Congratulations and good luck to Barack Obama – a very nervous start to his presidency!

There are millions watching in inaugural speech and watching him swear his allegiance to the United States of America and to God and he messed up his words, as he was clearly very nervous. I found this to be quite endearing and shows that he is human. However, let’s hope that these errors in his first works leading up to his presidency are not a sign on things to come. The USA and the World cannot afford to have another president like George W Bush!

AS I have written before, Mr Obama will have to hit the ground running – with the financial crisis, middle east problems in Israel, Iraq and of course Afghanistan, not to mention global warming.

I feel that Barack Obama restored himself in what sounded like a great inaugural speech including words like “re-making America” and I hold my hand up to him and wish him all the success – the World needs it…he holds the whole World in his hands – the next 100 hours will be crucial…the next few days need to be decisive…the following few weeks will be revealing…the coming months will show him out for what he brings to the most powerful country in the World…the next few years will be painted in history and lets hope that the real job at hand for Mr Obama is not too much and that he proves himself not just as the first black president, but more importantly in his capacity as a President of the United States of America!

His colour should not be looked at, but instead his actions, his decision and of course where he takes his country, the USA, from this moment on!

We have by no means seen the end to the banking crisis, as we see the UK government increase it’s steak in the Royal Bank of Scotland (RBS) to 70%! RBS has converted the preference dividends into ordinary shares to avoid paying the £600 million a year 12% fixed dividend so as to increase lending.

So the UK is at the point of having its very first nationalised bank, as Gordon Brown prepares for a new bank bail-out package to encourage further lending. Across the Irish see the Irish Government is looking to Nationalise the Anglo Irish Bank, as funding problems continue with this bank. So we are far from out of the woods and I might go as far as to suggest that we might even be still on the way into the woods!

The government also revealed a £20 billion loan guarantee scheme for small and medium businesses this week designed to limit the risk to banks that lend to businesses with a turnover of less than £500 million.

Mixed retail news

Matalan reported this week that its sales in its five weeks to 4 January were up by 5.9% over the same period last year. Matalan has 203 stores across the UK and sells discount clothing. Primark has also reported an increase in its Christmas sales which were up by and incredible 18% over the 16 weeks period to 3 January. In contrast to this Next reported a 7% drop in sales between July 2008 and Christmas and M & S have reported third quarter merchandise sales down by 8.9%.

Good news on the jobs front, as Waitrose is on an expansion push and intends to add 4,000 jobs, as the company prepares to buy 13 stores from the Co-op and open a further 9 stores across the country.

Computers sector in a down-turn

Although less than expected, Intel reported a staggering 90% fall in the last three months of 2008 falling to $234 million (£158 million) from £2.3 billion (£1.58 billion). Sales of computers have dropped as business owners delay spending money on buying new equipment as do domestic users pull back on their own spending on computers.

A change across the pond in America as Barack Obama prepares to take office next week he has pledged to spend $100 billion (£67.5 million) of the remaining bank bail-out fund on tackling the US mortgage crisis. The US senate has already given Mr Obama their approval to spend the balance of this fund, which amounts to $350 billion (£236 billion). The senate has also revealed plans for an $825 billion (£556 billion) package for tax cuts and spending to stimulate the US economy.

This week also saw America’s largest bank knocking on the US governments door yet again, as the Bank of America is to receive a further $20 billion (£14 billion) US government funds and a further $118 billion (£79.6 billion) of guarantees against bad assets. Bank of America had one of the strongest balance sheets of all American banks up to taking over Merrill Lynch, which has posted huge losses and there are reports that allegedly, the takeover by the Bank of America and the due diligence was not done properly.

Which car-makers will survive this crisis?

Third quarter car-sales saw a drop of 20% which led Guenter Verheugen the EU’s Industry Commissioner to warn that there are no guarantees that all European car-makers will survive the economic turn-down. The US carmakers are already having major problems and two of the mains ones, Chrysler and General Motors, would have gone to the wall if the US government had not bailed them out with spent billions of dollars.

End of the week saw:
Stock exchanges:
FTSE 100: 4,147
DOW: 8,281
S&P: 850.12
Nikkei: 8,230

Currencies
UK Sterling £ to US Dollar $ 1.48309
UK Sterling £ to Euro € 1.11306
UK Sterling £ to Japanese Yen 134.980
UK Sterling £ to Aus $ 2.19359
US Dollar $ to Euro € 0.750479
US Dollar $ to Japanese Yen 91.0150

Commodities
Nymex Crude oil – $36.51
Gold – $839.90

The World Bank has warned that there could be a deep world recession with a predicted slowing in economic growth in 2009.

With job losses being reported almost daily from around the world things are not good at present and the longer-term impact of these redundancies will continue to be felt through-out world economies. The World Bank has also warned that there could be banking failures in emerging market economies and with cash-flow from banks being tested due to banking insolvencies and a reluctance to lend, this will be a testing time for emerging economies.

Chinese exports have dropped and their growth is predicted to slow down, although their imports have dropped by a larger margin giving China a trade surplus of just over $40 billion (£27 billion) for November 2008.

14,000 job cuts at Rio Tinto the Anglo-Australian mining giant which represents 14.4% of their present workforce and is designed to reduce their $10 billion (£6.75 billion) debt mountain. Sony has announced an 8,000 job losses to their workforce in its electronics division in a response to the changing economic climate.

The UK’s manufacturing output fell by 1.4% in October which represents its biggest fall in more than six years and underlines the weak state of the UK economy. This means that UK output has fallen by 4.9% for the year to date and means that manufacturing output has now fallen for eight months in succession.

The opposition leader David Cameron is warning the government that it is putting the UK economy at risk with its extended borrowing, with the Government borrowing a further £20 billion having reduced the VAT rate to 15% from 17.5%, but said that this will be increased in 12 months time along with higher National Insurance hikes and a higher rate tax charge!

Sterling has been under further pressure and today the Pound-Euro rate stands at €1.14507, which belies the problems the UK economy is having and the Pound-Dollar rate is $1.48274.

The Organisation for Economic Co-operation and Development (OECD) has reported that the US economy is facing “The US economy is going through very difficult times“. This is a very detailed report and well worth a read and the report goes on the say that “After a long period of robust growth, the US economy has been struck by a confluence of adverse developments in reaction to past excesses during the upswing, as well as to exogenous shocks”. Barack Obama has some major issues to address when he takes office on 20th January 2009.

Across the pond in the United States of America there is a sea of change in more ways than one, America not only has a new president, but also it’s very first Black African American president and a change of party from Republican to the Democratic Party. History unfolded last night, as the votes came in and the new president was elected in front of euphoric crowds of US citizens.

“You and I together will change the country will change the world” Barack Obama

Obama is elected at a very difficult time for America and for the world too, arguably one of the most difficult situations the country has seen from a financial view point since the depression of the 1930′s. The impact of what the new president elect does will be felt around the world, as we all watch on, as has the unfolding events of the credit crunch.

In-business would like to wish Barack Obama every luck in his new role and whilst sitting here listening to his confident speech I am sure that he will do well.