spatial
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Post by spatial on Oct 4, 2022 12:36:53 GMT 10
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frostbite
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Post by frostbite on Oct 4, 2022 14:13:57 GMT 10
So what are the local implications if Credit Suisse collapses? Will your superannuation nose dive? Will local banks collapse?
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Post by Stealth on Oct 4, 2022 15:47:32 GMT 10
So I had to look this up because I know that the whole Lehman Bros. scenario was bad, but I couldn't remember exactly how/why. I'm still not sure I exactly understand, but a lot of it has to do with sub-prime mortgages and the value therein spudding in because of the GFC.
Long story short, and probably terribly explained, another Lehman Bros style crash in the current financial market would be disastrous. But it seems that Deutsche Bank are in similar difficulties. TWO massive global banking conglomerates going A over T sounds like a GFC double whammy.
What happens? Anything and everything that happened during the first GFC would likely be possible and then some. Jobs going out the doors from small and medium sized businesses going under, housing market going kaput, wage growth halting and/or going backwards, inflation spiking, stock market falling over a cliff... But who knows? Without a crystal ball or Michael Burry on speed dial I guess all we can do is make sure our own backyards are as secure as possible.
Any of those things could impact all of us directly or indirectly. Super is one place we'll feel it for sure, but consider the 'passive' things like inflationary markers hitting the roof. Problem is a lot of pundits can say what they think will happen but most of them don't have a single word on how to insulate from it unless you already own your own home and have the ability to manage your own retirement finances (ie. SMSF etc). Otherwise? Buckle up and grow a backyard garden is the most useful thing I've heard anyone put up for solutions.
Oh, and 'try not to spend so much money' as if food and shelter are things that people can elect to not spend money on 😅 🤣.
As a side note Burry did say on Twitter on 01 September that he thinks we're at the start of a market crash that he's predicted since 2021 and has likened the current market to the pre-dot com bust period, so I guess no need to have him on speed dial. I don't know if he's right, but he's had a pretty good track record so I guess we'll just have to wait and see.
Edit to add (after a few minutes of google-fu):
When Lehman Brothers collapsed in 2008, it had 639 billion dollars in assets. (2008 dollars)
In late 2022, Credit Suisse currently has 1.5 trillion dollars of assets under management. (2022 dollars)
$1.5 trillion 2022 dollars is $1.09 trillion 2008 dollars, and Lehman Bros. only had $639 billion. My math is garbage, but even I know that that's a sizable difference. We have to compare like for like, numbers wise. And CS is holding onto a lot more 2008 dollars than LB were when they went under. Interesting, that's for sure!
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spatial
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Post by spatial on Oct 4, 2022 15:59:00 GMT 10
So what are the local implications if Credit Suisse collapses? Will your superannuation nose dive? Will local banks collapse? It will be 2008 on steroids. Australia was not affect much by the 2008 collapse as China started simulating their economy with building endless rail and infrastructure, tens of millions of empty apartment blocks which benefited Australian coal, iron ore, and general imports etc. There was mass layoff, loss of employment, price of housing reduced by half, Pension funds (Super) lost a lot of value. Financial instructions stopped lending money, almost impossible to get bank loans, economic activity decimated. With very many Australians living on Credit cards, it will be a personal SHTF event for many Ozzies. Riots and looting, demonstrations, homeliness, crime going out of control - this has already started in a number of countries (Iran, UK Siri-Lanka, Germany preparing for winter rioting etc...), I am not too confident that the Aus Gov will be able to pacify the entitled generations. There are constant demands for more funds for housing, feeding, medical care, child care people are not currently mangling their budgets. This time it is way more than just a US housing bubble it is an everything bubble, debt is higher than any previous time in history. European financial systems will likely to be the first domino to fall, if China does not fall first. Governments go into economic protection, then trade wars, then hot wars. We are in the hot war stage, with more wars likely to break out. Any conflict in Asia/China will greatly impact Australia as we are dependent on everything from pharmaceuticals to building materials, fuels. There is already a shortage of many medications in Australia, prices going to go sky high..... |
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spatial
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Post by spatial on Oct 4, 2022 16:03:39 GMT 10
.......What happens? Anything and everything that happened during the first GFC would likely be possible and then some. Jobs going out the doors from small and medium sized businesses going under, housing market going kaput, wage growth halting and/or going backwards, inflation spiking, stock market falling over a cliff... But who knows? Without a crystal ball or Michael Burry on speed dial I guess all we can do is make sure our own backyards are as secure as possible...... Good summary, all the problems we are currently facing with supply and higher costs just accelerate. |
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malewithatail
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Post by malewithatail on Oct 4, 2022 17:06:36 GMT 10
Weve pulled as much super out as possible, and invested it in on farm assets, power systems, water supply's, machinery, tools etc. Whilst the article below is true, the Reserve Bank can just print more money to get out of debt, at the risk of inflation going wild, as it is. Catch 22 I suppose. asiatimes.com/2022/09/is-australias-reserve-bank-bankrupt/"debt is higher than any previous time in history." The first thing we will notice is that the Banks close Friday afternoon, and don't reopen Monday. Perhaps even a permanent Bank holiday. When that happens, the cash on hand, or what u can get from the teller machines, will be all u have to live on. Stockpile now. Throw in WW3, a few nukes, and its gunna be everyone for themselves. It’s Easier to Fool People Than to Convince Them That They Have Been Fooled. |
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Post by Joey on Oct 4, 2022 17:33:20 GMT 10
Add to this China is on the downward with their economy and housing bubble at bursting point
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frostbite
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Post by frostbite on Oct 4, 2022 17:53:57 GMT 10
Hmmm. I don't have a mortgage, and a large part of my super is a multiple of my salary, so that can't go down, but inflation might eat away at it. Retrenchment won't be so bad, a nice public service redundancy when I'm about 2 years off retirement anyway would be acceptable. I'm cashed up, so maybe the odd opportunity beckons when financially irresponsible people have to sell expensive toys at a fraction of purchase price to service their debt.
So a major crash might have both positives and negatives for me.
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dadbod
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Post by dadbod on Oct 5, 2022 15:16:53 GMT 10
very interesting to see which dominoes will fall. hard to compare to 2008 as times and geopolitics are different.
I would be worried that super will not be able to pay out what was promised. the ones about to retire just after the crash are the one hurting the most, as they dont have the time in the market to rebuild. its a shame but it is a part of the cycles of financial systems. It just sucks when its corruption and fraud involved.
I wonder if, in these times, we can QE our way out of trouble, and if the govt will be able to intervene when housing and finance both collapse. I think the govt should support the people, not the banks, and let them collapse and rebuild themselves. its absolutely criminal that institutions cause a crash, get the government (tax payer) help, and then charge the customers to fix their issues. to me it is treason and the bankers and politicians involved should hang.
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Tim Horton
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Post by Tim Horton on Oct 5, 2022 16:22:01 GMT 10
Trivia..... Possibly parallel, related to this issue ??
A number of years ago, Iceland, Greenland (?) one or the other had there banking system go bankrupt.. They took it on the chin, and worked there way out of it without the country going into bid debt, doing a bail out, or other action..
As I recall, there big banking systems were too heavily invested in some German banks bond issues (?) that went bust dragging them down also..
This may not be a good explanation of this bit of history, but they had the guts to ride it out, without causing themselves further damage...
And to me, most importantly, a number of banking, government, and regulatory people who should have know better than to get into this WENT TO JAIL over it...
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malewithatail
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Post by malewithatail on Oct 5, 2022 17:50:04 GMT 10
" I think the govt should support the people, not the banks, and let them collapse and rebuild themselves"
You know that's never gunna happen, Govts are too much in bed with the banks.
Who controls the energy can control whole continents.
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bug
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Post by bug on Oct 6, 2022 9:07:21 GMT 10
" I think the govt should support the people, not the banks, and let them collapse and rebuild themselves" You know that's never gunna happen, Govts are too much in bed with the banks. Who controls the energy can control whole continents. Disagree with this. The economic damage for the average person is far greater if an uncontrolled collapse is allowed. The reasoning for this is generally explained at the time, but is usually drowned out by a media far more interested in showing stories of people complaining about it. What is definitely done wrong though, is where the owners and those responsible for the collapse get to keep their billions afterwards. If a bailout occurs, then that bank/investment firm needs to then be owned by the government, available for purchase back at the same price of the bail out. If a law/regulation is broken that led to the collapse, then assets of those responsible need to be confiscated, the same way those of other criminals often are. If investors lose their home, so should the fund managers. |
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malewithatail
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Post by malewithatail on Oct 6, 2022 10:03:01 GMT 10
" I think the govt should support the people, not the banks, and let them collapse and rebuild themselves" You know that's never gunna happen, Govts are too much in bed with the banks. Who controls the energy can control whole continents. Disagree with this. The economic damage for the average person is far greater if an uncontrolled collapse is allowed. The reasoning for this is generally explained at the time, but is usually drowned out by a media far more interested in showing stories of people complaining about it. What is definitely done wrong though, is where the owners and those responsible for the collapse get to keep their billions afterwards. If a bailout occurs, then that bank/investment firm needs to then be owned by the government, available for purchase back at the same price of the bail out. If a law/regulation is broken that led to the collapse, then assets of those responsible need to be confiscated, the same way those of other criminals often are. If investors lose their home, so should the fund managers. Too right Vegemite. Go after the principles, just as what happens if someone defaults on a loan. They are pursued remorselessly by the insurance companies. As usual, its the little people that get shafted, the big wigs at the top end of town get to keep their wealth.
It will all even out WTSHTF, then they will be trying to eat their money and share certificates with no success, whilst us little people hold all the aces.
Three things cannot be long hidden: the sun, the moon, and the truth.
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Post by Stealth on Oct 6, 2022 10:24:06 GMT 10
It will all even out WTSHTF, then they will be trying to eat their money and share certificates with no success, whilst us little people hold all the aces.
The prepared will hold them. Definitely won't be fun to watch the unprepared though. I know there's a lot out there and probably a few in here who couldn't care less and I get that vibe sometimes too. But I worry about my younger family members who, for a variety of reasons mostly relating to the difficulty in finding available rental properties and the birth of an impending second child, had to take the only option that was available to them and purchase an expensive house. Their rental property was sold and they had a short time to find accommodation and it really was the best of some not great options. The house itself is great, but the price was unreasonable in my opinion. Then again the prices of most ALL houses is unreasonable at the moment. You do what you have to though. But with five rate hikes and more coming I worry for them. Their repayments would have gone up by about $600 a month and while their incomes are ok they aren't astounding. People like that don't have the luxury of time and disposable income to prep for a massive financial crash, especially because one is self employed. In a financial emergency I'm not sure how they'll fair. Of course family will help where we can but we also have our own bills to pay and families to feed. It's definitely a scary time for those who're only at the start of their financial burden with a new mortgage. |
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malewithatail
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Post by malewithatail on Oct 6, 2022 11:54:30 GMT 10
"But I worry about my younger family members who,"
I thought about ALL my family members, mum, step dad, sisters etc and invited them all up here. One sister and one of her kids was the result. My conscience is clear, I tried. You can lead a horse etc.....
I can understand mum and step dad as they are 90 +, but a move to a small town, with hospital doctors and ambulance 30 seconds away, would be OK. Its nearly 1,000 km north for them to move and I do understand it would be difficult. Like I said, I tried.
The economy is a slow motion train wreck. Nuk war is closer than at any time since the 1950's, but I think more are aware of things than were back then.
Never above you. Never below you. Always beside you.
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tactile
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Post by tactile on Oct 6, 2022 12:08:14 GMT 10
But with five rate hikes and more coming I worry for them. Their repayments would have gone up by about $600 a month and while their incomes are ok they aren't astounding. People like that don't have the luxury of time and disposable income to prep for a massive financial crash, especially because one is self employed. In a financial emergency I'm not sure how they'll fair. Of course family will help where we can but we also have our own bills to pay and families to feed. It's definitely a scary time for those who're only at the start of their financial burden with a new mortgage. They are in the same boat as a big fat chunk of Australians...
Rate hikes will top out pretty soon, if they can survive that they should be OK...assuming everything stays stable - jobs etc.
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bug
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Post by bug on Oct 6, 2022 15:05:53 GMT 10
The jobs market is fine. As good as it's been for years.
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tactile
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Post by tactile on Oct 6, 2022 15:19:18 GMT 10
It's fine...now
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frostbite
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Post by frostbite on Oct 6, 2022 15:45:41 GMT 10
I saw a woman on the fakenews last night saying how she has to sell her house because she can't afford the repayments at the higher interest rate. Well she could, but she didn't want to give up her overseas holidays and restaurant dinners. Tough luck lady. I survived on penne pasta and tomato sauce to pay my first property off at 21% interest rates, on an income that was only a few dollars above qualifying me for a health care card. Some times you have to do it tough to get ahead.
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tactile
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Post by tactile on Oct 6, 2022 16:27:36 GMT 10
Yep, we have had it good for a long time. People will have to make a few adjustments.
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