Value…….Financial Worth


Welcome to February News and Market Update

According to the Chinese Zodiac, the Year of 2009 is the Year of the Earth Ox whose sign symbolises prosperity through fortitude and hard work, stability and slow but steady expansion. The Ox personality is methodical and sensible. Used in farming to plough fields, Ox further symbolise tenacity, thoroughness, perseverance and harvests. The Ox character knows it will succeed through hard work and sustained efforts, and does not believe in get-rich-quick schemes. This would seem an appropriate but ironic symbol in this year of a new American President and his American Dream.

Historically it is difficult to recall a moment when a president has arrived with such huge expectations and elevated to Super Hero status even before their inauguration. Wanting to find heroes amongst the confusion of current financial villains would seem reasonable and even our own Prime Minister has been forced to take drastic action after discovering that a number of Cabinet members, including the home secretary, are really aliens in disguise in Marvel Comic’s Captain Britain and MI13 whilst Barack Obama makes an appearance in a bonus issue of the “Spider-Man” comic book Jan. 14. The Chinese New Year does not express superhuman values, yet, we are at a time when we face awkward economic choices and such values can take enormous strength to manifest.

The underwriting of so much of our Banking sector could have serious potential problems, equally, there are risks in doing nothing. The United States of Obama has offered a much needed spark that has been missing of late . What we all want to happen and what will happen still seems an unknown quantity and open to flights of fantasy; although, if we’re going into the realms of comic book hero and villains we should be aware that there is a burly strongman possessed of superhuman strength named Ox who is a member of the Enforcers. His body was swapped with another villain and he died as one body, and exploded in battle in his other body; after coming to life again he returned to his villainess gang as a lackey . Which at the present time doesn’t sound too unreal.

Kung Hei Fat Choy!


Market Update

Recently, a government Minister got herself into hot water for mentioning some green shoots of recovery in the economy, but, even a sympathetic assessment would struggle to find any significant shoots of recovery, especially if evidenced by the media.

The Banking sector seems to stumble from one crisis to the next. The problem is that if the banking sector is unwilling to lend, all business will suffer due to the knock-on effect. Example – Birmingham Midshires, part of HBOS, now owned by Lloyds Banking Group, issued a statement on 30 January, that with immediate effect, they were withdrawing from two distinct areas of lending. “While these specialist products represent a modest portion of the Bank’s overall lending, changing in line with the market ensures the bank continues to write a prudent and proportionate level of new business overall”. Fair reason, however, does “market” mean their competitors…..or the consumer? A game of Follow-the-Leader will not enable a recovery, whereas providing funding and products to meet the demand surely will.

Sharp falls in consumer spending and declines in investment potentially make recessions very deep. It would be unnecessary for small firms go out of business just because they can’t get access to short term lending. The Government proposals have sound intent but if banks perceive a credit application is too risky, they will not lend, despite Government guarantees. Banks are under pressure to build their capital base and keep control over arrears and bad credit so the path of least resistance is often to say “No”. Is there any wonder as to why banking reputation is probably at an all-time low.

And finally…….In tribute to Darwin as it is 200 years since his birth, we quote his Theory of Natural Selection – Are we seeing this being applied to our financial world? “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is the most adaptable to change”. 2009 is going to be quite an evolutionary year.