Triple 'A' Rating

[Dave225]

Does the UK’s loss of its AAA rating actually mean anything in the real world, or is it all a political stunt? After all it was issued by a Ratings Agency that managed to give a AAA rating to the US subprime mortgage market, and we all know where that ended up. Plus both the US and France have already lost theirs and seem to be surviving. However, there are differences in the scenarios which make things a little more difficult for us. The Eurozone has managed to calm everything down, at least for the moment and so the ‘heat’ is off there and the US has managed somehow to get cheap shale gas which is pushing a recovery of sorts. So the spotlight is on the UK and it does not look pretty. The primary culprit for the current state of affairs is our good friend Gordon Brown who managed to take a booming economy and turn it into a basket case within 13 years. He not only splurged all the surpluses when they were available he borrowed more, and kept borrowing when the surpluses dried up. What happened to all the cash?? God knows except an army of overpaid Public Sector employees, who do nothing. He also encouraged the general population to borrow like there was no tomorrow and of course when it all came crashing down....he disappeared. So, we have debts that are still rising and will take generations to pay off, if ever. The Bank of England’s answer has been to start printing money like any old 3rd world country and devalue the Pound. The talk of possibly more QE (devaluation to you and me) has just added to the pressure on the Pound. The ‘plan’ is that this will lower our prices and make exports more competitive. The big snag to that is that we have very little to export that we are not already doing, so the returns will be almost nothing. In stead we will increase all our import costs and in turn drive the local economy downhill.

 

All sounds wonderful so far but the markets have finally cottoned on to the wheeze and stated ‘Gotcha’.

 

What does this mean? It means we will all be paying more for everything in our daily lives, from fuel to food. Secondly it means that any ideas of EU holidays will be a lot more expensive, unless the Eurozone goes into another nosedive, but of course any downside to the euro sees local prices rise in the shops. The talk is of parity to the euro, yet again.Thirdly, and where it will really hurt is for retirees. Workers can have the option when things are bad to try for another job, get a salary increase or even migrate. Retirees do not have any of those options. If you have a fixed annuity, or even one increasing with RPI, you will still find you have less and less money and no way of bettering things. Working at B&Q may sound great but do you really want this to be your final option?? Plus, as the Pound devalues you get less and less for the Pounds you may, or may not have in the Bank. We saw pensioners in Azerbaijan, who had worked all their lives under the Russians, who when they pulled out saw their pensions decimated by the drop in the value of the Rouble to about 10% of the original. As you can imagine that meant going from basic comfort to total poverty in your 70’s , and begging was rife. Not something i would like to see happen here, but as the rise in Equity Release schemes is showing, it is hurting already.

 

The answer??? I do not have one but something will need to be done and Balls Up’s idea of borrowing more is total lunacy. Tax cuts would be a start and cutting business rates to encourage start ups, this would in turn drive the economy upwards, but will it happen??? I doubt it as our numpty politicians cannot see beyond the trees and any bright ideas are immediately culled by the LibDems who ‘see no evil, hear no evil and certainly admit to no evil’.

 

Methinks that my next trip to Spain may be as much recreational as exploratory to a possible move., unless someone has a better plan. At least it is warmer. Plus it is only Monday and the whole week is yet to come...............Oh Woe and Thrice Woe as Frankie Howard used to say.

 

[nowtelse2do]

Dave225 - 2013-02-25 8:02 PM

 

The Eurozone has managed to calm everything down, at least for the moment and so the ‘heat’ is off there and the US has managed somehow to get cheap shale gas which is pushing a recovery of sorts. So the spotlight is on the UK and it does not look pretty.

 

I think the spotlight is on Italy at the moment so Brussels are probable sh**ing themselves if Bunga Bunga gets back in. As for the USA, all our banks and BP are doing a spectacular Job of contributing to their coffers.

 

Dave

[CliveH]

Very much agree. The Italian elections are indicating that a significant number of people are voting for anti-austerity.

 

And indeed - my particular hobby horse re how an Independent Candidate can really shake things up when trust in the main parties sinks to a virtual non-existent level - the Italian Comedien, Beppe Grillo, turned his anti-corruption blog into a political party and looks like he has achieved nearly 25% of the vote!

 

An amazing result and a real boost to those of us that think the time is ripe for a real shake up of the same old same old in politics.

 

http://blogs.telegraph.co.uk/finance/matspersson/100022989/will-italys-anti-euro-comedian-have-brussels-bursting-into-tears-next-week/

 

The article above from a few days ago asked the questions

 

It looks quite possible that Beppe Grillo has done exactly what the muppets in Brussels did not want.

 

Could be the start of something here!

 

http://www.bbc.co.uk/news/world-europe-21576869

 

 

 

 

[John 47]

CliveH - 2013-02-26 6:33 AM

 

 

And indeed - my particular hobby horse re how an Independent Candidate can really shake things up when trust in the main parties sinks to a virtual non-existent level - the Italian Comedien, Beppe Grillo, turned his anti-corruption blog into a political party and looks like he has achieved nearly 25% of the vote!

 

An amazing result and a real boost to those of us that think the time is ripe for a real shake up of the same old same old in politics.

 

I take your point but return to mine! Who knows what this man stands for? He has been reluctant to talk to the press (some think because they would reveal his lack of policies) and insofar as he has expressed policies they seem to be of the "let priests have children so they don't interfere with other people's" sort of policies! On top of that, he won't be allowed a seat in parliament because of a conviction for manslaughter and his followers, who will be elected, have already started saying that you shouldn't take many of his statements seriously. It is all very well saying "balls to the lot of you" but somebody has to end up running the country. 25% of the country may well have voted for a party that ends up doing things they thoroughly disapprove of!

[CliveH]

No disagreement from me there John.

 

But at the same time I rejoice at the substantial number of the Italian electorates rejection of the same old tired politics. Time is ripe for a change.

 

Maybe "The Cricket"

 

Will be the start?

 

This behind a paywall so a cut n paste job:-

 

European bond and stock markets saw a sharp sell-off on Monday after a shock result from the Italian election, where no political group managed to win a majority vote.

 

While the centre-left coalition led by Pier Luigi Bersani won the lower house, the party did not gain a majority vote in the upper house necessary for an overall victory.

 

Meanwhile, the Five Star protest movement of comedian Beppe Grillo emerged as the strongest party in the country and Silvio Berlusconi's centre right bloc threatened to challenge the close tally.

 

The result will see the country face a political stalemate as competing parties attempt to form a functioning government.

 

As the results of the election appeared to offer no end to the eurozone crisis, investors were quick to sell off their European holdings.

 

The yield spread on 10-year Italian bonds over German bunds jumped 30 basis points to 290 in late trading.

 

Italy's FTSE MIB index nosedived from its high point of 16,871 at 15.32 CET yesterday to close at 16,352 yesterday.

 

This morning saw futures for the Euro STOXX 50 fall 3.1%, according to Reuters, signalling a sharply lower open for the European markets.

 

The euro also fell to an almost seven-week low against the dollar to $1.3042 in Asian trading on Tuesday; its lowest point since January.

 

In the US, the S&P 500 fell 1.83% to finish the day at 1,488, marking its worst decline since 7 November, as the divided result in Italy and the potential for US budget cuts weighed on sentiment.

 

However, the FTSE shrugged off Moody's downgrade to finish yesterday's trading 1.01% higher at 6,355.

.........................

 

 

[nowtelse2do]

Nice little comment in my favorite newspaper "The Daily Mail" *-)

 

In Italy a comedian becomes a politician.

In Britain a politician becomes a comedian.

 

Words spoken in jest but I can't see any untruths in them :-D

Maybe a few words left out of the analysis like, Sex pests, Perverts. Liar's, Thieves.

 

Dave

[Syd]

nowtelse2do - 2013-02-26 1:06 PM

 

Nice little comment in my favorite newspaper "The Daily Mail" *-)

 

In Italy a comedian becomes a politician.

In Britain a politician becomes a comedian.

 

Words spoken in jest but I can't see any untruths in them :-D

Maybe a few words left out of the analysis like, Sex pests, Perverts. Liar's, Thieves.

 

Dave

 

 

He may have become a politician but he will NOT become a member of any of their parliaments

[nowtelse2do]

Syd - 2013-02-26 1:27 PM

 

nowtelse2do - 2013-02-26 1:06 PM

 

Nice little comment in my favorite newspaper "The Daily Mail" *-)

 

In Italy a comedian becomes a politician.

In Britain a politician becomes a comedian.

 

Words spoken in jest but I can't see any untruths in them :-D

Maybe a few words left out of the analysis like, Sex pests, Perverts. Liar's, Thieves.

 

Dave

 

 

He may have become a politician but he will NOT become a member of any of their parliaments

 

No Syd, he's been done for manslaughter once, so barred. We once had a Prime Minister not long ago who in my opinion should have been charged with a more serious offence. But it's who you know that helps I suppose.

 

Dave

[John 47]

CliveH - 2013-02-26 10:19 AM

 

No disagreement from me there John.

 

But at the same time I rejoice at the substantial number of the Italian electorates rejection of the same old tired politics. Time is ripe for a change.

 

 

 

I enjoy the rejction of the establishement as much as the next man - especially since there is virtually no difference between the established parties these days - but unless there is some direction to the protest then where do we end up? One thing seems inevitable to me - that the people who really pull the strings will continue to do so. So in one sense, this "fake" change just plays into their hands by pretending things are now different.

[RogerC]

John 47 - 2013-02-26 2:31 PM

CliveH - 2013-02-26 10:19 AMNo disagreement from me there John.But at the same time I rejoice at the substantial number of the Italian electorates rejection of the same old tired politics. Time is ripe for a change.

I enjoy the rejction of the establishement as much as the next man - especially since there is virtually no difference between the established parties these days - but unless there is some direction to the protest then where do we end up? One thing seems inevitable to me - that the people who really pull the strings will continue to do so. So in one sense, this "fake" change just plays into their hands by pretending things are now different.

 

I agree that there's not much difference between any of the self interested/thieving/lying (generalisation here but the 'ruling classes' have brought it on themselves) morally lacking major players.  However it is 'them' that keep telling us if we don't like things as they are we have a voice at the ballot box.  It is good to see what has happened in Italy regardless of how infective the 'comedian' might be because it has made headlines and given a big 'two fingers' to the 'establishment.

 

Maybe it will happen here sometime soon.......goodness knows those 'in power' need a wake up call and be made to realise they are there to serve 'the country' not themselves.

 

[nowtelse2do]

RogerC - 2013-02-26 3:50 PM

John 47 - 2013-02-26 2:31 PM

CliveH - 2013-02-26 10:19 AMNo disagreement from me there John.But at the same time I rejoice at the substantial number of the Italian electorates rejection of the same old tired politics. Time is ripe for a change.

I enjoy the rejction of the establishement as much as the next man - especially since there is virtually no difference between the established parties these days - but unless there is some direction to the protest then where do we end up? One thing seems inevitable to me - that the people who really pull the strings will continue to do so. So in one sense, this "fake" change just plays into their hands by pretending things are now different.

 

I agree that there's not much difference between any of the self interested/thieving/lying (generalisation here but the 'ruling classes' have brought it on themselves) morally lacking major players.  However it is 'them' that keep telling us if we don't like things as they are we have a voice at the ballot box.  It is good to see what has happened in Italy regardless of how infective the 'comedian' might be because it has made headlines and given a big 'two fingers' to the 'establishment.

 

Maybe it will happen here sometime soon.......goodness knows those 'in power' need a wake up call and be made to realise they are there to serve 'the country' not themselves.

Oh for a Lord Sutch in times like this :-D Bring back the Raving Loony party. Then again that wouldn't work, we already have 3 Loony Parties. 8-)Dave

[nowtelse2do]

Just announced that Deputy Governor of BoE says that it's been talked about that the Bank Rate might go down to zero. STOP SAVING go and blow it all.

 

Dave

[teflon2]

My vote is for Ken Dodd at least he knows what the rate for income tax should be. (and he makes jokes about being caught.) John :-D (lol)

[Dave225]

nowtelse2do - 2013-02-26 6:12 PM

 

Just announced that Deputy Governor of BoE says that it's been talked about that the Bank Rate might go down to zero. STOP SAVING go and blow it all.

 

Dave

 

You need to catch up. They are now talking about 'negative interest rates'. You pay the bank to take your money. What next??

[Dave225]

Nice comments and yes, I realise Italy short footed me, but you cannot win them all. However, has anyone any ideas about how to solve our own problems, not the italians?Personally I am getting a bit tired of always worrying about what disaster is around the corner, and knowing there is little I can do about it.

 

I read that the value of the Pound has dropped 67% in 30 years. At that rate it will be zilch before I die. Maybe getting the Euro has some advantages we do not know about. Of course good old Scotland always goes in the opposite direction to normal, and we will know doubt be getting paid in 'Ecks' or whatever currency they come up with. The going rate will be 1 million 'Ecks' to the Pound. Looking back in my dim and distant past it was during the last Sterling crisis somewhere about the 70's that i kinda wished we had just scrapped the Pound and used the Dollar. I know it has its ups and downs as well, but in general it seems to fare better than us.

[RogerC]

Dave225 - 2013-02-26 7:12 PM

nowtelse2do - 2013-02-26 6:12 PMJust announced that Deputy Governor of BoE says that it's been talked about that the Bank Rate might go down to zero. STOP SAVING go and blow it all.Dave

You need to catch up. They are now talking about 'negative interest rates'. You pay the bank to take your money. What next??

 

Looks like we have another 'nutter' in charge of the asylum....so the BoE introduces negative interest.....the banks have to pay the BoE to hold money so who makes up the banks deficit?   I bet you a pound to a pinch of s**t it will be Joe Public.  In the words of a rather 'flowery mouthed' female comedian.....'what a feckin liberty'.

 

Just what we need  now .....an overpaid imported idiot to screw us all over again.....yes I know it was the Deputy Governor who spoke about this but it will need the Governor to give it the go ahead...............let's just hope the Governor isn't that stupid.

 

[Guest peter]

Can't see that happening. Everybody will draw out their cash and put it in a safe at home and save at the same time.

We would certainly consider it.

[Colin Leake]

We had a new kitchen fitted recently and because they were offering free credit for a year we thought we may as well do that and bank the interest. When we went to do it it turned out that we had no credit rating because with the exception of a mortgage we had never borrowed any money. We were presented with a long and complicated form to fill in to get round this. At this point we got bored and given low current interest rates it was not worth the effort so stumped up the cash and had done with it. Well when I say cash we used a caravan club credit card so at least we got two nights club site vouchers out of it.

[CliveH]

nowtelse2do - 2013-02-26 6:12 PM

 

Just announced that Deputy Governor of BoE says that it's been talked about that the Bank Rate might go down to zero. STOP SAVING go and blow it all.

 

Dave

 

It has been effectively zero and below for a while now. The base rate may be 0.5% but with Quantative Easing pumping our printed money of ever lower value the reality is that the overall rate has gone through zero and sits somewhere on the other side.

 

This is the HUGE danger of QE that nobody wants to speak about in the Government Banking system. The debt that we keep borrowing each day is backed up with assets that is effectively printed that afternoon.

 

 

[nowtelse2do]

Dave225 - 2013-02-26 7:12 PM

 

nowtelse2do - 2013-02-26 6:12 PM

 

Just announced that Deputy Governor of BoE says that it's been talked about that the Bank Rate might go down to zero. STOP SAVING go and blow it all.

 

Dave

 

You need to catch up. They are now talking about 'negative interest rates'. You pay the bank to take your money. What next??

 

With not many option around it could over a short term be a good thing. Not for saver's or pensions I admit . But if the banks have to pay the B o E then it would be wise to do what they should have been doing in the first place, lending to business's to kick start the economy, that way they would be making some interest and mortgages should be even cheaper. If it goes through it might be possible to get a mortgage of less than 2% over long term, I stress that I am saying short term.

 

OK, helmet on and waiting for the flak

 

Dave

[CliveH]

Dave225 - 2013-02-26 7:12 PM

 

nowtelse2do - 2013-02-26 6:12 PM

 

Just announced that Deputy Governor of BoE says that it's been talked about that the Bank Rate might go down to zero. STOP SAVING go and blow it all.

 

Dave

 

You need to catch up. They are now talking about 'negative interest rates'. You pay the bank to take your money. What next??

 

Not in the personal market Dave - but this, on the face of it, odd concept does happen at Corporate and Government level. It was not long ago that Germany issued very short dated Bunds at minus 0.05% interest. So for every Euro's worth, when it matured you got back 0.95 Euros.

 

And this sold very well!

 

The reason?

 

Inflation was a great deal higher than 0.05% and the Bundesbank and the ECB were busy printing Euros like there was no tomorrow.

 

And as a sentiment, that last sentence seems to many of us watching the debacle more of a prediction than we would like. 8-)

 

 

[Guest Peter James]

CliveH - 2013-02-26 8:38 PM

Not in the personal market Dave - but this, on the face of it, odd concept does happen at Corporate and Government level. It was not long ago that Germany issued very short dated Bunds at minus 0.05% interest. So for every Euro's worth, when it matured you got back 0.95 Euros.

 

And this sold very well!

 

The reason?

 

Inflation was a great deal higher than 0.05% and the Bundesbank and the ECB were busy printing Euros like there was no tomorrow.

and you are a Financial Adviser 8-)

How could inflation encourage people to buy at negative interest rates??

The reason was because people in places like Greece and Portugal were desperate to get their money into the safety of Germany in case the Euro went tits up and they only got Greek or Portugese currency for their Euros.

 

 

[CliveH]

Peter James - 2013-03-01 6:39 AM

 

CliveH - 2013-02-26 8:38 PM

Not in the personal market Dave - but this, on the face of it, odd concept does happen at Corporate and Government level. It was not long ago that Germany issued very short dated Bunds at minus 0.05% interest. So for every Euro's worth, when it matured you got back 0.95 Euros.

 

And this sold very well!

 

The reason?

 

Inflation was a great deal higher than 0.05% and the Bundesbank and the ECB were busy printing Euros like there was no tomorrow.

and you are a Financial Adviser 8-)

How could inflation encourage people to buy at negative interest rates??

The reason was because people in places like Greece and Portugal were desperate to get their money into the safety of Germany in case the Euro went tits up and they only got Greek or Portugese currency for their Euros.

 

 

That is part of the reason certainly - but not all of it - general uncertainty AND the fact that printing money to provide the security IS inflationary Peter is the main reason.

 

Try reading the FT - I know it is difficult but keep at it and it will pay dividends (that is a metaphor - not a statement) (lol) (lol) (lol) - in particular look up index linked gilts *-)

 

 

 

[Guest Peter James]

CliveH - 2013-03-01 7:59 AM

 

Peter James - 2013-03-01 6:39 AM

 

CliveH - 2013-02-26 8:38 PM

Not in the personal market Dave - but this, on the face of it, odd concept does happen at Corporate and Government level. It was not long ago that Germany issued very short dated Bunds at minus 0.05% interest. So for every Euro's worth, when it matured you got back 0.95 Euros.

 

And this sold very well!

 

The reason?

 

Inflation was a great deal higher than 0.05% and the Bundesbank and the ECB were busy printing Euros like there was no tomorrow.

and you are a Financial Adviser 8-)

How could inflation encourage people to buy at negative interest rates??

The reason was because people in places like Greece and Portugal were desperate to get their money into the safety of Germany in case the Euro went tits up and they only got Greek or Portugese currency for their Euros.

 

 

That is part of the reason certainly - but not all of it - general uncertainty AND the fact that printing money to provide the security IS inflationary Peter is the main reason.

 

Try reading the FT - I know it is difficult but keep at it and it will pay dividends (that is a metaphor - not a statement) (lol) (lol) (lol) - in particular look up index linked gilts *-)

 

 

 

Index linked gilts is another matter.

You did not say Index linked did you?

You said 'for every Euro's worth, when it matured you got back 0.95 Euros.'

I can still see only the one reason to do that.

To get German Euros before your Greek Ones were converted into Drachmas and depreciated by a lot more than 5%

 

[Dave225]

Clive states that negative interest rates will not affect the domestic market and to a degree that is true, but the knock n effects will certainly cause an effect. Interest rates will drop to 0% or even less and then inflation will eat away at any savings at all and so the country will have nothing left to use. Regardless of what anyone says if you remove all savings from the economy you are b..gg...d. Inflation is expected to stay at over 2% or even 3% for the foreseeable future so any form of savings is a waste of time. Then of course it all goes t..s up and there is nothing left. We now have countries chasing each other to devalue so once they all get to the bottom, we have the 1930's all over again.

 

The crazy thing is the Euro wil probably survive as there are enough countries supporting it to make it so, yes there will be pain and lots of it but it will survive. The Pound??????well I am not so sure. For sure the idiots in the B of E have no idea what to do.