mandag den 17. december 2007

Credit Crisis part II.... coming to theather near you...

Yes, there is big FOR SALE sign going on right now, the irony being that what we have seen so far was merely the beginning, the next move in the credit crisis will impact the prime lenders....

This is from internal note I sent out this morning>

Well, what can I say, seems someone been "stealing my research!"...

Now it even mainstream to publish this.... so when will Credit Crisis Round II come into play ones wonder....


From The Sunday Times
December 16, 2007

Can this be the worst crisis in 35 years?
John Waples, Business Editor
HOW is this for a dichotomy of views: "This is the worst financial crisis since 1972." Not my words, but those from the chairman's mouth at one of our biggest banks. And then, at the other end of the scale, the chief executive of a mid-sized corporate-finance house who pointed to a raft of takeovers taking place and suggested that if share prices stay this low, there will be a lot more deals next year.
The first "off record" conversation was deeply disturbing. He believed this financial crisis would spill well into 2008, the write-offs from the big banks would continue – particularly if rating agencies downgraded debt – and the only way out was for a number of banks to raise fresh funds in the market. He said last week's $100 billion bail-out from the world's central banks would not be enough.
The bigger concern, he said, was if the credit crisis spilt over into the wider economy, dragging America into recession and then seeped into the rest of the world. If this happens, then not even China will escape. Unlike Black Monday in October 1987, this time there has not been a stock-market crash, instead it looks like a deep and more prolonged slide.
As a result there are some painful facts – big corporates are now paying closer attention to their fixed and variable cost bases, and redundancies are inevitable in the new year.
A lot of the companies bought over the past two years are no longer worth what they were acquired for. This will lead to a further set of write-offs from banks. At the very simplest, this is because the take-out multiples that were being offered even eight months ago are no longer available.
On the more positive side, the views of the mid-sized broker should not be ignored. Share prices in companies in the FTSE 250 and under are being pummelled on even a whiff of negative news. But you just have to look at those that have received bids, such as Northgate, the information-solutions firm, Kiln, the insurer, and Close Brothers, the corporate-finance house, to see that buyers are seeing value at these levels.
Among Britain's top 200 quoted companies, nearly 10% now have dividend yields higher than interest rates. That suggests that investors are growing increasingly concerned that the dividends and growth cannot be maintained, or that stocks are merely oversold. If there is a conclusion to be drawn from this, it is that polarisation of opinion will continue: the big banks have more pain to come and shares will continue to be smacked. But there is still value to be found.
Beware the gnomes
IF the government starts to tinker with the tax treatment of offshore trusts held by rich foreigners living in Britain, it will undo all the success achieved over the past decade in establishing London's status as a world financial centre.
Our ability to attract the cream of world finance is down to the lenient way we treat the tax affairs of nondomiciles. This has resulted in the City being the envy of rivals New York, Frankfurt and Paris.
But, as my colleague Ben Laurance explains on page 7, that status is now at risk. This opportunity has not been lost on Switzerland. Zurich is working particularly hard to attract big corporates and the super-rich. It is negotiating bespoke tax deals and is starting to attract the attention of the private equity and hedge-fund world, as well as the big firms that want to cut their corporation-tax bills. It is a threat we should wake up to.

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