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No Jumpers At RBS And Bankers Guess On Interest Rates

by | 8th, August 2008

WHY is it that if the financial sector is down we are all supposed to feel down?

The FT’s Samuel Brittan is right to say that the financial sector is not the whole of the economy.

Financial services account for about 12 per cent of UK gross national product. The “wholesale” sector – from which the current crunch originated – contributes just under 4 per cent, although more than that of any other European Union country except Luxembourg.

Beaten by Luxembourg… The shame. First Eurovision. Now this. What it means is that if banks are doing badly, it need not be the be all and end all to all of us.

It might not even be the end for bankers. Sir Tom McKillop, chairman, and Sir Fred Goodwin, chief executive of Royal Bank of Scotland, have kept their jobs, despite RBS losing £691m in the first six months of the year.

Six moths ago, RBS shares were trading at 314.57p. Now they are on 239p. Is the worst over for the bank? Had you taken a sell in February 2008 of £10 a full point, you’d have won £750. Banks lose. You win.
Or out your money in oil.

Last month, oil peaked at $147. We only know it peaked at $147 a barrel because it is now $120 a barrel.
Oil has dropped to a three-month low.

Had a Tradefair punter sold oil at $147, they would have won. And they can still win. US crude for September is offered on Tradefair at 118.12 to 118.18.

Listen to Deutsche Bank. The bank is advising clients to take profits before the economic downturn casts its spell on the sector. It warns that oil will slide back towards its “marginal production cost” of $60 to $80 a barrel.

A sell now at £1 a full point and a win of £38 pounds could be yours.

Betting on markets is relatively simple.

You don’t know what you’re doing? Well, asks yourself this: do the bankers know any more than you?

The Bank of England’s monetary policy committee has decided to leave interest rates unchanged at 5 per cent for the fourth consecutive month.

Over in Europe, the ECB has been raising interest rates (the current ECB rate is 4.25 per cent). In the United States, the Fed has been cutting them (2 per cent while the corresponding).

How’s that for a consistent policy..?



Posted: 8th, August 2008 | In: Broadsheets, Money Comment (1) | TrackBack | Permalink