This email was sent to Money Box subscribers on 11 July 2008

Dear listener,

When will the credit crunch end? That’s what my audience of insurers and credit arrangers wanted to know at the end of a talk I gave near Oxford about the current financial turmoil. Of course, I didn’t know. No-one does. All I could share with them was the rather unsettling news that when I have asked economists – who should know if anyone should – none of them can say. We always understand, of course, that predictions by economists may or may not come true – they are simply the best expert guess at the time. But they are always given with confidence. It’s their job. Over the last year that has changed. Even economists admit that their predictions are now very uncertain. One even admitted to me that at the moment many of them were just guesses.

Money Box is off for the next five weeks (details later about what will provide your Saturday money fix). The regular series returns on 30 August. But the week before that – 23 August – we are doing a special programme on the credit crunch. A year after it began, we’ll look at how it is affecting us and, yes, see if anyone will stick their neck out and predict how much longer it will go on.

But for this last programme of the series, Money Box is starting with another big, and not unrelated, topic. What is happening to share prices. We may – or may not – be in a technical bear market by the end of today. The FTSE 100 closing at 5835 or below is the currently accepted moment when we are officially in the bear pit. That’s because the FTSE 100 had its most recent peak on 12 October last year when it reached 6730.7. It had been slightly higher on 15 June (6732.4) but that was more than twelve months ago. So if it closes tonight at 5384.5 or lower we are in bear territory as currently defined. So what? We will ask. And where is it going?

Among the FTSE fallers are the banks which have been having a rough time raising billions to make sure there is enough in the vaults to support their businesses. The banks – where are they going? And are they victims or causes of the credit crunch? Also should Bradford & Bingley be advertising for new deposits of more than £50,000 when it is struggling to raise the finance it needs?

Also struggling are many small businesses as order books dry up and customers delay payments. We report on a new approach by some banks which are reassessing how to deal with small businesses in trouble. And some of the help they're providing may prove controversial.

Remember Equitable Life? Many do and with no affection, as their retirement hopes were dashed as the company nearly collapsed. Money Box has been covering this story since at least 1999 and now, finally, next week, just as we go off-air, the Parliamentary Ombudsman, Ann Abraham, will publish her much delayed report on who was to blame. And the leaks are that the government and the regulators are firmly in the frame. But will that mean compensation for the millions who suffered?

So, what is going to replace Money Box over the next five weeks? The answer is… Alvin Hall’s World of Money. Alvin is of course well known for his award winning series Your Money or Your Life on BBC 1 and for Alvin Hall’s Art World here on Radio 4. And this summer he will be looking at the people making money by investing in commodities, wine, art, film, and high-end property. Five interesting weeks. Don’t miss it. I won’t.

This is the last newsletter until 22 August. So have a great summer. I’ll be back sooner than you can say "two weeks somewhere hot".

But before I go, here is this week’s…

…Crown Dependency Money News

I was going to write about tax in Guernsey. But it’s 20% on income for individuals and companies and, er, that’s it. No other taxes are levied. And Sark, which is technically a dependency of Guernsey, has no income tax at all. Just a small tax on property and wealth. So my top money news story for the Bailiwick is that Guernsey will benefit from a small slice of the $300 million provided by the International Cricket Council to help small nations develop their cricket teams. At the moment the team is entirely amateur. But in future the players may get paid to compensate them for the days they take off to play and practice. Watch out England!

Best wishes,

 

Paul Lewis

PS Don’t forget the live preview of Money Box on BBC1 Breakfast between 8.45 and 9 on Saturday morning.


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