Administration - here we go!

[Dirk Gently]

How is the credit crunch affecting you?
Are you with a bank for mortgage/account that is seen to be 'vunerable'?
Are you worried about your financial future?
Lehmen Brothers has collapsed & shares are tumbling. Does this affect you? AIG, one of the largest financial institutions is in trouble, shares have already dropped by 70%! I do a certain amount of business with them & I'm nervous to say the least, but there's little I can do about it.
We're heading for another recession & there seems little to stop it...well that's what I think, do you agree?

[Rob McCow]

In real terms - not much yet. We moved to a fixed rate mortgage a year ago and we're staying there as long as possible! Just as long as we don't all get sacked and the cost of living doesn't rise too much, we should be OK for now. Touching lots of wood

I feel a little sorry for the bankers who have lost their licenses to print money (move debts around) though.

[Wayne]

I don't have a credit card. (although i do have an overdraft facilty which gets used pretty often)
And i don't have a mortgage, i rent. So i guess the answer is no.

[WhiteCrow]

At school when I was 16, we had to learn about the Wall Street Crash.

Part of the cause of it was people expected something for nothing. Shares in companies which were worthless were being traded, and people encouraged to invest. Share values kept going up.

It seemed a sure thing that prices would continue to rise, and a lot of people and banks threw money into these things.

The problem was there was a minor panic, people realised their share worth had been overestimated, and the whole bubble collapsed.

That was 80 years ago. Now change the word "shares" into "property" or "sub-prime", and you've got an exact repeat of that effect now. Banks should have known better, and now we're all going to have to pay for their mistakes.

Something similar happened in 2000 - "dot coms" were seen as the next big thing. Websites were being rated as being worth hundreds of millions, despite these companies having minimal assets in the traditional sense. Hence the "dot coms" became "dot bombs".

At least we've learned our lesson. No we haven't. The same thing is now happening with oil and metal prices. The minute the property bubble burst, the gold rush turned to oil. There's not been a shortage of oil, but it's the way it's been traded which has increased the price of oil from about $90 a barrel to a high of $140 a barrel recently. But that bubble is now bursting too.

What's needed now is a bit of brakes on the system, a bit of common sense to try and restore some stability to the economy. I think the Bank of England needs to reduce the level of interest to try and stimulate the economy a bit more, and oil prices need to stabilise.

Basically the Government I think should be doing a bit more, taking SOME kind of action, instead of the feeling they're just burying their heads in the sand and hoping this is over come election time.

Anyway an interesting article ...

http://news.bbc.co.uk/1/hi/business/7525724.stm

[Paul Monk]

We're ok mortgage-wise as long as interest rates don't soar into double figures, but even then we have a back up plan. Energy bills and food cost rises have hit us the most.
Probably should start to think about changing our buildings and contents insurance then as they're with AIG.

[Captain Tancredi]

It's been interesting from my position actually working in a bank, albeit one of the smaller ones, not UK owned and not doing that much business in the US either- our American subsidiary is primarily an agricultural bank so the lending is secured against farmland rather than houses. In the last month or so it's been quieter than normal- it hasn't really picked up from the summer holiday season- but then again the end of the bank's financial year is the end of September, so it's quite common for those account managers who've hit their targets to hold new business over until October to give themselves a head start for 2008-9.

One advantage of working for a bank is that I've also been able to move all my card balances onto a staff rate personal loan, which seems to be working out well. But I think that part of the problem is that panic breeds panic and you end up in a situation where the damage is worse than it needs to be as a result of everybody running round in headless chicken mode and destabilising banks even further by taking their money out.

[cullsoft]

I know it's a very light-hearted look considering how harsh things can be, but I keep remembering more wise words from Mitch Benn: "Y'know, I think I'd be able to take the Credit Crunch a lot more seriously if 'Credit Crunch' didn't sound quite so much like a breakfast cereal..."

Not to say that I haven't been keeping a pessimistic eye on how bad things have going, I'd probably want to pay much more attention now that I'm actually putting money into our mortgage...

[Milky Tears]

Whoever first came up with "Credit Crunch" should be shot!

[cullsoft]

Whoever first came up with "Credit Crunch" should be shot!

I'm sure they'll be the first against the wall when the revolution comes.

Or at least straight after the immoral imbeciles who thought it was a good idea to milk money out of the poor with loans and mortgages they could never afford and pretty much cause this whole thing to happen.

[Paul Monk]

There's nothing wrong with the term "credit crunch" as such. Its just when it gets used to mean anything that is financially bad that it gets on my tits.

But I think that part of the problem is that panic breeds panic and you end up in a situation where the damage is worse than it needs to be as a result of everybody running round in headless chicken mode and destabilising banks even further by taking their money out.

I definitely agree with you there, Iain. The media don't help either but then the papers love announcing domsday don't they?

[Ralph]

Having just got back from my holidays, the gloomy weather plus the gloomy stock market conditions doesn't appeal to me at all. It's difficult to avoid when it's central to your work and the media irresponsibly relish panicing the general public and make them feel insecure on their pensions, investments, property and savings

[Dirk Gently]

I see AIG are being bailed out.

The U.S. negotiators drove a hard bargain. Under terms hammered out Tuesday night, the Fed will lend up to $85 billion to AIG, and the U.S. government will effectively get a 79.9% equity stake in the insurer in the form of warrants called equity participation notes. The two-year loan will carry an interest rate of Libor plus 8.5 percentage points.
(Libor, the London interbank offered rate, is a common short-term lending benchmark.)

The loan is secured by AIG's assets, including its profitable insurance businesses, giving the Fed some protection even if markets continue to sink. And if AIG rebounds, taxpayers could reap a big profit through the government's equity stake.

The assets in question are believed to value around $1.05 Trillion.

[Ralph]

The demise of HBOS a sound company until the stockmarket speculators moved in to drive the share price down is a sad reflection on current times. The headquarters to be in London with potentially 20,000 jobs in Scotland at risk reinforces further the north south wealth divide

[Captain Tancredi]

I would think the merged bank would want to keep the Edinburgh HQ and Scottish registration if only to be able to keep the right to print Bank of Scotland notes- it is quite literally a licence to print money (and I know about this from work, believe me). Bearing in mind that HBOS is only about five or six years on from its last merger, restructuring the organisation is going to be messy indeed- Halifax has about half a dozen different sites in Leeds alone, not to mention all the fiddly little subsidiaries like Intelligent Finance and Sainsburys Bank- but as a popular High Street bank there's a lot of good business in there as well.

On the other hand, as coincidence would have it, I had a statement from the Halifax today showing me how much I have with them (all of 76p). The tight-fisted so-and-sos don't even pay me interest on that- I reckon I should at least be getting a penny a year. As a customer I have to say that their culture has never impressed me, and my friend George who worked there never had a good word for the management, so any sympathy I have is purely for the front line staff who are going to be in limbo for a long time.

[Milky Tears]

I've never liked the Bank of Scotland and Howard from the Halifax ads is a **** of the highest order. Hoping the Clydesdale Diddy Bank is next!

[Dirk Gently]

I really don't get the mentallity of some people sometimes. Unite (the union for the HBoS employees) were moaning that the Government had turned thier backs on them by allowing the merger to go ahead, resulting in anything from 2,000 to 40,000 possible job losses. How the hell do they work out that this merger is not in thier best interests? What would they prefer, HBoS to go down the tubes so that every employee losses thier jobs like Lehman brothers?
The Government weren't about to try & bail out yet another bank when there was another willing to it for them.

[WhiteCrow]

The BBC website is interesting ...

Shares on Wall Street follow European and Asian markets higher as confidence is boosted by a US government plan to free US banks from bad debt.

You get the feeling now Banks know they can make huge profits, and reward themselves. But should they cock up royally, Government will bail them out.

I'm hoping the cost of all this bailing out will be the Government having more of a stake in bank behaviour. And really better regulation has got to be on the cards.

[Ralph]

I'm hoping the cost of all this bailing out will be the Government having more of a stake in bank behaviour. And really better regulation has got to be on the cards.

Have I missed something? - it was just the Northern Rock that was "bailed out" by the UK government. The FSA stopped shortselling which seemed sensible given the outcome for HBOS.

Having said that I take your point. The circumstances of HBOS I believe was unecessary though had it not been for the worst aspects of capitalist greed kicking in. I think there is a social cost which should be considered.

[WhiteCrow]

It was the American government which did the recent bailing out - I stand corrected.

[Captain Tancredi]

Looking back at Ralph's comment about job losses in Scotland, the (Labour) MP for Halifax was interviewed on Radio 4 last night, absolutely furious that a fuss had been made about keeping jobs in Scotland when HBOS is the biggest employer in her constituency after the local council (about 6000 jobs was the figure mentioned) and no such guarantees had been made there. Halifax is about 45 minutes' commute from the nearest alternative major employment market in Leeds and I would have thought that the number of devolved bodies now operating in Scotland would have created a fairly consistent demand for clerical workers in Edinburgh in particular.

I'd agree with Ralph's point though and add that we now seem to have the contradiction of a Labour government which seems to be going all out to reinforce regional inequality- if anything though I would have thought it would suit Labour to have big job losses in Scotland if only to create a headache for the SNP administration.

[Si Hunt]

The credit crunch is worrying to me like it is to everyone - food and petrol prices are soaring. I have a tracker rate mortgage which is fixed to the BOE, but that actually seems to have benefited as the BOE rate has fallen before it last rose, as they try and counteract rising house prices.

Perhaps the first evidence of getting stung was when I got my last pension statement. It's not an active account (oddly the one I pay into now seems unaffected) but one into which I paid a lot of money in the years before our company scheme started i.e a personal pension plan. Although I've not paid into it since the company one begun, it has been steadily rising as they invest the money. However, earlier this year it lost value for the first time - £300 in three months. In the last statement, it lost another £500 in the same time period. I'm thinking, if this goes on, then the thousands I paid in will soon be gone.

I've thought about transferring scheme or investment, but to be honest after seeing how the other investment's have performed, I don't think it's going to help. They've ALL been losing value for the first year ever, and rapidly so. To be honest, I don't understand why they don't just STOP investing the money in the current climate, but they don't and it continues to whittle away.

Si.

[SiHart]

The thing about pensions is that they're a long term investment, so although it's gone down a bit now Si, it'll probably improve as the financial situation improves. I would have thought, though I may be naive, that whatever you've paid in is safe- it's the bit they gamble on with shares (which is basically what they're doing) that will vary.

Personally, I seem to be OK. I don't know how long that will last, but for now, it's rather rather reassuring. I suppose too, that working in a public service my job is fairly safe, as these things tend to weather the storm a little better than private sector jobs do. As long as people keep paying their council tax in the Borough, anyway.

Si xx

[Andrew Curnow]

I watched whatever programme Andrew Neil presents after Question Time last Thursday - at one point Michael Portillo said that it's a worrying time for people because, where do you put your money? You don't want to put it into property, because that's losing value; you don't want to invest in stocks & shares, because they don't seem a safe bet; even putting it into banks would seem to be a bit dodgy.

All in all, I said to Zel I'm very glad we never have any money left over to invest!!!

[Dirk Gently]

You can't lose if you invest in property, given enough time it always gives profit..

[Ralph]

It's a tough time for everyone who wants to grow investments and pensions.
Human nature is such that the public like to follow the pack when sometimes it would be best to go against the trend. I think the answer is as always to not have "all your eggs in one basket". By the way if anyone's got a crystal ball I'd really like to check it out!