Is the stock market headed for a crash? - MSN Money | Investing - MoneyWeek: "Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock....
The housing crash means consumers have less money, and are more worried about what they spend it on. Banks are also less willing to lend money to anyone, and are being tougher on those they have already given money to. That spells disaster for small businesses in particular - skint consumers on one hand, and twitchy lenders on the other.
All this spells economic slowdown. Now, the experience of the past decade or so at least has been that when a slowdown looms, the central banks will cut interest rates. But the resurgence of inflation makes this a lot harder (and to be honest, the banks are so scared about their own liquidity that they're not passing on rate cuts anyway).
RBS issues global stock and credit crash alert
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 12:19am BST 19/06/2008
The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.
"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.
A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.
RBS warning: Be prepared for a 'nasty' period
Such a slide on world bourses would amount to one of the worst bear markets over the last century.
RBS alert: Quotes from the report
Fund managers react to RBS alert
Support for the euro is in doubt
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