Bears less than Stearn
Looks like Northern Rock was just the start of credit crunch with Bear Stearns needing a huge federal pay out just to stay afloat today. JP Morgan were ‘advised’ to buy Stearns for $1 a share to rescue the company and the USA from a huge fiscal implosion.
There is only one way this can go now without a shadow of a doubt and that is down. No amount of Prime ministerial reassurance will halt the thought processes going through any investor or creditors mind. If George V Dubya thought he could go out on a high after the Iraq debacle, he was very wrong. Didn’t his dad once say “read my lips : no new taxes” and then swiftly be removed from office for messing up the American honey pot.
Which financial institution will be next? Well it won’t be anything from the far east for the moment. In the UK HBOS group or Halifax and the Royal bank of Scotland have been hit heavily today wiping around 13% off their shares. Chances are they’ll be fine and the smaller building societies will be hit hardest. Anyone who has interests in American investment better have an escape plan as we could be downsizing for the next five years or so.
It is a real shame I didn’t invest in gold around 6 months ago as the price per Krugerrand was around £340 GBP. Now it is nearer £530 per ounce which is a staggering rise which happened directly after the American credit crunch and Northern Rocks collapse in the UK. Of course, hindsight is always 20/20 but those guys in the wild west were right to deal in gold in their days of uncertainty.
Gordon Brown’s tenure as Chancellor of the Exchequer was bullet pointed as fruitful and the best period of financial stabilty in the UK for, well, possibly ever. Now we can see that he was riding the crest of the financial boom time and that all it took to ruin that was a lot of pikey Americans not paying their mortgage on home sweet home, or a trailer. Maybe he is cleverer than we think and pushed through the Euro thingy because he saw all this coming and knew that it could well be the end of the Bank of England if he didn’t. The Euro has jumped up to £0.76 GBP from £0.65 about six months ago.
This all means the UK is becoming cheaper to travel to and live in especially with free European trade discounts but Ibiza holidays are gonna be very expensive. Oh well.
Posted: March 17th, 2008 under Uncategorized.
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