Jobs and Banking
The Bank of England expects that house prices have seen the worst and that there are enough independent signals to indicate that the economy is in a position to grow into 2010.
The temptation to look into a few months of stable-to-mildly-rising house activity and to extrapolate this into a much sought after upswing seems to have found a home with the central bankers as well.
Unfortunately the news from Continental Europe is not so sanguine with whole economies apparently teetering on the brink of disaster.
Much as we like to think of Britain as an island unto itself, the fact is that we are inextricably linked to the fortunes of the rest of the globe and to Europe in particular. Not surprisingly as they are a mere 21 miles away as the crow flies.
The continued massive spending splurge of the Treasury and the BoE seems to be holding the dyke for the time being. However, the fear is that once the boy pulls his finger out of the leak the weight of accumulated debt will drag the UK economy back into the abyss.
On the other side of the Atlantic the news was equally grim with a net 450K people losing their jobs in June. Whilst we can expect these blips on the upside, it is surprising to see that the start of the summer has seen such a cutback as this would normally be a good time for temporary holiday job prospects.
On the plus side those nice guys at Goldman Sachs etc seem to be doing very well indeed but there is a grim side to this piece of information as well. The unfortunate fact is that what business that is being transacted is being done, very much, in the bankers favour.
With the virtual destruction of the investment banks in the States the survivors are able to make far bigger margins on their deals simply because the clients now have few options. They are unable to play Goldman off against Citi or Merrills or Lehman etc.
Also see today’s market update, Spread Trading.
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