The worry is that new lending may not be prudent the government recently put pressure on banks to rescue Hynix, a chip maker.While there is a risk of a banking crisis in some countries, the more immediate concern is that, where financial intermediation has collapsed, interest-rate cuts may be ineffective as a way of boosting demand (again, shades of Japan).
As a result, the debtor countries' bond prices would collapse, interest rates would soar, and banks would be threatened with collapse.
Asian cities have climbed up the list of most popular destinations for applicants based in America and Britain (see table)—though that is partly the result of collapsing interest in the United Arab Emirates following the property bust in Dubai.
In September 2008, the month when US investment bank Lehman Brothers collapsed, UK interest rates were running at 5%.
Industrial production was more than a third lower in January than a year earlier; spending in the shops has collapsed; overnight interest rates are at 50% or so; the IMF has withheld the second tranche of a loan because the government in Kiev is failing to balance its budget.
Those bonds have collapsed as interest rates soared, and they're being kept alive only by the fact that the investment bankers and underwriters who have been left holding many of them face conflict of interest charges if they try to recover all they think they're owed.
Not until the Premier League is crippled by a combination of collapsing worldwide interest and a global financial meltdown will such a dream become viable.
The art market is in a particularly weird place right now, between the doomsday scenario of the art bubble exploding in our face, the stock market collapsing, the interest rate shooting up, and the emerging economies being annihilated on the one hand, and on the other hand the reports of collectors splashing record amounts of money on Pollocks and de Koonings".
Now, those denials have collapsed, bringing new interest.
When the Mexican peso collapsed in December 1994, interest rates shot up, many people who had borrowed money found they could not repay it, and the banks that had lent to them faced ruin.
