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Financial crisis over, armageddon cancelled – everything’s going to be just fine, right?

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Gordon Brown’s rescue plan for the banking industry seems to have been used as a blueprint for similar bailouts across Europe and even in the US, and for now it seems like the stock markets are responding positively with record gains on most of the major markets. So everything’s peachy and happy days are here again, right?

Wouldn’t bank on it (haha – see what I did there?). The bailouts seem to have done a good job of restoring confidence in the world’s banks, which has helped them to recover some of their share values and in turn enable the plummeting stockmarkets to recover some of the massive losses that happened last week. But there’s still an awful lot of grim news out there.

For a start, inflation rose to a 16 year high of 5.2% which means the cost of living is getting more expensive for most of us, especially since a lot of people believe the official inflation figures are usually much lower than the reality of the high street because the goverment uses a dodgy calculation to fudge the numbers.  The newspapers are quoting a lot of stuffed-suits who tell us that inflation is now peaking, because falling oil prices and the general decline in consumer spending will help to bring prices down – but we’ll reserve judgement until we see any actual evidence of falling food/energy prices.

Next up, news from the housing market keeps getting gloomier, sales in most of the country have slowed to record levels and property prices just keep dropping. So much of the UK’s ‘personal wealth’ (if you can describe debt secured on your rapidly depreciating home as wealth) and economic confidence is wrapped up in the property market that this state of affairs has left much of the population in a state of financial shock, especially those who don’t remember previous market slumps and assumed that property investments were a one way bet.

With the cost of living rising sharply, consumer confidence falling through the floor, and let’s not forget that enormous mountain of personal debt that nobody’s talking about at the moment, it’s probably a little early to be cracking open the bubbly just yet…

  1. Nice article!
    Thanks for sharing it.