What's hot and what's not?
The first few weeks of January can be a slow for news but thanks to the ongoing credit crunch any bit of financial news is still worthy of dissection and intense scrutiny. So here is my review of what was hot and what was not this week.
Hot: Apple, for promising to bring the cost of its iTunes music downloads in the UK inline with the rest of Europe. Okay, so it took a European Commission investigation for it to reach this decision, but better late than never. Next step, please can we pay the same as the Americans?
Getting Warmer: ID fraud is no joke but I had to laugh when I heard that Barclays had fallen victim to a scam so stupid that it beats Jeremy Clarkson telling The Sun readers his bank account details. The incident happened after some bright spark decided to would be a good idea to impersonate Barclay’s high profile chairman Marcus Agius to one of the bank’s own call-centres. A plan doomed to fail you might think but no – before you could say “can I ask you some security questions” a credit card was sent out and then next thing Mr Agius knew £10,000 had been withdrawn from his account. But all’s well that ends well, and the £800,000-a-year executive has now been reunited with his money.
Room Temperature: The Bank of England. I admit that although I was rooting for an interest rate cut in January I didn’t really expect one – and I don’t believe that half the economists and financial institutions who predicted a cut did either. It’s common sense that anything other than a rate freeze is unlikely (a) in January before all the high street Christmas figures are confirmed (b) the month before an inflation report and (c) a month after then last cut/hike. Yes interest rates do need to be cut sooner rather than later but it seems the Bank wants to see where inflation is before it goes all gung ho chopping rates. So bring on 7 February, when the Bank will have seen the inflation report and will (touch wood) bring borrowers a little winter joy with a rate cut.
Getting Colder: Plans to nationalise Northern Rock. If this goes ahead (which in all honestly I don’t believe they will, although I said the same about Leon winning the X Factor) then shareholders will lose out. In 1975, when MG Rover was nationalised, shareholders were cut out of the equation. The charitable ones might have thought it worth it if, as a nationalised entity, the company had returned to good health. But we all know that didn’t happen.
Freezing: ITV’s Tonight with Trevor MacDonald has jumped on the “house price crash is around the corner” bandwagon also endorsed by The Daily Mail and just about any estate agent that wants to get its name in print. The programme, entitled Britain’s Biggest House Price Falls, featured financial advisers predicting house price falls of up to 40% in 2008. Although it did note that a slower market might be good news for those first-time buyers who have been able to get a mortgage, the Tonight show depressingly reported that the housing market is only going one way and that’s down. I could go on for hours about why this view is not only simplistic and also potentially incorrect, but I won’t bore you. Instead, let me state that unless you have bought a property in order to make a quick buck, intend to buy and sell within a short space of time or think you paid too much for an overvalued property, then you probably don’t have any reason to worry about stagnant (note, stagnant not falling) house prices in the year ahead.