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A fresh global financial crisis unfolding?

Wednesday 30th May 2018

A fresh global financial crisis unfolding?

We all enjoy a little drama….

Some get it via sport. Others turn to the TV soap operas or the celebrity gossip columns in the newspapers….

But here at Money Truths we stick to the financial beat, where we find more than enough catastrophe, crisis, calamity, impending doom, fear, panic, hot air and all-out confusion to keep us entertained in perpetuity….

We don’t know who writes the scripts. But there’s never any shortage of action and we are never too far away from the next cliff hanger….

This week it is the Italians who take center-stage and teeter on the brink – threatening to take the rest of us over the edge with them…

  • Breaking the trust….

Trust, once broken, is something that can be difficult – if not impossible – to repair….

Trust in the Italian system is approaching breaking point this week, thanks to President Materella’s decision to veto the appointment of economist Paolo Savona as finance minister….

His decision effectively thwarted plans for a government coalition between Lega Nord and the more left-leaning Five Star movement – a coalition that had enjoyed widespread public support….

Materella (a dyed-in-the-wool Europhile) justified vetoing Savona’s appointment based on the latter’s long-term opposition to the euro – something, it was claimed, that might provoke an Italian exit from the EU….… Click here to read more

Sometimes, I wish I could drink petrol….

Wednesday, 23rd May 2018

Sometimes, I wish I could drink petrol….

The price of oil is climbing….

On Tuesday evening, a barrel of Brent crude was priced-up at $79.35….

That’s an increase of more than 45% across the last 12-months….

Great news if you own an oilfield. For the rest of us, it’s going to lead to further strain on the wallet….

  • Limited supply – but no shortage of demand….

America’s recent withdrawal from the Iran deal and renewed tensions in the Middle East are both factors in the most recent price actions in the oil markets….

But oil has been on a charge for a while now. And mainly because production cuts have served to decrease global supply….

But nobody is going to open-up the spigots and let the black gold flow more readily. You can rely on that….

OPEC agreed in 2017 to extend production cuts throughout this year. That means supply will remain limited until further notice….

There will be no shortage of demand though. That’s something else you can be sure of….

It doesn’t matter what economic activity you care to select – it has a clear and direct dependency on oil. There are not too many businesses that don’t need it or use it in one form or another….… Click here to read more

No closer to normality….

Wednesday, 16th May 2018

No closer to normality….

Cast your mind back to this day in 2007….

Can you remember what you were doing? Probably not….

Can you remember what interest rates looked like back then?

Allow me to refresh your memory….

Back in May 2007, the interest rate set by the Bank of England’s (BoE) Monetary Policy Committee (MPC) had just hit 5.5%….

Don’t worry, that’s not a typo….

I know it sounds fanciful, but I really do mean 5.5%….

  • A 6-year high and more to follow….

That figure represented a 6-year high….

It was the result of the BoE increasing the rate for the fourth time in just 9-months….

The rate is the baseline figure that (to some extent) informs borrowers what they can expect to pay for credit and tells savers what they can expect to be paid on deposits….

The bank had been increasing the rate in a bid to curb an inflation figure that in March 2007 had been running at 3.1%….

The hope was that a rising interest rate would encourage consumers to stop spending money and start saving it instead – taking heat out of rising prices….

I don’t tell you these things because I think you’ll enjoy a trip down Memory Lane.… Click here to read more