Please raise your glasses for slowing house prices, working retirees, Mervyn King and the euro
This year's Christmas card from my financial adviser contained a letter with one of those mass personalisations: 'Dearest All....' Being the festive season, it tried to be cheery, but was not. The last year had been extremely difficult, it said. Apologies to those of you who saw the value of your portfolios halve, but equities were still the best long-term bet etc.
Now, it seems to me there is much good news around for investors, if you know where to look. Stock markets are down for the third year running, but this provides a nice buying opportunity for those of us who didn't tell our financial advisor quite everything (in case he decided we needed just one more life or job protection policy).
The bears and bulls are still battling it out in the market, which means that if you missed a target price a couple of months ago, you are bound to get another crack at it before too long. The days of buy and hold are over, RIP. It was always a lazy strategy and ruinous for the brokerage business, which needs all the help it can get at the moment.
House prices have stopped rising. What a relief! For an unsteady few months, there was a danger of another great bust. But despite all the talk of exorbitant levels of personal debt, retail sales growth in November fell to the lowest level for two years. The UK consumer is getting the picture, and Christmas trading may not be as extravagant as the Treasury feared.
But there are more glad tidings! One in five retired people in the UK is heading back to work. Even if they are not doing it for the money (depriving the country of extra revenue), the benefits to the wider community are huge. Senior citizens must not be encouraged to think of themselves as victims, discarded on the scrapheap of society. Everyone needs to put their shoulder to the wheel to pay for our future pensions.
Mervyn King is to be the next Governor of the Bank of England. On trading floors, in cellar bars and glass-walled penthouses across the City, there was a long slow sigh of relief. Interest rates and inflation are at their lowest for 40 years, but it is a racing certainty that we have seen the last interest rate cut for a while. And sweet harmony will continue to dog relations between the Bank and the Chancellor of the Exchequer, which is as it should be.
The Treasury, meanwhile, has had a covert change of heart about joining the euro. This is our Christmas gift from the Government. Someone has discovered that since the UK's ignominious expulsion from the European Exchange Rate Mechanism in 1992, the UK economy has grown 1% faster per annum than the eurozone. Our GDP growth rate may be slowing, but theirs is struggling to move off first base.
The introduction of the euro single currency was a great success. It is just a pity that the underlying economy of the region has gone from bad to worse over the last two years. There is very little chance the UK's five economic criteria for joining the eurozone will be met. We are clearly diverging, not converging. The one-size-fits-all monetary policy is disastrous (look at the state of Germany!) Happily, Mr King is certainly up to the task of deflecting euro membership.
So be of good cheer this Christmas! If this is the calm before the storm next year, enjoy it while you can. If things are going to get better, why moan? Carpe Diem!
Caring for children and elderly relatives
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