10 October 2018 FT — Articles to Read

10 October 2018 FT — Articles to Read


Question: According to MSN: Money, what are 10 Money Tips you wish you could give to your younger self?


Bank of England warns EU of Brexit risk to 41tn (sterling) of derivatives – Pg. 2

–        The BoE said yesterday that clearning houses would have to tell European members such as banks to move business, or risk falling foul of European law

–        The BoE estimates that EU-based companies have over-the-counter derivative contracts with a notional value of 69tn (sterling) at UK clearing houses

–        Clearing houses must give members three months’ notice to move their business, which is costly and complicated.  This means that the EC must make an announcement about derivatives before Christmas, or clearing houses will have to start giving notice to their members

–        The BoE has consistently warned about Brexit posing legal uncertainty to vast amounts of financial contracts from insurance policies to derivatives, over the past year

–        The problem turns on EU law, which states that members such as banks must use authorized central counterparties to clear derivatives and interest rate swaps


How to avoid the next financial crisis – Pg. 9

–        It brings out two big points: the impacts have been long lasting and have spread far beyond the countries that suffered banking crises

–        The IMF notes that “91 economies, representing two-thirds” of global gross domestic product in purchasing-power-parity terms, experienced a decline in output in 2009.  This was the biggest negative shock in the postwar era.  Moreover, the bigger the losses in the short run, the bigger they were in the long run, too.  Countries with large immediately falls in output also showed larger increases in income inequality, relative to pre-crisis averages

–        …output also remains below pre-crisis trends in 60% of countries that did not suffer banking crises

–        On average, countries that experienced banking crises suffered a four percentage point bigger loss in output by 2011-13 thank ones that did not

–        The first task is that of monetary policy normalization in a world that has so much debt

–        A second task is how to respond to another big recession, when the policy space is so diminished

–        The final task is coping with the political aftermath of the crises


Answer: (1) Start saving for retirement ASAP; (2) Don’t treat yourself so much; (3) Be careful with credit cards; (4) Make paying all bills a priority; (5) Turn savings into a source of income; (6) Don’t ignore life insurance; (7) Learn to cook for yourself; (8) Always try for a lower price; (9) Tune out the financial noise; (10) Never stop learning about money