"Rearranging the deckchairs on the Titanic"

Alistair Darling announced his budget in parliament today [Wednesday] but it has drawn a poor reception from opposition parties and commentators. One e-mailer to Sky News described it as merely “rearranging the deckchairs on the Titanic”.

It is a recession that has brought the worst debts in over 50 years and unemployment rates that continue to rise to record levels.

Opposition leader David Cameron said that the government had brought decades of debt. “The last Labour government left the dead unburied, this Labour government leaves the debts unpaid,” he said.

“What is the point of another 14 months of a government of the Living Dead,” he lambasted.

Similar views were expressed by other members of parliament with Liberal Democratic Party leader Nick Clegg accusing the government of being “out of ideas and running out of steam”.

Cigarettes & Alcohol

Many pub goers will be steaming after Darling’s announcement to increase the tax on alcohol by 2%. The decision has angered the British Beer & Publicans’ Association [BBPA] and the Campaign for Real Ale which has lobbied hard to ease pressure on Britain’s pubs, which are now closing at a rate of 39 per week.

There is little solace for smokers who will see cigarettes rise by 2%. And motorists will be fuming after the Chancellor announced petrol would rise by two pence per litre in September and a further penny per litre every April for the next few years.

Tax on beer will hit every drinker in every pub and taxes on fuel will hit every motorist driving to work, Cameron said.

The BBPA said, “Today’s Budget signs the death warrant for thousands of Britain’s pubs and for tens of thousands of British jobs.”

Meanwhile motoring organisations have criticised the fuel tax rises. RAC motoring strategist Adrian Tink said, "Today's announcement is another brutal blow for motorists who have already witnessed a decade of non-stop increases and price rises.”

“It's time for the Government to stop treating motorists' pockets as a bottomless pit of money and recognise their right to drive at a fair, affordable price,” he added.
Car scrappage

There was scepticism over the government’s car scappage scheme which is aimed at reducing the amount of the more polluting cars on Britain’s roads. It is also hoped the scheme will help boost the car industry. From next month, until March 2010, motorists will be offered a £2,000 discount on new cars if they trade in cars older than 10 years. But the cars to be scrapped must have passed an MoT and there has been criticism that the scheme is too bureaucratic.

While the government is putting £1,000 into the scheme it is looking to manufacturers for a matching contribution. It has prompted some to say the scheme may prove to be uneconomic, given that the motor industry will also have to pay for the disposal of the old vehicles.

But Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders was broadly optimistic about the government plan.

“This is good news for consumers and will get people back into showrooms, kick-starting demand in the market,” Everitt said.

“The scheme recognises the economic value of the motor industry and we are determined to make it a success. There is clearly a great deal to do and we look forward to discussing the finer detail of the proposal with government in the coming days.”

Tax

The Chancellor announced he would raise income tax for those earning more than £150,000 per year to 50% as from April 2010. But while this may bring in vast sums of money, some believed it may scare some high earners out of the country.

Economy

It was the state of the economy which drew most interest. Chancellor Alistair Darling forecast the economy would shrink 3.5% in 2009, 2.5% worse than expected. He said growth was not expected to start until at least 2010 when it would be at 1.25% and 3.5% from 2011.

The figures have already been described as “fantasy” by acting leader of the Liberal Democratic Party, Vince Cable. He said the predictions were “Wildly optimistic and completely unreal.”

Even the International Monetary Fund predicts the British economy is likely to see a 4.1% contraction this year and projects further shrinkage next year.

The Confederation of British Industry (CBI) also said the figures “look optimistic” and warned against such long term predictions. Richard Lambert, the CBI Director-General, said “By pushing out the horizon for balancing the books as far as 2018 the Government is running too much of a risk.”

There were gasps of astonishment when Darling stated public borrowing was set to reach £175 billion by the end of 2009, amounting to 12% of GDP. The total debt would grow over the coming years he said, though the amounts borrowed would fall year on year. He announced borrowings of £173 billion in 2010, £140 billion in 2011, £118 billion in 2012 and £97 billion by 2013. This amounts to a total of £703 billion.

The City was shocked by the mounting debt. City commentator David Buik said many were “blown away by the gargantuan size of the national debt”.

Opposition leader David Cameron accused the government of “Running out of money, running out of moral authority and running out of time.”

But one leading trade union has supported the government’s efforts in tackling the economic crisis head on. Unite's joint general secretary, Derek Simpson said, “Alistair Darling had to deliver the toughest budget in decades but he has positioned Labour as the party for jobs and social justice while exposing the Tories for being the party of cuts and inequality.”

Jobs

In an effort to tackle the rising unemployment, the Chancellor said the government would offer support to the long-term unemployed under 25s who would be offered a job or training. He announced that an additional £1.7 billion would be made available to the Job Centre network.

Housing

Alistair Darling announced a scheme to guarantee mortgage backed securities to boost lending. Stamp duty holiday for homes would rise to £175,000 and be extended to end of year. In addition he said an extra £80 million would be made available for shared equity mortgage schemes.

But opposition leader David Cameron was not impressed by the chancellor’s proposals. “Home buy direct has not made a single sale through the exisiting scheme,” Cameron said.

Savings and benefits

There were announcements to identify and close tax loopholes which he said could raise more than £1 billion. And he proposed a cut in public spending from 1.1% to 0.7% in 2011-2012. In a move to encourage saving Annual limits for tax-free ISAs would rise to more than £10,000 for over-50s this year and for everyone else next year, the chancellor said.

Environment

In a bid to cut Britain’s CO2 levels by 34% by 2020, Darling said an extra £1 billion would be spent to support low-carbon industries. Around £500 million would be made available for offshore wind projects over the next two years and £435 million would be spent in support of energy efficiency schemes for homes, firms and public buildings.
But Friends of the Earth's Executive Director Andy Atkins said the government had not done enough. "The Government has squandered a historic opportunity to kick-start a green industrial revolution, create tens of thousands of jobs and slash UK carbon dioxide emissions,” Atkins said

The budget is rarely good news, but this year painted an extremely grim picture. Britain is likely to be in debt to the tune of more than £700 billion within 5 years. Unemployment sees no sign of falling and many expect the number to rise to more than 3 million by the end of 2009.

The opposition parties have made great capital in tearing Labour’s proposals to pieces and called for a change in government. The Conservatives may well win the next election set for 2010, but they will inherit a country in the worst financial situation in living memory. It is an unenviable position they will find themselves [BBC / Sky News].

TV News gears up for historic budget

With a little under half an hour to go until Alistair Darling delivers his budget, TV news channels and news organisations have pulled out all the technological stops to deliver a barrage of information. Sky are deploying political bloggers to issue reports as Darling delivers his speech. The channel is also making use of Twitter as it puts out constant updates. Skype, the internet telephony service, text and email is being used to get views from the public around the UK, to provide what it hopes to be a rich flow of information. The BBC have followed a more traditional path with political commentators providing comment in the studio as well as bringing live broadcasts from the City and around the country. Meanwhile Sky News are not only rooted outside parliament but also flying above bringing aerial pictures from the Skycopter. Even No 10 is a Twitter with its feed and providing online coverage. It may all prove to be information overload for some. But most will nonetheless be listening carefully to see what the Chancellor says.

Obama "to the rescue" as protests begin

Six protestors arrested driving an armoured vehicle

Barack Obama flew into Britain yesterday amid high security and under an intense media glare. There is anticipation that the US president will provide the impetus to help kick start the world economy as he joins 19 other state leaders at the G20 Summit. But it will take more than one man to pull the world out of its current downturn. There needs to be consensus amongst the other nineteen G20 leaders.

The French President Nicholas Sarkozy has already expressed his doubts and even said he may not sign any resolutions if they did not meet up to his expectations. There is already finger pointing with France and Germany accusing America of creating the financial crisis. And even Gordon Brown has made statements to the same effect, though he has backtracked since.
Speaking at the Foreign Office today the US President said, “I don’t want to identify blame I want to fix the problem”. He went on to quote a law professor who once taught him about responsibility versus blame. “Some are to blame, but all are responsible,” Obama said, adding that it was important for everyone to sit down together to solve the economic crisis.
Gordon Brown has continuously referred to the global problems requiring global solutions. And he echoed Obama’s stand that all the G20 countries should work together. “We must stand united to do what’s necessary,” Brown told assembled journalists.

There are fears that the G20 leaders will fail to meet consensus as there are too many vested interests. China is seeking to boost its export market as its projected growth drops below 8% and the numbers of unemployed soar above 20 million. But many Western countries may adopt protectionist policies, even if indirectly. Across Europe unemployment has grown significantly in the past few months and many countries in the Eurozone have fallen into recession. It has resulted in a fall in consumerism as people take a tighter hold on their expenditure.
There is a growing feeling that it is unlikely that any resolution will come together in the less than 36 hours during which the G20 leaders will come together. Indeed a larger proportion of time will be taken up with lunches and photo calls, leaving very little time for discussion.
The lack of faith in the G20 and increasing anger towards bankers and the government has encouraged many to take to the streets. On Saturday tens of thousands marched through London airing their grievances. And today hundreds of demonstrators have begun to converge on the capital.

There has been much media speculation that the protests may turn violent. But by noon most of the demonstrations had been lively but good natured. The occupants of an armoured vehicle were arrested after they drove into the financial centre. Six people were detained by police according to reports, and the blue ‘tank’ was impounded. Sky News also reported that three protestors had been arrested for possession of knives while another had been detained after assaulting a police officer.

Brown & Obama - an awkward relationship

The British press have ridiculed Gordon Brown's US visit

British Prime Minister Gordon Brown arrived in the United States on Tuesday with the hope of discussing a “global new deal”. But his effort to gather support to kick-start the world economy seemed to be getting a cold reception before it had even begun.

Snubs and criticism

Besides it being his first visit to the U.S. since Barack Obama became president, the Prime Minister’s itinerary was being downsized and rescheduled. Hopes of a joint press conference in the Rose Garden evaporated due to the heavy snow in Washington, though officials did not explain why the event was not moved inside. Some saw the move as a snub to the Prime Minister who has been particularly critical of the U.S. financial regulatory system.
During his monthly press conference last month [Feb 18th], Gordon Brown called for “an international system of regulation”, something he said was “absolutely essential”.
But his attempts of persuading others to join his plan have so far fallen on deaf ears. And it has not been helped by continued criticism of other countries. In his February statement he said there was a “failure in the American regulatory system.”

“If you take the sub-prime mortgage market in the United States of America, sub-prime mortgages, half of them were sold to Europe. So they were sold on by providers in the United States of America to Europe. But they were regulated by the American system and they were called Triple A. So the people who were buying these investments from America were buying what they were told was the most worthy investment of them all, Triple A rated, and there was a failure in the American regulatory system.”

However, while he said Britain was more tightly regulated, he conceded there was still room for improvement. “Our regulatory system has been a better system but it is still not good enough to meet the changing challenges of the times,” Gordon Brown said.

Despite his criticism of America, the Prime Minister has also praised Obama for his efforts in tackling the financial crisis saying they were doing “similar things” to what Britain was doing.
The atmosphere of Brown’s visit has already been soured by what some see as pointed gestures about the state of Britain’s so called “special relationship”. Barack Obama has already removed a bust of Winston Churchill that once sat in the Oval Office. And in what might be seen as another snub, former Prime Minister Tony Blair was invited to the national prayer breakfast in Washington last month and referred to by Obama as a “good friend”.

The White House insisted that a special relationship still existed between Britain in an attempt to brush off speculation. On his arrival at Andrews Airforce base the Prime Minister did receive a rather frosty reception in the form of extremely cold temperatures reportedly as low as minus 10 degrees Celsius.

'The special relationship'

His meeting with Rabbi Arthur Schneier of the Appeal of Conscience Foundation was somewhat warmer. During the visit Brown insisted the downturn could “only be resolved by people working together”. The Rabbi gave him a pot of honey in the shape of an apple in recognition of Britain’s work in tackling world poverty. But the Prime Minister will need more than a pot of honey to help him save global markets which have crashed to all time lows in recent days.
In an earlier interview with National Public Radio [NPR] he said that the priority was to “clean up the banking system”. But most of his discussions with Barack Obama were held behind closed doors. In a short question and answer session after the meeting Obama reaffirmed his belief in the special relationship between the U.S and Britain. “Rest assured it is not only strong but will get stronger as time goes on,” Obama said. He added that the relationship was important to the U.S and Great Britain. “It’s not just important to me but also the American people,” he emphasized.

Obama echoed the words of the British Prime Minister saying a “global new deal” was important. But he said the US banking sector had been dealt a heavy blow and economic recovery would not happen overnight.

Brown thanked Obama referring to their “partnership of purpose” which was founded on shared values and a need to solve world economic problems. He said that a “Big regulatory change” was needed. He was nonetheless positive saying, “There is a possibility of a global new deal in the next few months”.

Both leaders emphasized the need to work together with Obama declaring, “In this world we need to build alliances and not act unilaterally”. It was also important that all major G20 countries worked together with a common set of principles he said [BBC].

Despite much press speculation it appeared, that at least publicly, the two leaders were affirming their strong alliance.

'Weird and sinister'

However, Brown is certainly not running in the footsteps of his predecessor who was much admired in the US. Although he was welcomed by strong applause during his speech to congress, it was not in league to that seen in Tony Blair’s day.

The BBC’s Nick Robertson talked of 17 standing ovations, two less than that received by Prime Minister Blair. However not all pundits saw the reception as being so rapturous. Sky’s Adam Boulton described the so-called standing ovations as merely “seventeen bursts of applause”.
Blair was often described as Bush‘s poodle and recent cartoons have depicted Gordon Brown similarly as a dog sniffing at the butt of America. One could even descibe his speech as somewhat sycophantic. But his apparent obsequiousness did not go down well in the UK. Indeed his performance was even described as “dysfunctional” by one politician on the BBC’s Question Time. Shadow International Development Secretary Andrew Mitchell said the interviews in the Oval Office were “rather dysfunctional and rather needy”, though he thought that the Prime Minister’s call to avoid protectionism was important. Writer and feminist Germaine Greer was less than impressed by Gordon Brown’s delivery at Congress saying it was “Weird and sinister”. She said the speech was full of clichés and described it as “over the top”.

Indeed, he had barely begun his address before the praise for America drooled from his lips. "The US is and always will be an inspiration to me and the whole world," Brown said in his opening remarks. And the praise didn’t stop there. “America is an irrepressible nation" he said. "America is a nation with the vision to protect & preserve our planet Earth", a nation whose “spirit” would not be destroyed by terrorists, Brown declared. And of course there was the obligatory tribute to the "sacrifice of American soldiers who have given their lives" in two world wars, as well as Afghanistan & Iraq.

After the praise, and the announcement that Senator Edward Kennedy had been awarded an honorary knighthood by the Queen, Brown then launched into his bidding.

'Building for the future'

He said it was a "time for renewal“ and “ building for the future". "Let us agree rules and standards of accountability and transparency," he said and called on America to “renew our special relationship” and get “every continent playing their part for a global new deal”.
He may well find it an uphill struggle to get the full support of America despite his stated optimism. "I have never before seen a world willing to come together so much," Brown said, while insisting that it was time to “seize this moment” and “build tomorrow, today” [Full speech]

'Saving the world..'

While the reception was generally warm there were moments when some members abstained from applauding the British leader. In fact he received only half-hearted applause when he called for agreement on overhauling the world of international finance at the G20 talks in April.
It should perhaps also be noted that several dozen members of Congress failed to attend the speech. Their seats in the chamber were taken by House and Senate staff and other guests.
In December as the world recession was just beginning to bite, Brown was mocked for his slip-up in Parliament when he said, “The first point of recapitalization was to save the banks that would have otherwise collapsed. And we not only saved the world...”. His attempts to correct himself by saying “save the banks” were drowned out with laughter. The faux pas was then capitalized upon by opposition leader David Cameron who exclaimed, “Well, it's now on the record. He is so busy talking about saving the world, he has forgotten about the businesses of this country.”
There are many who now feel he forgot about “this country” as he fawned for America and its new charismatic, but seemingly disinterested, leader.

'printing money'

Back home the Bank of England announced another interest rate cut and a plan to inject billions of pounds into the economy in the form of “quantitative easing”. It was not met with huge enthusiasm except perhaps by politicians. Twitter, the micro-blogging service, was alive with comments suggesting the proposal to effectively print money could lead to rampant inflation and risked a Zimbabwe style economy developing. The interest rate cut, which was halved to 0.5%, has also created consternation amongst many Britons. Savers will see little point in putting money into banks which give so little return on their investment.

It remains to be seen if Brown’s global new deal and other initiatives will have any effect on the economy, or if he can pull nations together in fighting the global recession.

Eyes on China as Clinton arrives

US Secretary of State arrives in Beijing on Friday evening

US Secretary of State Hillary Clinton has said that both China and the United States need to “work together” during the current economic downturn. Speaking to CNN prior to her arrival in Beijing she showed optimism that the two countries could overcome previous difficulties. There have been a rise in tensions between the two superpowers over product safety and on issues such as human rights over the past year. However, Michael Santoro, author of China 2020, told CNN’s Kristie Lu Stout on Asia Today, that a new model needs to be fleshed out for the partnership to work.

China has suffered too from the economic crisis. Millions of migrant workers, once employed in factories across the country, have been made jobless. To get the country back on track China recently announced a $600 billion economic stimulus package and there are plans to boost its steel and auto industries, including about $1.5 billion to develop alternative-fuel vehicles. But with concerns of product safety, China has to address these problems as it moves into other areas of manufacturing. "It's no longer sufficient for China to become a manufacturer of sneakers or toys and the like," Santoro told CNN]. "Now they're looking to become players in the area of pharmaceuticals and foods and other high value-added products, where safety and quality are important characteristics for improving in the global economy."

While China’s economy has passed Germany and closed ranks with Japan, it has not been immune to the effects of the recession. The Chinese government has revised its growth figures for 2007 from 11.9 percent to 13 percent, bringing its estimated gross domestic product to $3.4 trillion, around 3% larger than Germany's $3.3 trillion for the same year, based on World Bank estimates. Beijing is expected to release its 2008 GDP figures next week [BBC / CNN / Xinhua].

Hillary Clinton arrives in a country still wary about Western attitudes towards it. President Barack Obama’s inauguration speech rattled some nerves in Beijing after he mentioned the word “communism”. During his address, Obama said, "Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions." China Central Television aired the speech live with a simultaneous Chinese translation, but when the translator got to the part where President Obama talked about facing down communism, her voice suddenly faded away. The programme suddenly cut back to the studio, where an off-guard presenter had to quickly ask a guest a question. Versions of Obama’s speech have also been cut on news websites, though English language versions remain intact [BBC].

English output from Chinese news services often differs from Chinese language versions. On CCTV’s China Today, human rights and the environment were mentioned as subjects the US Secretary of State was set to discuss with Chinese leaders. Professor Chu Shulong of Tsinghua University described the meeting as a positive move. But it will be a tight schedule on the last day of her Asian tour. She is set to meet with President Hu Jintao, Premier Wen Jiabao and Chinese Foreign Minister Yang Jiechi.

Clinton’s visits to Japan, Indonesia and the Republic of Korea (ROK) have made few headlines other than concerns over North Korea. However, many will be watching closely as she visits this growing economy which become so inextricably linked to so many others.

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

Woolworths stores will close by Jan 4th

Woolworths, the beleaguered British High Street store which went into administration in late November, will close all its stores by 4th January. In total 807 shops are affected and more than 30,000 staff are likely to lose their jobs. The closures will be phased in with two hundreds outlets shutting their doors on the 27th and 30th of December with the remaining stores closing on the 2nd and 4th of January 2009.

The hopes of finding a buyer for the troubled chain store have all but faded. Many staff have expressed sadness at the demise at the 99 year old store. But most will be more concerned about finding new jobs. The future for the thousands of staff is extremely bleak as they look forward to joining the list of unemployed. At least 1.86 million are now without jobs, according to official figures; the highest level since 1997. Unemployment has risen by 137,000 on the previous month and the number is likely to increase significantly over the coming months. Even Tony McNulty, the Employment Minister, says he didn’t believe unemployment had reached the bottom in a short statement to the BBC. But Gordon Brown who was on a whirlwind tour of Afghanistan, India, Pakistan and Iraq, was far more upbeat. Speaking from Basra in southern Iraq, he told reporters efforts would continue to find people new jobs. “We must do everything we can to get people back to work” he said [BBC / Sky News].