Earning opportunities

Regardless of the current economic difficulties, the internet remains one of the most lucrative seams of income still worth exploiting if you can find your niche. I firmly believe that this economic crisis will lead to a rise in online purchasing as most consumers regard online purchasing as a way to save money. Certainly, if your existing business does not have an online presence, then you are definitely missing out on an inexpensive way of promoting your business.
If you are under the impression that webhosting is a costly business, then check out the service at webhostingrating.com where they compare webhosts and basically tell you which offers the best deal. If you don't have software to create a website, then you can use this service to find the best place to get webhosting which includes a CMS service such as Joomla or Drupal.
There are many types of websites that could potentially make money in the credit crunch - a trading or auction website such as eBay which represents bargain purchases is an obvious one. However there are a number of different types of websites that could be used to generate income from blogs and forums to sites that resell webhosting. Webhostingrating.com compares hosts for the ones that offer the best deals in each of the different areas that you might be thinking of investing in.

Is the buy-to-let market dead?

Buy-to-let was a buzz-word that became a market of it's own in the last decade or so as many individuals discovered it as a means of generating huge amounts of money, and as a side-issue, huge amounts of debt.
Whilst it is certainly true that the 'Buy-to-let Boom' is over, buy-to-let as a concept is still a feasible business model as long as not taken to the extremes that have left individuals with millions of pounds of debt and a declining property portfolio. One such person was interviewed on British television this week, stating that their debt stood at something like £6.5m and losing properties to repossession on a daily basis.
In retrospect the mistake was fundamental and is basically at the root of the global credit crunch - an over-reliance on property prices to generate capital. Your typical buy-to-let mogul who emerged in the last decade proceeded in the following manner:
After a windfall of some type or other, the budding property magnate decides to buy a property (generally reasonably cheaply) with the intention of renting it out. A few renovations make the house habitable and a tenant is installed. It is probably the case that a small mortgage was taken on the property as the cash windfall would have probably covered a lot more than just the deposit. Let's assume the property was bought for £100k and £5ok of that was mortgaged... in the time between the purchase and the tenant being installed, the property has been improved, the market has gone up and the property is worth £120k, the mortgage is effectively being paid by the tenant and the owner has £70,000 equity in the house...
If this equity is 'realised' (and here is the bit where it all goes wrong...eventually) the house gets remortgaged and the £70,000 goes to be used as a deposit on three more properties where the exact same cycle is repeated.
If, two years later, the property is worth £150,000 then all is well and there is plenty of equity probably in each one of the properties - and this is how things went for a number of years. However if you have stripped equity out of a property and then the market declines, it is a very different story. The incredible part of the story is that mortgage companies seemed perfectly happy to allow property buyers both domestic and commercial to remortgage their houses with no thought as to what would happen if prices went down.
So I return to the question: is buy-to-let dead? No, emphatically no... what IS dead is remortgaging up to 100% of the current market price of your property whether it be your home or one in a string of properties. It is the purchasing of property with the assumption that 'the only way is up' that has hit a brick wall.
There is no reason at all why someone would not invest their nest-egg in a property that will provide rental income along with a (long term) capital return.
There is every reason not to use the equity to invest in another property without doing a lot of careful calculations. With a decline in house prices comes a decline in rental prices as renters become buyers, if you have a mortgage on your rental property you cannot guarantee that your tenants will cover the mortgage and you cannot guarantee that the value of your property will automatically rise in the short-term. If you understand these simple concepts then maybe you are ready to plunge into the market of buy-to-let..

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Japans recession

The world's second largest economy has reported it's sharpest drop on record yet remains positive about recovery. Economists are apparently in agreement that Japan is over the worst despite a decline in GDP of 4% in the last quarter, marking a full 12 months of decline totaling more than 15%. In contrast the UK and US only declined by 1.9 and 1.6 per cent respectively in the first quarter of 2009.
The crisis is now impacting on domestic spending as the effect of falling global demand takes it's toll and exports plummet. Workers are being laid off as production is cut back but the cycle of a cut in spending leading to joblessness, leading to further cuts in spending has (if economists are to be believed) already 'bottomed out'. This seems to be a bold statement straight after a 4% drop in GDP has been recorded and may be an attempt to 'spin' some confidence into the market.
Spin has played a major part in battling the economic crisis right across the globe, yet it has proven to be fairly ineffective when negative publicity about the crisis is readily available in the media. The people are not going to have the wool pulled over their eyes when staring uncertain job prospects in the face no matter how much spin you employ.
Practical measures are being taken as Prime Minister Taro Aso has announced a $150bn stimulus package to reinvigorate demand and re-inflate the economy, and economists are banking on the stimulus to work. If the experience of the Western Economies are anything to go by, whilst the stimulus packages do indeed serve to give the impression that 'something' is being done - they do not actually lever tightly grasped coins out of our hands, if anything the enormity of the situation can be highlighted by the quantity of cash being fed into the economy. The publicity caused by the billions and trillions of dollars on the table can actually make people cautious about how they spend the cash that they have. After all, even those who don't understand the minutii of macro-economics have probably worked out that in years to come, these huge amounts of cash will be coming straight out of our pockets. True to form, it is expected that when the Japanese economy recovers, purchase taxes will be hiked to help pay for the stimulus packages. Currently Japan's national debt outstrips any other major economy and currently stands at 200% of their GDP.

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The Multiplier

Economy Update

The Bank of England has not made any changes to the bank base rate at the last two opportunities and there are both encouraging and discouraging economic signs in the news.
Whilst Sainsburys supermarkets have just reported above-expected profits, the job-less figures in the UK have risen to 2.2million. It is of course arguable that with large companies laying off staff, short-term profitability could be a direct result of lay-offs...
It is the job-less figure which causes concern, as having a large proportion of the workforce not working is a big drain on the economy as a whole - we must hope that the government will concentrate it's efforts on getting people back into work as quickly as possible.

In the meantime, the whole MP's expenses debacle threatens to undermine the UK political system in it's entirety. It's all very well everybody firmly agreeing that the system was wrong, but they didn't seem too bothered to correct they system until suddenly the electorate is in possession of the facts. Everyone is at pains to point out that expenses claimed were in line with the rules, and the rules were at fault - but if we step back and take a look at who came up with the rules, that would presumably be these same parliamentary politicians wouldn't it??

The phrase 'fiddling' while Rome burns has now taken on a slightly different nuance...

To get back to the economic forecast, it has to be said that we are very likely in for 12 months of job-losses and hardship before the economy (GDP) finds a new level. Following this plateau, we can expect a slow build-up in GDP and eventually a leveling of house prices. I would hesitate to say that the worst is over, because that can be very subjective. If you are about to lose your job next week, then the worst is hardly over for you personally.. However, it seems that the bulk of the major crashes that were going to happen have happened, notwithstanding there will no doubt still be significant job losses in the coming months.

Related posts:
25% house price drop expected
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Joanna Lumley outsmarts Gordon Brown

In an increasingly desperate political UK climate, one figure emerges as a shining light. Yesterday on the 'One' show on BBC1 Rory Bremner declared that we are we are in the middle of a political 'character crunch' with a dearth of political characters worth imitating or lampooning.
Increasingly government ministers are exposing themselves as being devoid of wisdom. Jaqui Smith has announced a list of 'undesirables' that will not be welcomed into the UK including not only gangland killers and terrorists, but a US shock-jock who simply expresses views that are not in line with her personal preferences. One may well think that the shock-jock in question could be considered juvenile or even idiotic, (I must be careful because he sues apparently) but should that exclude him from the UK?? Whatever you believe about loud-mouthed undesirables, what sort of wisdom does it take to declare them banned from your nation? I am also doubtful now about the steps that were promised to take care of the Sir Fred Goodwin situation. The sledgehammer to crack a nut approach endorsed by Gordon Brown seems over-bearing on one hand, but on the other hand nothing has happened... so where is this sledgehammer - and where is the wisdom?
I don't want to appear politically biased, and the character crunch certainly extends to opposition parties, it is hard to see where the next political characters are going to come from regardless of political persuasion.
The one figure that emerges as a force to be reckoned with is Joanna Lumley who perfectly wrong-footed the Prime Minister by congratulating him on his integrity before he announced his measures for dealing with the Gurkhas. For those who don't know, the Gurkhas are the brave Nepalese soldiers that we seem to throw onto the front-line of every conflict, and then try to send home without a pension when we are finished with them...
Whether portraying 'Patsy' or 'Perdey' - I would certainly vote for Joanna Lumley to guide Great Britain through the next decade or so. I have long thought that the people best suited for running the country are those who don't have any political ambition. I move that Joanna Lumley should lead the 'Absolutely Fabulous' party to victory at the very next election. Join me in lobbying Joanna and starting a new political chapter in the UK's political history. Please rescue us from political mediocrity and complete apathy.

EC forecasts doom...

In the UK an expected rise in unemployment of 9.4% could leave 3 million unemployed, however this compares favourably with France who have already reported unemployment figures of 11% and Spain who are bracing themselves for 20% unemployment next year.
The European Commission have considerably dampened Alistair Darling's over-exuberant hopes of recovery after October this year, stating that realistically growth in UK output cannot be expected until late 2010.
Reduced demand for cars and machinery has hit the manufacturing base of Germany whilst other smaller European nations have been hit by significant decline in property prices leading to a decimation of GDP (more than 10% decline).
Despite indications that the stimulus packages are cushioning the decline, the economic outlook remains dull and cloudy for 2009, with clearer skies and brighter patches late in 2010. Rays of sunshine are not expected to break through until mid 2011 at the earliest.

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