The Great Debate UK

Britain faces recession without housing ATM

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James Saft is a Reuters columnist. The opinions expressed are his own.

james-saft1Even in the good times, many British consumers were borrowing against their houses just to fund routine consumption, indicating a big hit to come for retail sales and for the banks who hold the loans.

With house prices falling rapidly and mortgage debt tougher to get, it is no surprise that homeowners are less able and inclined to borrow against their houses in order to spend.

That will be hitting the High Street now – analysts are expecting a 0.6 percent fall on the month in retail sales for November when data are released later this week. But a rise in unemployment next year could expose a really serious weakness in household finances, as consumers who counted on being able to extract wealth from their houses to smooth consumption in bad times find that, when bad times come, the wealth isn’t there and the banks don’t want to lend anyway.

Researchers at Durham University looking at survey data found that 37 percent of homeowners borrowed against their house between 2002 and 2005, typically realising about 6,000 pounds. That’s a lot people borrowing a lot of money against very illiquid and now hard to realise assets.

from Ask...:

Money, money everywhere …except in your pocket?

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There's lots of money sloshing around the financial system these days. The Federal Reserve has established a target range of 0-0.25 percent for its key rate, bringing it closer to unconventional action to lift the economy out of a year-long recession.

From Washington, the first package aimed at rescuing the credit crisis-hit banking sector amounted to $700 billion. Treasury can use only half of that amount and it has already pledged all but $15 billion of it. The Senate has refused to pass a $14 billion rescue package for Detroit's three major car companies last week, leaving it in the hands of the Bush administration to work out a deal.

from The Great Debate:

Obama spurs EU on climate, economy

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Paul Taylor Great Debate-- Paul Taylor is a Reuters columnist. The opinions expressed are his own --

He wasn't present and he isn't even in office yet, but Barack Obama was the elephant in the room at last week's European Union summit on economic recovery and climate change.

The 27 EU leaders knew they needed strong agreements to reduce greenhouse gas emissions and give their recession-hit economies a big fiscal stimulus to make themselves credible partners for the U.S. president-elect.

from The Great Debate:

Minimizing exposure to investment management fraud

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williams_mark-- Mark T. Williams, a finance professor at the Boston University School of Management, is a risk-management expert and former Federal Reserve Bank examiner.  The opinions expressed are his own. --

It looks like the oldest trick in the book was used to allegedly bilk wealthy investors, banks, charities, endowments, and hedge funds out of their money.  How could sophisticated investors have been duped by what could potentially be the largest Ponzi scheme in U.S. history?  The answer may center on their due diligence prior to signing up with the investment firm run by Bernard Madoff, accused of masterminding the massive fraud.

Put your questions to David Cameron

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(UPDATED Dec 18 – This post is now closed for questions)

Conservative Party leader David Cameron will be speaking on the economy and the credit crunch at Thomson Reuters’ Canary Wharf office on Monday, followed by a question and answer session.

The Tory leader has argued that two main problems face Britain at present – a recession coupled with a record level of government debt, and that the government is trying to tackle one while ignoring the other.

from The Great Debate:

Green business and the conscience premium

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bryan-welch-ogden-publicationsWelch is the publisher and editorial director of Ogden Publications, home to Mother Earth News and Utne Reader. Any opinions expressed are his own.

Green business is arguably the most important marketing innovation of the century. And it’s here to stay.

from The Great Debate:

Great U.S debt engine slips into reverse

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John Kemp Great Debate-- John Kemp is a Reuters columnist. The views expressed are his own --

After six decades of uninterrupted credit creation and an unprecedented era of consumption and prosperity, the credit process has come to an abrupt halt. If credit has been the locomotive of the modern economy, the third quarter of 2008 marked the point when the engine stalled and the economy began to roll back down the hill.

For decades, financial activities have grown much faster than the real economy. Between 1952 and 2007, U.S. nominal GDP grew by a factor of 39 times, while total credit market debt outstanding surged 101 times.

from The Great Debate:

Finance throws sand in wheels of trade

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James Saft Great Debate -- James Saft is a Reuters columnist. The opinions expressed are his own. --

Trade finance, a basic lubricant for the global economy, is becoming much more expensive and tougher to get, accelerating an already harrowing downturn.

Banks are reluctant to allocate scarce capital to trade finance, which funds cross-border buying and selling, and are very wary about being caught short by defaults by other banks which write letters of credit or by the importers and exporters themselves.

Nine meals from anarchy

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Andrew Simms is policy director and head of the climate change programme at the London-based New Economics Foundation. The opinions expressed are his own.

andrewsimmscroppedNothing reveals the thin veneer of civilisation like a threat to its fuel or food supply, or the cracks in society like a major climate-related disaster. But that, increasingly, is what we face: the global peak and decline of oil production; and a global food chain in crisis due to multiple stresses including imminent, potentially irreversible global warming.

from The Great Debate:

Will EU live up to its green ambition?

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Paul Taylor Great Debate-- Paul Taylor is a Reuters columnist. The opinions expressed are his own --

European Union leaders this week face a crucial credibility test of their ambition to lead the world in fighting climate change, just as President-elect Barack Obama is making it a top priority for the United States.

Will the EU give real teeth to its pledge to cut greenhouse gas emissions by at least 20 percent by 2020, draw 20 percent of their energy from renewable sources and cut energy consumption by 20 percent over the same period, or will it fall short?

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