Euro-zone troubles

In what can only be described as a short-term measure, the Central European Bank is preparing to buy up Italian and Spanish debts in an attempt to stabilise the Euro. This comes in the wake of the down-grading of the US credit-rating - which to be fair, is nowhere near as bad as actually defaulting on debt re-payments.
However, the market is jittery and some steady nerves are needed along with some strong leadership. Like it or not, you cannot spend your way out of debt, and the over-spending of recent years is starting to reveal itself.
The parallels with personal spending are obvious, we the consumers have been overspending, this has triggered government and municipal overspending, and once the debt starts to get to the unmanageable stage, some hard-hitting cuts have to be made whether you are talking about a household or as a national economy.
Member nations of the European economy must face cost-cutting head on, jobs will be forfeit as over-spending produces unrealistc demand for employment - when the spending is curbed, the jobs will go. Of course this is not a perfect model as the fallout is not limited to the specific over-spend areas, the effect will be economy wide.
It has long been my belief that much of this overspending is a result of the over-riding appetite for consumable gadgets that is prevalent in the Western economies. However, demand is so insistent, that consumer choice may dictate that gadget-related jobs can be sustained and more fundamental consumer goods manufacturing and marketing might be under threat. I'm not saying that people prefer iPads to food, but somewhere along the line, gadgets are becoming more of a necessity in the public consciousness and less of a luxury. Personally I am quite sure that this is not a good thing when along with the desire for the gadget, comes the likelihood that in 6 months time, the same piece of kit will be on eBay for a quarter of it's original price, sold to partially-fund the purchase of the next generation must-have kit (which, it turns out, the consumer can ill-afford).
The only good thing to come out of the uncertainty (if you are NOT a nett investor), is that interest rates remain abnormally low, and the BoE have not the stomach to raise them and the mortgages of half the nation along with them..

Time to remortgage

Mortgage rates are about as low as anyone can remember right now as lenders seek to entice home owners with attractive interest rates. With the slow-down in the housing market this is hardly surprising. Normally you would expect lower house prices to attract house buyers almost regardless of the mortgage rates. Sellers are seemingly holding out for higher prices and just not selling at the rate that demand dictates, therefore the market has slowed in it's activity. In order to keep the market going, lenders are having to offer great deals.

What this means, is that if you don't have a tracker mortgage, you may want to remortgage to take advantage of the low rates.

Bank base rate is still holding at 0.5%, so there has never been a better time to remortgage - this rate has persisted for nearly two and a half years now and shows no indication of rising before the end of 2011.

Some fixed deals are available for about 3 or 4%, depending on the term of the mortgage, the longer term, the higher the rate indicating the expected course that interest rates will take. Be warned though, unless you will be making an interest saving of £1000, the cost of the remortgage will be higher than the savings you can make.

There are tracker deals about too, but unless you got yourself a tracker BEFORE the rates dropped so low, this is more of a gamble. Those who managed to secure a tracker before the rate dropped, may have one that tracks about 1% or even less above base rate, however base rate is so low now, that you will be lucky to find one that tracks less than 2% above.

If you are thinking of remortgaging, by all means take a look at all the offers out there, but also get the advice of a good independent advisor. At the same time, don't be frightened to tell the advisor exactly what you want - take a wish-list with you, and ask the advisor to find a mortgage that fits your requirements.

Twice I was persuaded (against my better judgment) to go with fixed mortages, until I insisted last time that I wanted a lifetime tracker mortgage. Again it cost £1000 (I just hate those sign-on fees - which is why I insisted on a LIFETIME tracker), but we have made tremendous savings since the rate went so low. This has allowed me to overpay my mortgage for the last two years. There is a kind of financial karma in this since we have a endowment mortgage which is unlikely to pay off the loan when it matures - overpaying means there will be less of a loan to pay off. I reckon we have paid off about 6 or 7% off the principal in the last two years through overpayment, another year of this and we will have paid off 10%.

It goes to show that no-one knows what will happen over the term of a twenty-five year mortgage - it tells you to be wary of the markets, but also tells you that whilst you are on the swings now, the roundabouts are just around the corner...

Interest rates remain stable

Despite a growing concern that interest rates will be on the way up, the Bank of England have kept UK base interest rate at 0.5%. This is great news for those with a tracker mortgage, not so good if you are a net investor...
I am continuing with my philosophy of over-paying my mortgage whilst the going is good, in the hope that it will stand me in good stead when my endowment matures. Whatever happens, I am quite sure that it will not do me any harm at all to try and lower the amount I will have to pay back to the bank in about 10 years time...
I anticipate that further measures will be needed before I can be sure that I can cover the full cost of the mortgage, but at least the impact will have been lessened by this bonus period of low interest rates.
The reason that the BoE have not raised interest rates is the continuing doubts about whether the UK economy is strong enough to accept higher rates. Whilst we have avoided double-dip recession this time, there are still concerns that GDP is not growing as was hoped.

RBS still happily handing out bonuses

UK Financial Investments (UKFI), which manages the Government's bank assets, is expected to give its approval of RBS CEO Stephen Hester's (near £8m) pay packet at the group's annual meeting in Edinburgh. Mr Hester took over the job from Fred Goodwin in 2008, and has been awarded an additional £4.5m potential shares windfall on top of his £2m annual bonus and £1.2 million salary. He and eight of his top team will share a bonus and shares windfall totalling £28m for its 2010 financial year.

RBS is 83% owned by the taxpayer following the bank's near collapse at the height of the financial crisis, and is expected to face wider shareholder anger when the remuneration motion (of almost 400% of salary) comes to a vote.

Identity Theft

Online transactions are becoming overshadowed by the increasing threat of identity theft protection a new service from IdentityHawk seeks to eliminate Identity Fraud by attacking the root of the problem which is Identity Theft.

IdentityHawk proactively identifies risks for it's members by monitoring chat-rooms and databases where suspicious activity around unique identifying data has been detected.
Data such as names, addresses, phone numbers, Social Security numbers, and much more are protected via this system.

Whilst there are always those who will be happy to carry out online transactions and not worry too much about having their peronal details compromised, there is a reluctance by much of the online community to expose themselves to the risk of identity theft. A protection service as offered by IdentityHawk offers peace of mind to even the most cautious of individuals. IdentityHawk even offers $1m insurance to it's members as part of it's comprehensive package.

'Tame' budget forecast

There is unlikley to be any surprises from George Osbornes budget as he delivers his 'budget for growth'. There is talk of raising the tax threshold by £600, which is worth about £45 per year... Slightly more interesting is the speculation that the government may push for National Insurance to be integrated into income tax. The difficulty here though, is that there are significant numbers of people paying NI who don't pay tax, the NI payments entitle them to benefits and state pension should they need them.

There will be small movements on fuel duty, first reports coming out of Westminster suggest a cut of 1p in duty from this evening, most of the rest of the budget has been aimed at encouraging investment - or maybe just not discouraging investment... some changes to gift aid to encourage giving, more money to be spent tackling tax-avoidence.

No doubt a fuller picture will emerge soon...

Loans

With the Bank of England base interest rates keeping low, it is still a good time to get a short -term loan although it is worth noting that a low base-rate does not mean that ALL interest rates are automatically reduced to such a low level.

Specialist short-term lenders still charge a premium for their services because they are specifically addressing the need for rapidly approved loans for the duration of just a few short weeks or months.

Such services are offered by payday loan lenders uk and frequently are able to approve a loan automatically online via a website. Although payday loans in the uk would not be the solution to all lending needs, they may be ideal for a short term where a payment is expected imminently, hence the name 'pay day loans'.

Project Merlin

The idea of Project Merlin held some hope of holding the banks to account for the misery they have spread through the economy, although in reality the measures could never be as punitive as the larger population would like.
We rely too much on our financial trading to make it unprofitable, it is one of the few remaining sectors that the modern UK now excels at...

What concessions have been drawn out of Project Merlin?

• To lend more money in 2011
• To lend more to small businesses
• To pay less in bonuses than they did last year
• To be more transparent about their pay packages
• To make a greater contribution to regional economies and society.
  

Who has signed up?

• HSBC
• Barclays
• Royal Bank of Scotland
• Lloyds Banking Group

Santander have also been involved in the project

To add in some specifics, the banks that have signed up will commit to making £190bn of credit available to businesses in 2011, up by £11bn, £76bn will be made available specifically to smaller businesses.

The banks will also provide £200m capital to David Cameron's Big Society Bank, which is supposed to finance community projects, and they will provide an extra £1bn over three years to the Business Growth Fund, which aims to help small business in hard-pressed parts of the UK.

And bonuses?

To be fair the banks have agreed some realistic controls, but there is not going to be a huge reversal of the bonus culture. Millions will still be earned by the few in salaries and bonuses

Was it worth the effort?

The agreement is a realistic 'moral victory', something was required politically, and this was the result. It will not make tremendous waves through the financial sector, and as one of the leading 'industries' of the UK, it makes little sense to 'hamstring' the banks. The banks have been in the spotlight, they created much of the mess, they have been the first to see a turn-around in fortunes. It would make little economic sense to stamp on the growth that is now starting to show. On the other hand, the banks have been caught out, and made to publicly acknowledge their part in the financial crisis - it's time to move on.

Spectacular Bank Failures

Economist John Vickers, chairman of the Independent Commission on Banking has slammed the British banking sector in a speech to the London School of Economics, he said:

"Ultimately, financial risks have to be borne, and in a market system they should not be borne by the taxpayer providing a generous safety net."

This at a time where banks feel they are ready to start paying themselves huge bonuses again, many CEO's already raking in millions in so-called 'performance-related' payments. The question that the nation is asking is "what do you give back when your performance is so dismal that the nation ends up footing the biggest tax bill ever generated?", the answer is of course, a resounding 'nothing' - even those who have skulked away in disgrace have already feathered their nests to such an extent that they are in danger of choking on their own hollow affluence.

In the meantime, the nation suffers with cuts to services in every sector, industries losing workers and long-established companies failing. Whilst many will regard this as just 'politics' or 'economics', for some this is their life... Some families will suffer hardships, real hardships - the cause of which can (whether it be directly or indirectly) be traced back to foolhardy, gung-ho actions of the financial institutions.

Admittedly, the economy had become over-inflated and therefore some workers owe a few years wages to the over-inflation, nonetheless, I believe on balance, it is likely that there has been more harm done than good.

Interest rates set to rise

It looks like the Bank Of England is trying to prepare the public for a rise in interest rates back up to what it feels is a normal level - which will mean the rates returning to a level of about 5% from the current 0.5%...

BoE official Paul Fisher is quoted as saying:

"...what we need to do is to trigger the mindset in people that that's where rates will eventually go back to,"

As if 'people' were stupid enough to think that this artificially low figure is the norm... I would have thought that the message would have been loud and clear if the BoE simply raised the level by 0.25% or 0.5% rather than just talked about it... If they were worried about 'people' panicking, they could have always stated that their 'target' figure is 5% at the same time as announcing an actual raise.

The way this has been done makes it sound like they are unsure of the impact of raising the rate and want to get an idea of what the reaction will be before they do it. The likelihood is that the raise will be implemented in small steps, but no indication whatsoever is given over how long this will take.

The background to policy changes are a relatively static economy showing little growth, a low sterling market value and creeping inflation - with the VAT hike about to strike, one must question the impact this statement by Paul Fisher will have on the householder. There is not much in the economic climate that is going to encourage householders to part with their cash (other than Christmas, which as far as I am aware is not as a result of Government policy..)

Personally, I think we are still in uncertain territory here in economic terms with the threat of the dreaded 'double-dip' still a possibility. I am making the most of the low interest rates by overpaying my mortgage, not by consuming more goods - any change in the interest rate for me will just mean an adjustment to my overpayment.

£7bn from UK to bail out Ireland

Chancellor George Osborne has said that Britain was prepared to commit seven billion to the Irish bail-out plan. The EU and IMF agreed on Sunday to help bail out Ireland with loans to tackle its banking and budget crisis in a bid to protect Europe's financial stability.

"What we have committed to do is to obviously be partners as shareholders in the IMF in an international rescue of the Irish economy,"

Osborne told BBC Radio 4....

"But we have also made a commitment to consider a bilateral loan that reflects the fact we are not part of the Euro ... but Ireland is our very closest economic neighbour."

Osborne was questioned about reports that Britain was going to contribute around seven billion pounds to Ireland, he replied:

"It's around that (figure), it's in the order of billions not tens of billions but the details of the entire package, not just the UK contribution, but the euro zone and IMF contribution, that is all being worked out as we speak and we should by the end of the month have the details on that."

Osborne was keen to stress that Britain should not have to provide further help to Ireland or any other Euro zone countries that got into trouble. However this contribution by Britain is causing trouble at home amid an atmosphere of spending cuts - there are claims that this bail out makes a mockery of the hardships Britain will endure as a result self-imposed austerity measures. The criticism is heightened by claims that this is a problem that arguably should be resolved primarily by the Euro-currency countries.

Short-term debt

As the economic crisis reaches a new stage, many individuals may suffer from unemployment and loss of earnings in the coming months. In many cases, workers may be forced to take lower-paid jobs and be forced into debt whilst trying to adjust to the new level of income.

In most cases, significant changes to life-style will be required, others may consider a short-term debt solutions like pay day loans. There are problems with this type of borrowing in that it can be a relatively expensive way to borrow and may result in several loans being taken out without the principal being effectively cleared. This type of debt should be cleared promptly and may require payday loan consolidation.

You may need payday loan help if your borrowing has got out of hand, and the only long-term solution is to seriously curb your spending. If you are experiencing problems with short-term (expensive) debt, you should make this a priority. Take an overview of your total income and outgoings and make adjustments that will allow you to love within your means.