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This is quite intesting. Responding to unprecedented instability and turmoil in the global banking industry, in late Feb the Global Finance magazine published a mid-year update of its top 50 list of banks it considers to be the safest. Usually its update is done yearly.

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Today’s announcement of quantitative easing  – lowering UK’s interest rates to 0.5% accompanied by the decision to print more money – is widely acknowledged to be a total untried gamble and an admission of failure of all previously announced rescue-the-economy measures by the present UK government. It appears it’s the first time this is being tried in the UK, so we don’t know whether this will be successful or a total disaster.

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A few weeks back I found this fantastic January 09 article by Norman Lamont. Despite my delay in commenting on it, this type of material is unfortunately set to have a rather long shelf life, unfortunately for us Britons; Gordon Brown is set to wreak further havoc in the economy before the fat lady sings eventually.

Lord Lamont argues that Brown is “like an arsonist posing as a firefighter”. What does he mean by that?

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Nationwise released their January market update on the 29th Jan 09.

This report shows that prices have fallen by 19% since they peaked in Oct 2007, including by 16.6% in the last 12 months alone. Although it seems to indicate the rate of decline is slowing down, we have not yet reached the bottom of the cycle because of where the house price to earnings ratio is.

House Price to earnings ratio: Probably the key interesting point in this report is the house price to earnings ratio. The long term average highlighted by Nationwide is 4, with some other sources putting it at 3.5 or maybe even lower. Either way, it is currently around the 5 mark. Read the rest of this entry »

When will this government at last start cutting its wasteful spending, the money it has been squandering for years, and money that – surely – it is now seeing it cannot afford to throw around any longer?

We are now finally hearing admissions about the mammoth scale of government debt UK’s accumulated over the recent years and especially in the aftermath of the financial sector fiasco, and that Britain will be saddled with this debt for 20 years or more. Debt that both us and the next generation will have to shoulder and pay for through higher taxes whilst the government is stuggling to balance its books and finds that its income is lower than its expenditure. None of these forecasts make pretty reading, but let’s face it, we were all aware something of this magnitude was about to start unfolding.

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The Labour Government is making a move to shift its focus onto fighting class discrimination in the UK.

What exactly does this mean? At the core of this new initiative, outlined in a new white paper, sits a noble aim, which is for “every individual to realise their potential, no matter what their background”. And that is a very good ideal to aspire to, don’t get me wrong. Equal opportunities matter at all ages, but especially for younger people still in education whose personalities and perceptions are still being shaped. People who are worse-off don’t always achieve (from the education or career point of view) as much as people from more affluent backgrounds, with notable exceptions of course, so the society as a whole is missing out if talent goes unnoticed or undeveloped.   Read the rest of this entry »

If anyone had thought that credit crunch has faded in significance, had been replaced by a deepening – and now acknowledged – global recession, but that basically things were back to some sort of known territory where we’ve been before and know how to get out of it eventually, this morning we were reminded that this was not the case.

Clearly, we are very, very far from being out of the woods, with banks continuing to be on the brink of disaster and still struggling to quantify the extent of their losses.

The new £50bn plan: The new bailout plan, announced in the UK this morning, will allow the Bank of England to buy up to £50bn of risky assets directly from any company (not just financial institutions) that agrees to enter into a voluntary insurance scheme for its expected losses on specified toxic debts. In return, banks have to pay for this insurance – typically with cash, but possibly also their shares. The scheme aims to insure companies against 90% of their losses on specified debts which resulted from the collapse of the sub-prime market and the ensuing global meltdown.

Two bailouts, two stories: This scheme, of course, exists on top of the first bailout in October 2008 where several key financial firms received £37bn as a capital injection to top up their reserves. The second UK bailout, however, has very different features to the first one. Not only the recipients of “aid” are different, but the insurance scheme “twist” is a new one. It is closer, albeit not idential, to the earlier US’s bailout model of buying up bad assets from struggling firms. Read the rest of this entry »

The onset of the recession on the UK High street has not really been noticeable up until now, but is starting to get quite visible.

We live in a small town in England. One could call our county fairly affluent, but it’s still a small town (full of history, too many tourists on Bank holiday weekends, some shabby buildings, some shops stuck in the 1960ies, and hundreds of grannies going about their chores on a daily basis… you know what it’s like).

There are plenty of shops in our town. There has been a move towards “premium shops” in the last 4 years that we’ve been here. A deli opened up and Costa coffee made its mark, loud and proud as it always does, on the main square (at least it’s not Starbucks, I say). But the outlook is changing. Read the rest of this entry »

The Labour government is making another attempt at welfare reforms. This week, a white paper is being published by James Purnell, the Work and Pensions Secretary, for discussion proposing a new approach. If effective, this should result in people living on benefits starting to look for work – or risk benefits being slashed, and should be implemented around 2010/ 2011.

I’ve long since felt a sense of bitter outrage that so many people in the UK get a free ride as “tax consumers” living – and some quite comfortably – at the expense of the rest of us. The system is notoriously inefficient and open to abuse. The case of a man who claimed benefits several times over, clocked up a “salary” in excess of £40K per year and only got caught because he carelessly drove to collect his “dues” in a brand new BMW springs to mind – and there are many other cases of blatant fraud.

In total, UK’s welfare bill tops £20bn. That’s pretty shocking in itself.  

What’s much worse is that many of these people bring up their children to believe that it is absolutely OK not to work as the state will provide. And these families can tend to have many kids (which in itself, I feel, is socially irresponsible) – often many more than the national average. That’s a new fast growing brood of brats, many intending to live off us in future. Great – we’ve created a system in the UK that actually encourages people and their offspring to become long-term and life-long shirkers. That surely was not the original intention of creating a welfare state in this country.

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