August? Bring on September
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