RON PAUL FINANCE

Worst Times In The History Of Banking…

admin — Thu, 02 Oct 2008 11:03:59 +0000

It is clear that the current banking crisis is epic, but some experts have expressed concern that this could dwarf the scale of the 1920’s wall street crash which saw such drastic loss of jobs and a rise in poverty. Standards of living have risen significanlty in the 90 years since the great crash, so we are in for a much tougher time this time round. Becoming as self sufficient as possible is one way in which many people are bracing themselves for the fallout, ridding themselves of credit and stocking up on food. Sustainable living is something which we have been encouraged to embrace, but now more than ever, it may offer the key to our survival. The media have been accused of much scaremongering, but often they are never in posession of a true picture of the proportion of the problem.

Congress Echoes Send Shockwaves Through Wall Street

admin — Mon, 29 Sep 2008 21:50:25 +0000

Congress has rejected the $700 Billion bail-out of the U.S. banking system. In a majority vote, it was decided that the package would be of little benefit to the American public and would simply line the pockets of fat cat bankers. Proposals to offer banks a reduced lifeline over a period of time, rather than in one lump sum is still being considered. One of the key fears was that the purchase of toxic assets could mark the beginning of the U.S. becoming a socialist society.

$700,000,000,000 For Toxic Assets

admin — Sun, 28 Sep 2008 23:20:29 +0000

We have recently seen that the U.S. have put together an unprecidented 700 billion dollar bail out package for failed financial institutions caught out by the collapse of the subprime mortgage market. This involves the American tax payer effectively buying their own unpaid debts from their creditors. The move could help to re-establish stability in the money market and encourage re-growth. The question on all tax payers minds is where is this money going to come from? Will the United States be forced to go cap-in-hand to some of its old enemies? Russia or China maybe? Could this be the fall of the Roman Empire all over again?

The Value of Money - How Much Is Your Time Worth?

admin — Wed, 24 Sep 2008 17:30:01 +0000

Whether we like it or not, money is the oil that lubricates most aspects of our daily lives. Without it, many of us would simply not have another means of buying and selling. Thousands of years ago, people would have bartered and swapped items as they required them. Once money was introduced as a currency, many items received a numerical value, rather than a personal one to the buyer. Over the last hundred years, living standards have increased exponentially, but it seems that the value of money itself continues to fall over time. This is known as inflation. Sixty years ago, it was possible to buy a house for just a few thousand pounds. The same property today is likely to fetch a hundred thousand pounds or more. So the question is whether the tables have turned and money is now valued in terms of what can be bought with it? Other things to consider: It wasn’t that far back where the husband was the provider and the wife was responsible for raising the children and making a home. Now it seems that both people in the relationship need to work just to pay the bills, therefore it seems that the value of the money being earned has dipped significantly. Does this mean the value of our time has also decreased?

New Mortgage Applications Reach Rock-Bottom

admin — Tue, 23 Sep 2008 19:53:52 +0000

This week has seen the lowest number of mortgage applications being made in decades. The number has halved since this time last year, further compounding fears of a recession. It appears that first time buyers are either waiting for the house price crash before purchasing or are turning to rental instead. The number of buy-to-let mortgages have also fallen sharply. There are also far more people being refused mortgages than ever before as banks and building societies try to avoid lending money that they just do not have to high-risk borrowers. House prices in the UK have fallen by as much as 25% in the last eight months. Many homeowners are choosing to sit tight and not sell until prices begin to rise because many buyers are likely to experience negative equity in the current market environment. Many of the largest property developers have ceased construction of new houses to prevent flooding the market with houses that nobody can buy, which would further impact the market value of property. Many such firms have had to make large cut backs and some have had to cancel substantial orders of building materials and make staff redundant.

Credit Cards - Can they be trusted?

admin — Mon, 22 Sep 2008 20:10:08 +0000

Credit card ownership has reached an all time high in the last decade. More people rely on plastic than ever before. Now the credit crunch has swept in it is much more difficult to obtain a credit card, but they still have their uses. Recently we saw a swathe of XL customers loosing hundreds or even thousands of pounds after the collapse of the travel industry giant, yet those customers who bought their ticket using a credit card were re-imbursed in full. Many other purchases are also covered by the insurance that comes as a package with a good credit card. Transaction management companies such as Visa, MasterCard, Delta, Maestro and American Express will continue to prosper from card distributors as long as people take advantage of this. Providing the balance is settled before interest is applied, there has never been a better time to be a credit card customer.

Recession - Riding out the storm

admin — Mon, 22 Sep 2008 19:50:05 +0000

Over the past few months, financial bodies have predicted that we are heading into a recession; but what actually does this mean? A recession is simply a down turn in the economy. Our economy in its simplest form is a flow of money, when times are good, money changes hands very quickly but when financial uncertainty creeps in, the flow of money slows down. People are not willing to buy non-essential items and will often reduce spending on some essential items where possible. Because this money is no longer flowing, many industries will struggle to manage their own cash flows and may in turn need to make people redundant to cut costs. This fuels the crisis further by reducing the number of consumers in the market. The snowball effect will gain momentum until the banks and the government intervene and reduce interest rates. This is intended to make commodities more affordable and promotes consumer spending. Once this begins, the markets will slowly start to recover. Its a boom and bust world.

Justified Pricing - Ethics or Extortion

admin — Sun, 21 Sep 2008 23:44:19 +0000

The marketing of brand values has become extremely difficult in the current world climate. Brands known for high quality are being priced out of the market by cheaper, less well known alternatives. Some manufacturers have been squeezed into making their products more affordable to appeal to the volume retailers. This has often had consequences to brand value because to make the product more affordable, but equally profitable, the only alternative is to reduce quality in both materials and workmanship. The reduction in quality rarely goes un-noticed and this in turn damages brand value. As the consumer becomes far more savvy in the quest for ‘best bang for buck’ and a greater awareness of the types of marketing tactics being used, it is extremely difficult for marketeers to communicate with the consumer. In a recent survey on consumer electronics, it was revealed that the majority of people would opt for an upper mid-range product rather than the cheapest or most expensive alternative. Many also admitted that they would invest considerable time digesting existing customer reviews on the internet before making a purchase where the value of the item exceeded their normal spend pattern. The summary of the survey was that people are willing to invest in a quality item regardless of branding providing the item fits the criteria for which it is intended. Marketeers have always strived to tempt consumers up the price ladder by offering small differences in price between models in a range of products, but it seems we are becoming wise to this tactic.

Frugality - Keeping up with the Jones’s a thing of the past

admin — Sun, 21 Sep 2008 21:51:56 +0000

Consumerism is fuelled by the human desire to increase ones social standing by the ownership of material possessions. The phrase “Keeping up with the Jones’s” is more prevalent than ever before, but as the credit crunch swings in, those who will ultimately survive are people who are able to remain largely self-sufficient and keep their heads above the proverbial water. Think about it, what makes someone a millionaire? At least a million pounds in the bank? More than a million pounds in assets? or an extravagant lifestyle? Many people will live a seemingly wealthy lifestyle, but are in truth, the polar opposite financially of the image they are trying to portray. Extravagance has its pitfalls, especially if it is funded by bad debt. Is someone who has just £1 to their name more or less wealthy that someone who has millions of pounds of debt?

Third world - New economic superpowers in the making

admin — Sun, 21 Sep 2008 21:40:16 +0000

Complacency in business is dangerous. Since the closing of the 20th century, business in the west has started to stagnate as the developing world superpowers have prospered at an astonishing rate. Countries such as India and China have benefited from cheap labour and have produced consumer items which rival anything available from established manufacturers. Now, it seems products produced in these countries have become the new benchmarks. China and India are set to become the new leaders in the technological and automotive industries. Old industrialized dinosaurs were once the envy of the world, but dated business tactics and a rise in living standards, human rights and wages in the west have increased the production and marketing cost of many products. The new superpowers are learning from other peoples mistakes and taking full advantage of their political ethics. Something which we have not seen since the boom of the Japanese economy. But be assured, once the economies of these nations begin to reap the rewards and living standards rise, new challengers will begin to emerge…