Double-dip recession a slam dunk for the UK
Posted on 25 January 2011 with 4 comments from readers
A double-dip recession has become almost inevitable for the UK after figures today showed a surprise 0.5 per cent contraction in GDP in the fourth quarter with bad weather and a snow-bound construction industry to blame.
However, with VAT rises and government spending cutbacks coming into force from the start of January the chilly winds of recession look almost certain to continue. The UK will become the first major economy to experience a double-dip recession.
Bear market
The is not going to be good news for investors in the UK, so recently celebrating the return of the FTSE above 6,000 points. Pride so often comes before a fall.
The pound tumbled on news of the negative quarterly GDP. Holding assets in pounds is going to become increasingly expensive as this year progresses and sterling devalues.
For home owners this is not good news either. Already a mortgage famine is driving the house prices lower on very low sales volumes. The Daily Mail’s cheeky report on One Hyde Park in London yesterday revealed that the only sales transactions to be completed so far are the Qatari owner and his British partner, at prices well below those advertised to the public.
This looks to be the year that UK house prices really turn down (click here). Every market has its tipping point and the arguments that defy gravity have become so thin as to be indefensible.
Bear market bargains
Investors who are not participants can only watch on the sidelines with their cheque books for the bottom of this ordinarily world-class, bench mark country for investment. It is not often that bargains emerge in such blue-chip markets and ArabianMoney will be keeping an eagle eye open.
Watch for a big fall in the FTSE as investors digest the meaning of a double-dip. And bad luck for the Qataris who bought Harrods at the top of the market.
4 Comments posted by readers:
Chicken Licken was right, the sky is falling in. It’s official. Honestly, with stories like this, why do any of us bother to carry on living?
Ed Note: Reality is not always what you would like but it is essential for investors to know reality.
I’m doing my part to prop up the Japanese and Chinese economies. The hard drive on my HP laptop gave up the ghost, so I bought a new Toshiba laptop. It is way too fast for my brain.
The sad thing is that the people who benefited the most from creating all this debt are the ones who helped create it. Countrywide and other bad mortgage originators got rich, and the politicians stuck the taxpayers with the bill. Watch David Faber’s CNBC masterwork, ‘House of Cards’ to see exactly how it was done. They made billions by creating bad debt, now transferred to the governments. All ‘legal’ too! How long before the governments go belly up? Or will China end up calling the shots a lot sooner than we think by buying the world?
Didn’t I write that Spain would be a problem a few weeks back? We had all better hope that a fellow on CNBC yesterday claiming that the Amazon has vast oil deposits is correct. A fall in global oil output will make these debt problems seem quite trivial.
I just hope Obama keeps trashing oil companies to drive their stock prices way, way down. Go Obama!
gotta weigh anchor for antoine jam..read ian fleming’s 12th bond, you only live twice..read tiger tanaka’s assessment of brit society (and therefore brit finance)
- written @ 1962..50 yrs on perfidious albion is much closer to expiration..sick beyond sanity..A$ is spot on AGAIN
http://www.kittycatchats.com/search/label/Economy
Unemployment is at an 8 month high, the foreclosure market is slowing down, the price of gas is going up. The middle is a positive, but on the other hand, maybe the banks realize they cannot get blood from a stone.
http://www.kittycatchats.com