Thursday, 9 October 2008


yo!...strange days!...innit...!

PALOOKAVILLE FINANCIAL stardate capitulation day+19

...while dorktrekkin inna long episode o
DORKTREK : LOST IN SPACE...the crew from the loft in
down town palookaville had fallen thru a back o a cornflakes box
inna breakfas nook an become trapped inna 'flation nebula...

...a de-leveraging black hole has been suckin alla life outa
the galaxy an 'vestments bin shrinkin...

...identified as a NIAGARA drainhole...the sucker goin dahn is a bank near you!

...alla kings horses an alla kings men...beamed in...a mothership o dosh ta plug a sucker up...

...trouble is...fat lady inna wings..innit! noboddy don know wether she don sung yet or no...

...CUBES an SPHERES...bin seen inna y'all know wot at means...


pjc :Profit illusion

..."Profits for the surviving companies will be squeezed by the recession and the taxes and public spending cuts needed to pay for the bank bailouts. As profits fall the idea that stocks are cheap on a price-to-earnings multiple will be seen for the illusion that it represents, and stocks will fall further...

...But how low will stocks go and how long will they stay there. It could be a steeper fall than I thought at the end of September and the recovery take much longer. This is not a normal cyclical recession in which stocks will bounce back. It is a once in a generation global financial crisis and will take very much longer to put right...." PJ Cooper

nick : Back in June 2008 I wrote a piece for VOXEU predicting a mild recession in 2009. Over the last few weeks the situation has become far worse, and I believe even these pessimistic predictions were too optimistic. I now believe Europe and the US will sink into a severe recession next year, with GDP contracting by 3% in 2009 and unemployment rising by about 3 million in both Europe and the US. This would be the worst recession since 1974/75. In fact the current situations has so many parallels with the Great Depression of 1929-1932, when GDP fell by about 50% in the US and by about 25% in Europe, that even my updated predictions could again be over optimistic....


nick : ..."But after these earlier shocks volatility spiked and then quickly fell back. For example, after 9/11 implied volatility dropped back to baseline levels within 2 months. In comparison the current levels of implied volatility have been building since August 2007 and are likely to remain stubbornly high.

But even these more moderate surges in uncertainty after these earlier shocks had very destructive effects. The average impact of the sixteen shocks I examined in prior research was to cut GDP by up to 2% in the following six-months. The current shock is both larger than these on average and also appears to be more persistent. If these earlier temporary spikes in uncertainty led to a 2% drop in GDP the impact of the current persistent spike in uncertainty is likely to be far worse...." voxeu

peteypainty : how was it fo yo zoon?

zooneh : yo is it fo us?..boss..

chart from alphatrends hat tip - financial armageddon

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