Markets In Crisis: Will It Get Worse?

[Ash4781]

http://observer.guardian.co.uk/business/st...2141685,00.html

Stephen Lewis, of Insinger de Beaufort, says it's too soon to call what's happening a full-blown 'credit crunch', but lenders that have spent the past few years lavishing cash on eye-wateringly leveraged deals are likely to be seriously wary in the months ahead.

'A "credit crunch", properly understood, occurs when would-be borrowers with plans for productive capital expenditure are denied access to loans,' he said. 'Not when lenders are leery of meeting the demands of any speculator who would like to gear up.'

Central banks, including the Bank of England, are likely to be mightily relieved if lenders start being a bit more wary. They have been shocked by the rapid pace of credit growth despite repeated interest rate rises in recent years, and have warned that CDOs and other new-fangled financial instruments may simply be hiding risk, instead of helping to spread it around

Any sector that has flourished as a result of cheap, few-questions-asked lending ('covenant-lite' is the City parlance for loans with few conditions) is likely to suffer if sub-prime ushers in a stricter financial era. Analysts say that everything, from commercial property, to fine art to Britain's overvalued housing market, could be vulnerable.

And if the supply of super-leveraged megadeals starts to slow, a whole industry of advisers, lawyers, ratings agencies and bankers will see their fees decline. Consultancy Oxford Economics warned last week that because of the UK's reliance on its rip-roaring financial services sector, the knock-on effects of the sub-prime crunch could depress GDP growth by up to 0.4 per cent.

Interesting times

[South Lorne]

http://observer.guardian.co.uk/business/st...2141685,00.html

Interesting times

...it will get worse before it gets better.....Wall Street Bankers are pulling lines on Lenders which are operating in the segment between prime and sub prime.....and even prime personal borrowers in the US are finding it hard to mortgage /remortgage...... .

[cells]

http://observer.guardian.co.uk/business/st...2141685,00.html

Interesting times

it will not get hard until the Japanese population wakes up and realises that their government has been **** fecking them for years.

its a little complicated to explain, which is why the Japanese are not rioting since they do not understand it. but because of their politicians their base rate is only 0.5% yet a Japanese man living in Japan would be hard pressed to get a mortgage for less than 10%

this stops asset inflations and allows the carry trade, which is good for the Japanese elite rich bastards but it totally screwing the middle class and poor

until they wake up and demand their base rate be increased, the world has a cheap source of credit. although this is through the blood and tears of many poor Japanese people

[Sinking Feeling]

it will not get hard until the Japanese population wakes up and realises that their government has been **** fecking them for years.

its a little complicated to explain, which is why the Japanese are not rioting since they do not understand it. but because of their politicians their base rate is only 0.5% yet a Japanese man living in Japan would be hard pressed to get a mortgage for less than 10%

this stops asset inflations and allows the carry trade, which is good for the Japanese elite rich bastards but it totally screwing the middle class and poor

until they wake up and demand their base rate be increased, the world has a cheap source of credit. although this is through the blood and tears of many poor Japanese people

This might be the model which is being copied in the west.

That is, that now banks have to find extra profit that came through fees and charges, they now have an excuse to push lending rates to much higher levels above base rates.