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'Worst financial crisis in human history':
Bank boss's warning as pound suffers biggest fall for 37 years
By Nicola Boden
24th October 2008

Economy outstrips forecasts to shrink by 0.5%
Pound suffers worst fall against dollar for 37 years
FTSE plunges 9% before rallying to close down 5%

Asian markets tumble for a third day amid global fears
The pound suffered its biggest one-day fall for 37 years today after official figures revealed Britain is on the brink of recession.
The economy shrank by 0.5 per cent between July and September, its biggest decline since 1990 and the first quarter of negative growth in 16 years.
Sterling plummeted as low as $1.53, nine cents down on the day and the FTSE-100 fell to its lowest point for five years after the gloomy data was released.

Analysts, astonished at the scale of the slowdown after predicting it would be 0.2 per cent, warned the UK was heading for a deep recession which may last two years.
Deputy governor of the Bank of England Charles Bean said: 'This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history.
'We have had banks crises in the past but what is unique about this event is its sheer scale. It is global... In terms of impact on the real economy, we are still in early days.'

It now appears inevitable that the UK will be in technical recession - classed as two quarters of negative growth - by the end of the year.
Gordon Brown's claim he ended the record of 'boom and bust' now lies in tatters. 'Today is the day the recession became real,' David Cameron said.

Distancing the Prime Minister from the downturn, his spokesman said it was clearly a difficult time for the 'global economy'.
'In the past year we have seen two unprecedented shocks - the first credit crunch since the 1930s and a record surge in food and energy prices. It now looks as though our economy is moving into recession as well,' he said.
Chancellor Alistair Darling added: 'Yes, it's going to be difficult, yes it's going to be tough, but we can get through it.'
Gloom: Deputy governor of the Bank of England Charles Bean says it is possibly the largest financial crisis ever
Sterling plunged as low as $1.5269 after the figures were released, its lowest since August 2002, before rising back to $1.5515. It started the week at $1.70.
The slump surpasses that of Black Wednesday in September 1992 when Britain was ejected from the European Exchange Rate Mechanism.
It means holidays to the U.S. have immediately become more expensive but is good news for British exporters selling abroad.
Shares fell almost nine per cent when the figures were released, having already shed five per cent in early trading amid fears the downturn could be the worst for 50 years.
They rallied back slightly to close down 5.6 per cent or 228.9 points as the Dow Jones also climbed back up after falling five per cent in early trading.

In the UK, HSBC, Standard Chartered, and commodities companies were among the worst affected stocks because of their heavy involvement in emerging markets.
The fall followed huge losses in Asia overnight due to intensifying fears of a global recession.

The last time the economy shrank was back when Tory Prime Minister John Major was in power and before the Black Wednesday plunge.

Output in manufacturing, construction and, most surprisingly, the services sector - which makes up 75 per cent of GDP - were all down as the economy ground to a halt.
Both the manufacturing and construction industries are now officially in recession after a consistent decline across the last six months.
Manufacturing, which makes up around 14 per cent of GDP, fell another one per cent to September on top of 0.9 per cent last quarter. Construction shrank by 0.8 per cent on top of a previous decline of 0.5 per cent.
The powerhouse services sector suffered its biggest drop for 18 years, dropping from 0.2 per cent growth three months ago to be 0.4 per cent in the red.

Vicky Redwood, of Capital Economics, described the data as 'truly shocking'.
'The fact that a recession is already under way isn't a surprise... but the fact that output has shrunk so much so early on in the downturn is clearly worrying,' she said.
'We expect the economy to contract for around two years in all, with a peak to trough drop in output of 1.5 per cent or even more.'
The Tories attacked the Prime Minister for failing to prepare the country for leaner times.
'We have had 10 years of a Government saying no more boom and bust,' Mr Cameron said. 'We have had 10 years of a Government not putting aside money for a rainy day. Well, that rainy day has now come.'
He insisted Britain would recover but that steps must be taken to 'rebalance' the economy and help out small businesses.
Liberal Democrat leader Nick Clegg warned that the country could be on the verge of a new 'winter of discontent' and called for tax and rate cuts to help struggling families.

Yesterday, stocks had swung wildly between gains and losses in the City and on Wall Street as the febrile mood battered markets.
The mood infected Asian markets overnight, with Japan's Nikkei closing down 9.6 per cent at 7649.08, the first time it has fallen below 8,000 since May 2003.
Shares plunged after electronics giant Sony announced it had halved its full-year profit forecasts.
South Korean stocks were down a similar margin - 10 per cent - after Samsung said its three-quarter profits were down 44 per cent, ending a record week of decline.
Indexes also plunged in Hong Kong, Singapore, Sydney and Mumbai. At a summit in Beijing, Asian leaders agreed a $80billion emergency fund to help ailing economies.
And in Europe, German stocks were down more than nine per cent and French shares more than eight per cent by mid-afternoon.

In the UK, both the Prime Minister and Bank of England Governor Mervyn King had warned this week that a recession is all but inevitable.
The Bank of England is under pressure to slash rates sharply to alleviate some of the pain but today's sterling plunge could restrict Governor King's room for manoeuvre.
A weaker currency drives up the cost of imports and therefore inflation, restricting scope for rate cuts.
Rates were cut back to 4.5 per cent on October 8 and minutes from a meeting of policymakers on Wednesday suggested another cut could come next month.
Experts, however, fear that even sharp rate cuts are unlikely to slow the economic decline.
Business leaders urged the Government to help struggling firms and consumers in a bid to limit the duration and severity of the recession.

David Kern, economic adviser to the British Chambers of Commerce, said: 'The economic outlook is serious. Urgent steps are needed to alleviate the worst consequences.

'Interest rates will have to be cut without delay to four per cent in November, and to 3.5 per cent shortly afterwards. Business taxes will have to be cut in the pre-Budget report, and the Government will have to insist that the vital flow of bank finance to small firms is maintained.'
Steve Radley, chief economist at the Engineering Employers Federation, added: 'While pockets of industry are still holding up, large parts of the real economy are being hammered hard. Business and the consumer will now be looking to the Government and the Bank of England to deliver a bold package of fiscal measures.'
TUC general secretary Brendan Barber said that ministers should now show 'the same commitment to fighting recession as they have done to saving the banking system'.

Greenspan's 'Tsunami'
Alan Greenspan, the man once hailed as one of the most accomplished central bankers in U.S. history, admitted last night that he had been taken by surprise by the 'once-in-a-century credit tsunami'.
The former U.S. Federal Reserve chairman said he was in 'a state of shocked disbelief.'
Mr Greenspan, who headed the central bank for more than 18 years, told a Congressional committee the financial crisis had 'turned out to be much broader than anything I could have imagined.'

He has been blasted by critics who claim he left interest rates too low for too long, spurring an unsustainable housing boom, and failed to crack down on sub prime mortgages being handed to people who did not satisfy conventional borrowing requirements.
It was the collapse of these mortgages and rising defaults a year ago that triggered the current crisis.
Asked point-blank whether he had been wrong in failing to intervene, Mr Greenspan admitted only that he had been 'partially wrong' in the case of credit default swaps, complex trading tools meant to act as insurance for bond buyers against default.
It was the closest he got to accepting any blame

We're all doomed article from Daily Mail

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http://wingsoverscotland.com/ http://www.newsnetscotland.com/

cheers Gusmac, needed cheering up

CC

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Think of how stupid the average person is, and realize half of them are stupider than that.
George Carlin

And what does opec do? Cut oil production by 1.5 million barrels.

Regards

JD

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Copyright notice © The contents of this post are copyright of JD and are not to be reproduced outside of TDO without written permission.

We'll be lucky to get out of this recession in 2 years. No one knows what the feck is going to happen but 2 years is a best case scenario. Some economists are predicting 5 years and a depression ta boot.

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All animals are equal but some animals are more equal than others.
George Orwell, "Animal Farm"

I think that is a sign of panic from them, and I doubt that will have any major effect on the price of fuel.

At the end of the day the world economy is slowing up, thus less oil is needed. The high prices have got folks to look elsewhere for energy.

I must have spoken to dozens of folks over the last year that have given up either their only car, or one of their two. So that's a 50% reduction in their oil outlay.

Let's hope more folks go that way and realize that the taxi/PH trade is very good value for money.

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IDFIMH

Perhaps we should become the great manufactures we once were. I mean what do we manufacture for ourselves anymore? We import everything from nuts and bolts to cars, from cotton to clothing. Whilst I appreciate that we cannot start making things over night we should certainly be looking at ways of making ourselves a little more self reliant. If it cost a little more to manufacture here surely the savings of not having to ship things half way around the world to get to us would have some kind of impact on price. The other thing that really bugs me is the fact that a great % of natural gas resources are sold off to France and the like so they can sell it back us and apparently the reason we do that is because we don't have anywhere to store the gas once its pumped. Go figure

I have great faith in our leaders (not). The very same leaders who make it more beneficial to sit on your lazy backside and have money given to you than going to work for it. I don't know if anybody has noticed, but I certainly have, the difference in the type of customers using the taxis lately. There are fewer and fewer working people getting in the cabs at night now and the only customers able to use us are those with no committments other than to get to the post office sometime Monday or their homework assignments, lol. It's not that these people never used the taxis before it's just that these seem to be the majority rather than the minority of your fares. I don't suppose it matters so much cos you still get paid but it's kind of getting your tax back when they pay you!!

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Note to self: Just because it pops into my head does NOT mean it should come out of my mouth!!

The only feel good factor that remains is Christmas, after that it's all over . . . then the shi* really will hit the fan ....

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All animals are equal but some animals are more equal than others.
George Orwell, "Animal Farm"

Yeah but the feel good factor from Christmas lasts me about 6 months at which time I start looking forward to the next Christmas and all my new toys so I should be feeling good for quite a while. I can't wait til this Christmas cos I think him in the red suit is bringing me a Wii, Wahoooo

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Note to self: Just because it pops into my head does NOT mean it should come out of my mouth!!

You need to get yourself up to Edinburgh, under the North Bridge, at the Waverley Station - somehow I don't think the Wii is going to cut it . . . .

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All animals are equal but some animals are more equal than others.
George Orwell, "Animal Farm"

I actually empathise with that, being 40th on a rank designed for 8 cabs aint fun

CC

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Think of how stupid the average person is, and realize half of them are stupider than that.
George Carlin

All they have done is reduce it by half the amount they increased production by when the price went ape sheit
So hopefully fuel will still fall at the pumps

And what was the markets reaction?

Another $5 fall.

if the price gets any lower all we will be paying at the pumps is the tax and vat

trade has been sluggish for over a year but it won't dissapear remember all those regular customers who don't drive but still need to go shopping or to the hospital or doctors especially the grannies

Yes unemployment will go up a little but probably less than 5% the working population the other 95% will still have their wages coming in and will still have money to spend they just won't go out so much because of the higher fuel bills but I bet they'll still go to Christmas parties weddings Birthday nights out halloween parties etc etc

and there is not much sign at the moment of people stopping going on holiday the airports all seem as busy as ever to me except for London escessive charges airport (also known as Luton)
and even they have been forced to cut their parking charges !!

so come on chaps and chapesses there are still fares to be had its not like we all work in the building trade we'll all still be in a job come the new year just might have to postpone buying that new taxi !

Perhaps I'm in the wrong area or on the wrong firm, but most of my regular customers will not be that effected by the credit crunch as they are already pot less. Or should I say car less.

I would say 50% of our regulars are either unemployed or retired, so they have no jobs to lose, and their houses are either council or fully paid up.

Maybe those firms that have exec punters, or large corporates, or loads of long/airport runs might be different. For those I would say watch the account limits.

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IDFIMH