#Brits play FTSE with recession
4114 Dead
Markets spooked by warning of recession
* Graeme Wearden and Kathryn Hopkins
* guardian.co.uk,
* Tuesday July 8, 2008
* Article history
The London stock market plunged into bear market territory today
following a grim warning that the UK economy is sliding into recession
and more job losses in the troubled housing market.
The FTSE 100 index shed 154 points in morning trading, falling as low
as 5358.7 as gloom hit the financial sector again. Stock markets
across Europe and Asia were also bathed in red.
It followed a grim warning from the British Chambers of Commerce that
the UK is in serious danger of recession, as companies are battered by
rising inflation and the ongoing credit crunch.
In its latest survey of the UK economy, the BCC reported that sales,
orders and confidence have all fallen sharply — bad news for
businesses and consumers.
"The outlook is grim, and we believe that the correction period is
likely to be longer and nastier than anticipated," said the BCC's
economic adviser, David Kern.
Manoj Ladwa, a senior trader at TradIndex, said the BCC's recession
warning "confirms the City's view that the economy is going to get a
lot worse before it gets better". And David Frost, head of the BCC,
warned the government could hit companies with a rise in business
taxes, which he said would be "catastrophic".
It is now almost a year since the credit crunch hit the global
economy. Although the FTSE 100 had recovered to 5462.9 by early
afternoon, analysts warned that it could fall below 5000 before the
crisis is over, meaning further losses for financial institutions and
small investors alike.
David Buik of BGC Partners warned that confidence on the markets was
"shot to ribbons".
"Over the last three months, when you got out of bed and read the
papers or watched TV, you would have seen nothing but bad news," Buik
said.
If the FTSE 100 closes below 5386, then it will have lost more than
20% since its peak in June 2007 — the definition of a bear market.
Britain's battered housebuilders suffered again today, after
Persimmon, the biggest company in the sector, announced it was cutting
2,000 jobs after sales dropped by over 30% this year. They have been
pleading for a cut in interest rates to encourage people back into the
housing market, but there is little optimism that the Bank of England
will reduce rates at its meeting later this week.
"In normal circumstances, the case for the Bank of England to cut
rates this Thursday at its regular monthly meeting would be cut and
dried. But the price of oil and food means that the threat of
inflation remains severe, and most analysts expect rates to remain
unchanged," said Ladwa.
The rising cost of raw materials and fuel has forced companies to cut
back on new investment and is likely to push retail prices higher, the
BCC warned.
Banks were also among the biggest fallers worldwide today, thanks to
speculation that there could soon be yet another round of write-downs.
Citigroup, UBS and others have already wiped off billions of pounds,
having invested in mortgage-backed securities whose value has now
slumped thanks to the subprime mortgage crisis.
Shares in America's two biggest mortgage providers, Freddie Mac and
Fannie Mae, fell 18% and 16% respectively amid speculation that they
may announce new losses. This sparked losses in Asia, where Japan's
Nikkei closed 2.45% lower and the Hong Kong Hang Seng shed 3.1%.
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a.a. #2211 -- Bryan Zepp Jamieson
Blackwater
<zepp22...@finestplanet.com> wrote:
>http://www.guardian.co.uk/business/2008/jul/08/marketturmoil.creditcrunch1
>Markets spooked by warning of recession
>
> * Graeme Wearden and Kathryn Hopkins
> * guardian.co.uk,
> * Tuesday July 8, 2008
> * Article history
>
>The London stock market plunged into bear market territory today
>following a grim warning that the UK economy is sliding into recession
>and more job losses in the troubled housing market.
>
>The FTSE 100 index shed 154 points in morning trading, falling as low
>as 5358.7 as gloom hit the financial sector again. Stock markets
>across Europe and Asia were also bathed in red.
>
>It followed a grim warning from the British Chambers of Commerce that
>the UK is in serious danger of recession, as companies are battered by
>rising inflation and the ongoing credit crunch.
>
>In its latest survey of the UK economy, the BCC reported that sales,
>orders and confidence have all fallen sharply — bad news for
>businesses and consumers.
>
>"The outlook is grim, and we believe that the correction period is
>likely to be longer and nastier than anticipated," said the BCC's
>economic adviser, David Kern.
That's one problem with an interlinked, global economy.
Things go wrong in ONE place and the problem SPREADS
everywhere like a virus.
Doesn't help that China and India have been suckin' up
UK jobs, opportunities and possibilities just like they've
done in the USA. Leaves the west with big expenses - big
welfare-states in some instances too - but not enough
business to PAY for it all.
The young and ambitious ... I'd say learn Mandarin and
move to China. That's where the growth and opportunity
will be for the next 20+ years fer sure. Everywhere else,
well ... kinda like a back alley in Tijuana ......
4114 Dead
They didn't benefit very much. India is looking at major social
unrest because of exploding prices in fuel and food, and the Chinese
stock market plummeted 4% last night.
>
> The young and ambitious ... I'd say learn Mandarin and
> move to China. That's where the growth and opportunity
> will be for the next 20+ years fer sure. Everywhere else,
> well ... kinda like a back alley in Tijuana ......
Actually, I think the Chinese bubble is about to burst. Their economy
manages to combine the worst of the socialist "managed state" with the
excesses of capitalism, and it's catching up to them.
They WILL retrench and return, but not without some major
institutional reform.
Blackwater
wrote:
Their governments will resolve to GET the damned
fuel ... meaning they'll outbid US, and subsidize
at home. Fortunately, being in the black, they can
AFFORD such a strategy for quite some time.
But where's that leave us ? Living on just the oil
we can pump out of our own wells ? That's 15-30
percent too little, depending on how you add the
figures. BIG problem - and not enough cash to
bail ourselves out anytime soon.
>> The young and ambitious ... I'd say learn Mandarin and
>> move to China. That's where the growth and opportunity
>> will be for the next 20+ years fer sure. Everywhere else,
>> well ... kinda like a back alley in Tijuana ......
>
>Actually, I think the Chinese bubble is about to burst. Their economy
>manages to combine the worst of the socialist "managed state" with the
>excesses of capitalism, and it's catching up to them.
Their biggest worry is the 'peasantry' ... the people
outside of the big rich cities. That's a LOT of people.
They're not HAPPY.
In just the last couple of years, a concerted effort has
been made to "spread the wealth" so to speak ... move
city-style business and services out into the countryside.
Just in time - or too little too late ? We'll see.
The quasi-commie system isn't serving very well anymore,
as you mentioned. They need to revamp ... but there's
a lot of politicians seriously eager to hang on to what
power they've got. It may be a case of where they'll
need to 'retire' old political offices when the person
occupying it retires, build their way into a new system.
>They WILL retrench and return, but not without some major
>institutional reform.
They can afford it.
4114 Dead
India isn't in the black now, and China's economy rests largely on
exports to the US, which means that it's starting to take a dramatic
hit.
>
> But where's that leave us ? Living on just the oil
> we can pump out of our own wells ? That's 15-30
> percent too little, depending on how you add the
> figures. BIG problem - and not enough cash to
> bail ourselves out anytime soon.
>
>>> The young and ambitious ... I'd say learn Mandarin and
>>> move to China. That's where the growth and opportunity
>>> will be for the next 20+ years fer sure. Everywhere else,
>>> well ... kinda like a back alley in Tijuana ......
>>
>>Actually, I think the Chinese bubble is about to burst. Their economy
>>manages to combine the worst of the socialist "managed state" with the
>>excesses of capitalism, and it's catching up to them.
>
> Their biggest worry is the 'peasantry' ... the people
> outside of the big rich cities. That's a LOT of people.
> They're not HAPPY.
Agreed. As I recall, you watch BBC World News America, so you're
better informed about China than most folks.
>
> In just the last couple of years, a concerted effort has
> been made to "spread the wealth" so to speak ... move
> city-style business and services out into the countryside.
> Just in time - or too little too late ? We'll see.
Well, the ham-handed approach of simply uprooting villages and
replacing them with cities isn't endearing the Chinese government to
their people. And pollution is becoming a big social issue there.
> The quasi-commie system isn't serving very well anymore,
> as you mentioned. They need to revamp ... but there's
> a lot of politicians seriously eager to hang on to what
> power they've got. It may be a case of where they'll
> need to 'retire' old political offices when the person
> occupying it retires, build their way into a new system.
Easier said than done.
>
>>They WILL retrench and return, but not without some major
>>institutional reform.
>
> They can afford it.
They'll have to.
Blackwater
wrote:
PARTS of the Indian economy are in the black. It's an
unusually uneven distribution of wealth there. But, they
are coming up in the world ...
China is in danger of killing ye olde golden goose. If their
policies and practices strip TOO many jobs, TOO many resources
from client nations ... well ... nobody can afford to buy
Chinese goods.
This may be one instance where their heavy-handed politicians
can do something ours cannot - forcibly intervene to limit
profit-generating persuits that endanger future business.
The USA, even most of europe, much too laissez-faire, much
to controlled by corporations. No way to grab the business
sector by the throat and say "Slow Down ! Don't Make Too Much
Money Too Quickly !".
>> But where's that leave us ? Living on just the oil
>> we can pump out of our own wells ? That's 15-30
>> percent too little, depending on how you add the
>> figures. BIG problem - and not enough cash to
>> bail ourselves out anytime soon.
>>
>>>> The young and ambitious ... I'd say learn Mandarin and
>>>> move to China. That's where the growth and opportunity
>>>> will be for the next 20+ years fer sure. Everywhere else,
>>>> well ... kinda like a back alley in Tijuana ......
>>>
>>>Actually, I think the Chinese bubble is about to burst. Their economy
>>>manages to combine the worst of the socialist "managed state" with the
>>>excesses of capitalism, and it's catching up to them.
>>
>> Their biggest worry is the 'peasantry' ... the people
>> outside of the big rich cities. That's a LOT of people.
>> They're not HAPPY.
>
>Agreed. As I recall, you watch BBC World News America, so you're
>better informed about China than most folks.
Anyone who watches an hour of BBC is much better
informed than people who watch a dozen hours of
that American infotainment criminally mislabeled
as "news".
>> In just the last couple of years, a concerted effort has
>> been made to "spread the wealth" so to speak ... move
>> city-style business and services out into the countryside.
>> Just in time - or too little too late ? We'll see.
>
>Well, the ham-handed approach of simply uprooting villages and
>replacing them with cities isn't endearing the Chinese government to
>their people. And pollution is becoming a big social issue there.
PART of the plan was to "spread the MESS" ... but the govt
pretends that wasn't on their minds.
SOME small towns were uprooted, true. However the latest
strategy seems a bit kinder and gentler. They simply start
relocating businesses & factories (and services) to the
outskirts of the small towns. Most of the labor force will
naturally COME from those small towns and the wealth is
thus spread.
I'm unsure whether this approach represents 'enlightenment',
or just whitewash that will only last until the Olympics
are over and those annoying foreign reporters are gone.
>> The quasi-commie system isn't serving very well anymore,
>> as you mentioned. They need to revamp ... but there's
>> a lot of politicians seriously eager to hang on to what
>> power they've got. It may be a case of where they'll
>> need to 'retire' old political offices when the person
>> occupying it retires, build their way into a new system.
>
>Easier said than done.
Ain't it always ... :-)
>>>They WILL retrench and return, but not without some major
>>>institutional reform.
>>
>> They can afford it.
>
>They'll have to.
They will.
They'd BETTER.
A civil war in a huge nuclear state like China would
be a terrifying thing.