Thursday, December 06, 2007

UK interest rates: A stitch in time saves nine

Today's 0.25% cut brought some relief to many in the financial & retail sectors who were staring at a possible meltdown in mortgage borrowing, credit card spend, Xmas shopping not to mention higher repossessions. Thus half the economy will be feeling relieved that when the Bank of England find itself between a rock and a hard place (inflation is also approaching the set target of 2%), it decided to tackle the problem that would have wider ramifications of the two. Even with oil prices now well over the psychological barrier of £1.00, expect another rate cut within the next four months.

Someobody that worked in one of the investment banks that has written off around £4bn in subprime just over a month ago was saying that its credit risk team was worried about the issue, 
two years ago. Lakini these guys had to be seen to be playing with the big investment banks, so on they went the purchase of toxic instruments as they are now know.

When TC aka G29 speak about investments, the least one can do is to listen/read. A nice piece in the BDA today. I definitely second their advice on the need for formal meetings (pinting doesn't exactly led itself to great investment ideas does it?). One thing though, how come they've kept their prospectus hidden (ok, apart from fears of political hijackers) ?

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