Daily Archive: February 11, 2013


Mervyn King’s funding for lending scheme has revived the housing market | Larry Elliott

There is more money for mortgages, it is being made available at cheaper rates and the number of transactions is up

Sir Mervyn King has revived the housing market. It took a couple of months for the Bank of England’s funding for lending scheme to have an impact but since the autumn the trend has been clear.

There is more money for mortgages and it is being made available by lenders at cheaper rates.

When the price of something goes down, demand tends to go up and Tuesday’s monthly report from the RICS – the trade body for estate agents – shows the number of transactions increased for the fourth successive month in January.

Threadneedle Street’s data on mortgage rates, released on Monday, provides evidence of hefty falls in the cost of borrowing.

The average two-year fixed mortgage with a 90% loan to value ratio fell from 5.33% in December 2012 to 4.73% in January 2013 – the biggest one month drop since 1996.

Interest rates for this particular variety of home loan are getting on for 1.5 percentage points lower than they were last spring and the lowest they have been since the heady days before the financial crisis.

According to Michael Saunders, UK economist at Citigroup, homebuyers who need to borrow only 75% of the value of a property can get a five-year fixed mortgage for 3.79% – the lowest since records began in 1995.

So is the market poised for takeoff, then? Probably not. For a start, not all mortgage rates are coming down; variable rate home loans are more expensive than they were a year ago.

Secondly, as the RICS points out, in London and the south-east a combination of high asking prices and the hefty deposits demanded by lenders is making it tough for first-time buyers to get a foot on the ladder.

Finally, higher than expected inflation is eroding consumers’ real incomes, generating a feelbad rather than feelgood factor.

All that suggests a gentle recovery in activity rather than a raging boom, mildly helpful to growth but not really the sort of economic rebalancing ministers were hoping for.

That said, after two barren years the government will take whatever’s on offer.

EconomicsHousing marketReal estatePropertyMortgagesLarry Elliottguardian.co.uk


How A Cushy Job Can Be Your Ticket To Financial Freedom

This is a guest post from Steve who runs the popular blog MyWifeQuitHerJob.com where he writes about building wealth and entrepreneurship with an online store.

cushy desk jobAre you bored with your job?

Are you tired of what you do on a day to day basis?

The fact is that there are many people who aren’t 100% happy with their day jobs and would like to transition to something new.

Picture this scenario. You’ve been working at XYZ firm for 10 years now. You know the ins and outs of your job and you do it very well. In fact, you are so efficient at what you do that you can do your job in your sleep.

But the problem is that you don’t feel challenged. You feel like you are underutilized. You know you are capable of much more but you either feel too lazy, too comfortable or too scared to do anything about it.

Is it time to change jobs?

Now if you were to talk to any personal development guru or career advisor, they would tell you to quit your job and do something else to keep your mind challenged. Conventional wisdom says that if you feel stagnant or bored with anything that you do, you should make a change.

For example, a close of friend of mine changes jobs every 2 to 4 years to keep his mind fresh. In fact, often times he’ll even quit earlier if he feels that he is stagnating in any way.

Symptoms of stagnation include being bored at work, having to deal with too much office politics or the lack of learning. At his last company, he had this really cush 9 to 5 job where he was making decent money and had his weekends totally free.

But he ended up leaving because he felt that he had learned what he needed to know already. And if he stayed, he might have gotten pigeon-holed into doing the same thing over and over for years on end.

A Different Perspective On My Friend’s Situation

Now my friend’s actions sound completely logical. After all, why stay at a job if you are no longer learning? Why continue on if the job is no longer fun or if you are no longer growing? Unfortunately, the reality is that we all have our reasons for staying put at where we are.

What if your current job pays very well and you’d have to take a pay cut to go somewhere else? What if you have mouths to feed and a family to support and your current job is much more stable?

After all, if your current job pays decently well and you are so good at your job that you have a decent amount of free time to relax, why not put that free time towards your own financial independence?

If you switch jobs, you’ll have to work even harder at your new company in order to establish yourself. Why devote that extra time for the benefit of someone else when you can spend it on your own endeavors?

If you stop and think about it, the cycle of getting bored, switching jobs, working harder for someone else, becoming complacent and switching jobs again is an endless cycle because you are placing the control in someone else’s hands.

Challenge Yourself In A Different Way

So instead of challenging yourself with a new job or wasting your mind away at your current one, why not start a small business on the side? If you are already a master at what you do and you have extra free time, why not give entrepreneurship a shot?

In fact, having a cushy job is the best time to start a side business because there is very little monetary risk. Worse case scenario? If your small business idea doesn’t pan out, you still have a steady income to rely on.

Realistically speaking, you can easily start a small business on the side while still working at your cushy job by leveraging computers and the Internet.

trust yourself

By having a computer server run your business 24 hours a day, 7 days a week, you can still hold a day job and let a computer do most of the work for you while you gradually build up your revenues.

The important thing to realize here is that by taking a step towards being your own boss, you are giving yourself a chance to be financially independent on your own terms.

Different Online Business Models

Of course, starting an online business or any business for that matter is not always easy, but one of the best things about the Internet is that the start up costs are so low. In addition, there are a variety of business models to choose from.

My Story
For example, when my wife became pregnant with our first child, she wanted to quit her job in order to be a stay at home mom. So my wife and I decided to start an store selling ladies handkerchiefs and linen napkins online.

At the time, we both worked full time jobs which were our only sources of income and we invested about $630 dollars to get the ball rolling. While our initial intention was to make some extra money on the side, things took off and we ended up making over 100K in profit during our first year of business.

Today, our business continues to grow in the double and triple digits and my wife has quit her job.

Jeff Rose’s Story
Now let’s say you aren’t willing to risk $630 for your business. Our very own Jeff Rose started his blog Good Financial Cents for probably under 10 bucks. But just look at his results today. He now pulls in 5 figures per month in earnings from his various web properties.

How does he earn his money? By producing great content and establishing himself as an authority in the financial sector, he has attracted quite an audience, an audience that listens to his recommendations and advice.

As a result when Jeff makes a product recommendation, people listen and he makes a small commission from the sale. Furthermore, his blog has also become an efficient sales funnel for his existing profession as a certified financial planner.

Mandy Rose’s Story
Another great example is with Jeff’s wife, Mandy Rose. Mandy runs the popular blog House Of Rose where she displays her talents for home decor and fashion. I must admit, I have a love hate relationship with her blog.

On one hand, she does a great job with her site and she has a beautiful house. But on the other hand, Mandy’s blog makes my wife want to redecorate and remodel our house which is costing me lots of money. :)

Anyways in a relatively short period of time, Mandy’s blog has already reached a 4 figure income per month through advertising revenue and her traffic even rivals that of GoodFinancialCents.com even though Jeff’s blog has been around much longer.

Note from Jeff:  I don’t mention much on this blog, but if you want to check out how my wife and I are making money online you can check out our joint blog Dollars and Roses.

What’s My Point?

If you get anything out of this post, it’s that you should always be looking to expand your horizons and to challenge yourself mentally. But you shouldn’t waste that brain power on looking for your next job. After all, your next job is never going to make you life changing money.

Your next job is never going to provide you with the freedom to challenge yourself in the long run.

Starting a business online can be done for under 10 bucks so there’s no reason not to give things a shot. It doesn’t matter whether you want to start an online store, a blog or a niche affiliate site website. By taking action, you are buying yourself a ticket towards financial freedom.

Bio: Steve runs the popular blog MyWifeQuitHerJob.com where he writes about building wealth and entrepreneurship with an online store.

photo credit: magiccyril via photopin cc


Greece is facing a humanitarian crisis | Alex Politaki

The EU’s own poverty standards show that Greece is in crisis. But member states won’t admit their ‘bailout’ was to blame

European societies typically assume that humanitarian crises only take place in the aftermath of natural disasters, epidemics, wars or civil conflicts.That such a crisis could happen in a European country, especially one that is a member of the European Union, seems out of the question to many of us.

And yet a number of experts would maintain that Greece is currently in the centre of a humanitarian crisis. The head of Médecins du Monde, Nikitas Kanakis, the largest and most prominent NGO in Greece, was among the first to declare it openly. The port area of Perama, near Athens, in particular, is in the midst of a humanitarian disaster. The Medical Society of Athens, the largest professional body of its kind, has even sent a formal letter to the UN asking for intervention.

If this humanitarian crisis has so far been little talked about, there are political reasons why. By acknowledging the severity of the situation, the Greek government and the EU would also have admitted that the current state of affairs has been brought about by the so-called economic “rescue” of Greece. So the authorities have chosen to keep quiet.

It is true that there is no general agreement on what constitutes a humanitarian crisis. But the definition used by those with experience in the field is practical and straightforward. A humanitarian crisis is usually marked by rising poverty, heightened inequality in education and social protection, and lack of access to social welfare services. Particularly important indicators are loss of access to primary health services, medical examinations, hospitalisation and medication. In other words: when you see a crisis, you will not mistake it for anything else.

Greece never imagined that it could face a humanitarian crisis.


China overtakes US in world trade

Combined total for imports and exports of Chinese goods hits $3.87tn, edging past the US for the first time

China has become the world’s biggest trading nation in goods, ending ending the post-war dominance of the US, according to official figures.

China’s customs administration said the combined total for imports and exports in Chinese goods reached $3.87tn (£2.4tn) in 2012, edging past the $3.82tn trade in goods registed by the US commerce department.

The landmark total for Chinese trade indicates the extent of Beijing’s dependence on the rest of the world to generate jobs and income compared with a US economy that remains twice the size, and more self-contained. The US economy is worth $15tn compared with the $7.3tn Chinese economy.

The US not only has a large internal market for goods, but also dominates the trade in services. US total trade amounted to $4.93tn in 2012, according to the US Bureau of Economic Analysis (BEA) with a surplus of $195.3bn.

But like most western nations, the US deficit in the trade of goods weighs heavily and is only expected to get larger.

The deficit in goods was more than $700bn compared with China’s 2012 trade surplus, measured in goods, which totalled $231.1bn.

Jim O’Neill, head of asset management at Goldman Sachs, said the huge market for western goods would disrupt regional trading blocs as China becomes the most important commercial partner for some countries. Germany may export twice as much to China by the end of the decade as it does to France, he told Bloomberg.

“For so many countries around the world, China is becoming rapidly the most important bilateral trade partner,” he said. “At this kind of pace by the end of the decade many European countries will be doing more individual trade with China than with bilateral partners in Europe.”

International tradeEconomicsGlobal economyUnited StatesChinaAsia PacificPhillip Inmanguardian.co.uk


‘Saving the World’? Gordon Brown Reconsidered by William Keegan – review

William Keegan makes a convincing case for reassessing Gordon Brown’s role in averting a global financial meltdown

About a year after the near meltdown of the global financial system in the autumn of 2008, BBC2 ran a three-part documentary on the subject. One after another, European and American politicians, bankers and other members of the global elite lined up to pay tribute to the starring role that Gordon Brown had played in averting catastrophe. “Why is this a secret?” I remember thinking at the time. “How come foreigners know about this and we don’t?”

This 100-page monograph is an attempt by the respected economic commentator, William Keegan, to restore the balance. Keegan’s thesis is that Brown, for all his many shortcomings, deserves a better place in history than his contemporaries have allowed.

The evidence is clear. It was the British government’s decision, announced on 8 October 2008, to take a controlling interest in three major banks that prompted the Europeans, followed quickly by the Americans, to do likewise. Indeed, the Europeans made no secret of this. A few days after the British had acted Brown was invited to address the 15 eurozone heads of government. “My friend Gordon has the right plan, we must do it in Europe,” said the French President Sarkozy, introducing Brown to the gathering. The Europeans followed suit on 13 October and the Americans, prompted by Brown, the next day.

It was the turning point. The following April Brown, chairing the G20 summit, would also take the lead in persuading world leaders to inject an unprecedented trillion dollars into the IMF and the World Bank with a view to stabilising the global economy. Again, foreigners noted the importance of what was achieved and of Brown’s pivotal role, but so far as most people in Britain are concerned it was a well kept secret.

Brown’s other enduring achievement, to which Keegan devotes a chapter, was to keep Britain out of the euro despite considerable pressure from Tony Blair to join. Again, not a small matter in view of what happened next.

Keegan is upfront about Brown’s many shortcomings. His scheming and plotting, his atrocious treatment of colleagues. Likewise, as Keegan also acknowledges, Brown made his share of mistakes, not least the fact that for so long he took the City at their own estimation and – like George Osborne – bought into the mantra of “light touch regulation”. This is not a panegyric, but it is a welcome reassessment of a deeply flawed leader who, when the moment came, rose magnificently to the occasion.

Chris Mullin is a former Labour minister and the author of three volumes of political diaries

Business and financePoliticsEuroEuroEurozone crisisEconomicsGordon BrownChris Mullinguardian.co.uk

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