According to CMA Datavision's Q1 report on the sovereign credit insurance market, out today, Spain has just entered the top 10 most risky countries, with a 32% chance of default within five years. Far worse is Portugal, with a 60% 5-year default risk (beaten only by Cyprus, which is a new inclusion in CMA's tables).
More surprising is the market's favourable assessment of the USA, which has recovered its insurance-implied AAA rating, and the UK, now listed as the 6th least risky country. It would seem that the credit insurance traders have bought the good news stories, in the face of continuing pessimism from a number of other economic commentators.
Norway, last quarter the only nation to have an implied AAA rating, retains pride of place, followed by the USA, Switzerland and Sweden with their newly reinstated triple-A grades.
Is the market's optimism at the top end justified, or mistakenly short-sighted?
INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.
Tuesday, April 17, 2012
Spanish credit now 10th worst globally; UK and USA recovering?
According to CMA Datavision's Q1 report on the sovereign credit insurance market, out today, Spain has just entered the top 10 most risky countries, with a 32% chance of default within five years. Far worse is Portugal, with a 60% 5-year default risk (beaten only by Cyprus, which is a new inclusion in CMA's tables).
More surprising is the market's favourable assessment of the USA, which has recovered its insurance-implied AAA rating, and the UK, now listed as the 6th least risky country. It would seem that the credit insurance traders have bought the good news stories, in the face of continuing pessimism from a number of other economic commentators.
Norway, last quarter the only nation to have an implied AAA rating, retains pride of place, followed by the USA, Switzerland and Sweden with their newly reinstated triple-A grades.
Is the market's optimism at the top end justified, or mistakenly short-sighted?
INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.
More surprising is the market's favourable assessment of the USA, which has recovered its insurance-implied AAA rating, and the UK, now listed as the 6th least risky country. It would seem that the credit insurance traders have bought the good news stories, in the face of continuing pessimism from a number of other economic commentators.
Norway, last quarter the only nation to have an implied AAA rating, retains pride of place, followed by the USA, Switzerland and Sweden with their newly reinstated triple-A grades.
Is the market's optimism at the top end justified, or mistakenly short-sighted?
INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.
Voting reform and campaign contributions: a modest proposal
In the UK, political parties are discussing restrictions on campaign contributions. There is also concern at the declining numbers of people bothering to vote at all - a trend particularly noticeable among those aged under 40.
I suggest we:
(a) ban all financial contributions to political parties
(b) do not fund the parties from public monies
(c) remove the Inheritance Tax exemption for legacies to parties
(d) impose a duty on all mainstream media - including newspapers and political journals - to report without bias on all political matters - and make it work better than the BBC does
(e) change the pattern of General Elections - instead of a big hoo-ha once every five years, often influenced unduly by events shortly prior to Polling Day, let us have every year a ballot in one-fifth of all constituencies
(f) ban all political advertising - let each party and each prospective MP give a clear explanation of their plans and promises, on one common website. The entries should remain up for inspection for at least 5 years, so that voters can check the record before voting again
(g) institute a system of Swiss-style policy referenda, whereby if enough people sign the petition, the proposal must be put to people's vote. In Switzerland the minimum is 100,000 requests, proportionately in the UK it would be around 800,000
(h) recognise the present franchise is failing, but rather than coerce or bull***t the young into voting, embrace the reality and switch from one-person-one-vote to one-pound-one-vote. Each elector gets to vote only in the constituency where they live, but can buy as many votes as they wish - credit or debit card machines could easily be installed in voting booths. Let it be a tax on political enthusiasm - all proceeds to HMG
Any more ideas for plain-packaging the political system?
I suggest we:
(a) ban all financial contributions to political parties
(b) do not fund the parties from public monies
(c) remove the Inheritance Tax exemption for legacies to parties
(d) impose a duty on all mainstream media - including newspapers and political journals - to report without bias on all political matters - and make it work better than the BBC does
(e) change the pattern of General Elections - instead of a big hoo-ha once every five years, often influenced unduly by events shortly prior to Polling Day, let us have every year a ballot in one-fifth of all constituencies
(f) ban all political advertising - let each party and each prospective MP give a clear explanation of their plans and promises, on one common website. The entries should remain up for inspection for at least 5 years, so that voters can check the record before voting again
(g) institute a system of Swiss-style policy referenda, whereby if enough people sign the petition, the proposal must be put to people's vote. In Switzerland the minimum is 100,000 requests, proportionately in the UK it would be around 800,000
(h) recognise the present franchise is failing, but rather than coerce or bull***t the young into voting, embrace the reality and switch from one-person-one-vote to one-pound-one-vote. Each elector gets to vote only in the constituency where they live, but can buy as many votes as they wish - credit or debit card machines could easily be installed in voting booths. Let it be a tax on political enthusiasm - all proceeds to HMG
Any more ideas for plain-packaging the political system?
Monday, April 16, 2012
Urgent need for UK consumers to review pensions and investments
Changes on their way mean that it's high time to review your insurance - and pensions.
Gender-neutrality law to increase costs for both men and women
By 21st December this year, the UK insurance industry will have to comply with the EU Gender Directive, which insists that men and women must be treated the same when setting rates. Up to now, by and large:
Time to get a product with guaranteed (i.e. fixed) premiums?
Taxation of life companies likely to increase premiums
But there's another change that will affect premiums, and it's to do with tax. Until now, life companies have been able to offset some of their insurance costs against gains on their investment business; this will stop from 1st January next year, so insurance premiums will no longer be subsidised by investment profits in this way. Actuaries have told HM Treasury (PDF) that this could raise premiums on some term insurances by around 10%.
Time to get a product with guaranteed (i.e. fixed) premiums?
Spouse cover and contracted-out pensions: better options now available
From April 6, 2012 the law on pensions has changed. Up to now, if you were married and some of your personal pension was built up using money from contracting-out of State top-up pensions (SERPS/S2P), that part of your pension fund had to provide a continuing income for your spouse if you died before him/her. This restriction has now been removed.
This means:
That said, there is also the question of what may happen on the stockmarkets (quite possibly affecting the value of your pension fund, unless you're in cash), and the bond markets (which influence annuity rates).
Time to review when you want to take your pension, what it's invested in at the moment, and how you ultimately intend to take the benefits?
I suggest you contact your adviser soon!
INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.
Gender-neutrality law to increase costs for both men and women
By 21st December this year, the UK insurance industry will have to comply with the EU Gender Directive, which insists that men and women must be treated the same when setting rates. Up to now, by and large:
- women tend to pay less for car insurance (typically, safer driver behaviour than men's) and life insurance (on average, women live longer than men)
- men tend to get better annuity rates when taking benefits from their pensions, and pay less for income insurance
Time to get a product with guaranteed (i.e. fixed) premiums?
Taxation of life companies likely to increase premiums
But there's another change that will affect premiums, and it's to do with tax. Until now, life companies have been able to offset some of their insurance costs against gains on their investment business; this will stop from 1st January next year, so insurance premiums will no longer be subsidised by investment profits in this way. Actuaries have told HM Treasury (PDF) that this could raise premiums on some term insurances by around 10%.
Time to get a product with guaranteed (i.e. fixed) premiums?
Spouse cover and contracted-out pensions: better options now available
From April 6, 2012 the law on pensions has changed. Up to now, if you were married and some of your personal pension was built up using money from contracting-out of State top-up pensions (SERPS/S2P), that part of your pension fund had to provide a continuing income for your spouse if you died before him/her. This restriction has now been removed.
This means:
- you can have a bigger pension income for yourself, if you opt not to include spouse protection (it may be that your spouse already has good pension benefits of his/her own), but alternatively...
- if you prefer, you can IMPROVE spouse protection - before April 6, the spouse pension based on contracted-out monies HAD to drop to 50% of the income you were getting; now, it can be anything from 0% - 100% of yours.
That said, there is also the question of what may happen on the stockmarkets (quite possibly affecting the value of your pension fund, unless you're in cash), and the bond markets (which influence annuity rates).
Time to review when you want to take your pension, what it's invested in at the moment, and how you ultimately intend to take the benefits?
I suggest you contact your adviser soon!
INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.
Urgent need for UK consumers to review pensions and investments
Changes on their way mean that it's high time to review your insurance - and pensions.
Gender-neutrality law to increase costs for both men and women
By 21st December this year, the UK insurance industry will have to comply with the EU Gender Directive, which insists that men and women must be treated the same when setting rates. Up to now, by and large:
Time to get a product with guaranteed (i.e. fixed) premiums?
Taxation of life companies likely to increase premiums
But there's another change that will affect premiums, and it's to do with tax. Until now, life companies have been able to offset some of their insurance costs against gains on their investment business; this will stop from 1st January next year, so insurance premiums will no longer be subsidised by investment profits in this way. Actuaries have told HM Treasury (PDF) that this could raise premiums on some term insurances by around 10%.
Time to get a product with guaranteed (i.e. fixed) premiums?
Spouse cover and contracted-out pensions: better options now available
From April 6, 2012 the law on pensions has changed. Up to now, if you were married and some of your personal pension was built up using money from contracting-out of State top-up pensions (SERPS/S2P), that part of your pension fund had to provide a continuing income for your spouse if you died before him/her. This restriction has now been removed.
This means:
That said, there is also the question of what may happen on the stockmarkets (quite possibly affecting the value of your pension fund, unless you're in cash), and the bond markets (which influence annuity rates).
Time to review when you want to take your pension, what it's invested in at the moment, and how you ultimately intend to take the benefits?
I suggest you contact your adviser soon!
INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.
Gender-neutrality law to increase costs for both men and women
By 21st December this year, the UK insurance industry will have to comply with the EU Gender Directive, which insists that men and women must be treated the same when setting rates. Up to now, by and large:
- women tend to pay less for car insurance (typically, safer driver behaviour than men's) and life insurance (on average, women live longer than men)
- men tend to get better annuity rates when taking benefits from their pensions, and pay less for income insurance
Time to get a product with guaranteed (i.e. fixed) premiums?
Taxation of life companies likely to increase premiums
But there's another change that will affect premiums, and it's to do with tax. Until now, life companies have been able to offset some of their insurance costs against gains on their investment business; this will stop from 1st January next year, so insurance premiums will no longer be subsidised by investment profits in this way. Actuaries have told HM Treasury (PDF) that this could raise premiums on some term insurances by around 10%.
Time to get a product with guaranteed (i.e. fixed) premiums?
Spouse cover and contracted-out pensions: better options now available
From April 6, 2012 the law on pensions has changed. Up to now, if you were married and some of your personal pension was built up using money from contracting-out of State top-up pensions (SERPS/S2P), that part of your pension fund had to provide a continuing income for your spouse if you died before him/her. This restriction has now been removed.
This means:
- you can have a bigger pension income for yourself, if you opt not to include spouse protection (it may be that your spouse already has good pension benefits of his/her own), but alternatively...
- if you prefer, you can IMPROVE spouse protection - before April 6, the spouse pension based on contracted-out monies HAD to drop to 50% of the income you were getting; now, it can be anything from 0% - 100% of yours.
That said, there is also the question of what may happen on the stockmarkets (quite possibly affecting the value of your pension fund, unless you're in cash), and the bond markets (which influence annuity rates).
Time to review when you want to take your pension, what it's invested in at the moment, and how you ultimately intend to take the benefits?
I suggest you contact your adviser soon!
INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.
Sunday, April 15, 2012
Is there a limit to wealth inequality?
What would happen if one person in the USA finally owned ALL its wealth?
Not possible, I suppose, because two of the three functions of money would be impossible: there would be nothing to act as a medium of exchange, or as a unit of account, until the omni-owner started to spend. And why would he spend? He would already own everything. Having no property, everyone else would be a slave.
So what is the theoretical maximum degree of financial inequality? And how close are we to that point?
Is this why the stockmarkets are stalling - there's not much wealth left to transfer to the upper crust, and what there is, the middle class are desperate to hang onto? Is that why, according to Tyler Durden, there's $8.1 trillion in cash holding off from investment - the rich won't put it back in unless they can pull out again at a profit, and the rest don't want to fall for the trick?
Not possible, I suppose, because two of the three functions of money would be impossible: there would be nothing to act as a medium of exchange, or as a unit of account, until the omni-owner started to spend. And why would he spend? He would already own everything. Having no property, everyone else would be a slave.
So what is the theoretical maximum degree of financial inequality? And how close are we to that point?
Is this why the stockmarkets are stalling - there's not much wealth left to transfer to the upper crust, and what there is, the middle class are desperate to hang onto? Is that why, according to Tyler Durden, there's $8.1 trillion in cash holding off from investment - the rich won't put it back in unless they can pull out again at a profit, and the rest don't want to fall for the trick?
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