Last month I wrote about how to invest in difficult times. Of course, like all of us I had no idea of the incredible drama about to engulf World financial markets. The sight of utter bewilderment on the faces of Lehman Brothers ex-employees, brought to reality just how personal this credit crunch has become.
To add insult to their injury Lehman's London operation, where all 5,000 jobs were sacrificed was one of its few remaining profitable centres.
And then came HBOS!..A solid bank a little over balanced in terms of its lending sources but not out of the ordinary in this respect. It was brought down by a failure to secure a very short-term cash flow requirement
from its fellow banks and speculation on its share price by hedge funds. A false rumour of its vulnerability was apparently planted into the market a month ago and an unsuccessful treasury investigation failed to find the source. Short selling is banned for the time being.
I, like no doubt other of our readers, have money on deposit there. I had and still have the fullest confidence in the security of that deposit. The inevitable actions the treasury, Chancellor and Prime Minister were forced to support have proven my confidence. The proposed actions of the US treasury to take the toxic debt off the balance sheets of US banks created a phenomenal share bounce back. Then guess what, just when we thought oil was on a sustained fall, we had the biggest one-day spike in history, apparently caused by a technical issue?
So in all this chaos what pointers can I offer...
UK Bank Deposits
