Recovery or false dawn?

I admit that my outlook on the current crisis is fairly dark and negative, but I think it's worth countering the spin that is being raised to paint a rosy outlook for supposed economic recovery.
These are the elements that are being cited as signs of recovery:

• Rising house prices (remember THIS is what got us into the mess to start with!)
• Recovering bank profits (sound familiar - see above...)
• Steady growth in GDP (hopefully this will be evidenced soon, but this is not the ONLY thing the economy needs - see below)
  

The real indication of a healthy economy would be:

• Stable and progressive public spending (UK borrowing will approach and unbelievable 80% of GDP this year)
• Steady rising of employment figures (We are approaching critical levels of unemployment)

It is only when the economy has stabilised (don't forget the Government has yet to reveal how it is going to pay for all the craziness thorough possibly crippling taxation), and employment levels are manageable that we can be satisfied that our economy will not go into free-fall. The danger is that this short-memory economy will rely on rising house prices to prop up spending again, it does not even bear thinking about the consequences of a similar crash before the effects of this one have been ironed out.
Can we be so stupid as to allow this to happen again? My answer is that yes, we are possibly on the verge of doing exactly that.
What have the banks learned from dragging the economy close to oblivion? They have learned that they can personally profit from such a crash and will do so again...
This is the sad state of human nature, now the profiteers have seen and tasted the good times, they will want to go there again and again to personally satisfy themselves regardless of the growing unemployment queues. Our only hope is that the Government have legislation lined up to prevent the financial community from profiting from their greedy nature - Sorry, still dark and foreboding for me - I really hope my skepticism is unfounded, but I think we have seen what can happen and I think we may be powerless to stop it happening again - Welcome to the combination of the powerful Free Market and the equally powerful sense of Human Greed.

Related posts:
G20 prepares for recovery
IMF recognises recovery
Is the credit crunch over?

Making your money work for you

If you have not done so recently, there is no time like the present to review your financial position - even if you have done this in the last 12 months or so, there is every reason to take another cold, hard look at your outgoings and take advantage of some of the recession-inspired saving that can be made...
Firstly, take a look at those Direct Debits to see where savings can be made, the obvious ones are to shop around for lower cost insurance, and get rid of any outgoings that are less than essential. Consider the cost of your car insurance to see if you can get a better price - make sure you check if there are reductions for keeping the car off road or in a garage overnight. Check those insurances that offer reductions for households that have more than one car.
Consider also the life insurance and critical illness policies etc. that you might have and check to see that you are getting the best value for money - remember the financial market is squeezed and there are savings to be made now.
Talk with your partner about whether now would be a good time to overpay your mortgage with mortgage rates being so low (this is something that I have been doing this year) this could mean that you pay your mortgage off a lot earlier than expected. Consider the all the options for every Direct Debit that you have and set yourself the target of slicing at least 10% off your overall outgoings, you will be surprised at how easy that is...

Let's put the record straight on the NHS

I know that this is more of a political issue than an economic one, but it is hard NOT to say anything about the current attack on the NHS by US politicians funded by private insurance companies.
Let's face it, the NHS was a Utopian idea which has not quite reached the pinnacle that some may percieve it was aimed for, but nevertheless is an absolutely fantastic institution to which many, many people owe their health and their lives.
Sure, there are queues for non-emergeny procedures, but then the option to go private is there for those who want it. On the other hand, when you are rushed into hospital from the site of an accident or as a result of illness, at what point in a British hospital are you asked for your insurance details? Answer: NEVER! There is never any question about who is going to pick up the tab for your visit to the doctors surgery or to outpatients or A&E it's all free - and how on earth can you knock that??
How on earth does a privately funded commercial enterprise even come close to the NHS? the same NHS that takes in private patients when the private hospitals mess up and suddenly have to rush their customers to the nearest A&E... Yes, for those who have not considered this before - what do you think happens when things go seriously wrong in the private operating theatre? The answer is that they rush their clients into the nearest NHS hospital and let them pick up the peices. How can they do this? Well the NHS is free for every UK citizen (even those with a private health plan) and the surgeons are of course trained in NHS facilites and NHS procedures and have contacts (if not actually a position) themselves in the local NHS facilities. It is easy for them to get their private patients admitted to an NHS facility when things go wrong.
There are even NHS surgeons who have been known to get their NHS staff to assist in private procedures and then get their 'overtime' approved as if they had done the work in an NHS facility - they basically use their NHS-acquired knowledge and skills, not to mention materials and staff for personal gain. This could be the next great scandal to follow on from MPs expenses if there were any media-interest...
However I digress, my point is that criticsism of the NHS from a country that only has privately funded healthcare is completely ludicrous and is inspired by fear from the private insurance companies. The possibility of free healthcare has shaken the very roots of the insurance companies that pass themselves of as healthcare professionals - this is very big business and business with a lot of influence, after all every Senator, Governer, professional politician and commentator (in fact anyone with any influence) HAS private healthcare and regards it as their right because they can afford it. They don't want to take a hospital bed next to a car mechanic, a housewife or a road-sweeper and are concerned that their life will be somehow cheapened by free healthcare available to anyone that needs it.
Take a moment and consider the people who are turned away at the hospital door, those who are discharged too early and those who do not even attempt to get any healthcare because they know they can't afford it - these are not the people with influence but these are the people who need healthcare the most. These people don't live in pristeen germ-free houses on guarded private estates, working in air-conditioned offices kept apart from the streets and their dangers. These people do not have membership of a private Gym and do not have their heart and cholestoral intake monitored on a weekly basis. These people are more likely to live exposed to violence and disease, eating the worst kind of food and exposed to pollution on a daily basis. These are the people without a voice in this debate and these are the people that would massively benefit from a free health service.
My fear is that despite Obama's attempts, middle-America will reject these plans to help those who are worse off than themselves, without appreciating what they are throwing away. The worst aspect of the debate is that the NHS is being slurred without any justification. I personally rejected private healthcare offered by my employers simply because I see no need for it. Any time I have needed a medical professional I have been able to turn in full confidence to the NHS and have found an institution which entirely meets my needs. Any time I have needed attention, attention has been there free and immediate, efficient and without consideration of cost. I have had a few short days in hospital as a child, X-rays, eye exams, help with tinitus, innoculations and the friendly advice of a GP or nurse any time I have needed it. I have been patched up at A&E departments around the country and have taken others to be attended with never a thought of cost to me personally - all I can say is 'Long may it continue' and to those in the US, I grieve that you will probably reject free health care - a more perfect example of 'throwing the baby out with the bath water' would be hard to imagine....

IMF announces start of global recovery

Although recession is still a reality for much of the global economy, the IMF has recognised that there are signs of growth. In fact a handful of economies are already officially out of recession already including France and Germany.
Olivier Blanchard made the announcement which is due to be officially published tomorrow, but takes the opportunity to urge caution against a false dawn which could happen if support in terms of support from Governments ceases too soon. He recognises that the economies emerging from this abnormally steep financial crisis will carry the scars for many years.
This comes at the same time that the Department for Children, Schools and Families statistics is announcing unprecedented levels of 'NEETs' amongst it's young population (Not in Employment Education or Training). It is believed that by the end of the year the number of youngsters in this bracket could rise to a million. This level could continue to rise for a sustained period leaving a legacy of a generation of aimless youth which could give rise to some severe social and economic problems.
The conclusion must be that we are 'not out of the woods' by a long way and the consequences of this financial crisis could effect a generation despite Governments and the IMF telling us that the 'crisis' is over, in many ways it has just begun...

Related posts:
G20 prepares for recovery
Recovery or false dawn
Is the credit crunch over?

Is the Credit Crunch over?

The banks are reporting high profits, and house prices are on the up - does this mean the credit crunch is over?
Not according to the Bank of England who have expanded the quantitative-easing program in a step that implies that further measures are required to get the economy back on track. By contrast, the European Central Bank has taken a more optimistic approach believing that the Euro economy is gradually correcting itself. Both banks have left their base lending rate unchanged.
High street banks have started to behave as if the recession is over, but whether this is leading to them extending significant amounts of credit to borrowers again is yet to be made clear. Estate agents are also keen to publicise the fact that house prices are on the up again, but a short-term rise in prices, may cause a mini-peak if significant amounts of sellers rush to flood the market with properties.
What is it then that makes the BOE so cautious? Possibly the fact that bank revenues are not being converted into lending for businesses, possibly the fact that despite a recovery in consumer and business confidence, the UK unemployment figures are set to rise after surveys revealed the following statistics:

• One firm in ten (of the 450 surveyed) confirmed certain redundancy plans yet to be actioned
• Four out of ten are considering making job cuts
• The Chamber of Commerce is set to announce unemployment figures close to 2.5 million and experts are predicting a possible peak of 3 million unemployed this year.

Even if house prices are going up and banks are reporting billions of pounds of profit, the continuing unemployment trend will require significant investment if it is to be 'bucked'.
Businesses who are not used to having to make redundancies or lay workers off may have been slow to respond to a drop in orders, the effects on these businesses will take longer to trickle through to the economy and it could be months and months before they are forced to take action. The smart ones will have to move quickly, the less smart may end up with closing down entirely if they do not cut their wage bills to suit the orders coming in.

Related Posts
Banks return to bonus culture mind-set
UK Inflation results
House price recovery?
BOE questions national debt

Make the internet work for you...

I have just started to think about upgrading to an 'unlimited' web site hosting account. Once you are paying for a number of hosting plans (like I am) it makes sense to gather all your sites together under a single hosting account. Although there are obvious drawbacks of having all your internet 'eggs' in one basket, the savings can be tremendous. However it is not just savings that I am thinking of, it is the way in which I will be able to expand my internet activities with virtually no additional cost.
One way to make money in the recession is by using the web to generate income, and I plan to create a number of sites that will help me to do exactly this. This will be made simpler with an 'unlimited' account which typically offers:

• Unlimited bandwidth
• Unlimited domain hosting (domains to be purchased separately)
• Unlimited subdomains

and often also include:

• Unlimited MySql databases
• Wordpress support
• Cpanel control

etc...
The cost of this type of hosting is at an all time low at the moment, and I am kicking myself because I have renewed hosting for three sites recently at a cost of about £80 a year in total. I have recently discovered that I could have one of these unlimited hosting accounts for around £25 a year!! The best deal I have found has been webhostingpad, they offer an amazing package for a very reasonable rate. Whether you need blog hosting or any other hosting, now is a great time to be looking round for great deals to make money whilst the global economy is finding it's feet. In fact, even though I feel I have wasted some money on my standard hosting, I am very seriously considering cutting my losses and switching to my new all-singing all-dancing hosting plan fairly soon as it will give me a chance to play with Wordpress which I am really looking forward to exploring.

Business as Usual

Banks are seemingly returning to their old ways after having soaked up £38bn of public money in the UK, Barclays and HSBC have reported profits of around £3bn each and are now in the process of paying out huge bonuses again. The taxpayer is left asking 'What have they learned?' and the cynical response is 'They have learned that the Government will bail them out when their greed outruns their value'
Astonishing figures have been reported that indicate despite cutting more than 7,500 jobs, Barclays wage bill rose by a staggering 36% to almost £5bn - that by anyone's standard is quite an incredible achievement (and not in a good way). What it really indicates that whilst they have got rid of a mass of lower-paid employees, they have continued to feed the fat cats that got the economy into the state that it is now...
I am sure that banks are firmly of the belief that they are forging ahead in showing that the economy is on the way to recovery whilst the workers continue to swell the ranks of the unemployed and have their homes reposessed. And indeed, it does seem like there is recovery in some financial sectors, but it has been remarked that the 'bonus culture' is here to stay. The danger is that we emerge from this recession with a quite literally 'leaner and meaner' (especially meaner) banking system and a decimated manufacturing base (not that there was much left to be ravaged).
The blame for letting the banking sector off the hook can be firmly laid at the feet of Prime Minister Gordon Brown, he is guilty of believing that the banking 'leopard' could change it's spots and show remorse for it's rash behaviour - think again Gordon...

Related posts:
RBS toxic assets underwritten
Sir Fred's full pension revealed
Quantitative easing on it's way
RBS investigation