The Credit Crunch Thread 2 - How low can we go?

[Kryten]

Continuing from this thread let the discussions continue.

[Mandrill]

http://news.bbc.co.uk/1/hi/uk_politics/7667284.stm

The UK's property market is likely to recover quicker than those elsewhere because too few properties have been built recently, Gordon Brown has said.

The prime minister told a City audience the US and Spain had "overbuilt" homes during the years of rising prices.

In contrast the UK had "pent-up demand" because not enough had been built.

He said the UK problem was not shortage of demand for homes at "the right prices" but a shortage of mortgages "at the right prices for people to buy".

So house prices are not the problem it's lack of mortgages :|.

It's becoming very obvious that Brown's idea of growth is to have everyone mortgaged up to eyeballs.

[NicolaUK]

The man is a fool. The problem is that too much of the wrong type of product has been built (i.e. flats) and what most people want (i.e. houses) has been negliected.

Is he going to fix the problems that occur with obtaining Planning Permissions and to ensure that the clueless NIMBY Squad are kept at bay?

And who does he think is going to build all these new homes? The Eastern Europeans are flooding back home and the UK housebuilders are on their knees

The next house price inflation bubble is already building, slowly of course, but it's coming :brickwall

[gagsy]

The BBC article shows just how crackers Brown is. Too few properties? Perhaps, if you define 'too few' as too few of the right sort and at the right price. Loads of blocks of flats have been thrown up all over the place resulting in an over supply of flats, and they are too expensive at that. Just how disconnected from reality is this man? He must well and truly believe that credit = wealth. It doesn't.

They've been talking up the need for millions of new homes for years.(John Prescott's doing I think.) Yet it never seems to be enough, the target stays out of reach. No matter how many homes get built they will still say there's a need for more, even when there is an estimated 1 million properties stood empty that could be renovated or converted.

Have you not follwoing what's happening world-wide ? how exactly would we have been able to escape what every other major economy is experiencing ?
A lot of the world's financial ideas stem from either London or New York as that is where the banks are based. Had Brown been on the ball, or at least not created such a toothless regulator and crippled the Bank of England, the problems of artificially cheap lending, collateralised debt obligations and the behemoth credit default swap market might have been lessened in the way they affect the UK.

Brown has also spoken of his dealings with the various international monetary and banking organisations. Laughably, he recently claimed he had spent years telling all who would listen that these funny financial products were going to cause problems. If that were true it was certainly within his power to put Britain on a far, far better footing than we are now. He didn't. Public debt has continued to increase (though he may think we're doing well as it is much less than some other European countries), private debt has got out of hand, the mortgage market has turned into a disaster, the retail sector is shrinking and banks are having to be nationalised.

He didn't have to make bankruptcy easier. He didn't have to make students take out loans (but it was the only way to pay for meeting a meaningless target of 50% of school leavers going to university.). He didn't have to make the benefits and tax systems so complicated. He could have got better value for money from the vast wodges he has thrown at public services.(Much of which has gone on bureaucracy, management and consultants.) He could have done more to encourage saving. He could have allowed the Bank of England to set interest rates appropriate for the wider economy not just his measure of inflation. He should then have not leant on the supposedly independent BoE to lower interest rates when the housing market stuttered a few years ago. At every step Brown has sought to keep the economic bubble inflated rather than allow it to deflate.

And now his solution is to nationalise banks and get back to cheap lending. Banks got into this mess because they stopped pricing risks appropriately. Gordon Brown's way out of it is... to stop banks from pricing risks appropriately.

Brown is certainly not the only one to blame though. There is a great slice of personal responsibility that has been absent in the public. Same too for the banks that have raked in vast profits and bonuses but now suck at the taxpayer's teat. The auditors of the banks deserve a damn good thrashing for this too.

[basegreen]

Whilst I find Broon as offensive as you do, restoring SOME reasonable lending inter-bank will lead to more available mortgages. At the moment there are very few. They can be as tight as they want on the criteria for qualification (tighter the better IMO), but whilever the LIBOR rate is so high, then there's not going to be any decent products worth using.

[meeti roti]

LTSB dropping like a stone today.

best thing they can do is pull out of the HBOS deal, let the Govt come in and nationalise HBOS and pick off the best bits of the group. At the moment they are getting hammered because of the link up.

[daveyb]

I don't quite get the long/mid term prognosis.

Listening to commentators, its clear that a small number of people in hedge funds are the major financial players (top 3 in US). These companies are often registered in tax havens for obvious fiscal reasons.

So, these guys have made an absolute mint in the boom time. The savvy ones have also made a mint shorting the banks. This means some of these guys are sitting on war chests running into billions. And, a firesale triggered by a recession is a great time for them to go shopping!

Whilst these funds exist and operate in lets say lightly regulated environments, whats going to stop them influencing the boom/bust cycle again? The government can make noises about tighter control, but dont these companies just go elsewhere to the next friendly market environment?

I'm sure someone here will enlighten me though! :)

[BlueDwarf]

With every bank in the US wanting to shed its Toxic debt, makes sense for LTSB to pull out now.
Even if they can asset strip it, who knows if they can hold out long enough for the markets to recover to actually realise the profits.


Gordy wanting to get cheap mtgs out to aid the house market is not really going to solve the problem.

[pyrogena]

I just got all excited at the Headline on Yahoo News - "Gordon Brown leaves Number 10"...sadly he's just moving down to Number 12. :(

Apparently he needs a "war room" to deal with the crisis and Number 10 just ain't big enough.

[Mandrill]

With every bank in the US wanting to shed its Toxic debt, makes sense for LTSB to pull out now.
Even if they can asset strip it, who knows if they can hold out long enough for the markets to recover to actually realise the profits.


Gordy wanting to get cheap mtgs out to aid the house market is not really going to solve the problem.

By cheap mortgages I assume he means good rates on interest but this is no good to people if the house prices are beyond thier reach especially now the banks have pulled the 125% and 100 % mortgages.Not too many people at the bottom of the market have the deposit and some might even have thier savings tied up in Iceland !!

[chrisjm]

I just got all excited at the Headline on Yahoo News - "Gordon Brown leaves Number 10"...sadly he's just moving down to Number 12. :(

Apparently he needs a "war room" to deal with the crisis and Number 10 just ain't big enough.

by 'war room' i presume they mean 'bigger fridge'

[jaminb]

Is he going to fix the problems that occur with obtaining Planning Permissions and to ensure that the clueless NIMBY Squad are kept at bay?



shall we get rid of all planning permission and let people build whatever they want in the middle of wherever?

does the clueless nimby squad include those who might want some environmental preservation?

[Mattie F]

He must well and truly believe that credit = wealth. It doesn't.


Well you say that but my understanding is that around 97% of deposits owe their existence to a corresponding loan. Or, to put it another way, if all the loans in the world were repaid tomorrow, virtually no-one would have a deposit.

And, unfortunately, the money supply a.k.a. interest bearing loans, needs to increase each year in order for there to be enough money to pay the interest on previous years’ loans. It’s a vicious circle of ever increasing debt that can only be resolved by moving to government issued debt free money which is spent (not lent) into existence.

[NicolaUK]

shall we get rid of all planning permission and let people build whatever they want in the middle of wherever?

does the clueless nimby squad include those who might want some environmental preservation?

Could that be any worse that all those flats that are uninhabited? Planning Permission should be there as part of the checks and balances against over-development not to stop any development at all. What cracks me up is that these are usually the same people who don't want houses being built and then moan that their children have to move away because there is nowhere local for them to live :brickwall

I think that protecting the environment is mainly used as a weapon by the NIMBY Squad, most of who couldn't care less about it but don't want Housing Association homes being built near to them. No homes can be built without an environment assessment so if there are protected species there, they rightly take priority.

There are a couple of large under utilised, brown field sites I know of that the local people would rather have as dumping grounds rather than homes.

The problems that we're seeing in the property market today are mainly caused by the Labour Government's actions 10 years ago. High density developments, raids on pensions and poor banking regulation have all added to the problems we face. This has all been coming for a long time but now, as then, no-one listens :oh-hum:

Most people wish to live in decent sized houses, it's a shame that Gordon Brown thinks he knows better.

[jaminb]

fair enough, good post :)

I just get sick of people coming from the other side saying that any development is worthwhile and needed and a step towards 'progress'

I'm still not convinced that we need all these new houses though. Where are all these people with no where to live?

[pyrogena]

fair enough, good post :)

I just get sick of people coming from the other side saying that any development is worthwhile and needed and a step towards 'progress'

I'm still not convinced that we need all these new houses though. Where are all these people with no where to live?

There's a few on the side of the main road in Reading - living in caravans :mad:

[NicolaUK]

fair enough, good post :)

I just get sick of people coming from the other side saying that any development is worthwhile and needed and a step towards 'progress'

I'm still not convinced that we need all these new houses though. Where are all these people with no where to live?

Thanks :thumbs:

I know that this data is 12 months old, but it says that the UK population will grow by 4.4m by 2016, so if we don't want another speculator driven property boom we better get building:

http://news.bbc.co.uk/1/hi/uk/7057765.stm

[gagsy]

Well you say that but my understanding is that around 97% of deposits owe their existence to a corresponding loan. Or, to put it another way, if all the loans in the world were repaid tomorrow, virtually no-one would have a deposit.

And, unfortunately, the money supply a.k.a. interest bearing loans, needs to increase each year in order for there to be enough money to pay the interest on previous years’ loans. It’s a vicious circle of ever increasing debt that can only be resolved by moving to government issued debt free money which is spent (not lent) into existence.
Money is funny. It's the only thing we have that can time travel and it only ever goes one way - backwards. Credit today is tomorrow's earnings. Because of that I can't really think of credit as wealth. What if I can't keep up my repayments?

[Jonny]

Am i missing something or does the fact of Lloyds buying HBOS with our money not quite add up?
How did they justify the deal financially if they now need to be bailed out?

[basegreen]

Well the Credit Default Swap passed without serious incident. After all the losses were netted out, I think about 9 billion USD was left. The media were saying it could be as high as 400 billion. Not a bad guess, Mr Peston?

[Johnny Vodka]

I'm still not convinced that we need all these new houses though. Where are all these people with no where to live?

Whenever this issue crops up on the news, they always manage to find some single professional stuck living with mum and dad as a case study. (I'm just glad I bought my place ~5 years ago or I could have been in the same situation.) I would have thought we'd need as much accomodation for singles and couples without children as families, given modern trends?

[Sandeep C.]

Did anyone else shout "BASS!" when they read the thread title?

[pyrogena]

Whenever this issue crops up on the news, they always manage to find some single professional stuck living with mum and dad as a case study. (I'm just glad I bought my place ~5 years ago or I could have been in the same situation.) I would have thought we'd need as much accomodation for singles and couples without children as families, given modern trends?

That's part of the issue though - more and more people re buying houses by themselves these days and not waiting until they're married. Hence, more houses needed. It also pushes up the number of FTB out there.

I dropped out of the housing market in this country back in 2005 - best thing for me to do at the time but I do feel a little twitchy now. I'm certainly not about to leap back into it though and plan to rent within the next 6 months. Personally I'm just not in a position where I can tie up any capital into a property.

[Mandrill]

Whenever this issue crops up on the news, they always manage to find some single professional stuck living with mum and dad as a case study. (I'm just glad I bought my place ~5 years ago or I could have been in the same situation.) I would have thought we'd need as much accomodation for singles and couples without children as families, given modern trends?


I would have throught the single professional market is what all these 1 and 2 bedroom apartment developments were built for ? Yet we have an over supply of them.

I'd say the single professional at home with Mum and Dad is there because they can't afford £150k for a 1 bed apartment.

[danielsesay]

Indeed. There's nothing wrong with living in flats, it's just that they're too expensive to buy for many of us.

[jaminb]

I'd say the single professional at home with Mum and Dad is there because they can't afford £150k for a 1 bed apartment.

be lucky to get a 10th floor hole next door to heroin addicts for that price down south

[KRW]

I would have throught the single professional market is what all these 1 and 2 bedroom apartment developments were built for ? Yet we have an over supply of them.

I'd say the single professional at home with Mum and Dad is there because they can't afford £150k for a 1 bed apartment.

They're all in the wrong place, though, aren't they? All in Manchester City Centre and so on. If you could move 'em down to Hampstead, they wouldnt stay empty for long.

[daveyb]

I'd not be recommending flats for City finance bods in London right now.

Most flats are not ground floor, and well....the sight of Suited people jumping out of their windows, it's most off putting isnt it? In the great circle of work, it does create new opportunities for street cleaners though.

[Mattie F]

be lucky to get a 10th floor hole next door to heroin addicts for that price down south

I bet you you could get something in Swindon for £150K, probably with a couple of bedrooms.

[farmroad38]

I bet you you could get something in Swindon for £150K, probably with a couple of bedrooms.

A quick search on Rightmove for properties within 10 miles of me in Bracknell returned over 1000 for less than £150k. Not sure I'd want to live in any of them mind you.

[jaminb]

fair dos, try the search in London and it's more a struggle

which according to economics should surely mean more rational people moving to jobs that are absolutely lower paid but your money goes further on housing. Is there much evidence of this happening?

[Mandrill]

They're all in the wrong place, though, aren't they? All in Manchester City Centre and so on. If you could move 'em down to Hampstead, they wouldnt stay empty for long.

Perhaps but they wouldn't be £150k either.

The reason for so many of those apartments is BTL.There is a new block going up in Hemel Hempstead and they are advertising the flats as investment opportunities:(.

[SIMON ADEBISI]

Well, the new budget over here is shafting us again. Income tax is to rise 1%, a new 10 euro travel levy is being introduced and the usual suspects ( drink, fags, petrol) are getting price bumps too. So we get less money to buy luxuries which are getting too expensive and if we want to travel to get them cheaper we get screwed too :thumbs:

[farmroad38]

...a new 10 euro travel levy is being introduced...

How does that work then?

[SIMON ADEBISI]

The levy is on air travel. Forgot to put that in. Buy a ticket, get screwed with taxes and fuel surcharges then another 10 on top.

[farmroad38]

The levy is on air travel. Forgot to put that in. Buy a ticket, get screwed with taxes and fuel surcharges then another 10 on top.

Ah, okay. That makes sense - had visions of being stopped on the motorway and being issued some sort of spot fine! :)

[KennyVader]

Well, the new budget over here is shafting us again. Income tax is to rise 1%, a new 10 euro travel levy is being introduced and the usual suspects ( drink, fags, petrol) are getting price bumps too. So we get less money to buy luxuries which are getting too expensive and if we want to travel to get them cheaper we get screwed too :thumbs:

Yup, if I remember rightly you're in Limerick? Just tonight it's been on the (mainland) main news how Northern Ireland is (already) enjoying something of a boom as the Irish near the border are popping over to do all their shopping.

Never thought a part of "Rip Off Britain" would actually be cheaper than it's neighbouring countries!

[SIMON ADEBISI]

And all the Norn Irons are coming our way for the cheaper petrol :lol:

[stu_69]

Yup, if I remember rightly you're in Limerick? Just tonight it's been on the (mainland) main news how Northern Ireland is (already) enjoying something of a boom as the Irish near the border are popping over to do all their shopping.

Never thought a part of "Rip Off Britain" would actually be cheaper than it's neighbouring countries!

Once a month my dad drives up to Newry from Dublin to do a big shop in Sainsbury's. he loves it. he will be doing all the christmas shopping up there (my dad does all the shopping and cooking in my parents house - my mum can't be bothered) as well.

That combined with his "booze" cruise in the borrowed highace to France means he is well stocked for a few months.

[Kryten]

I see the FTSE is down again today :(

[stu_69]

GM, Ford and Chrysler are all looking at a merger (GM to buy Chrysler and then merge with Ford).

Probably unrelated to this thread though.

[Kryten]

http://www.thedvdforums.com/forums/showthread.php?t=521872

Try that thread instead ;)

[Drysolder]

And now the Icelanders have the hump over taking our money and ******* it up the wall:

http://news.bbc.co.uk/1/hi/magazine/7669652.stm

They brought this on themselves, right, right???

[DeadYankee]

We shouldn't negotiate with terrorists

[rezabelady]

I studied alongside a couple of Icelandics for a year while overseas and they took great pride in bringing up their "victory" over Britain in the Cod Wars when the chance arose. It's apparently a pretty major event in their recent history so it's not a surprise to see their reaction to our governments attempts to oppress them again!

[pkr]

I studied alongside a couple of Icelandics for a year while overseas and they took great pride in bringing up their "victory" over Britain in the Cod Wars when the chance arose. It's apparently a pretty major event in their recent history so it's not a surprise to see their reaction to our governments attempts to oppress them again!

I've been to Iceland a couple of times for business and there is still a lot of resentment over the British invasion of World War II!

I'm sure they had a far better experience under the brief British occupation than they would have if the Germans had got there first.

[nutter45]

I see the FTSE is down again today :(

Down 300 points at close, bloody hell.

So much for the rebound :lol:

[basegreen]

****** day on the markets again :(

[Brunodog]

Down 300 points at close, bloody hell.

So much for the rebound :lol:

It feels appropriate to say that, even a dead cat will bounce.

[Kryten]

Terrible start again for the FTSE, looking like its going to be down sharply from the futures market

[basegreen]

The markets are determined to drop, but how much of it is sentiment, and how much is simply profit taking from the big rally earlier this week?

[farmroad38]

Down to fears of a global recession according to the news. I think we've just got to hold on tight and hope that we hit the bottom soon.

[Roberto]

No more bail-out please! It's only throwing good money after bad and prop up the markets for a day or two. Just let it all fall apart and use the money to pick up the pieces after. Otherwise we'll get to the point where they'll be no more in kitty left to do anything.

[daveyb]

No more bail-out please! It's only throwing good money after bad and prop up the markets for a day or two. Just let it all fall apart and use the money to pick up the pieces after. Otherwise we'll get to the point where they'll be no more in kitty left to do anything.
I suspect the bail-out wasn't purely for the UK public alone.

There is still an awful lot of investment capital from middle East, India and China located in UK and US institutions.

Imagine if they lost confidence overnight and withdrew their funds to safer territory. The impact would have been severe.

[KennyVader]

Imagine if they lost confidence overnight and withdrew their funds to safer territory. The impact would have been severe.

"safer territory"? But Gordo and Darling keep telling us that this is a "global problem" affecting every country in the world! There can't be any "safer territory" ;)

[daveyb]

The national instinct when times are hard is for a country to withdraw money invested abroad and spend it on the local economy. Can you imagine the clamour to do so if UK had surplus money invested elsewhere, and times got tougher here?...it'd be express article #1 every day.

I'd say gold is safer, given there is a finite amount of the stuff too; it's quite hard to print gold or create it on a computer screen (though I'm working on that...keep an eye out in the bargain forum ;) ).

It makes me laugh, this "global problem"....great bit of spin. It's hard to blame Mr global; there isn't a bunch of people working under the "global plc" label. The problem will have a global impact no doubt, but some parts of this globe will weather the storm better than others.

Imagine if you were a member of a rich Saudi family. You'd be waiting for real bargains to appear on the world market (like Manchester City FC !)

[Nirvana]

interesting you should say that. over the past week i've met two different wealthy arab investors who are visiting the country, and have asked about what "bargains" i would recommend for them to buy.

i told them they could probably pick up RBS for about £12bn but then you'd have to deal with all the crap that came with it too, so maybe not!

[chrisjm]

And now the Icelanders have the hump over taking our money and ******* it up the wall:

http://news.bbc.co.uk/1/hi/magazine/7669652.stm

They brought this on themselves, right, right???

Icesave/landsbanki had bilions of deposits actually in the UK but supposedly had no money, iceland have acted so corrupt over this whole affair. Im glad our gov stoped them stealing that money from the UK. Now can i have my share back please.

[Kryten]

Martin Lewis is going to be on Radio 2 at 1PM. Got to be worth a listen to see what the **** has to say about foreign banks now :D

[Coolio]

Still havent got my money from KE

[Hot Ice]

Still havent got my money from KE

Me neither. Which is worrying as B&B are taking it out on Monday!

[mjb1975]

Me neither, but the email did say 'close of business on Friday' so I'm guessing it'll be in there when I log in tomorrow or Monday.

[Coolio]

Money came thru

[SFletch]

Money came thru

Mine hasn't. :(

[DanWilde1966]

So here we go! Some scumbags will get their bonuses after all, and guess who's paying!

http://www.guardian.co.uk/business/2008/oct/21/lloydstsbgroup-executivesalaries

[Coolio]

Mine hasn't. :(


if it's any consolation I stupidly asked for the rest out yesterday so that may take a few weeks also

[smiller]

So here we go! Some scumbags will get their bonuses after all, and guess who's paying!

http://www.guardian.co.uk/business/2008/oct/21/lloydstsbgroup-executivesalaries

I read that as the normal staff (not unlike you or I) getting bonuses. i.e. those supporting the normal banking services, not the big bosses or big boy traders (aka "scumbags"). Which if they've met their bonus criteria, and their part of the bank is profitable, why not? Not their fault their superiors and those in the investment arm got the bank in a situation.

If they aren't paid bonuses the best staff will leave and go to a bank/another industry that will. And as stakeholders in these banks, we don't want that to happen.

[pyrogena]

I read that as the normal staff (not unlike you or I) getting bonuses. i.e. those supporting the normal banking services, not the big bosses or big boy traders (aka "scumbags"). Which if they've met their bonus criteria, and their part of the bank is profitable, why not? Not their fault their superiors and those in the investment arm got the bank in a situation.

If they aren't paid bonuses the best staff will leave and go to a bank/another industry that will. And as stakeholders in these banks, we don't want that to happen.

It's taxpayers money going into the banks, how about we get a vote on who gets a bonus or not?

I know of a number of large companies who are cutting right back on staff "perks", bonuses being one of them. All due to the credit crunch - why should the banks, who appear to be at the forefront of the problems, still dish money out to their staff?

[smiller]

It's taxpayers money going into the banks, how about we get a vote on who gets a bonus or not?

I know of a number of large companies who are cutting right back on staff "perks", bonuses being one of them. All due to the credit crunch - why should the banks, who appear to be at the forefront of the problems, still dish money out to their staff?

Would you want a vote on all strategies adopted by the bank? If we were typical shareholders then we'd have some influence on the board based on what they've done/plan to do, but not to the level of detail as this.

If the bank (or any company for that matter) is profitable over the course of a year, credit availablity aside, and the staff worked to get them that profit, then bonus should be paid. Of course bonuses are discretionary, and there is a problem over many industries where employees take it for granted they will get one. But not giving them will only hurt the bank in the long run and in turn our investment.

We're only talking on average 10% of a low to medium salary here (the story quotes 15K for branch staff) not the huge bonuses touted for the big boys. A lot of money over the whole organisation of course, but in most cases deserved. And in most cases performance based - my place wont pay unless you've exceeded your targets - simply meeting them won't get you anything.

[pyrogena]

Would you want a vote on all strategies adopted by the bank? If we were typical shareholders then we'd have some influence on the board based on what they've done/plan to do, but not to the level of detail as this.

If the bank (or any company for that matter) is profitable over the course of a year, credit availablity aside, and the staff worked to get them that profit, then bonus should be paid. Of course bonuses are discretionary, and there is a problem over many industries where employees take it for granted they will get one. But not giving them will only hurt the bank in the long run and in turn our investment.

We're only talking on average 10% of a low to medium salary here (the story quotes 15K for branch staff) not the huge bonuses touted for the big boys. A lot of money over the whole organisation of course, but in most cases deserved. And in most cases performance based - my place wont pay unless you've exceeded your targets - simply meeting them won't get you anything.

Then maybe I have a massive misunderstanding of the whole situation. Are Lloyds in profit, have they made a profit this year? If so why are they getting a massive cash injection from the government of taxpayers money?

Sorry, but "bail out" and "bonus" just don't go together. Are bank workers so blind that they think they can walk out over not getting a bonus in the current climate? Try telling that to some of the companies that have shelved bonuses.

[smiller]

Then maybe I have a massive misunderstanding of the whole situation. Are Lloyds in profit, have they made a profit this year? If so why are they getting a massive cash injection from the government of taxpayers money?

Sorry, but "bail out" and "bonus" just don't go together. Are bank workers so blind that they think they can walk out over not getting a bonus in the current climate? Try telling that to some of the companies that have shelved bonuses.

Someone might need to help me out here as I don't claim to fully understand it all, but if they are a similar position to my place then yes they may well be in profit come the end of the year (I've not tracked Lloyds performance so far). The main issue here is banks being able to get hold of cold hard cash - they're operations may well be profitable, but they need to get their capital ratio up to newly set, higher levels, hence the government bail out.

Even if overall the group isnt profitable, if the core banking operation is then why should they be punished for the investment arm? I worked for a bank when they made a billion pound loss thanks in large to the investment side - they still paid a bonus to the core operation as they recognised that losing staff would hurt them in the long run and make things worse.

Not all staff would leave of course, most would just grumble and be less productive (bad enough on its own) but the best would. There are banks that are doing well and they are cherry picking the best of everything right now, from staff to failed banks, and will continue to do so.

[farmroad38]

Then maybe I have a massive misunderstanding of the whole situation. Are Lloyds in profit, have they made a profit this year? If so why are they getting a massive cash injection from the government of taxpayers money?

Sorry, but "bail out" and "bonus" just don't go together. Are bank workers so blind that they think they can walk out over not getting a bonus in the current climate? Try telling that to some of the companies that have shelved bonuses.

Lloyds TSB made an interim profit of £949m before tax this year (http://www.lloyds.com/News_Centre/Press_releases/lloyds_reports_2008_interim_results.htm).

The bail-out is not necessarily because the banks are not in profit, it's because they cannot fund their lending. The amount of money they have deposited is far exceeded by the amount that they have lent out - normally they would make up the difference by borrowing from other banks and it is this inter-bank lending that has now pretty much dried up. The bail-out by the government is to cover some of this lending.

On a day-to-day basis, the banks will still be making a profit. The interest rates at which they lend are generally higher than those at which they borrow - the margin between the two is where most of the profit comes from (of course there is also profit made on charges for services). However, as the inter-bank lending rate is currently quite high (because banks don't want to lend to each other), their profits are being squeezed, to the extent that it no longer becomes viable when the LIBOR rate becomes so high that there is basically no point in them borrowing at that rate.

Does that make any sense - not sure I've explained it very well?

[basegreen]

Makes sense - fortunately there's been something of an easing of the LIBOR rate in the last few days, and the CDS levels are looknig much healthier (approaching the same "cost" as some of the lesser EU governments now), rather than being 5 times higher.

[Ono]

http://news.bbc.co.uk/1/hi/business/7697082.stm

Hedge Fund lose £13BN in 2 days trying to short sell VW shares and then scrambling to close positions when they found out the shares were actually rocketing up :lol:

[Dave h-j]

Hedge Fund lose £13BN in 2 days trying to short sell VW shares and then scrambling to close positions when they found out the shares were actually rocketing up :lol:

All because Porsche had 75% of the shares. This bit made me laugh:

It meant that because Porsche had not declared the proportion of VW shares it controlled, traders may have been indirectly and inadvertently borrowing shares from Porsche, selling them to Porsche, buying them back from Porsche and then returning them to Porsche.

Donkeys...

[Arthur Fowler]

Remembered yesterday that we've been investing a small amount in a fund each month since shortly after my children was born in the hope that it would fund their university education (if they go). Had them for about 12 years. Lost 30% of their value in the last 6 months. :(

Hopefully they will recover in time, but as it is only 4 years since the first of them would go to University, it seems likely that we would have been better off putting them in a cash savings account.

[bosque]

Remembered yesterday that we've been investing a small amount in a fund each month since shortly after my children was born in the hope that it would fund their university education (if they go). Had them for about 12 years. Lost 30% of their value in the last 6 months. :(

Hopefully they will recover in time, but as it is only 4 years since the first of them would go to University, it seems likely that we would have been better off putting them in a cash savings account.

I had smallish amount in shares which over the last year lost £2,000. When I made noises about selling back in April, my Nationwide "advisor" shrieked that I hadn't lost anything, it was only a paper loss and asked how I would feel if the market grew. That convinced me to put what was left in fixed-rate bonds.

[Arthur Fowler]

I had smallish amount in shares which over the last year lost £2,000. When I made noises about selling back in April, my Nationwide "advisor" shrieked that I hadn't lost anything, it was only a paper loss and asked how I would feel if the market grew. That convinced me to put what was left in fixed-rate bonds.

:lol: Well done. Good move :)

[mikegray]

Remembered yesterday that we've been investing a small amount in a fund each month since shortly after my children was born in the hope that it would fund their university education (if they go). Had them for about 12 years. Lost 30% of their value in the last 6 months. :(

Hopefully they will recover in time, but as it is only 4 years since the first of them would go to University, it seems likely that we would have been better off putting them in a cash savings account.

Similar situation here, I'd been saving for a deposit on a house. Still, at least the house prices are dropping too.

[KennyVader]

Woolies on sale for £1 (takes "pound shop" to a whole new level)

http://news.bbc.co.uk/1/hi/business/7737071.stm

Unfortunately having paid your £1 you have to take over their £385 million debt as well :nuts:.

Not that much of a surprise really, their stores have been a complete disaster for a few years now. They have some great and huge store locations but they insist on just piling pikey junk on all the shelves!

[caygs]

Share prices taking yet another battering around the globe. Further big losses yesterday continuing today in the Asian markets amid fears of a US recession. Certainly not helped by the big 3 US car makers saying they will go bust if they are not helped and helped quickly :(

[cabor]

Certainly not helped by the big 3 US car makers saying they will go bust if they are not helped and helped quickly :(

Made for very interesting viewing seeing these 3 CEOs being grilled about their business plans/use of private jets/personal wealth etc from people whose own constituents have small business,s going to the wall in droves without any help.

[gagsy]

I like Woolworths. When pound shops and supermarkets started muscling in on the tat retail market they didn't seem to have a coherent answer. A few Big Ws here and there. A half-hearted stab at catalogue retailing. Alan Sugar had wanted to buy a stake in the company but the Icelandic banking collapse scuppered it.

[douglasb]

In a lot of smaller towns, Woolies is the last place you can buy music off the shelf. It'd be real shame if music went pretty exclusively download/internet stores.

[meeti roti]

Just visited the Tesco Home store in Staines. Great range of stuff across 2 floors. i wonder why the likes of tesco arn't interested in Woolworhts. That many stores across the country rebranded with Tesco Home store.

Maybe they arn't bothered as every high street alread has a Tesco express/metro

[pyrogena]

Just visited the Tesco Home store in Staines. Great range of stuff across 2 floors. i wonder why the likes of tesco arn't interested in Woolworhts. That many stores across the country rebranded with Tesco Home store.

Maybe they arn't bothered as every high street alread has a Tesco express/metro

I would say your own comment is the answer there. Woolies aren't exactly a threat to Tescos and I don't think they would gain anything from spending money on buying them up.

More likely waiting for them to go bust, thus leaving the retail units empty - and then Tescos can dump a metro store there.

[gagsy]

Funny you should say that meeti roti. The Woolworths on Knaresborough high street closed last week and Tesco have agreed to take over the site.

[Coolio]

Theres a few of those Asda home stores that have cropped up over the last few years

[Roberto]

whoa! Now Zavvi going under!

http://news.bbc.co.uk/1/hi/business/6386153.stm

[splobber]

There's a huge thread in the suppliers forum...