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UK likely to go bankrupt says investment bank. - Magda Hassan - 12-03-2009 They should know. House prices 'could fall by further 55 per cent' House prices may fall by a further 55 percent and there is a "very real probability" that Britain will be bankrupted, a leading investment bank has warned in a private note to clients. By Robert Winnett, Deputy Political Editor Last Updated: 10:41PM GMT 11 Mar 2009 People who bought buy-to-let flats are expected to “begin panic selling” and the average home value could drop below £100,000. The predictions in a 298-page report from Numis Securities, a City investment bank, are the bleakest yet on the deteriorating state of the British property market. House prices have already fallen by about 20 per cent over the past year. However, in the note written last month, Numis said: “Despite UK house prices already having fallen 21% from the peak, we do not believe that the correction is anywhere near over. “Our core headline forecast is that UK property prices remain between 17% and 39% overvalued based on fair valuation. Moreover, history has shown us that when property…which has experienced a price bubble corrects, the price tends to fall below fair value for a period of time, as confidence in that market remains low. Prices could fall a further 40-55% if the over-correction was as bad as the early 1990s in our view.” The report warns that “city centre flats” and “new executive homes” are likely to record the biggest reductions and describes investing in buy-to-let property as a “poor man’s hedge fund”. “It is the action of these amateur investors over the next few months which we are most concerned about,” the report says. “We expect some to begin panic selling their portfolios, with the peak volume as is almost always the case with private investors, being at the market trough.” Yesterday, Alistair Darling, the Chancellor, warned that the world is facing the most difficult economic conditions for “generations”. However, the Numis report is scathing of Government attempts to help the economy. “The Prime Minister and Chancellor have publicly stated that they want banks this year to lend at 2007 levels,” it said. “We think this is a crazy policy, given that too much debt was one of the prime reasons why the economy has its current problems.” It also criticises the huge debts being run up by the Government to pump money into the economy. Yesterday, John Lewis, the retailer, said that the £12.5 billion cut in Vat has not made “any long term difference at all”. The Numis report says: “The bankruptcy of the UK is a very real probability as the UK Government is trying to stimulate a greater debt burden in a grossly indebted economy. We believe the scale of the macro imbalances in the UK means there is no prospect of a recovery in 2009 and we expect the UK to be mired in a deep recession through all of 2010.” Last night, the Conservatives said that the Numis analysis increased the pressure on the Prime Minister to apologise. Grant Shapps, the shadow Housing minister, said: “This is a devastating critique of the Government’s record and how Gordon Brown’s credit bubble will lead to a mountain of debt, a wave of repossessions and negative equity misery. Labour Ministers must take direct responsibility for fuelling buy-to-let speculation. “Gordon Brown’s fingerprints are all over this economic wreckage and he should now have the decency to at least apologies for his mistakes.” Yesterday, it emerged that the number of borrowers falling behind with their mortgage repayments has already doubled in the past year. According to Moody’s Investors Services, borrowers more than 90 days in arrears have increased to 1.5 percent of all home loans compared to 0.6 percent a year ago. http://www.telegraph.co.uk/finance/economics/houseprices/4974499/House-prices-could-fall-by-further-55-per-cent.html UK likely to go bankrupt says investment bank. - David Guyatt - 12-03-2009 To be perfectly honest, I am working on the basis that this could well happen. But know the enemy I say. Who are Numis? Well, they are the creature of the City's richest billionaire Michael Spencer. More here from Wiki: Quote:Michael Spencer Having made his bones at Drexel Burnham deserves atention, for it was Drexel's where the Junk Bond king and Mafia financier, Mike Milken, made his bones. The fact that Spencer also owns the spread betting firm City Index just adds further concerns. Despite my own personal concerns about the future direction of the British economy, I wouldn't trust this outfit not to be setting up a winning market bet. To add to this concern is the fact that Spencer is deeply involved with various Hedge Funds, has been caught in a dodgy deal and was until very recently the Conservative Party Treasurer until he was replaced by Stanley Find - another hedge fund boss. Beware dragons I say. UK likely to go bankrupt says investment bank. - Jan Klimkowski - 12-03-2009 It is very interesting that certain leading British politicians have gone Off Message recently and told us, in the classic words of a civil service mandarin, that "we're fucked". David is entirely correct to examine precisely whom is saying what. When the likes of Soros and Buffett speak, not only do they move markets, but their intention is to move markets. My assumption is that they intend to move markets in a direction which is favourable to their "investment" position. However, fundamentally, we are "fucked". The relevant questions are: How will it play out? and What do They have in mind for us ordinary folk? UK likely to go bankrupt says investment bank. - Peter Lemkin - 12-03-2009 I'd say they've engineered a check-mate for the average soul...and most will be 'fucked' no matter WHAT they do, unless they REMOVE themselves from the 'game' enitirely. Commune in the mountains with barter sounds better and better......in fact it starts to sound like the only way.... UK likely to go bankrupt says investment bank. - Magda Hassan - 01-12-2009 Quote:By Ambrose Evans-PritchardHa! Increase the VAT! How original. Why not tax the rich? Now there's a novel idea! Taxes on shares traded, foreign exchange, futures, everything in the elites casino. Tax that. Reduce defense budget. Get out of Afghanistan. Tax non doms. [url=http://www.telegraph.co.uk/finance/economics/6693162/Morgan-Stanley-fears-UK-sovereign-debt-crisis-in-2010.html][/url] |