Archive for March 2009

Celtic Tiger Bruised

March 31, 2009

Once known as the “Celtic Tiger”, Ireland has been taking a hit of late.  The first Euro currency country to be hit by recession, it is now in a deflatory period.

Having fought its way out of hard times in the mid 1980s to the mid 1990s, growth was so strong there which led to its firm place on the world economy map.

Quality of life there was ranked as the highest in the world – things were good.

Now, the economy has shrunk to record levels, and the decline is at its worst since the 80s.  But should there be concern?  Some commentators in Ireland say that despite the current hardship, the people of Ireland are being money-wise, saving what they can and trying to stay within means.  So while things are definitely tough going at present, there is optimism within the Republic that things will improve – perhaps not within 2009, but within the years to come.

Green Shoots or False Hope?

March 30, 2009

So is there really a glint of hope on the economic horizon?  Recently, an increasing number of publications and analysis have been releasing stories of ‘green shoots’.  But do these stories carry weight or are they just an attempt to up confidence amongst UK consumers?  Let’s not forget the G20 summit commences this week and demonstrations in London have been unprecedented.

New surveys are released today.  According to them, the residential property market in Britain has shown very early signs of recovery in the first part of March.  Apparently more encouraging is survey telling us that the average percentage of the asking price sellers are achieving has also increased for the first time in two years.  Whether the overseas mortgages department shows similar data is not mentioned.

You cannot argue with cold hard data but remember that those who release them are sometimes property firms or estate agents, and clearly they need everything they can get – don’t they?

Investments Trading – Which Way?

March 27, 2009

Yesterday we discussed investment options.  There are so many ways to invest your ISA allowance as we discovered, but what about longer-term investments?

Many people are now thinking about the future, and building up a security for later years – for themselves or for offspring.  A dabble in the trading game might appeal to many, so what are some ways to go about this?

1. Forex trading – this is an obvious way to get into trading.  Easily  accessed, and the largest liquid market at your disposal, you can play the currencies of the world and make good returns on the right decisions.  You get to start by using a demo account, so you can play a virtual game of monopoly with ‘fake’ money – an excellent way to start gently, get the hang of it and be sure before getting in too deep.

2. CFD trading – this is much more risky and tough, so not for the fainthearted.  It is also not for laid back investors who want to buy and forget.  CFDs require hands-on attention and being prepared to make a sharp decision quickly.  CFDs are unique in that you don’t actually own the share.  Rather, you make profit – or loss – on the difference between the price at which you bought and the price at which you sold at close of contract.  It is best to really consider how willing you are to give over some of your time and attention to CFDs before you enter into a contract.

Invest Now – But what are the Options?

March 26, 2009

So, the tax year is drawing to a close, and many of us might be wondering what to do with the £7,200 ISA allowance.

Now, before we baulk at the idea of entering the market in the current climate, how about going through some of the options…

Ok, so number 1 – invest in the USA, isn’t that the obvious choice?  After all, they are widely predicted to be the first to recover.  But, for UK investors, the dollar to pound exchange rate and vice versa may not bring in the returns, especially if the dollar depreciates against the pound.

Right, so how about sticking with UK equity income funds?  There are some really nice offers available on these, with most around 6 per cent annual income.  Definitely worth a thought.

What about our emerging market cousins?  Russia for example has some quite cheap stocks, and they should see a recovery as soon as the USA begins to pick up again.

There are other more risky options such as Japan, but these are not for the faint-hearted.  One thing is for sure – the time to act is now, as time is running out!!

Inflation Back to Basics

March 25, 2009

They keep talking about it, and it appears to be the big scary monster in the nightmares of world economies, along with its twin deflation… It’s inflation and what I would like to know is, what is it? Can we go back to basics for a moment?

Inflation in a nutshell:

– is measured in a number of ways, the main ones being CPI and RPI in the UK. CPI stands for Consumer Prices Index and RPI is the Retail Prices Index.

– affects the value of your money. If inflation goes up, your pound will buy you less. – is checked once a month by the Office for National Statistics (ONS).

– CPI is used for the UK’s monetary policy so therefore affects what the Government and the Bank of England make their targets.

Bit simply put there. But it helps to step back sometimes and make sure we understand some of the basics so that we can get our heads round the bigger economic factors and issues that affect Governments, banks, retailers, money markets, currencies, and the regular man on the street.

China VS USA – the Latest Spat

March 24, 2009

They’ve been at it for a while, and the need for a relationship counsellor seems only more necessary…yesterday the Governor of the People’s Bank of China criticised the status of the US dollar. In his attack, he called for the IMF to re-position the weight of the dollar in its current status as reserve currency within the IMF. He called for more importance and an increase to SDRs or Special Drawing Rights.

These were created in 1969 by the IMF as a potential claim for members, whereby they either voluntarily exchange SDRs for freely usable currencies, or are designated by the IMF to do so. But their reliance has been low in recent years, with the floating exchange rate system after the collapse of the Bretton Woods system.

The Governor’s calls are supported by Australia and other key nations,and would mean that China’s power within the IMF be increased. Currently their voting power is fairly low, despite being the third largest economy in the world.

The managing director of the IMF has also said that the increased reliance on fiscal stimulus around the world will not help fix the problems being faced. He said that countries need to repair their banking systems before injecting more funding.

But his comments are unlikely to be taken heed to at the forthcoming G20 summit, where a huge increase in funds to the IMF is likely to be agreed upon.

US Bonus Row Rages

March 23, 2009

The argument gripping the White House and Wall Street shows no sign of abating.  Collapsed insurance company AIG has been widely attacked by President Obama and politicians who say that handing out large bonuses to staff was a catastrophic and shocking decision, and that moves must be made to reclaim the money.

Obamaspoke of his amazement on the Tonight Show with Jeno Leno last week, and was clear and open in his opinion that AIG should not be handing out perks when they themselves have accepted $173 billion of taxpayer funds to prevent total collapse.  AIG’s bonuses totalled $165 billion – something of a money exchange between the taxpayer and the insurance company?

Wall Street have responded to the US government’s fury by saying that individual employees do not deserve to be effectively punished for the larger problems being experienced, and that there could be largescale walkouts which would lead to the situation worsening.

But politicians have not backed down and are launching actions to implement a tax plan that would reclaim the money.  The row will continue for some time…