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Day of reckoning

Robert Peston | 07:35 UK time, Friday, 10 October 2008

The sharp and nerve-straining falls in share price on Wall Street last night and in Tokyo today are damaging to the wealth of many, especially those saving for a pension.

Tokyo stock exchange dealers 10 OctBut it's as well to remember that they are the symptom of the disease, not the disease itself.

The underlying illness remains in the financial system, as manifested in the record amounts banks were charging each other yesterday for lending to each other for three months.

One serious anxiety concerns the auction today to settle liabilities on insurance - or credit default swaps - on debt of the collapsed investment bank, Lehman Brothers.

As I noted a couple of weeks ago, there are estimates that claims under insurance contracts will total $400bn. Sandy Chen of Panmure was one of the first to highlight the scale of this looming problem.

If demands for payment are as big as $400bn, there will be pain for banks, insurers, hedge funds and other financial institutions.

Here's why.

For every winner in a claim, there is a loser, the underwriter who has to divvy up. And if the underwriter lacks the resources to pay - which may turn out to be the case in this under-regulated market - that creates two losers: viz the bust underwriter and the claimant which doesn't get the money on which it was counting.

And if that claimant had been calculating its own financial strength on the basis that it had insurance against its Lehman debt, well then failure to receive payment could shatter the integrity of its balance sheet. Which in turn would create potential losers among its creditors.

So this day of reckoning on Lehman credit default swaps is momentous - and it could not come at a worse time for fragile bank shares.

The fall in Morgan Stanley's share price yesterday was a remarkable 26%, on the back of various nebulous rumours and as Moody's said it was reviewing Morgan Stanley's credit rating for possible downgrade.

There was also a doubling in the credit-default-swap price for insuring Morgan Stanley's debt: there was contagion from this opaque market to the more transparent stock market.

As soon as regulators have time for breath, they surely must as a matter of urgency bring some light, order and proper regulatory oversight into the credit-default-swaps market

But probably more urgent is for the US Treasury Secretary to decide how and whether he will inject US taxpayers' money into banks to recapitalise and strengthen them, along the lines of what the British Treasury is proposing to do.

But he "only" has $700bn to play with, which no longer looks that enormous in the context of the $400bn claims that may be enforced in just the next, anxiety-inducing few hours.

Comments

Page 1 of 4

  • Comment number 1.

    The Great Depression took place over 3 years, as each layer of leverage was blown away and another group were wiped out. Given the huge pyramid of derivatives and debt build on (over valued) real assets, this deleveraging will be as damaging and prolonged.

  • Comment number 2.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 3.

    "Fasten your seatbelts, it's going to be a bumpy night." The whole tottering edifice is starting to come apart - the danger is that the sort of situation that now exists between the UK and Iceland - the national repudiation of financial obligations and promises, leading to the seizure of assets - starts to be enacted out on a grander scale. After the Irish promise to guarentee all bank deposits and days before the collapse of the Icelandic economy, I and other posters warned investors to get out immediately. While I have sympathy for those people who did not know their money was being invested in Icelandic banks, I find it harder to sympathise with people who were, in effect, trying to make as much money as they could out of a tax haven. One now wonders which country will be brought to its knees and be unable to pay off its commitments. And even if depositors do get their money back eventually - how many will need access to their funds in the shorter term?

  • Comment number 4.

    #2

    re JP Morgan & Goldman Sachs

    If you are correct then how do they (in effect) bail themselves out, care to explain, something doesn't compute!

  • Comment number 5.

    A view from the other side....

    The vast vast majority of people in the world consider money to be a representation of the time they spend working. Whether this is correct or not is not the point I would like to bring up - that it is the perception of 9x% of the worlds population is important.

    The average world wage is about 2 dollars an hour....approximately.

    So when we, these people, see one trillion dollars, that means 500 billion hours of work.

    That is 90 days for the entire planet's population per trillion dollars.

    Since the working population is probably 50% of the total, then .......

    it takes half a year of the whole planet's population working to generate 1 trillion dollors.

    From the 99% of the population who think like this to the 1% who don't - have a nice day in the office !

  • Comment number 6.

    ...sharp and nerve-straining...disease....illness....anxiety....regulators have time for breath...anxiety-inducing...


    remove words like these [they only exist in YOUR head] and your copy will become less overblown and more readable.

    stop being a drama queen.

  • Comment number 7.

    What appears to be an unfolding debacle of the insurance of debt within the financial sector is just one more example of a financial sector that appears to have been running full steam ahead with the buffers clearly on the horizon. Just as within the general insurance sector in the recent past this looming debacle highlights the inherent problems of a system where veryone is not only making exaggerated profits but are doing it because everyone is scared stiff of missing the boat. What these insurers don't seem to have realised is that the insurance in financial sector that is a vertical market place unlike the real world where that market place is horizontal. In the real world the risk of an insured event occuring remains relatively the same no matter how many insured events occur at the same time. Those insured events do not generally cause other insured events to occur. In the financial world the more insured risks materialize the more chance there is that other insured events will take place because the actual insured event occurring automatically raises the risk of the event occuring again. one reason being that the insured events are intrinsically linked. In effect, when insuring the debt of a financial sector you are insuring a deck of cards. Great entertainment until the wind blows.

  • Comment number 8.

    Robert

    The underlining illness is excessive debt which is unsupportable and will collapse.

    As for Gordon's great plan this will not work for a number of reasons;

    1 Any bank using the Treasury scheme will be treated as a leper as it will be sending a message that it is not able to cotinue as a going concern. In these panicky times not even Governments will be believed.

    2 The ordinary shareholders will be virtually wiped out by this plan so why use it if the bank is doomed anyway?

    3 the directors will loose their golden parachutes if they use the Treasury scheme so why use it?

    I have said in the past on this blog ,that the end result will be a banking moratorium, which will cover the USA , Canada and most of Europe and many parts of Asia.
    A real fire break is needed but it will be impossible to avoid the oncoming depression just is we can stop the arrival of winter.
    People across the world have repeated the same mistakes as happened some 80 years ago just as those people failed to learn the mistakes made 60 years before that.
    Those who fail to heed the lessons of history are doomed to repeat them.

  • Comment number 9.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 10.

    Surely it would have been 'prudent' for our government to have waited the extra couple of days before plunging our cash into something that may still implode anyway ?

  • Comment number 11.

    I am surprised the Credit Default Swap market, which I understand is worth $50 trillion, has not been discussed more.

    This has been a completely unregulated market which presumably did not exist in the same way in 1929.

    Banks have been buying CDS's as a form of investment and made big profits in recent years from them. As with anything else they have made huge profits on, you can be sure that they are now faced with huge losses.

    I have a nasty feeling that this might be enough to push our high st banks over the edge, in spite of anything Darling and Brown say.

    It's obvious that Gordon is loving this crisis. You can just see him swagger and he can barely suppress a grin. He always did want to get control of everyone's money so he can spend it the way he wants. Now he alos has control of the banks. Next step will be to postpone the general election on the grounds of national emergency.

  • Comment number 12.

    How about putting a temporary block on the ratings agencies doing their work?

    As ultimately illegal and inappropriate as anything else that has passed for government action in the last few weeks, it will prevent surges on stocks that come under the limelight.

    Plus, in the current milieu, does any rating really mean much at all?

  • Comment number 13.

    Rome is now burning and our political Neros are still fiddling.

    Although a somewhat circular argument, what we are now witnessing is the scenario that perhaps our bank economists were predicting at least a year ago. Was this stock market crash forseeable by most? Is this why the credit markets froze over as the bankers themselves froze like deer in headlights?

    But beware, the forces that drove markets up in Robert's vortex are just as powerfully pulling the same markets down. A sink hole is opening up that will drag investments and economies far deeper than any realistic "floor".

    My local council (Cambridge) has just lost 9 million. It seems pretty real to me. And, on this minor news subject, can anyone tell me how so many public bodies ALL invested in Icelandic banks? How many Treasurers went on jollies to Iceland? Is it the case that a large chunk of the profits/capital have been used by Icelandic bankers to fund the purchase of West Ham???

  • Comment number 14.

    #6 - please take a look at the top of this page - IT IS A BLOG.

    If the collapse banks (and potentially sovereign nations) is not dramatic enough, then please forgive Robert for the sin of being "too" entertaining...

  • Comment number 15.

    #6

    To do that would sounds like the (often miss quoted) words of Jim Callaghan in 1978 - Crisis, what crisis...

  • Comment number 16.

    Brown and his puppet ministers are to blame for much of this crisis with their spend spend spend regime over 11 years and still they dont "Get it" They have poured more and more of our scarce resources on the fire this week and his latest bully boy tactics with Iceland sum up just how desperate he and his useless Government are. We are in a mess but that is no excuse for bullying others to save your own skin and British people still have a sense of fairness. Sub prime as he likes to blame for the world's ills was created by counties like Britain who allowed the likes of Northern Rock to offer 125% loans against overvalued assets and offered no regulation. Most ordinary people knew we were heading for financial melt down but Mr "We Will Do Whatever", still fed the flames and continues to do so.
    A decent man would step down today but his latest move on the assest of Iceland show just the man he is so I fear there is little chance of him going without the push. Shameful and disgraceful from a so called Democratic Country.

  • Comment number 17.

    6 - Get a life. Robert Peston is a journalist and does a damn fine job. Most of the people that read this do so out of curiosity and wonderment. Most are not bankers, they are not investors and they are not traders. They are just interested 'jo-scmo's' who have only become interested because people like Robert Peston have made it interesting.

    If it wasn't for that, it would just be boring money rubbish of little interest to us and we would just go back to blaming the most identifiable establishment figures - politicians whether it was their fault or not.

    Well done Robert lad. Keep it up and thanks for making it easy to understand.

  • Comment number 18.

    Wow. Is that almost a 50% loss?

    I am *really* glad I got my pension out at the top.

    I bet y'all wished you understood what money *really* is now, and why this was inevitable.

    Well. You need to watch the "Money as Debt" animated video on Google Video:

    http://video.google.com/videoplay?docid=-9050474362583451279

    And read: "What Has Government Done to Our Money?"
    http://www.mises.org/money.asp

    Best of luck, we're all going to need it.

  • Comment number 19.

    Does this mean that if the financial system survives today, then banks will relax a bit and start lending? Or are there more 'panic days' in the pipeline?

  • Comment number 20.

    ...I am surprised the Credit Default Swap market, which I understand is worth $50 trillion, has not been discussed more.
    ...

    its been talked about on Paul Mason's blog for weeks. Long before this one.

  • Comment number 21.

    The capitalist system is ANTIQUATED.
    We need a new set of rules.
    The way that shares are bought and sold.
    The way that property is sold and priced.
    Hedge funds and investment cos...do we need them, or are they just parasites.
    Otherwise it is endless false-booms and crashes.
    Change the system.
    If you get enough poor people out of this, they may all decide to vote communist.

  • Comment number 22.

    Alas ... time to re-think the legacy of Mr Greenspan ... he always resisted the idea of regulating the CDS market and in fact went before Congress to insist that it should not be regulated ... hailed as a hero at the time for saving the financial system and giving us stability ... unfortunately that now appears to be a house built on a bubble.

  • Comment number 23.

    Has the news that Citigroup have pulled out of the Wachovia takeover dispute with Wells Fargo gone unnoticed?

    This could essentially spell the end for Citigroup.

  • Comment number 24.

    The dominoes are falling today.Still the central bankers have not acted correctly by lowering intrest rates, and changing accounting rules for mortgages.Until this is done the banking problem will be at the core of the crisis and will eat at confidence. For the pound par with the dollar is coming same for euro.All in all a good buying event for the very brave.

  • Comment number 25.

    Dear Robert
    Too true this is a day of reckoning, in more ways than one we are exposed Nationally to three major problems, that have come to light since the Melt down in the markets.
    Local Councils and their Exposure to the Icelantic crisis, a double wammy on the general public already reeling from a£700 billion pound injection to the banks, now they may have to find a nother Bilion to bail out Councils and local Authorties.
    Finance Offiers may well be Responsible for failures in safe guarding public money in this crisis by leaving money in one basket.
    Then there are the police Budgets, this is going far beyond a loan from the Bank of England. Potentially this is a massive council tax rise , to cover the losses made by local authorities.
    Then there is the Loss of 100,000 names of British Service personnel, by EDS, this is a security disaster Mod should be charged with Neglegence MOD have lost untold numbers of memory sticks, documents and Lap Top computors in the last two years and it is National disgrace and the Government is to blame, one has to ask ones self is this being done on purpose to expose them to Terrorists??? The Governemnt ARE using The Terroism laws regards freezing of Icelands assets.
    It is no wonder Des Browne left the Government this was known about two weeks ago.Britain is a shambles itis falling apart ate the seems, and when an Afgan women and her children get £12000, tax free housing you ask yourself again, "WHAT THE BLOODY HELL IS GOING IN THIS COUNTRY?"
    I sincerely hope that this crisis and all that is going on with it, is not a rerun of the 1930s and what that led to.
    Some one has to take charge and sort this mess out because that it is what it is an absolute mess.

  • Comment number 26.

    Easy solution to all this:

    Get off to the Caribbean where all the wealthy hedge fund managers, investment bankers and lawyers are waiting for the stock market to hit absolute rock bottom so that they can start buying companies for almost nothing. And….

    …start raiding their personal deposit accounts which contain billions and start funding the bail out that way. Stop using taxpayers money whilst these characters are STILL rubbing their hands in glee over existing wealth and the wealth they are expecting to make over the next few years.

    Alternatively start raiding ordinary people’s bank accounts. After all we can’t be expected to frighten off this seemingly exceptional financial talent.

    Can we?

  • Comment number 27.

    # 6
    I thought it was a rather reserved and measured piece of writing. You should hear the traders ever since the FTSE opened.

  • Comment number 28.

    I don't know why anyone thinks the market is unregulated. The problem is that the regulation is unbalanced.

    Money has been lent across the globe at knock-down prices. Those debts have been sold and booked as assets on the assumption that they were underwritten or serviceable. Both assumptions have been improperly understood and under-risked and the result is that the market is trying to balance itself.

    Since there are more debts than real money to cover them the consequence of that balancing in an unregulated market would be catastrophic for us all.

    So Governments across the world are trying to buck the market by underwriting the debts to bolster confidence.

    The missing thing is management of the upside to mitigate the risk of intervention being required on the downside.

    Personally I feel we already have close to enough regulation - we just don't apply it. In fact we create and employ organisations to hide the fact that we don't apply it. I'll leave you to decide who they might be.

    Oh, and don't blame the Government. I don't remember anyone saying they'd only vote for Gordon if he stopped them borrowing 5 times their salary or more to buy an asset worth perhaps two thirds of their outlay.




  • Comment number 29.

    Broon and Darling (the comedy duo) have messed up big time. They grossly overspent, under-regulated for 10 years. Vacillated over Northern Rock for SIX MONTHS when action in 3 days would have averted a run on bank. Their rescue plan is too small, too late and tries to prop up a set of terminally ill patients. The plan simply won't work.

    What is needed is to either fully nationalise any failing bank or let it go to the wall. The bail-out cash could instead be filtered through to small businesses and individuals via the Building Socities and even possibly the Northern Rock. The only objective in providing liquidity to the big 4 patients is to maintain the status quo, protect a modest number of jobs and massage Brown's ego. unhappily the money lent to banks will NOT be lent to small businesses and private individuals, but in propping up balance sheets and paying off loans and CDS exposure.

    The Govt should signal intent by cutting its own spending by 50%. Yes, I am talking about reducing social security, health and education. Get back to basics in Govt like they are doing at the supermarkets. This will give investors confidence that UK PLC is taking dramatic action to get its house in order

  • Comment number 30.

    CitiGroup will almost certainly fall and the domino effect will be spectacular to put it mildly.


    i'm off to see if i can get a few allotments, might end up living there.

  • Comment number 31.

    #3 "And even if depositors do get their money back eventually - how many will need access to their funds in the shorter term?"

    This is exactly the problem with many banks today. They are *NOT* bankrupt; they just don't have access to cash in the short term !!

    #4 Yours is the simplistic reasoning that the Communist used to justify their "Socialist Peoples' Republics" and which collapsed so spectacularly in the late 80s, starting with the Berlin Wall !!

    For labourers and manual, this reasoning may be valid. However, there are those who work with their brains, doctors, lawyers, accountants, etc. They have knowledge and skills that average joe public doesn't and that knowledge has to be paid for somehow !!

    Furthermore, if everyone in Britain is paid $2 per hour, the first thing you know will be the unions clamouring for your head !!

    Even Cuba, the last stronghold of this concept, has accepted that its doctors must be paid more than its labourers or they will defect to other countries and earn more !! Raul Castro is a pragmatist and realist !!

    The question here is not what the average labourer earns but how much is that specialist knowledge worth !! Doctors who claim miracle cures that don't cure should be judged in the same manner as salesmen who claim wonderful products that don't work as claimed or IT consultants that claim miracle systems they can't deliver (heard of EDS, Accenture, etc. and their promises of wonderful government IT systems) or merchant bankers and their miracle products !!

    This current problem seemed to be when insurers pay themselves based on income rather than eventual profits when the insurance contract is finished. Their reasoning is that since nobody has defaulted on their credit insurance in the past, there will be no future defaults !! This is not the fault of the insurance industry per se but that of the flawed thinkers. Lloyds of London know better than to think that way because a ship that didn't sink this trip may sink in the next and they will not take profits until the ship has come home (familiar phrase ??) !!

    Using the same reasoning, the people who wouldn't go down to the pub and ask the local spiv to insure their Rolls Royce will expect their debts to be properly covered and insured by unregulated insurers simply because either these unregulated insurers charge less "premiums" or Lloyds of London wouldn't touch those debts will a very long barge pole !!

    Therefore, I suggest that, in the manner of Lloyds of London, all these insurers, bankers, "whatever" (spivs ??) should be treated like the Names of the Lloyds of London and be made jointly and severally *AND* personally liable for all the losses and that their assets should be seized to pay for those losses !!

  • Comment number 32.

    I don't know which is less acceptable, that hedge funds are still allowed to operate, given the chaos they've caused, or that their staff have salted away something like 2 billion for their year-end bonuses. If HMG's prepared to charge another soveriegn state with economic terrorism (a new low in diplomatic faux pas which will be used by our enemies to dismount what's left of our diplomatic credibility inside of the next six months, in passing), then the least they should do is sequester these assets under the same legislation, which appears to be common currency these days in motivating the very thing its supposed to suppress.

  • Comment number 33.

    All Gordon had to dom surely, was to shut the stock market (for however long it takes) and put UP interest rates - in that order! And another thing: why is the interbank lending rate so high, and for the three months period? We are told it is matter of "confidence". But if the banks are confident they will get their money back OK, then a sane rate shows confidence. If they are not confident they will get their money back, then they should not lend at all, as no rate of interest would cover it - 6.25% of nothing is nothing ! Or am I just a quaint old-fashioned thing?

  • Comment number 34.

    i see Gordon is urging other governments to adopt "his" scheme, well i don't think this rescue has actually worked, or am i being premature?

    For weeks now billions have been pumped into the system, where has it gone?
    Instead of giving money to the banks, why not become a lender to the very people who need credit, cut out the middleman as they are just taking the money and not passing it on.

    All this was started by some whizz kids who decided they could make money out of debt, well we have been doing that for years it is called interest, it was the desire to make even more money that caused this problem, in a word, greed.

  • Comment number 35.

    One sometimes wonders what if the regulator had been left alone to just get on with what they were supposed to be doing .....

    6 June 2005

    FSA under fire after Blair speech
    By Gavin Stamp
    BBC News business reporter

    The FSA is accused of being heavy-handed with its regulation

    The troubled Financial Services Authority has come under fresh attack after apparent criticism by Tony Blair.

    Unfavourable comments by the Prime Minister have sparked controversy at a time when the regulator is under increasing pressure.

    FSA chairman Callum McCarthy has written to Mr Blair asking him to back up claims he made in a recent speech that the actions of the regulator - which oversees mortgage, pension and insurance sales - were seen to be harming well-run businesses.

    Mr Blair told the Institute for Public Policy Research - in a speech entitled 'Risk and the State' - that the FSA was "seen as hugely inhibiting of efficient business by perfectly respectable companies that have never defrauded anyone".

    'Damaging'

    Defending the remarks, Mr Blair's office stressed he was referring to perceptions of the FSA's actions and that his sole aim was to improve regulatory performance.

    Downing Street was also at pains to point out that Mr Blair was not out of step with Chancellor Gordon Brown, who was instrumental in creating the FSA after Labour's 1997 election victory and recently described its performance as 'world class'.

    "The Financial Services Authority didn't just pop out of the bushes" Ned Cazalet, independent insurance analyst

    However, the FSA believes the comments were damaging.

    In his letter, Mr McCarthy said they harmed the regulator's ability "to support the principles of better regulation".


  • Comment number 36.

    @23, Citigroup may have pulled out, but the damages they're asking for will sink the pair of them and they'll take both out in the aftermath.

  • Comment number 37.

    I am far away and a bit removed from all this at the moment, but still have savings in the UK and Ireland. Roberts Blog has been of great use in explaining what is going on to me. And for my five bobs worth (five pennies ain’t worth much these days), I blame house prices in the UK for the bubble. The government knew this was coming – which is why they put up the amount and duration you could claim mortgage support when unemployed. Now house prices must come down, and personal debt must be lowered. Trust in the economic system (invest in stocks (companies) and cash (the government) not just in bricks and mortar (the value of which is based on someone else’s loan). But that is not going to happen is it? Doom Gloom and Woe for all. The next thing that will happen is rampant inflation, so the value of all those overpriced houses is lost, and cash savings are wiped out. Which means that people will again invest in bricks and mortar……

    But keep up the good work Robert, some one needs to shed some light on things, and I do not trust the politicians to do it. I do not think they understand or if they do are too fearful to explain.

  • Comment number 38.

    What's the chances the US election will be postponed? Are we slipping with this avanlanche into an altogether more terrifying police state? I don't think many people see the hurricane approaching, they just think it's got a bit windy ...

  • Comment number 39.

    I'm 46 years old and on an average salary. My pension has lost a third of its value and my shares are down by about £18,000. Am I suicidal? No actually, I'm virtually unffected. I have no plans to retire soon, and I'm happy to leave my shares untouched for another 20 years. Even if I lose all of them, so what? My wife is still spending money like it's going out of fashion. Grow up folks and stop being so miserable. These stock market traders are behaving like 5 year old kids. I can't believe that our economy is in the hands of such juveniles. I understand why the media have to report the facts, but I firmly believe that the reporting of this crisis is in part causing things to spiral downwards, because the juveniles at the stock market react to the news. The best way we can save the global economy is to have a global news blackout on this story for three months. When we emerge from the blackout, we'll be well on the way to recovery.

  • Comment number 40.

    During the Asian financial crisis Malaysia put limits on the flow of funds out of the country. They were severely criticised by the free marketeers - the same ones who have brought on this mess. However what it did succeed in doing was halting the slide in their economy. Perhaps the same thing is required in the UK.

  • Comment number 41.

    Scary times and still only just the beginning. Many retailers are heavily borrowed and will start looking like a bad credit risk with sales and the value of other assets falling. With that go failing manufacturing, for similar reasons. 1929 all over again and in spades.

    How can we survive, who know and it will be different for every individual. Perhaps we should start looking to trade in skills rather than money, at least swapping an hours labour for a bag of potatoes you know what you are getting.

  • Comment number 42.

    Robert,

    What dramatic headline will you use for Monday next week?

    These "Days of Reckoning" are the new norm.

    We have months or in the worst case years of such days to go. We are still at the start of things.

    There are probably over 1000 trillion dollars of unsupported financial commitments to be unwound. Only after this has happened can normal service be resumed.

    Banks and financial institutions MUST produce accounts - and, I suggest, these should all now be produce as if the organisation is bankrupt. Then we will have a reasonable idea of where we are and how we can build up again.

  • Comment number 43.

    Why did the credit rating agencies not know about all these dodgy dealings. Yesterday's problems with local authorities and charities investing in reasonably rated businesses seem to hinge on the credit ratings given by these agencies - did they not know the risks, or are they part of the problem?

  • Comment number 44.

    #20
    CDS's have been talked about on this blog for the past 12 months.....at least!

  • Comment number 45.

    To those attacking #6:

    yes this is a blog so #6 is as entitled to their opinion regarding RP's use of emotive language, just as you are.

    I'm with #6 on the use of "...armageddon, vortex, day of reckoning, unthinkable, spiral, doomsday...." and all of the other Daily Mail-isms that are put in there. They are not necessary for the reporting of the facts and in my view simply distort them. But fair enough, it's a blog so each to their own. What is irritating, though is the way the BBC then insert parts of RP's blog into their news stories for added credibility.

    Anyway, on to the more important stuff:

    ING: WHERE'S MY MONEY FROM MY KAUPTHING EDGE ACCOUNT?

  • Comment number 46.

    @16

    I don't understand why you are angry that the government has seized Icelandic assets. From what I have read, the Icelandic government have been quite open in admitting that they only intend to support Icelandic nationals savings and not UK depositors. Our government have taken action to insure that they may get some compensation for bailing out Iceland who have reneged on their obligation. Good on HMG I say.

  • Comment number 47.

    #8 Well said, indeed !!

    #11 and followed shortly by Brown's stormtroopers marching down the Mall !! Where have I heard this before, I wonder ?? I believe that was even an Olympics involved in it somewhere, if I remember rightly !!

    #23 Nope !! Wells Fargo poisoned the well and Citigroup is letting them drink from that first !! When Wells Fargo goes under, Citigroup will come in and pick over the assets at fire sale prices. The Wells Fargo move was a political maneuver by the Texas Mafia to prevent foreigners (Dubai, Singapore, others) from getting their fingers on US banks !! Meanwhile, Citigroup is still suing them (Wells Fargo and Wachovia) for breach of contract !!

  • Comment number 48.

    No.13 - no treasurers went on jollies thats not how it works

    What happens is at the start of every day the Treasury accountant works out whether they have to recall monies or have monies to invest and for how long, to balance their accounts for the end of the day. They then work out when they need it for - say for December's payroll date.

    They then ring the various brokers they deal with and see whose got the best rates and whether they can deal with them using their S&P and Moody's ratings usually. The broker will say "Glitnir is offering x%" and then the treasurer says "no we already have b£5m with them and thats our limit". so the broker says "Dexia is offering Z% and Landsbanki y%" so the accountant says "okay we will fix it for 3 months with Landsbanki". The dealer then sorts the deal and you arrange to pay Landsbanki for it that day.

    The reason the treasurers used them is the rates they were offering coupled with their ratings. Keeping it in their own account would typically net them base rate -1% not enough to meet their obligations and budgets.

    What you should be asking is how come they were still dealing with Icelandic banks up to this point when any reasonable Treasurer would have instructed their staff to stay well away months ago.

    Mizze

  • Comment number 49.

    Dear oh dear oh dear....
    Nothing has happened which alters my view that the whole situation is a sham.

    When will it finally be understood by those that are SUPPOSED to understand that no amount of money thrown at this will work.

    I believe there is a market saying "Don't fight the market..." Well, we the UK taxpayer is and are losing and will continue to lose until the fat cats and dealers are finally called to account.

    The system is corrupt by it's nature (the government issuing bonds which will no doubt be bought by the very banks that they are intended to save.). To echo a few previous comments I'm not an "investor" only a taxpayer and it fills me with anger that we are supposed to help those institutions that take every opportunity to fleece us.

    Over the past few weeks I have heard numerous commentators bleat on about how "something needs to be done..." and how a bail out is absolutely vital for our survival. Utter tosh. The Day of Reckoning is indeed approaching and the collective "we" will all live to regret the folly of wasting so much money for so very little. The government has effectively allowed itself to be held to ransom by banks and businesses because of it's short term political policies.

    Also as a sign of the nonsense being spoken in the media at large I heard a commentator on the radio saying that banks had better start lending again, by that I assume trying to saddle us with more debt, so that people can go out and have a good Christmas. What planet are these people on!?

    One final aside, despite any issues about Robert Pestons style it is absolutely correct that this is a blog where at least we can have our say even if it just makes us feel better. A free press (despite some balloons talking about Christmas) and a freedom of expression might be the only thing that keeps us together and gets us through this mess. The price of freedom is eternal vigilance.

  • Comment number 50.

    Robert,

    Isn't this what we, the taxpayers, are paying for?

    Wasn't Darling and Brown's plan was meant to ease the Libor rate and encourage banks to lend to each other again?

    Isn't anyone asking why this isn't working and what is happening to our money?

    Many on this blog have been aware of the dangerous fallout from Credit Default Swaps about for a while.

    http://news.bbc.co.uk/1/hi/programmes/newsnight/7506653.stm

    These things are a lot bigger than Lehmans. I have heard estimates from $43bn to over $200bn worldwide.

  • Comment number 51.

    Perhaps we should suspend the markets until they sort out where the real money is (or isn't)

  • Comment number 52.

    # 14, 15 and 17

    Robert Peston isn't doing a good job.

    His choice of vocabulary is making things worse - the more people read about crisis, etc, the more they will panic. The BBC should be presenting the news in a reasoned and un-sensationalised manner.

    Headlines like "Credit Chrisis: World in Turmoil" lead to a review of the how different countries are reacting to the current situation. So, why couldn't the Beeb have said "Credit Crisis: World's Reaction"?

    (yes, even I accept that Credit Crisis is reasonable)

    I am afraid that the use of the words highlighted in Post 6 shows Peston's weakness as a journalist and I very much fear that Peston and the BBC has Watergate syndrome - the excitement of a journalist who can actually change the world. However Peston is no Woodstein.

    The manner in which the BBC in general (and Peston in particular) is reporting the situation makes it worse. Simple as that.

  • Comment number 53.

    Been laid off from work
    My rent is due
    My kids all need
    Brand new shoes
    So I went to the bank
    To see what they could do
    They said son looks like bad luck
    Got a-hold on you
    Money's too tight to mention
    I can't get an unemployment extension

    I went to my brother
    To see what he could do
    He said brother I like to help you
    But I'm unable to
    So I called on my father father
    Oh my father
    He said
    Money's too tight to mention
    Oh money money money money
    Money's too tight to mention
    I can't qualify for my pension

    We're talkin 'bout Reaganomics
    Oh Lord down in the Congress
    They're passing all kinds of bills
    From down on Capitol Hill
    (We tried them)

    So what on Earth you gonna do
    When moneys got a hold on you

  • Comment number 54.

    As they used to say in Army war games during the Cold War when all wsa lost and nuclear weapons were fired, it's time to call 'end game' on this one, Robert. Time to look ahead.

    Half the planet reads your blog. Indeed I'd go so far as to say it is quite unique and invaluable in terms of the communication line it has built. There is no other voice, though, Lord knows, a British Government blog might attract a few readers.

    Thus if you have any ideas for the future, by which I mean the brave new world (of tomorrow, next week) now might be a good time to air them. And those ideas should be divorced from the old way because (as if it were not blindingly obvious) ploughing any more money into the systems is not working and will continue to not-work.

    GC

  • Comment number 55.

    Comparing this to the great depression is a bit far off. Unlike in the 1930's the US now is not the only country internationally with large coffers. The mid east and china are sitting on large reserves which will no doubt be used in the months to come. Especially China which has built up immense reserves, and its in its own interest to ensure that 'one' of its main customers 'the west' doesn't have a deep recession.

    The main thing needed now is international co-operation to get this mess sorted out.

    David
    http://www.joots.co.uk

  • Comment number 56.

    Bank ''Got any money you can give me?''

    Jo Public ''Err What for?''

    Bank ''Cos i'm crap with money and i'm skint''

    Jo Public ''How much do you need?''

    Bank ''About £500 Billion''

    Jo Public ''Whats in it for me?''

    Bank ''If you don't give us the money, we'll destroy your whole life

    Jo Public ''If I give you £500 billion you'll have to pay me back £800 billion and I want 20% of your shares''

    Bank ''No we can't afford it''

    Jo Public ''Anyway, what do you need £500 billion for?''

    Bank ''So we can lend it back to you at interest''

    Jo Public ''So you want me to give you my money for no return just so you can lend it back to me with interest''

    Bank ''Yeah, thats what we've always done''

    Jo Public ''Thats a scam and a con, thats totally fraudulent''

    Bank ''Yeah we know but what you gonna do about it?''

    If you have a loan, an overdraft, a mortgage, a credit card, a store card or any other form of debt then you are a slave. Applies to individual citizens, companies and GOVERNMENTS!

    The banks are your rulers and masters, if you're a slave then your masters, (the banks and finance industry) can force you to do anything they want..... and they will.

    Money is created by debt and debt=slavery

    Politicians, companies and the finance industry will lie and lie, to preserve themselves and their morally bankrupt monetary system which is fundmentally fraudulent.

    ''There are none so hopelessly enslaved than those that falseley believe they are free'' Johann Wolfgang von Goethe

  • Comment number 57.

    #23 and 36

    Why do you think Citi pulling out of that deal will spell the end for them? What have I missed? Thx

  • Comment number 58.

    This is what Marx wrote about the credit system, all those years ago...

    The credit system “reproduces a new financial aristocracy, a new kind of parasite in the guise of company promoters, speculators and merely nominal directors; an entire system of swindling and cheating with respect to the promotion of companies, issues of shares and share dealings.”

    “The credit system...accelerates the material development of the productive forces and the creation of the world market, which it is the historical task of the capitalist mode of production to bring to a certain level of development, as material foundations for the new form of production. At the same time, credit accelerates the violent outbreaks of this contradiction, crises, and with these the elements of dissolution of the old mode of production.

    “The credit system has a dual character immanent in it: on the one hand it develops the motive of capitalist production, enrichment by the exploitation of others’ labour, into the purest and most colossal form of gambling and swindling, and restricts ever more the already small number of exploiters of social wealth; on the other hand however it constitutes the form of transition towards a new mode of production.”

    Capital Volume III - Chapter 27 The Role of Credit in Capitalist Production

  • Comment number 59.

    As an aside from the highly interesting doom and gloom scenarios.

    Psychology and neuroscience students please take note.

    As a regular reader of Robert's blog since the NR fiasco and I mean regular (more than a year and counting). I have checked and read Robert's postings on an almost daily basis since then but I only discovered 3 days ago that he is Robert Peston and not Robert Preston. Whenever my brain registered Robert Peston it assumed it was a typo. Why is this? The surname Peston will not be accepted by my asscimilating faculties. I am amazed. Does this enhance the cliche that fact is a lot stranger than fiction? I hope someone can enlighten me on this conundrum.

    Thanks

  • Comment number 60.

    So how much of this supposed 400 billion is actually not going to be paid ? What level of 'default' is assumed to be likely ? Who or what sits at the end of the chain of claims ?Do you in fact have anything useful to tell us or are you just shouting out big scary numbers and waving your arms about ?

  • Comment number 61.

    Robert,

    These dramatic scaremongering posts are truly disturbing. I have to take issue with your first comment that the sudden drop in the market will especially affect those saving for a pension. This is not true; it will only affect people retiring in these turbulent times. Other pension-savers will benefit from low buy-in prices. These sweeping statements surely need to be curbed to fall in line with financial journalism guidance?

  • Comment number 62.

    so the whiz kids from the 'city' only found out about this recently- get a grip

    at the current time the stock market is proving to be of no useful purpose whatsoever

  • Comment number 63.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 64.

    #41

    "Perhaps we should start trading skills"

    Isn't that what we used to do, before this craze for everyone being a stock broker, we traded skills by their use in actually making things rather than just buying them from the cheapest source. The rather cutting comment about people 'knowing the value of everything but the worth of nothing' has never been more true than now, I just hope that there are enough people left in the UK who know how to set a machine tool etc.

  • Comment number 65.

    #32 Rahere
    I do agree that the sight of the Icelandic Prime Minister talking in extremely hurt tones about the use of Anti-Terror laws to seize Iceland's assets will have done great harm to Gordon Brown's administration and the UK, in the eyes of the world.

    The major asset of UK PLc has been the appearance of a boring democratic stability in a society that in the last century managed to avoid revolutions , this allowed a slightly magestrial approach in which shared assumptions about honour and the "right thing" , legal protection and safeguards coupled with the stable society added up to "A safe place for the world to put their money".

    The last two decades of "light touch regulation" has overlayed the sheer money making thrill of the Roaring Twenties to that underlying UK PLC " safe and stable" brand.

    The weight of debt has broken the "new and sexy" part of the appeal of UK PLC.

    Which is bad enough.... But Gordon Brown, and advisers, with one badly thought through reflexive action have smashed the underlying brand value , one built over a couple of hundred years, that "Your money is safe with us".

    Expect a quiet but steady movement of assets from Britain as foreign companies and governments (especially governments of smallers countries) digest the lessons of the Icelandic Prime Minister's outburst

  • Comment number 66.

    #43, the credit rating agencies are the biggest part of the problem. Why anybody pays any attention to them any more is beyond me...


    Is there some way that we can... how to put this... nationalise Iceland? Their natural resources will come in handy later on...

  • Comment number 67.

    I'd just to offer a vote of thanks for the moderators, who are showing a very high degree of integrity and discretion and working very hard indeed. In my view, their protocol is a model of democratic free speech.

    It's a real privilege to write on the BBC website especially at this awful time.

    Guy Croft
    Owner Guy Croft Racing Engines

  • Comment number 68.

    One of the serious issues arising from this current situation is the inability to price or assess risk and then price. The market is too volatile for any model to keep up. I have always felt that devices such as VaR are worse than useless in these situations. Since traders and middle office have no other useful tools in the box and not enough guts or experience to countermand the figures these models produce, they will get sucked into illogical trading.

    I'll tell you one thing at the end of the year the benchmark used for performance valuations will be ....are we still here!

    It feels like we are on a plane going through the worst turbalance ever, and all we can do is hold on tight and hope the pilot keeps the plane together and in the air. Looking out the window doesn't help as all you see are storms but with no idea if the black clouds are 10 miles or 100 miles in diameter.

    From a small business perspective I have done what I can do and that is get as much liquidity (cash) together as possible to ensire I have cashflow issue for the next 6 months. Good luck to the rest of you!

  • Comment number 69.

    This week was the biggest week, as I said on Monday. it seems we have limped through it so far.
    The lehman's issue could be a domino to starta new downward cycle.
    Still all to play for this week; and what a week it has been

  • Comment number 70.

    As I wrote in a blog about 2 weeks ago, the black hole - which nobody has seen or bothered to worry about - namely, the total value of national and international debt is so great that NOBODY can fix the problem. $700 billion and £400 billion are small change in comarison. When the entire banking system has to be bailed out by the taxpayer, the system is bankrupt.

    The party is over!

  • Comment number 71.

    #26 Unless those "wealthy hedge fund managers, investment bankers and lawyers" all keep their wealth in gold, their "personal bank accounts" are in the same banks as other peoples' !! Or do you imagine that they have magic boxes stuffed full of 50 quid notes ??

  • Comment number 72.



    Your not all quite getting it are you.

    Our economies are being crashed, there is nothing mistaken or suprising, this is and has been the plan for years now.

    Crash the national economies so you can build a global one. Simple as that.

    Sub-prime is not the cause of this it is just one of the many tools used to instigate it. The end of the M3 index is the biggest smoking gun in all of this. It was equivocal to hiding the bills under the mat in the hope they would go away.

    By the end of this there will be no dollar, no pound, be no national control over anything.

    You only have to read the writings of those who are perpetuating all of this to understand it.

    They wanted this depression and they are getting it. Why the bbc are still trying to convince you that we are in a redeemable situationn i do not know.

    Peston should be telling everybody straighht what is going on. A big massive theft. The biggest heist in History and we are the victims.

    They create a problem then will offer us a solution, a single global financial order, which would of course require a single global political order to oversee it.

    We are essentially heading not back to the 20's with this one but back to the 14 centuary.

    We should be getting told to get ready to make sure we can feed our families, because the next stage if this is going to be a fight for food.

    There is nothing you (we) can do to stop this short of a popular uprising and a storming of parliament. The only way we are going to survive this as free individuals is to accept that we will have to fight for our freedom one more time.

    I know this is not going to happen, as folks are still fast asleep, i will get mocked and derided for even saying such a thing and the people of the west will march into economic slavery without ever educating themselves as to why.

    In a way we deserve this, its the end of our world as we know it. We can choose to either take control of it ourselves or let the paulsons of this world continue to define it for us.

    This is the endgame

  • Comment number 73.

    Hey!.....everybody!....chill-out!....its only money!
    The sun will still rise tomorrow morning....even if Robert Peston reports that it won't.

    We're just entering the 'Age of Aquarius'......Aquarius...... aka the great leveller.
    The meek shall inherit the earth.

  • Comment number 74.

    35. At 09:00am on 10 Oct 2008, TerryNo2 wrote:
    "One sometimes wonders what if the regulator had been left alone to just get on with what they were supposed to be doing ....."


    Mr Bliar was pointing out that the FSA was being over zealous with small financial firms such as IFAs and this is still the case today.

    The FSA, which is mainly run by ex-bankers has spent/wasted fortunes (hundreds of £millions) building up their 'empire' causing havoc and putting vast amounts of red tape on to the retail businesses for insurance, pensions and investments and the financial advisers' industry.

    While at the same time these ex-bankers have turned a blind eye to the banking industry and all of their woes.

    The FSA have even been trying to bring in new procedures to allow these same banks to muscle in on the over regulated retail financial sector and allow the banks to sell financial products with less rules or regulation meaning less protection for the consumer.

    The FSA has been poorly run allowing the BIG banks to get away with it, while using bully tactics on the small financial adviser firms who do not have the financial muscle, like the banks, to fight back.

  • Comment number 75.

    The Americans call Las Vegas 'lost wages' but that place seems like a temple of virtue now compared to the stock markets.

    In Las Vegas if you do not gamble yourself you do not lose any money, in the the stock markets if the gamblers lose we all lose our savings..Which is the real city of sin ?

  • Comment number 76.

    59 - It is a well known scientic phenona-thingy that your brain doesn't read individual words, it reads clusters and as a result it sometimes mistakes one word for another so long as it makes sense, particularly if it is more familiar with one word than the other.

    It's a bit like politicians and bankers - it makes groundles assumptions.

  • Comment number 77.

    I may be being stupid here, but if the banks are insured against this caustic debt, then why aren't government supporting the insurers only, instead of offering gigantic amounts of money, to failing institutions, that have now proven that they can't manage them. A centralised bail-out via the global underwriters would surely make more sense.
    If the insurers are paying the banks for these bad loans, who then owns the reposessed assets? Are there huge amounts of property now owned by AIG?

  • Comment number 78.

    Intersting that the Russians have stepped in to support their own banks

    This has has some credibility as everyone at leat knows they have the money to actually deliver.

    In the case of many western governments, the market reaction tells you how convinced everyone is that the money is really there for the scale of suport required.

    Going long on the rouble is a good idea, there is a global balance of power shift going on between the 'haves', the 'have nots' and the 'thought we hads'

  • Comment number 79.

    Can the BBC find somebody who has a passing acquaintance with the facts.

    The list of obligations is well-known and is listed on the ISDA website. The counterparties are known too. Mr Preston urgently needs to learn the difference between face value and the amount at risk. If a zero coupon bond for a billion is not due for another 10 years then it is not work a billion and a billion is not at risk.

    Wouldn't it be nice if British licence fee paid for a financially literate business editor?

  • Comment number 80.

    #48

    Never mind how the system works, the Icelandic problem was known about (it was even written about here if I remember correctly), any LA (etc.) finance director should know were their funds are and keep abreast of the markets etc - that is part of their job description if they are depositing money into the markets - anyone up to speed on Iceland should have been withdrawing their money in the weeks and days before Iceland closed the door. The actions of these LA's etc might not have been illegal, it might have even been Govt. policy, but it's still gross incompetence by the finance directors when dealing with public money. Their only defence is that almost everyone else was as intoxicated by the prospect of making a quick 'buck'...

  • Comment number 81.

    19#

    "Does this mean that if the financial system survives today, then banks will relax a bit and start lending? Or are there more 'panic days' in the pipeline?"

    Lending was the heroine of the banking system. There's no point in giving an addict Heroine when he has started going cold turkey. But the problem is the source of the heroine has gone! There is none to feed him (or the thousands of others in the system)!

    There are more panic years in the pipeline not days!

  • Comment number 82.

    The underlying disease is still the belief in Bread and Circuses at all costs, and as the summum bonum. The fiddling of books is a symptom.

    Thank you.

  • Comment number 83.

    A question for the "experts": If everyone is selling shares, who is buying them?

  • Comment number 84.

    It has always seemed to me that the US 700 USD bailout was a firebreak and the fire was still burning, what is new. The UK 1/4 Trillion or 1/2 Trillion or 3/4 Trillion, whatever you want to call it, was an attempt to jump further down the slope and create a stop point. It is weakened by other countries failing to take effective large scale action. Perhaps the public who so fiercely opposed intervention are starting to grasp why it is needed, it is not a matter of choice, it is damage limitation. The critics who say it may not work miss the point, it has to be made to work. If intervention is needed and not taken, the longer it is left the greater the level the fear has to be developed to drive intervention forward. The mechanism is simple, fear, no action, more fear, compromised action, more fear, relief and rebound, realisation the intervention will not put things back to where they were, more fear. The bottom is decided by the level of fear not rationale. The real ecomony meanwhile moves along, fear seeps throught to it, big ticket items don't sell, the economy contracts. The public realise uplift is not tomorrow and just battern down the hatches for 3 months, possibly more, some companies cannot survive and just disappear. The regulatory authorities cannot measure the ecomony contraction fast enough to react, the delay in knowing where things are is grounds for argument about which is the threat, inflation or stagnation. There are repeated positive political messages, at first well recieved, then doubted. Conflict with groups or countries starts to divert attention. This has already started, effectively fiscal war has been declared on Iceland by the UK. Groups and communites look to see who is the best positioned, who will survive the best, and survival becomes based on somebody elses failure. It is very dangerous. Unpopular governments gain popularity when the country is seem as being under attack and that encourages combative policy. It would be very nice to think that a mild recession with a rebound in the middle of 2009 could occur but it is doubtful any viable model exists to predict it with any certainty, we have not been here before. It is a matter of hope. There is no reason why the sort of banking collapse we are seeing should not occur in Main Street, it is the same mechanism, a withdrawl of operating funds. It does not matter how sound the business appears, if the cash tap is turned off the business is gone very quickly. The stabising of the ecomony to encourage investment is critical.

  • Comment number 85.

    Brown told us he had fixed the cycle of boom and bust. He is responsible and only his removal is going to start to fix the confidence problem. GET OUT NOW BROWN.

  • Comment number 86.

    #61: You're not the only one, BBC deputy director general Mark Byford had the same problem.

    http://www.guardian.co.uk/media/mediamonkeyblog/2008/jul/08/heypesto

  • Comment number 87.

    61 - That statement is only true provided the stockmarket increases in value faster than inflation.

    Just supposing that the stockmarket has been overvalued for the last decade or so because prices have been linked to assumed profits as opposed to reality, and in fact it will continue to fall for the next 3 years till it reaches it's 'true' value of around 2500. Then flat lines for a decade like the Nikkei did.

    Not such a good investment to get involved with a stock related pension then is it.

    Could always try housing hahahahahahah

  • Comment number 88.

    Surely Credit Default Swaps is a fire that will quickly burn itself out!

    E.g. Lehman go bust, the people who sold the CDSes on Lehman also go bust because they cannot pay, whoever took out a CDS on those companies also goes bust, etc. It just triggers a domino effect that wipes out the whole unregulated CDS market.

    Good riddance to it too. The whole premise was silly. E.g. you buy a high risk bond and then a CDS to make it a low risk investment - why not just buy a low risk investment in the first place and keep things simple!?

    In any case the CDS market was nothing more than gambling as many people were using it to place bets rather then mitigate risks on bonds they actually held.

    The net losses will not be in the trillions as some say because quite frankly that money never even existed. It is like this: if I put one pound on a six horse accumulator bet at the bookies, then I can get odds exceeding 1000000:1. Therefore, if the bookies goes bust before I collect my winnings then I could say I have lost a million pounds - in reality, I have just lost my original one pound bet because I never had the million pounds. I might be upset, but I am not ruined and life goes on!

  • Comment number 89.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 90.

    Hey #45 ME TOO ...

    ING: WHERE'S MY MONEY FROM MY KAUPTHING EDGE ACCOUNT?

    I initiated a transfer at the start of the week and no sign of it yet!!

  • Comment number 91.

    @57

    Part of the reason is that whoever gets Wachovia will fall into the "too big to fail" category.

  • Comment number 92.

    #40 - Great Idea!

    Then all countries do the same thing and the world stops! Everyman for himself! Back to the 1930's!

    Not the best plan listed here!!

  • Comment number 93.

    I'm not sure that this is such a big deal. Underwriters and claimants will have known for some time now that this is coming. If there are large enough concentrations of liquidity or credit risk in a single institution to topple it, they should have already alerted the Bank of England to this fact, and appropriate temporary assistance provided. No doubt some of the actions already taken have been done so in anticipation of this event.

  • Comment number 94.

    My guess is the markets are this jittery because they are now focused on what will happen more widely. The failure in the Banking system has been accounted for per se. With money this tight and demand slackening many highly leveraged businesses will be in very hot water. The markets are obviously expecting repercussions across the business world. What they are telling us, unlike the calming words of the IMF, is that a deep recession is more or less inevitable and growth is a long way off. My guess is that we are now in for a long-haul bear market of ten years of more - and the markets know it.

  • Comment number 95.

    Robert,

    Could you make your headlines a bit more graphical and lurid please, to capture the current mood of things.

    Vorex was quite good, as was Armageddon.

    But we haven't seen Maelstrom around for a while, nor Tsunami come to think of it, but perhaps that one has been a bit overused in the past so it has no impact.

    How about
    'Credit and Time runs Backwards.
    World to end Tomorrow as Brown gives 400 billion back to Taxpayers and Bankers vote for Big Bonuses once again'

    But then again, if Time is running backwards then the world should really be ending Yesterday.

    Alternatively, what do you think of

    'IMF have convened a special meeting with Stephen Hawkings to send a message into Space to ask if anyone out there has a few zillion quid they won't need until the next Millenium'

    Anyway, has anyone seen Keynes recently, because Endogenous Neo-Classical Growth Theory is on the Scrap Heap of not very good long term ideas.
    It only leads to eventual Bust.

    cheers

  • Comment number 96.

    #55 "international cooperation" has just become moot because Bully Brown used anti-terror laws to seize Icelandic assets instead of negotiating for a guarantee of British deposits !! Such heavy handed tactics will not win friends and influence people. And to crown it all, he is asking other countries to follow his tactics - i.e. seize the assets of any country that even look sideways at you !! Diplomacy ?? What diplomacy ??

    No one will trust the British again just as no one trusts the Americans any more when they used anti-terror laws on any one whose face they didn't like !! Guantanamo Bay still operates despite its illegality by International Human Rights Laws !!

    The big guns (or more accurately, the big cash mountains) are all in the Middle and Far East and all else is posturing by pocket dictators from banana republics !!

  • Comment number 97.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 98.

    Is there a problem with the ICICI Bank, have just been timed out of their website?

  • Comment number 99.

    I agree with post 30. Going to the allotment is a good idea! Because isn't there something bigger happening here? Won't this all lead to a complete reassessment of how we live, what is important to us etc? Have we been living beyond our means for so many years when the rest of the world is struggling with poverty that the chickens have finally come home to roost and some sort of just judgement is being exacted on us?

  • Comment number 100.

    #52

    Do you honestly think that Mr Peston has such power over the markets - if so - lets all get him to say "Crisis over, buy, buy, buy" tomorrow morning, if you are correct the markets will have an all time high...

    Of course you know that won't work as the markets don't get their info from the BBC, they get it via their Blomberg terminals etc. and that Blomberg are sounding just as dire about the situation as Mr Peston and the BBC is.

    I really do wish that all they anti Peston bankers and speculators would just cool it, the only people they are discrediting are themselves - assuming that it's possible to be any more discredited than they are already.

 

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