An Emergency Bank Holiday is Possible

Col. Crackpot · Post by **Col. Crackpot** » 2008-03-16 08:28pm

The Oil Drum.
The internet needs scaremongers with teotwawaki.com gone. Were all gonna die, man!

Admiral Valdemar · Post by **Admiral Valdemar** » 2008-03-16 08:31pm

Good to see you address the piece and not go for cheap points scoring.

Col. Crackpot · Post by **Col. Crackpot** » 2008-03-16 09:02pm

Admiral Valdemar wrote:Good to see you address the piece and not go for cheap points scoring.

I will make the concession that we are in for some serious shit. 70's stagflation here we come. The dollar is weak, commodities are high and property values are in decline. The difference now is that Europe and Asia are stronger now than they were in the 70's (and god forbid.. the 30's) and the global demand for durable goods coupled with the cost advantages of a weak dollar bodes well for US exports.

Admiral Valdemar · Post by **Admiral Valdemar** » 2008-03-16 09:33pm

Col. Crackpot wrote:
I will make the concession that we are in for some serious shit. 70's stagflation here we come. The dollar is weak, commodities are high and property values are in decline. The difference now is that Europe and Asia are stronger now than they were in the 70's (and god forbid.. the 30's) and the global demand for durable goods coupled with the cost advantages of a weak dollar bodes well for US exports.

It's not so much the issue with finances, although they are the earliest warning indicators in the economy when something is wrong (and it surely is). It's more that, combined with various other chronic issues that paints a bleaker picture. The credit crunch, by itself, may not have been as big a story had it not started at a time when the world is experiencing massive resource use growth and dwindling access to said resources.

If anything, this little escapade will maybe get us to be more frugal again. Maybe.

Col. Crackpot · Post by **Col. Crackpot** » 2008-03-16 09:37pm

Admiral Valdemar wrote: It's not so much the issue with finances, although they are the earliest warning indicators in the economy when something is wrong (and it surely is). It's more that, combined with various other chronic issues that paints a bleaker picture. The credit crunch, by itself, may not have been as big a story had it not started at a time when the world is experiencing massive resource use growth and dwindling access to said resources.

If anything, this little escapade will maybe get us to be more frugal again. Maybe.

call me a sonofabitch if you want to, but i'm starting to think that US and UK forces sitting atop one of the worlds biggest oil reserves may keep my kids from freezing to death one winter. Maybe yours too if half of what you say is true.

Admiral Valdemar · Post by **Admiral Valdemar** » 2008-03-16 09:46pm

Col. Crackpot wrote:
call me a sonofabitch if you want to, but i'm starting to think that US and UK forces sitting atop one of the worlds biggest oil reserves may keep my kids from freezing to death one winter. Maybe yours too if half of what you say is true.

Why would I call you an SOB? It'd be the height of hypocrisy. Anyone with half a brain knows what Iraq was really for and I am not going to deny that my quality of life is supported by the treading on other peoples' freedom and prosperity. The difference between you and me and the rest of the population is that we both know this and acknowledge it. Many want out of Iraq and voice other opinions that they'd soon back-pedal on when they can't gas up their SUV or even feed themselves and provide heat.

Right now, this financial clusterfuck is down to our own doing, but I still see fingers pointing elsewhere. This will likely be just the first volley in a salvo of crises that affect us in coming decades. I wake up in the morning and the financial markets news is the first thing on TV, though I am in a mood when I wish to any sky pixie that all of this I read about is total bullshit.

And yet, when I bump into the first asshole of the week when outside, I can't help but secretly wish the crash would come sooner to inject a dose of reality into our shallow world. And what better way to spook these people than to make them believe their precious money is evaporating before their eyes.

Post by **Darth Wong** » 2008-03-16 11:05pm

I also think it's a bit premature to say that the entire world banking system is looking at a US-style collapse. The downward turn in the rest of the world's banking system is directly attributable to foreign bankers foolishly buying shitty US commercial paper. Those banks which tried to limit their exposure are doing better as a result. It's not as if there's some kind of cascade effect.

Post by **Broomstick** » 2008-03-17 12:06am

It's not like there isn't historical precedent for one country's financial system going into meltdown - it always affects the rest of the world to one degree or another.

Post by **Darth Wong** » 2008-03-17 12:10am

Col. Crackpot wrote:
Admiral Valdemar wrote:It's not so much the issue with finances, although they are the earliest warning indicators in the economy when something is wrong (and it surely is). It's more that, combined with various other chronic issues that paints a bleaker picture. The credit crunch, by itself, may not have been as big a story had it not started at a time when the world is experiencing massive resource use growth and dwindling access to said resources.

If anything, this little escapade will maybe get us to be more frugal again. Maybe.
call me a sonofabitch if you want to, but i'm starting to think that US and UK forces sitting atop one of the worlds biggest oil reserves may keep my kids from freezing to death one winter. Maybe yours too if half of what you say is true.

Home heating is mostly done with natural gas, and natural gas is a continental resource. It can't be shipped overseas too easily, so it's brought in through pipelines from elsewhere on the same continent (in your case, from north of your position). So your kids probably don't need mideast oil for heating. They do need it for the car, though.

Alan Bolte · Post by **Alan Bolte** » 2008-03-17 12:21am

Looks like the banks are opening Monday morning, but in the mean time the Fed has cut its discount rate by 0.25% to 3.25% and opened borrowing to certain non-banks, the primary dealers in government securities.
Link

phongn · Post by **phongn** » 2008-03-17 12:39am

Darth Wong wrote:Home heating is mostly done with natural gas, and natural gas is a continental resource. It can't be shipped overseas too easily, so it's brought in through pipelines from elsewhere on the same continent (in your case, from north of your position). So your kids probably don't need mideast oil for heating. They do need it for the car, though.

Many places in the US use heating oil and not NG.

Illuminatus Primus · Post by **Illuminatus Primus** » 2008-03-17 01:09am

So stupid when we have geothermal heat pumps, I mean Christ, what a waste.

Elfdart · Post by **Elfdart** » 2008-03-17 05:01am

Broomstick wrote: I have money, but I'm hanging onto it because I don't know when I'll be getting more and food takes precedence over toys.

Which makes sense. If and when I get my check from Uncle Sam, which the government thinks will stimulate the economy, it's going into my checking account because (a) with my luck I'd lose the cash (b) it's not enough to put into savings and (c) I believe in keeping a phantom $100 in my checking -old school overdraft protection. There is also option (d) which is food, gas, bills -which is probably how about >90% of those checks will be spent.

How paying for things you MUST have (food, fuel, bills) is supposed to roll-start the economy is beyond me*. Even those who might have some rebate money left over aren't likely to spend the money right away unless they have to. All it would take is for Numbnuts to start a war with Iran for gas to hit five or six dollars a gallon and pffffffffffffffffft! -so much for that rebate money.

* Maybe they're hoping we'll be like the Katrina refugees who blew their emergency money on strip clubs, video games and nail salons.

atg · Post by **atg** » 2008-03-17 06:07am

What do people think of this comparison:

Great Depression:

American Banks loaned vast amounts of money to Germany/German Banks (bad risks).
Germany used the money to pay off reparations to the Allies, rather than use them for construction/money making projects as they said they were going to.
When the debts had to be called in, Germany/German Banks couldn't pay off the loans or continue repayments because of too much debt. This lead to the collapse of many American banks and in turn the stock market.

Today:
Banks/Credit Lenders lent money to pretty much anyone (bad risks).
The people with the loaned money spent them on items that would decrease in value - computers, entertainment equipment, cars, some housing, etc, or had borrowed what they couldn't afford.
Loans are called in that can't be paid, repayments aren't met.

Can this lead to another banking collapse in the US? Will the stock market do a 1930s belly-up? I hope not; but my gut says yes.

With the rise of Asia, I at least believe that Australia will be better off with our economy increasingly tied into the Asian markets rather than the US/Europe.

Post by **Sea Skimmer** » 2008-03-31 02:41pm

Darth Wong wrote: Home heating is mostly done with natural gas, and natural gas is a continental resource. It can't be shipped overseas too easily, so it's brought in through pipelines from elsewhere on the same continent (in your case, from north of your position). So your kids probably don't need mideast oil for heating. They do need it for the car, though.

That’s changing, the latest LNG tankers don’t have to keep boiling off part of the cargo to keep the rest cold as they used to (the boil off was fed into the engines, but not with the best efficiency) so its now much more economical to move gas by sea. A whole lot of new terminals and tankers are being built or planned as we speak. Some supplies are coming from new gas fields, particularly in Russia, other are coming from oil fields which previously burned off the natural gas but now reclaim it. I hate to think how many trillion cubic feet of gas we already wasted with flare off towers.