Banking Crisis - Bear Stearns (US's Northern Rock Scenario) impact on UK

worldtraveller

UK007BullDog wrote: »

Worldtraveller, but if lenders have to borrow at really high rates there is NO WAY that the rates here will fall. The last BoE cut were not even passed on to the customers or at a very reduced rate.

With oil going up and costs increasing world wide, food costs and all the other bills increasing I see the rates going up. But then I am not a trained economist/analyst, I am just going by what happened in the past.

But I'm talking about the money markets being able to borrow at rates that could go into negative interest territory in the U.S. and this will be bound to have an effect in the rest of the world. You are correct in implying that these significantly lower rates cannot be passed on in total, but IMO there will still be significant falls. You are correct in general about inflation and it's affect on policy in the past, but, as I say in my OP, the Governments will need to do everything possible to avoid a worldwide recession, which I personally believe is a distinct possibility with the way things are going.

UK007BullDog

What do you mean by negative interest?

globalds

UK007BullDog wrote: »

What do you mean by negative interest?

http://www.bloggingstocks.com/2008/01/30/is-americas-negative-interest-rate-just-like-japans-in-1998/
nice simple explanation.
http://www.abc.net.au/pm/content/2003/s893425.htm
Or a longer version

Datasafe_2

Ah,

another link to the relevance of Japan to our current situation.;)

Datasafe_2

UK007BullDog wrote: »

The car market is also a good indicator. The more 0% deals are offered the worse the economy is getting.

I was going to mention that.

"The warning from Eurotaxglass's suggests that the increased cost of borrowing, stagnant house prices and the credit crunch have now spread to the car market."

http://news.bbc.co.uk/1/hi/business/7293395.stm

globalds

Datasafe wrote: »

I was going to mention that.

"The warning from Eurotaxglass's suggests that the increased cost of borrowing, stagnant house prices and the credit crunch have now spread to the car market."

http://news.bbc.co.uk/1/hi/business/7293395.stm

The car market seems the perfect example of a global trend ..
http://news.bbc.co.uk/1/hi/business/6346325.stm
Lets hope the American manufactureres can start building what the market demands.
http://www.autoblog.com/2007/03/05/confirmed-ford-fiesta-coming-to-america-hope-for-mondeo/

globalds

Datasafe wrote: »

Ah,

another link to the relevance of Japan to our current situation.;)

...It was less about relevence ..More of an example ..
The relevence or not of Japan on this subject is that they could bankroll their economic mismanagement witha very healthy positive balance in trade .So huge public works projects and bailing out of banks ,could be done without the threat of bankrupting the economy .

mircea

My axe to grind is about the millions of pounds of bonuses paid to those who work in the Financial Industry. My understanding is:
Joe public spends billions of pounds on gambles taken by a share trader; the trader pushes through bad gambles because they bring him a nice round bonus; and he does it for so long, he causes a total collapse of the financial markets globally. Joe Public pays for the bad gambles. The share trader retires with his million pounds bonuses to live happily ever after.
Am off to become a City trader.

Datasafe_2

globalds wrote: »

The relevence or not of Japan on this subject is that they could bankroll their economic mismanagement witha very healthy positive balance in trade .

Whereas we have a very unhealthy trade deficit. My point is even with a healthy trade surplus, Japan was plunged into years of depression.

If you belive what the govenment tell us, we have a good economy. :rolleyes:

globalds

Datasafe wrote: »

Whereas we have a very unhealthy trade deficit. My point is even with a healthy trade surplus, Japan was plunged into years of depression.

If you belive what the govenment tell us, we have a good economy. :rolleyes:

If you are of the oppinion (Which I am) That the lenghth of the depression in Japan was due to the fact they were wealthy enough to pay for their ineficient mismangement to continue for far longer than was necessary .Some may say it is still continuing.
Then It may help to understand why I feel a short sharp correction is a better option .
A quick recalculation of a family income and a realisation that what is needed is a few less holidays and un-necesary luxuries ...Is far better than asking for a £10,000 loan whilst you try and sort your debts out ...
An economy is dynamic And even the best run will need tweeking and tightening all the time ...And every now and then to be totally remodeled ...The UK is in a better position than most to be able to do this ...I can't gaurantee that the generals won't make decisions that will lose them battles ...but they have the resources that many would envy.