Tim Price

Thursday

3 Oct 2013
Tim Price

Mark Carney has a £250,000 housing allowance - why would he care about rising property prices?

In popular myth, King Cnut the Great, more commonly known as Canute, set his throne on the sea shore and commanded the tide to retreat. One version has it that Cnut’s display was a sign of regal arrogance — though if the event ever did occur, it was more likely a rebuke to obsequious courtiers. Speaking of which, the financial media have been in thrall to a new king of finance since Mark Carney was elevated to the governorship of the Bank of England in July. His procession to office included previous high-ranking positions at Goldman Sachs, the Canadian Department of Finance and the Bank of Canada. If you’re in the mood for a wry smile, visit the Bank of England’s website. Granted operational independence in 1997, the Bank’s key objectives, other than to print banknotes, are regulation of the financial system, financial stability and monetary policy.

Mark Carney has a £250,000 housing allowance - why would he care about rising property prices?

Thursday

2 May 2013
Tim Price

Investment special: The case for gold

Few assets are more misunderstood than gold. I might even refine that statement — if you’ll pardon the pun — and say that few assets are more misunderstood than money. Gold happens to be both. Technically, of course, we are constrained by government edict to use pounds sterling for the payment of our taxes and debts. My take on this dismal state of affairs, but also my optimism, can best be summarised in the title of Nathan Lewis’s recent book, Gold: The Once and Future Money. Economists give money three attributes. It should be a unit of account (we can price things in it). It should be a medium of exchange — which avoids the inconvenience of barter. And it should be a store of value, something which enables us to maintain our purchasing power in real terms if we choose to defer spending and save instead.

Investment special: The case for gold

Wednesday

3 Oct 2012

Thursday

3 May 2012
Tim Price

Investment Special: On the defensive

These are dark days for investors. Interest rates squat at historic all-time lows in order that the Bank of England can continue to bail out our errant banks and government. Western economies toil under a monumental burden of public and private-sector debt, to which austerity is merely the latest desperate political response. Securities and currency markets are all being manipulated by extraordinary and highly inflationary monetary stimulus. Safe havens, anyone?The situation is doubly challenging for anyone in or approaching retirement. By artificially suppressing the yields available on UK government bonds or gilts, and therefore annuities, through its absurd policy of quantitative easing (a.k.a. money printing), the Bank of England has done an excellent job of further enriching the banking lobby whilst impoverishing those least able to add to their investment pot.

Saturday

15 Oct 2011
Tim Price

Investment special: The zero era

The Bank of England’s latest announcement of quantitative easing, widely referred to as QE2, prompts as many questions as it does answers — particularly for investors and pension-holders. Under a QE regime, money printed out of thin air is used to purchase government bonds from banks and other private sector investors. The theory then has it that long-term interest rates will fall, and banks will have more money to lend to eager borrowers.There’s just one problem with this cunning plan: it doesn’t work. It did not work in Japan, the first country to flirt with QE. Richard Koo, chief economist of the Nomura Research Institute, calls QE ‘the 21st century’s greatest monetary non-event’. The reason for his scepticism is that we are not in a normal business-cycle recession, in which the central bank reacts to a disorderly economic boom by hiking interest rates to suppress inflation.

Saturday

10 Sep 2011
Tim Price

Investment Special: The doom boom

Not for nothing is economics known as the dismal science. Having failed to foresee the global bubbles in credit, banking and housing, mainstream economists have compounded the problem by advocating entirely the wrong solutions. Like generals fighting the last war, most economists (and leftists who think they understand economics) continue to bang the drum of Keynesian stimulus, evidently un-able or unwilling to understand that countries, like their citizens, cannot borrow their way out of debt. Cue the world’s largest ever sovereign-debt crisis.But not every economist got it lament-ably wrong. A number of financial thinkers anticipated both the bubble and the crash. Though few of them actually hail from Austria these days, they are known in financial circles as the Austrian school.

Saturday

21 May 2011
Tim Price

INVESTMENT SPECIAL: The trend is your friend

In the 1983 comedy Trading Places, two unscrupulous commodity brokers wagered that they could take a vagrant off the street and turn him into a successful trader. The film was a hit, symbolic of a more innocent age when interference in ordinary people’s livelihoods by gambling financiers was the exception rather than the rule. What is less well known is that its plot was essentially true. Also in 1983, the commodities trader Richard Dennis set out to show that anybody could trade provided they were taught properly. His partner, William Eckhardt, disagreed, and a wager was born. Dennis placed classified ads in the back of the financial magazine Barron’s. Experience in trading was not necessary. He ended up with two classes of what he called ‘turtles’, named after a visit to a Singapore turtle-breeding farm.

Saturday

19 Mar 2011
Tim Price

INVESTMENT SPECIAL: Folding money

Forget Bernie Madoff. The biggest Ponzi scheme in history is unfolding before your very eyes. If you have money in the bank, you will be a victim.The rot set in on 15 August 1971. That was the date on which the Nixon administration, reeling from the costs of the Vietnam war, unilaterally took the dollar ‘off gold’, ending fixed convertibility between the US currency and the precious metal. From that day to this, the currencies of the world have been backed by nothing more substantial than politicians’ promises. It was not always thus. Throughout history, man has used a variety of things as money, including cattle, shells, tobacco and cotton. But over time, precious metals won out over all their rivals on account of their scarcity, durability and beauty.

Saturday

1 Dec 2007
Tim Price

The end of the world is nigh

For a solvent mortgage lender to require emergency government support on a huge scale suggests that all is not well in our financial markets. This understatement matches the gorgeously hubristic claim from ‘Chuck’ Prince of Citigroup, America’s largest bank, in July, that ‘as long as the music is playing, you’ve got to get up and dance. We’re still dancing.’ But by November Prince was gone, victim of a multi-billion-dollar write-down relating to losses in the mortgage market. Perhaps he now dances with Stan O’Neal of Merrill Lynch, America’s biggest stockbroker, who also resigned in November after giant mortgage-related losses. Countless institutions have been brought low, having invested in supposedly low-risk bonds cobbled together from mortgages on US property.

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