Thursday, Mar 05, 2009
So, the market didn't like QE?
Reuter: FTSE tumbles 3.2 pct on financials; Aviva slumps
Britain's leading share index ended down 3.2 percent on Thursday, shrugging off the Bank of England's interest rate cut, as Aviva (AV.L) led financials lower on concerns over the insurer's capital strength.
The FTSE 100 .FTSE closed 116.01 points lower at 3,529.86, after gaining 3.8 percent on Wednesday to snap a three-session losing streak. The UK benchmark is down more than 20 percent so far this year after sliding more than 31 percent last year.
Posted by peter_2008 @ 05:59 PM (460 views) Add Comment
4 Comments
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1. 51ck-6-51x said...
The market does not seem to think that QE will help banks profit.
The corporate outlook is no different, there will still be a relatively high default rate and low recovery rate and there is little reason for banks to lend any extra capital they receive.
I think that sums it up.
2. jack c said...
From Moneymarketing - www.moneymarketing.co.uk/cgi-bin/item.cgi?id=182031&d=340&h=341&f=342
Insurance giant Aviva soon dragged on the index with shares losing 19 per cent to 230.25p in morning trades after posting losses of £885m for 2008, a year it described as "tumultuous". The company continued to extend its losses throughout the afternoon following the Bank of England's sixth rate cut to 0.5 per cent and closed down 33 per cent at 189p.This sparked a sell off across the sector with Legal & General falling over 28 per cent to 26.60p, Prudential down 20 per cent to 221p, Standard Life down 14.82 per cent to 138.50p and Friends Provident down 13.5 per cent to 60.70p.Banks didn't fare much better with Barclays closing lower by 24 per cent to 65.50p. Lloyds Banking Group was more than 15 per cent further into the red at 40.30p while Royal Bank of Scotland fell over 8 per cent to 20.80p
Declining crude and copper prices dragged oil and mining companies lower with Royal Dutch Shell closing down over 2 per cent to 1,419p and BHP Billiton down over 5 per cent to 1,107p.
3. troy said...
from XAT3/4
Our current system of exchange was created with a profit motive aimed at capitalising on people's need for currency. The Central Banking System (which produces the actual currency and loans it to governments at interest and sells it to high street banks at face value) was set up as a network of private businesses with official-sounding names, engineered to make a profit for their shareholders. These include the Bank of England,1 The Federal Reserve,2 and all the other Central Banks throughout the world. Not one of them is democratic! All of them are masters of disguise. Even nationalisation has not stopped Bank of England stock holders from receiving their dividends, nor stopped the bank from keeping 75% of its profit, while writing off the 25% it pays to the Treasury as corporation tax. 3
The use of money allows the necessary exchange of goods and services within our world, much the way blood cells aid the distribution of oxygen through our bodies. It would be right and good if this exchange medium was provided freely according to need; but instead, the production of money has been turned into a profit-centre. If our own bodies were to work on this basis they would not function in a healthy way for long.
The Central Banks (which charge interest to governments for the money they produce from out of nothing, with no labour or wealth involved) have secured these loans against your future taxes. Without even asking you, a substantial part of your future worth has been put up as collateral.
What Central Banks do in a big way with countries, your local bank will replicate on organisations and individuals, using the same slight of hand to produce the funds they lend out of thin air.
4. Jeremy said...
Banks have to charge interest to cover defaults - only problem is, they took too much of the insurance pot as profit and can't cover the defaults. Whoops.