meltdown monday
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Meltdown Monday. Tutor2u Economics 15 th September 2008. A day that shook the world. Lehman tips over the brink. Market Panic over HBoS. Greenspan on the crisis. - PowerPoint PPT PresentationTRANSCRIPT
Meltdown Monday
Tutor2u Economics
15th September 2008
A day that shook the world
Lehman tips over the brink
Lehman Bros Share Price
Source: Reuters EcoWin
Jan07
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan08
Feb Mar Apr May Jun Jul Aug Sep
0
10
20
30
40
50
60
70
80
90
US
D
0
10
20
30
40
50
60
70
80
90
Market Panic over HBoS
£s per share
HBoS ordinary share price
Source: Reuters EcoWin
Jan06
Mar May Jul Sep Nov Jan07
Mar May Jul Sep Nov Jan08
Mar May Jul Sep
0
1
2
3
4
5
6
7
8
9
10
11
12
GB
P
0
1
2
3
4
5
6
7
8
9
10
11
12 United Kingdom, HBOS ORD, Close, Pounds Sterling 2.325
Greenspan on the crisis
• Alan Greenspan has described the current chaos in the markets as "a once-in-a-century type of financial crisis" adding that it would inevitably have a significant impact on the global economy
AIG seeks emergency funding
Robert Peston’s Blog
“one of the world's biggest insurers, AIG, is reeling from losses on its exposure to real estate and credit default swaps, or complicated financial insurance - and, according to the New York Times, is seeking a $40bn bridging loan from the Fed.”
The US housing slide holds the key
“The humbling moves, which reshape the landscape of American finance, mark the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments.”
Source: New York Times
Monthly house price index Jan 2000=100
US House Prices - S&P Case-Shiller Index
S&P Case-Shiller, Chicago S&P Case-Shiller, Composite-10
S&P Case-Shiller, New York S&P Case-Shiller, San Francisco
Source: Reuters EcoWin
00 01 02 03 04 05 06 07 08
100
125
150
175
200
225
250
Inde
x
100
125
150
175
200
225
250
Click on the headlines
Every cloud …..
Closing daily price, US dollars per barrel of oil
Brent Crude Oil Prices
Source: Reuters EcoWin
Jan06
Mar May Jul Sep Nov Jan07
Mar May Jul Sep Nov Jan08
Mar May Jul Sep
50
60
70
80
90
100
110
120
130
140
150
US
dol
lars
per
bar
rel
50
60
70
80
90
100
110
120
130
140
150
When will rates be cut?
Per Cent
Interest Rates for the Euro Zone, the UK and the USA
Euro Zone Interest Rate United States Interest Rate United Kingdom Base RateSource: Reuters EcoWin
Jan03
May Sep Jan04
May Sep Jan05
May Sep Jan06
May Sep Jan07
May Sep Jan08
May Sep0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
Per
cen
t
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
USA Interest Rates
Bank of England Rates
Euro Zone Interest Rates
Too late to avoid a UK recession?
Overall index of consumer confidence, seasonally adjusted
UK Consumer Confidence and Base Interest Rates
Source: Bank of England and GfK Confidence Data
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct04 05 06 07 08
-30
-25
-20
-15
-10
-5
0
5
Inde
x
-30
-25
-20
-15
-10
-5
0
5Index of Consumer Confidence
Dotted line shows long term mean
Long run average
3.50
3.75
4.00
4.25
4.50
4.75
5.00
5.25
5.50
5.75
6.00
Per
cen
t
3.50
3.75
4.00
4.25
4.50
4.75
5.00
5.25
5.50
5.75
6.00Base Interest Rates
UK property woes
Annual percentage change in UK house prices
The Housing Recession Deepens
Source: HBOS and Nationwide Data
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
-15
-10
-5
0
5
10
15
20
25
30
Per
cen
t
-15
-10
-5
0
5
10
15
20
25
30
Nationwide
Halifax
Stocks and Mortar
FTSE 100 index (bottom pane) Average UK house price (top pane)
The Housing Boom Ends - Will Shares Follow?
Source: Reuters EcoWin
01 02 03 04 05 06 07 08
3000
3500
4000
4500
5000
5500
6000
6500
7000
Inde
x
3000
3500
4000
4500
5000
5500
6000
6500
7000FTSE 100
80000
100000
120000
140000
160000
180000
200000
£s
80000
100000
120000
140000
160000
180000
200000House Prices