Groundhog Pay
A top think-tank claims that city bonus will rocket 50% to £6 billion this year. High-flying traders are set to rake in huge payouts once again following massive profits for banks over the last six months.
The Centre for Economics and Business Research said that bonuses are beginning to bounce back. The payout is £4 billion lower than 2007, but is nearly £2 billion more than was expected six months ago. It will stun the thousands of Brits who have lost their jobs ever since the crisis began.
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Weakness on Weakness
Not only do balance sheets drive the economy, but the economy drives balance sheets via asset values. A weak economy implies weak asset values and weak balance sheet, which means lending is further inhibited. Also, as a weak economy means higher risk premia, it brings tough times for borrowers. Spending suffers, as es profitability. Jobs are shred, investment plans get shelved and on it goes.
Something like these dynamics may lie hidden between the lines of the latest MPC minutes. Implicity in these dynamis is the risk of a deflationary tendency.
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UK Central Banks Expect Recovery
The central banks in Britain is expecting a recovery. The news flow is generally good. Corporate earnings are coming in better than expected. Consensus forecasts for economic growth are being revised upwards and conventional monetary policy with low interest rates in on hold for a long time.
Rise in Insolvencies Blamed on Lack of Liquidity
According to Freshfields, the business owners are finding it hard to manage their companies because of a lack of liquidity.
A report from the legal firm indicates that compared with a 21% rise in the first quarter, the corporate insolvencies rose by 40% at the end of the second half of 2009.
Scope for Disappointment in 2101
A Legal & General Investment Management economist has warned that the strength of the economic recovery may be overstated. Tim Drayson said that investors should be careful, as households were still adjusting to the crunch, the effects of government stimuli were wearing off and firms were remaining cautious.

