Tuesday, November 23, 2010
Calm in the storm
Posted by David Smith at 09:45 AM
Category: Thoughts and responses

Markets have had a bad press in the past three years, particularly when you put the word "efficient" in front of them. The markets, however, are a useful check on the state of sentiment and the extent of the risks.

This morning we awoke to news of renewed, and potentially serious tensions betweem South and North Korea, with a military attack by the latter on one of the former's islands. The newspapers are full of impending eurozone disaster, following Ireland's bailout and the political fallout from it, which will mean an early election and could threaten the country's austerity plan. The coalition is breaking up, which might send a few shudders this side of the Irish Sea.

But the markets are surprisingly clam. The euro hasn't collapsed and neither have stock markets. It may be the lull before the storm, or it may be that markets are underestimating the risks. Still, any port ...

Update: Markets got a little less calm as the day progressed, the FTSE 100 ending a fraction under 100 points lower.

As for hard numbers, there's a hint in tbe latest British Bankers' Association statistics that mortgage and business lending is stabilising, and that the underlying picture for the latter may be marginally stronger once you take into account repayments of loans by larger companies. That, of course, is the story the BBA wants to tell. More here.