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Tom Thread in the Port Conversations, reminded me of a conversation I had elsewhere with Jdaw1 about the World Financial Markets. I professed my ignorance but asked if all the suggestions were true that we would be heading for a short sharp re-adjustment on the World Stage. Many analysts suggested a 10-15% downsizing was required.
I dont wish to put words in your mouth, but I seem to remember your answer was one of, 'We could be, but it is not certain, and the sound advice is to carry on as normal'

I presume we are actually in such a re-adjustment, or is this an over hyped blip?

Alan

The problem is that in the USA, there is 25% of loan that are considred high risk. For comparaison, in Canada it is only 5%.

What happens now is that people can't give the money back for their loan and they struggle selling their house as a last act.

I have a bad feeling about this situation where big banks will be able to buy smaller loaners on the market for peanuts... just like it happened in 1929-1930. They'll get more control on the market and raise their benefit again....

I'm fairly bullish about most share prices rebounding, but believe there will be some serious casualties along the way.

The core issue of subprime loans has to be put into context - the total number, the proportion that are likely to go bad, the actual loss after properties subject to bad loans get sold off..

On it's own that looks like a very manageable number - that people are making such a big deal of this makes me suspect that there is lot more in the shadows that hasn't made it into the press yet - possibly a carousel situation whereby debt instruments have become so complex, they are actually secured on themselves...

Certainly money has been unrealistically cheap, while at the same time the city institutions have been making huge profits.

Something has seemed 'not right' for some time now, and with economies on both sides of the pond dependant on consumers spending more money than they earn, a bust had to happen sooner or later.

Regardless of central bank rates, borrowing looks set to get a whole lot more expensive, and that's going to give people who've borrowed too hard a big problem..

Tom

Well , I'm no world financial expert , so I'll enjoy a 1982 Messias Colheita & peanut butter instead .

The world economy is on a sticky wicket when the best suggestion in this thread is the 1982 Messias colheita.