Forecast for Japanese Yen

The Japanese Yen, has been appreciating against the Dollar and Euro for the past few years. It is currently 109 Yen to 1 dollar. In 1998 it was 130

However, on purchasing power parity standards, the Economist Big Mac index suggests the Yen is 27% undervalued against the dollar (and the dollar has been weak itself). It is approximately 50% under valued against Euro.

This is due to, the very low interest rates in Japan (close to 0%). It means foreign investors have an incentive to borrow in Japanese Yen and invest in countries with higher interest rates (e.g. ECB interest rates are 5.25%). This is known as the carry trade and has pushed the value of the Yen lower.

The very low interest rates have occurred because of the sluggish economic growth and deflation. If economic growth in Japan picked up, it would allow interest rates to rise and reduce carry trade. People might start holding Japanese Yen to invest in.

However, the Japanese economy has been hit by the global slowdown and rise in commodity prices. As a net importer of commodities like oil, rising prices have caused cost push inflation which have reduced consumer spending.

Thus although inflation has increased, it is the wrong kind of inflation. Interest rates are unlikely to rise as the economy slows down and probably enters into recession next year.

With this persistent economic weakness, the Japanese Yen may remain undervalued for longer.

However, I forecast that in the long term - end of 2009, 2010, the Japanese Yen will start to appreciate because the current cost push inflation is temporary and the economy has the potential to regain normal growth and normal interest rates - which would boost the value of the currency.

Tips for Getting Out of Debt During Credit Crunch

The credit crunch has made credit more difficult and expensive; it has only served to highlight the importance of reducing debt without relying on extending credit or finding new products. These are some basic principles for getting out of debt, that anyone can follow.

Make A Commitment.

The most important step to getting out of debt, is to give it a priority. If we just have wishful thinking, it will do little to help improve the situation. We need to make a firm resolution to change our spending and income patterns. With this firm resolution it will help make the necessary changes rather than just making only very marginal changes.

Think Outside the Box.

Rather than just tinkering at the edges, make a clear evaluation of your situation. If necessary, take the advice, input of an outside person. For example, look carefully at your main expenditures and decide how necessary they are. Start with a clear slate and then work out the spending which is absolutely necessary. Only add spending which really improves your lifestyle. For example, you may find that your renting costs could be reduced by moving in with parents, or getting an extra person to share the house. This step could save a significant part of your monthly outgoings and save significant amounts.

Live on a Minimum figure.

Sometimes, to change our habits we have to make radical changes. Rather than going through the week, putting things on our credit card. Give yourself say £50 cash and make it last the week. This will give you a new value for money; it will force you to make savings and think carefully about how you spend money. You may be pleasantly surprised by how much you can save.

Be a cautious Buyer.

Avoid impulsive buying, think carefully about how much you need to get something. If necessary leave a gap between seeing a good and buying. Buy things you give 10/10; but, if it is only a 7/10 it is not worth it.

The Frugal Approach to Cooking

These are some simple penny pinching tips to help reduce your debt. It is important to try implement as many of these frugal tips as possible. Furthermore, the savings should be used to directly reduce your debt capital - not just pay the interest on debt.

Tips for Saving Money on Cooking

Free Food.

At this time of the year, you can find free food in many hedgerows. Blackberries, wild strawberries and mushrooms. It can be good fun learning which food are edible. If you have young kids they are likely to enjoy the challenge. It's certainly cheaper than taking them to a leisure centre.

Turn Off Appliances at Right Moment.

If you are baking in the oven. You can probably turn it off 10 minutes before it is finished, as the heat will remain.

Don't Overboil.

If you are boiling vegetables, simmer lightly rather than aggressively boil. If you are are over boiling you are using too much gas and can turn the heat down without affecting the cooking. Also don't cook for too long.

Don't use too much water.

If you making a cup of tea for one person, don't boil the whole kettle, make sure you can seem the line for minimum water use needed. Similarly, when boiling vegetables, keep a lid on and don't boil excess water which will take longer and require more heat.

Microwave.

A microwave can be useful for heating and reheating food using less energy than conventional methods. A microwave is not so great at boiling water, but for reheating food, it is excellent. Just make sure the food is heated all the way through.

Eat Raw.

In modern life, we have a tendency to overcook food, which is a shame because it reduces the quality of the food, and leaches vitamins from the food. Eating vegetables raw, is a little of an acquired taste, but, it is very nutritious.

Avoid Ready Made Meals and Sauces

Supermarkets can place a premium on ready cooked foods, because they tend to be bought by the 'cash rich time poor' If you buy your own ingredients you will save a lot of money, especially for cakes and meals.

Buy discounted Food near sell by date.

Supermarkets often sell food at a discount when it is approaching its sell by date. Some foods don't deteriorate at all and the best before date is quite conservative. Take advantage of these special offers to save money

Euro Forecasts for 2009

The Euro is currently overvalued by 50% against the American Dollar (on purchasing power parity. See Big Mac index)

In the past the Euro's strength has been justified because:

Strong anti inflationary credentials of European Central Bank.
The Euro seen as the emerging global reserve currency to take place of Dollar.
Relatively strong economic performance.

However, future prospects for the Euro, don't look good.

• Overvalued Housing markets are already beginning to fall. Countries like Spain and Ireland could see large price falls, as demand dries up and glut in supply continues. A housing crash could drag the rest of the economy into recession. Especially in a country like Spain, where construction and housing accounts for a big % of the economy.
• Slower growth in main European countries like France and Germany.
• European exports suffering from persistent strength of Euro
• Prospect of lower ECB interest rates to protect the eurozone slipping into recession.
• The decision is complicated by the fact that European inflation is high due to rising costs of oil. As a net oil importer the Eurozone has suffered from the record oil price increases
  

How To Improve Your Credit Rating

Your credit rating shows how much banks trust you in making loans. A good credit rating involves maintaining a good reputation for paying back loans and mortgages. Your credit rating can easily be hit by missing payments and defaulting on loan repayments. These are some practical tips to help protect and improve your credit rating.

Find Your Credit Rating.

Firstly, you can review your credit rating by getting your credit report. You can contact a credit agency such as equifax, Experian. You can check your report for mistakes and see whether you are being associated with some ex-partner who is dragging your credit score down.

Dispute inaccuracies

If you notice inaccuracies on your credit report, make sure you report them to the bank / credit card company. In quite a few cases, mistakes do occur. It is important you don't get your credit score dragged down by these kind of mistakes.

Do Borrow.

A good credit rating will be improved by having a track record of taking out loans and repaying them. If you have never borrowed, banks will be more nervous about lending to you because you have no history of repayment. Use a credit card and make sure you pay it off every month.

Monthly Direct debits.

A missed payment will count against you. Insure against this possibility by setting up direct debits to pay minimum balance payments. This ensures you will not gain negative points for forgetting to pay. (easy to do). Be careful, you don't fall into the trap of just paying the minimum balance though. Try to pay off your credit card balance in full, especially if it has high interest rates.

Write to explain missed payments.

If you do have a missed payment or face difficulty meeting repayments, take active action. Write to your bank to explain why your payment was late. If you are struggling to make mortgage payments, try to arrange a manageable repayment situation. It is much better if you forewarn your bank of repayment difficulties, rather than just allow it to happen.

Register on Electoral Roll

Make sure you keep your information updated on electoral register. Banks use this information.

Dealing With Credit Crunch

The credit crunch is 12 months underway, but, there are no signs of it abating. Top British banks continue to report disappointing profit warnings. With house repossessions expected to rise, banks could be faced with even more write offs in the future. With the forecast bleak, how might consumers respond?

Kick Addiction to credit

This recession is primarily caused by the hangover from a credit binge. Banks have had to let go of their laissez faire attitudes to debt. More than ever it is important to protect your credit rating and pay off your debts. Start with debts with highest interest rates first. Look for ways to cut unnecessary spending and reduce your regular outgoings.

Protect Your Job.

Unemployment is already rising, make sure you don't give your firm reason to sack you. Be willing to adapt and offer positive contributions to your firm. Be a pleasant, useful worker and you will immensely increase your chances of getting a job.

Rent vs Buy

Rather than buy during a period of falling house prices, continue to rent until the market bottoms out and prices start to rise. There is nothing to be gained from buying now apart from negative equity.

Don't Despair.

Amidst all the gloom of the credit crunch and looming recession, don't despair at all the bad news. It is important not to focus on the bad news but look for ways to get a better job in the future.

Be Flexible

The labour market is becoming increasingly flexible. Jobs for life are increasingly uncommon. Look for ways to boost your income by working for yourself on the internet.

Related

• Dealing with High Oil Prices
• More tips on dealing with economic downturn at Housing Finance tips

Global Warming Future

Dealing With Consequences of Global Warming.

Scientists predict global temperatures could rise by 4 degrees on pre-industrial levels. A rise in the world temperature of 4 degrees would cause serious economic problems.

Problems of global warming include:

• Rise in freak weather patterns raising cost of insurance.
• Loss of farmland to desertification
• Extinction of species
• Rise in sea levels as polar ice caps melt.

Dealing with Global Warming

• Investment in desalination Plants. Water shortages will force countries to look for alternative water supplies. Desalination plants could become an intrinsic part of countries infrastructure.
• Dealing with lost agricultural land. Rising food prices may force a change in agricultural patterns for example, it may encourage less intensive farming use such as less cattle and more vegetarian foods.
• Ending subsidies which distort agricultural markets and promote the production of inefficient agricultural techniques.
• Dealing with mass migration from hot countries to colder countries.
• Dealing with rise in pests which thrive in warmer climates.
  

Who will Benefit from Global Warming?

• Cold countries like Siberia and Alaska will see an extension in their growing season and lower fuel bills.
• Air conditioning companies.

Who Will Lose out from Global Warming?

• Countries in hot environments. Countries near the equator will struggle to deal with rises in global temperatures of 4 degrees or more. It will lead to greater desertification and loss of agricultural land.
• Water shortages. Water shortages in many countries will be exacerbated by both global warming and a rising population.
• Islands / Coastlines near sea. If global temperatures rise and polar ice caps melt, sea levels will rise. This could lead to some islands being completely submerged under sea. Other countries will see widespread flooding and erosion.
• Insurance Companies. Global warming is liable to disrupt weather patterns and cause more storms, hurricanes and flooding. This will increase insurance claims. Some areas may become uninsurable.