Are worldwide money markets still the key to recovery?
After a brief period of confidence in the UK and worldwide economies, the last couple of days have seen a significant injection of realism into the arena. More and more companies and more and more financial institutions around the world are suggesting that money markets are the key to recovery and so far they have not responded as hoped.
In simple terms, until there is a return of confidence to the UK economy there will be limited funds available to only the most blue-chip of borrowers. As a consequence it could prove more and more difficult for companies such as Royal Bank of Scotland, which is due to refinance £300 billion of short-term debt over the next month, to refinance debt positions on similar terms to their original deals. It is literally a chicken and egg situation in that confidence needs to return to economies before money markets respond while economies need money before they can turn the corner.
As a consequence, we have seen governments around the world attempt to inject confidence and funding into the money markets as a short-term boost in the hope that natural lending would grow and takeover. So far it has not happened but there are signs of a slowing rate of decline in the worldwide economy and still hopes of a recovery next year.
Share this..
Related stories
The Lehman Brothers carve up continues
As the dust starts to settle on the Lehman Brothers debacle we are seeing more and more groups come forward to cherry pick the better operations of the fallen giant. Barclays announced the purchase of the US operation last week and we have now seen Nomura step forward for a slice of the Asian operations. There is also speculation that both Barclays and Nomura are in the bidding for the European...
Read MoreGovernment criticised for awarding £7.5 billion train contract to Japanese consortium
The UK government is today under severe pressure after awarding a £7.5 billion contract to upgrade the InterCity 125s to a Japanese led consortium. Unions and Labour backbenchers are said to be up in arms at the move which potentially puts at risk a number of UK jobs. However, in many ways the government cannot win because each and every party commenting today had their own particular angle and t...
Read MoreIs protectionism really as bad as people suggest?
As the worldwide economy continues to head downwards we are seeing more and more signs of protectionism around the world as governments look inwards to protect trade and employment. Gordon Brown has been a particular critic of protectionism even though he has come under significant pressure at home to ensure "British jobs for British workers". So what really is protectionism and is it really as ba...
Read MoreCo-op pulls mortgage products
The Co-operative Bank (Co-op) has confirmed that its range of two-year fixed rate mortgages will be withdrawn from sale. According to a statement from John Barker, the head of mortgages at Co-op, the products will be pulled as of the close of business tonight. The bank will continue to offer its range of three, five, ten, and 25-year mortgages to both new and existing customers.The decision to wit...
Read MoreNew Car Sales Plummet As Expected
On average last month saw 20% fewer new cars sold than over the same period last year but this base figure seems to hide some real pain for the big players. It seems as though BMW (down 40%), Jaguar (down 41%) and Land Rover (down 58%) were the big losers but we also saw Mercedes-Benz new car sales fall by 35%. This is also on top of with the price reductions which had been mooted for some time!...
Read More