Will the stalactites hold?

The financial meltdown has been making a mess on stock exchange floors and business boardrooms globally but nothing that has been tried so far seems to be freezing the tide of red ink.

Since the financial crises that kicked off in August 2007 it has beset markets and financial institutions all over the world, stock markets have lurched upwards, downwards and sideways since and seemingly at the whim of the market regulators in the United States.

The next collapse of a Bear Stearns, Northern Rock, Lehman Brothers or another New Zealand finance company seems just around the corner-if Bear Sterns Fannie and Freddie and Lehman Brothers have gone the way of the dodo, you can bet other Wall Street firms who have been drinking at the easy credit trough and lending to others whose assets are of dubious value are going to head the same way.

Last week a massive bombshell, one that has been on the brink for the best part of seven years, Fannie Mae and Freddie Mac finally collapse and the US Federal Government will pile 100s of billions of taxpayer dollars into it hoping to stem the flow.

All this has had a chilling effect on the credit market, the lifeblood of business, between financial institutions and other business and between individuals.

Heads of powerful investment banks have still not come clean about their exposure to the sub-prime derivatives market to in what Warren Buffett has called "financial weapons of mass destruction" and we continue to see new revelations everyday about previous cavalier attitudes to lending, and borrowing, coming home to roost.

The value of these derivatives in the Fannie and Freddie collapse are relevant to the bleak outlook for world markets and the global economy and likewise the recent Lehman Brothers meltdown.

Optimism is well overrated in this market because the bubble of optimism keeps getting pricked.

Even Warren Buffett's assurances that the Federal Reserve did the right thing bailing out Fannie and Freddie had me worried.

It seems a tad self serving to me on his part considering he usually keeps his mouth shut and claims not to like the limelight-seems to me he has been popping up everywhere in extended interviews, ball games, TV shows and the like over the last year or so, most uncharacteristic of him and his style in the past.

My feeling is that investors are set for at least another year of this cloak and dagger stuff.

The market has so far been propped up by taxpayers around the globe-directly to help ailing banks and indirectly to allow cheaper credit to flow through financial markets and ease the pressure on doing normal business.

There is no sign yet that this approach has or will work in the future, having said that, the vast increases in new and different financial instruments in the 1990s and early 2000s and the resultant surge in speculation and bull runs in sharemarkets took time to reach their nadir.

Perhaps now that the bubble has burst it will take just as long to recover from the hangover than the credit binge party itself.


Related Share Investor Reading

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Global Credit Squeeze: There is no free lunch
Global Market Meltdown: What is Warren Buffett doing?
Credit crunch a blessing is disguise

Discuss this topic @ Share Investor Forum







c Share Investor 2008

TV One Colmar Brunton Poll: Sept 14 2008

In the latest TV One Colmar Brunton Poll out this minute the polls are not good for Labour but things have changed.

National is on 53%, and Labour on 35%. The Greens are back over the 5% threshold and Act has crept back into the picture with 2%. The Maori Party is on 1.8% and New Zealand First is at under 2% support.

National would have 66 seats on these numbers and Labour just 43. The Greens would have six MPs and, assuming electorate seats are held, the Maori Party gets four, Act three, United Future and the Progessives one seat each.

More significantly, John Key also leads Helen Clark by 10 points as preferred Prime Minister.

It puts last months polls that gave Labour a closing gap into sharp focus because they failed to show any sort of meaningful long-term trend.

Today's Colmar Brunton Poll continues a steady trend of National leading Labour by 15 points or more for over a year.

It also shows how much Helen Clark's support of Winston Peters has hurt them and NZ First itself.

More at TVNZ

National pulls well ahead in poll (3:33) VIDEO

Related Political Animal Reading

Colmar Brunton Poll: 22 August 2008

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Colmar Brunton Poll: 22 June 2008

c Political Animal 2008

A Sign O' the Times

Originally from Whaleoil but I got this from KiwiBlog, come two highly modified Labour Billboards.

Helen's own billboards have been airbrushed and manipulated but these hoardings take the photo shopping that one step further.

Labour tried some fakery of their own earlier this year when they posted brochures to kiwis extolling the virtues of their generosity to families in the 2008 Budget and used a fake family on the offending junk mail.

Perhaps then, the billboards below are not far from Labours past history of fakery and surface sheen.

These fake billboards certainly put Clark's matter of trust claims in some perspective.

Satire, yes, but there is some truth behind those composites.

c Political Animal 2008

Labour eats Bush in Indian Nuclear sandwich

Agenda  
Episode 23, 14 Sep 2008 

On the Agenda programme this morning Phil Goff is trying to defend the bad decisions and shonky position of our defence forces: inability to fight in combat,purchasing decisions gone awry etc.

Incidentally Goff is very defensive, rude and shouting over the interviewer.

The big news though that a phone call from George Bush has pushed Labour to allow India to develop their nuclear capabilities, a clear flip flop on Labours previously strong nuclear stance:

"There were several high-level phone calls" to the capitals of the holdout countries, with even US President George W. Bush and secretary of state Condoleezza Rice on the phone, an unidentified diplomat told AFP in Vienna. The holdouts complained of "bullying" tactics by Washington. "The Chinese were furious. They walked out. And there’s no agreement without the Chinese," a diplomat told AFP. The Irish were furious, too, and had complained that the US had been bullying them.

Horah News Service

“It was clear to us that as long as these countries were a group, they would remain a problem,” a senior Indian official said. “But we also knew none of them wanted to be the last man standing.” So between the United States and India, a determined political effort was made late Friday night to ensure each of the four came on board. The first to agree was China, said the official, and the last New Zealand, with Ireland and Austria also dropping their objections in between. Though the last three communicated their decision to Washington, the official said the Chinese side directly informed India that it intended to back the consensus.

The Hindu

Seems this little gem has been hidden by Goff and his friends in the Labour Party and is important to note before you vote on Novemeber 8 that a party that calls itself an opponent to Nuclear proliferation globally, flip flops when it comes down to a phone call by a President of the United states that they would label a war monger.

Where are Labour's principles now?

Let them eat Bush.

c Political Animal 2008