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WASHINGTON: In a bleaker assessment than those of most private forecasters, the World Bank predicted Sunday that the global economy would shrink in 2009 for the first time since World War II.
The bank did not provide a specific estimate, but bank officials said its economists would be publishing one in the next several weeks.
The World Bank also warned that global trade would contract for the first time since 1982, and that the decline would be the biggest since the 1930s.
the global economy would shrink in 2009 for the first time since World War II
Deep VIOLENT Depression - I cannot emphasize this enough . . . and I have already taken heat for using the "V" word. But today I am prepared to kick it up a notch, and urge you to prepare for what is unfolding. Did we think we would have seen the extent of the violence during the Civil War, when we killed each other on our own land? Did we ever think we would have seen the violence that came out of the Depression? Hitler came to power when people lost hope in the government and financial markets. Can it happen again? We said it could never happen then, so now that we are in far worse shape than 1930, why couldn’t something much worse come out of this crisis?
100,000 Protesters - Does the government have any idea how angry people are, how betrayed they feel? It will be years before our economy recovers from the devastation wreaked by bankers. In the meantime, the possibility of something awful happening is very real. We’re one swing of a garda baton, one cracked ., away from chaos. - Gene Kerrigan
This statement could have been written about the United States, England, France, China or just about any country in the world. But for now, it comes straight from The Irish Independent. You didn’t see it on CNN, CNBC or even in any of the American papers. You had better prepare for it, because it will shut down banks, supermarkets and the very fabric of what we are. If you have not built up a food pantry, stored cash and gold, and armed yourself, you might want to consider doing it now.
Morgan Stanley predicts economic collapse worse than depression
Morgan Stanley’s UK equity strategist Graham Secker painted a bleak economic picture for the United Kingdom. In his morning forecast, Mr. Secker warned that UK profits could fall by 60% in the current downturn - a worse performance than the great depression of the 1930s.
“We now forecast UK profits [will] fall by 60% across 2008 and 2009. While this sounds a rather draconian and hyperbolic downgrade, we believe it is realistic and incorporates the big losses that have come to light in the banking sector as well as a sharp drop in commodity prices (oil was $100 last September).
“Our forecasts assume that the banks sector makes around a £20bn loss in 2008 and 2009 and that the insurance sector makes no profit in 2008. The profile is much less severe if we strip out the banks – for example, our model suggests profits for the market ex-financials will fall 24% in 2009 post 15% growth in 2008.
“At this point we are also officially introducing a top-down 2010 earnings per share and dividends per share growth forecast of 0%. While this could be perceived as “fence-sitting”, we think it accurately reflects both our uncertainties about the future and an underlying bias not to want to invest in assets based on the expectation of any economic or profit growth next year.
“If our expectation of a 60% peak-to-trough decline in UK profits is correct, this would mark an even worse outcome than that seen in the early 1930s when our data suggests profits fell by around 57%. However we do not consider this forecast unreasonable – prior to this downturn, we saw the biggest 5-year increase in corporate profits in the history of our data and hence it is not unreasonable to also expect the biggest bust.
By LIZ RAPPAPORT and SERENA NG
The credit markets are seizing up again amid new anxieties about the global financial system.
The fear and uncertainty that sent stocks to 12-year lows is now roiling the market for corporate bonds and loans, which have given back much of the gains they chalked up earlier in the year.
Short-term credit markets are still performing better than they did last year thanks to government programs to buy commercial paper and guarantee short-term debt. But some risk premiums are widening. The spread on junk bonds, for example, has climbed to 19 percentage points over that of comparable Treasury bonds, up from 16 percentage points in February. And Libor, the London interbank offered rate, a common benchmark interest rate, has crept up over the past weeks, from 1.1% in mid-January to 1.3% on Friday, reflecting banks' concerns about being paid back for even short-term loans. It is still well below its peak of 4.8% last October.
[New Fears as Credit Markets Tighten Up]
This time around, the economy is slipping deeper into a recession, and bond investors worry the government's repeated modifications to its financial-rescue packages are undermining the very foundations of bond investing: the right of creditors to claim their assets first if a borrower defaults. Without this assurance, bonds of even the most stalwart institutions are much riskier to own.
After what seemed like the beginning of a thawing of debt markets early in the year, sentiment has deteriorated, analysts say. The markets remain open only to the strongest companies. A rally in U.S. Treasury bonds last week reflects another bout of flight-to-quality buying. Junk bonds have lost more than 7% in returns in the past month, while high-grade bonds have lost more than 2%. Both drops are relatively large considering these markets had stabilized over the new year.
Part of the problem is that investors are still waiting for key details from the government about its plans to shore up U.S. banks and unfreeze the credit markets. After launching a $1 trillion program to kick-start consumer lending last week, the Obama administration is considering creating multiple investment funds to purchase bad loans and other distressed assets. The intent of the funds is to stabilize the prices of good assets and restore investor confidence.
IMF, World Bank, UN & BIS aren't clever enough to sell their program of 'One World Government'. Epic failure will ensue. Thanks for the comedy, this comedy is at a global scale. Don't kid yourselves, we know..
Circle jerks like yourself will be standing in the soup lines. We'll have the final laugh..
That impeding war you have planned is not a good idea. Paperwork & phone taps have you in a precarious situation.. ROLL the dice, you will lose.. winks.
Well that's fairly close to my examination...
As it is we have seen industrial production collapse in every region. The drops in January were: Japan (-31pc), Korea (-26pc), Russia (-16pc), Brazil (-15pc), Italy (-14pc), Germany (-12pc). Falls that took two years from late 1929 have been compressed into five months.
Originally posted by pause4thought
If we believe the problem - reaction - solution scenario, whereby the PTB have pushed us to the brink in order to get people to beg for their 'new' (but long-prepared) 'solution', we should keep our eyes on the G20 to do something immense, something radical. (Cue moves towards something like the end of physical money and/or regional, or even a global currency.)
"I think the best thing that could probably happen to General Motors, in my view, is they go into Chapter 11, they reorganize, they renegotiate ... the union-management contracts and come out of it a stronger, better, leaner, more competitive automotive industry," McCain told "FOX News Sunday."
Mark-to-Market Accounting: Practices and Implications
March 12, 2009, 10:00 a.m., 2128 Rayburn House Office Building
Kanjorski Convenes Hearing to Address Problems Facing Mark-to-Market Accounting
Washington, DC – Congressman Paul E. Kanjorski (D-PA), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, today announced that the Subcommittee will hold a hearing to examine the mark-to-market accounting rules that many contend have exacerbated the current troubles in the financial industry and in the broader economy. The standard requires companies to value assets they hold at current market values. For assets that are frozen and have a diminished current market value but may recover value in the future, the standard has proven problematic. Companies are then forced to write-down billions in assets, which can lead to further write-downs elsewhere.
“Illiquid markets have resulted in great difficulty in valuing sizable assets. Some have therefore complained about fair value accounting and sought to eliminate it. While companies need stability, investors still need accurate information. We therefore cannot allow for fantasy accounting that wishes away bad assets by merely concealing them,” said Chairman Kanjorski. “As a result, we will seek at this hearing to engage in a constructive, thoughtful conversation with a diverse range of viewpoints aimed at identifying fair-minded, incremental, and achievable fixes to this problem. In short, I want to find a way – within the existing independent standard-setting structure – to still provide investors with the information needed to make effective decisions without continuing to impose undue burdens on financial institutions. Each of our anticipated witnesses will have the opportunity to contribute as we all pursue consensus solutions together to this thorny, contentious issue.”
The ADB report estimates capital losses last year in Asia, excluding Japan, at $9,625bn, or 109 per cent of gross domestic product, compared with a global average of 80-85 per cent of GDP. For Latin America, the study estimates 2008 losses at $2,119bn, or 57 per cent of GDP.
Mr Kuroda says: “I am afraid things may get worse before they get better. However, I remain confident that Asia will be one of the first regions to emerge from it, and it will emerge stronger than ever before.”
Originally posted by jimmyx
just a side note to this...i am a smoker (yeah, i'm not proud of it) and i was just at the store on sat. 3/7/09, and they told me that cigerettes will be going up next week by 10 BUCKS A CARTON!! reason...federal tax.
i think i'll buy some lollypops for my oral fixation. this is about a 25% increase in the price!!!