Who’s this menacing figure storming out of 11 Downing Street? Why, if it isn’t scary Alistair Darling, who’s been up all night practising Chinese burns in preparation for today’s Big Meeting with the Council of Mortgage Lenders.
Every photo of Darling in this morning’s papers showed him sporting a fierce expression that let the world know that brooking opposition was not one of the Chancellor’s agenda. I suspect, though, that in private he’ll get down on the carpet and simply beg for lower rates. Got to be worth a try...
The stakes are high on this one. It’s not just about propping up the over-inflated housing market. The longer rates stay significantly above the Bank of England base rate, the more impotent the Bank and the government look.
They tried a rate cut — that didn’t work. In fact, Halifax put their lending rates up the next day.
Yesterday they announced a measure which will allow banks to swap mortgage-backed assets for government bonds. Will that work?
"The terms of the Bank of England facility are pretty rubbish," says an investment banker friend. "I doubt many banks will use it; you can get better terms privately through the Repo market. I think it’s just a fig leaf to cover the Bank’s total inaction on the sub-prime crisis."
So it’s doubtful whether this latest stunt will cut the mustard. Now Darling’s been reduced to making snarling speeches in Parliament about how we taxpayers are "entitled to expect" lower rates in return for these government-backed loans.
Well, Abbey’s not listening. It’s withdrawn all its buy-to-let mortgages, and today announced a rise in the cost of fixed-rate deals by up to 0.61 percentage points.
Reluctant starlet Merv King is getting in on the act too. The Bank of England Governor wants other banks to follow Royal Bank of Scotland’s (RBS) lead in raising fresh capital.
RBS is today asking for £12 billion through a rights issue. Shareholders are being offered the chance to buy 11 new shares at 200p for every 18 shares they own. Last night’s closing price was 372p.
"If shareholders take up its offer, RBS shares could soon be trading at 306p — a fall of 17%," says colleague Frank Hemsley.
That’s the "theoretical ex-rights price". So will RBS be a bargain down at those levels?
"Don’t count on it," says Frank. "Other high street banks are likely to do the same thing. The whole sector could move lower before the end of the cycle."
The banks are likely to heed King’s request. They’ve got little choice — they need the cash. But they’ll do so because it’s in their own interest, not for "the good of the economy".
That’s why Darling’s pleas are a waste of breath. After all, when was the last time your bank did something for you out of the goodness of its heart?
Insider signals are clear — gold WON’T fall
"Gold miners are putting their money where their mouth is!" eager commodities beaver Garry White told me this morning. "The gold price won’t fall. That’s what they’re saying."
It seemed a pretty bold call.
"Who’s said this?" I asked.
"It’s not what anyone’s said," replied Garry. "It’s what they’re doing with their money — or rather, what they’re not doing with it. And that’s much more significant."
Find out why Garry reckons these "insider signals" make gold a screaming buy right now
Africa powers up
Hidden behind the curtain of his emerging markets cubbyhole, Manraaj Singh diligently studies the myriad global investment opportunities that come his way. Manraaj is a hard taskmaster; his scrutiny fierce. Most would-be investments don’t make the grade - only the very best find a place in his Profit Hunter portfolio.
When Manraaj comes out from behind his curtain, the tension is palpable. I never know what nugget of information he’s about lay on me.
This morning, the gleam in Manraaj’s eye was shining brighter than ever... I knew he was about to tell me something big.
"This could be the answer to Africa’s power crisis!" he proclaimed.
Manraaj has good reason to be excited. African politicians met with the money men yesterday to secure backing to build the world’s largest dam.
"This will generate twice as much power as the Three Gorges dam in China," says Manraaj.
Manraaj has Africa firmly in his sights, and is on the hunt for new investments that could benefit from this power bonanza.
But here’s the really great news. There’s already one such investment in the portfolio, and Manraaj says it’s a big, fat BUY
Until tomorrow,
Ben Traynor
P.S. If you enjoyed this article you can find out more about our free email, The Right Side by clicking here.
