This week has seen more turmoil on the financial markets and stress in the banking sector on both sides of the Atlantic!

Whilst the US government is battling to win over Congress to pass the $700 billion bank bail-out the UK Government is nationalising banks on this side of the Atlantic. Just this weekend a deal has been thrashed out with the Bradford & Bingley and the UK Government to secure its future. Whilst over in the US the biggest bank so far, The Washington Mutual to fail and be taken over by regulators as a result of the sub-prime lending fiasco!

With many economies moving closer or into recession, like The Republic of Ireland is now officially in recession and we have Japan now with a trade deficit!

In the UK the economy needs lower interest rates, but this is looking doubtful for HSBC customers where they are looking to raise interest rates due to a shortage of money. However, the World banks are putting yet more money into the banking sector, with the Bank of England lending an extra £30 Billion.

The problems are being reflected in the retail sector with Marks & spencer seeing a turn in their fortunes for the first time in a while and JJB sports has posted a £9.7 million loss for the first six months of the year – “blaming the “worst retail recession” it has ever known”. With the business Ted Baker also in problems and at a point of calling in receivers, the economy is not looking too healthy.

All this is at a time when the present government see it fit to fight amoungst themselves over their leadership, whilst world economies are going into economic meltdown – it is a worry where this is all going to end!

But there is good news for low paid workers! The National minimum wage has been increased by the Government – great for business owers, just what they need when things are tough already – lets add more problems and increased costs.

End of the week saw:
Stock exchanges:
FTSE 100: 5,088
DOW: 11,143
S&P: 1,213
Nikkei: 11,893

Currencies
UK Sterling £ to US Dollar $ 1.83301
UK Sterling £ to Euro € 1.25915
UK Sterling £ to Aus $ 2.20458
US Dollar $ to Euro € 0.68769

Americans must support a massive bail-out of financial markets to ease a “serious financial crisis”, US President George W Bush has said.

The entire economy was in danger, he said in a live TV speech, and failure to act now would cost more later.

He has invited presidential rivals John McCain and Barack Obama to the White House on Thursday to discuss the $700bn (£378bn) rescue package.

The rivals have disagreed on delaying a TV debate over the economic turmoil.

Mr McCain says he is suspending his campaign to help with the crisis, but Mr Obama says voters now need to hear from the candidates more than ever.

The two men will attend a meeting with administration officials and congressional representatives on Thursday morning in the US capital in a bid to broker a mutually acceptable bail-out deal.

‘Distressing scenario’

Mr Bush made his comments in an evening address to the nation.

Major sectors of America’s financial system were at risk of shutting down, he said, and without action a “distressing scenario” would unfold.

George Bush warned that major sections of the financial system were at risk

His administration is calling on Congress to approve a costly bail-out – under which the Treasury would use public money to buy bad debt from troubled financial institutions – as soon as possible.

But lawmakers from both the Democratic and Republican parties have voiced doubts about the plan and the speed at which they are being asked to approve it.

They want assurances that it will benefit ordinary American home-owners as well as Wall Street, and be subject to adequate oversight.

Mr Bush said he understood the frustration of “responsible Americans” who “are reluctant to pay the costs of excesses on Wall Street”.

“But given the situation we’re facing, not passing a bill now will cost these Americans much more later,” he said, calling for a bipartisan commission to oversee the plan.

‘Rise above politics’

Both of the candidates in November’s presidential election have been speaking out on the issue.

“Given the situation we’re facing, not passing a bill now will cost these Americans much more later” US President George W Bush

Dire warnings from US leader

Mr McCain said he was suspending his campaign to return to Washington to help agree a deal, saying he feared the rescue package would not pass “as it currently stands”.

He also called for his first presidential debate with Mr Obama on Friday to be suspended – something Mr Obama did not support.

Americans needed to “hear from the person who in approximately 40 days will be responsible for dealing with this mess”, Mr Obama told journalists.

The two men did, however, call for a bipartisan approach on the bail-out.

“This is a time to rise above politics for the good of the country,” they said in a joint statement late on Wednesday.

News reported by The BBC

Concern returned to the US stock market as US Treasury Secretary Henry Paulson faced tough questions about his $700bn (£382bn) financial rescue plan.

The Dow Jones industrial average closed almost 1.5% lower after Mr Paulson was grilled by a Congressional hearing.

The plan faced opposition from both Republican and Democrat senators on the Senate Banking Committee.

Investors are concerned that the measures could now either be delayed or watered down.

“We have got to look at some alternatives,” said senior Republican senator Richard Shelby.

The committee’s chairman Democrat senator Chris Dodd, speaking after the hearing, said: “What they have sent us is not acceptable.”

Another senator asked if a smaller programme worth $150 billion might be enough to begin the bail-out, with a promise of more to come.

Mr Paulson replied that this would be a “grave mistake” and would fail to end the financial turmoil in the markets.

‘Private greed’

Senators voiced concerns that taxpayers would be paying the price of mistakes made by banks.

“I believe if the credit markets are not functioning that jobs will be lost…that the economy will just not be able to recover in a normal, healthy way” Ben Bernanke, US Federal Reserve chairman

Global reaction to financial turmoil

They also said it was crucial not to rush through the bail-out, without carefully considering how it would work.

Richard Shelby said: “I have long opposed government bail-outs for individuals and corporate America alike.”

And Chris Dodd said the “economic maelstrom” stemmed from a mixture of “private greed and public regulatory neglect”.

However US Federal Reserve Chairman Ben Bernanke urged swift action.

He warned that without the plan, the “fragile” financial markets would almost certainly get worse and this would have an effect on the rest of the economy.

“I believe if the credit markets are not functioning that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy way,” said Mr Bernanke.

European markets were also hit by concerns about the bail-out plan.

The UK’s FTSE 100 closed down 1.6%, France’s Cac 40 fell 1.7%, while in Germany the Dax ended 0.5% lower.

Earlier in Asia, Hong Kong’s Hang Seng index ended nearly 4% lower. Japan’s market was closed for a public holiday.

News reported by The BBC

This week has seen the biggest movements ever on the FTSE 100 – when at the end of the week the index jumped 8.8% on news of the US government has pledged to bail out the troubled US banking system!

The FTSE has been on a roller coaster starting the week at 5,417 and dropping to 4,880 during the week to jump 431 on friday to end slightly lower thatn the beginning of the week at 5311! Earlier in the week the Glbal Central banks pumped $180bn into the markets to lift the amount of funds available to the world banks. On Friday the US Treasury is proposing to buy back up to $800bn of the bad debt in the US mortgage market, as the US debt plan takes shape.

It will be interesting to see what happens in the mortgage markets over the coming months where we have seen a 36% slump in mortgage lending in August this year over August of 2007, once the above measures start to kick in. The lending market has stalled because banks are reluctant to lend to each other and the inter-bank lending rates are at a high – I was speaking to my friend in Australia and he commented that “getting a mortgage in Australia at the moment is like winning the lottery!”

The core assets and business of Lehman Brothers is to be purchased by Barclays Bank for $1.3bn, which incredibly includes Leham’s Manhatten Skyscraper worth on its own around $1bn! So in a market of turmoil the vultures circle and there are bargains to be had. Judge approves Lehman deal.

As with last week the travel industry has seen trouble with Italian airline Alitalia being on the edge of going into liquidation. What seems crazy is that there have been two rescue packages open to the company, which have been turned down by the unions to block redundancies. So the unions would rather sit there and block a rescue where a few jobs are lost in preference to the whole company going under where everyone losses their job! CAI consortium was only approved by 3 out of the 9 unions to block 3000 job losses!

On the bright side is that the petrol retailers have are reducing fuel at the pumps in the UK on the bakc of dropping oil prices. BP and supermarkets Asda and Morrison were leaders in cutting prices.

End of the week saw:
Stock exchanges:
FTSE 100: 5,311
DOW: 11,388
S&P: 1,255
Nikkei: 11,921

Currencies
UK Sterling £ to US Dollar $ 1.83070
UK Sterling £ to Euro € 1.26995
US Dollar $ to Euro € 0.69370

The future of thousands of jobs is in the balance in the wake of Lloyds TSB’s £12.2bn takeover of Halifax Bank of Scotland (HBOS).

While Lloyds dismissed claims that up to 40,000 jobs faced the axe as “ridiculous”, it refused to rule out compulsory redundancies.

The takeover will lead to cost savings of more than £1bn, Lloyds added.

Meanwhile the global markets were calmer after central banks pumped billions of dollars in extra funds.

The UK government also said it is “determined” to ensure the stability of the financial system and protect savers.

Gordon Brown pledged to “do everything to protect depositors in Britain, who need to have confidence in the banking system”.

The takeover by Lloyds TSB values shares in HBOS at 232p each.

By close of trade in London on Thursday, when the deal was announced, shares in HBOS closed up 17%, at 172p, while Lloyds shares shed 17.7% to 253p.

Turmoil

The deal comes as a crisis of confidence on global financial markets has wreaked havoc in recent days:

Gordon Brown said the decision was ‘right’

– A lack of funding has forced global central banks to pump billions of extra dollars into money markets
Russia’s main stock markets have been suspended for two days in a bid to prevent a meltdown after steep falls in share prices
– Banks around the world have admitted they could lose millions after the collapse of US investment bank Lehman Brothers
– The Federal Reserve rescued AIG with an $85bn (£48bn) package amid fears the group, once the world’s largest insurer, could collapse
– Bank of America bought investment bank Merrill Lynch in a $50bn deal earlier this week, another sign of the upheaval of the financial sector
– Meanwhile, the UK’s economic picture remain glum, with latest figures showing mortgage lending slumped again in August
– US President George W Bush sought to soothe nerves by announcing that authorities would closely monitor markets
– The UK’s Financial Services Authority has announced steps to restrict short-selling of shares

Deal welcomed

Effectively the buy-out of HBOS is a rescue deal after its shares plummeted recently amid concerns over the firm’s future.

Under the terms of the deal – which must be agreed by shareholders – HBOS shareholders will receive 0.83 Lloyds shares for every HBOS share.

LLOYDS vs HBOS
Branches – Lloyds 1,900; HBOS 1,100
Customers – Lloyds 16 million; HBOS 22 million
Employees – Lloyds 70,000; HBOS 72,000
Savings – Lloyds is the UK’s fourth largest savings bank; HBOS is the market leader
Retail savings balance – Lloyds £65bn; HBOS £139bn

“This will be a unique opportunity to accelerate and extend our strategy and create the UK’s leading financial services group,” said Lloyds chairman Sir Victor Blank.

Lloyds chief executive Eric Daniels said “You have the largest savings bank, you have the largest current account provider, you have two terrific distribution networks.”

According to the deal agreement “significant cost savings can be made by combining the networks and back offices of Lloyds TSB and HBOS”.

Under the cost saving plan retail branches will be cut, while head office posts, human resources and finance and legal departments will also face cuts.

Analysts have suggested that up to 40,000 jobs could go, but banking consultant Jonathan Charley said HBOS was under pressure not to make such deep cuts.

He estimated that 10% of the combined workforce, or about 14,000 posts, could be cut.

Competition fears

BBC business editor Robert Peston said the government had opted to push through the Lloyds TSB-HBOS tie-up after HBOS voiced concerns that depositors and lenders had begun to withdraw their credit from the bank.

Declan Curry goes through the main points of the deal

Earlier Chancellor Alistair Darling said the government would allow the HBOS-Lloyds TSB deal because financial stability “must trump” competition fears.

But he denied that the authorities had rushed through the transaction.

“It didn’t just suddenly happen,” he told the BBC.

City watchdog, the Financial Services Authority (FSA) welcomed the merger saying it would “enhance stability within financial markets and improve confidence among customers and investors in the UK financial sector”.

“I’m worried by banks merging. Too much money in one pot is dangerous.” Stephen, London

Send us your commentsConcerns about HBOS’s security were so great that even the prime minister was involved in pushing through the deal, our business editor said.

“There were growing concerns in the HBOS boardroom that a climate of fear was being created about its future that could have led to a funding crisis, or a Northern Rock-style run – on steroids,” he said.

Market leader

Meanwhile, Mr Daniels – who will take over the helm of the new firm – was keen to stress that the takeover had not been forced on HBOS.

“There shouldn’t be any impression this is a shotgun marriage or a forced marriage, this is something that’s been looked at for a good long while,” he said. This is the right transaction for HBOS and its shareholders

Dennis Stevenson, HBOS chairman

Lloyds added that the takeover was part of its strategy to build “the UK’s leading finance company”, adding that it also intends to increase the number of competitive mortgages on offer for first-time home buyers.

The creation of such a large bank, which will hold a third of the UK mortgage and savings market, would not normally be allowed under competition rules say analysts.

But the deal was backed by the government, using a special national interest clause, on the grounds that a collapse of HBOS would have had a disastrous impact on the UK.

However, Lloyds chairman Sir Victor Blank did say the Office of Fair Trading would look “very carefully” at the business if it discovered any market abuses in the future.

Scottish focus

The group also moved to allay fears that the takeover would mean a blow to Scotland where HBOS is currently based.

Lloyds said the new group would continue to use The Mound – HBOS’s corporate headquarters – in Scotland, continue to hold annual general meetings in Scotland and carry on printing Bank of Scotland notes.

“In addition the management’s focus is to keep jobs in Scotland,” it added.

HBOS chief Andy Hornby will remain with the company, but his role has not been decided.

“Against the backdrop of the very high levels of volatility our industry is experiencing, the combined group will be one of the strongest players in the UK financial services sector.

News reported by The BBC

The US Federal Reserve has announced an $85bn (£48bn) rescue package for AIG, the country’s biggest insurance company, to save it from bankruptcy.

AIG will get an $85bn loan, in return for an 80% public stake in the firm.

The rescue follows the collapse of US investment giant Lehman Brothers, which caused share prices to plummet across the world’s financial markets.

Meanwhile, Barclays said it had reached a deal to buy Lehman’s US investment banking and capital markets businesses.

The $250m deal, which is subject to approval from the bankruptcy court, will make the British bank the third biggest investment bank in the US.

Barclays will also purchase Lehman’s New York headquarters and its two data centres in New Jersey for $1.5bn.

Emergency meeting

The rescue of AIG – which has a trillion dollars in assets and insures bank loans around the world – prompted a tentative rally on Asian markets.

Wednesday trading saw gains in Tokyo, Taiwan, Singapore and Seoul, though prices in Hong Kong fell after starting higher.

The dollar also rose against major currencies.

The board of the Federal Reserve made its decision about AIG “with the full support of the Treasury Department”, it said in a statement, adding that the secured loan included conditions designed to protect “the interests of the US government and taxpayers”.

US Treasury Secretary Henry Paulson refused to bail out Lehman Brothers, the fourth-largest investment bank in the US, after it filed for bankruptcy protection on Monday.

“These are challenging times for our financial markets” US Treasury Secretary Henry Paulson

However, Mr Paulson said he supported the Fed’s move to assist AIG and said the move would protect taxpayers.

“These are challenging times for our financial markets,” he said.

Correspondents say the demise of AIG – which has policy holders in more than 100 countries and insures deals and investments across the globe – would have a far greater impact on financial markets than Lehman’s collapse.

Were the company to fail, many banks and investment funds in the US and around the world would lose their insurance cover at a time when defaults on payments are likely to rise.

The Governor of New York, David Paterson, said AIG had so many business interests it would be hard to predict how widespread its bankruptcy would have been felt.

“Its tentacles go further in to the avenues of business, as in mortgages, as in credit, as in hedge funds, as in countless ways that affect consumers, that affect drivers, that affect homeowners, affect passengers,” he said.

AIG had posted losses in each of the last nine months.

It was badly affected by the collapse of the US housing market, says the BBC’s business reporter Rob Young, owing to the underwriting payments it was forced to make when customers defaulted on their loans.

Market slump

The AIG plan calls for the government to seize up to 80% of the company and remove its management, in a similar fashion to the way it took control of mortgage giants Fannie Mae and Freddie Mac which were crippled by the US housing crisis.
The global financial community is reeling from Lehman’s demise

The White House welcomed the package, saying the deal was made “in the interest of promoting stability in financial markets and limiting damage to the broader economy”.

Meanwhile, the Fed has left interest rates unchanged at 2%. The BBC’s Matthew Price in New York said the bank had decided an interest rate cut would not help to alleviate the short-term financial crisis.

On Wall Street, the Dow Jones rallied on Tuesday, closing 141 points higher having on Monday suffered its worst day’s trading since the September 2001 attacks on the US.

But leading indices across Europe ended lower, with banking shares being the worst hit.

Central banks around the world responded by carrying out emergency measures to keep markets liquid.

The Bank Of England and the Bank of Japan injected £20bn (25bn euros; $36bn) and 2.5 trillion yen ($24.1bn; £13bn) respectively into their money markets.

The extra funding came as the interest rates at which banks lend to each other rocketed – as they did at the start of the credit crunch.

News reported by The BBC

The Abbey bank has become the latest high-street lender to cut some of its mortgage rates.

It is now making fixed-rate deals cheaper for people who can put down a deposit of just 15%.

In the past week other lenders including the Nationwide, HSBC and the Co-op bank have also cut their rates.

The downward trend in fixed-rate mortgage costs is due to the falling cost to banks of borrowing wholesale funds on the financial markets.

“Fixed rate interest rates have reduced recently and as the market environment changes, we’re able to pass these benefits to our customers,” said Phil Cliff, director of mortgages at Abbey.

The latest move was welcomed by Aaron Strutt of mortgage brokers Chase De Vere.

“Abbey cut the majority of their mortgages over 75% loan-to-value in June,” he said.

“The remaining deals were not a viable option for thousands of their borrowers with smaller deposits.

“It is good news that Abbey have started to offer better deals for those with 15% deposit,” he added.

Competing for business

The changes mean that the interest charged on some of the Abbey’s fixed- and variable-rate mortgages has come down by up to 0.6%.

This week has seen a continuation of the trend for lenders to be making frequent cuts in rates on their residential mortgages

Ray Boulger, John Charcol

Until now the lender had only two fixed rate deals on the market, each for five years, for those who could not put down at least 25% of the value of the property.

From Monday, it is introducing new deals for those with a 15% deposit and cutting the interest rates on existing offers.

Ray Boulger, of mortgage brokers John Charcol, said the mortgage market had improved considerably since the “depths of despair” in the first six months of the year.

“This week has seen a continuation of the trend which started about 10 weeks ago for lenders to be making frequent cuts in rates on their residential mortgages, especially fixed-rates, and actively competing for business rather than competing to avoid business.”

“An increasing number of lenders have started offering cheaper rates for loans-to-value up to 60%, 65% or 70%, demonstrating that risk-based pricing is becoming increasingly important,” he added.

He also pointed out that some building societies were now starting to compete for business again, after seeing their lending slump earlier in the summer.

Even the buy-to-let market was becoming more active with some lenders now offering cheaper deals to would-be landlords, according to Mr Boulger.

News reported by The BBC

The house price correction is happening faster than anyone expected – but is that good or bad for the economy as a whole?

Most people would instinctively think it bad. Certainly there will be more short-term damage, to the construction industry obviously but also to other activities associated with the housing market. That said, in most aspects of business life it is nearly always better to make adjustments quickly. It is better for companies facing a fall in demand to cut capacity fast; better for banks with loan losses to write of the bad debts and turn attention to new business; better for retailers with stock they can’t sell to get rid of it somehow and replenish the shelves.

The template for this housing crash is the last one – that of the early 1990s. Those of us who had expected a long plateau in house prices this time, as incomes gradually caught up, look like being wrong. Last time round, the adjustment was indeed a long and drawn-out one. There were four or so years of gently falling prices then a final sudden lurch downwards. That was then followed by a period of reasonable stability before the latest housing bubble, which burst last year. As you can see from the graph, the falls are coming through fast this time. According to the Halifax, prices dipped for the fifth straight month in June. It now expects a fall from the peak of last year of 10 to 15 per cent, though other forecasts talk of slides of up to 30 per cent.

If the decline goes above 15 to 20 per cent, peak to trough, this crash will have turned out bigger than the last one. But it could also be shorter. There is a floor to prices – a level where homes become affordable again. We could be back to such a stable market in two or three years, rather than five or six, and not be in for the death-by-a-thousand-cuts that US housing is enduring. It is that drawn-up aspect to the US decline that triggered the collapse in confidence last week in Fannie Mae and Freddie Mac (the Federal National Mortgage Association and the Federal Home Mortgage Corporation), the two state-sponsored lenders. If the US government does have to rescue them, that would have huge reverberations around the world. But it would also mark a turning point in financial markets.

If the decline were to continue at the present rate, we would be back to a reasonable ratio between prices and incomes after a couple of years. You can do a back-of-an-envelope calculation. House prices are around six times earnings when they should be about four times. So they have to dip by a third in relative terms. That sounds terrible but two years of prices falling at 10 to 15 per cent coupled with two years of wages rising at 3 to 4 per cent gets you pretty much there.

Now were this to happen so suddenly, there would certainly be a huge shock. A lot of people would be in negative equity and lenders would find themselves having to shepherd weaker borrowers through a difficult time, helping those who need to move home despite their loans being larger than the value of their houses. And, as noted above, there would be a lot of damage within the housing industry.

So: plenty of disruption. But once house prices have clearly bottomed out, perhaps by the end of next year, confidence could come back quite fast. While I can’t see us having another runaway boom for a long time, there are lot of people out there with cash earning interest, waiting for prices to come to a level where they can again afford the homes they would like. So by the start of 2010, we could have the sort of broad stability in the housing market that pertained from 1996 to 2001.

What are the broader implications of this for the economy? I have long argued in these columns that 2009 will be more of a worry than 2008. Even now, after all the gloom that has been washing around, the economy is still growing, albeit slowly. Employment may have stopped rising but it is very high by historical standards. Unemployment has started to creep up but so far very slowly. However, the surge in the oil price may have brought the dip forward a bit, and by the back end of this year growth could have slowed to a halt. If this house price slide really gets moving, 2009 could be a very difficult year indeed.

I think the markets have at last cottoned on to this and their somewhat belated appreciation that things won’t zip out fast next year was behind the further bout of gloom that hit shares last week.

Very slow growth next year will have serious consequences for the public finances, which have been drawn up on the assumption of growth of 2.25 to 2.75 per cent in 2009. The latest forecasts coming in put it more like 0.5 per cent. If that were to happen, we would be into a deficit of £50bn or more – the sort of level that would blow the fiscal rules that Gordon Brown established to bits and hence be profoundly embarrassing for a government about to fight a general election.

On the other hand, if 2009 does look grim, prospects for 2010 could be better. That may seem a long way off right now, but if the housing slump had more or less come to an end, that would give a boost to domestic demand.

And then inflation will be back to an acceptable level. Indeed, if oil and commodity prices start coming down next year, as most people expect they will, the consumer price index could be below the central point of its target range of 2 per cent. It is a simple mathematical point that the higher the oil price this year, the greater the scope for an oil price reduction to cut inflation next year. That would clear the way for cuts in interest rates, which in turn would help steady the housing market.

You see the point: at the moment house prices are falling faster than most people expected and oil and other commodity prices are rising by more. This is speeding up the adjustment. So in the short term there is more disruption than most people – and certainly the Treasury – expected. That disruption will continue for another year or 18 months and that will be difficult.

But come 2010 you could start to see the basis for an economic recovery, with growth resuming, more affordable homes and acceptable energy prices. Unless…well, unless something else goes wrong in the meantime.

Those evil speculators aren’t as deadly as we think

The surge in oil prices, as with all commodity prices, has given rise to the charge that speculators are in some measure responsible – an issue to be examined by the Treasury Select Committee this week.

They might like to recall that UK politicians blaming speculators for market decisions they don’t like goes back to 1964 when George Brown, the new head of the Department of Economic Affairs, accused the “gnomes of Zurich” – the Swiss bankers – of speculating against the pound to try and drive it down. In the event, the gnomes’ judgement proved right, for the pound was devalued three years later.

Nowadays the gnomes are no longer just in Zurich; they are in every big financial centre. But while many people feel distaste for these traders, it is wrong to assume that speculation can distort markets in the long-term: the only thing that can do this is something that affects supply or demand. The issue is whether markets can distort prices in the short term and speculators make profits out of those artificial swings.

There is a lot of empirical work on this which seems to suggest that it can. It is too early to do the sums but I would expect that the oil price this year rose more swiftly than it otherwise would because speculators pushed it up faster. But by doing so they may have forced people to conserve earlier than they otherwise would, and hence trim the top off the ultimate peak in the price. But when a move in the markets is resisted by the authorities, speculators can clean up.

What I find most interesting is how the collective judgement of speculators can give a feel for what the hard money thinks. The index run by the broker Tradition predicts that our house prices will go on declining until 2011 – which maybe makes the recovery in 2010 argument I have made above look a bit optimistic. And the peak-to-trough “forecast”? Between 25 and 30 per cent. But look on the right side. At least no one has suggested yet that speculators are pushing prices down faster than they would otherwise go.

News reported by The Independent