Jul 26 2007
Quietly falls the Dow
On 6 July I warned about the debt mountains built up on both sides of the Atlantic during the decade of easy money, and forecast that the central Banks would carry on tightening. leading to the further collapses after the sub prime crisis.
On 15 July I talked about the huge imbalances between Asia and the US and the instability they are creating in world markets.
In the last two weeks the message has begun to get home to share markets. Tonight the UK index is down 200 points and the US one currently 340 points lower.
The Uk market has to discount the big losses made by many businesses as a result of the floods as well as the impact of tightening credit on the debt inflated markets worldwide.
During the easy come easy borrow years people fell in love with independent central banks who kept interest rates low. I wonder how long the love affair will last, if the Central Banks really mean this squeeze and carry on pressurising debt out of the system. I assume the central banks will back off quite soon. If they don’t then it could be quite a collapse.
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John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College...
Everyone keeps predicting all this doom, gloom, stagflation, collapse etc. There were a lot of people saying the FTSE would start falling after January back around Christmas time.
I don’t know what to believe, but the way I see it, either what went up will go down and things will go pear-shaped in the USA/UK, or a vibrant, post cold-war world economy will keep things on track for the immediate future.
Whilst I believe that economic development of the world is a force for good, I can’t help but think we need to maintain military superiority more than ever now - just in case.
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