Financial Crisis - how bad will it get?...
 

I'm sure everyone by now is aware of the current financial crisis sparks by the sub-prime lending woes in the US.

FTSE is tanking again today and has now fallen 11% in under a month.

Seems investors dont want anything to do with debt, so of course banks and BS's are having issues getting people to finance their debt - result of course will be that it will quite suddenly get much harder to borrow money.

Obviously for consumers this will mean a big turn-around as recently its been stupidly easy to borrow large sums of unsecured debt, and take out crazy-multiple mortgages, fuelling crazy house prices, however if businesses are having issues raising funds this will surely have a massively damaging effect on the economy??...

This all doesnt really come as a surprise, as things had gone so slack - but I'm amazed things have gone this bad this quickly?

Are we in for a bit of a recession here? How bad could it all get?

They will keep on telling us that it is all ok really, helped on by the BBC of course, but eventually it may well all come to a head. Flash must be desperately trying to hold it all together at least until he is elected.

Les

I think a lot of this is a natural correction. However until we can work out the full liabilities that banks have exposure to with their cdo's and complex credit derivatives then there will be uncertainty and therefore volatility. We shall see but the possibiliy of a US rate cut may blow this bad time out of the water and we'll see a charge again. As for the UK, the sub prime blow out in the US is based on different circumstances to what we have here, I don't see the same effect with respect to house prices etc.

House price drop to home owners - "Correction"

House price drop to renterd - rub hands...

It was rising rates which popped the US housing bubble, but this lending crisis will push prices down even further. Here we probably would have gone the same way, but IMO its the sub-prime crisis which has almost certainly popped the housing market here (before high rates could). As lenders simply will not be ABLE to get their hands on the money to lend the people - of course the affect on prices will be downward.

Whats far more worrying IMO is lending for businesses. We've had a decade long boom, and if businesses struggle to raise capital we'll have a nasty bust surely?

Having only been in the jobs market for a few years since leaving uni, I've only read about the busts and recessions, like in the late 80's/early 90's but obviously never experienced one - and I dont want to!!

just wait - mortgages are not best sellers at the moment which could indicate less secure lender even still further over here!

Ive said it on another thred but 0.5-1% more on interest rates, and theres a lot of people ****ed in the UK. That'll spark a recession.

Flash:lol1: Iv'e not heard him called that before. quite appropriate though

I think you've got the wrong end of the stick from the papers you've been reading. Sub-prime lending is an American issue, not British unless UK banks have been underwriting US financial institution's debt.

It also allows the BoE off the hook as fas as another interest rate rise is concerned, which will have a positive affect on lending.

You do seem to be very obsessed with money, house prices, interest rates and mortgages.

You should ask webby to set up Financial Corner ;)

Sub-prime lending is an American issue which is having a massive impact world wide because so many banks (not just US) have exposure to it!

The FTSE has just closed down 4.1% - biggest single day loss since Sept 11th (after losing 3.7% in one day last week, which was at the time the biggest single day loss since Sept 11th)

Carry trade is unwinding as investors pull out of anything involving risk and debt - this will have a massive effect all over the world. (This is where you borrow money in currency where rates are low, and lend where its high - one of the main reasons for the cheap loans here!)

Watch lenders rates rise sharply and lending criteria get very tight over the coming months!!!

FT.com / MARKETS / Currencies - Yen surges as carry trades unwind

Good thinking Rannoch, take note webmaster ;)

Thought HSBC had their fingers severely burnt bt getting heavily involved with US sub prime ?

Anyway,I have learnt that in the UK,nothing can ever go wrong ever again.Boom and bust is a distant memory,same for unemployment and same for mortgage rates over 6%.Never will we see problems again.

Errr....I think those people might be in dream land:)

Sub-prime lending may be an American issue, but I guess that our equivalent is people borrowing large salary multiples who are stuffed if interest rates or other living expenses go up by much.

I'm not sure why you're quoting me as if to offer an opposing viewpoint, as I've already made the point about UK banks underwriting US sub-prime debt.

Pete's understanding is based purely on what he reads in the papers - hence the semi-hysterical posts on these subjects whilst completely ignoring base rates off setting and supply crunch on the financial side.

This is typical of the selective reporting carried out by the doom mongers (and toilet paper news paper.) Quote the statistics that back up your story and ignore the rest. You seem to have failed to mention that between close on Friday (after the big drop) and close on Monday the index bounced back by 180 odd points.


p.s. - This is the biggest daily loss since March 2003, but that doesn't have the same ring to it as 09/11 :rolleyes:

Based on sources such as Bloomberg, Reuters and Financial Times, but hey I'm sure these are all just doom-mongering eh, and infact everything is rosy ;)

Prob not a good time just yet to think about buying a house in the USA then. But as long as the british economy does not fall flat just yet, it might swing to be come an advantage for some, attracting UK money in, and boosting things a little.

Does look in a bad way though. When I was out there a couple of weeks ago, one of the largest morgage companies collapsed. :(

talking of carry trades, you should see the GBPNZD rate, bounced 10% in a few days!

As you were.....

Oh and the FTSE100 is up 127 points in extended trading.....

Looks like i might have picked a good time to sell everything i own and leave the country then :)

Great time to invest - i am lined up to have my biggest month of client investment all year.

Anyone who belives the stockmarket will grow over the long term may as well go in now.

I know the feeling of planning that, not far behind you :)

snazy and NAT21 - where to?

So which one of these three superb sources mentioned 9/11 and forget about March 2003? Oh - Hang on - you can't link March 2003 to some terrible disaster so it won't look as bad. So now we have agreed that there have been bigger falls in the FTSE at least twice this millenium, can you look up your superb sources and see what happened over the following 12 months?

India, Thailand, Cambodia, Vietnam, Philipines, New Zealand, Australia, Hawaii, West coast US...no idea after that! Not rock solid plans, if i like it enough somewhere i'll stay as long as i can!

Dow ended up just 15 points down on the day......watch the FTSE jump in the morning!

see!


crash my arse...as it where.

dead cat bounce more like :)

dead rubber cat by the looks of it

Just been "selling in" a busines story to the national papers -tricky as several of them said somethin along the lines of "we're having a financial meltdown at the moment - call us next week!"

FTSE up 1.5% so far today already...you lot worry over nothing.

House prices?...The only way is up!!!...woohoo!