Euro zone

[Guest pelmetman]

Anyone taking bets on whether it will survive8-).................

[nowtelse2do]

No..!! you're overweight :-D and trying to cause trouble :-D

[Guest pelmetman]

nowtelse2do - 2011-08-04 8:17 PMNo..!! you're overweight :-D and trying to cause trouble :-D

Me cause trouble8-)..................I am overweight though:$..................But at least I'm not argumentative:D   

[francisgraham]

I'm feeling quite please with the Euro at the moment. On Saturday I had the dubious pleasure (hopefully for the last time) of flying to Bordeaux with BMi Baby and returned yesterday. 

I had a house in France, just south of the Dordogne in Lot et Garonne, and it's just sold after six months on the market, which is pretty good for France at present. It went to a Dutch couple and I had to go to complete formalities etc.

It's gone up in value since I bought it in 2000 but the biggest gain has been the currency increase in that I think I bought at about 1.60 Euro to the pound and have sold at 1.13.

I was using it less and less and when friends visited last year in their new motorhome I became sold on the concept and eventually decided to take the plunge and sell the house. 

I do think that the Eurozone will survive. It's a bit like the enormous banks, some things are just too big to be allowed to fail.

Nice to see by the way that nothing changed whilst I was away! One newish thread was pulled this afternoon and I wasn't even it! 

[CliveH]

It is not just the Eurozone that is in trouble - the world markets are all going through the same gasp of "what if"

 

And it is a big "if" - should the euro fail - as on the face of it - seems likely.

 

The so called "fixes" we have see for Greece for example is all smoke and mirror window dressing. Little REAL substance.

 

For example - the Brazilian market fell because its markets are the developed and developing world.

 

If nothing else this underlines the concept of the "Global Village" where everything is interlinked.

 

In our small bit of the pond we should be VERY pleased that we are not in the Eurozone and very pleased that our economy does NOT rely on manufactured goods. And thankful that we are service orientated and technology orientated because wherever the simplistic manufacturing takes place (and this will increasingly move according to cost per unit (EVEN IN "GREEN" GOODS SUCH AS SOLAR PANELS! :-S ) ) the technology and service will be required.

 

Our manufacturing base in the UK is now very different to the "dark satanic mills" of old - we are now focusing on developing and producing tomorrow’s products that will be everyday products next week manufactured elsewhere (most likely China/India)

 

So I do think we have a place in the world economy and it is not so gloomy as the likes of the BBC just love to ram down our throats. But J.H.C.!!! - the Eurozone is a mess and need to be sorted.

 

Sadly it will take greater minds and personalities to sort than those that are in power at the moment.

 

So sit back and watch

 

There will be financial "blood" all over the carpet. Let's hope our politicians have the sense to distance themselves.

 

 

 

 

 

 

 

 

 

 

 

 

OK - where did I put those bandages? 8-)

 

[antony1969]

Stock market falling , my pension currently worth nothing will now mean I owe them when I retire . Am glad I have no savings with the interest rate as it is and equally so that I have no shares as I think today could be squeezy bum time if the markets continue to fall . Maybe Malcolm , Knight of the Road can chuck a few quid in of his cash pot and prop up the euro for a few months

[CliveH]

Hi Anthony

 

If you are close to retirement you should be moving a proportion of your pension funds to less volatile funds such as Fixed Interest, we used to include cash funds when interest rates were about 5%, but of course of late the returns on cash funds have been very poor due to interest rates, so we use other low volatility funds.

 

As for the funding of your pension - take heart mate! - if the markets are low it means you buy more units per £. This is a good thing as long as you consolidate future gains by siphoning growth off to low volatility funds as outlined above.

 

Basically now is the time to put money into savings/pensions because it is rather like having a "Sale" - the cost of the asset you are buying into are cheaper than they were last week. And the markets will recover - they always do.

 

To me - (as an IFA) - the bigger issue is the viability of pensions for the individual - if your employer contributes as well, then fine. But if you are doing it alone, then the tax relief on the contributions, whilst a tax benefit is more than wiped out by the stealth tax on the growth of the fund - and the poor annuity rates when you come to take the benefits.

 

You are lucky to get 6% gross - 5% net - that means you have to live 20 years in retirement just to get your own money back!

 

This can mean that you have to live longer than your expected life expectancy just to break even!

 

ISA's and offshore investment are far better options for most individuals – I believe it is a mistake to plan lifes longest holiday by pension plans alone. Successive governments have increased the taxation and restricted access to such an extent that private pensions are of dubious value.

 

For example – if you do not want an annuity and decide on the more flexible “Drawdown” facility and you die, the Coalition government, this April 6th, increased the tax hit on the fund from 35% to 55%.

 

Which considering most people only got 20% tax relief on the contributions and then paid tax on the growth they achieved within their pension plan seems particularly mean. Certainly it is counter productive.

 

Little wonder then that saving via a pensions is at an all time low.

 

And little wonder, I suppose, that this same coalition government is now introducing legislation to make contributing to a pension compulsory!

 

Is this a benevolent nudge to us all to save more for our retirement?

 

Or is it another way of increasing the tax take?

[Guest pelmetman]

CliveH - 2011-08-05 7:50 AM  if you are doing it alone, then the tax relief on the contributions, whilst a tax benefit is more than wiped out by the stealth tax on the growth of the fund - and the poor annuity rates when you come to take the benefits.You are lucky to get 6% gross - 5% net - that means you have to live 20 years in retirement just to get your own money back!This can mean that you have to live longer than your expected life expectancy just to break even!

Given my predilection for pork pies and cheap red wine, I doubt I'll get my money back(lol)

[vindiboy]

I had £3,000. in a Mini Cash ISA with Nationwide and last year I received the Princely sum of £7. interest. tax free I cashed the ISA in and bought £3,000 Premium Bonds and last Month I won £25 pounds, more than three times more than the ISA paid me already.I 'm no financial genius but know what is best for me.

[CliveH]

Premium bonds are an excellent investment - tho the "return" has been lowered to reflect current interest rates. The problem with them is that you are limited to how many you can hold and the "income" via winning is not regular - but if you hit the jackpot! - who cares!! (lol)

 

My sons ISA - with Fidelity in their Strategic Bond fund (Fixed interest) where he placed £3000 in it on the 22nd July 2010 is worth £3,148.85 today. That is a 4.96% return.

 

http://www.trustnet.com/Tools/PDFViewer.aspx?url=%2FFactsheets%2FFundFactsheetPDF.aspx%3FfundCode%3DF2F58%26univ%3DU

 

My Wife’s ISA taken out over a similar period, again with Fidelity, but here she placed a total of £10,000, in it, - £6000 into Fidelity Emerging Markets and £4000 into the same Strategic Bond fund as our son. Here because of the growth within the emerging markets the £10,000 is now worth £10.980.71.

 

Which is a 9.8% return - with the performance going negative over the last 3 months.

 

http://www.trustnet.com/Tools/PDFViewer.aspx?url=%2FFactsheets%2FFundFactsheetPDF.aspx%3FfundCode%3DFIIEM%26univ%3DU

 

The decision we have now is how much of the "safe" Fixed interest funds do we move into the emerging markets fund because the view is that Fixed interest returns will remain low whilst Emerging markets will recover strongly. So now is a good buying opportunity.

 

[Guest pelmetman]

CliveH - 2011-08-04 11:31 PM the Eurozone is a mess and need to be sorted.Sadly it will take greater minds and personalities to sort than those that are in power at the moment.So sit back and watch There will be financial "blood" all over the carpet.

Watching the European politicians reminds me of Ceasar who fiddled as Rome burned(lol)

At least our politicians just fiddled their expenses:D 

[nightrider]

Antony,

I am no financial genius but where money is concerned I run a tight ship, once I put money in the bank it never see's the light of day (lol)

Investments are not for me, I much prefer buying and selling and what I make is mine, I have two stepsons both in high paying professional jobs but neither one has a pot to p*** in, I have a peculiar way of earning money (legal) and it has never failed me yet.

 

[Guest pelmetman]

I sail a different course to many:D..........I strive to earn less..........In fact I'm so good at it the government thinks I don't have enough and gives me more(lol)(lol)............. 

[Brian Kirby]

Collectively, European politicians cannot respond at the rate markets need. Individually, some of them undoubtedly understand the need, but others just seem to think they are in charge, and the markets will just have to put up with their way of doing things. At present, it seems they should be learning otherwise - but are they?

 

Listening to the news over the past week, I've been reminded of two jokes.

 

The first is about two men walking in the desert. They round a corner of the path, and are confronted by a snake. The first man asks the second if it is a rattle-snake. The second draws a gun, shoots the snake, shrugs, and says "who cares"?

 

The second joke is of two men walking in the jungle. One of the men is a furrier. An animal leaps on the furrier, who shrieks to the other, "is that a tiger on my back? The second man replies "I dunno, you're the furrier"!

 

It seems to me the collective management of the Eurozone, in this crisis, are acting a little like the second man in the second joke, whereas the markets want them to behave as the second man in the first joke. Actions, not second opinions. It goes back to the quip by the American politician (Kissinger?), who asked, "if there is a major crisis somewhere in the world who, exactly, in Europe should he telephone to obtain the European response?"

 

None of the nation states will do as logic demands, and cede management of their borrowing rights to a central authority - because it raises too many questions over what their governments would, actually, then be for. The simple answer to that, of course, is to run that countries affairs in much the same way that County and Unitary authorities run bits of the UK at present. Not appealing to Prime Ministers and Chancellors who see themselves as major players on the world stage.

 

To me, if the Euro is to survive, as I hope it will, the price states will have to pay for membership will be to borrow only through the European Central Bank, which will be the sole source of external, internationally tradeable, bonds, and will issue internal, non-tradeable, bonds to states needing to raise funds for infrastructure projects or to cover short term fiscal deficits. All states will have to back the Central Bank with funds to cover its bond liabilities to a proportion of GDP (or similar), so that external ECB bonds carry high credit ratings. Thus, states wishing to increase their borrowing would have to satisfy the ECB that their fiscal position is sustainable at least over the duration of any loan granted. That would have considerable implications for tax and spending decisions within the states, where over-extended exchequers would be told "no loan until your account is back within limits" (supposedly, originally, 3% of GDP). Anything significantly less than this, and they will never gain the upper hand and bring about the stability they need and want.

 

This is the gaping hole at the core of the EC, because it implies central control over a large portion of every state's budget, with individual parliaments relegated to the roles of regional assemblies. It implies a European parliament with real powers, a European minister of foreign affairs, a European chancellor, and in all probability a European defence force. It is the elephant in the European room, and it has been there since day one, not of the Euro, but of the European Common Market itself.

 

The argument over whether to deepen or broaden the EC went the wrong way, in favour of broadening, and the introduction of the Euro similarly went the wrong way, by failing to recognise that there was, by then, a de-facto division into camps, in effect a two speed Europe. Had Europe been deepened instead of broadened, the Euro may have worked for its core members; had the Euro project been shelved until such time as the broadened EC completed harmonisation measures, to bring its member states to more or less the same economic positions, the Euro project could then have been a success, though far off into the future.

 

Problem was, the deepeners lost their argument, but wouldn't let go on the Euro, in the hope it would eventually bring them what they wanted. I think it may work out that they were right, but not before some truly radical actions are implemented, which will take far longer that the markets will tolerate, and will, I think, result in some countries having to ditch the Euro with catastrophic results for them. The alternative, IMO, will be a very stormy period within the core EC as a whole, as populations protest at the amount of their tax that is being spent propping up countries whose Euro memberships should never have been accepted.

 

While that little lot settles, the Americans have an equally pressing, though quite different, problem of their own, that they show little present appetite for sorting out.

 

So, if the US and Europe are preoccupied with their own problems, and both are suffering the hangover from the party no-one had the sense to bring to a close, a big chunk of the middle east is in political turmoil, and the horn of Africa is experiencing famine, I wouldn't be putting too much faith in Brazil, Russia, South Africa, India or China (the BRICs) as where the growth will be.

 

Why? Because so much of their production is sold into European and American markets. Both America, and Europe, will try to re-patriate some production, to increase employment at home and to try to generate growth. Even the call centres will begin coming back. That will take some of the steam out of the BRIC's growth. Add that the BRICs have, to a large extent, invested heavily in America and Europe, and their earnings will also fall.

 

Technology, and the desire for globalisation, have had the effect of synchronising world markets. Not completely, of course, but to a greater extent than hitherto. It seems to me that an outcome of this interconnectedness is that the world's markets march more or less in step, so that when one major market hits trouble it embroils the others - and at present we have two major markets in the doo-doo! That, I think, spells trouble for all, rather than as has been the traditional view, that when the west is down, the far east will be where the growth can be found, and vice versa.

 

The biggest advantage we have is that (pretty much! :-)) everyone knows this, and wants to avert the impending disaster, which should adequately focus minds on solving the core problems. As to whether it will, time will tell. I think we're back to Clint Eastwood: are you feelin' lucky, Punk? Oh dear, and all I want is to wander Europe in peace in my little home on wheels! :-D

[Guest pelmetman]

As usual a very succinct summing up Brian:D.............So if we're lucky we will get away with a long recession.........if not..................... anyone fancy a depression8-) 

[Guest peter]

Wait...........there's more. :D

[pkc]

peter - 2011-08-05 8:58 PM

 

Wait...........there's more. :D

 

:-D :-D :-D :-D :-D :-D :-D

[Guest pelmetman]

peter - 2011-08-05 8:58 PMWait...........there's more. :D

Whilst we're waiting Peter, whats the new camper like?:D

[malc d]

It's all being organised by speculators.

 

They spread scare stories - markets crash - they buy lots of shares - they then spread 'good news' stories- markets rise - they sell lots of shares - make big profits.

 

Wait a couple of months - spread scare stories - etc etc

 

Works every time.

 

;-)

[pkc]

malc d - 2011-08-05 9:55 PM

 

It's all being organised by speculators.

 

They spread scare stories - markets crash - they buy lots of shares - they then spread 'good news' stories- markets rise - they sell lots of shares - make big profits.

 

Wait a couple of months - spread scare stories - etc etc

 

Works every time.

 

;-)

 

I'm amazed the government didn't see it coming.

 

Should have gone to speculatorsavers..

[Guest pelmetman]

Now the US credit rating has been lowered8-)

[malc d]

pelmetman - 2011-08-06 8:56 AM

 

Now the US credit rating has been lowered8-)

 

 

" Credit rating agencies" - the best friend a speculator could ever have.

 

;-)

[oldlowie]

pelmetman - 2011-08-05 11:36 AM

 

Watching the European politicians reminds me of Ceasar who fiddled as Rome burned(lol)

 

Jesus fecking Christ 8-) It was Nero *-)

[nightrider]

oldlowie - 2011-08-06 10:19 PM

 

pelmetman - 2011-08-05 11:36 AM

 

Watching the European politicians reminds me of Ceasar who fiddled as Rome burned(lol)

 

Jesus fecking Christ 8-) It was Nero *-)

Now if I had sent in a post like that I would, no doubt have been hauled over the coals (?)

[nowtelse2do]

oldlowie - 2011-08-06 10:19 PM

 

pelmetman - 2011-08-05 11:36 AM

 

Watching the European politicians reminds me of Ceasar who fiddled as Rome burned(lol)

 

Jesus fecking Christ 8-) It was Nero *-)

 

Dave, I didn't know you were that far up the ladder. Never knew you had a middle name neither :D

Can I come round for supper? :D