Article

2007-12-31 Britain

Grim Brown warns of bleak year for Britain

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Posted by lotp 2007-12-31 00:00|| || Front Page|| [11136 views ] Top

#1 Blah, blah, economy, blah, blah, credit crunch (have you looked at interest rates? Do those look like the rates of a credit crunch?) blah, blah, (anybody notice the 4.9% GDP growth last quarter) blah, blah.

With all due respect Mr. Brown, tough economic times come and go. If you had even the slightest clue what you are talking about, you would know for certain that the next one won't have anything to do with this 'credit crunch'.

Cuz it aint one.

Posted by Mike N. 2007-12-31 00:28|| 2007-12-31 00:28|| Front Page Top

#2 Buy low, sell high. Buy now!

Posted by Besoeker 2007-12-31 00:59|| 2007-12-31 00:59|| Front Page Top

#3 So. . . .

It's W's fault!

Does BDS know a limit?

Posted by no mo uro 2007-12-31 06:59|| 2007-12-31 06:59|| Front Page Top

#4 Actually, Mr. Brown, if you were to de-collectivze Britain even a wee bit (let's say, um, health care, perhaps) you could improve your economy instantly.

Posted by no mo uro 2007-12-31 07:02|| 2007-12-31 07:02|| Front Page Top

#5 So much for the claim London is becoming the "financial capitol of the world..."

Posted by M. Murcek">M. Murcek 2007-12-31 07:17|| 2007-12-31 07:17|| Front Page Top

#6 There are a couple issues mixed up in the comments here IMO.

First, interest rates lag behind liquidity, so the current interest rate level isn't a good indicator of whether or not there is a credit crunch. For regulatory reasons, the banks in the UK aren't jacking up interest rates quickly (nor are the banks in the US). However, they aren't lending as much either. In particular, some banks are finding they cannot get the funds guarantees that would allow them to extend credit to good risk consumers. It will take months or perhaps more than a year for that to ripple through the economy and slow down home, car and consumer goods purchases. In the meanwhile, there are 3-4 quarters to go during which the securitized debt instruments which underlie bad lending will unwind. That unwinding may proceed more gently or more violently, depending on a number of outside factors - but unwind they must. And until they do, risk related to already-securitized debt will act as a brake on the economies of the US and Europe. Not necessarily an instantaneous stop, but a slowing down over time.

The slowdown is underway and may accelerate. This credit slowdown may in fact hit the UK harder than the US due to the differences in the way that the Bank of England manages funds guarantees vs. the Federal Reserve procedures. We'll see ....

Posted by lotp 2007-12-31 08:47|| 2007-12-31 08:47|| Front Page Top

#7 Re: London as the financial capital of the world, it is still the case that the London Exchange processes over a trillion dollars worth of currency exchange every trading day. That's a separate issue from the state of the British economy.

Posted by lotp 2007-12-31 08:50|| 2007-12-31 08:50|| Front Page Top

#8 Looks like he ought to put on the sweater and steal Carter's "Malaise" speech...

Posted by tu3031 2007-12-31 11:31|| 2007-12-31 11:31|| Front Page Top

#9 He looks like Ted Kennedy's drinking buddy with that pic...

Posted by Raj 2007-12-31 12:57|| 2007-12-31 12:57|| Front Page Top

#10 He's a Stalinist control freak that bottled out of an election (after Bliar resigned) that he was sure to win. He stole £5 billion a year from the peoples' pensions funds from 1997 onwards. He is reknowned for his 'stealth taxes' and the way in which, as Chancellor, he complicated the UK tax code to such an extent that accountants were complaining they didn't understand it anymore. He is known as 'Macavity', because when the shit hits the fan (inevitable with these nouveau Socialists) he is never to be seen.

If you want to know more about the other half of the double-act that has done more to damage this country than anyone could have conceived 10 years ago, then check out www.order-order.com, and start clicking....

Posted by Tony (UK) 2007-12-31 14:22|| 2007-12-31 14:22|| Front Page Top

#11 lotp,

CDO's have been unwinding for two quarters already. Bad loan likely have a as much as a year left. Bank lending rates haven't gone up at all, in fact, they've gone down in response to the decrease in the short rate.

If a liquidity problem emerges, its not going to be from a some bad home loans. Fed actions maybe. Corporate default rates are good. Haven't check in a while, but as of earlier this fall, they were still below historical averages.

Posted by Mike N. 2007-12-31 17:08|| 2007-12-31 17:08|| Front Page Top

#12 The liquidity problem in Britain isn't due to bad home loans there, Mike, but rather due to a tightening of inter-bank lending. Which comes as a response to the perceived riskiness of previously issued & collateralized sub-prime loans here.

That said ... I know of several small businesses in my state who are finding it harder to get credit for capital purchases that would have been approved a year ago without difficulty. From their perspective there is indeed a credit crunch. But certainly we're not seeing runs on banks here, unlike the Northern Rock scenario in the UK.

We'll see how it plays out ....

Posted by lotp 2007-12-31 17:34|| 2007-12-31 17:34|| Front Page Top

#13 You've nailed it. Everybody is afraid of subprime and the paper they it is causing problems with. When subprime and the paper was only able to get as big as it was because of top much liquidity.(and not enough 'responsible' places for it.)

Banks are afraid of the unknown. Once this is done, we'll see it wasn't the problem everyone was afraid it was.

Also, banks were giving loans to almost anyone for almost anything a year ago. A little belt tightening could simply be a return to responsibily. It certainly isn't a crippling credit crunch.

Now, if Bush keeps interrupting the markets with this telling banks to freeze rates thing, we could end up with a major credit crunch. But not because of subprime. Because of politicians.

Posted by Mike N. 2007-12-31 19:29|| 2007-12-31 19:29|| Front Page Top

#14 Once this is done, we'll see it wasn't the problem everyone was afraid it was.

"it'll be bigger than Y2K, you'll see! And you'll all be sorry!"

/economic AlGore

Posted by Frank G">Frank G 2007-12-31 19:43|| 2007-12-31 19:43|| Front Page Top

#15 Not wishing to beat dead horses, but ...

CBI Expects Grim Year but Soft Landing

British business and the City are braced for a grim year for the economy as the global credit crunch, weakening house prices and softening consumer spending look set to make 2008 the worst year since the recession of the early 1990s.

The CBI in its New Year message today warns that it now expects a "difficult year" for the world's fifth largest economy due to the "two big shocks" of the credit crunch and rising prices of food, oil and other commodities.

London Scottish Bank shares dive on lack of capital

The doorstep lender London Scottish Bank admitted yesterday that it does not have enough capital to satisfy the regulator and warned that it may not be able to pay a final dividend.

Shares in the troubled financial services group, which also carries out debt collection, ended the day 18% lower at 63p after it revealed it needed to take an extra charge of as much as £22m because customers were failing to repay their loans. The shares have halved in a year.

My concern is the impact this will have on British support in Afghanistan and elsewhere. Brown is tepid in supporting MOD under the best of times - and 2008 doesn't look like it will be good times at all for the UK.

Posted by lotp 2007-12-31 21:09|| 2007-12-31 21:09|| Front Page Top

#16 Not too good in Ireland, either:

Growth in lending to Ireland's private sector was the weakest in four years in November, with Ireland's cooling property market knocking growth in loans to homebuyers to its lowest level since 1996.

Posted by lotp 2007-12-31 21:31|| 2007-12-31 21:31|| Front Page Top

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