My UK Destiny

Investors feared that the bank's collapse could leave the financial market in tatters, just as Lehman Brothers' bankruptcy did in mid-September.

The yield curve is a key measure of investor sentiment, with a higher curve generally indicating a weaker economic environment.

The spread measures the difference between actual borrowing costs and the expected targeted borrowing rate from the Fed. It is used as a gauge to determine how much cash is available for lending between banks. The bigger the spread, the less cash is available for lending.

The TED spread measures the difference between the 3-month Libor and the 3-month Treasury bill, and is a key indicator of risk. The lower the spread, the more willing investors are to take risks.

1/Nov/2008 , Saturday

When the dollar was relatively weak, companies that do a lot of business abroad - Cola Cola, 3M and Philip Morris International, to name a few - saw profits increase when converted from foreign currencies into U.S. dollars.

The benefits of foreign exchange, which many companies would rather downplay, have been tremendous in recent months. Tobacco maker Philip Morris made more than half of its 17.5% sales growth last quarter from changing money. Merck posted a 2.1% decline in sales; without foreign exchange, revenues at the pharmaceuticals maker would have decreases nearly three times as much.

But currency hedging is a tricky business: Companies use derivative financial instruments such as option contracts and currency forwards to try to counterbalance the risk they incur from selling abroad.

The fed funds rate is used to set rates for a wide variety of consumer loans, including home equity lines and credit cards, as well as for many business loans. The lower the rate, the more the Fed hopes to spur economic activity.

While rate cuts are traditionally the key tool the Fed uses to stimulate the U.S. economy, it has had to take other steps to address the current credit crisis.

The Fed has loaned hundreds of billions of dollars to banks through a new lending facility and is starting to loan money directly to major businesses by purchasing commercial paper, which is what some banks and businesses use as their primary method to fund day to day operations. To top of page.

Lending rates: Meanwhile, the credit market continued to improve, with Libor, the overnight bank-to-bank lending rate, falling to 1.14% from 1.24% the previous day, according to Dow Jones. The 3-month Libor fell to 3.42% from 3.47%.The TED spread, the difference between what banks pay to borrow from each other for three months and what the Treasury pays, widened to 2.81% from 2.71% Tuesday. The spread hit a record 4.65% earlier this month. The narrower the spread, the more willing banks are to lend to each other.The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, slipped to 0.57% from 0.75% late Tuesday, showing investors would rather see little return on their money than risk the stock market.

Recent turmoil in the world's financial markets and concerns about a global recession have driven investors away from high-yielding currencies such as the euro and the pound. As a result, lower-yielding currencies like the dollar and the yen have surged in value because they are considered by many investors to be a safe-haven.

carry trade

Investors often borrow yen to fund investments in higher-yielding currencies. When those currencies weaken, and investors reverse their positions, they are forced to buy back the yen, raising its value.

A stronger yen can hurt Japanese companies that sell goods overseas when profits are translated back into yen.The dollar fell to ¥94.09 Monday from ¥94.63 late Friday. On Friday, the yen drove the dollar to a 13-year low of ¥91.10.

The recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability.

So, will your job survive the economic crisis?

The credit crunch has already had a doleful impact on the jobs market. Unemployment is rising at its fastest rate in 17 years and is set to hit two million by Christmas. Some economists say it will climb to three million by the end of 2010. The Prime Minister and the Governor of the Bank of England have admitted that the economy is likely to slide into recession soon. They may keep their jobs at the end of all this – but will you?

Manufacturing

Not the force it was but about three million jobs still depend on it. Short-time working at Nissan (Sunderland), Ford (Southampton) and Land Rover (Halewood, Merseyside) tell us all we need to know about the carmakers. Long-term decline in the face of low cost competition from China, India and elsewhere seems to be accelerating. Some firms, such as JCB, are deferring pay rises to help save jobs. About 60,000 jobs have been lost over the past 12 months.

Likelihood of being fired = 3/5

North Sea Oil

According to a survey by KPMG and the Recruitment and Employment Confederation (REC), the energy and mining industries saw a 23 per cent rise in vacancies in the past few months. However, that was when the price of a barrel of oil was more than $100, peaking at $147 in July. Although the industry tends to have long lead times and is highly seasonal – unexpected weather can stop work on oil rigs and gas platforms for long periods – the outlook must be gloomier now.

Likelihood of being fired = 3/5

Financial services

Dismal. Cuts at Goldman Sachs are the latest in what will prove to be a long list of redundancies. The Hay Group, an employment consultancy, recently forecast that 111,000 jobs in the financial sector could be lost in the UK in the next year. There's been a 19 per cent decline in vacancies in the past month, a poor omen. Partial nationalisation may cushion the blow in some places but the gross overcapacity in the sector and a round of mergers will see the sector's largest ever rationalisation.

Likelihood of being fired = 4.5/5

Lawyers

Or "legal professionals", as the Office for National Statistics (ONS) describes them. Up by about 6 per cent on the year, they thrive in bad times as well as good. The collapse in conveyancing has hurt but the usual casualties of a credit crunch and a recession usually mean more misery-related work for our learned friends; bankruptcies, repossessions, class actions from disgruntled shareholders/savers and so forth.

Likelihood of being fired = 1/5

Teaching

The vast majority of teaching staff are employed in the public sector, which is the place to be for the next few years if you value job security. Anecdotal evidence suggests some people are retraining as teachers, and the teaching bodies are hoping to capitalise on the crisis to boost numbers. Vacancies in the public sector generally are up by 8.7 per cent.

Likelihood of being fired = 0.5/5

Shopworkers

Another engine of employment growth that has stumbled. It depends, though. At one extreme, this is not a good time to be a Porsche dealer, with sales down a third on 2007. Aldi and Lidl, by contrast, are reporting encouraging results. Most retailers say they'll be taking onfewer seasonal workers this Christmas. Vacancies were down 9 percent last month.

Likelihood of being fired = 3/5

IT and computing

Still growing strongly: the KPMG/REC Survey puts demand up by 46 per cent in September. Much IT and software work has been associated with financial services, so this may well see a sharp decline in coming months. Some of the slack, at least, ought to be taken up by major new public sector programmes such as the ID cards scheme and, possibly, national road pricing.

Likelihood of being fired = 2/5

Construction

More than 30,000 building workers have lost their jobs in the past 18 months, according to the ONS. The credit crunch has cut the volume of funds going into the property market by about 70 per cent, with predictably grim consequences. The only bright spot has been the resilience of public sector infrastructure projects. The Government has said it will bring forward work on Crossrail, the 2012 Olympics and nuclear power. The worst could soon be over, if only because it has been so bad.

Likelihood of being fired = 3/5

Hotels and catering

About 11,000 jobs were lost in the second quarter of the year. Going out less often is usually one of the first options for hard-pressed families, and the strength of the pound, which had been relatively robust until the summer, hasn't helped tourist numbers. However, if you can cook you're okay – demand for chefs is up and they're in short supply.

Likelihood of being fired = 4/5

Media

Recent announcements of job cuts at ITV News, Channel 4, and the Express and the Metro newspapers confirms that the credit crunch is squeezing the sector both ways – from a meltdown in advertising revenues and from the decline in consumer demand. Trendy, but in jeopardy.

Likelihood of being fired = 4/5

Nursing

Although the breakneck pace of spending on the health service is likely to slow in the next few years, the commitment of the Government to spend our way out of recession should help protect jobs in the NHS. The KPMG/REC Survey ranked nursing and medical care as the only category of job to register a rise in demand last month, for both permanent and temporary/contract staff.

Likelihood of being fired = 0.5/5

Likelihood of being fired = points out of 5 (5 being most likely to have employees end up on the dole)

25 October 2008, Saturday

Unemployment will rise, living standards will fall and the whole of Britain will be affected.

There are three large dangers here. First, that the banks continue to suffer losses they are ill-equipped to cope with. The second danger is deflation. The lesson of the world economy in the 1930s, and of the Japanese post-bubble stagnation of the past 20 years, is that it is extremely difficult to reverse a situation where prices – in the shops and of houses and shares – routinely fall. This is both a symptom and cause of an economy where confidence has virtually collapsed along with the banks.The third danger is simply that the recession drags on, and the economy stagnates for a long time – the so-called "L-shaped" recession. In this case, the Bank of England could be prevented from cutting interest rates radically because of a collapse in the pound, already under way and possibly set to accelerate, with a commensurate danger of inflation.

22 October 2008, Wednesday

Oil ends at 16-month low

U.S. crude for December delivery lost $5.43 to end the session at $66.75 a barrel in New York.

Dollar:As the global economy slowed, investors sought the stability of the dollar, which also contributed to lower oil prices.Oil, like other commodities, is traded in dollar terms. So when the value of the dollar goes up, it often means that the dollar-denominated price of crude falls.

Stocks tumbled as weak corporate results and forecasts - and slumping commodity prices - amplified fears of a broad recession.Global markets slid, with Asian and European stocks ending lower. Treasury prices rose, lowering the corresponding yields. The dollar was mixed versus other major currencies. Oil, gas and gold prices fell.

Commodities:Reported a negative growth

Credit market:Treasury prices rose, lowering the yield on the 10-year note to 3.62% from 3.70% Wednesday. Treasury prices and yields move in opposite directions.

The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, slipped to 0.98% from 1.19% late Tuesday. However, the yield remained above recent lows as investors began to pull money out of the safer investment and put it back in stocks.

Last week, the 3-month fell to below 0.2%. Last month, it reached a 68-year low around 0% as investor panic hit its peak.

Treasury bond prices often climb when stock prices fall as investors seek the perceived safety of government debt.

UK
Libor is a daily average of what 16 different banks charge other banks to lend money in London and is used to calculate adjustable rate mortgages. The higher the rate, the more difficult it can be for homeowners to meet their payments.

Treasury boost. Investors are also seeking the safety of U.S. government bonds, which offer a lower but guaranteed return over more risky equities. Investors typically shift assets into Treasurys during times of economic turmoil.

Oil: Commodities such as oil are traded in U.S. dollars, so a decline in the value of oil makes the dollars themselves a much more attractive investment.The cut in oil prices also should probably alleviate some pressure on the U.S. economy. The U.S. is the world's largest oil consumer. That will likely help the dollar in the long-term.The rally in Treasurys was also giving a lift to the dollar because foreign entitites that want to shift assets to U.S. bonds need to first convert their currencies, thereby driving up demand for U.S. dollars.

Global crisis:With the economic crisis is in full swing, cheaper, and thus more easily obtainable, currencies such as the U.S. dollar and the Japanese yen are in a better position to recover later on down the road.Investors are shifting their investments from export-dependent currencies, such as the Australian and New Zealand dollars, to the U.S. dollar and yen, which are cheaper than the euro

18 Oct 2008, Saturday

Break the cycle

You can nip all that in the bud by sitting down before the deadline and allowing yourself the time to calmly complete it; you’ll see that you were making a stressful mountain out of a manageable molehill.

Make it more achievable by breaking it down. If it’s a 2,000 word essay, reward yourself by taking a half-hour break after you’ve reached 500 words. Make sure your target is one of quantity rather than time

American psychologist William James, and he has a point. Once you’ve triumphed over that elusive essay or properly prepared for your exam, you’ll feel much better with yourself. You may even find that the prospect of rearranging your socks has suddenly lost its allure (strangely enough), giving you the opportunity to get out there and do something exciting with your time!

15 October 2008

Critics have said that Lehman's failure made the crisis that much worse and, because Lehman was a force in the commercial paper market, put a crimp in businesses' ability to finance themselves when Lehman disappeared.The Fed and Treasury were trying to find someone to buy the firm but it just wasn't possible. Unlike American International Group, which had collateral to put up, Lehman did not.

The firm could not post sufficient collateral to provide reasonable assurance that a loan from the Federal Reserve would be repaid.