New mortgage approvals have dropped to the lowest monetary value we have seen in over two and a half years. Given that only 42,088 new loans were approved last month this is the worst since records began in 1997.
The worrying thing is that even though property prices were about 5% across 2007 the prices actually fell in the last quarter.
I suspect rates need to come down by two more quarter point increments if we want to see this start to change ion any sustained way and I'll be interested to see business borrowing figures next month to see how it is biting into the supply chain.
My bet is for a February or March .25% cut and then another in June or July, watch this space.
Thursday, 24 January 2008
Wednesday, 23 January 2008
Don't Panic Captain Mainwairing !
The Bank of England has just voted 8-1 for a hold in interest rates, at least someone isn't panicing like the Fed !
Smart money would be on a .25% drop again next month and that's where my money would go as they have commented that the risk of higher inflation has "worsened markedly" and even Mervyn King mentioned this in his speech last night.
Energy costs must be pressing on inflation as well as some pay settlements (except the Police) and it seems likely a small cut will be needed to keep things ticking along.
Smart money would be on a .25% drop again next month and that's where my money would go as they have commented that the risk of higher inflation has "worsened markedly" and even Mervyn King mentioned this in his speech last night.
Energy costs must be pressing on inflation as well as some pay settlements (except the Police) and it seems likely a small cut will be needed to keep things ticking along.
Slashing Away
The Fed has chopped interest rates to 3.5% lopping a massive 0.75% off their rates, why?
Well, they seem to think by not doing so the USA will drop into .......recession.
I have seen a comment from one banking guru who claims that this move is "obvious panic" and it's difficult to argue against that.
Stock markets are looking extremely volatile right now and despite closing back up on the day it's easy to see how the FTSE could easily take a second hit after early trading losses. There seem to be a lot of jittery dealers and this is now getting very close to home, starting to cause a few flutters in some major UK multiples I will bet. It's coming, just make sure you have your house in order with bank borrowings and debtor ledgers, remember, the survival of the fittest.
Well, they seem to think by not doing so the USA will drop into .......recession.
I have seen a comment from one banking guru who claims that this move is "obvious panic" and it's difficult to argue against that.
Stock markets are looking extremely volatile right now and despite closing back up on the day it's easy to see how the FTSE could easily take a second hit after early trading losses. There seem to be a lot of jittery dealers and this is now getting very close to home, starting to cause a few flutters in some major UK multiples I will bet. It's coming, just make sure you have your house in order with bank borrowings and debtor ledgers, remember, the survival of the fittest.
Strike Two
Bank of America has now joined the club of big losers by announcing a 95% fall in profits for Q4 ! They put it down to...guess what ? rising credit losses.
Their net income dropped to$268m in Q4 when it was a whopping $5.26bn for the same period in 2006. Wachovia another US bank has also announced an incredible 98% drop in their Q4 profits.
Bank of America has had to provide $1.74bn to cover credit losses.
Recession? Don't be silly, Gordon Brown and George Bush say there isn't, so that must be right, mustn't it?
Their net income dropped to$268m in Q4 when it was a whopping $5.26bn for the same period in 2006. Wachovia another US bank has also announced an incredible 98% drop in their Q4 profits.
Bank of America has had to provide $1.74bn to cover credit losses.
Recession? Don't be silly, Gordon Brown and George Bush say there isn't, so that must be right, mustn't it?
Friday, 18 January 2008
Getting Close to Home
So having said yesterday to watch out for something closer to home, here are.
This morning, Scottish Equitable have closed the exits on some of their funds because of a rush to withdraw cash from its commercial property funds. They have now introduced a 12 month delay to get your money back.
The fund managers are already blaming the rush to the exits on worries about US sub-prime mortgages, the threat of recession and interest rates.
Friends Provident did just the same in December.
Because it can take a while to realise assets the amount of withdrawals has got to the point where they need to sell off buildings just to raise enough money to make the payouts.
The crunch is creeping closer.....
How long is it going to be before a corporate b2b organisation starts increasing their prices due to credit squeezes ?Not long I will wager.
This morning, Scottish Equitable have closed the exits on some of their funds because of a rush to withdraw cash from its commercial property funds. They have now introduced a 12 month delay to get your money back.
The fund managers are already blaming the rush to the exits on worries about US sub-prime mortgages, the threat of recession and interest rates.
Friends Provident did just the same in December.
Because it can take a while to realise assets the amount of withdrawals has got to the point where they need to sell off buildings just to raise enough money to make the payouts.
The crunch is creeping closer.....
How long is it going to be before a corporate b2b organisation starts increasing their prices due to credit squeezes ?Not long I will wager.
Thursday, 17 January 2008
Wow, what a crunch !
After I posted details of the Citigroup loss, who could have seen this coming.
Merrill Lynch has reported a loss for 2007 of $7.8bn for the last 12 months.
It is the company's second quarter's loss on the bounce now and it cost the previous chief executive his job.
Watch out for more losses closer to home shortly.
Merrill Lynch has reported a loss for 2007 of $7.8bn for the last 12 months.
It is the company's second quarter's loss on the bounce now and it cost the previous chief executive his job.
Watch out for more losses closer to home shortly.
Wednesday, 16 January 2008
Using low cost legal services
Andrew Lynch of Metro tells of his experience using BACK inContact's low cost legal services, recovering over £40,000 in under 2 weeks with £2,000 interest and NO LEGAL BILLS !
Metro Outlook - VODCast 1
Metro Legal Advisor Andrew Lynch talks to the BACK inContact team about his role and some of the challenges they face.
Staggering
Just when you thought the crunch might not be real, look at this for a hit. Citigroup had to announce a loss due to the credit situation totalling an incredible $18.1bn which the Chief executive had to describe as "clearly unacceptable". This loss was apparently down to over exposure to bad mortgage debts.
Citigroup also commented that their revenues fell by around 70% in Q4.
Citigroup is set to receive a cash injection of $6.88bn from the Singapore government investment agency GIC and it was only recently that the Kuwait Investment Authority said it had bought a $3bn stake in the bank. Just last November, the Abu Dhabi Investment Authority made an investment of $7.5bn.
This big hitting bank has cutting its dividend for the quarter by 41%, from 54 cents to 32 per share, as well as bringing in a further $14.5bn by selling securities (which includes the investment from GIC).
Citigroup isn’t the only one being clobbered by bad debt but their provision for bad debt is by miles the biggest so far.
Let’s look at what the rest have been hit for:
Citigroup: $18bn
UBS: $13.5bn
Morgan Stanley $9.4bn
Merrill Lynch: $8bn
HSBC: $3.4bn
Bear Stearns: $3.2bn
Deutsche Bank: $3.2bn
Bank of America: $3bn
Barclays: $2.6bn
Royal Bank of Scotland: $2.6bn
Freddie Mac: $2bn
Credit Suisse: $1bn
Wachovia: $1.1bn
IKB: $2.6bn
Paribas: $439m
It could be coming to a bank near you soon if it hasn’t already and squeezing your rates up to pay for someone else’s mess ups.
Get your credit book in shape soon !
Citigroup also commented that their revenues fell by around 70% in Q4.
Citigroup is set to receive a cash injection of $6.88bn from the Singapore government investment agency GIC and it was only recently that the Kuwait Investment Authority said it had bought a $3bn stake in the bank. Just last November, the Abu Dhabi Investment Authority made an investment of $7.5bn.
This big hitting bank has cutting its dividend for the quarter by 41%, from 54 cents to 32 per share, as well as bringing in a further $14.5bn by selling securities (which includes the investment from GIC).
Citigroup isn’t the only one being clobbered by bad debt but their provision for bad debt is by miles the biggest so far.
Let’s look at what the rest have been hit for:
Citigroup: $18bn
UBS: $13.5bn
Morgan Stanley $9.4bn
Merrill Lynch: $8bn
HSBC: $3.4bn
Bear Stearns: $3.2bn
Deutsche Bank: $3.2bn
Bank of America: $3bn
Barclays: $2.6bn
Royal Bank of Scotland: $2.6bn
Freddie Mac: $2bn
Credit Suisse: $1bn
Wachovia: $1.1bn
IKB: $2.6bn
Paribas: $439m
It could be coming to a bank near you soon if it hasn’t already and squeezing your rates up to pay for someone else’s mess ups.
Get your credit book in shape soon !
Monday, 14 January 2008
Eur going to love this.....
The Irish credit market is set for a revolution.
BACK inContact one of the fastest growing business services in the UK has launched in Ireland, bringing FREE business debt recovery to the Emerald Isle.
Collections letters for FREE
Businesses of all sizes based anywhere in Ireland can now have their debt recovery letters sent by the BACK inContact law firm partner for Ireland for absolutely no cost. Using pan European Late Payment legislation all business to business collections letters are FREE and all other collections letters are just €9.99 plus tax.
Incredible Service
To make this incredible service available, Entrepreneurs Barry Kemp and Andrew Charlton’s BACK inContact have appointed Limerick based Dermot G O’Donovan Solicitors as their exclusive partner for Ireland.
The Irish market has long since been on a high as the Celtic Tiger rode the crest of a property wave but with the economy stagnating and the credit crunch biting customers are demanding much more than law firms have been willing to give, now, all that changes.
Simply Unrivalled
By harnessing technology and making efficiencies within a traditionally labour intensive market BACK inContact and Dermot G O’Donovan are able to offer a service that is simply unrivalled within the Irish market.
BACK inContact (Ireland) is lead by renowned legal management consultant Anne Neary in partnership with Barry Kemp and Andrew Charlton who created and implemented this business model in the UK. Anne’s expertise in the Irish legal market and BACK inContact’s automation and vision give this exciting project an amazing team.
"With BACK inContact we are offering levels of service ranging from completely free for Late Payment Compensation based claims to fixed price €9.99 for pre-legal letters. Where else in Ireland can you get these prices whilst still receiving a top level service?"
Andrew Charlton commented “Dermot G O’Donovan stood out from the pack during the partner selection phase we conducted and in our opinion are the most progressive and proactive legal firm we have seen in Ireland.
Adrian Frawley is the managing partner at Dermot G O’Donovan and added:
"What excites me about bringing my firm to the BACK inContact team is that this service shows our ambition to put the client at the centre of everything we do. All of our offerings are completely transparent because nothing aggravates a client more than unexpected large legal bills and invoices that law firms frankly cannot justify. I have no doubts this service is going to go from strength to strength and Dermot G O’Donovan will grow with BACK inContact to be Ireland’s number one collections team."
Since its launch in 2007 BACK inContact has attracted thousands of clients with more joining daily. To join the credit revolution and change the way you work with your collectors log on to http://www.backincontact.com/ or read our credit blog “Give me credit” by going to http://backincontact.blogspot.com/.
For more information about Dermot G O’Donovan please visit their website at http://www.dgod.ie/.
BACK inContact one of the fastest growing business services in the UK has launched in Ireland, bringing FREE business debt recovery to the Emerald Isle.
Collections letters for FREE
Businesses of all sizes based anywhere in Ireland can now have their debt recovery letters sent by the BACK inContact law firm partner for Ireland for absolutely no cost. Using pan European Late Payment legislation all business to business collections letters are FREE and all other collections letters are just €9.99 plus tax.
Incredible Service
To make this incredible service available, Entrepreneurs Barry Kemp and Andrew Charlton’s BACK inContact have appointed Limerick based Dermot G O’Donovan Solicitors as their exclusive partner for Ireland.
The Irish market has long since been on a high as the Celtic Tiger rode the crest of a property wave but with the economy stagnating and the credit crunch biting customers are demanding much more than law firms have been willing to give, now, all that changes.
Simply Unrivalled
By harnessing technology and making efficiencies within a traditionally labour intensive market BACK inContact and Dermot G O’Donovan are able to offer a service that is simply unrivalled within the Irish market.
BACK inContact (Ireland) is lead by renowned legal management consultant Anne Neary in partnership with Barry Kemp and Andrew Charlton who created and implemented this business model in the UK. Anne’s expertise in the Irish legal market and BACK inContact’s automation and vision give this exciting project an amazing team.
"With BACK inContact we are offering levels of service ranging from completely free for Late Payment Compensation based claims to fixed price €9.99 for pre-legal letters. Where else in Ireland can you get these prices whilst still receiving a top level service?"
Andrew Charlton commented “Dermot G O’Donovan stood out from the pack during the partner selection phase we conducted and in our opinion are the most progressive and proactive legal firm we have seen in Ireland.
Adrian Frawley is the managing partner at Dermot G O’Donovan and added:
"What excites me about bringing my firm to the BACK inContact team is that this service shows our ambition to put the client at the centre of everything we do. All of our offerings are completely transparent because nothing aggravates a client more than unexpected large legal bills and invoices that law firms frankly cannot justify. I have no doubts this service is going to go from strength to strength and Dermot G O’Donovan will grow with BACK inContact to be Ireland’s number one collections team."
Since its launch in 2007 BACK inContact has attracted thousands of clients with more joining daily. To join the credit revolution and change the way you work with your collectors log on to http://www.backincontact.com/ or read our credit blog “Give me credit” by going to http://backincontact.blogspot.com/.
For more information about Dermot G O’Donovan please visit their website at http://www.dgod.ie/.
Crunch is going to SQUEEEEZE you harder
I see this week that the US Federal Reserve has said that the prospects for the economy in the USA have worsened for 2008.
The Federal Reserve Bank has reduced their rates three times since mid 2007 and they are now at the lowest level in two years.
During his speech on Thursday the Fed announced that they may take substantive additional action to try and support growth and also to reduce the “downside risks".
US stocks have responded positively as the Dow Jones industrial average climbed by almost 1% and the NASDAQ rose by just over half of a percent.
Mr Bernanke said that the facts he had suggested "that the baseline for real activity in 2008 has worsened and the downside risks to growth have become more pronounced".
The US is facing a major challenge in dealing with both a diminishing housing market and rising inflation as oil and food prices rise.
Mr Bernanke also explained that the issues with the slowing housing market and in particular the sub-prime mortgage crisis, was having on the wider economy.
Banks must write off billions of dollars of investments linked yet again to sub-prime debt and went on to say that the financial situation "remains fragile, and many markets remain impaired", explaining that saying that major banks are still exposed to the credit crunch.
This week Merrill Lynch said the US had already entered a recession and even Goldman Sachs suggested it is heading in that direction.
Anyone who thinks the worst is past could be in for a shock and it’s imperative to shape up before the credit crunch squeezes you.
The Federal Reserve Bank has reduced their rates three times since mid 2007 and they are now at the lowest level in two years.
During his speech on Thursday the Fed announced that they may take substantive additional action to try and support growth and also to reduce the “downside risks".
US stocks have responded positively as the Dow Jones industrial average climbed by almost 1% and the NASDAQ rose by just over half of a percent.
Mr Bernanke said that the facts he had suggested "that the baseline for real activity in 2008 has worsened and the downside risks to growth have become more pronounced".
The US is facing a major challenge in dealing with both a diminishing housing market and rising inflation as oil and food prices rise.
Mr Bernanke also explained that the issues with the slowing housing market and in particular the sub-prime mortgage crisis, was having on the wider economy.
Banks must write off billions of dollars of investments linked yet again to sub-prime debt and went on to say that the financial situation "remains fragile, and many markets remain impaired", explaining that saying that major banks are still exposed to the credit crunch.
This week Merrill Lynch said the US had already entered a recession and even Goldman Sachs suggested it is heading in that direction.
Anyone who thinks the worst is past could be in for a shock and it’s imperative to shape up before the credit crunch squeezes you.
Sunday, 6 January 2008
Where did this crunch come from ?
This credit crisis started when US mortgage companies made hundreds of billions of dollars of loans to individuals that had less than perfect credit histories, this is often called subprime lending.
These debts are often then bundled together into a portfolio and then sold to on to other financial institutions in different countries often, who then in turn flogged the debts to pension funds, sometimes, even for more than the book value!
Nobody really knows who is holding some of these duff loan portfolios and until we do many banks are reluctant to lend to each other, and investors then become wary about the general state of institutions in the financial sector.
These debts are often then bundled together into a portfolio and then sold to on to other financial institutions in different countries often, who then in turn flogged the debts to pension funds, sometimes, even for more than the book value!
Nobody really knows who is holding some of these duff loan portfolios and until we do many banks are reluctant to lend to each other, and investors then become wary about the general state of institutions in the financial sector.
CRUNCH !!!
Credit Crunch? What Credit Crunch?
Sitting in the UK in the accounts department of an SME you might be wondering what on earth the credit crunch has got to do with you. After all, this is all to do with US mortgages isn’t it?
Well, in the same way that small acorns can grow into mighty oaks, it seeks that mighty oaks can come tumbling down if it is overburdened with small acorns.
The economic problems faced by Americans today, in their personal and professional lives are starting to spill over into Britain. The long story (about how it all came about) is one for the economist, however, its sufficient to say that interest rates and fuel costs are rising sharply on a global basis and putting the squeeze on you and I.
However, it’s also affecting your debtors. Debtors are facing the same pressures that you are and the rapid rise in house prices and commercial lending rates are hurting debtors.
So that’s a microscopic look at the credit crunch. The harsh reality is that he who shouts loudest gets paid first, so don’t let credit terms drift or extend credit without checking out your customers first. You are often lending them money for your supplies when the bank wouldn’t!
Debt problems are spreading far and wide; both companies and individuals need to take stock and protect themselves from this epidemic of the credit crunch. To provide a service on the basis of unproven creditworthiness to a client is an incredibly risky business in the current climate.
This is where BACK inContact can help:-
We offer an extensive credit checking service to provide our clients with knowledge not guesswork.
We have expert advice on hand to help you manage your finances effectively and we can help provide you with an effective credit control procedure individually tailored to meet your needs.
If you have a tricky to collect invoice, at any stage in the process from just due to seriously overdue call us today. We can help and take away the hassle. The best bit is, it might even be free. Check out our web site to see how, www.backincontact.com.
Sitting in the UK in the accounts department of an SME you might be wondering what on earth the credit crunch has got to do with you. After all, this is all to do with US mortgages isn’t it?
Well, in the same way that small acorns can grow into mighty oaks, it seeks that mighty oaks can come tumbling down if it is overburdened with small acorns.
The economic problems faced by Americans today, in their personal and professional lives are starting to spill over into Britain. The long story (about how it all came about) is one for the economist, however, its sufficient to say that interest rates and fuel costs are rising sharply on a global basis and putting the squeeze on you and I.
However, it’s also affecting your debtors. Debtors are facing the same pressures that you are and the rapid rise in house prices and commercial lending rates are hurting debtors.
So that’s a microscopic look at the credit crunch. The harsh reality is that he who shouts loudest gets paid first, so don’t let credit terms drift or extend credit without checking out your customers first. You are often lending them money for your supplies when the bank wouldn’t!
Debt problems are spreading far and wide; both companies and individuals need to take stock and protect themselves from this epidemic of the credit crunch. To provide a service on the basis of unproven creditworthiness to a client is an incredibly risky business in the current climate.
This is where BACK inContact can help:-
We offer an extensive credit checking service to provide our clients with knowledge not guesswork.
We have expert advice on hand to help you manage your finances effectively and we can help provide you with an effective credit control procedure individually tailored to meet your needs.
If you have a tricky to collect invoice, at any stage in the process from just due to seriously overdue call us today. We can help and take away the hassle. The best bit is, it might even be free. Check out our web site to see how, www.backincontact.com.
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