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Uncertainty, anxiety and investment #finance

Investment not only comes from the rich it comes from pension funds who invest on behalf of the middle classes of the wealthier countries of the world. Our national lottery is run by a private company Camelot, which in turn is owned by the Ontario Teachers’ Pension Plan. That pension fund invests in lotteries which are basically a licence to print money and property which is always in short supply. MPs also invest in property especially in London so there is little chance of property going down in value. Keeping a large section of society poor also promotes desperation and it is the desperate and greedy who play the lottery which raises 30 million a week for good causes like the Olympics. We rarely see lottery money going to food banks or to help the sick and disabled (except Paralympics) whose anxiety seems to be of no concern.

financial anxiety

Who benefits?

Who benefits from the lottery? The judges, lawyers, doctors and the rest of the middle-class of Ontario with their fat cat pensions. It also benefits super fit athletes. It doesn’t benefit people queuing at food banks so the ‘good causes’ spiel is a bit misleading.

Confidence

These large pension funds lost confidence in the UK at the time of the Brexit referendum. They cut their investment in Britain particularly in companies they perceived to be riskier. The anxiety of the pension fund managers was heightened by media reports of impending disaster if we left the EU. Share prices crashed and then picked up again, at least for the FTSE 100 companies. Investors are demanding bigger returns because of the perceived increase in risk and this is affecting companies that are struggling a little. Carillion has debt mainly to its pension fund and their share price crashed. The market should have responded and investors should have snapped up the shares while they were cheap. A takeover bid should have been likely but the market is rigged and unregulated. This means that Carillion could go under if confidence in the company takes more battering. Why did the share price crash? We can’t blame the media. In fact, it was shorting that caused panic selling and led to a lack of confidence in the market. Carillion has suspended the dividend but still has good revenue and could be a good long-term investment.

Uncertainty

There is now widespread uncertainty and it isn’t just affecting share prices, it is affecting consumer spending. People are tightening their belts and worse, they are defaulting on loans and using overdraft facilities. Austerity is beginning to really bite and uncertainty is making people cautious about spending too. This isn’t a good time to invest in retail, obviously.

Financial anxiety

Many people are tightening their belts and expecting the worst. The economy will probably get worse with falling living standards and higher inflation. With incomes stagnant or falling with falling investment, we could see another recession. Saving now is a wise move, especially if income from investments are falling. We should all have a cash buffer to use in case we lose our income or some other emergency arises. Many wealthy people have a buffer made up of gold bullion to use in case of a serious financial crash that completely devalues the currency. For us, mere mortals, investing in gold sovereigns is a good idea too. Financial anxiety can give us sleepless nights and can be avoided by making preparations for potential disasters.

That’s all for this week. I’m pleased to say my personal finances have stabilised and my assets increased a little this week after a disastrous few months! I was almost tempted to buy shares but I think uncertainty still reigns so I’ll wait!

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