Landmark’s Blog
Barclays and HSBC report profits
Published on 6th August, 2009 at 15:18 by Eric Mowinski.
As some of the major banks report this week we have seen a return to profit for some. Does this mean we are turning the corner?
Barclays and HBSC reported encouraging profits this week whilst Northern Rock and Lloyds incurred losses. Even though these banks showed losses the share price in Lloyds rose 11% as the market suggested the worst times are over.
I have recently wrote on a number of occasions that these figures may provide us with a temporary respite, allowing the markets to recover from their over stated lows, but the underlying problems have not gone away.
A sobering thought is the level of government debt which now stands at £950billion. This amounts to 56% of GDP. If we add to this amount the level of personal debt taken by the UK consumer the figures become quite staggering.
Why is this a problem? If unemployment is rising the level of defaults on personal finance will rise and this will in turn put more pressure on the banks. Why will unemployment rise? well we are living in an economy with an ageing population. This population will spend less and therefore company profits will be less in the future.
Positioning your investments appropriately will be vital
Posted under the following tags: investments, gdp, banks.
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