoto said:

When the crash happens the winners will people with no debt,not cash.

I’m interested by what you mean by this? If a crash occurs then no debt is of course an advantage, but without cash, and the irony of lending usually being restrictive after a crash, then how can a winner prosper from such prudence if a crash occurs? They might be stable due to no debt, but to capitalise without capital?

Because in real terms it's harder to service debt in a rising interest scenario where much more depends on maintaining that debt?

But that assumes rates rise during a crash? I can't see that there is any wiggle room for them to rise now, particularly if there is a crash.

I appreciate jobs get lost and business goes South so having no debt takes away the risk of insolvency, but in terms of being a winner I would have thought that you have to have some mechanism to purchase in that crash (whether by cash or borrowing ability) in order to "win"? Otherwise having no debt just means you are less likely to go under during a crash than win?

In a crash you are a winner if you keep your family home,pay the car finance etc.You don’t win any thing,other than being able to pay the bills and sleep at night.

[jshell]

smifffymoto said:

Shnozz said:

jshell said:

Shnozz said:

smifffymoto said:

When the crash happens the winners will people with no debt,not cash.

I’m interested by what you mean by this? If a crash occurs then no debt is of course an advantage, but without cash, and the irony of lending usually being restrictive after a crash, then how can a winner prosper from such prudence if a crash occurs? They might be stable due to no debt, but to capitalise without capital?

Because in real terms it's harder to service debt in a rising interest scenario where much more depends on maintaining that debt?

But that assumes rates rise during a crash? I can't see that there is any wiggle room for them to rise now, particularly if there is a crash.

I appreciate jobs get lost and business goes South so having no debt takes away the risk of insolvency, but in terms of being a winner I would have thought that you have to have some mechanism to purchase in that crash (whether by cash or borrowing ability) in order to "win"? Otherwise having no debt just means you are less likely to go under during a crash than win?

In a crash you are a winner if you keep your family home,pay the car finance etc.You don’t win any thing,other than being able to pay the bills and sleep at night.

[Shnozz]

Yes, fair point. I didn’t know if there was something more I was missing there! I’ve been anticipating a cold wind for a while now and trying to be ahead of the game this time around as I missed that opportunity last time.

[Digga]

If your debt is structured and at fixed rates - as per most term finance agreements and many mortgages - and they are manageable in magnitude andyour income stream is (relatively) recession proof, then a recession in and of itself is not going to cause trouble.

Those with unstructured debt are exceptionally vulnerable to both rate rises and also the ability of the lender to call in the debt. Mortgages tend to be the safest from the debtor's POV because, for various reasons, they are tricky for the banks to foreclose on.

[stongle]

f1ten said:

Will be interesting to see if we have a short January bull run on the stock market this time. My guess is eh no!

Depends how much pressure Trump can exert on the Fed....