Dow Jones Climbs 10.9%

Could this be the end of the beginning? After weeks of really bad news the Dow Jones Industrial Average shrugged off data regarding poor consumer confidence to record a 10.88% rise to 9065. The prospect of a 0.5% cut in US interest rates appears to have over ridden the negative sentiment. It will be interesting to see how Asian and European stock markets reacts during the early part of Wednesday.

French Economy Overtakes UK

One consequence of the £ falling against the Euro and Dollar is that we are falling down the world rankings for the size of our economy. For so long we've heard that the UK is the world's fourth largest economy. No longer. On a trade weighted index the £ is now the weakest it's been seen 1996 - the year before Labour came to power. As a result the UK has been overtaken by China and France. With a quarterly GDP of $559 billion we are 7.8% behind France who are fifth and 13% of Italy who are seventh.

French Holiday Homes in Sales Slump

According to the Daily Telegraph the sales of French holiday homes have slumped. The fall in sales is particularly sharp in traditional British havens such as the Dordogne. The problem is caused by a logjam in the British housing market. French rural properties are generally bought by more affluent British consumers - sometimes in the runup to retirement. With the British property market in freefall, prices are down 12-13% on 2007, potential buyers of French property are unable to raise the necessary cash.

Petrol Prices on the Way Down

We may be nearing financial Armageddon but there is some good news out there. It seems the collapse in the global economy is driving down the price of oil. Brent Crude is now below $80 per barrel. Despite the £ sterling weakening against the US $ this has led to falls in prices at the pump. Tesco have announced a cut of 3p per litre to £1.06. By my reckoning that's still just over £4.80 per imperial gallon. But it seems Tesco are using market forces to bring down prices. Maybe we should put Tesco boss Terry Leahy in charge of running the economy?

The Truth About Iceland

As the FTSE spirals below 4,000, the UK Government intends to use legal action to pursue an estimated £19 billion worth of British cash tied up in Iceland. This is made up of £1 billion owed to UK local government, £6 billion owed to UK individuals and £12 billion owed to UK companies and institutions. The strangest thing is, what were these people and organisations doing relying so heavily on a tiny country?

Iceland has a population of 320,000. The UK's £19 billion represents and investment of almost £60,000 a head. Kent County Council, which represents a population of 1.4 million has £50 million at stake. The truth is emerging that, contrary to earlier reports, ratings agencies were flashing up warnings about Iceland as early as April. However, I would go further. The apparent financial success of Iceland and Icelandic companies - especially their banks - always smelt a little fishy.

Over recent years Icelandic banks such as Kaupthing, Glitnir and Landsbanki have been offering very attractive rates of interest. Generally much better than their UK domiciled equivalents. How could they do this on a long term basis? What intrinsic competitive advantage did they hold over traditional banks. Second, Icelandic investment companies such as Baugur were buying up huge chunks of the British high street with investments in companies such as Iceland (the grocery retailer), Karen Millen, House of Fraser and Hamleys. None of these companies was known to trading any better than their equivalents. But Baugur was awash with cash. Even West Ham United, a generally under-performing English Premiership football club, has been acquired by Icelandic owners. Who just happens to be connected to Landsbanki.

There's a generally in life, and one especially apt for finance, that if something sounds too good to be true it probably is. The rise of Iceland as an economic power house was too good to be true. The UK people, businesses and local government authorities that have lost money should have used common sense rather than waiting to be told by the ratings agencies that there was something rotten in Iceland.

UK Councils Risk Money in Icelandic Banks

The latest twist in the banking crisis is that UK local government has hundreds of millions of pounds at risk. This is money on deposit with a number of Iceland's banks. As it stands, these deposits are not being guaranteed by the UK Treasury. The Treasury has undertaken to guarantee private deposits and plans to sue the Icelandic government for losses. According to a report in today's Daily Telegraph:

Based on information from Conservative councillors, the Tories said they had identified at least £160 million of council funds exposed in Landsbanki or Heritable.

One authority alone - Kent County Council - has £50 million deposited in Landsbanki and Heritable, as well as Glitnir Bank.

I am located in Kent and a Kent council tax payer. If the money is never recovered each Kent council tax payer stands to lose £100 each!

Pipex - Rubbish Telecoms Provider

Pipex are a rubbish company. They are owned by those jokers of the telecoms market Tiscali. Yesterday I received a letter telling me my phone would be cut off as my account was apparently in arrears. When I tried to use my phone I was given a message telling me my service was suspended and that I should phone customer services on 150. Guess what? Number 150 was engaged and remained so all day.

I got through to Pipex via an 0800 number. The staff at the end of the line told me that as an ex-Bulldog customer I needed to speak to Pipex Homecall - a separate division. I spoke to Pipex home call who told me they couldn't help as I was a business customer and needed to speak to the Pipex business team. So I phoned back the business team. I was asked, "Are you an ex-Bulldog customer?". On answering "Yes", the phone was put down. I originally signed up with Bulldog. At the time they operated UK call centres, based in Manchester. Now they have been acquired by Tiscali they have gone down the pan.

Several frustrating phone calls later I was told by Pipex's Lithuanian call centre, that they had a problem and that I shouldn't be cut off. However, this person couldn't rectify the matter, neither could their boss. Several hours later I was called by someone on the Pipex customer services team. They wanted to check my details. When I gave these they explained they had called the wrong number. I then asked them to rectify my problem. They couldn't. Several emails and phone calls later I have received an email from them asking me to call their customer services team on an 0871 number. Each call costs 10p per minute. Why should I be paying this when they have cut me off in error? And guess what, I can't call them from my landline as they have cut me off. Pipex business telecoms are totally crap. Do not deal with them.

Bradford & Bingley - Dalek City

In all the turmoil I forget to find time to mention the demise of Brandford and Bingley. In the 1980s I had the fortune to live in Bingley, just a couple of hundred yards from the B&B headquarters. These were affectionately known by the locals as "Dalek city". For the simple reason that the yellowy/creamy concrete monstrosity was so out of step with the rest of Bingley's architecture.

As a former local resident I was attracted to saving with the then then building society, and eventually, received the flotation shares. I had plenty of time for the then chief executive, Christopher Rodrigues but sold my shares when he left.

Market Turmoil - Business as Usual

In all the frenetic media coverage its difficult to remember that most business activity is carrying on as usual. The world of Wall Street and the City appears almost completely detached from the day to day activities of most businesses.

I look after a range of clients across a number of different industries and market categories. Most are carrying on as usual. Yes, they are all aware that there is a coming recession. And they are all aware that consumers and small businesses are acting in a more prudent manner. But, so far, the apocalyptic headlines have made little real difference to their business performance. If you're selling a business, I would recommend you contact them.

Only yesterday retailer Tesco - not a client of mine - reported an 11% rise in profits. Too bad for Tesco, the media wasn't interested. At the other end of the scale business carries on for many small businesses. Yes, if you're an estate agent or mortgage broker there isn't much activity. But how many businesses are directly connected to a sector that was bloated by years of above inflation growth in house prices?