Safe as houses - part 2

They think its all over

The sign of the times? The sign of the times?

As articles are published in date order part 1 appears below

Some brave souls tried to find reasons for the mess, alas the old joke that 'if you need three opinions on the economy, then ask two economists' came back in force, for complicated it was, with statistics aplenty. We were told that 8% of UK mortgages could be termed sub-prime, that the US has lower dollar reserves than India, Singapore and Brazil and also the world's largest trade deficit, while the UK has the third largest deficit. However, the cynic in me raised a smile when the news came that UK banks would no longer lend money to each other. Now that was funny, as the banks, by contrast, have lent so much money to the nation's credit card holders. In looking for a culprit for the sub-prime mess, first criticising, then blaming hedge funds became the preferred option; even if one hardly had a clue as to what they did for a living. Only knowing that in the past, hedge funds had been given a hard time by trade unions and a Parliamentary Select Committee alike.

Safe as houses - part 1

In the beginning

Safe in their hands? Safe in their hands?

Introduction - At the start of what we now call the credit crunch I sensed that this was to be no ordinary event. As an avid reader of any business and economics news I developed a near morbid interest in this subject, so kept a diary. On a personal level, I once had a Northern Rock deposit account and own some bank shares.

In 2007, when some families in the UK were coping with the damage to their homes caused by the floods, another disaster was gathering pace. Unlike the floods, which at the time went straight to the top of the nation's concerns, the sub-prime crisis of the USA began at first as a mere trickle in the the depths of reporting. Not at all photogenic, this event took a long time to get the attention it deserved. Eventually we saw the Northern Rock (NR) investors form into queues to get their money back, the outcome from this event will, in time, be seen as a force equal to the UK floods, and reaching far beyond any flood plain or barrier. So how to describe the sub-prime crisis? An act of pure folly, or merely a market correction?

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