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Is this an election that nobody can really win.

May 5th, 2010 by tom | 0 Comments | Filed in Central banks, Daily News, Debt, Employment, Recession, Retail, Stocks and shares, UK Bank Accounts, UK Banks, UK employment, World Banks

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There are those political cynics that claim that when Tony Blair stood down three years ago, he was well aware of the financial train wreck waiting his natural successor Gordon Brown around the next bend. And the same people might well now be saying that Gordon and his well known cohort Alasdair can’t wait to hand over the keys of numbers ten and eleven Downing Street to anyone who will take them

Because who ever gets the keys will also inherit a financial deficit of around £150 billion. The only way to live with, never mind reduce such a deficit, is to make yourself highly unpopular, both with the people who voted for you and against you. Political analysts now predict that whoever wins the election are looking for a comparably short term stay in power, unless some kind of unprecedented financial miracle occurs. We live in hope.

A recent survey taken over 1,400 companies, still suggests that small firms remain reluctant to go to banks requesting funding. Of the companies surveyed, it was discovered that less than twenty percent of respondents applied for new credit in February and March, with only half being successful., Sixteen percent of the companies surveyed who were holding bank loans said their cost had risen in February and March.

Operators of the South-eastern franchise, Britain’s first high-speed rail service, the Go-Ahead Group will be eligible receive a continuation of the government subsidy they have received for the next four years. The continuation has been granted due to the non-completion of expected property developments around Stratford and Ebbsfleet stations, after the group won the tender in 2005. Although Go-Ahead reported an increase in passenger traffic and turnover of eight percent in the first three months of the year, they are reporting profit growth of at least ten percent for the same period.

Recent figures released by the British Franchise Association (BFA) show that, despite the recession, the franchise industry in the UK has grown in 2009. The sector’s revenue increased by £400 million pounds to £11.8 billion in 2009, with the number of franchise systems active in the UK increasing by seven form 835 to 842 . The number of employees working for franchise based operations, according to the BFA figures fell by 2,000 during 2009 to 465,000 including both full-time and part-time workers. On average, it was reported that franchises reduced the number of full-time staff, while hiring more part-time staff in 2009.

Sales of Apple’s iPhone has helped mobile phone operator Orange return to growth with revenue increasing by almost six percent to €1.3 billion since it began selling the smart phone device last November. Orange, the first UK operator to break Apple’s exclusivity deal with O2, have reported that in the last six month sit has won 220,000 new contract customers the company, owned by France Telecom has begun an integration process with T-Mobile which will make them the biggest mobile phone operator in the UK.

Arts and craft retailer HobbyCraft announce the sale of the company private equity firm Bridgepoint in a management buyout for a figure in excess of £100 million, stating that intense competition among other interested parties pushed up the price from its initial level of £75 million with profits forecasted to have increased for the recently completed financial year HobbyCraft’s most recent accounts show a 42 percent increase in earnings to £7.5 million for the year ending February 2009. Bridgepoint’s plans for HobbyCraft are to open up to an additional 100 stores over the next five years.

Shares in High Street banking giant Barclays have fallen 6.4% despite a considerable increase in pre-tax profits for the first three months of 2010.

Barclays announced profits for the first quarter of £1.82 billion, up 47% on the same period of last year. Most of the profits came from their investment banking arm Barclays Capital, although analysts expected that the division would earn more. On the news before the weekend, Barclays earned the dubious award of being the biggest faller on the FTSE 100 index, down 23 pence to 338 pence.

Uncertainty regarding the Euro pushed Sterling up against the dollar while the Euro fell again. The pound closed on $1.5309 and €1.509

On the FTSE, stocks plunged at the fasted rate for one day for five months after the economies of both Greece and Portugal were downgraded spurring concern that these heavily in debt European nations are moving closer to default. The index sank 200 points to 5,553. 29, its biggest drop for six months

The US economy grew at an annualised rate of 3.2% in the first three months of the year, down from the previous quarter. The reason for the slower growth was attributed to reduced government spending and a fall in exports. According to figures issues by the Commerce Department economy grew at a rate of 5.6% in the final quarter of 2009, with the continued recovery in the economy founded on strong personal consumption.

Before the weekend, shares on Wall Street made a minor recovery after falling sharply on Thursday. The Dow Jones closed up seventeen points to 11008.61 while NASDAQ fell 10 points to 2461.47.

Greek Prime Minister George Papandreou has warned the country to be prepared for a new round of austerity measures. The news comes as the European Union (EU) meet to trash out details of an emergency plan to help tackle Greece’s crippling debt.

The findings of the negotiations between Greece, the International Monetary Fund (IMF) and the EU were expected to be announced on Sunday, with a . new series of cuts and tax rises expected to be demanded of Greece.

The Greek government have pressed to have the loan deal completed by the 19th May to avoid a devastating debt default. Eurozone members and the IMF have agreed a €110 billion (£95 billion) three-year bail-out package to rescue Greece’s embattled economy. The EU will provide €80 billion in funding with the rest will come from the International Monetary Fund (IMF). Before the funds can be released, the loan must first be approved by each of the fifteen 15 Eurozone members.

Official figures relating to the Spain’s unemployment rate show that there are 4.6 million people out of work in the country at the end of March, taking the unemployment levels in the country to 20% for the first time since 1997,

Spain’s jobless rate is the highest in the Eurozone. With the European Union (EU) figures showed that the eurozone unemployment rate remained unchanged at a 10% level in March

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Have pity on Gordon- if you can

June 21st, 2009 by admin | 0 Comments | Filed in Daily News

governmentAnyone who makes a practice of observing Prime Minister Gordon Brown cannot have failed to notice that the “hand dog” look that has become his trademark seems to have grown even more profound in recent weeks. The expenses scandal which although its smear reach every corner of the house seemed to affect him more than anyone else. This is understandable when you consider that he the leader of the house.

While this scandal refuses to go away, there is a new one arising that can be pinned directly on to Gordon and his crew, and has already led to cries of “dishonesty” from the opposition Conservative party.

George Osborne, the shadow chancellor, has being issuing some pretty strong accusations against the prime minister stating that he “basically misled the House of Commons”.
The opening for attack came when Brown obviously pressurised and showing it, during a heated prime minister’s questions session proclaimed that “UK capital expenditure will grow until the year of the Olympics”. Osborne, a slick political operator, immediately picked up on the fact that Gordon’s announcement was in direct contradiction to the official Treasury’s projections published in this year’s Budget red book.

What Brown’s obvious slip of the tongue and its later less than objective interpretation from George Osborne has led the Conservative’s to open the book on the whole affair and have succeeded in unearthing a few more jewels, to be used to weaken Brown and the Labour party in the run up to a now eagerly anticipated general election. An election that is more or less guaranteed to see an end to the Brown government, with the Prime Minister only has succeeded in serving for two years. That may be a bitter pill for the man to swallow, especially as Tony Blair kept him waiting in the wings for a whole decade.
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How Brown, Blair and Bush, bought over Britain

June 9th, 2009 by admin | 0 Comments | Filed in Debt, Global Credit Crisis, Recession, conspiracy theory

governmentAnyone, whoever took the time to study modern history, will have heard the story of how the American “fathers” managed to purchase the island of Manhattan for two bottles of whisky and a few brightly coloured beads from the Red Indians. The fact that the island went on to become one of the most expensive pieces of real estate in the World must make that particular piece of business one of the greatest “snow jobs” in history. Yet it is possible to say that what Messrs. Brown, Blair and Bush did to the UK public over the last ten years or so doesn’t fade much by comparison.

Bush and Blair thankfully have been banished to the annals of history, but Brown seems to be hanging on for ever, or at least till the next elections.

And hanging on is the word, and a surprising side of Brown’s nature that we have never seen before is that, nothing seems to embarrass him. The recent round of political scandals, which at least for Brown’s sake, showed that politicians from both of the major UK political parties do have something very similar in common. They have absolutely no compunction in putting their hand in the government cash register to make sure that they are not deprived of even the most obscure form of home comfort, as long as it is at the expense of the British public.

Once the callous thinking behind this fact has been established and verified by the press then anything else seems possible. Were the UK public forced to accept expensive in terms of human lives and money on wars in Afghanistan and Iraq, which might have been justified as short term military campaigns but certainly have gone on too long and have basically achieved very little. Why did the UK government sit back and do nothing when crude oil prices shot through the roof, Did Bush and his cronies persuade them to sit on their hands and everything would be ok, while the government coffers emptied to pay the oil rich nations their ransom money? And who is to say how much that nasty side of corporate America, who backed George Bush into becoming probably the worst President in American political history made out of that deal.

And when the global financial crisis hit, Blair had already had the foresight to make himself scarce and Bush followed not too long after, as his second term of office slithered to a welcome halt. There is a new broom in the White House and he is sweeping clean. The recovery that is taking place there seems to be genuine, yet one wonders if it can really take such little time.

In the UK, financial recovery seems to be happening too but at a much slower and more cautious pace. If there is a recovery it is certainly not being felt by the majority of the public, who are struggling to survive. Their economic future looks grim for the next twenty years or so, but as is our nature, we seem not to complain about it too much. Instead the focus of attention is why Susan Boyle ( who does look a little like Gordon Brown in drag) didn’t win some pointless talent competition or will a newer, stronger version of Swine Flu come back and kill of half of the global population anyway. So why worry!

In other words, as Brown, Blair and Bush and their political predecessors long since discovered, the public will mostly always believe and accept just about anything you tell them. After all what do Red Indians know about property development?
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Is the global financial crisis a conspiracy?

April 14th, 2009 by admin | 0 Comments | Filed in Global Credit Crisis, Recession, UK Banks, UK employment, World Banks, conspiracy theory

Is the global financial crisis a conspiracy?—or just a case of too many people who should have stopped the rot looking the other way.

When more talented and experienced writers than I sit down to write the history of the first global depression of the 21st century, the chances are that they will say that it all began with the collapse of the Bear Stearns Bank of Manhattan, New York, and attach much of the blame on the crash on the role of mortgage-backed securities that brought the global banking system to its knees.

In its prime Bear Stearns were the fifth-largest investment bank in all of the US, and had survived and even profited during every financial upset since their foundation in 1923. What symbolized the bank and attracted investors was their conservative management policy. However when money supply became easier in the early years of the third millennium, some new generation financial wizards saw the golden opportunity to earn some fairly massive paper profits for the bank, and some really fat bonuses for themselves as a result. In the space of a few years, Bear Stearns shed their conservative image and became the leader in securing loans against asset-backed securities. Other banks followed suit, however Bear Stearns exposed themselves very heavily, and enjoyed tremendous profits for the initial few years. However during 2006 and 2007, as interest rates began to rise and the public found it difficult to make payments, losses became to mount. Instead of curtailing their activities, the bank’s executives chased their losses by increasing their exposure, with similar disastrous results. In March 2008, the whistle was blown on their activities when the Bear Stearns’s board were forced to approach the Federal Reserve Bank of New York asking for an emergency bail- out. When no help was forthcoming, the bank was sold off at a bargain price of $10.00 a share, $120.00 a share less than the bank had been valued at just twelve months before. With the collapse of Bear Stearns, alarm bells and sirens began to sound along the entire length of Wall Street and eventually reverberated around the World.

In the UK, the first cry for help came from the Northern Rock Building Society, and later most of the major high street banks were also found to be in very shaky financial positions many of them due to excessive and indiscriminate lending. The UK public found themselves exposed to the sum of one trillion pounds, which at the time seemed like a colossal sum of money, but now fades into significance when compared to some of the figures being bandied about during the many global conferences being held to discuss the situation, how it happened, how is to blame for it and where did all the money go?

To try and discover the reasons and attach the blame we first have to acknowledge that the World is going through a situation of major change.

First of all global population is on a constant increase, and due to that fact the World’s natural resources are being exhausted. The great industrial nations of the Western World seem neither interested nor capable of finding viable alternatives. Secondly, the governments of the Western World have to come to terms with the fact that there will not be nearly enough jobs for everybody if they do not embark on some of form of protectionism. Not so much against each other, but against the emerging economies of India and China. It may be unpalatable for many to think that way, but the uneven flow of capital to these nations must be curtailed before further and deeper rooted financial disaster falls.

The UK taxpayer, as well as all their friends in the Western World, is both the biggest losers in the situation as well as one of its principal causes. The increasing dependency on the consumer on credit was allowed to reach epidemic proportions. Whilst the banks were allowed to make windfall profits on the back of Joe public’s impatience, naivety or stupidity, the government looked on.

And why not, as long as this irresponsible behaviour was allowed to continue and the economy was ostensibly booming, the UK treasury was earning unprecedented fortunes in the form of tax incomes. Now that the bubble has burst, the taxpayer of the Western World is being asked to mortgage his future yet again to prop up the banks and insurance companies, who have become vulnerable, yet cannot be allowed to fail.

When the history books are written, it will be difficult not to point a finger at those people who were at the helm before and during this crisis. First of all US President George W. Bush and our own PMs Tony Blair and Gordon Brown.

Tony Blair had either the good sense or the good fortune to abdicate his throne and left Gordon Brown to carry the blame for the mess that is now the UK economy. However he cannot come out of it with clear hands entirely, because you wouldn’t need to be a financial genius to see the writing on the wall at least two years before everything went belly up.

So when we take a look at the picture as it stands now, it is obvious that the worst is over, at least because we now know what to expect for the World economy in general and the UK economy in particular. A period of recession, of austerity, hopefully followed by a longer period of restraint, reconciliation and prudent financial management for the public and private sectors as well as the public at large.

There is only one question in my mind that for the UK public remains unanswered, and that is the most significant question of them all. Yet nobody wants to address the question and provide the answer.

Where did the money go!

People seem to have forgotten that during a period running from 2005 to 2008, the price of crude oil doubled and for a while even trebled and almost quadrupled.

It also may not be a coincidence that since the global financial collapse has reached it full force the price of crude oil has fallen to levels that were consistent for almost the previous ten years. Which means that the OPEC member nations simply pushed the prices through the roof, knowing that the World was in a state of false euphoria and would pay any price for a barrel of oil? Oil that began 2005 at $40 a barrel reached a peak of $150 in late 2008.

Just to consider some of the statistics that these facts generate is mind boggling. Current global consumption is around 85 million barrels of oil a day, making for an annual global demand for 31,000,000 barrels. If we take into account that the OPEC member countries are breaking even at $40 a barrel, that means that over the five year period from 2004 to 2008 inclusive, their overheads for producing the 150 million barrels of oil comes out to a staggering six trillion dollars. What is even more staggering is the fact that at a conservative estimate the OPEC countries sold us that oil for an average of $80 a barrel, which means that they made a 100% profit or six trillion dollars.

$6,000,000,000

That’s a lot nothings by anyone’s standards as well as being almost exactly the sum of money that the global economy is hanging out their tongue looking for.

While these figures are rough estimates, the numbers that generated them are accurate and even if they are out by five or even ten percent, they still make some pretty cruel reading.

So if there is a conspiracy behind the global financial crisis, there it may lie.

The question has to be why the leader of the World’s most powerful nation allowed that massive amount of capital flow through his government’s hands.

As readily as Bush and Blair formed an alliance to invade Iraq they could just have easily done so to put a stop to the Western dependency and by doing so forced the price of crude oil down. Their actions will have certainly caused a recession, but one that would surely have been nowhere as severe and painful as that which currently is upon us.

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Flash Gordon …. loadsamoney in disguise?

October 21st, 2008 by admin | 0 Comments | Filed in Daily News, Recession

“He saved every one of us!”…or did he?

Nothing like a good old fashioned war or a crisis to shore up the public’s perception of an unpopular leader. It works every time. The one thing I’m surprised about is that Flash Gordon hasn’t evoked memories of the blitz and a “we’re in this together” message. Except, we’re not all in this together, are we? MPs, even if they lose their jobs, have the best pension plan in the UK bar none, they have lecture tours, board seats and lucrative after dinner engagements. The same boat?…it isn’t even the same ocean!

Tony Blair has just bought a near £6m pile in the country. I’d like to know where an ex PM earning about £200k a year gets the cash to do that? It’s 30 times his income and he’s too old to get most traditional mortgages. If his wife is earning about £500k a year, it’s still 8 times their joint incomes.

No doubt Gordon Brown will get the same type of country pile once he departs Downing Street and hits the lecture circuit for a while…which he no doubt will. He has been hailed as the global architect of the financial system rescue plan and has in the process made Bernanke and Paulson look like a pair of clowns…with big shoes and big mouths that fit each other beautifully. What good the bailout plan does remains to be seen…but there are plenty in the city who think this type of intervention does far more harm than good.

But make no mistake, the PM and the MPs will be sitting pretty after all this is over. Sure, some of their investments are suffering in the same way ours are, but they have implicit tax payer guarantees on their pensions at a time when everyone else is looking at their private pension pot with incredulity.

Flash Gordon….more like Harry Enfield’s character from the last boom….loadsmoney!

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