The Sunday Papers
The ongoing global financial crisis gives the media plenty of bones to chew on. My favourite recent website headline was “Footsie stumbles on stuttering Thursday”, I scrolled nervously down the page to see that the FTSE 100 had closed up 32 points !
OK, I get it now, even good news is bad news, because that’s what the media is selling right now. At least when not giving equal prominence to the antics of an (allegedly) drunken ex Atomic Kitten. (Now if there really was a real Atomic Kitten that would be news !).
The financial pages tell us that cash remains king (wasn’t it always ?). Individuals and companies that have cash on their books are in a more defensive position and may also be better placed to profit from any future recovery. Really, who would have thought ?
The calmer voices declare that we should have faith that, in the long run, companies will earn money and distribute their profits. Over the long term they will earn shareholders more than they would earn in a building society. Seems sensible enough, if you can afford the wait.
A few more views from the financial pages:
Some experts insist that fund managers investing in selected stocks and shares on today's prices will snap up long-term bargains that will pay off over the next 10 or 20 years. Seems sensible enough, if you can afford the wait.
According to the Financial Times Money section, that strategy would not appear to apply to bank shares. It says shareholders are being advised to not participate in the upcoming wave of share issues from Royal Bank of Scotland, Lloyds TSB and HBOS because the government's partial nationalisation limits any potential upside from increasing the size of their stakes. On the other hand I wouldn’t mind betting that banks find a way to make money again, and lots of it, in the not too distant future.
Both FT Money and the Mail on Sunday report that the banks are dragging their heels when it comes to cutting interest rates after the half per cent reduction by the Bank of England. Blimey, they’ve started already ! (See above).
In the Sunday Times consumers are being urged to take steps to protect themselves from falling property prices, increased bills and the prospect of job losses. Insight of the highest order.
The Times on Saturday gave prominence to the fact that 200,000 homebuyers who bought a 125% mortgage from Northern Rock and are now trapped with punishing interest rates of 7.2% - because nobody else will take on the debt. Sorry ? Northern Rock lent 125% of property values to 200,000 investors ! Who thought that was good idea and can I have some of what they were on !
The Independent on Sunday says rising rates mean that Northern Rock repossessions are rising. They advise those affected not to "roll with Rock's punches" but to complain loudly because "what is happening to you isn't fair - do not slip quietly into the night". No, it isn’t fair but then, on the other side of the coin, getting someone to lend you £125,000 on an asset worth £100,000 is hardly very fair either !
Given less prominence is that fact that Northern Rock have already paid back almost half the Government money used to bail it out. Good News for the taxpayers I would have thought, and positive news for the recent extended bank bailout also. Let’s stick it on page 49 then.
As for the “buy-to-letters”, investing in property is now seen as a road to riches only for a minority (say, the Duke of Westminster) - and is now a headache for the rest. Sympathy seems in short supply.
The weekend financial pages beckon once more, or should we just stick to the Racing Post ?
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