Volker-This is not an Ordinary Recession

Generali

Rochdale_Pioneers wrote: »

What I am saying is that the declining UK economy keeps being compared to the size of the world economy pre-crash. Global GDP is shrinking as individual national GDPs shrink. UK in recession on its own really hurts - we shrink as a slice of the total pie. UK in a global recession is less bad - we shrink but our size of the pie can actually increase if we shrink at a slower rate than the pie.

You can only compare the size of your economy to the total economy at any moment in time. If our GDP drops 10%, but European GDP drops 15%, then we come out of it comparatively stronger - a bigger player in a shrunken market.

Ok, I see. By definition, if your economy is bigger then it's stronger so what you say is undeniably true.

I'd be a little wary of using a single or couple of sets of figures to say that the UK is going to do a lot better than other countries. My guess is that France and Germany will be hit hard by the recession but climb out of it fairly quickly as they both have very large engineering sectors.

The UK being much more reliant on services, financial services and retail is likely to drop more slowly (except the financial services bit clearly!!!) but come out of recession at a later date - empirically that is what happens at least, engineering leads the economy, services and retail trail it.

bubblesmoney wrote: »

you can see for yourself the FSA chap on the video at the hearing going on now saying clearly that many of them cant be sold now as no one will buy them and also even if we hold them a few years they still cant be sold and that mostly they wont exist in future. i dont know if he meant all CDOs or just the toxic assets with the banks now. this was a specific question regarding CDOs and other complex instruments which the FSA person agreed are very hard to decipher and that people who buy them probably didnt know much either as per the chairperson of the hearing.

there was also a question about a compulsory CDS trading going on through official multilateral channel, they seem to be looking into it apparently. 75% of the CDS market as per FSA is apparently not standardised and cant be put through a central clearing mechanism and would still need OTC mechanisms!!!

there was also a specific discussion on the 'unmeasurable inputs' needed for valuing these assets and FSA person said he didnt know what these 'unmeasurable inputs' were. this was a specific question regarding barclays assets as far as i can remember.

Valuing OTC products is very hard and there is clearly going to be an element of subjectivity about it. That's not the same as saying they have nil value.

For example, if you imagine the super senior tranche of a very simple CDO where most of the mortgages have been paid off and only a few remain at low LTV. The chances of default on that product are minuscule and so it would be perfectly reasonable to value that at 99% of discounted cash flow. Clearly the equity tranche of a CDO made up of 1,000 sub-prime, 100% LTV, self cert mortgages made by Fat Cat Shyster Bank needs to be valued more conservatively and probably at $0 or thereabouts.

nickmason

MrFonzerelli wrote: »

Originally Posted by Conrad
Is my maths correct?

£500,000,000 (5oobn) UK Govt intervention

Divided amongst say 30,000,000 million working citizens (not all necessarily working at once)

= a measely £166.66 per person.

To avoid a depression

You've mixed up billion with million and moved a decimal point across.

So £500,000,000,000/30,000,000
= c£17k per person

I think that's no longer measly!!

Sounds about like the average take home pay for a year.

I've an idea, why don't we just extract that from all those people who were showing off about how they were making more each year from HPI than from their day job?

(I suppose we could let them off once they repent and accept that it wasn't real in the first place....)

cogito

MrFonzerelli wrote: »

UK GDP is dropping down the league table.

"Britain’s economy has been overtaken by France and, according to economists, could even fall behind Italy next year. ....new figures show that the economic crisis has pushed Britain well down the international league table."
http://www.timesonline.co.uk/tol/news/uk/article5299162.ece

Which is entirely due to the devaluation of the £ just as the reverse was true when the £ was stronger.

Generali

cogito wrote: »

Which is entirely due to the devaluation of the £ just as the reverse was true when the £ was stronger.

From the article:

Britain has also dropped to sixth place in the world on another measure which adjusts for short-term exchange rate fluctuations. These figures, compiled on a so-called purchasing parity basis, show that India is now a bigger economy than Britain, along with America, Japan, China and Germany.