30 November 2010

The Eurozone still remains unstable

Nouriel Roubini, chairman of Roubini Global Economics more commonly known as ‘Dr. Doom’ does not believe that the €85 Billion Bailout of Ireland is enough to stabilise the Eurozone. 

While many agree that such a small sum is not nearly enough to restore confidence in Europe,  Mr Roubini goes further and suggests that Spain’s current position is extremely unstable and the amount which the Spanish government is projecting as a figure to cut debt is far too small and next year it is likely that the Spanish will be asking for a bailout.

While it is not all gloom in Europe with Italy, Germany and the UK performing better than expected the danger of the debts of Spain and Portugal are very much apparent in the minds of investors.

The value of the Euro continues to decline against both sterling and the dollar. Meanwhile the Dollar goes from strength to strength. It’s position as a safe haven currency has been beneficial while uncertainty over the Korean peninsula continues.

29 November 2010

Australian share market reverses slow start

The Australian share market finished higher at close of trade on Monday, reversing a slow start to the week.
The market recouped its early losses with help from strong performances by energy, banking and healthcare stocks.

Markets experienced a sluggish start on Monday as a result of limited trade from Wall Street at the end of the last week owing to the US Thanksgiving holiday. EU debt concerns had also contributed to subdued trade.

The benchmark S&P/ASX 200 index gained 0.44 per cent to finish at 4618.5 points, while the broader All Ordinaries index increased 0.35 per cent to 4706.7 points.

Some of the best healthcare performers included Cochlear which gained 79 per cent to $80.95 and Sonic Healthcare which increased 1.28 per cent $11.88.

Energy stocks also buoyed the market with Woodside adding 76 cents to $41.71 and Santos up 6 cents to $12.37.

In currency, the Australian dollar dropped to US96.55 cents as Korean political unrest and EU debt concerns continued to impact the market. Flat data relating to Australia’s third quarter economic performance may also have had a negative impact.

26 November 2010

Pay Day Loans As A ShortTerm Money Solution

It is to unlikely that at some point in our life we will find ourselves in a tricky financial situation that requires a certain amount of leverage in order to find our way out. Sometimes, all it takes is a little extra cash flow to pay off an outstanding bill, make our money stretch to the next payday or perhaps to pay for an emergency repair (dishwashers, cars, dog’s leg...etc)

A payday loan is an intended short-term loan (usually to be paid back within 30 days) and is often considered to be an ‘emergency loan’ and used as a last resort in the sense that it should not be relied upon as a monthly get-out clause.

This kind of loan ranges from anywhere between $100-$1500. The amount borrowed is generally smaller than other lending companies. A payday loan will have noticeably higher interest rates because of the ‘short-term’ nature and this is normally set at about $25-$30 for every $100 borrowed. Therefore if you borrowed $500, you would end up having to pay back $750 within the 30 day period.

Because there are rarely credit checks for people acquiring payday loans, many people who use them are not financially stable. This can be a slippery slope especially when you consider the high interest rates. However, if used properly it can be a great short term fix.

Should there be loans granted with no credit checks? The majority of people are divided in opinion but it is no doubt that payday loans have helped a number of people out of varied financial black holes.

24 November 2010

New Year brings misery for commuters with 6.2% train fare increase

The price of rail fares will increase by an average of 6.2% in January, putting yet more financial pressure on the UK population.

The Association of Train Operating Companies (Atoc) announced the above-inflation increase today, claiming that changes in government policy have demanded that passengers pay more towards railway investment.

Although Atoc failed to report the specific price rise for each train company, it is thought that season ticket holders will be most severely affected with on average, 10.8% increases. Some commuters, such as those travelling from Ramsgate to London with Southeastern will see their annual season ticket price rocket from £3,880 to £4,376 an increase of 12.8%.

Chief executive of Atoc Michael Roberts said: "We know times are tough for many people but next year's fare increases will ensure that Britain can continue investing in its railways.

"Even with these fare increases, the money passengers spend on fares covers only half the cost of running the railways - taxpayers make up the difference.

"The government is sticking with the previous administration's policy to cut the taxpayers' contribution to the overall cost of running the railways.

Meanwhile, the leader of the TSSA rail union Gerry Doherty stated: "It is simply outrageous hard pressed commuters are being forced to pay fare hikes of up to 10% when they are themselves facing pay freezes and job cuts.”

The news comes on top of last week’s increases in energy costs and yet further economic concern over the eurozone crisis.

23 November 2010

Long Way To Go For Albertans

Alberta, a province in the West of Canada is in trouble post-recession.

New figures released by finance minister Ted Morton show that Alberta is heading towards the prospect of a $5 billion deficit.

This prediction exceeds the estimated deficit total that was made in the spring budget by a quarter million dollars.

The increased deficit total of $257million is linked to a number of factors including lower employment levels and a decreased number of visitors, all of which were catapulted into a downtrend by the recession. The province has also struggled to replace a once-huge revenue take decimated by the drop in the price of abundant natural gas

As well as the above contributors, Alberta saw financial losses due to an influx of emergency funding that totalled $534 million as money was used to fund a multitude of natural disasters such as flooding, mountain pine beetles and wild fires. The province also took a hit of $1.1 billion on the personal income tax ledger.

It is estimated that Alberta used funds of up to $38 million to renovate a Edmonton nursing home. Villa Caritas is used to house senior psychiatric patients who are moved out of Alberta Hospital.

Despite Morton describing such a downtrend as “the new normal” the Finance Minister assures the public that the next two years will see the return to a balanced budget as well as clarifying the unlikelihood of cuts.

“Our forecasts are always about in the middle of the private sector forecast...it means little or no expansion but it doesn’t translate into cuts.”

16 November 2010

Concern in Europe as Ireland resists EU ‘bail-out’

Speculation over the economic stability of Europe was fuelled today by the reported refusal of Ireland to accept financial assistance from the European Union.

With their economy in increasingly desperate shape, it was thought that Ireland would seek help from the European Financial Stability Fund which was set up earlier this year to support Greece through similar financial crisis.

It was rumored that Ireland would look to secure funds of up to 80 billion euros from the fund, however the Republic deny that any discussions are taking place.

The plummeting of house values and mounting development-related debts accumulating in the country’s largest banks have left Ireland with a total deficit of 32% of its gross domestic product.

The Irish government is proposing tax rises and spending cuts in its December budget with the aim of generating 6 billion euros by next year. However, it is feared that such cuts will only serve to deepen Ireland’s recession and end up costing the government in benefit payments and falling tax revenues.

It is thought that Ireland’s reluctance to accept the EU ‘bail out’ is due to fears of relinquishing economic control and jeopardising their sovereignty.

This decision is proving unpopular in the rest of Europe which is keen to avoid financial problems in one country escalating into economic crisis on a wider scale. It is also having a knock on effect on the performance of the euro which is plummeting against the increasingly strong US dollar.

10 November 2010

All Eyes On China As Pressure On the Superpower Mounts

Pressure on China is at an all time high with top economists and countries warning the superpower that unless it changes its dangerous trading strategy, economies world-wide will be severely harmed as the imbalance between countries continues to grow.

The Prime Minister, David Cameron, commented on the air of danger that China has created saying that the trade surplus, which overtook economist’s predictions, had created a ‘dangerous tidal wave of money’ which is now flooding the global economic landscape.

The trade surplus for October was recorded at $US27.15 billion. This is despite the fact that the previous month’s trade surplus was nowhere near as grand; in fact, it declined to just $US16.9 billion

The Prime Minister was not just concerned with China freeing up its own economy, but he was also commenting on China’s rigid political system which leave civilians with little political freedom.
In a public speech at Peking University, he argued that the two liberties are inextricably linked with one naturally implying the other. The Prime Minister, who is on a state visit to Bejing added pressure on China over its Yuan currency as well as challenging the communist regime and asking from China, “a greater political opening.”

Brian Jackson an economist from Royal Bank of Canada, commented:

“Chinese exports and imports are both continuing to record impressive growth, defying concerns about weaker demand both home and abroad. But the disparity in global trade balances is the key point that will likely attract attention as senior officials fly in to Seoul for the G20 meeting.”

However, Cameron tried his upmost to abstain from making moral judgements over China as he commented that Britain was nor perfect either, in an attempt to smooth over any offence taken by the hosts of the speech in Bejing.

08 November 2010

HSBC Stands Up To Banking Levy

On Friday 5th November, HSBC renewed the prospect that it might quite London following George Osborne’s banking levy; this was coupled with the outlines to halt inflated bonuses for bankers.

The bank commented that such changes would mean that HSBC could not sufficiently compete with other banks because they were no longer on a “level field” with their competitors.

The banking levy by Osborne would mean that HSBC-as well as all other banks would have their annual income capped to £2.5bn with no capacity to stretch beyond this limit. HSBC publicly spoke out about the changes during a series of conference calls with journalists and City analysts.

The chief executive of the bank, Mr Geoghegan complained that HSBC was being targeted simply because it was based in London. He commented that this situation was akin to “tax on emerging markets growth” which is where HSBC accumulates most of its income.

On the situation Mr Geoghegan commented, "Policymakers need to understand the consequences on the wider economy and growth." He continued, "Along with many other international banks, HSBC already complies with the Financial Stability Board's global principles on remuneration. If the EU takes those principles further and applies additional requirements to European firms operating in emerging markets, it would place those firms at a disadvantage to their regional competitors and to those based in North America."

01 November 2010

Home Loans For Those With Bad Credit Histories

As the recession begins to make its tentative steps towards some sort of recovery, prospective buyers who have been turned down elsewhere, begin to find they can apply for mortgages once again.

Whereas the pre-recession market housed such ‘sub-prime’ candidates and indeed this is what most thought caused the financial breakdown, post-recession it has been virtually impossible for those persons with a bad credit history to acquire a mortgage.

Now, almost three years on, a handful of lending companies have begun to repeat the sub-prime practise, with companies including Precise Mortgages, Kensington Mortgage Company and Aldemore lending to those customers with a flawed credit history.

So why are companies starting to lend to these kind of clients again? Such clients can be a massive earner for lenders due to ‘bad credit’ products holding much higher interest rates than standard financial products. Not only this, but the market for sub-prime products is enormous, with so many people unable to attain home-loans in recent months; banks understand that where there is demand, they should really be supplying.

Financial data shows that mortgage lending has declined by from £162 billion to a £112 million from August to September and this has encouraged the beliefs of economists who are predicting the likelihood of a double-dip recession.