Greece In a Downward Spiral
Not my words, but those of Jason Manolopoulos in an article in The Times today.
This paragraph sums up Greece’s progress to get their economy in check.
The technocrats are nominally in charge and the EU elite is applying plenty of pressure on my country to accelerate reform, but they are discovering that the Greek system is almost ungovernable. It took Ireland just a few weeks to make more progress on cutting back their public sector debt than we have seen in two years in Greece.
And there’s a lot more in the same vein.
The article finishes by saying that an unplanned Greek default and return to the drachma would be catastrophic.
I think I may get hold of Jason’s book called Greece’s Odious Debt.
Everybody else should get hold of today’s Times and read the article, as it has a lot of repercussions for us all. For instance, he claims that the IMF is breaking its own rules, by lending to a country whose debt is above 120% of GDP. nd who’s funding the IMF? We are for a start!
Cherie Blair Moves Into Private Health Care
According to The Sunday Times and the Daily Mail, Cherie Blair is part of an attempt to setup a chain of private one-stop health clinics called Mee Healthcae. Read about it in the Daily Mail here.
The domain, meehealthcare.com, seems to have been registered, but the website hasn’t been setup yet.
The registrant appears to be Gail Lese, a business partner of Cherie’s mentioned in both articles.
What would Mark Serwotka and Bob Crow think?
So Why Is A Credit Rating Important?
According to this report, there is anger in the EU about the downgrading of the credit rating of France and eight other EU countries.
So is this important for the countries involved?
Look at it on a personal basis!
If you have a good credit rating, you can borrow money a lot cheaper, than if you have a bad one.
It’s just the same really.
The only difference is that the rating agencies seem to have a large number of individual ratings, which are meaningless to the man on the Dalston omnibus, unless he’s a banker going home from the City.
Incidentally, we’re going to borrow £180 billion this year. if we were downgraded, that might cost us around £2 billion or even more.
So the downgrading of France has really dropped them dans le soupe! And President Sarkozy says we’re in a worse state than France, but then our rating hasn’t been cut and their’s has.
I liked this comment on The Times website under a detailed explanation of the downgrading.
Had it been us losing our AAA I can only imagine the very high level of spite, malice and vituperation which would be hurled our way from France. The French would have been having the time of their life! Yet the British government has not made any formal comment at all and the on-line comments have been remarkably restrained although I have to admit to just a modicum of schadenfreude.
We may not have made any official statement, but I suspect quite a few of the great and good are laughing in their beer tonight.
RBS Is In A Downward Spiral
This morning RBS has announced another 3,500 job losses on top of 2,000 announced, just a few months ago.
I’ve always felt that RBS should have been allowed to go bust. I think now, that some of the employees who are still left, wish it had happened, as at least they’d now know where they stand. I suspect too, if they’d been put out of work at the time, they might have been able to have rebuilt their lives and careers since.
Now they are just in an awful state of limbo.
The country might be in a better state too, if the money used to prop up RBS had been used for more important purposes.
But saving RBS was just a bribe to Scotland, by Britain’s worst-ever Prime Minister, Gordon Brown. As he got voted out in 2010, it didn’t even work!
Barclays Capital’s Skyscraper Index
This has been published every year since 1999 and according to this article by the BBC, it forecasts economic downturns.
HMRC Scams
I am very lucky in that I can afford an accountant to do my tax returns, so I know that if I get an e-mail from HMRC, it’s a scam.
I’ve had three in the last few days.
This page on the HMRC web site gives details on how to recognise them.
i forward all mine to phishing@hmrc.gsi.gov.uk. This is indicated on this page.
One of the interesting things about these e-mails, is that they were all to an old e-mail address that I don’t use now. I do monitor it, in case one of my old friends hasn’t got my new one.
For financial transactions, I always use a particular e-mail that is not used elsewhere. That means that if I get an e-mail to that address, I check it thoroughly and if say it’s selling me a holiday, I then know that my bank or other financial institution might have been compromised.
Is The Economy Getting Better?
I’m not sure, but there have been some good stories today.
On the BBC this morning there was a piece about how small exporters were doing well.
I know it’s a Japanese car company, but this article on the BBC about Nissan can’t be seen as anything but positive. It’s also in an area of high unemployment, where they need every job they can get.
John Lewis also reported a 6.2% like-for-like increase in sales during the Christmas period. As the company have branches in most parts of the UK, it can’t be anything other than a good thing. Next too is on target, but other retailers aren’t doing so well. But that isn’t necessarily a bad thing, as customers are picking up a few bargains. I bought a new pair of boots from Blacks at a very silly price.
Over the last few weeks, I’ve been to several places on the trains, like Reading, Blackfriars, Cambridge and others, where the fruits of investment seem to be coming through. You can argue, that these were planned by the previous government, but it does seem that progress has speeded up in the last year or so. I will say that some of the developments in the London area, seem to have benefited from better engineering and project management, with the professionals being given targets by the politicians, who then have not interfered at the micro-management level. We could probably do even better with Network Rail, if they were controlled in the same way as Transport for London.
And lastly today, this piece about the pound has come in, showing it has risen against a failing euro. That may not be a totally good thing for exporters, but it shows that the world thinks our economy is on the mend.
David Would Not Be Amused
My friend, David, finished his career as the Business banking Director of Lloyds Bank.
He was a proper banker, although he was a bit of a rogue. But one on the side of the bank and his clients!
So when I read in the Telegraph, about the dreadful mess Lloyds is now in, after the takeover of HBOS, I wonder what he would have thought of the fiasco.
I know some of the things he did to sort out serious problems and I know he would not have been amused. I suspect that Prudence would not be on his Christmas card list.
The Zopa-Go-Round
The title of this post, nods a little towards Rossminster, which was credited with a rather dubious tax avoidance scheme, that was nicknamed the Money-Go-Round, by the press. The two companies Zopa and Rossminster operate in different fields and I suspect they have really nothing in common. But I like the title.
Now, why do I call it the Zopa-Go-Round?
Usually saving accounts fall into two broad categories.
- The account gives you instance access and an obscenely-low interest rate.
- Your money is locked in for a year or maybe longer, but you get a slightly better rate. But getting your money out early is not only extremely difficult, but it comes at the cost of various financial penalties.
Zopa is something different and very much between the two.
As 2011 has just finished, I now know that I earned just under six percent before tax over the year and that includes all bad debts and charges.
Not a bad rate considering that you have no restrictions on withdrawing money, if it is in your account. So if you have just been paid some interest or some capital has been returned, you can transfer it to your bank account without charge, if that is the place you need it. There is also no charge for putting more money in.
So one of the great things about a Zopa account is that it can be used like a higher interest deposit account without the restrictions and you can move you money in and out freely, as it suits you.
If you take my circumstances, it illustrates how a Zopa account can be used.
When I moved here, I was unable to sell my stud in Suffolk, so I am living on my savings in the Zopa account, plus a small drawdown from my pension. So each month, instead of re-investing all of the money that I earn from Zopa in new lending, I retrieve enough to pay my bills and expenses. If I have any surplus at the end of the month in my current account, I transfer this money back into Zopa.
In my case, much of the capital I have put in, is still lent out to borrowers, but is of course paying regular interest. I could if required sell some of these loans on, but as most are up-to-date, I prefer to keep the borrowers I know, rather than new ones I don’t.
So the money goes around and around and sometimes I choose that it comes out my way.
Hence Zopa-Go-Round!
You can think of many people, who might want this form of flexibility.
I don’t think that my situation is untypical, as often there comes a time in one’s life, where you downsize your house or your possessions.
C and I had always intended to sell up and move to London, although we’d never put a date on it. but we had window shopped for a house in Hampstead. Unfortunately, her premature death put an end to all those dreams. A lot of our possessions would probably have been sold and we wouldn’t have really needed to have three good cars and a horse box.
So just like many, on retirement, we would have a few thousand pounds to either spend or save. Hopefully, the sale of the stud, would have bought a desirable house, where we wanted it.
As I have found, Zopa has been an ideal place to put that money and draw it out as and when I need it.
Zopa though, isn’t the best place to put money, that you might need in a few months, unless you are prepared to use their system to sell good loans to other people. So it wouldn’t be the best place to save your money to pay the taxman, unless of course you save more than you need or do very detailed calculations.
One thing to remember is that if say you put £10,000 into Zopa and lend it for three years at an average rate of five percent, you’ll get just over £300 a month back. I’m assuming that you don’t adjust the interest rates you charge to get the best return and that you don’t reinvest the money returned.
The Money-Go-Round
I must admit that I’ve borrowed this title from the nickname of a rather dubious tax-saving scheme thought up in the 1980s by a company called Rossminster Group. Little is found on the Internet about this company, although there is a bit in the obituary of one of Mrs. Thatcher’s ministers, Peter Rees. I became aware of Rossminster through my bank manager and friend, David, who was also bank manager to the Group. He explained what they did as moving money between large number of onshore and offshore accounts, so that it was difficult to say, where it was for taxation purposes. You have to remember that in those days of the 1970s, tax rates were very high and moving money to say the United States to start a subsidiary there was so impossible it was virtually banned. The latter is one of the main reasons, why so few small, but very profitable private companies were successful before the 1980s and 1990s. Any success, especially in a technological field was to be envied and not nurtured, especially if it was in competition with one of the government’s pet projects. And if it was successful, it had to be taxed to the hilt.
My association with Rossminster was rather limited, but I was asked to quote for a computer system to manage all those accounts. I didn’t do much, as I had bigger fish to fry. But David did a lot of business with Rossminster, as all those transfers meant a lot of bank charges in those days. In the end, as he once said he had a good run with the company, but eventually someone offered Rossminster a better deal.
The Anonymous Widower 