The UK economy was stunned back on its heels on Friday when the eagerly awaited GDP figures were announced. They showed that the UK economy had contracted by 0.4% for the third quarter instead of showing growth of 0.2% that had been. This news means that tat the UK remains in recession. Despite recent euphoria, this setback means that the UK gross domestic product (GDP) has contracted for six consecutive quarters, for the first time since quarterly figures were first released more than half a century ago. However officials from the Office for National Statistics (ONS) have hastened to state that the figures are not final and could still be subject to revision, as they are only the first estimate. There were some recent indications that the expected growth would not be met in the period including July to September, including negative growth in retail sales during September, and a 2.5% decline in industrial output in August.

Sterling fell by more than one percent after it transpired that analysts had incorrectly forecast that the economy would emerge from recession aid record quarterly growth of 0.2 percent. The pound lost some ground against the dollar, while strengthening against the Euro.

• Pound/US dollar 1.6307
• Pound/Euro 1.10879
• Pound/Japanese Yen 150.1223
• Pound/Swiss Franc 1.6758

The FTSE 100 recovered a little of Thursday’s losses, as attention turned to economic data thought likely to show an end to recession in the UK. Despite news to the contrary, the index stood its ground, up 35.21 points to close on 5242.57. The FTSE 250 25 wound up a week of constant fluctuations up just 4.74 points to 9323.65.

The number of US bank failures so far in 2009 has reached more the 100 mark. The figure was reached after US federal regulators shut down a trio of small Florida banks. So far bank failures have cost the Federal Deposit Insurance Corporation (FDIC) fund an estimated $25 billion this year, with

More US banks having failed this year than in any year since 1992.

Microsoft, the US software giant announced their third quarter profits were higher than analysts predicted. The company put this down to a mixture of cost-cutting and stronger consumer demand.

Shares of Microsoft rose by 7.9 per cent to $28.68 in pre-market trading.

Despite Microsoft’s success, the Dow Jones took a major tumble before the weekend, down 109.12 points to fall below the 10,000 barrier again, closing on 9972.18. The NASDAQ Composite index dropped a little, down 10.82 points to close on 2,154.47

Sales of previously-owned US homes unexpectedly rose in September, reaching their highest level since 2007.The National Association of Realtors announced that sales had risen by 9.4% last month, making for an annual rate of 5.57 million, up from 5.09 million in August. Analysts were taken by surprise, as they had sales to reach 5.35 million units in September. Meanwhile, the average sale price dropped to £106,937 ($174,900), 8.5% down from a year ago, making for the smallest annual drop in 13 months

Crude oil prices fell by more than $1 a barrel on Thursday after reaching a fresh 2009 high of $82 during the previous session. Gold prices also softened after recent strong gains, trading at an average of $1,058 an ounce

financial

Related Websites

• It's Budget Week! It has been a big week from a political standpoint;...
• Stop Thinking About That Year-End Bonus Are you making plans for your year-end bonus?  Please don't. Christmas decorations...
• Recession Confirmed? The Worst News Yet Mr. ToughMoneyLove is all about the hard truth.  Lately, most...

Tags: Banking, British Economy, British Pound, Credit Crunch, Crude oil, Currency, Dow Jones, Economics, Economy, FDIC, Federal Deposit Insurance Corporation, Financial News, FTSE, Gold, gross domestic product, Microsoft, Money, Money Markets, NASDAQ, National Association of Realtors, Office for National Statistics, Recession, Retail, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK Recession, US Banks

Royal Bank of Scotland is considering approaching the market for extra money to avoid handing more control to the government. The bank, now 70% owned by taxpayers, is preparing to join the government’s Asset Protection Scheme (APS) to stop some toxic investments going bad. But it is also considering asking shareholders to invest further to prevent the government’s stake rising to a possible 84.5% if it insured all its bad assets with the APS.

According to official figures released on Friday, the UK government posted a record budget deficit for an August as the recession continues to bite into government tax receipts, The Office for National Statistics said the public sector net cash requirement (PSNCR) stood at £10.379 billion in August. That was lower than the 12 billion pounds expected by analysts but still twice the level of the same month a year ago and a record for the month of August. July’s PSNCR was also revised up by some £1.5 billion. The government’s preferred accruals-based measure, public sector net borrowing came in at £16.119 billion s, also weaker than expected and a record high for August, versus £9.876 billion pounds in 2008.

The flow of net lending to companies fell in July by the largest sum on record, according to a statement issued by the Bank of England on Friday. The figures provide further indication that more action may be needed to get credit flowing in the UK economy.

On a more positive note, mortgage approvals by major UK lenders rose in August for the seventh consecutive month to 57,000 from 53,000 in July. The net flow of lending to UK businesses fell £15.5 billion in July after a £3.6 billion pounds fall in June, making for the largest single decline since 1998.

UK Business Secretary Peter Mandelson has called on the European Union to intervene to prevent governments using state aid as a bargaining chip to protect jobs during Magna International Inc.’s takeover of General Motors Co.’s EU plants. Mandelson has joined the list of European politicians concerned that a German plan to provide €3 billion in loan guarantees to support the GM-Magna deal will sway the company. As the carmaker struggles with overcapacity, Magna has said it plans to cut about 10,500 jobs.

According to senior officials at the State Bank of India,(SBI) India’s largest lender, are looking at acquisitions of up to $1 billion in the UK and expect to maintain a 40 per cent growth rate in its UK business.

The bank’s overseas business plans, expected to be driven by both expansion and acquisitions, include the opening of 40 overseas branches, according to SBI chairman OP Bhatt. The bank was looking at all regions of the World, including the UK, for acquisitions. Besides the UK, the regions where the bank plans to open new branches include North America, Bangladesh and Nepal, where its subsidiary will set up 11 more outfits. It will open five more in branches in the UK by June next year and make London a hub for its European operations to boost international business. At present, the lender has seven branches in the UK and plan to open another, hopefully in October.Currently, the UK contributes over $3 billion to SBI’s turnover.

British Sky Broadcasting has accused the media regulator of making elementary errors in an official review of the pay-television market, and said that Ofcom, the independent regulator and competition authority for the UK communications industries, was exceeding its powers. BSkyB delivered its detailed response to the regulator’s findings that it should sell its most valuable content, including Premier League football and first-run films, to rivals at prices set by Ofcom. In the document, the broadcaster accuses the regulator of producing a financial analysis is fundamentally flawed, as well as challenging Ofcom’s right to even rule on the case, that has taken two years to decide. The pay-TV review was prompted by a complaint from four of BSkyB’s competitors, Top-Up TV, BT Vision, Virgin Media and the now defunct Setanta.

The biscuit group that makes Jammie Dodgers and Wagon Wheels, Burton’s Foods have been taken over by its lenders in a debt restructuring move that leaves Duke Street Capital, its private equity owner, nursing a considerable loss. The fate of Duke Street’s investment in Burton’s comes just over two years after its plans to close one of the biscuit maker’s factories caused the private equity group to be invited to a parliamentary inquiry for questioning.

On the FTSE Standard Life rose 1.8 per cent to 283 pence after Goldman added the insurer to its “buy” list.

Leading property stocks were higher. British Land gained 3.3 per cent to 528 pence after completing the sale of half its Broadgate development to Blackstone. Hammerson followed, gaining 2.6 per cent to 439½ pence.

The UK’s FTSE 100 index continued to climb but at a slower pace , rising 8.94 points to close at 5172.89, making for a 3.2 per cent gain for the week.

Meanwhile the FTSE 250 lost almost all of its previous day’s gains on Friday, falling 57.15 points to wrap up for the weekend on 9,306.93

The dollar fell to fresh one-year lows this week as rising risk appetite stemmed haven demand for the US currency. Continued improvement in sentiment encouraged investors to abandon the low-yielding dollar to seek higher returns elsewhere. The pound continued to lose value against the main currencies on Friday’s trading.

• Pound/US dollar 1.6271
• Pound/Euro 1.1059
• Pound/Japanese Yen 148.7878
• Pound/Swiss Franc 1.6751

Another two US banks have been closed by the federal regulator, taking the total number of American banking failures this year to 94.

The Federal Deposit Insurance Corporation (FDIC), which controls the banking sector, has shut Irwin Union Bank & Trust and Irwin Union Bank.

The move comes after their parent firm – Irwin Financial – was unable to meet an FDIC demand to boost their capital.

The failure of the two banks is likely to cost the FDIC £522 million.

The Dow Jones Industrial Average continued to move upwards towards the weekend , up 36.28 points at 9,820.2. The NASDAQ consolidated a little, up 6.11 points to 2132.86.

Gold dominated trading this week with bullion inching towards its record high of $1,030.80 a troy ounce set in March 2008.

It reached $1,023.85 on Thursday but was back to $1,012 on Friday, up 0.7 per cent on the week. It found support from dollar weakness and concerns about the outlook for inflation.

financial

Related Websites

• What Happens When Demand for US Debt Dries Up? Over a year ago, I wrote about China threatening to...
• Cent and nickel composition unsurprisingly under fire PfBlueprint caught this AP article on CNN regarding the rising...
• Brits to Sell White Cliffs of Dover to the French BABE HUGGETT: Staggering under a national debt of £830 billion...

Tags: APS, Asset Protection Scheme, Bank, Bank of England, Banking, British Economy, British Pound, British Sky Broadcasting, BskyB, BT Vision, Burton’s Foods, Currency, Dow Jones, Duke Street Capital, Economy, FDIC, Federal Deposit Insurance Corporation, Financial News, FTSE, General Motors, GM-Magna, Irwin Financial, Irwin Union Bank, Magna International Inc, Money, Money Markets, NASDAQ, Ofcom, Office for National Statistics, Peter Mandelson, PSNCR, RBS, Recession, Royal Bank of Scotland, Setanta, State Bank of India, Top-Up TV, UK Banks, UK business, UK Economy, UK government, UK Recession, US Banks, Virgin Media

Signs that the UKs hard hit investment banks are springing slowly back to life comes with the news that new job openings in July were at their highest for the year and the impetus is expected to continue if not increase in the autumn.

According to recent data, the number of job listings in June and July across London’s financial sector was almost double of that in December 2008 with an August looking to be even stronger.

The strong half-year results from most of the major UK banks show a dynamic upward trend, especially in investment banks, which at the peak of the financial crisis cut their staff back to the bone.

Another item of positive news from that banking sector is that the Lloyds Banking Group is to place their decision to close its 164-strong Cheltenham & Gloucester branch network on hold for the time being. Less than three months after announcing their decision, partially state owned Lloyds, are to take a second look at their decision, and while the situation is under review, the branches will remain operational after their planned closure date of November. Lloyd’s sudden change of heart is believed to be connected to its recent request for state aid approval from the European Commission.

Shares in John Menzies rose more than 24 per cent on Wednesday after demand for air travel and new contracts for newspaper delivery boosted underlying profits at their aviation services and news distribution division.

Meanwhile Menzies’ news distribution division, responsible for more than two thirds of the company’s total turnover, announced a 2 per cent reduction in sales to £573 million.

In the first half to June 30, Menzies negotiated new contracts with all the leading newspaper and magazine publishers, and is now serving an extra 3,000 retail outlets.

One of the largest and well known UK camera retailers, Jessops, who have been experiencing financial difficulties for some time now, have announced that they are close to closing a rescue deal with their bankers.

In spite of falling sales, Jessops, who operate 211 stores across the UK and Ireland, announced their intention to defer the end of their financial year to November, hopefully to allow the company sufficient time to reach an agreement with HSBC on restructuring its £60 million debt facility.

A spokesman for Jessops announced that sales had been weak for the summer months, down 4.7 per cent in the 12 weeks to August 16, on top of the expectations that the company would make a pre-tax loss before non-recurring charges for the year, following its £49.8 million pre-tax loss in the year to September 2008.

Britain’s largest bus and train operator FirstGroup, who also own and operate the Greyhound coach brand in the US, announced that the famous Greyhound buses will soon be seen on UK street, The company plans to start a bus route, running from London Victoria to Portsmouth and Southampton . .

The buses will be equipped with all the comforts that a passenger could ask for, including free Wi-Fi, power sockets for each passenger, air conditioning, complimentary newspapers and leather seats. To add a bit of character, each Greyhound bus will be named after character featured in US classic pop music, with of the names brought to mind including Peggy Sue, Billy Jean and Barbara Ann.

FirstGroup, who acquired the Laidlaw company, Greyhound’s parent company in a £1.9 billion deal in 2007, intend to provide strong opposition to their competitors through providing greater comfort and improved service at low cost. Each Greyhound coach will have a maximum of 40 seats compared with the usual 50. Customers will be able to reserve their seats over the internet.

The FTSE 100 was in good shape yesterday rising 66.91 points to close on 4,756.58. On the way back is the FTSE 250 jumping by 1.92% or 161.11 points to close on 8,531.36 at the end of the days trading.

It has been revealed that Bank of England governor Mervyn King intended to inject even more billions into the UK economy in August, but his move was vetoed by his colleagues on the monetary policy committee. The news has unnerved markets, sending the pound lower and gilt yields down. King apparently had intended to increase the central bank’s “quantitative easing” programme of injecting cash into the banking system by £75 billion to a total of £200 billion.

The pound remained fairly stable, apart from falling heavily against the Swiss Franc.

• Pound/US dollar 1.6507
• Pound/Euro 1.1582
• Pound/Japanese Yen 155.3327
• Pound/Swiss Franc 1.755

In the six months to April US banks have begun to reduce consumer access to revolving loans including credit cards and home equity lines of credit for about 20% of borrowers, according to a recent study. The study shows that banks in America are becoming increasingly aggressive in cutting their lines of credit to US consumers, with the average decrease to a consumer’s credit line averaging $5,100, more than double the $2,200 average reduction in the six months to October 2008

Seemingly unaffected was the Dow Jones Industrial Average, which continued its steady recovery, up a further 45.19 points to close on 9324.35. The NASDAQ also continued to show improvement, up 14.39 points to close on 1983.63

The sudden surge in the price of oil following data showing a huge drop in crude supplies last week was what pulled US stocks out of their early week slump

US natural gas prices sank to a seven-year low on Thursday amid concerns about a possible supply glut as winter looms in the offing.

Demand for natural gas has been weak, particularly from the industrial sector. US producers have cut the number of rigs drilling for new gas by more than half since September 2008 although stocks continue to rise due to output from existing facilities.

Related Websites

• FT.com / Companies / Banks - D Bank job cuts focus on New York and London Deutsche Bank is to shed 900 jobs as it responds...
• Finovate Demos - Part 3 Here's another round of my notes from yesterday's Finovate demos....
• Should I Close My Credit Card? Melissa writes in with the following question about closing credit...

Tags: Bank of England, Banking, British Economy, British Pound, Cheltenham & Gloucester, Currency, Dow Jones, Economics, Economy, European Commission, Financial News, FirstGroup, FTSE, Greyhound buses, HSBC, Investment, investment banks, Jessops, John Menzies, Lloyds, Mervyn King, Money, Money Markets, NASDAQ, Recession, Stock Markets, UK Banks, US Banks

It now seems likely that the Financial Services Authority, the Government appointed body appointed to control the UK banking system seem to have become a little weak at the knees, with the announcement that their remuneration code, due to be released today, does not fully focus on requiring bank boards and management to link remuneration and especially bonuses more closely to risk

Their reaction appears to come after the CEO of the largely state owned RBOS Stephen Hester announced that if leading bank executives are not offered bonuses and salaries in keeping with their market value, they will leave the industry.

According to FSA chief executive Hector Sants, the FSA’s new guidelines are designed to ensure that boards prevent management from introducing compensation policies that, in effect, subordinate the interests of capital providers to those of employees.

But the final version will step back from the March draft’s specific recommendations that two-thirds of each bonus should be deferred and that individual rewards take into account the overall performance of a firm rather than just that of the individual or division, people familiar with the code say.

No more free holidays to Lichtenstein and a visit to the safety deposit box seem likely to happen for UK tax dodgers as the HM Revenue & Customs agree a deal geared to recover lost tax income. Up to £3 billion of taxable income is believed to have been secreted away by more than 5,000 British investors to be held in the vaults in this tiny land –locked European principality. With the exchange of information now guaranteed, these naughty investors will be offered the chance to volunteer details of their deposits in return for penalties, which will arrive at no more than the 10% of tax evaded on the money deposited over the past 10 years. As part of the reciprocal agreement the three Lichtenstein investors holding money in UK bank accounts will be presented with a free "kiss me quickly" hat by Chancellor Alistair Darling.

Europe’s largest defence contractor BAE Systems announced that they have been awarded five-year contract from the US army that will be worth around £1.32 billion. The contract is to supply sensors designed to allow all weather and night sight operation. All in all, yesterday was a big day for BAE Systems, with the announcement that their portable laser target locator had also been selected by the US Army for a separate five-year rolling contract that will be worth up to £250 million, while in the UK BAE Systems secured a 10-year partnership deal worth £369.5 million to support navy and air force torpedoes.

Despite the global tightening of defence budgets, BAE has continued to take a growing share of the market, with sales increasing by 28 per cent to £9.9 billion for the year.

An overwhelming increasing demand to generate energy from waste has encouraged the New Earth Group Company to float a rights issue intended to raise £15 million to fund expansion.

The New Earth Group plans to use the funds to develop new power plants to recover energy from waste that will operate alongside its existing waste treatment and composting business.

The company management’s conviction that there will be a demand for energy generation from waste comes as government regulations force businesses to find alternatives to landfill, and as the quest to cut greenhouse gas emissions intensifies.

The first stage looks likely to be a large new waste treatment facility based in Avonmouth, scheduled to begin operation pen in 2011.

Hanson, the heavy building materials company have announced that they will be putting their building products companies up for sale as the malaise haunting the UK construction industry continues. Hanson have been the dominant operators in the UK’s brick and cinderblock market for many years and consequently have been hard hit by the downturn in building starts.

A spokesman for Hanson UK announced that the company hoped to complete most of the sell-offs by the end of 2009.

The FTSE 100 continues to decrease in value, yesterday down 50.86 points to close on 4,671.34.

Meanwhile the FTSE 250 was losing ground after a run of gains. On Tuesday it dropped like a stone, down 118.35 on 8,302.66 at the end of the day.

Sterling fell for a fourth-consecutive session as data continued to point to inflationary trends.

• Pound/US dollar 1.6506
• Pound/Euro 1.1652
• Pound/Japanese Yen 158.0089
• Pound/Swiss Franc 1.7834

In the US, reports from Department of Labour show that in the second quarter of 2009 productivity rose at its fastest annual pace six 2003. The figures show that the average workers’ hourly output rose at an annual rate of 6.4% in the period from April to June. However, the figure for the first quarter of 2009 was revised downwards, to an increase of 0.3% from an initial estimate of 1.6% growth, while labour costs fell 5.8% on an annual basis during the same period.

Financial stocks led the way for the worst day in Wall Street since early July, amid some signs that the financial crisis is still around. Suffering particularly were the US Banks d after the Congressional Oversight Panel hinted that the US Treasury had not done enough to relieve them of toxic assets.

On Tuesday’s trading, the Dow Jones index continued to lose some of its value down a considerable 96.5 points, to 9241.45. The NASDAQ also continued to drop well below the 2,000 mark, down 22.51 points to close on 1969.73.

Crude oil prices have fallen again, on OPEC’s announcement that they anticipate demand to decline further than predicted next year, with renewed forecasts of 27.97 million barrels per day for 2010.

On the news, US light crude dropped $1.15 a barrel to $69.45, while London Brent finished $1.04 lower at $72.46.

Related Websites

• Roddick Selects Stefanki as 2009 Season Coach The former world no. 1 tennis player, Andy Roddick, recently...
• 50 Million Pound Challenge What is the 50 Million Pound Challenge? It is the...
• We Will Retire...Millionaires!! I found an article on The Motley Fool which does...

Tags: Alastair Darling, Alistair Darling, BAE Systems, Banking, British Economy, Credit Crunch, Currency, Dow Jones, Economy, Employment, Financial News, Financial Services Authority, FSA, FTSE, Hanson UK, HM Revenue & Customs, Money Markets, New Earth Group, RBOS, Stephen Hester, UK Bank Accounts, UK Banks, UK government, US Banks, US Treasury, Wall Street

Last week’s announcement of Lloyds Banking Group’s intentions mount a rights issue planned to raise up to £20 billion in a rights issue has caused no uncertain amount to Chancellor Alasdair Darling and his team as well as those private sector investors who have seen fit to buy some of the bank’s shares. .

In an understandable nut possibly ill timed attempt to reduce the reliance on the UK government, Lloyds’ management began to test the water on the concept that the terms of its participation in the government’s asset protection scheme (APS) might be open to re-negotiation after their second-quarter results were much more positive than analysts anticipated.

However it does appear that the bank will not be met with too many friendly faces when they set about convincing Darling to take a second look at the basic terms of the scheme after several months of highly complex negotiations have been put to bed. ..

Chancellor Darling’s long held standpoint on the APS as the international model for cleaning up toxic assets is believed to be untouchable. In addition, government officials are reported to be of the opinion that raising Lloyd’s ability to raise sufficient capital is questionable, and any attempts to sidestep the scheme would be not only be unwise, infeasible or sufficient to satisfy regulators.

The financial implications of Lloyds opting out of the APS could be fundamental, with the bank having to rise between £30 billion and £40 billion in capital to satisfy the regulator’s stress test. In addition, the UK government could be entitled to demand compensation for carrying £575 billion of the banks liabilities since March of this year.

The Financial Services Authority reported yesterday that the number of new financial companies seeking UK regulatory authorisation have risen by ten per cent during the second quarter, making for the first increase since early 2008.

Independent financial advisers, including those who offer life assurance and other retail ¬products were reported to comprise the single largest group.

Next in line were financial advisory services, private equity shops and corporate finance boutiques. Cottage financial service industries that have been established by ex-city financiers who fled the mainstream banks during the recent turmoil in the financial sector.

The number of firms cancelling their authorisation with the FSA also slowed by 18 per cent in the three months to June, according to another recent study.

On the FTSE yesterday, shares in the BT Group were very much in demand after positive analyst reports.

The reports stated that BT’s broadband business looked set to benefit from Tiscali’s exit from the UK and Vodafone’s failure to capture a share of the market. Shares in BT rose 2 per cent to 134 pence.

Banks led the fallers amid the growing debate about whether Lloyds Banking Group should pursue their controversial rights issue scheme.

Lloyds fell 4 per cent to 98 pence, while shares in Royal Bank of Scotland dropped 3.6 per cent to 45 pence and Barclays also lost 1.8 per cent to close on 358½ pence,

Enterprise Inns slid 1.9 per cent to 172 pence after two of the company’s senior directors took advantage of their share’s rebound.

Ted Tuppen, group chief executive, raised more than £500,000 after selling 300,000 shares at 167 pence each, while CEO Simon Townsend cashed in 67,500 shares for 173 pence. Enterprise share values have jumped by more than three times since December, when both directors increased their shareholdings.

Shares in IT services group Logica were up 1.3 per cent to 113 pence after claims that the company was a potential bid target for BAE Systems.

BAE, 1.5 per cent higher at 325½ pence have been known to be actively on the lookout for acquisitions in an attempt to expand their security operations currently focused on the defence sector, making Logica’s public service operations a credible target..

There was unexplainably strong volume in instrument maker Spectris, whose shares closed 2 per cent higher at 576 pence.

The FTSE 100 drifted from its high of the year, losing 9.36 points, or 0.2 per cent, to 4,722.2.

Meanwhile the FTSE 250 closed just half a point down on 8,421.46

The pound stepped backwards against the other major currencies.

• Pound/US dollar 1.6483
• Pound/Euro 1.1654
• Pound/Japanese Yen 159.6125
• Pound/Swiss Franc 1.7853

The news that the US banks stand to collect a record $38.5 billion in overdraft fees this year has left a bitter taste in the mouths of many. Even more so when considering that the bulk of the revenue will come out of the pockets of already financially stretched consumers, struggling to keep their heads above water during the current financial downturn.

Overdraft fees have almost doubled during the last decade, and seem inappropriate when considering the political pressure applied to banks to ease the burden on after being bailed out by taxpayers.

The Federal Reserve is working on rules on overdraft fees, and rules on customer charges could be a priority of the Obama administration’s proposed Consumer Protection Agency if approved by Congress.

US stocks drifted from last week’s highs on Monday, with investors looking to bank profits even as several experts gave a relatively bullish analysis for equities.

However sellers far outnumbered buyers on Monday’s trading

On trading Monday, the Dow Jones index eroded a little down 32.12 points, to close on 9,337.95. The NASDAQ also dropped below the 2,000 mark again, down 8.01 points to close at 1992.24.

Latest reports prior to President Obama’s visit are that Mexico has moved into its deepest recession of modern times.

Figures to be announced on gross domestic product in the second quarter is expected to report a 10.4 per cent fall, following a first-quarter drop of 8.2 per cent, according to the finance ministry.

The International Monetary Fund predicts that, for the full year, the economy will fall by 7.3 per cent, the worst performance in Latin America.

Related Websites

• Gimme My $1.395 Million Back! I know for a fact that I'm not going to...
• James Packer Casino Plays on Losing Streak If you are feeling buffeted by the global financial deep...
• History of Top 10 Banks of the United States [/caption] The year 2009 was not a very promising one...

Tags: Alasdair Darling, BAE Systems, Bank, Banking, British Economy, British Pound, BT Group, Credit Crunch, Currency, Dow Jones, Economics, Economy, Federal Reserve, Financial News, Financial Services Authority, FTSE, International Monetary Fund, Lloyds, Lloyds Banking Group, Logica, Money, Money Markets, NASDAQ, Obama administration, Recession, Royal Bank of Scotland, Simon Townsend, Stocks and shares, Ted Tuppen, Tiscali, UK Banks, UK government, UK Recession, US Banks, Vodafone, Whitehall

75% of oncologists when surveyed said that they would refuse to take Chemotherapy if they were diagnosed with cancer. The treatment kills the body’s’ immune system at exactly the time it needs it most. The oncologists cited the fact that chemotherapy is marginal in its effectiveness and that its toxicity is very damaging to the body generally. It’s is a case of the cure being worse than the disease. I believe the same can be said of financial rescue packages.  Often, their unintended consequences are much worse than the original problem.

The bailouts in the US and the UK and other countries will have negative consequences that few currently understand. The side effect of printing vast sums to help out the financial system will have the effect of creating inflation and lowering interests to artificially low levels. It will cause the currencies to weaken and will stop the natural healing process of the financial system. Now, there are a few questions we need to ask ourselves. Is a higher inflation rate, an artificially low interest rate and a weaker currency in the nation’s best interest? The answer is obviously no. Tax payers will be protected, but savers and wage earners and those on fixed incomes will pay a heavy price for the bailouts. Anyone who holds savings in currencies where massive bailouts are happening will have the value of their savings decimated through inflation. Food will cost more. Oil will cost more. Disposable incomes will fall. It will be more difficult to save, which is really what the financial system needs. Taken to an extreme, we could see hyper inflation and a situation like Zimbabwe or Argentina where we will all be millionaires…living on bread and water.

A smoker cannot stop smoking because the short term pain is psychologically too much to bear for the undoubted long term gains. The result is that the inevitable pain is put off until the day of reckoning comes and the situation requires a much bigger dose of pain. Like the smoker, we should take the immediate pain for our own good. Let the banks fail, let the unemployment rate go up, let interest rates go to the moon, let the market sort it out…it works!

By having “big Daddy” aka the government soothe us now by interfering in a mechanism that they aren’t supposed to be interfering in, we put ourselves in a position where, instead of a few years of a sharp and undoubtedly very painful recession, we endanger our very economic existence.

This way to the coroner.

---

Related Websites

• Compound Interest Week: Real Interest Rates of High-Interest Saving Accounts On Monday we learned about how long it took to...
• Understanding Bonds When you invest in a bond, you are essentially entering...
• Magic Bullet Blender The Magic Bullet is perhaps one of the most popular...

Tags: Bailout, Currency, Financial News, UK Banks, US Banks

No sooner was the US bailout bill passed…literally 5 minutes later on CNBC, the talking heads were telling us that the bailout wasn’t a panacea and wouldn’t solve much. The market plummeted on news of the bailout. Pardon? Weren’t we just told that this was the big solution to the big problem by GW Bush himself? Come on….$700bn is a lot of money…this must be enough…right? Wrong…it’s the literal tip of the iceberg. Congress was railroaded into it against its will and there are some very disturbing sounds coming from Capitol Hill at how this bill was passed through the house.

The Congressmen and women who could be bought off by tax breaks and legislative sweetheart deals were…but there were those wouldn’t go so quietly. Some have accused the government and the Federal reserve of Financial Terrorism. It has come out that the only way to pass the bill was to create a state of fear and panic…to bully congress into action. Several Congressmen have since come out and said that an ultimatum was put to them…either pass the bill or go back to your constituents and explain why there is Marshal Law on the streets of the US. This is the widely reported stick that was used on those who refused the carrot.

It doesn’t really matter about the bill…it’s a side show….an illusion. The un-leveraging process will continue…and so will another process that is set to continue…the privatisation of profits on Wall Street and the nationalisation of losses. The poor US tax payer…will they ever learn?

The bill was put together by Ben Bernanke and Henry Paulson…2 people who only a few months ago told us everything was OK! Why should we listen to them now? Plenty of people saw this disaster coming…let’s get them in to tell the government what to do. There is Marc Faber from Boom, doom and gloom, Jim Rogers, co founder of the quantum fund (who recently relocated his family away from his beloved America) and Peter Schiff, who has been talking about his implosion for years and who manages billions of dollars for his now very wealthy clients…why not get these guys in? The reason why is that they are ALL dead against the bailout.

It’s Henry Paulson, ex head of Goldman Sachs, bailing out his friends on Wall Street with taxpayer’s money. The funny thing is Ben Bernanke studied the Great depression his whole life…maybe he didn’t learn enough from books and wants another crack at it in real time. If he does, he’s going the right way about it. The death star of derivative junk will eventually all be sold to the US tax payers through this bill…the $700bn is just round one.

---

For More information on specific Banks use these links

• Alliance & Leicester
• Barclays
• Capital One
• Child Trust Fund
• First Direct
• HSBC
• Post Office
• Tesco Savings

---

For all the best deals on Current bank account, Business bank accounts, Savings and Mortgage deals visit the number one Independent Bank Compassion site Bank—Accounts

Related Websites

• Oil Investing Update - 20% Return in 90 Days – Principal Guaranteed For those of you who've been following my blog, you...
• Text of President Obama's State of the Union Address [/caption] Remarks of President Barack Obama The State of the...
• Finovate Startup 2009 Live Twitter I am attending Finovate Startup 2009. It is an action...

Tags: Economy, Global Credit Crisis, US Bail out, US Banks