No Confidence

A Populus poll for The Times shows that two thirds of voters think that the Government's measures to boost the economy will make no positive difference in either the short or long term. This will become a self fulfilling prophecy; because if people don't have confidence in the future they won't spend any money, and Britain's consumer based economy will remain stuck in recessi...

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Woolworths In Administration

As expected, Woolworths is now in administration. Deloittes, who are acting as administrators will keep the stores open and pay staff in the period up to Christmas; there are expressions of interest in the company.However, this sorry state of affairs could have been avoided if certain lenders had not blocked the company's plans for selling the retail unit to Hilco.The lenders who blocked the plans included Barclays, and Bank of Ireland subsidiary Burdale Financi...

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Woolies Suspended

The Times reports that shares in Woolworths have been suspended at 1.22p this morning, as the company attempts to conclude talks to sell its 840 store retail business. Hilco are understood to be prepared to buy the retail division for £1. However, the banks that Woolies owes money to are less than happy with the possible losses arising on such a deal.Added to the problems that Woolies faces, in trying to secure a deal, is funding the wage bill and continuing to trade "solvently". The directors are under a legal obligation to trade solvently, in...

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Rearranging The Deckchairs on The Titanic

Alistair Darling delivered his pre budget report yesterday, which in theory was designed to ease the pain of the recession.However, at best it can only be described as tinkering with palliatives in the short term with painful costs in the medium/long term.A cut in VAT from 17.5% to 15% will have little effect on demand, as stores etc are already offering 20% discounts; indeed it is considered likely to cause more administrative hassle than it is worth. Darling needed to cut VAT by more than this, were it to have any significant effect; regrettably...

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Paulson Rescues Citigroup

The US government, in the shape of Hank Paulson (the hapless and hopeless US Treasury Secretary), has come to the rescue of Citigroup which has seen its shareprice collapse over the last week.Paulson has come up with a package, including guarantees against losses on assets, worth $306BN together with a $20BN.There is irony here.Those of you with a reasonable memory may recall that when Lehman Brothers faced a similar crisis, Paulson was happy to let it go to the wall. The result being the current banking crisis and the world's worst recession since...

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Start Lending!

John McFall, the chairman of the Treasury select committee issued a blunt warning to banks last night. "The banks appear reluctant to launch their recapitalisation lifeboat and start lending again to households and businesses.They are navel gazing and looking warily at each other instead of concentrating on their customers, many of whom are still in peril on a sea of uncertainty."To add to the pressure on the banks, heads of the main high street banks have been summoned to the Treasury today for a final warning.The cosy world of banking has been...

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The Ultimate Pound Store

Woolworth's has the dubious distinction of turning itself into the ultimate pound store, as it puts its 815 retail stores up for sale for £1.Woolworths has about £295 million worth of debts, and has entered takeover talks which could see its retail division sold to Hil...

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Timid

It seems that the Bank of England's recent 1.5% cut in rates was not as bold as some commentators had first believed. According to minutes of the Monetary Policy Committee (MPC), members had wanted to cut rates by 2%. However, they were afraid that such a cut would be too much of a shock for the financial markets.We are facing the worst recession in decades, under these circumstances assertive bold leadership is required; yet the Bank continues to dither. The upside to the dithering is that clearly another rate cut is on the w...

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Inflation Falls More Than Expected

The Consumer Price Index has fallen by more than expected, from 5.2% to 4.5%.The fall in inflation is being attributed to the reduction the price of fuel, food and utility bills.This is the first fall since July 2007, and opens the way for the Bank of England to cut rates further and faster.The question remains as to whether the Bank of England will act with courage, and cut rates aggressively in order to stave off the worst effects of the recessi...

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Icleand Deal Agreed

Some good news for some of the hapless individuals who placed their life savings offshore in an unprotected environment.Iceland's prime minister, Geir Haarde, said that an agreement had been reached (a 'common understanding') with EU member states that will see it cover savers' deposits in return for financial assistance, including agreeing on a stabilisation package from the International Monetary Fund (IMF).The government of Iceland will "cover deposits of insured depositors in the Icesave accounts in accordance with EEA law."I would express...

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The PPI Rip Off

The Competition Commission is finally looking to get its teeth into the con trick of payment protection insurance (PPI), as it issued a statement yesterday calling for a ban on sales of the policies when people take out loans and credit cards.The Commission wants banks to wait for 14 days before approaching borrowers to sell PPI, and wants to ban financial providers increasing interest paid by charging for the entire cost of a policy at the start of a loan.Martin Lewis, the personal finance campaigner, estimates that half of the policies in force...

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Halifax Profiteers Out Crisis

Halifax decided to ignore government pleas to pass on rate cuts, and instead chose to double the margins on some of its most popular mortgages last night. Halifax reintroduced two year tracker deals for borrowers with a 25% deposit at a rate of 5.14% (2.14% above base, Halifax's best tracker a month ago was 1.04% above base).Halifax's five year tracker for borrowers with a 25% now has a rate of 5.39% (2.39%, a month ago Halifax was offering five year trackers at 1.25% above base).Shades of profiteering?Halifax, needless to say, blame Libor. Oddly...

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Back on Track

Three mainstream mortgage lenders have relaunched their tracker mortgages, since last week's mass exodus following the 1.5% cut in interest rates.- Abbey has introduced a two year tracker at 4.99% (1.99% above base, being 0.7% higher above base than its previous tracker)- Lloyds TSB has introduced a tracker at 4.79% (1.99% above base, being 0.7% higher above base than its previous tracker)- Alliance & Leicester has introduced a new tracker at 4.89% with a 1% fee.Strange that they increase their margins, when the rates are falling. However,...

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Sales Collapse To 1978 Levels

The Royal Institution of Chartered Surveyors (RICS) latest survey shows that estate agents in England and Wales have sold an average of 10.9 properties per firm in the 12 weeks to the beginning of November.That is the lowest level of sales since the survey began in 1978. The Times reports that, in response to the recession, Gordon Brown is to use this weekend's financial summit in Washington to call for co-ordinated tax cuts across the world's major economies to help reduce the depth of the global downturn.The most effective for of tax cut will...

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Bankers' Blacklist

Be warned, according to The Times, bankers are drawing up secret black lists to ban businesses from overnight borrowing.Seemingly hundreds of clients have been included on the lists, which include international trading and commodities companies that supply the small-to-medium-sized business sector.Were the banks still private companies, this would be a matter between them and their borrowers. However, now that the government has effective control over a number of them, this is now a matter that directly affects government policy and credibility...

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Called To See The Headmaster

As predicted, despite the 1.5% cut in rates yesterday, the high street banks have been a tad tardy in passing on the cuts to their hard pressed borrowers. Needless to say, the government is not best pleased as it will be blamed by the voters for this (not least because it now has effective control of a number of these banks).Alistair Darling therefore summoned the CEOs of HSBC, Barclays, Lloyds TSB, HBOS and Abbey to Downing Street this morning to demand that they immediately pass on the rate cut to their customers. Bradford & Bingley (B&B),...

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Bank Finally Acts

The Bank of England has finally taken bold action to try to ease the pain of the recession, it has cut interest rates by 1.5% to 3%.Here is the announcement in full: Bank of EnglandThe question is will banks and building societies pass this rate cut on to their borrowers, or merely cut their savings rat...

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Change

Congratulations and good luck to President elect Obama.He has one hell of a task on his hands wrt the economy (US and world economy). He at least will hit the ground running, by announcing his treasury team in the next few days, and will not wait until January before implementing a number of initiatives.This may be the turning point, if other countries and their central banks also do their b...

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Mandy Piles on The Pressure

Lord Mandelson, Business Secretary, has put pressure on the banks today, by warning them that their customers will not be best pleased if the interest rate cuts are not passed on.This warning comes after David Hodgkinson, chief operating officer of HSBC (who travelled with Gordon Brown to the Gulf), warned consumers they might not see any benefits if the Bank of England cuts interest rates this week.Lord Mandelson, who is also in the Gulf, is quoted in The Times:"I have to say when official rates are being cut it's not unreasonable for the customers...

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Silly Money

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The Sub Prime Pyramid Scheme Explained

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