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Posted: 1/26/2009 5:13:28 AM EDT
Britain on the brink of an economic depression, say experts
Britain is heading for economic depression for the first time since the 1930s, economists have warned.

By Edmund Conway, Economics Editor
Last Updated: 8:22AM GMT 24 Jan 2009

Families must brace themselves for a slump of far greater severity and longevity than the recessions of the 1980s and 1990s, they warned. They said the current crisis will be of a scale to rival the biggest peace-time crisis in modern history — the Great Depression.

The warning was delivered by economists and politicians after the Office for National Statistics revealed that the economy shrank by 1.5 per cent in the final three months of 2008 alone.

The contraction follows a 0.6 per cent fall in gross domestic product (GDP) — the most comprehensive measure of Britain’s wealth generation — during the previous three months. This means Britain fulfils the criteria for a technical recession — two successive quarters of negative output.

The news sent the pound sliding to its lowest level since 1985. Sterling dropped more than three quarters of a cent to $1.3688 as investors speculated that the Bank of England may be forced to cut interest rates towards zero in response to the recession.

John McFall, the Labour chairman of the Treasury select committee, sounded a more optimistic note. He said: "We know that 2009 is going to be really tough for many people. There is a determination in Britain and across Europe to keep people in work, to avoid unemployment, so people’s contribution will not be lost."

Confirmation that the economy has entered recession capped a week in which Gordon Brown was forced to announce a new £350 billion bank rescue plan. Unemployment has almost reached two million. President Barack Obama discussed the financial crisis with the Prime Minister on the telephone yesterday, his first call to a European leader.

The fall in GDP is the sharpest since 1980, when Britain was mired in its most severe post-war recession. The news is an embarrassment for Mr Brown, who pledged as Chancellor not to return Britain to "boom and bust".

Britain is likely to suffer more than other economies due to its heavy reliance on the financial services sector, which has all but imploded in the wake of the economic crisis, experts said.

Others raised the spectre of an outright economic depression, often defined by experts as a peak-to-trough economic contraction of 10 per cent. Aside from the demobilisation periods following the First and Second World Wars, this kind of contraction has never taken place — not even in the 1930s’ Great Depression.

Roger Bootle, the managing director of Capital Economics, said: "I think there’s a very good chance this recession will be the worst since the 1930s. I suspect the economy could shrink by 6 per cent from last year to the end of next year — and that might not be the end.

The plight facing Britain is uncannily similar to the 1930s, since prices of many assets —from shares to house prices — are falling at record rates, but the value of the debt against which they are held remains unchanged.

This “debt deflation” is among the most painful of all economic phenomena, since it means the amount families owe increases each year even if they borrow no more.

Albert Edwards, a strategist at Société Générale, likened the British economy to a Ponzi scheme — a fraudulent debt mountain like that allegedly used by the New York hedge fund manager Bernard Madoff.

“What I find amazing is that people aren’t really nailing Gordon Brown and [Bank of England Governor] Mervyn King for this,” he said. “At least in the US they had the excuse of the arrival of sub-prime — a new sector of the market. We didn’t really have anything similar but we ended up with a bigger national Ponzi scheme than the US.”


http://www.telegraph.co.uk/finance/financetopics/recession/4326894/Britain-on-the-brink-of-an-economic-depression-say-experts.html



Rogers: UK system 'is finished'

Jim Rogers, one of the world's best known investors, has attacked the British financial system, claiming 'it is finished'.

Speaking to the BBC, Mr Rogers said owing to the current economic climate, the UK will 'not make much money again'.


http://news.bbc.co.uk/1/hi/business/economy/7844963.stm


Link Posted: 1/26/2009 5:35:27 AM EDT
[#1]
Let the muzzies help em out.

HH
Link Posted: 1/26/2009 11:30:18 AM EDT
[#2]
Quoted:
Rogers: UK system 'is finished'

Jim Rogers, one of the world's best known investors, has attacked the British financial system, claiming 'it is finished'.

Speaking to the BBC, Mr Rogers said owing to the current economic climate, the UK will 'not make much money again'.


http://news.bbc.co.uk/1/hi/business/economy/7844963.stm




This JIm Rogers… the Sorosite who told investors in 1996 to invest in that up and coming market Zimbabwe?


James Beeland Rogers, Jr. (born October 19, 1942) is an American investor and financial commentator. He is co-founder, along with George Soros, of the Quantum Fund, and is a college professor, author, world traveler, economic commentator, and creator of the Rogers International Commodities Index (RICI).

He's moved to the Far East claiming it was the new Gold Rush for investors, guess he didn't see the coming collapse of the far east markets in that crystal ball of his.
Link Posted: 1/26/2009 6:36:26 PM EDT
[#3]
Fundamentalist View: 'There will be only two London-listed banks left by the end of 2009'
Two years ago, the suggestion that nationalisation could happen in the United Kingdom would have been laughable.

By Tineke Frikkee
Last Updated: 7:06PM GMT 21 Jan 2009

But the government is now the largest, or only, shareholder in Lloyds/HBOS, RBS and Northern Rock and it seems highly likely that HSBC and Standard Chartered will be the only UK-quoted bank shares by the end of 2009.

Even in these tough markets, however, it is worthwhile to continue to think about the need for long-term, inflation-beating investments to fund or supplement retirement. UK equities can do this over the long term because gross domestic product (GDP) – a measure of economic output – growth will return and plenty of companies are in decent shape to benefit from this.

In one or two years' time inflation could well raise its head again as emerging markets recover from their cyclical slowdown and capital injections start feeding through. Governments by that time also need to start paying down some of their mountains of accumulated debt, and inflation would help to erode this over time. Cash, government bonds and corporate bonds are unable to beat inflation over the long term.

We undoubtedly have a difficult period ahead for the UK economy with its structural bias towards financial services and household consumption. Both of these, we believe, are likely to deliver weak to no growth over the next few years as the deleveraging process continues and regulation intensifies. As a result the outlook for the UK equity market as a whole remains tough. Good stock selection will continue to be crucial. Those areas that have benefited from the credit boom continue to be best avoided.

We continue to avoid equity exposure to UK domestic banks despite the significant falls in their share prices. We are moving to a new world where thrift will, and should be, pre-eminent. Banks do not want to lend, and will not do so unless government compels them to. We believe 2009 banking bad debts will deteriorate at a rate that will still surprise negative market observers.

Many defaulting assets classes have not been tested in past recessions as they simply were not around on a meaningful scale, for example credit cards, innovative mortgages and private equity debt. These could well destroy all the bank capital that was raised in 2008. As a result, UK domestic banks remain short of equity capital with the UK government the only source of new capital. The trend towards nationalisation will continue, consistent with government objectives to force banks to lend more. As a result we think the outlook for UK bank stocks remains bleak. Government priority is to support the banking system, not bank shareholders.

But there are some very attractive dividend yields to be had in the UK. In fact, an investor can get 3.2 times more dividend yield on the FTSE All Share than on Bank of England base rates. According to Barclays Capital data going back to 1899, this is the highest the stock market dividend yield has ever been, even beating the last "highest ever" level (3.1 times) at the start of the World War II. There are still plenty of uncertainties around but, if we can make sure the dividend yields we get on our stocks or funds come through, then it may be that investors are starting to get paid to take on some additional risks.

We believe investors can find relative safety in dividends in those UK equities that offer comparatively safe defensive earnings – that is, shares with a lower risk of downgrades – exposure to globally diversified markets (to benefit from a translation back into the weak pound); a strong balance sheet (so expensive borrowing can be avoided), head room in the percentage of earnings that has been paid out as dividends (so this has room to rise in tougher times) and a firm dividend growth commitment at board level.

Many of the UK's mega cap companies – that is, very large companies with a big stock market capitalisation – tick most or all of these boxes. We favour companies like BP, Shell, GlaxoSmithKline, AstraZeneca, Vodafone, and British American Tobacco, but also many of the utilities. We believe BP and Shell will be able to meet their dividend commitments for a number of years – even at these levels of oil prices. In fact, Shell has at least maintained its dividend going all the way back to the World War II. At its last results, Vodafone's CEO explicitly stated that the company sees increasing its dividends as the primary reward to its shareholders. We believe Vodafone's dividend will grow by at least 3pc going forward from an already attractive dividend yield of nearly 6pc.

When it comes to picking funds offering income, we believe investors should analyse if these funds have grown their income consistently, even in prior periods of dividend cuts, such as 2001 and 2002. We also believe investment houses with their own analysts should offer greater confidence in avoiding companies which cut their dividends. Typically, in uncertain times like these, sell-side analysts tend to be late or wrong in their earnings and dividend forecasts.

Tineke Frikkee is fund manager of Newton Higher Income, a £2.1bn unit trust that delivered returns of more than 22pc over the last five years, compared to 9pc growth in the FTSE All Share index.

http://www.telegraph.co.uk/finance/personalfinance/investing/shares/4298704/Fundamentalist-View-There-will-be-only-two-London-listed-banks-left-by-the-end-of-2009.html
Link Posted: 1/26/2009 6:50:49 PM EDT
[#4]
We undoubtedly have a difficult period ahead for the UK economy with its structural bias towards financial services and household consumption. Both of these, we believe, are likely to deliver weak to no growth over the next few years as the deleveraging process continues and regulation intensifies. As a result the outlook for the UK equity market as a whole remains tough. Good stock selection will continue to be crucial. Those areas that have benefited from the credit boom continue to be best avoided.


They're screwed and they don't even know it.  They will officially become a nobody and they can thank themselves.  Tough shit.

HH
Link Posted: 1/26/2009 6:59:21 PM EDT
[#5]
Quoted:
We undoubtedly have a difficult period ahead for the UK economy with its structural bias towards financial services and household consumption. Both of these, we believe, are likely to deliver weak to no growth over the next few years as the deleveraging process continues and regulation intensifies. As a result the outlook for the UK equity market as a whole remains tough. Good stock selection will continue to be crucial. Those areas that have benefited from the credit boom continue to be best avoided.


They're screwed and they don't even know it.  They will officially become a nobody and they can thank themselves.  Tough shit.

HH


I'm sure they will find a way to blame either Bush or America or both.  

Link Posted: 1/26/2009 7:02:44 PM EDT
[#6]
Quoted:
Quoted:
We undoubtedly have a difficult period ahead for the UK economy with its structural bias towards financial services and household consumption. Both of these, we believe, are likely to deliver weak to no growth over the next few years as the deleveraging process continues and regulation intensifies. As a result the outlook for the UK equity market as a whole remains tough. Good stock selection will continue to be crucial. Those areas that have benefited from the credit boom continue to be best avoided.


They're screwed and they don't even know it.  They will officially become a nobody and they can thank themselves.  Tough shit.

HH


I'm sure they will find a way to blame either Bush or America or both.  



Of course they will.  They're too stupid to realize they did it to themselves.  Again, they have so many muzzie buddies that could help them out!

HH

Link Posted: 1/26/2009 7:17:09 PM EDT
[#7]
Quoted:
Quoted:
Quoted:
We undoubtedly have a difficult period ahead for the UK economy with its structural bias towards financial services and household consumption. Both of these, we believe, are likely to deliver weak to no growth over the next few years as the deleveraging process continues and regulation intensifies. As a result the outlook for the UK equity market as a whole remains tough. Good stock selection will continue to be crucial. Those areas that have benefited from the credit boom continue to be best avoided.


They're screwed and they don't even know it.  They will officially become a nobody and they can thank themselves.  Tough shit.

HH


I'm sure they will find a way to blame either Bush or America or both.  



Of course they will.  They're too stupid to realize they did it to themselves.  Again, they have so many muzzie buddies that could help them out!

HH



Speaking of muzzies, I wonder if the British politicians can run away as fast as the London Bobbies?  



Link Posted: 1/26/2009 11:30:03 PM EDT
[#8]
Quoted:
Fundamentalist View: 'There will be only two London-listed banks left by the end of 2009'
Two years ago, the suggestion that nationalisation could happen in the United Kingdom would have been laughable.

By Tineke Frikkee
Last Updated: 7:06PM GMT 21 Jan 2009

But the government is now the largest, or only, shareholder in Lloyds/HBOS, RBS and Northern Rock and it seems highly likely that HSBC and Standard Chartered will be the only UK-quoted bank shares by the end of 2009.


Seems the writer of that article doesn't keep up to date with reality… Barclays Bank seems to have passed him by.


ETA: Pssst!  Want us to buy up any other failed US banks?


Barclays bank shares sky-rocket after bailout fears fade
14 hours ago

LONDON (AFP) — The share price of Barclays soared on Monday, closing up 73 percent, after the group insisted it did not need a government bailout, following recent speculation to the contrary.

At one point in London trading, Barclays stock jumped 78 percent from Friday's close, as investors were reassured by a statement which said the group would not take state cash because it was adequately funded.

Barclays eventually closed the day up 73.2 percent at 88.7 pence on London's FTSE 100 index of leading shares, which ended 3.86-percent higher at 4,209.01 points.

Barclays on Monday said that it expected a 2008 pre-tax profit of more than 5.3 billion pounds despite credit-crunch writedowns of eight billion pounds.

The stock had almost halved last week on concern that it could turn to the government for extra cash –– like rivals Royal Bank of Scotland and Lloyds Banking Group which are both now majority state-owned.

"We are not seeking subscription for further capital –– either from the private sector or from the UK government," Barclays chairman Marcus Agius and chief executive John Varley said ahead of the market open.

Barclays added that it would report annual pre-tax profit "clearly above" the 5.3 billion pounds anticipated by analysts.

The results would include total writedowns of eight billion pounds after losses on credit markets, with full details to be given on February 9.

Agius and Varley said in the letter that they would bring forward the bank's 2008 results announcement by one week to February 9 because of recent market pressures.

"In view of the events in the banking sector last week, we have decided to communicate now with employees, customers, clients and shareholders in this open letter in order to address the principal causes of concern which we are hearing," the pair said.

"Writing in this way ahead of the release of results is unusual, of course, but the turn of events is also unusual."

The figures showed that despite being badly affected by the credit crisis, the bank was still able to generate record revenues in 2008, allowing it to offset the damage and report solid results, the group said.
The bank had "confidence that our capital resources are sufficient to manage Barclays safely and prudently even in these difficult markets.

"Our starting point is that Barclays has 36 billion pounds of committed equity capital and reserves; we are well-funded, and we are profitable."

Barclays continued to have adequate capital levels, at some 17 billion pounds above the minimum required, and accordingly it would not be seeking to raise fresh funds, neither from the market nor the government.

Last week, the government announced a second massive bailout programme costing billions and which has seen it take large holdings in several banks, including Royal Bank of Scotland and Lloyds Banking Group.

Barclays said Monday that 2009 had got off to a good start, with high levels of business reported, especially at its Barclays Capital unit, which last year took over the North American operations of failed US investment banking giant Lehman Brothers.

Britain's banks have been hit hard as a result of the international financial crisis, which has plunged the economy into a recession and sparked massive government rescue packages for the banking sector.

However, Barclays has spurned state cash, opting instead to sell around one third of its stock last year to oil-rich Middle Eastern investors from Abu Dhabi and Qatar.


http://www.google.com/hostednews/afp/article/ALeqM5ifFnZ_4GemSOxLCZVDtvKEYq6eSg
Link Posted: 1/27/2009 12:00:24 AM EDT
[#9]

"…The joke about London being Reykjavik-on-Thames is not appropriate. What's happened is a milder version of what has happened in the US, only a little more transparent. My sense is that America may be in far worse shape. The UK does not have the housing glut that the US has. The financial services industry does play a more important role in the UK economy, but in both countries its collapse has serious ramifications. I think the UK may be better placed to tackle this, because the US still has a hang-up about nationalisation. The US is in the position the UK was in at the time of Northern Rock. The British Government spent a couple of billion trying not to nationalise it; I think the US may spend about $2trn before coming to the realisation that there is little alternative to a significant government role.…"

Joseph Stiglitz, Nobel Prizewinning economist and professor at Columbia University, New York

Link Posted: 1/27/2009 5:02:19 AM EDT
[#10]
Quoted:
Quoted:
Quoted:
Quoted:
We undoubtedly have a difficult period ahead for the UK economy with its structural bias towards financial services and household consumption. Both of these, we believe, are likely to deliver weak to no growth over the next few years as the deleveraging process continues and regulation intensifies. As a result the outlook for the UK equity market as a whole remains tough. Good stock selection will continue to be crucial. Those areas that have benefited from the credit boom continue to be best avoided.


They're screwed and they don't even know it.  They will officially become a nobody and they can thank themselves.  Tough shit.

HH


I'm sure they will find a way to blame either Bush or America or both.  



Of course they will.  They're too stupid to realize they did it to themselves.  Again, they have so many muzzie buddies that could help them out!

HH



Speaking of muzzies, I wonder if the British politicians can run away as fast as the London Bobbies?  






Gutless people do gutless things.  Should be expected from over there.

HH
Link Posted: 1/27/2009 5:53:27 AM EDT
[#11]
Albert Edwards, a strategist at Société Générale, likened the British economy to a Ponzi scheme — a fraudulent debt mountain like that allegedly used by the New York hedge fund manager Bernard Madoff.

“What I find amazing is that people aren’t really nailing Gordon Brown and [Bank of England Governor] Mervyn King for this,” he said. “At least in the US they had the excuse of the arrival of sub-prime — a new sector of the market. We didn’t really have anything similar but we ended up with a bigger national Ponzi scheme than the US.”


"..a bigger Ponzi scheme than the US."

How funny...wonder how long it is before they finish their trip down the toilet.  

HH
Link Posted: 1/27/2009 6:06:27 AM EDT
[#12]
Quoted:

Joseph Stiglitz, Nobel Prizewinning economist and professor at Columbia University, New York



A Nobel Prize winner and a Professor at Columbia?  May as well have quoted a Russian economist.  

Link Posted: 1/27/2009 6:17:43 AM EDT
[#13]
Quoted:
Quoted:

Joseph Stiglitz, Nobel Prizewinning economist and professor at Columbia University, New York



A Nobel Prize winner and a Professor at Columbia?  May as well have quoted a Russian economist.  




The former Senior Vice President and Chief Economist of the World Bank too.  His credentials seem sounder tan those journo instpundits.
Link Posted: 1/27/2009 6:18:17 AM EDT
[#14]
Quoted:
Quoted:
Quoted:
Quoted:
Quoted:
We undoubtedly have a difficult period ahead for the UK economy with its structural bias towards financial services and household consumption. Both of these, we believe, are likely to deliver weak to no growth over the next few years as the deleveraging process continues and regulation intensifies. As a result the outlook for the UK equity market as a whole remains tough. Good stock selection will continue to be crucial. Those areas that have benefited from the credit boom continue to be best avoided.


They're screwed and they don't even know it.  They will officially become a nobody and they can thank themselves.  Tough shit.

HH


I'm sure they will find a way to blame either Bush or America or both.  



Of course they will.  They're too stupid to realize they did it to themselves.  Again, they have so many muzzie buddies that could help them out!

HH



Speaking of muzzies, I wonder if the British politicians can run away as fast as the London Bobbies?  






Gutless people do gutless things.  Should be expected from over there.

HH


Everytime I see the bobbies backpeddling, I think of this....


http://www.youtube.com/watch?v=XcxKIJTb3Hg


"Run away!  Run away!  Run away!"



Link Posted: 1/27/2009 6:26:34 AM EDT
[#15]
Quoted:
Quoted:
Quoted:
Quoted:
Quoted:
Quoted:
We undoubtedly have a difficult period ahead for the UK economy with its structural bias towards financial services and household consumption. Both of these, we believe, are likely to deliver weak to no growth over the next few years as the deleveraging process continues and regulation intensifies. As a result the outlook for the UK equity market as a whole remains tough. Good stock selection will continue to be crucial. Those areas that have benefited from the credit boom continue to be best avoided.


They're screwed and they don't even know it.  They will officially become a nobody and they can thank themselves.  Tough shit.

HH


I'm sure they will find a way to blame either Bush or America or both.  



Of course they will.  They're too stupid to realize they did it to themselves.  Again, they have so many muzzie buddies that could help them out!

HH



Speaking of muzzies, I wonder if the British politicians can run away as fast as the London Bobbies?  






Gutless people do gutless things.  Should be expected from over there.

HH


Everytime I see the bobbies backpeddling, I think of this....


http://www.youtube.com/watch?v=XcxKIJTb3Hg


"Run away!  Run away!  Run away!"





I needed that this morning...I'm still LMAO!

HH

Link Posted: 1/27/2009 6:36:28 AM EDT
[#16]
Gutless people do gutless things. Should be expected from over there.

HH



Link Posted: 1/27/2009 7:25:10 AM EDT
[#17]
Quoted:
Gutless people do gutless things. Should be expected from over there.

HH



http://img.thesun.co.uk/multimedia/archive/00409/SNN2702JB_682_409850a.jpg


Got a link to his story?

Link Posted: 1/27/2009 2:48:15 PM EDT
[#18]
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