Repossessions rise as recession deepens

In another sign of a deepening recession it was announced today that home repossessions have risen a massive 92% in the third quarter of 2008 compared to the same period the previous year. A total of 13,161 properties were repossessed in the three month period up to September 2008 and some analysts believe the outlook is extremely bleak as more and more people fall behind with their repayments. The number of homeowners who were behind with their mortgage repayments jumped to 340,000, a rise of 24% during the year and 10% higher than in the previous quarter. Sky’s business editor said there may be upward of 75,000 repossessions in the coming year according to the Council of Mortgage Lenders, on a par with the 1991 recession [Sky News].

Whether because of people overstretching their budgets or because of sudden redundancy, the news is not encouraging. House prices are falling and many are finding themselves in negative equity. Those that are attempting to sell their home are also finding things difficult as banks and building societies become less reluctant to lend money despite government bailouts.

There was also more bad news in the manufacturing sector today. Car production in December was down by half that of 2007 and with car sales down over the year by 11.7% on the previous year’s figure the prospect of more job losses seems likely [BBC].

Today there were further job losses after the sportswear manufacturer Reebok announced it was shedding 160 staff from its Bolton factory. UK manufacturing has slowed as orders have dried up. This in turn has forced companies to make cut backs in order to stay afloat. The vicious circle is pushing the numbers of unemployed close to 2 million [BBC].

But the shedding of jobs is not only confined to the UK. In the US, technology giant Microsoft has announced it is putting 5,000 people out of work over the next 18 months [BBC]. And as technology stocks fall chip maker Intel announced it too was laying off over 6,000 staff [BBC].

Official figures due to be released tomorrow are expected to show Britain has entered recession. Most people do not need any public announcement to see that the UK economy is in dire straits.

And with top economists warning companies not to invest in Britain and saying that the pound was “finished”, the future is far from rosy. Jim Rogers, a well-known investor, speaking on Bloomberg [video / video], said "I would urge you to sell any sterling you might have...It's finished. I hate to say it, but I would not put any money in the UK." The investment guru, like many others is looking to the east. Rogers has himself moved to Singapore, and his daughters, Happy and Baby B, are learning Mandarin Chinese which he sees as the “best skill one can pass on”. But although he sees both China and India as fast emerging economies he says even they must solve some of the more physical problems of air and water pollution.

The West has long been the destination of those from Asia seeking to better their financial prospects. The tide now appears to be turning.

2008 leaves little to rejoice about

Oil prices, China, the US election & a global recession dominated 2008

2008 has been an eventful year but perhaps it is the cataclysmic events that have left the most lasting of memories. January saw the price of oil pass the $100 per barrel mark. The month also saw a stand off between Iranian forces and US warships over territorial water disputes. The year also started with Israeli incursions into Gaza leaving nearly 50 Palestinians dead. Financial markets were also rocked after rogue trader Jerome Kerviel lost more than €4.9 billion for the French bank Societe Generale in what at the time was described as a “large scale internal fraud” by President Sarkozy.

China saw the beginning of what was a turbulent year after thousands became stranded in the worst snow storms the country had seen for years. The clear up continued well into February and left dozens dead. The US also experienced rare February storms which left around 60 dead. The New York Philharmonic Orchestra played a rare concert in North Korea to soften the diplomatic tension between the two countries. But tensions continued in many other countries. Violent clashes occurred in Serbia and Kosovo after the latter declared its independence and bombings continued to wreak havoc in Iraq and Pakistan.

In March Dmitry Medvedev won the Russian election but was widely seen as Putin’s puppet. Attempts at developing a peace process in the Middle East once again fell on stony ground and incursions and terrorist attacks continued. China returned to the headlines after riots in Tibet left up to 100 dead and the fallout became a PR disaster for the country after protests followed the Olympic torch around the globe during April. There were further troubles after a train crash in Shandong province left 70 dead.

May became a cause for celebration for many Londoners after Boris Johnson won the Mayoral election. But it was the natural disaster in Myanmar which dominated headlines after a cyclone left thousands dead and without help as the country’s dictatorship refused foreign aid. China was the next victim after a massive earthquake struck Sichuan province. Around 80,000 died in the earthquake and a quarter of a million were injured, but China was far more accepting of foreign help, though it was less appreciative of the criticism of its building regulations after it emerged many schools appeared to have been badly built. May also saw oil rise beyond $135 per barrel leaving many motorists around the world with increased running costs.

June brought further rises in the price of fuel and tanker strikes in Britain which nearly saw the pumps run dry. Zimbabwe was once again in the news after Robert Mugabe stole another election. But in the US election Hillary Clinton finally conceded defeat in her bid as Democratic candidate and endorsed Barack Obama. China once again suffered the wrath of nature’s power after floods left millions homeless and more than a hundred dead.

July saw violence return to Israel after a man used a tractor to unleash an attack on civilians. Four were killed and nearly 40 were injured before the man was shot dead by police. Bomb attacks in Afghanistan and Pakistan left more than 60 dead. July also saw the first signs of the impending recession after Fannie Mae and Freddie Mac ran into trouble and stock markets around the world began to fluctuate wildly. But it was the Olympics which hit the headlines as August arrived. However, despite the show of the century, the media could not help but criticise the poor air quality, the arrests of foreign journalists and highlight terrorist attacks that struck in parts of the country.

As the US election campaign got into full swing the financial crisis began to bite hard and one institution after another began to fold. China was also suffering from its own crisis after it was revealed that milk had been contaminated with the industrial chemical melamine leaving thousands sick and at least four babies dead. But it was the financial downturn that gripped most people’s attention well into October. Almost everyday there was further bad news as one company after another announced it was running into financial difficulty.

November brought with it a moment of history after Barack Obama became the first black American President. But the celebrations were short lived as the reality of the deepening financial crisis set in. There was further tragedy after Pakistani terrorists killed dozens on the streets of Mumbai in India. A three day siege ensued and around 156 were killed. India was left reeling from the attacks and there were calls from many to retaliate against Pakistan. THere was no retaliation, though tensions remain high between the two nuclear powers.

December saw Greece gripped by riots after police shot a young teenager dead. Zimbabwe, already suffering from financial collapse, was now becoming the victim of a cholera pandemic which Mugabe blamed on the West. But the West was more concerned with its own demise as one company after another shut its doors. For many retailers it was far from a very merry Christmas as many were forced to slash prices in order to drum up trade. And in the Middle East, the birthplace of Christ, it ended much as it had begun with Israeli bombardments on Gaza and with tanks preparing to roll into the Palestinian territory.

UK - Recession claims more retail victims

Sales have already started at many UK stores

The recession has claimed its third victim in less than 48 hours after record store Zavvo called in administrators [BBC / Sky News]. Only yesterday the Officer's Club, a men's clothing store, started to close 32 of its 150 shops immediately after they filed for administration. The remaining stores were set to be sold off. But a last minute buyer may save more than 900 jobs [BBC]. Only hours after the Officer’s Club made the announcement, Whittard of Chelsea chain also filed for administration but was rescued after a private equity firm bought it [BBC / Sky News].

Britain’s retailers have already experienced one of the worst Christmases on record despite launching cut price sales. Many stores slashed prices by more than 50% to attract shoppers. And to some extent it has worked. London's west end streets reported their best day of the year on Tuesday, with more than £60 million of business being done by 500,000 shoppers on Oxford Street, Bond Street and Regent Street. But it is unlikely to make the retailers much profit. The shopper is becoming exceeding savvy and watching how they spend. Some shops have also angered customers after slashing prices by half without warning soon after customers have purchased them full price. There are stories that on some occasions, some shoppers have re-purchased the same item and later returned the previously bought item for a refund.

In order to recoup costs the sales have already started at many retailers. Some stores are even set to open on Christmas Day. For those with money and secure employment there are many bargains waiting to be snapped up. But the future look extremely bleak for thousands of shop workers set to be laid of shortly before the new year. MFI the furniture retailer has already shut its doors and Woolworth is beginning to wind up its business with stores even selling of the fittings [BBC].

Bush bails out US car giants

With Christmas round the corner the American car industry has been given an early gift in the form of a massive $17.4 billion bail out. President Bush announced the loan on Friday, less than three weeks before he hands his office to President elect Barack Obama.

The reasoning behind the President’s decision was that allowing the US car industry to fail would not be "a responsible course of action". He said that not helping out the industry would leave Obama with added problems. There are conditions though. The firms must show they’ve spent wisely and not paid out in executive perks including the much publicised private jets. But sceptics suggest the problems in the automotive trade cannot be solved quickly. Speaking to
Channel Four News, Dr Daniel Griswold of the Cato institute said that other Foreign car manufacturers were not suffering the same problems and that Bush’s claims suggesting that the US car industry failure would be “too much to bear” were highly exaggerated [BBC].

It is not just US car manufacturers that are running into financial difficulties. As consumers tighten their belt car sales the world over are falling. Britain has seen massive drops in car sales with Jaguar Land Rover being of particular concern. The car firm, which employs about 15,000 in the UK, said last month that it faces "unprecedented trading conditions" as global sales for the whole of the car industry have fallen sharply since the summer. But there is unlikely to be the same help seen in the US. Business Secretary, Lord Mandelson told the BBC, "We are analysing very carefully what is going on in the [car] sector, and we will make good judgments in good time if it is appropriate for the government to take any action or if it is possible for us to do so". But he added there was not “an open chequebook” available.

The financial crisis has taken it toll in many sectors. Besides banking institutions, the retail market has been particularly hard hit. Today MFI, which filed for administration in November, finally closed its stores leaving 1,400 people out of work [BBC]. Woolworths is gradually winding up its business will all store due to shut by early January. Nearly 30,000 will find themselves unemployed when the 99 year old store finally closes its doors, a particularly sad legacy for a business that has survived the Great Depression and several economic downturns. It appears no business is immune from this current recession