Thursday, Sep 20, 2007
The economic and financial doldrums ahead
Money Week: Is Britain heading for a Japanese-style lost decade?
The Bank of England was only ever going to be independent for as long as it was doing what the boss wanted. And for ten years, it did. Now the entire Anglo-Saxon economy - possibly the global economy, if you account for the fact that China’s economic miracle relies a great deal on selling Americans cheap goods - is a Ponzi scheme built on houses.
Posted by enuii @ 04:50 PM (722 views) Add Comment
3 Comments
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1. alan said...
I beg to disagree with the article. There are NOT "signs of the (banking) problems abating, now" . Sorry, Moneyweek but the numbers coming out of the US on Sub-Prime defaults are going up fast. They will cause another big bond/fund hit, soon.
http://www.bloomberg.com/apps/news?pid=20601206&sid=akOEPec30TR4&refer=realestate
Credit Suisse put the numbers together, as the Bloomberg article says. "As many as half of the 450,000 subprime borrowers whose mortgage payments increase in the next three months may lose their homes because they can't sell, refinance or qualify for help from the U.S. government". This will generate a much larger wave of loan defaults than has previously been seen.
The Swiss are experts at banking, and Credit Suisse is the 2nd biggest bank. When they say duck, you duck!
2. japanese uncle said...
My gut feeling tells, things are much worse in this UK bubble than in the Japanese bubble in 1990. Consumers debt was hardly an issue at that time in Japan, there was no 1.3 trillion personal debt. Besides the property bubble in Japan was about commercial property rather than houses, thus basically smaller in scale that what we see now in UK. Savings was much bigger in Japan whose manufacturing base has been reasonably wholesome all the time. I am afraid the aftermath of this bubble may well be beyond comparison. Economic Chernovyl may be the only word for it.
3. planning4acrash said...
The embarracing thing is, that, to have avoided all this, all we needed were higher interest rates in 2000, a short sharp recession and hey presto. Its like a hung over person who can't bring themselves to puke up, so they remain hung over for far longer than they need to be. The system needs a purge, and it'll happen eventually whether the government like it or not.