20.08.08 by Andrew Montlake

The Big One

There is growing speculation amongst city analysts that another big jolt is about to hit. Talk of “The Big One” is intensifying which will involve the collapse of a big US investment Bank, a household name.

Kenneth Rogoff, the chief economist of the IMF from 2001 to 2004, said “The US is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say the worst is to come.”

He went on to say “We’re not just going to see mid-sized banks go under in the next few months. We’re going to see a whopper, we’re going to see a big one - one of the big investment banks, or big banks.”

Obviously this has put the jitters up equity markets, and the key question for us in the UK and within our industry is if this happens what will be the fall out here.

We have seen mortgage lending 27% down on last year according to the Council of Mortgage Lenders latest report for July, although this is 5% up on June.

The ongoing battle between some of the major lenders has meant that more products have been appearing and the rates have been moving in the right direction from a consumer point of view.

This is nicely reported on the BBC website here.

With everyone a lot more aware of what is happening and the issues of the credit crunch, we can only hope that such a seismic event will not see lenders run to the hills yet again.

My optimistic view is that UK banks have been through the worst and even this, although undoubtedly slowing it down, will not ultimately alter the course of slight recovery we are seeing.

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