New Financial Broadsides for Britain? A Small Round Up…
Hi all, great to be back - with somewhat of an apology for the scarcity of my posts lately. It’s been a simple case of “nose to the grindstone” serving clients and also taking some much needed R n’ R with family hols. With all of that said, the last quarter has been one of the most exciting periods (or that may read “frightening” depending on how your personal finances are set). Scanning the financial headlines brings up some obvious culprits…
Broadside for UK Retirees to come?
Troublesome data from the Pension Protection Fund just hit our monitors - these guys insure the pension schemes of British companies. Backed by Government sponsorship they worryingly just released figures showing their deficit just fell off a cliff… £80 Billion to be precise over the last year, with it cratering a mind boggling £17 Billion in July 2008 alone.
Thus it would appear that many UK Company Pension Schemes still haven’t weaned themselves off dependence on equities. By taking some some of the ‘fat years’ equity gains from the bull markets and diversifying into safer ports to batten down and protect pensions from the coming economic downturn that so many insightful forecasters had been predicting for the last three years, much of this loss could have been avoided.
The problem that future UK retirees face going forward is that now the whole financial markets are so firmly locked into a ‘bear’ mentality the present-day cost of buying your future pensions just keeps getting more and more expensive.End result - yep, that means funding your pension just got hit by inflation too!
BoE Highlights Economy B_ _ _s Up?
Hear the cheery chappie himself Mervyn King report about what the heck is going on economically from the perspective of The Bank of England.
If you’re feeling just a tad overwhelmed by which bit of bad economic news is going to hit you next - food prices, mortgage rates, petrol prices, crashing investments then maybe you should sit this one out, or watch the video below with the sound down - the wallpaper’s nice anyway! As far as ‘The King’ suggests there is more gloom and depression to follow.
The BoE even beats the governments latest forecast misery with the predictions that growth will stagger along at just 2.25%, the mortgage market will probably never return to pre-credit crunch levels and 100% mortgages are a thing of the past.
He noted inflation would continue it’s upward trend to 5% but would probably hit a ceiling then, and that consumer spending, plus house prices would keep going down, down, down.
If you want to see him outline all this cheery stuff in detail then here is a 6 minute video which gives you the most important aspects you need to know. To be forwarned is to be forearmed as they say.Just click on the video to see it…
Eurozone hit - will it now cascade down upon the UK?
Fear is one of the worst emotions ever, and the problem we face as investors is the panic effect which sweeps not just across nations, but now across entire continents throughout the globe in virtual nanoseconds because of the speed of modern media and communications. Markets can falter and then be shattered within hours.Panic in one country begets panic in another basically - and it looks like that’s what about to happen after our European cousins reported their economies are set for a major slump too.
The 15 Eurozone economies dropped by 0.2% in the last quarter leading analysts to predict it’s heading into the realms of real recession. Germany led the charge with the biggest economy of the lot in Europe dropping by 0.5% between April and July 2008, compared to the same time last year.It’s doesn’t look good - but what will we do here? Just believe things will be terrible, or engage in a little good old fashioned contrarian thinking to outflank the chill wind being blasted our way by every TV, monitor and newspaper report that comes our way?
I know that none of us can afford to bury our heads in the sand, but now more than ever I believe it’s time to hold one’s nerve, steady the boat and not act rashly. It’s my personal view that despite the current storms, they will actually work out for good for long term investors and are simply scouring the current financial ‘riverbed’ of weeds that have been clogging the system and needed clearing anyway.It’s wise to remember - its always darkest before the dawn.
Before we know it, we’ll all be listening to Mervyn King talking about the “green shoots of recovery”. Remember you heard it here first.
Until the next time…
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