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Insurance Blog – keeping up the crusade against rip off banks that we are all paying for now in higher taxes and soon to be higher interest rates!

Someone should tell Cameron that he could get rid of the so called deficit if he sold the Banks that this Country owns!
However it suits his political purposes to line the pockets of his banking prep school chummies with Government money is the form of treasury bonds………

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1. New Year Recession Fears
2. UK Unemployment hits record heights
3. UK Government CON DEM The FSA Insurance Regulator

If you haven’t taken out unemployment insurance yet, there may still be a little time, although given latest figures you will have to move as fast as the postman with the redundancy notices, as UK Unemployment hit record heights.

Here’s the facts of the state of Britains Economy

The employment rate for those aged from 16 to 64 for the three months to November 2010 was 70.4 per cent, down 0.3 on the quarter.

The number of people in employment aged 16 and over fell by 69,000 on the quarter to reach 29.09 million.

The last time there were larger quarterly falls in the employment level and rate was in the three months to August 2009.

The number of people working full-time fell by 37,000 on the quarter to reach 21.16 million and the number of people working part-time fell by 32,000 to reach 7.93 million.

Part Time Working at all time high!

The number of employees and self-employed people who were working part-time because they could not find a full-time job increased by 26,000 on the quarter to reach 1.16 million, the highest figure since comparable records began in 1992.

The unemployment rate for the three months to November 2010 was 7.9 per cent, up 0.2 on the quarter.

The total number of unemployed people increased by 49,000 over the quarter to reach 2.50 million.

Male unemployment increased by 43,000 on the quarter to reach 1.48 million and female unemployment increased by 6,000 on the quarter to reach 1.02 million.

Youth Unemployment at record levels!

The unemployment rate for those aged from 16 to 24 increased by 1.0 on the quarter to reach 20.3 per cent, the highest figure since comparable records began in 1992.

The number of unemployed 16 to 24 year olds increased by 32,000 on the quarter to reach 951,000, the highest figure since comparable records began in 1992.

Redundancies on steady increase.
There were 157,000 redundancies in the three months to November 2010, up 14,000 on the quarter.

The number of people claiming Jobseeker’s Allowance (the claimant count) fell by 4,100 between November and December 2010 to reach 1.46 million, although the number of people claiming for up to six months increased by 7,200 to reach 960,300.

The total number of male claimants fell by 6,600 on the month to reach 1.02 million but the number of female claimants increased by 2,500 to reach 439,300.

The inactivity rate for those aged from 16 to 64 for the three months to November 2010 was 23.4 per cent, up 0.2 on the quarter.

The number of economically inactive people aged from 16 to 64 increased by 89,000 over the quarter to reach 9.37 million.

Early Retirement at Record levels !

The number of people who were economically inactive because they had taken retirement before reaching the age of sixty-five increased by 39,000 on the quarter to reach 1.56 million, the highest figure since comparable records began in 1993.

Wages Stay the Same!
The earnings annual growth rate for total pay (including bonuses) was 2.1 per cent for the three months to November 2010, unchanged from the three months to October.

The earnings annual growth rate for regular pay (excluding bonuses) was 2.3 per cent for the three months to November 2010, unchanged from the three months to October.

The Oulook.

Very Bleak!  The current situation is comparable to the early Thatcher years and the axe has yet to fall on 600,000 public sector workers. The knock on effects to the high street of this contraction in money flow will damage small to medium sized businesses as demand inevitably drops. Further unemployment within the already contracted private sector is inevitable as orders dry up and the unemployemt queues will increase.

All sectors of the economy will suffer from this so called ‘double dip recession’ particularly high end products and high street businesses will suffer. Insurance will not have an easy time either! Already we are seeing once profitable sectors like shop insurance virtually disappear as a viable large market as the number of shops rapidly decreases. When was the last time you saw a high street travel agents or hardware store? The pattern is being repeated across all sectors of the UK Commercial Insurance market.

Coupled with this we are under immense inflationary pressures from energy prices and global food markets which inevitable, although foolishly, will lead to the Bank of England be foreced to politically raise Interest rates. After all, there are no more weapons in the economic arsenal.

Darwinian ConDemNation.

The future is blue and orange and civil commotion – If you are not a merchant banker, are you fit enough to survive?

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If all the Economic pundits are to be believed, you would think that the economy was rosy! No chance of a the dreaded double dip recession now ……..

Hmm, what about the 600,000 job losses in the public sector that still have to be made this spring and will have to be paid for out of a shrinking GDP, rising wage demands from the private sector, fuels costs going through the roof and VAT at it’s highest ever 20%!

However you look at the current situation the immediate future does not look too bright!

Amongst all the coalition division and noise about quangos, cuts, student fees, interest rates and inflation, the UK Government has this week raised Insurance premium tax to 6%. With the cost of Insurance already at record highs as companies try to build up lost claims reserves, maybe they thought we’d not notice more indirect taxation!

The future doesn’t look too orange for Corporal Clegg and his Liberal lackies either who are currently enjoying their lowest popularity level for 30 years.

Meanwhile David Cameron is making noises about the housing sector while failing to enforce the necessary lending from the banks that would inject some momentum into a recovery, he has spoken out about plans to clamp down even further on mortgages in the name of responsible lending.

Tory Housing minister Grant Shapps has said that under the new  FSA’s Mortgage Market Review (MMR) proposals, he himself would have failed to get a mortgage.

Now Cameron has said that lenders have already gone too far in preventing ‘good risk’ buyers from getting mortgages.

The Prime Minister warned that the housing market was ‘stuck’ and would not improve until banks and building societies got back to ‘respectable’ lending.  Cameron said the reaction to the crash had now gone too far.

He said: “The pendulum has now swung too far the other way. If you are a single person, you are earning a decent salary, you go to the bank or building society, you are actually quite a good risk, they won’t give you 80% of the value, they won’t give you four times your salary.

“So we are working with them to try and say, of course we don’t want to see the unsustainable boom of the past, but we’ve got to get proper lending, respectable lending, going again.”

Cameron made it clear that he did not want to see a return to 120% mortgages and loans based on seven or eight times earnings.

He said: “We don’t want another housing boom where prices rise out of people’s reach, but the housing market is a key part of the economy. You need a housing market where people are able to sell and people are able to buy.”

Yeah and one where banks lend money! It wasn’t irresponsible lending to UK homeowners that caused the current recession, if this was the case then repossessions would not be at the levels they are! Moreover bad banking and buying toxic debt from the USA were the root cause. With the same people in control, these banks must be forced to lend to both homeowners and businesses alike if we are to see any real recovery in the housing and employment markets in the UK in 2011.

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The CPI fell by 0.2 per cent between June and July this year compared with no change over the same period a year ago. These 1-month changes are both within the normal range for a June to July period; since 1996, the monthly movement between these two months has varied between a fall of 0.8 per cent and an increase of 0.1 per cent.

Some myopic Internet financial analysts who have been arguing for a base rate increase for over a year are still crying foul……

“Inflation is a stealthy enemy for savers and when rates are low, it quietly erodes the spending power of a hard earned nest egg. Savers may have had a short respite from a marginal fall in inflation, but savings rates have hit a plateau and may be there for a while.

“The average one year fixed bond rate has fallen from 3.07% in January to only 2.54% today and the average five year fixed bond rate has fallen from 4.56% to 4.08% for the same period.

“The average instant access savings rate is still at rock bottom at a rate of only 0.74%. The only trigger for any improvement in savings rates may be a surprise increase in the Base rate by the Bank of England, but this is most likely not to happen soon.”

Stated a recent industry commentator,  who Insurance Blog thinks is living in cloud cuckoo land and who obviously has been sitting on his dwindling nest egg of savings, and foolishly thinks he will survive a double dip recession caused by an increase in Interest Rates!

However the Bank of England sensibly have other ideas, and quite rightly given the downward curve of inflationary pressures have decided to leave things as they are!

The Bank of England’s Monetary Policy Committee voted two weeks ago to maintain the official Bank Rate paid on commercial bank reserves at 0.5% and their decision now looks justified with inflation self balancing. The recent inflation has been artificial with rises in the RPI in areas such as fuel and power and food, although where there are alternative suppliers the markets have had to adjust to the temptation of putting prices up to pay for their past mistakes, and the UK Insurance Market is a typical example of this.

The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion. The Committee’s latest inflation and output projections will appear in the Inflation Report to published on Wednesday 11 August.

The minutes of the Bank’s meeting will be published at 9.30am tomorrow on Wednesday 18 August.

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In a speech to those lovable Bankers and Merchants (Merchant Bankers having a Ruby to you and me Cockneys!) at the annual Lord Mayor of London’s dinner at the Mansion House last night,  Champagne swaffing hatchet man George Osborne announced that the FSA will cease to exist in it’s current form by 2012.

Osborne said,

“What we are proposing is a new system of regulation that learns the lessons of the greatest banking crisis in our lifetime. I can confirm that the Government will abolish the tripartite regime, and the Financial Services Authority will cease to exist in its current form.

“We will create a new prudential regulator, which will operate as a subsidiary of the Bank of England. It will carry out the prudential regulation of financial firms, including banks, investment banks, building societies and insurance companies.”

The news will probably be met with cries of  “hurrah” from Insurance Brokers up and down the Country, who have for five years been complaining about the unfair business practices demanded by the bureaucrats and exorbitant costs of Fees.

Without doubt, The UK Insurance market has shrunk since the FSA came to power due partly to to restrictions and barriers to entry to the market, imposed by the FSA.

What prudential authority is created to replace it remains to be seen. ……

It’s all a little deja vu and while we resent paying our FSA fees as much as the next person involved in UK Insurance, one cannot but think, haven’t we been here before? and before…….

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So what are the choices?
Hmm – A pompous inexperienced public school prat of the Harry Enfield mold with zero social conscience or a one eyed Scot with questionable religious motives whose already been given the chance to ‘change’ things and failed miserably in some quarters!

Yep, I can hear you all shouting that there are other choices, but my yellow friends you are kidding yourselves. I want you to all return to your constituencies and prepare not to govern!

This is a straight Two horse race like it or not – although it may, like the pathetic Lib/Lab pact of the Seventies not decide the outcome at the first hurdle.
In fact with all these Tory created Strikes and Industrial actions leading up to the election I keep getting flashbacks that I’m in 1979…. God help us all….

So today unpolitical but always controversial Insurance Blogger, nails his colours firmly to the mast and asks you the British people…..

NOT TO VOTE FOR CHANGE !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Why?

Because in case you haven’t noticed the UK Economy is on the brink of slipping back into recession.

The Interest Rates need to be kept as close to zero for at least another five years if the Japanese Economy recovery experience of the Nineties is to be followed.

A Conservative Government would naturally interfere with Interest Rates and the Bank of England monetary policies.
The Conservative party simply cannot be trusted not to inflate the rates to protect their own and their core voters savings!
Look what happened to the UK the last time they were allowed to Govern!
Lest we forget that quickly?

SELLING ENGLAND BY THE POUND

The Bank of England who along with the major European Insurance Companies, are currently doing a mighty fine job of managing UK Debt.

Insurance Companies can’t buy enough UK Government debt in the shape of gilts!

The last offering of UK debt this month was 3 times oversubscribed as the Insurance Illuminati rushed to defend Britain!

It looks like the UK Government are managing the debt pretty soundly!

Truth is, where else do you put your money? Greece? The Euro??

So if Insurance Companies (who BTW own everything including the banks) have faith in the Status Quo – - then So do I!

A vote for Cuckoo Cameron would be utter Madness. Cuckoo BTW because he hasn’t got any policies of his own!

Answers, objections and biased opinions in the comment box below please!

X

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Mass Devaluation.

Cheap Holidays in the Sun!

Suddenly Europe will not be worth half as much as it was!

Worse still for the Euro Bankers is the fact that the amount of Greek debt appears unquantifiable due to some smart bookeeping by the previous conservative government who were incumbent for most of the credit crunch and the subsequent recession.

This is not going to impress those financial entrepreneurial illuminati who have their money tied up in the Euro and itchy fingers on the sale button!

Europe is supposed to be growing itself out of recession faster than the UK or USA.
Some say that this is a mirage and was a temporary bounce due to the Eurobankers encouraging consumer spending coupled with the christmas seasonal factor.
The overall trends appear to be down!

If the Euro collapses on the money markets, all participants will pay the price of the Greek tradegy.

I can already hear the British Euroskeptics say ‘I Told You So!’ as the Irish economy collapses.

So what will it mean for the UK and in particular the UK Insurance Industry?

Well Insurance Blogger thinks it could be a very good thing for the UK financial services industries as a whole.

After all when the Money markets sense a tsunami coming; the smart money always runs to the safest shores!

Of course the right wing euro-sceptics will claim victory in the advent of a Cameron led election victory; but the real praise must go to Gordon Brown and Barack Obama for not following the Euro pump priming recovery route.

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So Where’s the money gone? And what is Quantitive Easing anyway

It turns out that QE as the press now like to call it, is radically different from the Pump Priming developed by FDR in 1930 to get the States out of the Great Depression!

And this explains why you and me, the small and medium sized enterprise and it’s workers are not getting any credit or money!

Truth of the matter is QE is designed to shore up the internal arteries of the international banking system and not leak any money out. To leak money by the creation of credit to the general public and increasing the money supply would introduce both inflationary and currency exchange pressures that would be far from welcome in the current economic climate.
So here is how QE works – The UK Government decides to make up some more cash to shore up the banking system. It creates £25 billion pound worth of bonds that it says you and me will repay! It then instructs the Bank of England which sells them to Banks. They make a nice profit by selling them onto – have you guessed it yet?

Yes 95% of the guilts and bonds go to INSURANCE COMPANIES! Very little money is being released to the public system.

It just means that today the Government decided that You, Me and Everybody! – in the UK, now owes another £25 billion of made up money plus the made up Interest, to Aviva et al.

So QE cannot have any beneficial effects to the likes of you and me, Joe Public, except the potential ability to stave off a second wave of recession by keeping the banks ticking over!

Pump Priming conversely is a ‘lets spend our way out the crap’ solution which would only work in the UK if the money is diverted into the public sector.

Why just the public sector?
Because only large national institutions have enough employees to spread the money to all parts of the system before it returns to the investment banks.

Like all system solutions they have to be top down and bottom up!

The recession will not come to an end in this country until we start pumping it into the bottom!

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This increase applies from midnight Monday 6th October 2008.

Customers with joint accounts will be eligible to claim up to £100,000.

Whether this will be enough to stop funds flowing overseas remains to be seen.
Both Ireland and Greece have unilaterally declared to protect all depositers funds.
This move has caused great uncertainty within EU markets and at the weekend German Chanceller Angela Merck suggestede that German banks may take the same action.

We await further moves from Gordon Brown and Mr A Darling.
The situation could be worsened further this week as the Bank of England are erxpected to cut Interest Rates by up to 1% to deal with the ongoing banking and insurance credit crunch crisis.

No related posts.

The latest Credit Conditions Report from the Bank of England has indicated banks and building societies are likely to further reduce lending activity over the next quarter.

Noting lenders had reduced the availability of secured credit to households in the three months to mid-September by more than they had anticipated in the Q2 survey, due in part to declining house prices and the economic outlook, it added a further decline was now expected.

A spokesperson for UK Loans said “Confidence in the market is the catalyst for increasing the circular flow of capital. The downward trend in mortgage and public lending reflects the lack of liquidity flow between the lenders. We dont expect any deceleration in the downward trends until after the US general election, when confidence may enjoy a dead cat bounch.
Whether this honeymoon period in the US will be enough to halt the downward spiral in the UK remains doubtful, given that the UK growth figures were based soley on overvalued housing stock and a general election victory for whoever in the UK will not enjoy the honeymoon period that the end of the Bush administration will inevitably bring.”

With artificial inflation the bubble will always burst.

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