business daily ...

  1. 5,816 Posts.
    Hmmm... 13/03/2003


    From the desk of the Australian's Robert Gottliebsen...host of
    Business Daily.
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    The forces that caused the 4.8% fall in the UK market will ring alarm bells around the world.

    Earlier the German market has imploded because of problems in its telecommunications insurance and banking sectors.

    While Britain was following a key force was the selling by British Insurers who had guaranteed equity values for policy holders and now can't stand the losses.

    In addition ninety per cent of the top UK companies have deficits in their defined benefit pension schemes.

    As the market falls those losses compound.

    The Londoner's are also beginning to realise their financial fabric is based on derivatives which in turn depend on the solvency of only six global banking organisations.

    If one fails all may go.

    The value of dwellings in London is going to fall sharply, which will hit the banking community.

    In the US, if the Dow tests the 7,200 level then the UK market will suffer another blow.

    Towering over these concerns is the fact that Prime Minister Tony Blair is leading the UK into Iraq at a bad time for the British markets.

    The best hope of reversing the slump is a quick and successful war in Iraq.

    If the uncertainty extends for over a month then share prices may go lower.

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