Word: downturn
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...fitting end to what has been a remarkably bubbly period for London. Over the past decade and a half, ever since its last protracted downturn, the British capital has transformed itself into Europe's indispensable financial center. Leaving Frankfurt and Paris in the dust and encouraged by the policies of Gordon Brown, the current British Prime Minister, it has become a magnet for people, jobs and investment from around the world. The big U.S. banks made London their international hub, and the major continental European banks moved much of their trading and investment banking operations there. About 70% of international...
...coming downturn is already shaping up as different - and tougher - than some previous ones. That's because the financial crisis is taking place at the same time as a real estate downturn, a conjunction that is unusual; in the past, one has often followed the other, but it's rare for them to happen simultaneously. And the problems are being exacerbated by an explosion of household debt in Britain over the past decade, which now leaves people especially vulnerable. Buoyed by rising property prices, households ratcheted up their borrowing to a massive 173% of disposable income...
...central London has dropped by 12% so far in 2008, according to realtors Savills, while sales volume is down by 50% in some areas like Clapham and Fulham. That's just the start. Vincent Tchenguiz, one of the biggest property moguls in the U.K., believes the real estate downturn will last five to seven years. "It's obvious that with a crippled financial sector the consequences won't be too good," he says. "London was helped by strong international markets, but as they're now gone, we'll see some stress...
...manufacturing now accounts for just 6% of the city's output, half the proportion of two decades ago. Has London become too reliant on a single industry, putting all of its eggs into one volatile basket? "Obviously people see it as a risk, and if there's a prolonged downturn, it will become an issue," says Andrew Goodwin, a senior economist at Oxford Economics, who nonetheless believes that while "there is a concern about dependency, financial services have done well historically." At the Guildhall, which is where the City administration is based, policy head Stuart Fraser is bracing...
...Congress' $700 billion bailout bill. (Kryzan says she would have voted yes; Lee says the bill was "necessary," but an "embarrassment" because it was loaded with so many pork barrel projects.) Upstate New York and the rest of the Rust Belt has been hit particularly hard by the economic downturn, with the region still reeling from the loss of manufacturing jobs over the past several decades. It is fertile ground for anti-corporate sentiment, and Kryzan is tapping it to attack Lee, who is running on his business background; he worked for his family's business, an engineering and technology...