The end of this week has seen Japan announce a rescue package pf 1.5 trillion Yen (£11.4 billion) to help Asian Countries threw the economic slow down.

The Prime Minister of Japan Taro Aso has decided on this rescue package and will be spent on promoting trade within the region and on infrastructure over the next three years.

The Japanese Prime Minister has called upon other wealthy nations to help smaller countries in the same way and has warned against protectionism. We are already seeing signs of protectionism in the UK, with workforces showing their growing resentment or foreign workers.

Japan has been hit hard by the slowdown and only this week NEC has announced 20,000 job cuts over the next 14 months and Hitachi has announce 7,000 job losses due to a drop in sales and is predicting a 700 billion Yen (£5.3 billion) loss for the year.

In contrast to this bad news Subway announce that it intends to open 600 new stores across the UK creating around 7,000 new jobs. Also, good news for Amazon as they saw their profits increase by 9% for the final quarter to December 2008 making a final annual profit of $1 billion (£685 million), so there is good news around despite the gloom.

A tough time for the air industry yet again, after getting through the high oil prices over the last several months we have now seen a huge fall in freight traffic and even more that the drop after 9/11. Freight traffic has falling by 22.6% in December of 2008 over the same month last year. The International Air Transport Association (Iata) is warning of a tough time for both passenger and freight airlines alike.

With the G20 summit coming up in April in the UK the UK’s Prime Minister Gordon Brown has urged a global confidence, saying that world leaders must have the “confidence to act” to tackle the global recession. Mr Brown was speaking at the Economic Forum in Davos where there were many world business entrepreneurs speaking and included Sir Stelios Haji-Ioannou the founder of Easyjet, who was trying to talk up the opportunities that exist in a down-turn.

Turning to commodities, gold has seen a further rise this week ending the week at $929 having risen 3.7% over the end of last week. The price of gold will remain high and might go even higher with the prospect of a continuation of a weak US dollar. Oil is still flirting around the $40 mark having dropped back again this week ending at $41.75, representing a drop of over 10%.

The first oil company to show signs over the affect of falling oil prices is the worlds largest oil giant Exxon Mobil. The company has reported a big 33% fall in profits for the last quarter of 2008 over the same quarter for 2007, falling to $7.8 billion (£5.3 billion).

End of the week saw:
Stock exchanges:
FTSE 100: 4,150
DOW: 8,001
S&P: 825.88
Nikkei: 7,994

Currencies
UK Sterling £ to US Dollar $ 1.45905
UK Sterling £ to Euro € 1.13592
UK Sterling £ to Japanese Yen 131.282
UK Sterling £ to Aus $ 2.28796
US Dollar $ to Euro € 0.778240
US Dollar $ to Japanese Yen 89.9350

Commodities
Nymex Crude oil – $41.75
Gold – $929.00

The highlight of this week was a new president being sworn-in in America as the 44th American President Barack Obama, takes centre stage.

There is nothing like a change in power to make people feel better which is a bit like having a shot in the arm. Barack Obama has plenty to do in his new role having followed the office of probably one of the worst presidencies in history. They say that major depressions come every 75 years or so and this one has come at about the right time according to history, helped along with bad management of the largest economy in the world!.

UK is officially in recession

Back over in the UK where we are still stuck with our government we are now officially in recession due to having two consecutive negative growth quarters ending December 2008. Sterling came under more pressure too this week with most currencies falling away again. The Sterling to US dollar rate closed at just over $1.37, which represents a fall of over 7% this week and has fallen by just under 35% since the rate hit $2.11 back in August of 2007. The US Dollar is back to the rates we were seeing back in December of 2001.

The other currency that has fallen sharply is the Sterling Euro rate closing the week at just under €1.06, having recovered a small amount last week.

Oil price recovers

Despite gloomy news around the globe the oil price has recovered this week with Opec cutting production and as much as 1.55 million barrels per day in January. The priced closed up at $46.47, which is a rise of 27% in one week. So it will be interesting to see where the price of oil moves this week with cold weather on its way on the one hand and on the other hand “peace” is restored in the Middles East for the time being.

Rising job losses

This has also been another week of job losses and warnings of job cut-backs, with Microsoft announcing 5,000 cuts in its work force which is the first ever in its history of trading! Over in Germany chip-maker Qimonda has filed fro bankruptcy with the loss of 12,000 jobs around the world. Corus, the Anglo-Dutch steel maker owned by Tata is to cut around 3,500 jobs with up to 2,500 of hose in the UK alone! But it is Spain that seems to be worst hit with their unemployment rate hitting 13.9% or 3.2 million jobless in the last quarter of 2008.

More trouble on the tech front!

Another first in this economic gloom as Samsung the South Korean chip-maker records its first ever quarterly loss. Samsung Electronics is the world’s biggest chip-maker and made a loss of 22.2 billion Won (£11.6 million), which is as a result of falling global demand as well as prices in memory chips and liquid crystal displays (LCDs). Japan’s electronics company Sony has also given out a profits warning along with other tech firms including Microsoft and Nokia.

If you want to read some good news for business in all this gloom the BBC have a great article on Why recession can be good time to start business

End of the week saw:
Stock exchanges:
FTSE 100: 4,052
DOW: 8,078
S&P: 831.95
Nikkei: 7,745

Currencies
UK Sterling £ to US Dollar $ 1.37210
UK Sterling £ to Euro € 1.05837
UK Sterling £ to Japanese Yen 121.637
UK Sterling £ to Aus $ 2.09337
US Dollar $ to Euro € 0.771464
US Dollar $ to Japanese Yen 88.6288

Commodities
Nymex Crude oil – $46.47
Gold – $895.80

A study by a United Nations Agency has shown that as a result of the present economic crisis there will be 20 million extra unemployed people leaving the total unemployed at 210 million by then end of next year.

“The global financial crisis could increase world unemployment by an estimated 20 million women and men. We need prompt and coordinated government actions to avert a social crisis that could be severe, long-lasting and global” Director-General of the International Labour Office (ILO)

Bang & Olufsen to cut jobs

Economic uncertainty is leading to luxury goods being left on the shelves as Bang & Olufsen reported that it will be cutting 300 jobs. This job cutting regime is part of a broader streamlining of it’s business to reduce costs and includes focusing on a smaller range of products. Bang & Olufsen, a Danish company, has posted its worst quarterly loss so far this decade earlier this month.

Worrying times ahead for us all!

“We have abruptly moved from an era of changes to a change of era” Mr. Somavia, in a statement to the International Monetary Fund (IMF)

One of the sectors to be worst hit is the housing market, a bubble that has truly burst as gross mortgage lending declines still further in September. According to the Council of Mortgage Lenders (CML) the gross mortgage lending reached an estimated £17.7 billion in September, representing a decline of 10% over August and a 42% drop from September of last year.

“The mortgage market is open for business. But weakening consumer demand and ongoing funding constraints will dampen monthly lending figures for the rest of this year and into the first quarter of 2009. We estimate gross lending in 2008 will be around £255 billion (£363 billion in 2007) and net lending of around £40 billion (£108 billion in 2007).” CML director general, Michael Coogan

Council of Mortgage Lenders website

Another base-rate cut is needed to help the economy and the housing market, because although the Bank of England made an emergency rate cut of 1/2 of one per cent, this reduction is not always finding its way to the mortgage market.

Having taken a review of products promoted on MoneySupermarket.com the best rate of 5.34% requires a 25% deposit for re-mortgages and their lowest deposit loan for the same purpose of 15% returns a rate of 6%. For first-time-buyers they are looking at having to put a deposit of 10% down and the best rate seen today is 5.35%. So it would appear that the 5% deposit loans are long gone, which is no wonder the market has almost ground to a halt.

The problems faced by the UK have provoked higher public sector borrowing which can only get worse, as the jobless number increases putting strain on government benefits and provisional estimates of the public finances show that in September the public sector had:

• a current budget deficit of £5.9 billion;
• net borrowing of £8.1 billion