Clouds on the horizon - Non Brexit thread :)

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Happy in Cyprus
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Clouds on the horizon - Non Brexit thread :)

Post by Happy in Cyprus » Wed Oct 10, 2018 5:44 pm

I've read several articles recently all saying pretty much the same sort of thing. And I suppose it is 10 years since the previous worldwide recession. Sobering reading. Looks like the UK might have to resort to QE...whatever next :shock:


IMF: 'Dangerous undercurrents' threaten global economy
Kamal Ahmed Economics editor. 9 hours ago

One of the most comprehensive studies of the state of banking and markets since the financial crisis warns that "dangerous undercurrents" are a rising threat to the world economy.

The International Monetary Fund's Financial Stability Report says that although banks are far safer than they were in 2008 there are new risks.

Trade tensions are growing, the IMF says, and inequality has risen.

Further moves towards a trade war could "significantly harm global growth".

Other threats to trade, such as a disorderly Brexit, could also "adversely affect market sentiment", the IMF argues.

The US-based organisation says that a "no-deal" departure from the European Union could lead to fragmentation in European money markets, meaning that finance cannot flow around the system so efficiently.

The body urges the Bank of England to be ready to provide more quantitative easing - money printing - if it is required.

In a separate report, the IMF said the UK had historically weak public finances with high levels of debt and low levels of assets. Britain sold off many of its assets in the privatisations of the 1980s and 1990s and also did not create a sovereign wealth fund from its oil revenues, which Norway did.

Of leading industrialised countries, only Portugal's "net worth" was in a poorer position, the IMF said.

That could mean that Britain will have to raise more taxes in the future because government-owned asset growth will not provide as much support to the economy.

The Financial Stability Report is the second time in 24 hours the IMF has published sober warnings about the state of global finance.

On Monday, it downgraded world growth forecasts for next year, blaming new trade barriers.

Tuesday's report says governments should resist attempts to roll back banking regulations put in place in 2008 to stop a similar financial crisis happening again.

President Donald Trump has already pushed through laws repealing banking rules in America for smaller institutions, saying they were holding back bank lending to businesses.

The IMF also warns market investors, who have seen the largest upward bull run in stocks in history.

The report says they are in danger of becoming complacent about the chances of an economic shock to the system.

One could be the ending of "easy money".

Central banks are starting to withdraw the stimulus that was put in place at the time of the financial crisis.

Interest rates are rising and quantitative easing - money printing - being dialled back.

The IMF fears this could lead to sharp falls in markets.

The risks of a government funding crisis in Italy, where the country's banks are under pressure, is also highlighted.

Jimgym
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Re: Clouds on the horizon - Non Brexit thread :)

Post by Jimgym » Wed Oct 10, 2018 5:53 pm

Add to that the new Italian Govt. and their monetary policies which are looking reckless and putting them on a collision course with the EU and there are certainly some storm clouds on the horizon.

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kingfisher
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Re: Clouds on the horizon - Non Brexit thread :)

Post by kingfisher » Wed Oct 10, 2018 6:46 pm

Would that be the same IMF which completely failed to foresee the 2008 financial crash?

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Re: Clouds on the horizon - Non Brexit thread :)

Post by Jimgward » Wed Oct 10, 2018 9:42 pm

Mrs Thatcher’s legacy - assets sold, oil and gas taken too quickly, no funds built and what seemed to be prosperity, was based on mortgaging the country - but some think she saved the nation!

We will never agree - but it shoujld be easy to see why both sides believe what they do....

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Re: Clouds on the horizon - Non Brexit thread :)

Post by Jimgward » Wed Oct 10, 2018 9:45 pm

Mrs Thatcher’s legacy - assets sold, oil and gas taken too quickly, no funds built and what seemed to be prosperity, was based on mortgaging the country - but some think she saved the nation!

We will never agree - but it shoujld be easy to see why both sides believe what they do....

Termites Dream
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Re: Clouds on the horizon - Non Brexit thread :)

Post by Termites Dream » Thu Oct 11, 2018 3:15 pm

HIC to address your initial post there are warnings a plenty and have been for sometime. The Bank of International Settlement have also issued warnings. IMF last year asked that some banks should have additional scrutiny as they were a systemic risk to the system. Barclays in UK, but banks in Germany, France, US, Italy and about three in Japan from recollection. Nothing has changed at the banks.

Problem is the central banks have printed too much money, with low interest rates for to long. The US has debts I doubt it will ever pay and Japan is off the scale. All trying to defy gravity.

In the UK the low interest rates have forced house prices up and mortgage debt to levels that could not be sustained in our younger days when 7% was considered good. A rise in interest rates will correct this.

We have a market tumble today, time will tell if it continues but we are due in my view, but if bond rates continue to climb then no point in staying in a risky stockmarket. Jim Rogers who used to partner Soros reckons it will be the worst recession of his lifetime.....We will see.

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Re: Clouds on the horizon - Non Brexit thread :)

Post by WHL » Thu Oct 11, 2018 3:36 pm

Mrs Thatcher’s legacy.. I seem to remember she was booted out by her own party?

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Re: Clouds on the horizon - Non Brexit thread :)

Post by Devil » Thu Oct 11, 2018 3:41 pm

I would not be so pessimistic. The price of gold today is about €33,000 per kilo which is roughly halfway between the peak and the trough over the last 10 years. If things were as bad as you make out, there would be a rush on gold as a safe haven.

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Re: Clouds on the horizon - Non Brexit thread :)

Post by Termites Dream » Thu Oct 11, 2018 4:05 pm

The rush to Physical Gold.. safe haven has not begun yet. And what Gold??... the Comex has very little compared to say 5 years ago. Contracts are usually settled in London in cash, because US struggles. Gold in Physical form is now traded in China who are buyers so like a low price decided by Comex. I think the Comex actually traded twice the world supply in the first six months of this year, in what is called paper Gold, because you cannot trade those levels in real Gold... it does not exist. When buyers want real metal instead of a Dollar settlement for a futures contract the price will rise in my view.

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