Au­gust? Bring on Septem­ber

The Jewish Chronicle - - Business -

TS EL­LIOT de­scribed Au­gust as the ‘cru­ellest month’ and for the fi­nan­cial mar­kets this year, that could not be more true. Go­ing back four decades it was in mid-Au­gust 1971 that the then US Pres­i­dent Richard Nixon cut the US dol­lar loose from gold bul­lion ush­er­ing in the mod­ern world of float­ing ex­change rates. In Au­gust of 1992 the pound came un­der enor­mous sell­ing pres­sure in the Euro­pean Mon­e­tary Sys­tem (the pre­cur­sor of the Eu­ro­zone) pre­par­ing the way for ster­ling’s ex­pul­sion of a few weeks later and the even­tual de­struc­tion of John Ma­jor’s gov­ern­ment.

Four years ago the money mar­kets froze in Au­gust 2007 caus­ing the credit crunch and trig­ger­ing the col­lapse of Lehman Brothers a year later as the fi­nan­cial world was brought to shud­der­ing halt. The mar­ket catas­tro­phe this sum­mer is the lat­est in­stal­ment in the cri­sis which be­gan four years ago.

The im­plo­sion in the bank­ing and the fi­nan­cial sec­tor was re­solved when gov­ern­ments on both sides of the At­lantic stepped in to prop up the bank­ing sys­tems and their economies. The re­sult was a mas­sive trans­fer of debt from the bal­ance sheets of the pri­vate sec­tor to in Greece, fol­lowed by the crises in the other na­tions on the Euro­pean pe­riph­ery, Ire­land and Por­tu­gal. It is the fail­ure of Europe’s authorities to con­tain the sovereign­debt­prob­le­monitspe­riph­ery which has led to the con­ta­gion in the past month to Spain, Italy and now even France. If that were not enough Pres­i­dent Obama’s scuf­fle with the Repub­li­cans on Capi­tol Hill over Amer­i­can debt lim­its and bud­get drained frag­ile con­fi­dence from the US econ­omy, which — de­spite the rise of Asia — is still the en­gine of global growth.

With each down­grade of na­tional debt across the Euro­pean Union and more re­cently in the US, where Stan­dard & Poor de­prived Amer­ica of its ‘triple A’ rat­ing, a cri­sis of con­fi­dence has been trig­gered. Most wor­ry­ing is that the debt down­grades have been ac­com­pa­nied by signs that growth is dwin­dling. In Amer­ica, the econ­omy barely grew in the sec­ond quar­ter. In France (the lat­est coun­try to come into the fir­ing line) out­put was zero and the in the UK, there have been a se­ries of growth down­grades with the Bank of Eng­land now ex­pect­ing the econ­omy to grow at just 1.4 per cent this year. In­vestors have made their own judge­ments. There has been a rush out of risk as­sets. Para­dox­i­cally, the most ob­vi­ous ben­e­fi­ciary has been gold which has pow­ered to $1,800 an ounce. What has been ex­tra­or­di­nary about these events is the re­luc­tance of po­lit­i­cal lead­ers to take re­spon­si­bil­ity. It took the re­cent UK ri­ots to bring David Cameron and­hisChan­cel­lorGe­orgeOs­borneback to Down­ing Street. In the US it was the tur­bu­lence on Wall Street that forced a bud­get deal and the chair­man of the Fed­eral Re­serve Ben Bernanke to come rush­ing to the res­cue of the Amer­i­can econ­omy again with a prom­ise to hold US in­ter­est rates at the cur­rent near-zero rates for two more years. In Europe it has been Jean-Claude Trichet who has held back the tide of spec­u­la­tion by buy­ing Ital­ian and Span­ish bonds. But this can only­betem­po­raryrespite­foraeu­roarea tee­ter­ing on the edge. The re­gion will re­main in cri­sis un­til the bail-out fund has been restocked and the Euro­pean Cen­tral Bank (ECB) is given the au­thor­ity to is­sue bonds de­nom­i­nated in euro.

A lack of strat­egy by the elected lead­ers in the West has cost savers and pen­sion­ers large chunks of their hard­earned sav­ings. In the UK an­nu­ity rates have come down sharply and the value of ‘money-pur­chase’ pen­sions, SIPPs and share ISAs dec­i­mated. Au­gust has left ev­ery­one poorer and that is be­fore the hol­i­day credit card bills ar­rive on doorsteps. Alex Brum­mer is City Edi­tor of the Daily Mail

IT is Kids Week, mean­ing that from 12 Au­gust to 4 Septem­ber a child aged be­tween five and 16 can see West End shows for free when ac­com­pa­nied by a full-pay­ing adult. Up to two ad­di­tional chil­dren can also get half price tick­ets in the same trans­ac­tion.

There are 31 shows to choose from in­clud­ing Shrek and The Wizard of Oz. You can book from now up un­til 4 Septem­ber via the Kids Week web­site or by call­ing 0844 248 5151, al­though tick­ets are sub­ject to avail­abil­ity and you can only book up to eight tick­ets per book­ing. Kids Week ticket-hold­ers can also at­tend some show-re­lated ac­tiv­i­ties for free. But re­mem­ber, you need to buy a full-price adult ticket to take a child for free and there may be pro­mo­tions else­where on these, sav­ing you more than get­ting a free child’s ticket. So check this first. More cheap days out at www. mon­eysaving­ex­pert.com/daysout

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