The great interest rate rip off part 1

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BBC NEWS | Business | More 25-year fixed-rate mortgages?

 

With housing now top of the political agenda, Prime Minister Gordon Brown has put forward a plan to provide more long-term, fixed-rate mortgages as a key measure to control house prices. But will it work? In fact it was in 2003 that, as Chancellor, Mr Brown asked Professor David Miles to report on why such mortgages are not very common, or indeed very popular.

Back then, Mr Brown said that if there were more of these mortgage deals around, they would help to smooth out the ups and downs of a volatile property market.

 

 

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Will it work?

It has never been obvious why, exactly, more long-term fixed-rate mortgages should in fact lead to more stable house prices.

And the immediate reaction from industry experts to the government's latest announcement shows a degree of scepticism.

"The overall benefit to consumers from the government legislating for longer-term fixed-rate mortgages is uncertain," said David Stubbs of the Royal Institution of Chartered Surveyors.

As Professor Miles reported four years ago, these deals are not very popular because they tend to have a higher interest rate than their short-term counterparts.

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Is the puny dollar a sign of America’s decline? -Times Online

 

There are many explanations for the apparently perverse relationship between currencies and economic performance, though none of them is watertight. For example, currencies tend to strengthen in response to rising interest rates and fears of inflation – which are obviously bad for economic performance – but also in response to strong economic growth.

On the other hand, a currency may weaken because inflation prospects are improving, as they are in the US at present, or because investors fear a financial collapse, which some believe to be a looming in the US mortgage market. But if the causes of currency strength are ambiguous and contradictory, the consequences are clear. A currency that keeps rising, as the euro and sterling are at present, will eventually do serious damage to almost any economy, hurting export competitiveness and stunting growth.

This is what happened to Britain and America after the pound and the dollar appreciated excessively in the early 1980s and again in the early 1990s. It happened to Germany and Japan in the mid1990s and again in the middle of this decade to the eurozone. Europe and Britain enjoyed some relief in 2005, when the euro and the pound temporarily weakened.

But now they will have to bear the full brunt of excessive currency strength. In Britain’s case, the strength of the pound may not do too much harm, since it will forestall or at least delay any further rate rises from the Bank of England. On the Continent, however, the European Central Bank seems determined to keep raising interest rates, thereby exacerbating the damage done by the euro’s excessive strength.

Americans, meanwhile, will enjoy the benefits of a super-cheap currency, which will more than offset falling property prices and problems with a small minority of mortgage loans. American politicians, for all their faults, instinctively understand this, which is why they have generally welcomed a falling dollar and have been pressuring China and Japan to let the dollar weaken against the yen and the renmimbi – not just, as at present, against the euro and the pound.

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After the credit binge, markets fear the crunch is on the way - Times Online

 

The dollar plumbed fresh lows and shares in Europe tumbled yesterday as investors fretted that strife in America’s sub-prime mortgage market could herald a wider credit crunch, which, in turn, would undercut US prospects.

In another turbulent day for global markets, rattled by Tuesday’s threat from Standard & Poor’s (S&P) to downgrade $12 billion of bonds backed by US sub-prime home loans, the dollar bore the brunt of investors’ anxiety.

The greenback slipped to a record low against the euro for the second day running, lifting the surging single currency to a high of $1.3787. The pound was propelled to a new, 26-year high, closing in London at $2.0343, having earlier hit a peak of $2.0351.

In Europe, shares were badly battered, with the FTSE 100 index and France’s benchmark CAC40 both shedding 0.3 per cent, while Germany’s DAX lost 0.8 per cent.

 

 

 

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Anxiety over the risk of a credit crunch comes after years of lax lending by US instititions, encouraged by abundant, cheap credit created worldwide by past, very low interest rates. Now, with global interest rates sharply higher, this glut of easy money is drying up. The fear is that, as rates charged to borrowers rise, more of the loans too readily handed out in the past will turn bad, leading banks to impose much tougher conditions on new lending, slamming the brakes on corporate activity and the US economy.

The second worry, over the housing downturn, is closely tied to the first: were US house prices to fall more sharply, this could fuel still more mortgage defaults, triggering even greater tightening of credit conditions.

Fear of such a vicious circle was ratcheted up by the S&P warning over the value of bonds backed by high-risk, low-quality, sub-prime loans.

Yet economists remain confident that such worst-case scenarios will not materialise. Despite a warning yesterday from the National Association of Realtors that US home sales and prices will fall further this year than it previously thought, Charles Plosser, a senior Federal Reserve official, argued last night that this should not derail prospects for US growth to rebound...

 

 

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What has been the impact outside the mortgage industry?

Hedge fund are losing a fortune because they have bought hundreds of billions of dollars of bonds backed by sub-prime mortgages, which are plummeting in value. Since hedge funds get most of their money from pension funds, retirement pots are also taking a drubbing. The cost of borrowing is rising as investors get increasingly nervous about lending

Have any UK firms taken a hit?

In addition to HSBC’s mortgage losses, Queen’s Walk Investment, the listed vehicle of the Cheyne Capital hedge fund, reported a plunge into the red for the year to March 31. Cambridge Place, the London fund manager, was forced to close its $908 million listed fund a day later. Barclays is likely to make a significant loss on the $300 million loan it made to one of Bear Stearns’s hedge funds

 

Don't worry dangerous Merv will fix it with a interest rate rise.....

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Lenders set to foreclose on 1.8m borrowers in sub-prime crisis - Times Online

 

Mortgage banks are expected to foreclose on 1.8 million American home loans this year as already-stretched “sub-prime” borrowers contend with rising interest rates, according to new research.

The predicted foreclosures represent a 44 per cent jump on last year and are expected to leave about 720,000 mortgage holders without a house, with potentially far-reaching consequences for the global economy.

A foreclosure is a legal process typically set in motion when a borrower falls 90 days behind on mortgage repayments. About 40 per cent end in a forced sale or repossession of the house, while the bank and borrower reach an alternative repayment schedule in the remaining cases.

The number of foreclosures jumped by 87 per cent to 164,644 in June, compared with the year-earlier period, according to new figures released by RealtyTrac, the American mortgage research firm.

This brings the total number of foreclosures to 925,987 for the first half of the year. It compares with 1.25 million for the whole of 2006 and is more than the 847,000 recorded in 2005, according to RealtyTrac.

A significant jump in the number of foreclosures is bad for the housing market because it leads to fire-sales and damages confidence, which then reduces prices. Declining house prices discourage consumer spending and make lenders generally nervous about approving loans, which is bad for the economy as a whole. As the world’s economy becomes increasingly integrated, an increase in the cost of borrowing and a decline in company profits are more likely to cross the Atlantic and have an impact around the globe.

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Every household pays £900 a year to cover bungled Government projects | the Daily Mail

 

Every household in Britain is paying £900 a year to cover the cost of bungled Government projects.

Labour has squandered a staggering £23billion of taxpayers' money by failing to control the spiralling costs of hundreds of flagship schemes, figures reveal.

 

The 2012 Olympic Games in London, the Channel Tunnel Rail Link, a super-computer for the NHS and the Eurofighter military aircraft are among the projects that have soared over budget. The wasted money would have been enough to build nearly 100 new hospitals.

 

MPs and low-tax campaigners said the sum squandered was "criminal".

Philip Hammond, Tory Treasury spokesman, said: "It is outrageous that hard-working British families have been hit to the tune of £900 each to pay for Labour's project cost overruns.

 

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Experts said the problems stemmed from a failure by departments to specify exactly what they wanted, underestimating costs to get a project approved and paying over the odds in an attempt to solve the problem.

 

Not only do we get the tax bill we also get rewarded with higher interest rates further straining household budgets!!

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Tesco sets aside green issues to focus resources on a price war - Times Online

 

Tesco is launching its biggest price-led advertising campaign for a decade amid growing concerns of a slowdown on the high street. The £4 million campaign, starting on television tonight, will feature independent price checks on 10,000 products in each supermarket chain and show where Tesco is cheaper – or more expensive.

The move comes three weeks after Asda announced £250 million of price cuts. Within hours, Tesco responded with reductions worth £270 million, putting pressure, say analysts, on Morrisons and J Sainsbury.

Tesco claimed yesterday that in the past year it has been 7 per cent cheaper than Sainsbury’s and 1 to 2 per cent cheaper than Asda. However, Asda said that research in The Grocer showed that it had been Britain’s cheapest supermarket for ten years in a row. A spokesman said: “Tesco needs to get its calculator back out.”

 

Slow down or start of a recession caused by successive BoE interest rate rises?

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After the floods - Hull struggles with rate rises | Special report | Guardian Unlimited Business

 

Some towns are suffering more than others from the continuing rise in interest rates over the past year, with Hull, Stevenage and Slough the hardest hit, according to new research.Researchers at Experian Business Strategies analysed more than 400 towns to identify types of people and neighbourhoods most susceptible to debt and rising interest rates.

"There are winners and losers when interest rates change," said Neil Blake, chief economist at Experian Business Strategies. "People with savings will gain and those with mortgages or large amounts of unsecured debt will lose out. However, our research shows that the winners and losers are heavily concentrated in some locations and in certain socio-economic groups."

He said the rise in interest rates was bad news for places such as Hull, where there are higher proportions of people with large mortgages, lower gross incomes, significant levels of unsecured borrowing and fewer savings. Hull is still struggling with the effects of recent floods.

The report uses Experian's postcode-based Mosaic consumer classification to identify types of people and neighbourhoods most susceptible. Neighbourhoods most vulnerable include those identified as "just moving in", "fledgling nurseries" and "burdened optimists".

 

A single interest rate doesn't work the whole system is failing the people of this country whilst our politicians sit and watch.

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GE bails out of US sub-prime market - Times Online

 

General Electric (GE), the US conglomerate, is set to offload its sub-prime mortgage business as American-based banks increase the number of foreclosures (or repossessions) on homeowners with a poor credit history. GE is expected to announce the sale of WMC Mortgage Securities as part its second quarter trading update later today. The mortgage group, acquired by GE three years ago, has already been subject to cost cuts after 1,200 jobs were slashed, leaving 700 staff at the company, while it has reduced the number of home loans it grants to borrowers.

It has already had to write down the value of these loans and is expected to have to take another one following the sale.

GE's decision emerged as the number of foreclosures on home loans in the US leapt by 87 per cent during June, compared to the same period last year. Around 720,000 Americans are expected to be left without a house as banks repossess homes following borrowers' failure to make mortgage payments during a 90-day period.

 

The number of loan foreclosures in the States hit 925,987 during the first half of the year, compared to 1.25 million over the whole of 2006 and 857,000 recorded in 2005

 

 

 

How long before UK starts to see a similar picture due to the current irresponsible rate raises???

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Homeowners feel squeeze as some rates top 8% - Times Online

 

Homeowners on standard mortgage deals are being forced to pay interest rates of more than 8 per cent for the first time since 1999. Bank of Scotland and Birmingham Midshires, both divisions of HBOS, the biggest mortgage lender in the UK, increased their standard variable rates (SVRs) yesterday to 8.1 per cent and 8.19 per cent, respectively.

The rates increased to more than 8 per cent after the lenders passed on last week’s quarter-point base rate rise. Only a fraction of borrowers take out mortgage deals pegged at their lender’s SVR, preferring cheaper short-term deals instead. But many end up paying the SVR when their short-term deal comes to an end while they are negotiating a new loan.

In addition, many homeowners who have nearly repaid their mortgage often choose to pay their lender’s SVR rather than pay large arrangement fees to lock into another short-term loan. Lisa Taylor, of Moneyfacts, the price comparison website, said: “If you have a small outstanding mortgage and are paying the SVR, this is really going to hit you in the pocket. Unsecured lending is now cheaper than these rates."

 

On a £100,000 loan that's roughly £8100 a year in interest!!!!

 

Interesting that they didn't state what the banks interest rate was before the last increase.

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The palaces of the mega-rich rise 35% in value - Times Online

 

The lust of rich men for real estate in Chelsea, Kensington and Notting Hill remains undiminished by rises in interest rates that are fast subduing the mood of other homebuyers. The prime Central London property market rose by 3.1 per cent last month, bringing the annual rate of growth to 34.5 per cent, the highest since 1979, according to Knight Frank, the estate agent.

Houses valued at £4 million-plus are the top performers, up 43 per cent over the year. Nationwide’s figures for the whole of the UK show average annual growth of 10.2 per cent, a result that is itself skewed by the ebullience of the capital.

Liam Bailey, Knight Frank’s head of residential research, acknowledges that he underestimated the sheer weight of cash that would seek out white-stuccoed town houses, or supersized “lateral” apartments. He says: “We saw growth of 30 per cent last year and expected 15 per cent; the surge in demand means that we have raised our forecast for the whole year to 25 per cent.”

 

And the poor get to pay with higher interest rates!!! Nice.

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The new home loan [problem] - Times Online

 

What should you do if you can’t afford the house of your dreams? Simple – downsize or start saving. But some homebuyers have sought out an easier alternative, faking their finances to make it seem that they are earning much more than they are.

A plethora of websites produce “duplicate” bank statements, payslips, utility bills and P60s at the click of a mouse. Some claim that these are legitimate services for people who have lost their P60.

But the sites visited by Times Money made no attempt to verify any of the information we supplied about wages or income. This makes it easy for people who want to borrow more than they can afford to fake their details. Alternatively, they can use the false information to claim they are earning less than they actually are, cutting their tax bill or child maintenance payments.

The documents are convincing. The P60s, the statements issued by employers at the end of the tax year that state how much a worker has earned, are printed on the same stationery as that used by employers. And the bank statements are full of fictitious “everyday” withdrawals and payments, such as the monthly subscription for Friends Reunited and groceries at Tesco. A recent report from the Institute of Payroll Professionals (IPPR) says that the number of websites offering these documents is increasing.

 

Helping to drive up interest rates!!!! Surely the BoE must stop this rather than raise interest rates further!!! O wait the BoE only know how to raise interest rates as nothing else matters or works!!!

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Petrol prices and property slide deter US shoppers - Times Online

 

Surging petrol prices and the slide in the American property market kept shoppers out of US malls in June, triggering a far worse than expected fall in retail sales.

Retail sales fell by 0.9 per cent last month, representing the sharpest fall in almost two years.

Demand for cars, furniture and building supplies fell as consumers eyed the sliding price of property and struggled to keep pace with higher mortgage payments.

Car manufacturers saw sales fall 2.9 per cent as the rising cost of fuel hit demand for gas-guzzling sports utility vehicles.

 

The figures also brought into question the stock market rally on Wall Street on Thursday, suggesting that investors may have been overenthusiastic about better than expected results from Wal-Mart, the retailer.

Jan Hutzius, chief economist at Goldman Sachs, the US investment bank, said that the poor retail figures raised pressure on the Federal Reserve to cut interest rates.

The price of fuel hit $3 a gallon this week – just as US petrol consumption surges to meet rising demand from American holidaymakers.

 

A world wide recession looming, caused by the worlds central bankers???? And they are only one letter off being what they really are!!

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Banks rip off customers by pushing up price of using credit cards abroad | the Daily Mail

 

Banks are pushing up the cost of using plastic cards overseas just as millions of families take their summer holidays.

 

Travellers face higher charges on everything from buying a meal in a restaurant to hiring a car or paying a hotel bill.

As much as £6 in every £100 is going to the banks in some cases and industry analysts suggest the total figure for these hidden charges was £326million last year and will be approaching £500million for 2007.

Every time a card is used to make a purchase or withdraw cash overseas, at least one and sometimes two fees are added. The extra charges could cost a family of four more than £40 over a two-week holiday.

 

Personally I think Merv needs to put up interest rates to stop this, it's amazing how interest rates control everything in the economy. Higher prices forced on the consumer again, yet we all pay double with higher interest rates.

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Thanks for the link I'll have a look at it later

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The economy’s momentum still carries the day - Times Online

 

HEADWINDS vs momentum. That just about summarises what is going on in the US economy. Some weather watchers say the headwinds are close to gale force. The uproar in the subprime mortgage market has the rating agencies becoming more picky; lenders such as Barclays and Lloyds TSB taking a longer look at borrowers before handing over money; and even the red-hot private-equity dealmakers paying a bit more for the loans that finance their takeovers.

Oil and petrol prices remain at levels that are pinching consumers’ pockets, and driving up the cost of doing business. Inflation is tame (up only 1.9% from last year) if you look at the “core” prices, excluding food and energy, as Federal Reserve Board chairman Ben Bernanke continued to do last week in a speech that economists at Goldman Sachs characterised as “very academic”. But Fed members apparently neither eat nor drive, according to consumers who find that inflation in food and energy prices is hurting them.

Then there is the housing market, with foreclosures up 87% from last year’s level and prices falling. Consumers notice when petrol prices rise because they have to fill their tanks every week, and they notice when house prices fall because they have less to boast about at dinner parties. Those prices continue to fall under the pressure of rising unsold inventories. The spring selling season proved a damp squib: potential buyers are holding back in anticipation of still lower prices, and higher mortgage rates are making home ownership more expensive. Prolifer-ating “for sale” signs are upsetting reminders of the soft market.

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BBC NEWS | Business | Profit warnings at five-year high

 

Profit warnings issued by UK-listed firms are at their highest level since the low point of the technology-led stock market crash in 2001. In the first half of 2007, 191 companies cut earnings forecasts, 13% more than in the same period in 2006, research by Ernst & Young has shown.

A shortfall in sales was the most often quoted reason for warnings, suggesting a downturn in the UK economy.

Software and support services firms issued the most earnings downgrades.

More than 230 profit warnings were issued at the beginning of 2001 at a time when the UK stock market had almost halved in value since its exuberant peak in the final days of the dotcom boom.

Keith McGregor, corporate restructuring partner at Ernst & Young takes the view we are a long way from the economic climate of that time.

But he cautioned that the high number of profit warnings "are a reminder that segments of UK plc are struggling" in a changing environment of rising interest rates and more expensive borrowing costs.

 

Is the recession just around the corner???? Self induced by the genius that is the MCP???

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BBC NEWS | Business | US retail sales fall unexpectedly

 

US retail sales unexpectedly dropped by 0.9% in June, a report from the US Commerce Department says - their biggest decline in almost two years. Sales were down 0.4% even without the effect of a slump in the car market, the cause of much of the fall.

The month before, retail sales had risen by a revised figure of 1.5%.

The problems in the housing market were reflected by a 3% fall in furniture sales and a 2.3% fall in sales of building materials and garden supplies.

The figures are likely to add to fears about the prospects for the US economy, currently assailed by the problems with sub-prime mortgages and the risk of a knock-on effect on investment and lending.

If retail sales stay weak, that could impact economic growth, since consumer spending accounts for two thirds of economic activity.

Figures out on Thursday had led economists to expect better retail sales figures.

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The euro’s rise and rise is unsustainable - Times Online

 

Most commentators seemed to have no doubt about the explanation for last week’s most important economic event – the 26-year highs hit by the pound and the euro against the dollar, which now threaten to open the floodgates on a tide of currency speculation, transforming economic conditions for British and European export industries in the months ahead. The Financial Times explained this momentous event very clearly in Saturday’s leader, saying: “The dollar slide came amid another week of negative market movements, principally driven by more bad news from the US sub-prime housing market. The gap between growth in and outside the US explains some of the fall in the dollar. The large US trade deficit also puts inevitable downward pressure on the currency.”

I beg to differ. Market chatter last week may well have been dominated by the US housing panic, but a less emotional analysis suggests that something very different was probably going on. For a start, it seems odd to use the phrase “another week of negative market movements” to describe a succession of record highs on almost every stock market from New York to Hong Kong to Frankfurt – and the biggest weekly gain on Wall Street since 2003. Secondly, it is far from clear that the dollar’s decline has anything much to do with either the trade deficit or the gap between US and international growth. It is obviously true that the US economy has been relatively weak recently, growing by an annualised average of just 1.6 per cent in the past two quarters, and that America has by far the biggest trade deficit in the world. But before drawing any strong conclusions, it is worth recalling which major economy has had the strongest growth rate in the past two quarters.

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Ice-cream makers frozen out as corn price rises - Times Online

 

What’s the connection between ethanol, the biofuel produced from corn, and a cherry vanilla ice-cream?

Answer: the first is responsible for pushing up the price of the other.

This month, the price of milk in the United States surged to a near-record in part because of the increasing costs of feeding a dairy herd. The corn feed used to feed cattle has almost doubled in price in a year as demand has grown for the grain to produce ethanol.

 

Christina Seid, whose family have been making ice-cream at the Chinatown Ice Cream Factory for 28 years, said yesterday that she expected to have to raise her prices, along with all competitors in the short term. “We are holding out as long as we can, but prices will rise,” Ms Seid said.

 

As previously mentioned on this thread about the increasing cost of milk worldwide, no interest rate is going to combat this problem. Of course Merv the Dim thinks it will as it's all to do with the money supply and nothing to with reality. Perhaps we should all stop drinking milk to reduce the demand and the price will fall, then we can all develop osteoporosis and cost the health service billions in treatment???

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Are these the last days of the Oil Age? -Times Online

 

Oil ruled the 20th century; the shortage of oil will rule the 21st. There is now no doubt about the rising trend in oil prices. In 2003 a barrel of Brent crude sold for $29; in 2004 it rose to $38; in 2005 it rose to $54.50; in 2006 it rose to $65. Last Friday the price closed at $77.50. Some dealers expect it to test the $80 level quite shortly.

Last Tuesday the lead story in The Financial Times was the latest report from the International Energy Agency. The FT quoted the IEA as saying: “Oil looks extremely tight in five years’ time,” and that there are “prospects of even tighter natural gas markets at the turn of the decade”. For an international agency, that is inflammatory language. This steep rise in the oil price over a four-year period has been caused by demand rising at more than 2 per cent a year, while supplies had risen more slowly, by a healthy 4.1 per cent in 2004, but by only 1.25 per cent in 2005 and 0.5 per cent in 2006.

This has revived the “oil peak” debate among oil analysts. Some analysts believe that the world will never again be able to pump as much oil as we are pumping at present.

 

Don't worry interest rate rises will combat the inflationary pressure of oil price rises, again another example of planet MCP reality not being part of planet earth reality.

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RBS raises the stakes in ABN battle | | Guardian Unlimited Business

 

Royal Bank of Scotland has launched a new bid for ABN Amro, offering shareholders more cash in an attempt to wrestle it away from rival bidder Barclays.The consortium of RBS, Fortis of Belgium and Franco-Spanish bank Santander this morning said that while it would stick with its original offer of €71.1bn (£48.1bn), the cash terms are being upped from 70% to 93%.

RBS said that it was still saw considerable value in buying ABN even though its LaSalle operations, which it wanted to acquire, are definitely being sold to Bank of America for €21bn.

 

No doubt this bid is all funded from lending, increasing the money supply therefore increasing the need to increase interest rates. Yep you've guessed it the consumer will pay for it!!!!

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BBC NEWS | Business | Inflation sends kiwi to new highs

 

Higher-than-forecast inflation and expectations of interest rate rises have sent New Zealand's currency to its highest against the dollar since 1985. Consumer inflation rose by 1% in the three months from April, which helped push the kiwi to $0.7900 to the dollar.

The latest inflation data was above central bank forecasts, and double that seen in the previous quarter.

New Zealand interest rates currently stand at 8%, which is the highest in the industrialised world.

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London helps to lift house prices - Times Online

 

House price growth softened in May, according to official figures released today.

Statistics from the Department for Communities and Local Government suggest that higher interest rates are beginning to bite in some regions, although across the country as a whole annual gains remained in double digits - boosted by rising prices in London, Scotland and Northern Ireland.

These combined to keep annual prices at 10.9 per cent in May, down from 11.3 per cent in April.

The average house price in May stood at £211,056, according to the Government figures.

 

The data is based on sale completions and so lags other surveys.

Howard Archer, the chief UK economist at Global Insight, said: “The data add to the overall evidence that house prices are coming off the boil, although it should be borne in mind that the DCLG tends to provide lagging evidence on house prices, as the office calculates its index at the time when mortgages are completed."

Seema Shah, property economist with Capital Economics, said: "The regional picture shows that the real strength of the market continues to lie with London, Scotland and Northern Ireland.

"These three regions continued to record annual house price growth of over 10 per cent in May. However, of these three, London was the only one not to see a moderation in house price inflation from the previous month."

 

Quite rightly another interest rate rise is needed to curb this regional problem. If northerns lose there houses who cares just as London is OK.

 

There is no justification for a national interest rate. Why should the north pay the price for the excess of London. Inflation is NOT a macro-economic problem, it's a micro-economic problem but we just get a blunderbuss approach by all central banks. Not that all Londoners will be fine many will suffer as well.

 

Interest rates simply do not work a 21st century approach needs to be developed for a 21st century problem. The banks are increasing becoming a hard sell operation as they MAKE MONEY BY SELLING LOANS there by increasing the money supply, this seems to have got by the MCP who just want to make the consumer pay for all the faults in the system.

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Sterling and oil advance into record territory - Times Online

 

The price of oil tested record highs in London today, amid heavy speculative buying and concerns over tight US fuel supplies.

Crude's ascent was mirrored in the foreign exchange markets, where the pound climbed to $2.04, a 26-year high for sterling against the greenback.

The dollar looked to be weighed down by continued jitters over the US housing market, soft US retail sales data from Friday and fears over today's Empire State manufacturing survey for July, which is expected to show a pullback in the sector in the US.

Meanwhile, Brent North Sea crude for August delivery hit $78.40 in London, within a whisker of the record, $78.64. set on August 9, 2006, when a pipeline spill forced BP to close production from Prudhoe Bay, the biggest oil field in the US.

 

New York’s main oil futures contract, light sweet crude for delivery in August, jumped to $74.44 a barrel, a level seen most recently last August 11.

Michael Davies, the Sucden analyst, said: “Just as at the end of last week, there is a continuous inflow of fresh speculative and fund money supporting the prices."

Brent prices were also lifted by upcoming maintenance work in the North Sea, which raised fears of a supply crunch.

Mr Davies added: “Tightening supplies from the North Sea region are still seen as supportive of crude futures, while market participants remain concerned about seasonal maintenance on North Sea oilfields at the end of the summer, in addition to unexpected outrages.”

 

I think another interest rate will will help to combat these increases, as well as stabling the Niger delta. It appears that Merv appears to think so!!

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BBC NEWS | Business | Your Money | Wealth gap 'widest in 40 years'

 

The gap between rich and poor in the UK is as wide as it has been for 40 years, the Joseph Rowntree Foundation (JRF) has said in a report. The JRF found that households in already wealthy areas had become "disproportionately" richer compared with society as a whole.

But the number of "poor" households has risen over the past 15 years.

Since the 1980s, wealthier people have moved to the suburbs while the poor remain in inner cities, the JRF added.

Society polarised

Looking at wealth patterns over the past four decades, the JRF found that the gap between rich and poor actually narrowed in the 1970s.

But during the 1980s and 1990s inequality had increased as a "polarisation" in British society had occurred.

As for the decade beginning in 2000, the report said the picture was "less clear", with some initiatives such as tax and pension credit helping the poor while wealthier people were gaining from a property market boom.

 

I would suspect that this picture will change again when the interest rate rises start to kick in, the BoE helping to plunge more people into poverty.