I don't think it is just a Pre-Election thing, the main causes are the Mortgage Market or Toxic Assets as Banks call them, basically the Banks have invested in things that are too High Risk and they have back fired so they have to pay for it. It's been quite Bad all week when Lehmans Collapsed but because of the UK stopping Short Selling till the New Year (Link for those who don't know what Short Selling is - Short Selling
) and the US said they would as well but only till October and also many other Central Banks in the World, the Markets seem to have recovered for now anyway. Our Market is nearly back to what it was at the beginning of the Summer (5400 on the FTSE in June), currently around 5300 today plus we had the Biggest Rise on our Market in History over 8.8% Growth since yesterday.
But it is certainly messed up and doesn't look to be getting any better I'm afraid, I have to say UK is the only European Country yet to have our Economy lose anything with Growth in the First Quarter of the Year and only small Growth in the Second Quarter but we still expect to go into Recession meaning 2 months of Negative Growth or a Bad Third Quarter which is likely because of this Financial Crisis.
A few combination's come into this Economy Crisis including the Rise of Oil in the Summer, rising Food Costs and the Banks being too Greedy and lending too much money out as well as Money to people who couldn't pay it back, those unpaid Mortgages being the Toxic Assets I talked about.
Don't expect a Depression the Central Banks are smarter than that now they'll pump Money into the Economy if something is going to happen, it just might be a Rough Year or 2 with some Negative Growth and Maybe a Little Growth come Next year. Something really bad has got to happen for a Depression to occur now that the Federal Bank has announced it may put money in the Financial Market and UK is about to as well, Japan already has.
Yeah a bit of a long Post as well but thats how I see it anyway.
Edited by woodyblade, 19 September 2008 - 07:06 PM.