2007 saw virtually every financial sector face decline. My own holding in Irish Lifes ‘BankScope’ took a pounding worthy of the national Football team.
One thing you won’t hear many analysts talking about is what the knock on effects may be and where the next disaster may strike, because like many things, money has a knock on effect on other areas, in the same way that expensive oil makes chocolate bars more expensive (It is more in transportations costs to get the chocolate to the shops etc. so at some time there will be a degree of cost push inflation).
So today I will try to consider other areas that may suffer, and some of them are as follows: Automobiles, luxury goods, building materials, and heavy machinery. Naturally there will be some rationale behind this. So I’ll start.
Automobiles: They are inadvertantly tied to the same financial markets that the banks are tied to, the cost of funds has risen and because of the increased risk on car lending (even though it is a secured asset) will play a role …