With an earlier than expected rise in inflation, which soared to 2.9% in December, interest rates could be rising sooner than expected in 2010.

The reading for the consumer prices index (CPI) came in well above the expected 2.4% figure making for the largest ever rise in inflation over a single month, according to figures issued by the Office for National Statistics (ONS) Reasons given were reduced s discounting from retailers in the run-up to Christmas and fuel prices remaining unchanged compared with sharp falls a year earlier.

The Bank of England had already expressed fears that inflation would rise this year, but this high figure will curtail the bank’s efforts to store up inflationary pressures while kick-starting the economy out of recession.

The Bank’s target for CPI inflation for 2010 is 2% and the jump to 2.9% puts its policymakers in a delicate position. While higher than expected inflation would force them to raise rates before the economy has properly recovered.

The head of the International Monetary Fund head has again warned that the global economy could yet experience another downturn, known in financial circles as a double dip recession.

Managing Director Dominique Strauss-Kahn said countries should rush to exit from stimulus packages that have bolstered growth through huge amounts of government spending and that it is too early for policy makers to withdraw stimulus that’s driving the global recovery.

“The global economy is recovering, even if its recovery is fragile,” Strauss-Kahn said in a recent speech. "While a plan to withdraw emergency measures “should be designed today” it should not yet be “implemented” because world economies are still dependent on government support and private demand remains weak" Strauss-Kahn has previously voiced his opinion that the world’s economic recovery is occurring “sooner and stronger” than anticipated. More than $2 trillion in government spending around the world has spurred growth, pulling economies out of a recession spurred by a meltdown in the U.S. housing market. Separately, Germany and France raised their growth forecasts for the year. Strauss-Kahn went on to add that China and Asian economies are leading the recovery.

British Airways cabin crew is to vote again on possible strike action, according to a recent announcement from the Unite union.

A spokesman for Unite predicted that a fresh ballot of its members would be held in the near future. The move came after recent talks with BA failed to find a resolution to a long-running dispute. BA announced in reply that they were "saddened but not surprised" by the decision, whilst promising to make every effort to allow talks to continue. If talks fail, a strike could begin as early as March if cabin crew vote in favour of industrial action.

BA had already planned a 12-day strike for Christmas last year which was blocked by a court injunction.

The long protracted takeover of Cadbury by US food company Kraft now appears to be going forward after the Cadbury board approved a new increased bid. Cadburys will now advise their shareholders to accept a new offer of 840 pence a share – valuing the company at £11.5 billion ($18.9 billion). Shareholders will also receive a dividend of 10 pence a share.

The additional cash represents a 90 per cent premium to the Cadbury share price before the deal was announced and a 50 per cent premium to Cadbury’s undisturbed share price of 568 pence before Kraft approached Cadbury in late August

Spokespersons from both Cadbury and Kraft jointly announced that details of the agreement were still being finalising and would make a statement later.

Many city pundits were surprised that the deal eventually went through so smoothly after months of animosity between the two companies.

It is expected that Kraft’s final offer consisting of 500 pence in cash, with the rest made of Kraft shares made the deal much sweeter for Cadbury shareholders. To finance the takeover Kraft will require borrowing around £7 billion ($11.5 billion)

Shares in Cadbury topped the FTSE 100 on Tuesday.

Sterling was among the few currencies to rise against the dollar and the Euro on Tuesday after UK inflation jumped in December, increasing the possibility of monetary tightening and increases in interest rates being brought forward. The pound closed at 1.636 against the dollar, with the Euro being traded at 1.1459

The FTSE 100 index rose 41.6 points to 5,496.9, while the FTSE 250 index added 33.4 points to 9,571.6.

In the US, Citigroup announced losses of $7.6 billion for the last quarter of 2009, large due to their efforts to repay US government bail-out funds, and coming after three consecutive profitable quarters. Citigroup’s ’s loss was in line with Wall Street analysts’ expectations and would amounted to a loss of $1.4 billion, had it not been for its repayment of the $20 billion in funds it received from the troubled asset relief programme. For the same period of a year ago, Citigroup reported a loss of $17.3 billion. In 2009 as a whole, Citigroup made a loss of $1.6 billion on $80.3 billion turnover.

The Dow Jones Industrial Average rose sharply on early trading after being closed on Monday for Martin Luther King Day. The index rose 115 points to close on 10,725.43. The NASDAQ Composite was also on the up, 32 points to 2320.4

Computer giant IBM has announced that after cost-cutting work helped to increase its earnings by 9% in the last three months of 2009.

They have raised their profit target for 2010. IBM made a net profit of $4.8 billion (£2.9 billion) for the fourth quarter, up from $4.4 billion from the same period in 2008, with turnover for the quarter increased by 1% to $27.2 billion

Crude prices fell to a three week low on Tuesday, with prices averaging around $77.00 a barrel. Traders pointed out the implications in the oil market of the bankruptcy of Japan Airlines, as the Tokyo-based carrier made extensive use of oil derivatives to hedge its cost and the bankruptcy is likely to force investment banks to unwind the hedges.

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Tags: Bank, Bank of England, Banking, British airways, British Economy, British Pound, Cadbury, Citigroup, consumer prices index, Crude oil, Currency, Dominique Strauss-Kahn, Dow Jones, Economics, Economy, Financial News, FTSE, IBM, Inflation, Interest Rates, International Monetary Fund, Japan Airlines, Kraft, Money, Money Management, Money Markets, NASDAQ, Office for National Statistics, Recession, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, Unite, US Government

Millions of members of the UK community of retirees are looking at the dim prospect of receiving a pension hike of less than ten pounds a month when the new rates kick-in in April 2010 The reason for the minimal increase is that UK inflation on which pension rises are calculated. Is considerably less than the minimum of 2.5%. government pledge to annually increase the state pension.

Instead, recently released figures from the Office for National Statistics show that UK retail prices index registered actually recorded a fall of 1.4% for the year ending September 2008. This means that both state and public sector pensions, both of which are calculated according to September inflation, will reach only the minimum figure of 2.5%.

A spokesman for the charity, Age Concern rushed to state that at £97.65 a week the basic state pension was seriously inadequate to guarantee the UK elderly a reasonable standard of living. Thy went on to insist that the current pension system is in need of urgent reform that will ensure older people can live off their pensions without having to apply for benefit top ups.

A monthly study has shown that living costs for pensioners are rising at a rate much higher than those for younger people, with the elderly spend a disproportionate amount on energy bills and food.

This daunting piece of news for UK retirees is only the latest in a line of unexpected pitfalls they will have to bear. Recent studies have shown that not only are many Britons are dramatically reshaping their retirement plans to match a new reality. A reality that depicts those who were due to retire in the near future, are putting off their retirement for as long as possible as the reality hits home that those who are retiring today will need to live off less than what represents half of the UK national average wage.

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Tags: Age Concern, British Economy, British Pound, Credit Crunch, Debt, Economy, Financial News, Government, Inflation, Interest Rates, Money, Money Management, Office for National Statistics, pensioners, Recession, Retail, retirees, Savings, state pensions, UK Economy, UK elderly, UK government, UK inflation

There were some glum faces yesterday at the Office for National Statistics on the announcement that consumer price inflation remained unchanged in July at 1.8 per cent in July, after forecasts that it would drop sharply for the month to 1.5 per cent.

Hopes were that after the Bank of England had extended its quantitative easing programme by £50 billion taking it up to £175 billion, that inflation figures would react accordingly. The fact that they didn’t points to signs that the recession is deeper than analysts have been calling till now. During the last 16 months inflation has proved higher than analysts predicted on no less than 12 occasions.

The Building Societies Association (BSA), the body appointed to represent Britain’s mutually-owned lenders, has issued a complaint to Europe’s anti-trust regulator. The complaint is regarding a planned restructuring of state-owned bank Northern Rock, that the organization claims would distort competition in the mortgage market.

BSA has requested from the European Commission to ensure that Northern Rock be made to pay financial penalties if the proposed overhaul goes ahead.

The Commission is due to deliver its verdict in the autumn, with a negative verdict liable to cause a major setback in the British government’s efforts to restore Northern Rock to financial health and sell it back into private ownership

Spiralling costs seems to be hitting home everywhere, with the news that the cost of running the Houses of Parliament has reached almost half a billion pounds in 2008-9 being another example. The costs of operating the UK seat of government is proving to be an increasingly expensive pastime, with costs up

more than £12 million from 2008 arriving at close to £400 million, a sum that includes salaries, allowances and pensions for MPs and their administrative staff. One the upside, the costs of maintaining the House of Lords dropped by almost a third from £152.5 million to £106.5 million. There must be a message there, somewhere.

The news that the Royal Bank of Scotland Group PLC is close to putting its asset management business up for sale, will be good news for most, but not for those who bank at Coutts, the private bank owned by RBS, renowned as an adviser to the Queen, that will be included in the package and may well fall into foreign hands.

On the FTSE, shares in African Minerals, the iron ore mining company, managed by Regal Petroleum founder Frank Timis, rose 1.6 per cent to 312 pence on news that the company had embarked on takeover talks with Eurasian Natural Resources Corporation (ENRC).

Shares in the Sierra Leone-based group have risen 13-fold this year amid speculation of interest from several parties including ENRC.

In the retail sector Tesco’s shares were the weakest, falling 0.5 per cent to 363 pence after industry data for July showed a poorer month.

Credit checking agency Experian inched 0.4 per cent higher to 517 ½ pence after suggestions from the US Federal Reserve that lending supply was improving.

The FTSE 100 made up for most of yesterday’s reverses rising 40.77 points to close on 4685.78. The FTSE 250 recovered after a major collapse on Monday, rising 80.39 points to close on 8,354.48

According the BOE Governor Mervyn King the pound’s biggest five-month rally in 24 years may be stuttering to an end, largely due to the Bank’s flooding the U.K. economy with newly printed cash.

Sterling soared in value by 23.5 percent from March 10 to Aug. 5 on speculation U.K. assets would rise as the worst financial crisis in six decades eased. The rally appeared to be petering out and the pound has slumped 2.6 percent since Aug. 5 to last week’s $1.6543 close. However on Tuesday, the pound improved a little on figures showing inflation proving far more resistant to recession than economists had expected.

• Pound/US dollar 1.6353
• Pound/Euro 1.169
• Pound/Japanese Yen 156.3554
• Pound/Swiss Franc 1.777

In the US, news that construction starts of new homes had fallen in July, after three straight months of increases caused no little construction.

The number of new properties sold for last month fell 1% to an annual rate of 581,000.

US wholesale prices also recorded an unexpectedly large fall last month, down 0.9% from June, and by 6.8% from July 2008.

The Dow Jones Industrial Average recovered part of the previous day’s losses rising 82.6 points t to close on 9217.94. The NASDAQ moved up 25.08 points to close on 1955.92.

The ongoing weak demand for personal computers and printer ink has seen Hewlett-Packard (HP) Revenue fell by 2% to $27.5 billion, not encouraging but better than Wall Street estimates.

Like most technology firms, HP has suffered in the global downturn as consumers trim their spending.

Meanwhile that perennial optimist the International Monetary Fund (IMF) has woken up to remind us that the world has indeed begun to recover from recession, adding that the process will not be simple.

A chief economist for the IMF warned that the recession had "left deep scars, which will affect both supply and demand for many years to come"

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Tags: Bank of England, Banking, British Economy, British government, British Pound, BSA, Building Societies Association, Coutts, Credit Crunch, Currency, Dow Jones, Economics, Economy, Eurasian Natural Resources Corporation, European Commission, Experian, Financial News, FTSE, Global Credit Crisis, Hewlett-Packard, House of Lords, Houses of Parliament, HP, IMF, Inflation, International Monetary Fund, Mervyn King, Money, Money Markets, mortgage market, Mortgages, NASDAQ, Northern Rock, Office for National Statistics, RBS, Recession, Retail, Royal Bank of Scotland, Stock Markets, Stocks and shares, Tesco, Tesco's, UK Banks, UK Economy, UK government, UK Recession, US Federal Reserve, Wall Street

What does Christianity, 911 and The Federal Reserve all have in common?
“Zeitgeist, the Movie is a 2007 documentary film released online free and on DVD, presenting Christianity, the September 11 attacks, and the US Federal Reserve Bank as being instrumental for social control. According to the website’s “statement”:

Zeitgeist, The Movie and Zeitgeist: Addendum were created as Not-for-Profit expressions to communicate what the author felt were highly important social understandings which most humans are generally not aware of. The first film focuses on suppressed historical & modern information about currently dominant social institutions, while also exploring what could be in store for humanity if the power structures at large continue their patterns of self-interest, corruption, and consolidation.” Source Wikipedia

Veiw Zeitgeist:

The second film, Zeitgeist: Addendum, attempts to locate the root causes of this pervasive social corruption, while offering a solution. This solution is not based on politics, morality, laws, or any other “establishment” notions of human affairs, but rather on a modern, non-superstitious based understanding of what we are and how we align with nature, to which we are a part. The work advocates a new social system which is updated to present day knowledge, highly influenced by the life long work of Jacque Fresco and The Venus Project.”

Veiw Zeitgeist: Addendum

http://www.zeitgeistmovie.com/

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Tags: 911, Banking, Christianity, conspiracy theory, Economy, Finance, Inflation, Money, Money Management, The Federal Reserve, Zeitgeist

Governor of the Bank of England, Mervyn King was left with some egg on his chin yesterday when February’s inflation figures were announced yesterday. Instead of the expected inflation rate of 2.6%, representing a decrease of 0.4% from January, it was disclosed that the rate for the month had instead risen to 3.2%. This meant not only a rise of 0.2% but a disparagement of 0.6% from the Bank’s target.

It was estimated that the increase was largely driven by increases in food costs, due to the weak pound, according to figures provided by the Office for National Statistics (ONS).

It appears to be “back to the drawing board” for Dr. King and his crew, who appeared to leading the country to a period of consistent deflation, which was scheduled to reach 2% by April 2009. That target seems unlikely to be met, and Bank of England will be obliged to explain to his colleagues at the Treasury, as well as the British public as to what went wrong.

Without taking too much time to apologise and explain what went wrong with his deflation plan, Mervyn King instead cautioned Chancellor Alistair Darling that he should seriously curtail any plans that he had to instigate a second fiscal stimulus when announcing next month’s Budget.

The Bank of England governor warned that the current fiscal position in the UK is not one that could allow for another round of similar significant round of fiscal expansion.

On the FTSE yesterday, the mood of euphoria that had engaged Wall Street over the last 24 hours was not echoed. There were some rising stars; however banks and commodities, who had led the charge yesterday, appeared to be consolidating.

The highest flier on the day was the Innovation Group Plc whose shares shot through the roof, rising by a 72 percent (3.11 pence to 7.41). Innovation develop software for the insurance sector and may be on line for takeover, through a US based private-equity fund.

After news on their agreement to refinance their 215 million-pound banking facilities with Royal Bank of Scotland Group Plc. Broke, the Davenham Group saw their shares rise by 28 percent (3.25 pence to 15)

One of the U.K. -largest distributor of newspapers and magazines John Menzies Plc announced that they had successfully renegotiated contracts to distribute leading newspapers and magazines in the U.K. This good news sent their shares surging 27 percent (14.75 pence to 56)

Ukraine based iron ore producer Ferrexpo Plc were reportedly on the verge of announcing positive earnings for 2008, pushing their stock up 11.4 percent (6.75 pence to 66 pence)

The U.K.’s second-biggest water company, Severn Trent Plc are also scheduled to report their 2008 earnings figures. In anticipation, their shares rose 1.1 percent (11 pence to 1,025 pence).

SABMiller Plc the world’s second largest brewers enjoyed a conservative hike in their share value of 3.2 percent (31.5 pence to 1,030) on positive reports from their brokers.

Bank shares dropped almost five percent on average yesterday, after jumping by more than ten percent on Monday, on the news of the financial bailout from the US.

On the day, the FTSE 100 dropped 1.1 percent (41.35 to 3,911.46), having risen by 2.9 percent on Monday. The FTSE250 held its own closing at 6,403.55

As a result of a surprise rise in UK inflation last month, the pound was driven to a new high against the dollar on Tuesday

In New York, the pound climbed to $1.4690, an increase of 0.9% and did even better against the Euro and the Yen, rising by an average of 1.5%

Pound/US dollar 1.469

Pound/Euro 1.018

Pound/Japanese Yen 142.79

Pound/Swiss Franc 1.6571

Wall Street shares also took an understandable step backwards after the carnival atmosphere on Monday. The Dow Jones Average dropped 115.57 to close at 7660.29. Nasdaq also fell 37.785 points to 1517.99

In a report released on Monday, the e World Trade Organisation predicted that global demand for manufactured goods will plummet by almost ten per cent in 2009, representing the largest drop since World War Two.

Report explained that the dramatic trade slump was amplified as a result of a shortage of finance and growing protectionism.

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Tags: Bank of England, British Economy, British Pound, Inflation, Interest Rates, Recession, UK Banks, UK Recession

Trouble’s brewing for tea and coffee specialist Whittard of Chelsea, which is about to call in the administrators after months of poor sales.

Whittard of Chelsea are owned by Icelandic group Baugur and backed by Landbankski, the troubled Icelandic bank. After Iceland’s banking system has reached meltdown, the banks have cut off their cash support to Whittard’s.

Landbankski’s major shareholder Bjorgolfur Gudmundsson also owns Premier League club West Ham United, which is up for sale for a rumoured £250 million.

The City also fears entertainment chain Zavvi, the former Virgin Megastores, is close to the brink after the collapse of Woolworths’s distribution arm, which was its main supplier.

Celebrity jeweller Theo Fennell’s has announced an £840,000 loss, the first for three years.

The chain, whose jewellery is sold at prime London shops and concessions around Britain and the world, blamed the recession for sales falling by 20 per cent from £12.8m to £10.2m in the six months to 30 September.

Clients include Liz Hurley, Elton John, Elle Macpherson and the Beckhams. The downturn has forced the company to postpone a new store on Bond Street in London.

Home Retail Group, owner Homebase DIY chain, is holding up the FTSE as many retail sector shares fell over concern about the discounts on the high street.

Retail analysts say on 20% discounts, stores are halving profits. On 40% discounts, they are breaking even and on anything more, they are trading at a loss.

The City expects to see 15-20 major high street retailers to collapse after the January sales.

The FTSE closed down 37.77 points at 4,249.16 and in New York; the DOW was also down 54 points to 8519. The pound showed little movement overall, ending at 1.074 Euros and US $1.47.

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Tags: banking system, Baugur, Bjorgolfur Gudmundsson, Credit Crunch, Inflation, Landbankski, Premier League club, Virgin Megastores, West Ham United, Whittard of Chelsea

History is in the making as for the first time ever, the Government and Bank of England all but control the UK banking sector.

Until now, the powers that be have set the Bank of England interest rate, but banks and building societies have had the option of whether to follow or not.

Tomorrow, Bank of England governor Mervyn King has a chance to write his place in the history books by taking the interest rate to the lowest ever since the bank opened for trading 314 years ago.

The monetary committee he chairs has four options:

·     Leave the rate as it is at 3%

·     Cut the rate by less than 1%, for instance by 0.25% or 0.5%

·     Cut the rate by 1% to 2% – a rate last seen in 1951

·     Cut the rate by more than 1% to enter a historic new era. 

For the first time, the Bank of England governor knows his actions will not be undermined by speculators in the banks because the Government now calls the shots in several of the UK’s biggest banks after bailing them out with billions of pounds of taxpayer’s cash.

The odds are a 1% cut as the bank was looking to cut the rate by up to 2.5% last month according to minutes of their meeting.

This makes economic sense as inflation is falling and dropping the rate frees up cash for businesses making loan repayments and homeowners with mortgages – both moves stimulate spending that is so badly needed to shift the country out of recession.

Retailers are falling like dominoes in the high street with manufacturing and construction in dire straits.

Cutting the interest is the single act that will promote a ‘feel good’ factor in the economy and put more money in people’s pockets rather than the paltry cut in VAT.

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Tags: Bank of England, Government, Inflation, Interest Rates, Mervyn King, UK interest rates

“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men. “

-Woodrow Wilson

Wilson, after the fact, realised what the Federal Reserve Act did in 1913…it gave away the power of the US people to the bankers. The revolutionary war in America was for nothing for it simply stalled the inevitable rise of the European central banks in their grip over the once mighty industrial United States.

“Gentlemen, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank.

You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin!

You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out.” Andrew Jackson.

 Since then, the bankers, as Jefferson predicted, has inflated the currency and robbed the citizens of that once proud nation through inflation. Now, the massive deflationary bust is upon us as the elastic band of credit, once stretched so tightly, springs back with a vengeance to destroy remaining wealth of the US and the West.

We were seduced…it is our fault. If history is a guide, we will throw them out…but they will be back before long with schemes more fiendish that before to dominate and control us…the next time, if they get their way, it will be forever.

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Tags: Credit, Federal Reserve, Federal Reserve Act, Great Depression, Inflation, UK Banks, Woodrow Wilson

If you take this to its logical conclusion, 2 things become pretty clear. The first is that the government can’t repay the money it owes to the central bank. If the central bank creates it first transaction at £100m….and if the government never does another transaction, where does the money come from to pay back the interest owed to the central bank? The answer is that it cannot ever be repaid. The only legal currency comes from the central bank so the principle can never be repaid.

If all the money was taken out of the UK financial system tomorrow and given back to the central bank, there wouldn’t be enough because of the debt that has accumulated and which is legally owed to them.

This is why central banks must continue to print more and more money. The extra printing of money is called “inflation” and it must be built into the system in order to repay the bankers the interest that the government (the tax payers) owe to them. Mr Browns current planned spending binge will mean that inflation goes way up as the banks print more money.

Now….if you have been paying attention, you will wonder and scratch your head. How on earth can these central bank guys just print money from thin air and then be able to buy companies, houses, gold…you know, real stuff….stuff that’s actually worth something with little pieces of paper that they create out of thin air?

Well, the politicians have done a little deal with the bankers. You see, the politicians don’t like taxing you because then you will vote them out of their nice job, big post-politics boardroom pay packets and very important positions. The politician’s number one rule is to get re-elected. They just accept the way the whole system works and to be honest, not many of them have figured it out. The end result of the scam is bankruptcy and a hyper inflationary bust as the central bank must print more and more money to give to the government to repay the debts that the government has accrued to the central bank in the interest on the money on the principle it has borrowed from the central bank.

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Tags: Central Bank, Gordon Brown, Hyper Inflation, Inflation, Money, UK Financial System

Let’s start with the first fib Gordon Brown told us to kick off the central bank series of articles…that the business cycle is dead. That mathematically cannot be true as long as there is a central bank which creates money out of debt and charges interest.

This money from debt mechanism, never questioned, is the business cycle. It is also the cause of rising prices and the cause of the slow yet steady devaluation of the currency through monetary inflation.

The central bank is nothing short of a giant ponzi scheme…and the mathematical limits of its ability to perpetuate itself are coming to an end. This is one of the key things that we are seeing right now as this fiat currency system begins to crumble around the world as it’s mathematical limits are approached and the way to fix all fiat currency schemes, which do work for a while, are tried.

 Governments have no other way out than to print more money and borrow until they can’t borrow another penny. This works at the start of a fiat currency scheme, but eventually leads to a hyper inflationary bust.

Now, with all this deflation happening right now, you might think this is odd…but it’s really very simple. The deflationary period comes first, as credit is destroyed after the huge credit bubble. We are seeing the deleveraging of the credit and the ensuing destruction process happening right now as loans and mal investments’ are written off all over the system.

The hyper inflationary element comes as the government attempt out dated Keynesian notions of spending our way out of the current crisis. The huge government spending tries to correct the issue of too much credit with more credit. It’s laughable really to any serious economics student. It can’t work. It has never worked. It created more and bigger problems down the line.  You should be worried about the inflation that Gordon Brown will now create a lot more than if a few banks had failed. It’s a case of the cure killing the patient.

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Tags: Central Banking, Currency, Debt, Gordon Brown, Hyper Inflation, Inflation, Keynesian