UK finanical crisis of 1973-1975

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Dear friends, Attached please find an overview of the financial crisis that gripped Britain in 1973-75, following a year of declining profits and after OPEC declared a cut back in oil supplies to the West. In the 16° 00' Virgo rising chart, the L6 Saturn, which rules financial (in)stability in the chart is weak and badly placed at 2° 17' Leo H12. L12 Sun also afflicts H4 of real estate and H10 of the government. The crisis set in during a Ve/Su period after Rahu had settled into a stationary placement at 5° Sagittarius H4, closely aspecting natal Saturn. Meanwhile, transit Saturn and transit Ketu became conjunct in Gemini H10, with tr Saturn aspecting its own natal placement. In the summer of 1974, the nodes again became stationary with Rahu at 25° Scorpio conjunct natal L1 Mercury and Ketu at 25° Taurus H9 afflicting natal L2

Venus at 25° Capricorn H5. At this time, all confidence was lost in the financial market. In early 1975, the crisis lifted as the heavy aspects cleared. It seems the transits ahead in the UK chart are quite similar to those in the early 1970s. Best wishes, Thor UK´s financial crisis of 1973-75. The London

stock market peaked in late May 1972, with the FT30 Index hitting 543.6. By Jnuary 1975, the FT30 Index had fallen by more than 70% from the high point. On January 6 1975, the market bottomed amidst rumours of yet another financial debacle, that National Westminster Bank was in financial difficulties and close to collapse. PEAK OF THE BOOM IN 1972 The economy was growing at 5% and no one saw any reason for the market to go down, and paid little attention to a 23% growth in the money supply. 1972 was a boom year for the financial sector, with some financial institutions

trebling their asset base. The Index held above 500 until late January 1973, when Edward Heath announced Phase Two of his anti-inflation policy, described by the Financial Times as "the most comprehensive set of economic controls since the war”. Interest rates had been pushed up to 11.5%. In October 1973, the Arab states announced that oil supplies to the West would be cut by 20%. With the trade figures showing a record deficit the government declared a state of emergency. CRISIS EMERGES IN LATE 1973 The first casualty of what became known as the secondary banking crisis was London & County Securities. Having announced plans to set up

a chain of regional offices, fears of financial problems struck suddenly in November when the shares slumped from 200p to 58p. On December 1 the shares were suspended at 40p and rescue talks were held with NatWest. Next to hit trouble was Cedar Holdings, a banking and second mortgage specialist, struck down by an explosive mismatch of its short-term borrowings and long-term lending. The 14.5 times over-d stock market debut of Sainsbury’s and frozen foods group Bejam had lifted the market mood. But over the first year of the bear market the FT30 fell 32%. Gold shares, however - then, as now - forged ahead. CRISIS TAKES HOLD IN 1974 The year of the abyss was 1974. In January, amid mounting fears of a full-scale miners’ strike, the FT30 crashed to a seven-year low of 301.7, breaching the previous bear market low in 1968-71 - the first time the index had done so since its inception in 1935. Simultaneously, gilts crashed to a new record low, with yields topping 13%. In February the Conservatives lost the "Who governs Britain?" election, and the budget of Labour chancellor Denis Healey did nothing for market confidence. The top rate of income tax was raised from 75% to 83%, Corporation Tax raised to 52% and National Insurance contributions increased. GOVERNMENT EFFORTS

By the end of May 1974 it was obvious that industry was caught in a horrific profits squeeze, with wage inflation being pushed to 30%. Stern Holdings, one of London’s biggest residential property groups, announced it was in difficulties, Guardian Properties and Vavasseur were suspended, and shares in former high-flier First National Finance Corporation had slumped to just 22p. A £500m Bank of England ‘lifeboat’ for crisis-struck secondary banks now looked woefully inadequate. In August, United Dominions Trust needed a £30m rescue package, Triumph Investment Trust plunged into losses and Court Line, the country’s second largest tour operator, collapsed. By October the FT30 was down to 188, and markets round the world down by 40%. In November markets hit renewed panic mode as Triumph Investment collapsed and Jessel Securities was suspended. Property companies such as

British Land became penny stocks. British Land was down to 9.5p and Land Securities had fallen from 212p to 89p. Shares in Slater Walker and Keyser Ullman were heavily sold and most damaging of all were rumours that National Westminster Bank was in trouble. By the end of the year the FT30 was down 53% at 161.4, and no less than 70% down from the May 1972 high. The mood in the City was black. Pessimists warned of the need to stock up on tinned food while others muttered of a citizen army being formed by retired Nato commander Sir Walter Walker. CRISIS DUE TO FALLING PROFITS Why had it all gone wrong? According to former broker George Blakey, whose history of the London stock market provides one of the best accounts of this time, the reason "was simply an erosion of real corporate profits at a time of accelerating inflation when rigid price controls, coupled with a penal tax system, made it impossible to earn a real return on investment". Between 1968 and the second quarter of 1974, trading profits as a percentage of GNP had fallen from 12.7% to 5.7% and the annual cash flow of industrial and commercial companies had been cut from £4bn to £1bn. There was one final, bitter twist. On the first trading day in 1975 shares in Burmah Oil were suspended at

100p and the company was forced to call for government financial assistance. It had to hand over its 21.6% holding in BP, which was to be sold years later by the government at a thumping profit. By January 6 the FT30 had fallen to 146. RALLY TAKES HOLD IN EARLY 1975 The rally began cautiously with, by City legend, a buying programme by leading pension funds and insurance companies after a lunch given by the Prudential at its High Holborn offices. By the end of the year the FT30 had rebounded 133% to 375.7. But by then Jim Slater had resigned, his empire reduced to rubble. In early November Denis Healey made a formal application to the IMF for a loan, spending cuts were looming and more political storms lay ahead. Undeterred by all of this, two small companies began to make headway into a new era - Hanson and BTR. The depth and ferocity of this bear market scarred a generation of investors. It was not until the end of the decade that the index rescaled its 1972 peak. By that time a counter-revolution in political economy was already under way. http://scotlandonsunday.scotsman.com/business.cfm?id=706612002

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