House Sales Fall

The Times reports that the number of homes sold during 2008 has fallen to the lowest level since 1974, this despite a record 14.6% fall in annual house prices during October. The pressure is on the Bank of England to stop dithering and cut interest rates aggressively, so called "experts" predict that rates will fall from 4.5% to 2.5%.In the midst of this, Gordon Brown and the Labour party are enjoying the "high" from their "nationalisation" of the banks.My advice to Brown and Labour is simple, enjoy it whilst it lasts. Bankers, banks and money...

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Signs of a Heartbeat?

Despite the best attempts by the politicians and media to talk the UK economy into a slump, the mortgage market has refused to lay down and die.The Bank of England reports that mortgage approvals for house purchases rose in September, for the first time in over a year. Mortgage approvals rose to 33,000 in September, up from a record low in August of 32,000.Net mortgage lending rose by £2.2BN in September, in August it fell by £691M. Notwithstanding the faint signs of a heartbeat in the mortgage market, the pressure is still on the Bank of England...

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The Bankers Strike Back

The major high street banks, never fearful of damaging their already trashed reputations, will go to the Court of Appeal today in a bid to overturn the High Court ruling that unauthorised overdraft charges are unlawful.The banks lodging the appeal include; Abbey, Barclays, Clydesdale, HBOS, HSBC, Lloyds TSB, Nationwide and the Royal Bank of Scotland.Whatever the outcome, not expected to be decided for quite some time, the banks will ensure that they make money out of their customers one way or another. In the event they lose the appeal, they will...

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Sterling Falls

The Pound continued to fall this morning, below $1.55 in early trade, as traders take account of Britain's parlous financial state.However, those who believe that a country's machismo can best be displayed by a strong currency are seriously misguided. A falling pound, under the current circumstances, will be of great benefit to Britain's exporters.That said, the Bank of England has a duty to cut interest rates swiftly and aggressively in order to lessen the effects of the recession.The longer the Bank dithers, the worse it will beco...

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Down Down Down

The FTSE fell 8% this morning, as the UK entered its first recession in 16 years.Alistair Darling told BBC News: "It's obvious now that our economy, other economies across the world, are moving into recession. Yes, it's going to be difficult, yes it's going to be tough, but we can get through it." Therefore why is the Bank of England still sitting on its hands, and not cutting interest rates more aggressive...

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How The City Works

Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for £10 each. The villagers, seeing that there were many monkeys around, went into the forest and started catching them. The man bought thousands at £10 and, as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy monkeys at £20 for each. This renewed the efforts of the villagers and they started catching monkeys again. Soon the supply diminished even further and people started going back...

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Tax and Spend

Old style Labour is rearing its ugly head in terms of its fiscal "management".Figures from the Office of National Statistics (ONS) show that net debt (£645.3BN), expressed as a percentage of GDP had risen to 43.3% at the end of September, up from 36.2% a year ago.This rise in public spending, which of course will have to be financed by tax rises, will not save the country from recession nor indeed provide much of a soft landing. The key to "managing" the recession is that of cutting interest rates, not just in the UK but in the other major economies...

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Rate Cuts

Despite the "bailouts" being promised by various governments, the markets are currently in freefall as the fact that the world's economies are heading for recession strikes home.Poor retail figures from the US, and lousy employment figures in the UK have added to the misery.It is clear that the "bailouts" need to be augmented by serious interest rate cuts by the central banks of the G7, failure to grasp that nettle will see the world stuck in a recession that may turn to slu...

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The Bank Run

Injecting capital (nationalising) into banks is all very well. However, there are two further steps that governments need to take:1 Guarantee all deposits (deposits are the bedrock of the banking system, without a guarantee depositors will continue to withdraw their money)2 Cut interest rates by at least another 1% in all major economiesDo the above and the run on banks will be halted, fail to do the above and the run will contin...

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Interest Rate Cut

Yesterday's 0.5% reduction in interest rates by the Bank of England was not enough to stave off recession, another 0.5% at least is required n...

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Worthless Guarantee

As I predicted earlier this week, the guarantee by the Icelandic authorities re bank deposits was not worth the newspapers it was printed in.Icesave, the online British arm of Iceland's second biggest bank Landsbanki, announced yesterday that its customers could no longer withdraw or deposit money, as Landsbanki was taken into receivership. The Icelandic government then reneged on their pledge to guarantee deposits.Alistair Darling told the BBC:"The Icelandic government have told me, believe it or not, they have no intention of honouring their...

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The Disunited States of Europe

True to form the governments of Europe have shown their true colours and acted in their own self interests, wrt the ongoing banking crisis, rather than in a unified Europe wide manner.Ireland, Germany and Denmark have guaranteed bank deposits and others (such as Spain and Greece) look likely to follow.Had the EU acted in unison, it may have lessened the panic. Unfortunately the scramble to protect self interest has done nothing to assuage the market.The UK now needs to take the following actions, without any further dithering:1 Guarantee all bank...

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The House of Cards Comes Tumbling Down

The FTSE fell by 6% this morning, despite the fact that congress approved the bailout.The Times reports that Alistair Darling will make a statement later today on whether he will bail out the UK's banks.On Saturday Angela Merkel, the German leader, criticised the Irish decision to guarantee all deposits in their leading banks without consulting other European countries. One day later Ms Merkel was forced to take almost the same action. All very well. However, the uncomfortable truth, that governments dare not speak of is that if there were to be...

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