1 ECB gloom suggests QE2 may be on the horizon (Nils
Prately in The Guardian) The European Central Bank (ECB) launched its €1.1tn
(£800bn) quantitative easing programme only in January. Now, with a full year
left to complete the bond-buying spree, QE2 is being prepared.
The bank’s president, Mario Draghi, didn’t put it so
baldly, of course, but the hints were there in a gloomy press conference that
delivered a 1% fall in the value of the euro against the dollar. If the ECB is
ready to adapt the “size, composition and duration” of the current programme,
everything is up for grabs.
Two conclusions follow. First, the old one: the ECB
launched QE too late. Even in the face of a deteriorating eurozone economy, it
debated the policy for about 18 months before sceptics at the German Bundesbank
could be persuaded. The second is that China has plainly rattled Draghi. “We
are observing a weakening of the prospects of the Chinese economy,” he said.
For short-termists, it is comforting to hear central
bankers sounding worried and talking about heavier doses of monetary medicine.
Thus stock markets rallied yesterday. But that is just knee-jerk stuff. If the
Chinese economy really has hit a brick wall, it will make little difference if
the ECB buys, say, €80bn of bonds a month rather than the current €60bn.
2 Lessons to learn from Greece situation (James
Thomas in Gulf News) With the Greek crisis reaching some form of resolution, at
least for now, it would be good to look at what lessons we can all learn from
this to avoid similar pitfalls ourselves.
Don’t spend more than you can afford. This is the
first rule of financial planning. Relating back to Greece, first they must stop
producing deficits so it can then begin reducing its mountain of debt. Avoid
debt. This seems obvious, but it is best to avoid being in debt in the first
place. But for many years, more loans, debt servicing and debt rollover were an
afterthought in Greece until the debt load became so huge no one was willing to
lend to them anymore.
Have a plan and stick to it. In financial planning,
we try to come up with a sensible plan to achieve each client’s goals. But the
plan does no one any good unless it is implemented. Always have a Plan B. It is
evident now that the new Greek government never had a credible Plan B in the
negotiations with their creditors. As a result, they were forced to accept what
is commonly accepted as a humiliating deal for yet another bailout.
Do not burn bridges. The Greek negotiating strategy
was disastrous. They managed to alienate almost every single member of the
Eurozone and then eventually asking them for another multibillion-Euro bailout.
Actions have consequences. And so do votes. The Greek voters elected their
leaders to govern, and they were not able to deliver on their promises. When a
country is not governed well there can be consequences. And this can be the
case with your money.
Change is hard, but necessary. When something is not
working in your personal financial situation, it is best to take immediate
corrective action because a delay in making a change may make the effects of
the eventual change even more dramatic and painful. For example, if you have a
problem overspending on your credit cards, it is perhaps best to cut them up;
if your job is damaging to your health you may want to find another one. But
Greeks are finding it extremely difficult to change their ways.
3 Fifty per cent US workers have gone to work with hang
over (Kia Croom in San Francisco Chronicle) A recent study conducted by
Blowfish, a manufacturer of tablets to prevent hangovers reports 50 percent of
American workers have gone to work hung over. Twenty-eight percent of
respondents report being late to work because of a hangover and seven percent
have admitted a hangover affected their performance on the job.
Cathy, a database administrator working in the
financial district anticipates catching the final 49ers preseason game,
Thursday as they take on the San Diego Chargers. She’s not ashamed to say she
might be just a bit hung over come Friday.
This isn’t the only way football season takes a toll
on productivity. Last week, we learned employees that play fantasy football
will cost companies an estimated $14 billion this season. If the morning after
a game is not your friend, and if you truly can’t go in, don’t. We are not
advocating violating company substance policies.
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