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Table of Content

Week 1: Introduction to Economics......................................................................................................2

Week 2 : Economic System.................................................................................................................13

Week 3 ; Economics Influence on House Hold Purchases....................................................................22

Week 4 ; Credit Creation....................................................................................................................29

Week 5 ; Financial Institutions............................................................................................................39

Week 6 ; Investments.........................................................................................................................48

Week: 7 ; Consumer Price Index.........................................................................................................59

Week 8: Presentation.........................................................................................................................68

Week: 9 ; Exchange Rates...................................................................................................................85

Week 10 ; Self Reflection....................................................................................................................99

Week 1: Introduction to EconomicsEconomics is the study of the production and consumption of goods and the transfer of wealth to produce and obtain those goods. Economics shapes the world. Through economics, people and countries become wealthy. Because buying and selling are activities vital to survival and success, studying economics can help one understand human thought and behavior.

There are two main types of economics: macroeconomics and microeconomics.

Microeconomics

It focuses on the actions of individuals and industries, like the dynamics between buyers and sellers, borrowers and lenders. 

Macroeconomics

On the other hand, takes a much broader view by analysing the economic activity of an entire country or the international marketplace.

Economics in our daily life

Economics has an enormous effect on the daily  lives and wallets of all people, even if they aren't actually involved in economic studies. The principles of supply and demand play out every day for every person making purchasing decisions on goods and services, and in keeping or finding a job. Changes in circumstances or government mandates on any aspect of an industry creates a ripple effect of price changes through multiple industries to the end consumer

Example

 Your income is not unlimited. With that limited income, you want to buy a lot of things. You have to choose what product to buy, at which price and how much quantity. Now, let's say that you have 13 last dollars in your pocket. With that money you can either buy a ticket for a movie or buy beers and pizzas and watch the TV-show. What you do is what gives you more pleasure, or, as we say, what maximize your utility. You make an economic choice.

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Article One:

What Is Economics and Who Cares?

Economics is the study, description, and analysis of the ways in which societies produce and distribute goods and services. Economics can be applied to ancient civilizations—the Greeks and Phoenicians had economies—and to modern societies at the national, state, and local levels. For instance, California has the largest economy of any state, while New York City has the largest of any U.S. city. Even a household has an economy (although this does not cover “home economics”). Any system for deciding what is produced, how is it produced, and who gets to consume it, whether it is the system of an entire planet—as in the global economy—or a defined segment of society, is an economy and can be understood in economic terms.

An Inexact Science?

Economics is the study, description, and analysis of the ways in which a society produces and distributes goods and services. In economics, the term goods and services refers to everything that is produced in the economy—all products and services, including government “services,” such as national defines and the prison system. Economics is one of the social (as opposed to natural or physical) sciences, as are psychology and anthropology. Social sciences examine and explain human interaction. Because of this, the findings and knowledge produced by a social science generally cannot be as exact or predictable as those of a physical science, such as physics or chemistry.

For instance, if you put water in a saucepan on a stove, you know with certainty that it will boil when it reaches 212° Fahrenheit. But if you are the governor of a state and you raise the state sales tax, you cannot be certain about the effect it will have or be able to answer any of the following basic questions: How much money will the tax raise? In order to avoid the tax, will people take more of their business across the state line? Will they shop more often on the Internet, where there is no sales tax (yet)? Will companies in the state experience lower sales and generate lower corporate income taxes as a result?

Economics deals with these kinds of questions, but it seldom comes up with totally precise explanations or correct predictions. Why? Because human behaviour in the economic realm is as complex and mysterious as it is in any other sphere of life.

It's Not Perfect, but It Helps!

The good news, however, is that economics can tell us the likely results of a sales tax. In addition, as a scientific discipline, economics provides extremely useful analytical tools and frameworks for understanding human behaviour in the areas of

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getting and spending money, which (let's face it) occupies the majority of most people's waking hours.

Economics deals with fundamental, often life-or-death issues. That is why economics is important. Its challenge lies in its mysteries: We don't know when the next expansion or recession will arrive. We don't know if a federal tax cut will help the economy grow. We don't know which new technologies should be encouraged and which

Ones won't pan out. And, tragically, we don't know how to overcome poverty, hunger, crime, and other evils rooted in economic reality. But economics is the branch of the social sciences most concerned with these matters, and is it the one that's well equipped to help us deal with them.

Economics provides a framework for understanding government policies, business developments, and consumer behaviour here and abroad. It provides a rich context for making decisions in your business, professional, and financial life. The economy is to business as the ocean is to fish. It is the environment in which business operates. The more you know about this environment, the better you will function as a manager, analyst, and decision maker.

Excerpted from The Complete Idiot's Guide to Economics © 2003 by Tom Gorman. All rights reserved

Including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.

Article Two

Overview of Economics: Three Economists and Their Theories

The three most important economists were Adam Smith, Karl Marx, and John Maynard Keyne

(Pronounced canes). Each was a highly original thinker who developed economic theories that were put into practice and affected the world's economies for generations.

Adam Smith and His Invisible Hand of Capitalism

Adam Smith, a Scot and a philosopher who lived from 1723 to 1790, is considered the founder of modern

Economics. In Smith's time, philosophy was an all-encompassing study of human society in addition to an inquiry into the nature and meaning of existence. Deep examination of the world of business affairs led Smith to the conclusion that collectively the individuals in society, each acting in his or her own self-interest,

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manage to produce and purchase the goods and services that they as a society require. He called the mechanism by which this self-regulation occurs “the invisible hand,” in his ground-breaking book, The Wealth of Nations, published in 1776, the year of America's Declaration of Independence.

While Smith couldn't prove the existence of this “hand” (it was, after all, invisible) he presented many instances of its working in society. Essentially, the butcher, the baker, and the candlestick maker individually go about their business. Each produces the amount of meat, bread, and candlesticks he judges to be correct. Each buys the amount of meat, bread, and candlesticks that his household needs. And all of this happens without their consulting one another or without all the king's men telling them how much to produce. In other words, it's the free market economy in action. In making this discovery, Smith founded what is known as classical economics. The key doctrine of classical economics is that a laissez-faire attitude by government toward the marketplace will allow the “invisible hand” to guide everyone in their economic endeavours, create the greatest good for the greatest number of people, and generate economic growth. Smith also delved into the dynamics of the labour market, wealth accumulation, and productivity growth. His work gave generations of economists plenty to think about and expand upon.

Karl Marx: It's Exploitation!

Karl Marx, a German economist and political scientist who lived from 1818 to 1883, looked at capitalism from a more pessimistic and revolutionary viewpoint. Where Adam Smith saw harmony and growth, Marx saw instability, struggle, and decline. Marx believed that once the capitalist (the guy with the money and the organizational skills to build a factory) has set up the means of production, all value is created by the labor involved in producing whatever is being produced. In Marx's view, presented in his 1867 tome Das Kapital (Capital), a capitalist's profits come from exploiting labor—that is, from underpaying workers for the value that they are actually creating. For this reason, Marx couldn't abide the notion of a profit-oriented organization. This situation of management exploiting labor underlies the class struggle that Marx saw at the heart of capitalism, and he predicted that that struggle would ultimately destroy capitalism. To Marx, class struggle is not only inherent in the system—because of the tension between capitalists and workers—but also intensifies over time. The struggle intensifies as businesses eventually become larger and larger, due to the inherent efficiency of large outfits and their ability to withstand the cyclical crises that plague the system. Ultimately, in Marx's view, society moves to a two-class system of a few wealthy capitalists and a mass of underpaid, underprivileged workers.

Marx predicted the fall of capitalism and movement of society toward communism, in which “the people” (that is, the workers) own the means of production and thus have no need to exploit labor for profit. Clearly, Marx's thinking had a tremendous impact on many societies, particularly on the USSR (Union of Soviet Socialist

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Republics) in the twentieth century. In practice, however, two events have undermined Marx's theories. First, in socialist, centrally planned economies have proven far less efficient at producing and delivering goods and services—that is, at creating the greatest good for the greatest number of people—than capitalist systems. Second, workers' incomes have actually risen over time, which undercuts the theory that labor is exploited in the name of profit. If workers' incomes are rising, they are clearly sharing in the growth of the economy. In a very real sense, they are sharing in the profits.

While Marx's theories have been discredited, they are fascinating and worth knowing. They even say something about weaknesses in capitalism. For instance, large companies do enjoy certain advantages over small ones and can absorb or undercut them, as shown by examples as old as Standard Oil (now ExxonMobil) and General Motors and as recent as Microsoft and IBM, in high technology, and ConAgra and Dole in agriculture. In addition, as we will see in Wealth and Poverty, income distribution in U.S.-style capitalism, which is a “purer,” less-mixed form of capitalism than that of Europe, can tend to create a two-tier class system of “have's” and “have not's.”

Keynes: The Government Should Help Out the Economy

John Maynard Keynes, a British economist and financial genius who lived from 1883 to 1946, also examined capitalism and came up with some extremely influential views. They were, however, quite different from those of Karl Marx and, for that matter, Adam Smith. In 1936, he published his General Theory of Employment, Interest, and Money. We will examine Keynes's theories later. They mainly involve people

Propensity to spend or to save their additional money as their incomes rise, and the effects of increases in spending on the economy as a whole. The larger significance of Keynes's work lies in the view he put forth about the role of government in a capitalist economy. Keynes was writing during the Great Depression. It's worth noting at this point that in the United States unemployment reached about 25 percent and millions of people had lost their life savings as well as their jobs. Moreover, there was no clear path out of the depression, which led people to seriously question whether Smith's invisible hand was still guiding things along. Was this worldwide collapse of economic activity the end of capitalism?

Keynes believed that there was only one way out, and that was for the government to start spending in order to put money into private-sector pockets and get demand for goods and services up and running again. As it turns out, President Franklin D. Roosevelt gave this remedy a try when he started a massive public works program to employ a portion of the idle workforce. However, the United States entry into World War II rendered this a less than pure experiment in government spending. The war effort boosted production to extremely high levels (to make guns,

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ammunition, planes, trucks, and other materiel) while simultaneously taking millions of men out of the civilian workforce and into uniform.

Keynesian economics is an approach to economic policy that favours using the government's power to spend, tax, and borrow to keep the economy stable and growing. A Keynesian is an economist or other believer in Keynesian economics. The validity and desirability of Keynes's prescription for a sluggish economy—using government spending to prime the pump—are still debated today. Again, we will look at the theory and practice of what came to be known as Keynesian economics later.

Many other economists of note advanced theories and otherwise added to the body of knowledge in the science. We will look at their ideas as they arise in our examination of economics. However, Adam Smith, Karl Marx, and John Maynard Keynes (later Lord Keynes) are widely recognized as the most influential—Smith because he founded and formalized the science of economics, Marx because he challenged capitalism and had such a forceful impact on society and politics, and Keynes because he prompted new practices as well as new theories in the world of economic policy. Keynes also played a key role in the founding of the International Monetary Fund and in other political economic measures taken at the end of World War II. Excerpted from The Complete Idiot's Guide to Economics © 2003 by Tom Gorman. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.

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Summary

Adam Smith

Adam smith was a Scottish moral philosopher and a pioneer of a political economy. In 1776 he wrote a book “The Wealth of Nations” Smith laid the intellectual framework that explained the free market and still holds true today. He is most often recognized for the expression “the invisible hand,” which he used to demonstrate how self-interest guides the most efficient use of resources in a nation’s economy, with public welfare coming as a by-product. To underscore his laissez-faire convictions, Smith argued that state and personal efforts, to promote social good are ineffectual compared to unbridled market forces.

Example for Invisible Hand; If I sell candies for 1 peso each and Christian sells them for 2 pesos for 3 pieces, he will get all the business making me lose mine so in order to compensate for my loss I should be forced to lower my price as to stay alive in the business. I am guided by an invisible hand which is my self-interest to gain profit or as Adam Smith would say everyman for himself

The theory of the Invisible Hand states that if each consumer is allowed to choose freely what to buy and each producer is allowed to choose freely what to sell and how to produce it, the market will settle on a product distribution and prices that are beneficial to all the individual members of a community, and hence to the community as a whole. The reason for this is that self-interest drives actors to beneficial behaviour. Efficient methods of production are adopted to maximize profits. Low prices are charged to maximize revenue through gain in market share by undercutting competitors. Investors invest in those industries most urgently needed to maximize returns, and withdraw capital from those less efficient in creating value

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John Maynard Keynes

John Maynard Keynes, a British economist and monetary virtuoso who existed from 1883 to 1946, likewise inspected a free market system and concocted some amazingly compelling perspectives. They were, in any case, very not quite the same as those of Karl Marx and, so far as that is concerned, Adam Smith. In 1936, he distributed his General Theory of Employment, Interest, and Money. We will inspect Keynes' speculations later. They fundamentally include individuals'

Penchant to use or to spare their extra cash as their wages climb, and the impacts of expansions in using on the economy as an issue. The bigger hugeness of Keynes' work lies in the perspective he set forth about the part of government in an industrialist economy. Keynes was composing amid the Great Depression. It's significant right now that in the United States unemployment arrived at around 25 percent and a huge number of individuals had lost their life investment funds and in addition their employments. Additionally, there was no get way out of the melancholy, which headed individuals to genuinely address whether Smith's undetectable hand was all the while directing things along. Was this overall breakdown of financial movement the end of a free market system?

Keynes accepted that there was one and only way out, and that was for the administration to begin using to place cash into private-part pockets and get interest for products and administrations up and running once more. It would appear, President Franklin D. Roosevelt try this cure attempt when he began a gigantic open works project to utilize a bit of the unmoving workforce. On the other hand, the United States entrance into World War II rendered this a short of what immaculate analysis in government using. The war exertion helped creation to a great degree abnormal states (to make firearms, ammo, planes, trucks, and other materiel) while at the same time taking a huge number of men out of the regular citizen workforce and into uniform.

Keynesian matters in profit making is a methodology to financial arrangement that supports utilizing the legislature's energy to use, expense, and acquire to keep the economy steady and developing. A Keynesian is an economist or other adherent to Keynesian money making concerns. The legitimacy and attractive quality of Keynes' remedy for a lazy economy—utilizing government using to make preparations are still wrangled about today. Once more, we will take a gander at the hypothesis and practice of what came to be known as Keynesian trading and lending later.

Numerous different economists of note progressed speculations and overall added to the collection of learning in the science. We will take a gander at their thoughts as they emerge in

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our examination of money making concerns. Notwithstanding, Adam Smith, Karl Marx, and John Maynard Keynes (later Lord Keynes) are generally perceived as the most persuasive Smith in light of the fact that he established and formalized the art of commercial concerns, Marx on the grounds that he tested private enterprise and had such a powerful effect on society and legislative issues, and Keynes in light of the fact that he incited new practices and also new speculations in the realm of financial arrangement. Keynes additionally assumed a key part in the establishing of the International Monetary Fund and in other political financial measures taken toward the end of World War II. Excerpted from The Complete Idiot's Guide to Economics © 2003 by Tom Gorman. All rights saved including the right of proliferation in entire or to some extent in any structure. Utilized by game plan with Alpha Books, a part of Penguin Group (USA) I

Karl Marx

Karl Marx, a German economist and political researcher who existed from 1818 to 1883, took a gander at private enterprise from a more negative and progressive perspective. Where Adam Smith saw agreement and development, Marx saw unsteadiness, battle, and decrease. Marx accepted that once the industrialist (the gentleman with the cash and the authoritative aptitudes to assemble an industrial facility) has set up the method for generation, all worth is made by the work included in delivering whatever is consistently created. In Marx's perspective, introduced in his 1867 tome Das Kapital (Capital), an entrepreneur's benefits originated from abusing work that is, from coming up short on specialists for the esteem that they are really making. Therefore, Marx couldn't tolerate the idea of a benefit situated association. This circumstance of administration misusing work underlies the class battle that Marx saw at the heart of a free market system, and he anticipated that that battle would eventually pulverize private enterprise. To Marx, class battle is not just inborn in the framework due to the pressure in the middle of industrialists and labourers additionally heightens about whether. The battle heightens as organizations in the long run get to be bigger and bigger, because of the inalienable effectiveness of substantial outfits and their capacity to withstand the cyclical emergencies that torment the framework. At last, in Marx's perspective, society moves to a two-class arrangement of a couple of well off entrepreneurs and a mass of came up short on, underprivileged specialists.

Marx anticipated the fall of free enterprise and development of society to socialism, in which "the individuals" (that is, the specialists) possess the method for creation and subsequently have no compelling reason to adventure work for benefit. Obviously, Marx's reasoning had a colossal effect on numerous social orders, especially on the USSR (Union of Soviet Socialist Republics) in the twentieth century. In practice, then again, two occasions have undermined Marx's hypotheses. Initially, in communist, midway arranged economies have demonstrated far less productive at delivering and conveying merchandise and administrations that is, at making the best useful for the best number of individuals than industrialist frameworks. Second, labourers’ earnings have really climbed about whether, which undercuts the hypothesis that work is abused for the sake of benefit. In the event that specialists' livelihoods are climbing, they

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are plainly imparting in the development of the economy. In a genuine sense, they are offering in the benefits.

While Marx's speculations have been ruined, they are captivating and worth knowing. They even say something in regards to shortcomings in free enterprise. For example, vast organizations do appreciate certain focal points over little ones and can ingest or undercut them, as demonstrated by illustrations as old as Standard Oil (now ExxonMobil) and General Motors and as later as Microsoft and IBM, in high engineering, and Conagra and Dole in agribusiness. Moreover, as we will see in Wealth and Poverty, pay conveyance in U.s.-style private enterprise, which is a "purer," less-blended manifestation of a free market system than that of Europe, can have a tendency to make a two-level class arrangement of "have's" and "have not's."

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Bibliography

Video links

YouTube. 2014. Definition of Economics - People Respond To Incentives. [online] Available at: https://www.youtube.com/watch?v=rt8LTN0zm3k [Accessed: 3 Dec 2014].

Education Portal. 2014. What is Economics? - Definition & Types - Video & Lesson Transcript | Education Portal. [online] Available at: http://education-portal.com/academy/lesson/what-is-economics.html#lesson [Accessed: 3 Dec 2014].

YouTube. 2014. Econ - 1 Definition of Economics. [online] Available at: https://www.youtube.com/watch?v=tvMe9D0qXG4 [Accessed: 3 Dec 2014].

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Self-Reflection

In this week I learned that what economics basically is about and how it plays a role in our daily lives and what are its consequences and Advantages in our lives. It was a bit hard to find the appropriate information for Economics because I was studying Economics for the first time. In this week I got to know that Economics plays a key role in each and every aspect f our lives. We can’t even imagine that in every decision we are making use of economics. Nowadays I start thinking and take my decisions economically that what should I do which will be helpful to me or will it give me some profit or I will lose some thing

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Week 2 : Economic SystemEconomic Systems

The mechanisms that deal with the process of production, distribution and consumption of goods and services in an economy is said to be economic system. The economic system elaborates the relationship among residents and institutions of a country. The resources are scarce, which creates fundamental economic problems (what & how to produce and for whom to produce) while economic systems provide remedial answers to these problems. There three basic types of Economic System;

Planned-Economy

It is a command economy by the state and all the resources in the economy are owned by the government. Mostly the favoritism policies are prevailing in the economy which distracts economic development.

Market-Economy

Free market economy where private firms owned all resources in the economy. The capitalist system become in action which promote growth but un-equal distribution in all sectors of the economy. Inflation, unemployment, unequal distribution of wealth etc. are the disturbances of the free market economic system

Mixed-Economy

It has the features of the previous both economic systems

Pakistan Economic System

The planned or command economy and Market economy have many flaws that neither of systems could deliver desirable results. Planned economic system is adopted by almost all the countries in the world because it has summed-up the features of the command and free economic systems. Pakistan has the mixed economic system in the country. Under the new economic system all the decisions regarding production and distribution wealth is taken by the private firms while government authorities imposed taxes on these business activities. The government has the close look on the business operations in the economy and regulates the system where necessary to monitor the malfunctions of firms.

Comparison

Pakistan and UK both have mixed economic in practice. The differences include the stability of the economic processes in the economy. It is obvious that both external and internal factors affect the economy of the country. UK has stability in its economic and political system while Pakistan has suffered the volatile practices.

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12 September 2013 Last updated at 01:08

Norway: Is world’s largest sovereign wealth fund too big?

By Matthew Price BBC News, Oslo

Much of Norway's oil and gas lies beneath its beautiful landscape

Most of Europe is struggling with how to reduce spending, but not Norway. It has invested the income from its oil and gas reserves so wisely that it now has what many consider to be the world's largest sovereign wealth fund, estimated to be worth $1tr (£0.6tr) by 2020. But is that too big?

They play the long game on the trading floor. When Facebook announced it was going to float on the stock market, the analysts here went to work. They assessed the pros and cons, the likely value of the company, the chance of a big loss, and of a big gain.

Then they bought Facebook shares. Like everyone else who did they lost money almost immediately. Unlike many others however they did not rush to sell them.

"We have the possibility in times of turbulence to sit through the turbulence," says Yngve Slyngstad, the CEO of Norway's pension fund.

A billion dollars a week passes through the fund's office in the Norwegian Central Bank building in Oslo.

More than 200 staff work here. Another 100 in their offices in New York, London, Shanghai and Singapore.

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The trading floor is calm, considered, even slightly academic. Wall Street this is not. There's no panicked selling of stocks as markets plunge.

Their mission, by government mandate, is slowly and carefully to build up wealth to help fund this country long after the oil and gas reserves run out.

"That was what happened in the 2008-2009 period," Mr Slyngstad continues. "Many other investors were forced to sell. We had the privilege to not only sit on our assets, but to accumulate more."

'Working with reason'

In Norway's case money makes money. Profits and taxes from the oil and gas industry give the government oil fund $1bn a week.

The fund holds on average 1% of the world's shares. In Europe it owns more than 2% of all listed companies.

Valhall is an oilfield in the Norwegian sector of the North Sea

That is thanks both to the hydrocarbons - and the fact that successive governments have stuck to the political consensus that profits from the oil industry should be invested in the fund.

The government mandate for the fund specifies that it must be transparent and open. It also aims to influence the way in which the companies it invests in behave.

It has a set of principles which guide its investment strategies, and to which it attempts to get others to subscribe to.

"As long-term owners," says Mr Slyngstad, "we need to "make sure that the companies are long-term profitable, and not only good for the investors, the shareholders, but for society at large.

"We work with reason and not with force."

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But does it make a difference? The fund believes it does. In the area of children's rights for instance they believe their stance has encouraged companies that use child labour to address the issue.

"Of course this is very long-term work where results are measured in not years, but decades," adds Mr Slyngstad.

Multiple funds?

Norway is one of the richest countries per head of population. Europe's debt crisis feels very, very far away in this affluent corner of the continent.

At Norway's Business School in Oslo however, the professor of asset management, Bruno Gerard, believes the fund must be changed.

Erna Solberg described her election victory earlier this week as "historic"

"It's going to be impossible to keep managing this immense flow of money within one organisation," he says.

"It is very well-managed, but... a small mistake on a big fund can have enormous consequences. It would be far less damaging if we had several smaller funds."

That is something Norway's newly-elected Conservative party - it will lead the next coalition government - says it might consider.

"Should it be two or three funds not one?" asks Erna Solberg, the party's leader.

There will be a discussion, she suggests.

"Of course as Conservatives we also believe that if you have a regime with a bit more competition you might get better results."

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Prof Gerard is convinced that is the way the debate is going. "It's not whether to split the fund - but when to split it."

Any change in how they run things in the fund would have no effect on global markets, but it could be crucial for Norway's future.

Some say the fund holds too many shares, and argue at least some of the profits would be better spent on infrastructure or research and development in Norway.

Spend too much though inside the country and they risk overheating the economy.

Mr Slyngstad addresses the issue with a wry smile. "As a starting point it's better to have a large fund than a small fund," he says.

But whatever they decide, while most of Europe grapples with how to save, Norway is well ahead.

It is focused on making sure that even when the oil does run out, the money doesn't.

Summary: Article

Using the oil and gas resources, Norway has made some wise investment decisions and gathered the world’s greatest sovereign wealth fund. This fund is expected to touch the value of $1tr (£0.6tr) by 2020. Norway has played some tremendous trading tricks to achieve this. They know the art of staying calm during the turbulence period.

Work for a Cause:

Successive governments in the Norway have stuck to the policy of investing the income from oil industry in the fund. They have made consistent efforts to ensure the transparency of the fund. Mr. Slyngstad, the CEO of Norway's pension fund says that they work for a cause. Their aim is to bring betterment in the society with their long-term profit goals.

Increasing the Number of Funds:

According to Bruno Gerard, the professor of asset management, managing a huge amount of money within a single organization is quite impossible. Same are the thoughts of the leader of newly elected Conservative Party, Erna Solberg. She said that the government may consider increasing the number of funds.

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IEA, the major reason for this pricing issue is the US gas shale boom.

14 November 2014 Last updated at 12:13

Oil prices likely to fall further, says IEA

Oil prices are likely to continue falling well into 2015, the International Energy Agency has said.

The IEA, a consultancy to 29 countries, said weak demand and the US shale gas boom meant crude's recent fall below $80 a barrel was not over.

On Friday, Brent crude, one of the major price benchmarks, traded at $78.13 a barrel, near a four-year low.

"It is increasingly clear that we have begun a new chapter in the history of the oil markets," the IEA said.

"Barring any new supply problems, downward price pressures could build further in the first half of 2015."

Brent Crude Oil Futures $/barrel LAST UPDATED AT 26 NOV 2014, 12:00

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price change %

78.26 -

-0.07

-

-0.09

The organisation, set up after the "oil shock" of the early 1970s to advise major oil importing countries, said that pressure was building on the OPEC oil producers' group to restrict supply to bolster prices.

However, there have been reports that Saudi Arabia, OPEC’s key member, is not yet willing to turn off the taps. OPEC members are due to meet on 27 November to discuss the supply and demand issues.

Most OPEC members rely on oil revenues to support economic growth and spending.

Also, it is likely that oil and gas explorers will become increasingly worried that falling prices will make exploration uneconomical.

Brent has fallen for eight weeks in a row, its longest losing streak since 1988, according to Reuters' data.

The US energy department said this week that it expected low fuel prices to last into next year.

Earlier this week, the IEA's Global Outlook, a report into the industry's long-term challenges, warned that the US shale gas boom was masking serious risks to global energy security.

Summary: News

International Energy Agency (IEA) has said that the trend of falling oil prices may extend to 2015. First half of the coming year is expected to face the pressure of low oil prices due to supply issues. The falling price trend would have a negative impact on the oil exploration too, as the exploration will certainly become uneconomical. Oil producing OPEC members will have to restrict the oil supply in order to make the prices go up. They have already called for a meeting on 27th of November to discuss the concerns regarding oil supply and demand. According to

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Bibliography

 Unknown. 2014. [online] Available at: http://www.bbc.com/news/world-europe-24049876: [Accessed: 3 Dec 2014].

 BBC News. 2014. Oil price falls 'set to continue'. [online] Available at: http://www.bbc.com/news/business-30049294 [Accessed: 3 Dec 2014].

Economywatch.com. 2014. Pakistan Economic Structure | Economy Watch. [online] Available at: http://www.economywatch.com/world_economy/pakistan/structure-of-economy.html [Accessed: 3 Dec 2014].

Recorder, B. 2012. Pakistan - a state in economic crises - I | Business Recorder. [online] Available at: http://www.brecorder.com/articles-a-letters/s=:/1229768:pakistan-a-state-in-economic-crises-i/?date=2012-08-23 [Accessed: 3 Dec 2014].

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Self Reflection

In this week I learned that how market runs and what is economy and how many types of economy are?? Basically I was having problem in Mixed Economy that how it runs but after going through some articles and information from internet I get the whole image of it .I also find difficulty in comparing the economies of Pakistan and Briton because they both are different countries having different cultures, Tradition and also having different political and economical system nut after going through some research I compiled the whole information quite successfully. In my opinion Mixed Economy is best because it also includes planned and free economy so it helps the government to maintain the profit and runs the government successfully

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Week 3 ; Economics Influence on House Hold Purchases

Economic influences on household purchases

What is recession?

It is economic period in with output growth decline or become negative or the downturn remains in the business activities for two-three continuous quarters. Recession badly affects the GDP of the country that influenced the economic growth and development of the country.

Recession and Supermarkets

Recession caused the shrinkage in the market activities due to the high unemployment and inflation. In six years period (2007-12), the disposable income of the consumer contracted below the inflation rate of 32%. Moreover recession changed the buying patterns that consumers either by live conservatively or within their budget limits. They preferred to stay home by avoiding going to clubs, pubs, takeaways and restaurants. According TNS Global and Nielsen market research, it said that during the recession about 4%-5% groceries sales were declined annually. Similarly, about 36% of the UK consumers decreased their groceries purchases during the recession period.

Supermarkets Response to Recession

The large supermarkets in UK started different price promotional strategies to attract consumers from the high-low market segments. These markets tried to fine out best market tool to erode market share from those in business.

During the recession, customer loyalty programs were introduced by the big players in the business. Leading from the front, Tesco launched Club card Loyalty scheme as aggressive market tool to regain the lost market share. Owned labeled Price Promise comparison price voucher was also launched by Tesco that consisted upon a basket of branded and non-branded items. The similar strategies were also launched by others such as Morrison and Sainsbury’s.

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Article

Shopper behaviour as the UK exits recession

26 January 14:07 2010

Andy Wood, managing director of GI Insight, looks at consumer supermarket shopping behaviour during the recession and asks what its effect will be now the UK is exiting recession.

There is little doubt that supermarkets have been weathering the recession rather well, with many reporting strong profits and increased sales.

And, with a large proportion of consumers looking to avoid costly nights out and takeaways, many of the big supermarkets have rushed to fill the void – the result being that, overall, the major chains have seen their grocery sales lifted by 4-5% year-on-year in recent months, according to figures from market research firms Nielsen and TNS Global.

Below the surface of these seemingly positive figures, however, there has been a significant underlying shift that could be troubling for some segments of the retail grocery sector.

We surveyed a broad spectrum of consumers and found that more than a third of shoppers have switched from their usual grocery supermarkets to ‘value’ retailers, as once-loyal customers look to trim their household expenses by turning to cheaper alternatives.

This underlying shift has been occurring at different levels in the grocery sector and has become more pronounced as the recession has progressed. Our latest figures show a higher proportion of people moving to ‘value’ alternatives for the long term than a similar study conducted earlier in the year.

It found that 36% of UK consumers have gone down market with their grocery shopping for a significant portion of their food purchases, in an effort to economise as the recession has dragged on.

The study also found that, now that the economic outlook is improving, only 10% of UK consumers plan to move back ‘upmarket’ within the next year, representing a net loss for higher-end supermarkets of 26% in the longer term.

A similar study we conducted in May found a net total of 21% of shoppers had moved downmarket and planned to stay there. The latest results indicate that, as the UK has continued to face a difficult economic climate, more consumers who have moved to less costly alternatives are now beginning to see this as a long-term solution.

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The main beneficiaries in the retail grocery sector of this drive to economise have been those large-scale supermarkets that have pushed everyday low prices, while some of the more basic bargain retailers have also seen benefits.

At the other end of the spectrum, certain premium players have also benefited as they have successfully marketed own-label brands while encouraging customers to treat themselves to special luxury food products to compensate for curtailed spending elsewhere.

A valuable tool in all of this retail grocery market turmoil is the customer loyalty programme. While earlier in the year Tesco’s market share dipped in the face of consumers going downmarket looking for better deals, the market leader has managed to turn things around and in November actually saw slight year-on-year growth in its market share for the first time since the end of 2007, according to TNS figures. This can largely be attributed to the aggressive prelaunch of Tesco’s Club card loyalty scheme.

In addition to leveraging their loyalty programmes, Tesco and high-end grocery chains such as Waitrose and Sainsbury’s have been introducing budget ranges in a bid to stem customer churn – the essential Waitrose range being a perfect example.

At the same time, value supermarkets have been using price promotions to try to attract more customers away from the middle and high-end segments of the retail grocery market and keep those who have already moved.

With certain players in the very top end and the bulk of competitors at the bottom segment of the retail grocery sector thriving in very competitive circumstances, the supermarket chains and the independents being squeezed in the middle now have to find the right tools to regain eroded market share and win over consumers rethinking their shopping habits, as the UK exits recession.

Summary: Article

The research carried out by Nielsen and TNS Global has revealed that sales on the grocery at various well known chains have increased by 4 to 5 % in few months. A consumer survey shows that about one third of the costumers have switched from supermarkets to retailers. This switch has been observed at different stages in the grocery sector and is found to become stronger as the recession increases. The most recent study reveals that most of the costumers now see the long term solution of the economic crisis as moving to cheaper alternatives. The grocery market needs to introduce effective customer loyalty programs in order to keep their customers. Whereas, the value supermarkets need to work on the price promotion and find right ways to get hold of the costumers.

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German economy succumbs to the slowdown

The country’s manufacturing sector is slowing and factory orders are tumbling, but it does not make sense to write off Germany as an investment opportunity just yet

By Andrew Davis

3:54PM GMT 11 Nov 2014

Regarded as the Eurozone’s engine for years, Germany is no longer running so smoothly.

The country’s legendary manufacturing sector, which has made it the world’s third biggest exporter, is slowing markedly – industrial output fell 4pc in August, the biggest month-on-month drop since February 2009.

Factory orders also tumbled 5.7pc, suggesting the soft patch will continue for a while at least. German consumers, meanwhile, are in cautious mood, with retail sales in September dropping by more than 3pc, once again the biggest monthly decline since the credit crunch was at its worst.

All in all, it looks as if Germany is succumbing to the slowdown taking hold almost everywhere, a notable exception being the US. As a major exporter, Germany is exposed to weakness in other parts of the

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world – its major trading partners in the Eurozone are all experiencing slow growth and several are on the brink of recession. It’s entirely possible Germany could dip back into recession this year.

Further afield, the huge Chinese market is cooling rapidly, which naturally damps demand for German exports, while Russia is feeling the chill of international sanctions and suffering a currency collapse.

For investors, the German story is based on its excellence as an exporter and affluence of its domestic market, both of which are now in question to some degree at least.

If world growth is slowing, as seems to be the case, Germany’s ability to continue exporting its way to prosperity is going to be compromised. At home, meanwhile, the government’s determination to return to a budget surplus in the near future means relatively little chance of any stimulus to boost domestic demand.

It does not make sense to write off Germany as an investment opportunity – the quality of its companies, not to mention the probability that the Euro will weaken further as a result of loose monetary policy, make it a formidable exporter whose prowess is not about to disappear overnight. But the Eurozone looks as if it will be on its knees for a while, so a lot will depend on how the wider world fares.

That said, investors need to appreciate that the factors that fuelled Germany’s resurgence during the noughties, in particular China’s years of 10pc growth, are receding into past and that means its companies will need to find new avenues to pursue.

This is no disaster – it may be getting harder to sell top-of-the range BMWs to Chinese government officials, but there’s little sign of Aldi and Lidl’s budget-shopping invasion running out of steam.

Summary: News

According to euro zone’s economy engine, Germany is facing trouble in the manufacturing sector which was considered to be the backbone of Germany’s growing economy. Germany’s standard as the first-rate exporter is now in question. Many of the Euro Zone trading partners of Germany are facing economic crisis and are expected to be the victim of recession. This makes Germany vulnerable to recession in the present year. Yet, it is not appropriate to say that Germany is not a profitable investment venue. The quality of German companies is so to make it such a dreadful exporter whose decline is not a story of few days.

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Bibliography

Talking Retail. 2010. Shopper behaviour as the UK exits recession. [online] Available at: http://www.talkingretail.com/opinion/talkingpoints/shopper-behaviour-as-the-uk-exits-recession/ [Accessed: 3 Dec 2014].

Telegraph. [online] Available at: http://www.telegraph.co.uk/sponsored/finance/macroeconomics-investment/11215692/germany-economy-slowing.html?WT.mc_id=605804&source=TrafficDriver [Accessed: 3 Dec 2014].

Mediatel.co.uk. 2014. How shoppers and supermarkets are responding to the recession. [online] Available at: http://mediatel.co.uk/newsline/2013/03/28/how-shoppers-and-supermarkets-are-responding-to-the-recession/ [Accessed: 3 Dec 2014].

Talking Retail. 2010. Shopper behaviour as the UK exits recession. [online] Available at: http://www.talkingretail.com/opinion/talkingpoints/shopper-behaviour-as-the-uk-exits-recession/ [Accessed: 3 Dec 2014].

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Self-Reflection

In this week I learned about cost of production, monopoly, Oligopoly and I also learned about recession and how companies goes through it and what are the reasons for recession and how companies manage through it .What are impact of recession on the country and market and how the country manage to get rid of it.I was having a little problem in understanding about recession but after consulting my tutor I learned it .According to me when there is recession we peoples or citizens should not take our money out of our bank accounts . if we will do this we will go further in recession because banks will have no money to invest so definitely that particular country will go into recession

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Week 4 ; Credit Creation

Credit Creation

Creation of credit is an important function of a commercial bank. Money deposits in the commercial bank have provided investment opportunities for the bank. It is supply of money from the bank which increases the money circulation in the economy. Thus credit creation by the bank is said to be the multiplication deposits. The central bank always keeps a close eye on the supply of money to avoid inflation.

Process of Credit creation

Commercial banks use different methods for credit creation in the economy. Credit creation is process of advances money in form of loans and investments which further expand the deposits of the bank. Therefore, if someone deposits money in bank then bank would perform multi-expansion of credit while withdrawals of money create multi-contractions of credit. Most common method of credit creation is keep say 20% reserve ratio of deposited money ($1000*20%=200) and advance $800 in form of loans. This process is repeated by other banks to create credit in the financial sector. Today’s popular source of credit creation is plastic money such as credit cards.

Credit cards advertised benefits and annual payment rate (APR)

Citi. Diamond Preferred Card Standard Chartered Platinum Visa/MasterCard1% unlimited cash back and 0% interest on first $3000 withdrawal

0% interest rate up to 18months

APR-24.455% APR- 11.99% to 21.99%Minimum Payment rate:2% or $50 whichever is higher on outstanding balance

Minimum Payment rate:$5 or 3% whichever is higher on outstanding balance

24/7 dinning, shopping and travelling 24/7 dinning, shopping and travelling1000 pounds= $1564.45Minimum payment (1564.45*2%)=$31.29Each month paying $50 will take 50months with total interest $917.43 to get rid off of debt

1000 pounds= $1564.45Minimum payment (1564.45*3%)=$46.93Each month paying $46.93@ 20% APR will take 98months with total interest $643.41 to get rid off of debtMost favourable for me.

Payday Loan:

Sunny.co.uk

The company provides online loan facilities for the short term up to the maximum of one month. Usually APR on these payday loans are high due to the high risk bearing by the company. The sunny payday APR

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is 1751% a massive interest rate. They don’t charge late fees but its payment quite high than a normal credit card APR 20 to 25%. Credit card option is better than payday loan because;

It gives protection on the consumer purchase

There is no interest to pay on the daily basis

It is cheap and for long term

Fair pricing

Flexibility in borrowing and repayment

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Article

Soaring UK personal debt wreaking havoc with mental health, report warns

Centre for Social Justice says poorer people 'bearing brunt of storm' as debt hits £1.4tn – almost as high as economic output

 Credit card debt has trebled to £55.6bn since 1998 while overall personal debt including mortgages has reached £1.4tn. Photograph: Alan Schein Photography

Personal debt in Britain has reached £1.4tn – almost the same amount as Britain's national economic output – according to a report that warns debt is wreaking havoc on people's mental health and wellbeing.

Poorer people are "bearing the brunt of a storm" during which average household debt has risen to £54,000 – nearly double what it was a decade ago, the report by the Centre for Social Justice thinktank warns.

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The report, entitled Maxed Out, found that almost half of households in the lowest income decile spent more than a quarter of their income on debt repayments in 2011. More than 5,000 people are being made homeless every year as a result of mortgage or rent debts.

Christian Guy, director of the think-tank established in opposition by the work and pensions secretary, Iain Duncan Smith, said: "Problem debt can have a corrosive impact on people and families. Our report shows how it can wreak havoc on mental health, relationships and wellbeing. Across the UK people are up until the early hours worrying about their finances and bills."

The report, written by the former Labour work and pensions minister Chris Pond, found that:

• Personal debt in the UK, including mortgage lending, stands at £1.4tn – an average of £54,000 per household compared with £29,000 a decade ago.

• Consumer debt had trebled since 1993 and now stands at £158bn;

• More than 8m households have no savings, including half of low-income households;

• Outstanding debt on credit cards has almost trebled since 1998 to reach £55.6bn;

• There were 300,000 arrears on mortgage in 2012 – with 34,000 homes repossessed. This is a reduction of 30% from the peak of the recession but a 60% overall increase since 2006.

Pond said: "With falling real incomes and increasing costs of basic essentials, many – especially the most vulnerable – are sliding further into problem debt. The costs to those affected, in stress and mental disorders, relationship breakdown and hardship is immense. But so too is the cost to the nation, measured in lost employment and productivity and in an increased burden on public services."

The report found that the decision of mainstream banks to refuse credit to the less well-off has led to a dramatic increase in the demand for short-term credit – from payday lenders, pawnbrokers and doorstop lenders – which is now worth £4.8bn a year. More than 1.4 million people have no access to a bank account and "are effectively excluded from the entire financial sector". This contributes to the "poverty premium", a £1,280 annual surcharge on everyday goods and services faced by low-income households.

Payday lenders have increased their business from £900m in 2008-09 to more than £2bn – accounting for around 8m loans – in 2011-12. The number of people resorting to loan sharks has increased to 310,000 people.

The report says: "For the most financially excluded, there is often no option but to turn to illegal moneylenders. It is estimated that over 310,000 people borrow money from these criminals each year. Illegal moneylenders extort money from their victims, often arbitrarily raising interest rates, demanding payments or charging penalties. Their use of violence and intimidation terrorises people and communities, enforcing a 'veil of silence' that allows them to escape detection. This is an inexcusable crime in modern Britain.

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Many of the side effects of problem debt can also work to drive people further into debt, creating a vicious cycle. While it is often hard to prove causation, there is a clear relationship between the following and problem debt: unemployment, family breakdown, addiction, and poor mental health. Similarly, many of these factors are interrelated, meaning problem debt can have diverse causes, requiring multidimensional support in order to fully resolve the underlying problems."

SUMMARY: Article

A report of the mental health says that debt has a devastating effect on person’s mental health. Household debt in Britain has become double the amount it was a decade before. Report says that as a consequence of mortgage or rent debts, hundreds of people become homeless every year. Mostly, financially instable people tend to get involved in illegal activities and seek help from moneylenders, who exploit their victims in every possible way. Debt problem has a direct relationship with other issues like unemployment, broken relationships and addiction. In order to eliminate debt issues, the above mentioned related problems must be address properly.

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Article

Weak global economy weighs on Britain's blue-chips

Sales at FTSE 100 companies slumped in the second quarter due to weak global demand and a strong pound -- while FTSE 200 firms, with less international exposure, fared better

By Lauren Davidson

5:00AM GMT 10 Nov 2014Sales slumped at Britain’s blue-chip businesses in the second quarter of this year, after weak global demand and a strong pound weighed on earnings.

However, London-listed medium-size companies, which are less exposed to external markets, fared better, pointing to the strong growth of the UK economy relative to its international counterparts.

Revenues at FTSE 100 companies fell 5.8pc to £61.9bn in the three months to the end of June, compared to the same period last year, according to the latest Profit Watch UK report from The Share Centre, the stockbroking service.

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Sheridan Adman’s, investment research analyst at The Share Centre, said, “The news on the global economy, and among Britain’s big trading partners, is not good, which is likely to keep the pressure on UK plc.

“However, in the year ahead, there is likely to be less of a drag from the high pound, and the domestic economy is still growing. We think earnings are likely to be better than some fear and the market continues to present good opportunities to invest.”

BHP Billiton and Diageo, two of the biggest companies to report in the quarter, took a toll on the FTSE 100’s performance, after shrinking commodity prices and a particularly strong pound prevented the companies from reporting an earnings increase in sterling.

BHP is trading 10pc lower than it was at the start of 2014, while Diageo has lost almost 9pc of its

value.

But the recovery of the UK economy helped boost sales at FTSE 250 companies, which are less exposed to the global market, by 11.3pc to £32bn, with net profits growing by 28.5pc to £2.2bn.

Property and construction sectors fared particularly well -- together contributing more than £2bn in sales -- due to the boom in the UK housing market.

The UK economy expanded by 0.8pc in the second quarter of this year, rising, largely due to strong growth in the services sector. GDP rose by 3.1pc on an annual basis, its fastest pace of growth since late 2007.

By comparison, the European Commission last week cut its 2015 growth forecasts for the Eurozone

from 1.7pc in May to 1.1pc. The growth forecast for Britain was revised upwards from 2.5pc to 2.7pc.

Overall, revenues across the FTSE 350 increased by 1.6pc to £93.9bn, with net profits up 12.5pc to £14.1bn due to fewer write-downs and lower tax bills.

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Profit Watch UK analyses annual financial data from the FTSE 350 companies with year-ends before 30 June and which report earnings before the end of September, to provide an overview on the state of UK plc. This year’s second-quarter report includes financial results from six FTSE 100 firms and 24 from the FTSE 250.

Summary: News

Blue chip businesses in Britain had to face sales downfall resulted from strong pound and weak global demand. On the other hand, medium sized companies in London having a little exposure to international market fared well. According to Sheridan Adman’s, who is an investment research analyst at The Share Centre, UK plc is going to be under pressure; however, the coming year may bring some good investment opportunities by the market. In the second half of this year, well grown services sector helped UK economy to rise by 0.8pc. An upward revision is made in the growth forecast for Britain.

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Bibliography

Watt, N. 2013. Soaring UK personal debt wreaking havoc with mental health, report warns. [online] Available at: http://www.theguardian.com/money/2013/nov/20/personal-debt-mental-health-report [Accessed: 3 Dec 2014].

Davidson, L. 2014. Weak global economy weighs on Britain's blue-chips - Telegraph. [online] Available at: http://www.telegraph.co.uk/finance/markets/11219398/Weak-global-economy-weighs-on-Britains-blue-chips.html [Accessed: 3 Dec 2014].

Which.co.uk. 2014. Six reasons why credit cards beat payday loans - February - 2012 - Which? News. [online] Available at: http://www.which.co.uk/news/2012/02/six-reasons-why-credit-cards-beat-payday-loans-278639/ [Accessed: 3 Dec 2014].

Sunny.co.uk. 2014. Sunny Rates: Transparent and Fair Pricing - Sunny. [online] Available at: https://sunny.co.uk/our-loan-pricing [Accessed: 3 Dec 2014].

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Self-Reflection

In this week I learned about how banks or companies runs their business by making their customers fool. I also learned about the different between types of accounts in banks e.g. differences between visa card, credit card and debit card and how through these accounts banks like Barclays,HBC etc. Make money and how companies like Tesco, Morrison’s etc. make money by their Tesco club card .I also learned about the way they make money by giving loans and by their interest rate each and every bank and company have their own interest rate. I was having problem with interest rate table but after requesting my tutor for explaining me again I understand the whole phenomenon. According to me I will never take any loan from any bank or company because it increase day by day.

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Week 5 ; Financial InstitutionsFinancial institutions

World Bank

The foundation of World Bank was laid down in 1945 at Bretton Woods conference. It is the UN international financial institution that facilitates the poor countries by providing long term loan for the strengthening the capital structure of those economies. The other objectives include poverty elevation programs, promotion of international trade and foreign investment in developing and developed nations.

European Central Bank (ECB)

The head office of European Central Bank is at Frankfurt, Germany. It manages the entire euro region of European System of Central Banks that consisted upon 28 countries. The important role of ECB is to regulate the financial system and price stability of the EU member countries. The ECB functions include; Promote co-operations among 18 countries of Euro-Zone and safeguard the euro economic systems.

Bank of England

It is the central bank of the UK. It was founded in 1694 which is located at London. The Bank of England played a pivotal role in economic safeguard of the country. The macro & micro agents of the financial market is regulated by the Bank of England. It main functions include;

Supervise the Government financial dealings

Regulate the financial market with monetary policy

Issue currency notes and coins

Keep foreign exchange and gold reserves

Crowd Funding Websites

Crowd funding via web is a quick and easy fund raising sources where many companies or investors reading to provide funds. Funds are available on the collaboration sources for the new business start ups and for expansion of the business. Following are two renowned crowd funding websites. There is two types’ crowd funding categories.

Donation base funding

Investment base funding

Crowd funder Inc.

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The website Crowdfunder.co.uk provides funds in many categories including, Business, community, environment, sports, school and film and theatre. The process for the funds raise is very easy and personalizes. The company delivers their services very successfully.

The company provides many promotions tips to the investors and entrepreneurs

The project owner can updates the work of his new projects with company experts

The local press portrays the success stories of the many funds raisers

One can promote his projects on the company’s web pages on social sites

The crowed also include the press and media as BBC and guardian

Crowd cube Capital Limited (crowdcube.com)

This is the longest websites that provides funds to the small business to the large companies. It provides funds on different terms to the fresh entrepreneur in the market and giving advice on request for the success. The funding site allows small business to investment for future expansion through large firms. Moreover, businesses can avail investing opportunities, raise finance and also invest money in the equity shares of the large public limited companies.

Different articles about the success stories of the crowdcube.com can be found in the world’s most renowned new papers.

It include Sunday times, express, Wall Street Journal and many more

Since 2000, company noticeable investment stake are in MYSQL, YOOX Group, LOVEFILM and Natural Motion

It also funded 400 Private with the investment of 1.8M Pounds.

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Schumpeter

Business and management

Crowd funding start-ups

Herding investors

Nov 27th 2013, 12:30 BY C. S.-W

IN 2005 Venky Harinarayan and Anand Rajaraman, two venture capitalists, were approached with an offer by Sean Parker, the founder of Napster, once the internet’s biggest music-sharing service. In exchange for a small amount, they would be given a stake in a new start-up run by one of Mr Parker's associates. They took him up on the offer. Today they still own their shares in Facebook, and are much the richer for it.

The story of Messrs Harinrayan and Raja Raman is rare, but it does not stop some dreaming of a prescient ground floor investment in a company about to crest a wave of popularity. A growing number of websites on both sides of the Atlantic feed that dream by offering would-be venture capitalists the ability to chance their hand. Because of differences in regulation, however, British crowd funding sites got an early start (in America soliciting such investments from the general public has only recently become legal, and not all regulatory problems have been worked out). To capitalise on their advantage Britain’s crowd funders are now going international.

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Seders is one such business. Launched in July 2012 the site initially offered investors the chance to put their money in Britain-based start-ups. This week it announced its expansion into Europe: it now also allows continental investors and entrepreneurs to use its platform. To be able to add momentum to this move, it is reaching out to investors via its own platform for the first time, hoping to raise £750,000 ($1.2m) for a 12, 66% stake.

If it does not raise money for itself, Seders takes 7.5% of each successful funding round sourced from its crowd of investors. Nearly 50 start-ups have raised £3.7m in funding. The typical backer is a tech-savvy professional in his 30s or 40s, says Jeff Lynn, Seders' chief executive, but recent graduates looking for a nest egg and retirees hoping to boost their pension pot also support start-ups.

Crowd cube, another British crowd funding service, announced last week that it has forged a technology partnership with a site in Italy, adding to similar deals it already has sealed with firms in New Zealand and Spain. In Britain Crowd cube has helped 81 businesses to raise nearly £16m, taking a fee of 5% of the amount invested. The average investor stumps up £2,500 for his stake. Most of the start-ups funded through the platform are based in the south of England; only a solitary Scottish start-up has won over backers. Four in five start-ups that seek support fail to raise enough interest, demonstrating that Crowd cube’s users are discerning with their money.

Both platforms are regulated by the Financial Services Authority, ensuring that investors' cash does not disappear. And both are middlemen: they bring an audience to the product, and the product to an audience. But whereas Crowd cube introduces investors to investments and moves on, Seders manages the investments on behalf of its users until the firm is sold, goes public—or belly up.

Both services owe a debt to kick starter, a crowd funding site on which backers are rewarded with gifts (a CD, a book, or a magazine) or early access to the products they support, rather than a share in a company. Those backing a Kick starter campaign expect only a finished item, though. Those funding start-ups may want to have a say, even if their investment is small. Nearly 80 people invest in the average project that passes through Crowd cube. Getting them to sign the papers, for instance when a start-up wants to raise real venture capital may be hard. The risk is that crowd funding today may mean herding cats tomorrow.

Summary: Article

Crowd funding is growing rapidly, providing the venture capitalists with the opportunity to take a chance. There is large number of crowd funding websites worldwide. However, British sites started off quite early as compare to recently establish American sites that are still facing legal challenges. Seedrs which is a crowd funding site launched in 2012 started with giving investors the opportunity to invest only in British start ups is now going to expand in Europe. So the British crowd funders will now enjoy investing in international businesses. Another British crowd funding site, Crowd cube has announced its partnership with Italy. Financial Services Authority is regulating these sites for the protection of investor’s money.

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Article

Save money and time on your international currency transfers

For great exchange rates, low fees and expert guidance make your international payments with the Telegraph International Money Transfer Service

3:12PM GMT 03 Nov 2014

There are many reasons why you may want to send money overseas. Perhaps you are buying a holiday home abroad or you’re planning to retire to sunnier climes as the dark days of winter draw closer.

If you already have an overseas home you may need to pay a foreign currency mortgage or household bills. Alternatively, you could need to transfer funds to pay school or university fees.

Before transferring your funds overseas, make sure you are getting value for money with a great exchange rate and low fees by using a foreign exchange specialist such as the Telegraph International Money Transfer Service, which is run in partnership with monocarp.

For most people, the first port of call when making an international payment is their bank. But high-street banks typically don’t offer the most competitive exchange rates. The Telegraph International Money Transfer Service typically beats the rate you’ll receive from high-street banks by 3-4 pc. With large sums, this makes a real difference – on a transfer of £100,000 it could mean an extra £4,000 in your pocket.

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But the saving doesn’t stop there. The transfer fees are low too. Banks typically charge £20 to £40 each time you move money abroad, whereas the Telegraph International Money Transfer Service only charges £4 for an online transfer and a maximum of £10 when you place an order over the telephone. And, as a Telegraph reader, your first transfer will be completely fee free.

For anyone sending money overseas on a monthly basis, the lower fees mean you can save up to £432 over the course of a year. This could pay for flights to visit friends and family living abroad or to go to stay in your holiday home.

Foreign currency rates are changing all the time – often quite rapidly. On September 10, in the run-up to the Scottish referendum, a pound bought €1.24. Just three weeks later, on September 30, the pound reached a new two-year high against the euro of €1.28. That makes a difference of €20,000 on exchanging £500,000 in just 20 days.

By using the Telegraph service you’ll have access to expert guidance from monocarp’s account managers, who keep a constant watch on the currency markets. They can provide information about a ‘forward contract’, which allows you to lock into an exchange rate for a period of up to two years. So if you don’t need to make your money transfer immediately, you can be sure you don’t get caught out if the markets move against you.

If you buy a house or move abroad, it is likely that you may have to make regular overseas payments to transfer your pension or to pay a mortgage or local bills. In this case, it’s worth considering the regular payment plan. Once set up, scheduled payments are made automatically and, as with a forward contract, the exchange rates can be fixed for 24 months. This helps you budget and protects you should the exchange rate move against you.

Monocarp started trading currencies in 1979 – last year it traded £10 billion in 100 different currencies. They are authorised and regulated by the Financial Conduct Authority for the provision of payment services, so you can rest assured that your money is in the safe hands of experts. All clients who make a trade will be sent a monocarp Star card, which is an exclusive reward card. It gives members the company’s best online exchange rates for travel money, which can be picked up at the airport or in its London branches without any advance warning.

Summary: News

Telegraph International Money Transfer Service provides you with the best money exchange service. There may be a lot of reasons for transferring money overseas. Telegraph service which works in collaboration with moneycarp offers money exchange at lowest fee. Most of the people use banks for sending money overseas but exchange rates offered by banks are too high. Telegraph service gives you exchange rates better than those offered by banks. Telegraph’s service provides you with an opportunity to have guidance of account managers from monocarp regarding the currency market. Trading with monocarp will give you the reward of a monocarp Star card which will help you to take advantage of lowest money exchange rates.

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Bibliography

The Economist. 2014. Herding investors. [online] Available at: http://www.economist.com/blogs/schumpeter/2013/11/crowdfunding-start-ups [Accessed: 3 Dec 2014].

Telegraph.co.uk. 2014. Save money and time on your international currency transfers - Telegraph. [online] Available at: http://www.telegraph.co.uk/financialservices/money-transfer-and-expat/foreign-ex-and-money-transfer/11205511/Save-money-and-time-on-your-international-currency-transfers.html [Accessed: 3 Dec 2014].

Worldbank.org. 2014. World Bank Publications and Documents. [online] Available at: http://www.worldbank.org/reference/ [Accessed: 3 Dec 2014].

Yourarticlelibrary.com. 2014. World Bank: its Objectives and Functions. [online] Available at: http://www.yourarticlelibrary.com/economics/world-bank-its-objectives-and-functions/23534/ [Accessed: 3 Dec 2014].

Europa.eu. 2014. EUROPA - European Central Bank. [online] Available at: http://europa.eu/about-eu/institutions-bodies/ecb/index_en.htm [Accessed: 3 Dec 2014].

 England.mu. 2014. The important role of the Bank of England. [online] Available at: http://www.england.mu/articles/bank-england.html [Accessed: 3 Dec 2014].

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Self-Reflection

In this week I learned about the types of banks and their banking system.e.g investment banks, commercial banks and retail banks. And what are their uses and how they help the local community. What is the difference between Central Bank of UK and other banks and what are the functions of each and every bank and how they make money. This week was a little bit easy for me because I was on time in class so I carefully listened the whole lecture also learned that in recession time when all other banks are collapsing Central bank which is the government bank helps the other bank by providing the loan on interest and they also generate money to overcome recession and its Central Bank which balance the whole economy of the whole country. If the amount of money start increasing in the country they produce less money to stay in equilibrium.

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Week 6 ; InvestmentsInvestments

Alternation Investment Market (AIM)

AIM is the part of the London Stock Exchange which provides opportunities to small-medium companies to raised equity capital for future expansion. It allows the companies to make its fortunes by accessing the global equity markets, investors and sectors of the world’s leading corporations. AIM played a significant role by providing small-medium enterprises to raise capital for expansion. About 3000 companies are trading under the AIM. It consisted upon the FTSE-50, FTSE-100 and FTSE all index indices.

Advanced Computer Software Group PLC (AIM FTSE-100 index)

Company Profile:

The company business activities are consisted upon software, health and IT services. There are total 2000 employees in the company who deliver quality services to different organizations to enable them to achieve high growth with lower costs. The company’s sales turnover has been increasing for the last five years and reached to £203m. The company is also awarded as 13th largest company among other listed companies on AIM.

Sales turnover is increased about 68% between 2013 and 2014 which boost up the pre-tax profits by 32% from £9.2m to £12.1m. The strong financial performance further strengthens the earning per share (EPS) of 18% between the two years. The details of the company price movements for the last four weeks are given as follows.

Date Open Close Volume

1 Dec 2014 (Mon) 140.00 139.50 1,185,69728 Nov 2014 (Fri) 139.50 139.50 2,779,65827 Nov 2014 (Thu) 138.50 139.00 8,369,78726 Nov 2014 (Wed) 138.00 138.75 25,470,30825 Nov 2014 (Tue) 138.25 138.00 123,307,69424 Nov 2014 (Mon) 118.75 119.75 1,004,67921 Nov 2014 (Fri) 120.00 120.00 481,46520 Nov 2014 (Thu) 119.50 119.00 740,08319 Nov 2014 (Wed) 117.75 119.00 334,47618 Nov 2014 (Tue) 118.50 118.50 271,81217 Nov 2014 (Mon) 119.50 119.25 379,21414 Nov 2014 (Fri) 117.25 119.00 3,730,70313 Nov 2014 (Thu) 113.50 118.75 489,79712 Nov 2014 (Wed) 114.50 115.00 331,398

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11 Nov 2014 (Tue) 110.25 113.50 230,19810 Nov 2014 (Mon) 109.00 113.50 196,9707 Nov 2014 (Fri) 112.00 112.75 219,0866 Nov 2014 (Thu) 107.00 111.00 1,204,6245 Nov 2014 (Wed) 106.75 107.00 933,5264 Nov 2014 (Tue) 108.00 106.75 898,1533

Comments:

The share price movement of the company is favorable in the context of the business sector. The above summarized ups and downs in the share price along with turnover. If we analyze the data in the past four weeks the normal changes has occurred because of the company’s sales turnover showed favorable trends.

London Stock Exchange (LSE)

LSE is the UK main stock market where large publically listed companies trading on different indices. It is the world’s biggest stock market. It has certain financial requirement for the companies to join to increase their visibility towards the global market. The primary role of LSE is to provide well efficient capital market for brokers and investors. The trading data on LSE send towards 100 destinations in the world. The indices on the LSE are consisted on FTSE-100, FTSE-250 and FTSE-350.

Aberdeen Asset Management PLC (LSE-100 Index)

Company Profile:

It is an international investment management group that facilitates retail and institutional business around the globe. The company provides professional services to these companies to get large market share in their respective sectors.

According to annual report 2014, company has shown net revenues growth of 4% as compared to 2013. The total sales in 2014 (£1,117.6 million) as compared to 2013 (£1,078.5 million) were recorded. The increasing trend in sales increased the before-tax profits by 2% between 2013 and 2014. The assets management is increased between 2013 and 2014 by 62%. Similarly the diluted price per share was 31.1p as compared to 32.5p in 2013. The total human resource of the company is consisted upon 1800 distinguished employees. The summery of the share price movements for the last 4 weeks are given in the following table.

Date Open Close Volume

1 Dec 2014 (Mon) 448.40 457.50 7,545,15128 Nov 2014 (Fri) 454.60 449.90 7,837,869

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27 Nov 2014 (Thu) 454.40 455.80 2,403,47626 Nov 2014 (Wed) 458.20 453.40 4,324,38725 Nov 2014 (Tue) 453.30 457.70 3,331,77824 Nov 2014 (Mon) 454.40 454.20 2,274,73421 Nov 2014 (Fri) 449.90 455.20 7,873,27620 Nov 2014 (Thu) 440.00 446.40 2,419,32819 Nov 2014 (Wed) 448.30 444.80 1,991,26918 Nov 2014 (Tue) 445.90 447.90 2,662,38017 Nov 2014 (Mon) 439.00 443.80 2,289,49814 Nov 2014 (Fri) 432.30 441.60 3,499,91513 Nov 2014 (Thu) 429.10 432.30 2,972,77012 Nov 2014 (Wed) 434.30 426.90 8,927,06411 Nov 2014 (Tue) 451.70 446.00 3,640,51610 Nov 2014 (Mon) 443.90 451.10 2,104,8777 Nov 2014 (Fri) 448.90 442.70 2,826,4416 Nov 2014 (Thu) 439.80 447.20 3,894,7875 Nov 2014 (Wed) 432.10 442.00 5,984,4714 Nov 2014 (Tue) 429.70 430.50 3,538,3433 Nov 2014 (Mon) 432.90 430.40 2,414,274

Comments:

The company’s business segments are large so, as the turnover of sales has been showing upward trends. There are normal changes occurred in the share price movements of the company. It is because of the company revenues contributions of 128% in total revenues from business services along with other two segments A beginner's guide to investing in the stock market

Feature by Cathy Adams (May 1st, 2013).

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A beginner's guide to investing in the stockmarket

Last updated: May 1st, 2013 Feature by Cathy Adams

To a beginner, the stock market can appear a rather daunting experience. But in reality, with dismal returns on offer from banks and building societies, investing in shares provides an opportunity to hedge against rising inflation and achieve greater returns.

The basics

In the UK, the main stock market  is the London Stock Exchange, where public limited companies and other financial instruments 

The stock market is split into different indices - the most famous in the UK being the FTSE 100, comprised of the largest 100 companies. The most well-known indices come from the Footsie group - the FTSE 100, the FTSE 250, the FTSE Fledgling and the alternative investment market  (AIM), which lists small and venture capital-backed companies.

Unlike cash, the stock market is not a risk-free investment. It has its ups and downs, however, with the main index FTSE 100 returning 13.59% over the past year to 18 July, it has beaten any savings account hands down.

Investing directly

There are two ways to access the stock market: directly, and indirectly. Although 'directly' is a misnomer - investing in the stock market is always done through a third-party broker - direct investment means buying the shares in a single company, and becoming a shareholder.

There is a wide range of broker services available. Some offer bespoke services and tailored advice, such as Charles Stanley, Redmayne Bentley and Killik & Co, whereas others are nothing more than execution-only share dealing services.

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Pick the right stocks and shares ISA for you

These are online platforms through which a client can buy and sell shares independently through a share dealing account, without being offered advice.

Examples of these include  Interactive Investor, Hargreaves Lansdowne or The Share Centre.

"For beginners who want to be more involved and dabble with individual shares, it makes sense to open an online, execution-only share dealing account which keeps the cost of investing to a minimum," says Martin Bamford, managing director of Surrey-based  IFA  Informed Choice.

Reading the financial press can be useful in terms of choosing which shares to buy, Bamford adds. "There are also plenty of internet forums where share tips can be found. Don't part with your money to receive share tips, as there is plenty of useful information in the public domain  free of charge.

"Stick to companies you find interesting and spend the time researching a company before you invest."

Money Observer  is a good place to start, as it lists the full performance, along with yield and price/earnings ratio, of shares listed on the major FTSE indices each month; as well as performance for funds, trusts and exchange traded funds - more on those later.

Investing indirectly

An indirect approach is a more common way of accessing shares, as it spreads risk by investing in a number of companies. This can be done via an open-ended fund, such as an open-ended investment company (OEIC) or unit trust, which is made up of shares typically from between 50 and 100 companies, and can be sector, country or theme specific.

Money in these funds is ring-fenced away from the fund provider, so if the firm defaults, the money is still safe.

An  investment trust  is another pooled investment, but it is structured in the same way as a limited company. Investors buy shares in the closed-end company, and it is listed on an index in the same way as a company such as Tesco or RBS. Trusts are less numerous than funds, but often cheaper.

"Beginners are best suited to using collective investment funds to access the stock market," adds Bamford. "This enables them to use the collective buying power of a fund to reduce charges on a small starting portfolio. They also get access to a professional  fund manager to buy and sell individual stocks, rather than having to make these decisions on their own."

While investment funds and trusts are actively managed products, run by a fund manager who handpicks stocks and has some direction over the performance of the fund, an exchange traded fund (ETF) is a passive product. ETFs are vehicles that simply track an index such as the FTSE 250. As  index-

linked products, they can access almost every area of the market.

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ETFs are far cheaper than funds or trusts, as there is no active manager to pay for. However, as they simply track an index, if the index falls spectacularly, so will your investment.

All the investment vehicles described above can be accessed through a broker or fund platform, directly through the asset manager or through a wrapper such as a stocks and shares  ISA.

How to find a financial adviser

As for more complicated investments, Bamford has some words of advice for beginners: "Leave spread betting and day trading to the professionals, as these can be high-risk ways of investing money."

He adds: "When you are getting started, it makes real sense to buy blue-chip company shares on the LSE and hold them for several months. Regular trading will kill profits quickly, with the cost of buying and selling shares exceeding the returns you can make from a small starting stake."

A fund-of-funds or a multi-manager fund, which is a single fund investing in a range of others, can be a good starting point for novices as it demands little involvement from the investor.

"It's proactively managed and investors can choose a risk profile which suits them, so they are secure in the knowledge that the investments are in line with their expectations," says Peter Chadbourn, founder of Colchester-based IFA Plan Money.

However, these types of funds are more expensive than investment trusts and funds.

What to be aware of

There are several things that investors should be aware of before committing any money to the stock market.

"As a starting point, you need to decide what you want to achieve, how long you are planning to invest for and how much risk you are prepared to take," says Patrick Connolly, certified financial planner at AWD Chase de Vere, "as this will help you decide which investments are appropriate".

Tales of other people's huge gains can be tempting, but the market won't always go in your favour and you must be prepared to see your investment drop as well as fall. "You must understand your

tolerance to risk rather than appetite for reward. Risk and reward go hand-in-hand, and any investor must consider the potential downsides before investing," says Chadbourn.

"Secondly, investors must understand the structure of the investment: look at the fund factsheet rather than the glossy marketing material," he comments. "The factsheet will tell it warts and all, rather than what the company wants you to see."

The costs involved in buying funds, trusts, shares or ETFs can vary massively, and higher fees can easily eat away at future returns. To ensure value for money, Chadbourn highlights the importance of comparing charges on different products. "By buying directly from a fund supermarket, you'll benefit from reduced initial charges on funds, as compared to a big retail outlet like a bank."

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That said, discount supermarkets and execution-only brokers don't offer advice, so for a novice investor, it may be better to seek some proper, independent advice from a financial adviser before making any investment decisions.

How to cut the cost of investing

Without the help of a crystal ball, timing the market is impossible. Instead, look to invest regular premiums on a monthly basis rather than a depositing a lump sum into a fund. By drip-feeding money in, it's possible to negate the risk of market timing - if the market falls, the regular premium will simply buy shares at a cheaper price the following month.

"Don't get swayed by investments just because they are at the top of the performance tables," warns Connolly. "Strong recent performance should be seen as a warning sign, as the investment gains have already been made, rather than as an opportunity to buy." The final key point is that investments should be held for at least five years to smooth out any bumps in the market, but that doesn't mean once they're bought they can be left unchecked.

Connolly concurs: "Review investments every six months to ensure they are performing in line with expectations. If they aren't, try and understand why and then look to make changes if appropriate."

Summary: Article

The favorable investment trends in the stock market are more fruitful than the investment in money markets. The investors in any market concerned with high potential outcomes. The stock market in the UK is comprised on London Stock Market (LSE) and alternative investment market (AIM). Large public limited companies are trading on the LSE and AIM dealt with small and venture traded companies. Trading on the stock market is also having volatile investment conditions as up and down trends in the money market.

Investment in Stock Exchange

The new investors should follow some guidelines that are prescribed by different experts and investing firms to avoid unfavorable returns. There are two ways of investment in the stock market; directly and indirectly. The direct trading includes Contact broker firms, share trading account, money observer, investor forum and financial press news. Similarly, indirect trading utilizes, open-ended investment company, close-end investing trust and exchange traded fund (ETF).

Precautions

According to investment experts, the new trader on the stock market should aware of the capital market win-lose situation. The investor should study the experiences of people, structure of the investment, charges of buying and selling, stay for long period of time and check the listings on the stock market for at least six months.

Hidden investment costs are "a national scandal"

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News by Laura Whitcombe (Nov 17th, 2014).

Hidden investment costs are "a national scandal"

Last updated: Nov 17th, 2014

News by Laura Whitcombe

Pension savers and investors are being "exploited" as part of a "national scandal" that sees investment costs concealed, according to a leading campaigner.

People investing in funds directly or through their pensions and stocks and shares Isa’s have little idea of the true costs of doing so, research by the Financial Services Consumer Panel (FSCP) has confirmed.

Commonly cited measures such as the annual management charge  (AMC) may account for just a quarter of the true costs investors really face "as many of the charges are deducted directly from the fund and remain hidden", it said in its latest discussion paper.

The panel points out that this is a problem that has serious consequences for investors, citing the example previously given by the Department of Work and Pensions that an AMC of 1.5% a year reduces a final pension pot by 22% after 40 years due to lost compound growth potential.

The panel's own research found that "the full costs borne by savers are simply not known" with the main reasons "simply that many costs are not properly measured or declared".

It added "even fund managers frequently do not appear to know" – based on its research that found around two-thirds of investment managers could not provide information on transaction costs.

The FSCP is calling for investment managers to be required to quote a single and comprehensive annual charge, including estimates of forward costs such as transaction charges.

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"All other costs, currently deducted by the investment manager directly from the fund, would be borne by the investment management firm. This would enable consumers to compare different firms' charges, and also act as a powerful incentive on firms to improve efficiency," it added.

It also suggested investment managers could have a strengthened legal obligation to put the interests of their customers first, known as 'the fiduciary duty'.

Damning conclusion

Gina Miller, founder of SCM Direct and the True and Fair Campaign – which is calling for simpler cost disclosure - said: "Exploitation of pension savers and investors is a national scandal and this report exposes the depths of the scandal.

"The damning conclusion of this report that 'the evidence reveals a market characterised by a weak demand side that is rapidly growing numerically, and a powerful industry in which misaligned incentives are systemic and which enjoys, largely unchallenged, the potential to exploit consumer behaviour, product structure complexity and the lack of cost transparency' should act as a wake-up shout, not call, for all political parties, government, regulators and the industry."

Sue Lewis, chair of the panel, added: "People are depending more and more on investment to deliver their long-term financial wellbeing, especially in the light of the recent pension reforms. It is completely unacceptable that consumers do not know what firms are charging them to manage money on their behalf, and cannot compare different offers. While we recognise that the industry is working to improve disclosure, this does not go far enough."

Summary: News

The following report is aim to provide information to investors and pensioners regarding true costs of investments in industry (Financial Services Consumer Panel (FSCP).

Most often the new investors are unaware about the true costs they might face on their investments. The hidden costs dilemma has been explain by this report and called it as “national scandal”. This report mentioned that annual management charge (AMC) levy is just 1.5% along with initial fees on the investment; but there is also other charges cut-offs from the investments. These hidden costs (cut-offs) are either implicit or not properly measured by the investment managers as most of them never provide exact statistics for the transaction costs.

FSCP further mentioned that if hidden charges cut-off happens in future then the consequences would be borne by the investment firms. It is also added that due to the high demand in the investment market, its operations should be made more transparent, acceptable and reliable. Thus investors and pensioners would not be exploited due to the malpractices of the investment market.

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Bibliography

Moneywise.co.uk. 2014. A beginner's guide to investing in the stockmarket. [online] Available at: http://www.moneywise.co.uk/investing/first-time-investor/beginners-guide-to-investing-the-stockmarket [Accessed: 3 Dec 2014].

Moneywise.co.uk. 2014. Hidden investment costs are "a national scandal". [online] Available at: http://www.moneywise.co.uk/news/2014-11-17/hidden-investment-costs-are-national-scandal [Accessed: 3 Dec 2014]

Reuters.com. 2014. Advanced Computer Software Group PLC (ASWA.L) Financials | Reuters.com. [online] Available at: http://www.reuters.com/finance/stocks/financialHighlights?symbol=ASWA.L [Accessed: 3 Dec 2014].

Advancedcomputersoftware.com. 2014. Advanced Computer Software Group Documents & Reports. [online] Available at: http://www.advancedcomputersoftware.com/investors/finance-reports.php [Accessed: 3 Dec 2014].

Digitallook.com. 2014. Advanced Computer Software Group Share Prices - Stock Quote (ASW) Share Prices, Stock Quotes, Charts, News, Financials. [online] Available at: http://www.digitallook.com/companyresearch/199769/Advanced_Computer_Software_Group/share_prices.html [Accessed: 3 Dec 2014].

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Self Reflection

In this week I learned about the Insurance companies, liquid and illiquid assets and types of financial instruments e.g. bonds. I also learned that what is FTSE 100 FTSE 1000 and what is FTSE 100 index and charts and also that what is stock exchange and how it works and earns profit and who are involved in the thing I learned is that stock exchange plays a key role in the country’s economy

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Week: 7 ; Consumer Price Index

Consumer Price Index

Consumer Price Index (CPI) is important measure of changes in price level of the consumer basket of goods purchased while Retail Price Index (RPI) include the changes in the costs of that fixed basket of goods. Both of these measures are used to level of inflation in the consumer’s goods. CPI and RPI both are used to find the proportion of the prices of last year and current year.

Why it does Matter?

Payments such as pensions, incentives, savings, student’s loans etc are all affected by the prevailing inflationary trends in an economy. So, payments of these items are following the inflation pressure. In this context taking either CPI or RPI as to measure inflation would give different results especially RPI would provide high figure for all the above payments. The higher figure of the RPI is due the inclusion of costs of mortgages, rents and council tax.

Policy changes Impact

If someone has received pension on the base of CPI and if Government payment based on RPI then he/she will get less. It is because RPI rise very quickly. Moreover, if RPI is 3% and 2.33% CPI on annual base for 25 years of public service then shifting from RPI to CPI would reduce public pension by 30000 pounds. Similarly from CPI to RPI would make additions to the cost of payments. Changes to CPI would save lot of money to the treasury.

Moreover, the proposed change in the pension scheme in 2011 has also marked reduction in the pension money. According to the report, LCP said that UK employees have to save more money in order to tackle the loss from CPI change to RPI. In this context it is said that if average CPI of 0.75% annually, a retiring age of the employee is 60 years then he might loss about £1,200 as he reached the age 75 on the total value pension of £10000.

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The switch in price indices

One cut to rule them all

The chancellor has already announced what may turn out to be the most important spending cut

Oct 14th 2010 | From the print edition

ON OCTOBER 20th the suspense will end. George Osborne will disclose where the spending cuts set out in his budget will be made. But the chancellor of the exchequer revealed what may be the most crucial cut of all back in June: his decision to change the price index used to uprate benefits and public-sector pensions. The switch may seem technical and arcane, but it will yield ever-growing savings. It will also have an important, largely unnoticed impact on private pensions.

Since governments started to uprate benefits each year to maintain their real value, they have used the retail-prices index (RPI), a measure of inflation dating back to 1947. From the early 1980s they have also

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used a variant called the Rossi index, which excludes housing costs, for some payments. Since 1997, official statisticians have also published the consumer-prices index (CPI), which provides a common measure of inflation in European states. From December 2003 the Treasury changed the index used for its inflation target from one based on the RPI to the CPI, but continued to use the RPI for benefits.

From next April, Mr Osborne announced, the CPI will be used to uprate benefits, tax credits and public-sector pensions. The switch will save money—a lot of it—because the CPI generally records lower inflation than retail prices. The uprating will as usual be based on inflation in the year to the preceding September. This means that, next year, benefits will be increased by 3.1%, the rate for the CPI published this week, rather than the 4.6% shown by the RPI. That gap is particularly high: the average difference since 1997 has been 0.85 of a percentage point (see chart).

That long-run average offers a better guide to the future. It may be smaller than the present gap, but it will still have a big impact on welfare spending. It has arisen for two main reasons. First and foremost, the two indices use different averaging formulae when calculating price changes for each individual item. Overall, this “formula effect” contributes half a percentage point to the gap between the two. Second, and explaining the remaining difference, the RPI includes owner-occupier housing costs, which are left out of the CPI because of the difficulty in establishing a common procedure across Europe. The RPI also includes council tax; the CPI doesn't.

The omission of owner-occupier housing costs in the CPI should be rectified once European states agree upon a common approach. But the formula effect will persist. Most economists think that the CPI method is the right one, because its formula mimics the behaviour of consumers, who buy less of a product that is becoming relatively dearer. The method used for the RPI, by contrast, implicitly assumes that consumers do not react this way.

The Royal Statistical Society has aired its unease about the gap between the two measures and called for a thorough review. But if the CPI does in fact broadly represent inflation more accurately, then Mr Osborne's decision seems justifiable, certainly once the index starts to take account of owner-occupier

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housing costs. To have continued with the RPI would in effect be to carry on making benefits more generous, rather than retaining their real value.

Whatever its justification, however, the switch is a boon to a government looking for big economies. By 2014-15, the final year of the parliament, it contributes £6 billion out of a total £11 billion of savings already identified in the welfare bill (themselves part of £83 billion in total spending cuts). That far exceeds the £1 billion a year saved through withdrawing child benefit from higher-rate taxpayers, which has caused much more of a furore.

The cut that keeps on cutting

And, crucially, the policy—which will affect not just benefits but also public-sector pensions—will keep on making extra savings. By 2015-16 it will yield an annual saving of £1.8 billion for public-sector pensions, according to a report by Lord Hutton, a former Labour minister, released on October 7th. Lord Hutton also pointed out that the switch had reduced the value of pension rights to employees in these schemes by 15% on average. There is one big exception: the basic state pension, which makes up about 30% of total welfare spending, will be uprated from next April by earnings, prices, or 2.5%, whichever is the highest. Typically that is earnings, though high inflation means that prices will be used next year (in another exception retail prices will be used one last time).

The reform will also affect the private sector, because the government has indicated that the CPI should become the default measure of inflation in occupational schemes, when they uprate the pension rights of people who have left and payments to pensioners. This effect will not be universal, since many schemes specify the RPI as the index to use when uprating pensions. But the Pension Protection Fund, which provides a safety net for private schemes left in the lurch when their companies go bust, recently estimated that if the switch were to reduce future inflation by just half a percentage point a year this would cut its liabilities in 2030 by 5%.

Yet the measure's least-remarked sting may eventually be on taxpayers. Since the “Rooker-Wise” amendment to the 1977 budget, the RPI has been used to index income-tax allowances and thresholds, so that any real changes in them need explicit parliamentary sanction. If the CPI is good enough for pensions and benefits as well as the inflation target, surely it would be incongruous to stick with the RPI for tax? If that switch were made too, the exchequer might lose a bit in excise duties, but would gain more overall, and the yield would keep on rising. That would be handy for Mr Osborne if he needs to raise more tax without too much of a fuss.

Summary: Article

On 20th October, Mr. George Osborne will reveal the budget strategy. The spending cuts will affect the private pensions and savings will be increased. According to most of the economists the CPI method is the correct one as it shows the behavior of consumers who are less inclined towards buying dearer products. RPI method, on the other hand, rejects such behavior of the consumers. The budget policy will not only have impact on private pensions but will also generate extra savings. While CPI proves to be advantageous in pensions and inflation rate, it is inappropriate to use RPI for tax

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Article

12 November 2014 Last updated at 16:24

Ross McEwan, chief executive of RBS, talks about his "anger" with a "small group of people"

The chief executive of the Royal Bank of Scotland (RBS) has told me that he "cringed" when he saw copies of the chat room messages which talk of "making free money" and "keeping numpties out of the market".

Groups of bankers who went by the exotic names of The A Team, The 3 Musketeers and The Players colluded to fix foreign exchange rates for the advantage of their banks.

And themselves.

The Financial Conduct Authority (FCA) helpfully published a selection of the messages - just so we could all see what was going on.

Mr McEwan is one banking chief executive who has actually faced the media music today. Of course, his bank is 80% owned by the taxpayer, so he has more responsibility than most.

But the approach is certainly in contrast to the response of others. HSBC, for example, put out a one line statement this morning after the announcement of the record fines for foreign exchange manipulation.

"HSBC does not tolerate improper conduct and will take whatever action is appropriate," it said.

'Totally unacceptable'

In his interview with me, Mr McEwan was slightly more expansive.

"The chat room articles talk about the individual looking after themselves and not looking after the customer and that's the thing that makes me cringe," he said.

"We are building an organisation centred around the customer and these are a few people looking after themselves and their mates at other firms - unacceptable, totally unacceptable."

He said disciplinary action could follow and I understand that three people have already been suspended by RBS with a further six under what is known as "serious review". Over 50 present and former staff are having their work investigated.

"We have a major accountability review that started some months ago," Mr McEwan said.

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"We've been looking through the millions and millions of emails and files and chat room conversations. That process is underway today to look at who is accountable.

RBS was bailed out by the government after being deemed "too big to fail"

"As an organisation we do want to hold people accountable for good behaviour and rewards - and bad behaviour. We will be clawing back [pay awards] and taking disciplinary proceedings where wrongdoing has been done."

Complaints pushed aside

This has been another grim day for banking.

Despite protestations that things are changing, there is evidence published by the FCA today suggesting that, before the official investigation, whistleblowers were ignored by banks and complaints from customers (the global businesses and pension funds that rely on foreign exchange markets) pushed aside.

Interviewing the Governor of the Bank of England on Monday, I was struck when he said issues of misconduct were now so widespread they could have an impact on financial stability.

And the banks are nowhere near out of this peculiar Groundhog Day - where fines arrive as regularly as London buses.

Banks are still setting aside billions of pounds to deal with the mis-selling of payment protection insurance.

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Further, banks have paid out £1.4bn to settle claims they mis-sold interest rate hedging products to small businesses. There will be more to come.

On foreign exchange, criminal investigations are ongoing by the Serious Fraud Office and the Department of Justice in America.

They could drag on to 2016 with trials and possible jail sentences.

Many major banks have faced a series of investigations over misconduct

There are also investigations into the operation of the commodities market and the US housing market at the time of the financial crisis.

Legal action is pending over efforts by RBS to raise £12bn of capital in 2008 and Lloyds calamitous takeover of Halifax Bank of Scotland the same year.

And RBS will soon hear the details of millions of pounds of fines it is facing over the collapse of its IT systems in 2012 which led to people being locked out of their accounts.

Barclays is also facing regulatory misconduct claims over its capital raising, also in 2008, from Qatari and Abu Dhabi investors.

And so it goes on. And on.

Public frustration is understandable. At the top - the likes of Mr McEwan - there seems genuine desire for change.

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And of course, the vast majority of people working in banking - traders included - are simply trying to do a good job.

But while a handful of influential "Musketeers" and "Players" are talking about screwing the opposition and doing collusive deals (remember, the evidence published today is from as recently as last year) the public will remain sceptical that the banking stables can ever be cleaned out.

Article written by Kamal Ahmed Kamal Ahmed

Summary: News

The Office for National Statistics (ONS) stated that government would changes pension payment from Consumer Price Index (CPI) to Retail Price Index (RPI). This change would cut-off in the payments to the state pensioners. The changes were also brought in 2011 from RPI to CPI which has shown large payments to the pensioners. The recent change is obliged due the savings purpose for the treasury by the government. Experts said that RPI has given very volatile results as it has include some other costs such mortgages, council tax and rents. Logically pensioners have contributed large money to the treasury so they would allow receiving more. These statistics would definitely bring about half of the average gap between these two measures. The ONS has been observing many options such as to change either nothing or partially change the formula to close the gap between the two measures of inflation. Thus everybody would remain better off without any one worse off.

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Bibliography

The Economist. 2014. One cut to rule them all. [online] Available at: http://www.economist.com/node/17251994 [Accessed: 3 Dec 2014].

 BBC News. 2014. RPI changes 'may hit pensioners'. [online] Available at: http://www.bbc.com/news/business-19826770 [Accessed: 3 Dec 2014].

Telegraph.co.uk. 2013. Inflation: RPI, CPI and RPIJ explained - Telegraph. [online] Available at: http://www.telegraph.co.uk/finance/economics/9792480/Inflation-RPI-CPI-and-RPIJ-explained.html [Accessed: 3 Dec 2014].

BBC News. 2014. Workers 'cannot afford to retire'. [online] Available at: http://www.bbc.com/news/business-14370452 [Accessed: 3 Dec 2014]

Self Reflection

In this week I learned about the expenditure of consumers ,income and output .This week was quite difficult for me because of illness I missed my half class and I arrived late so I got confused in calculations for finding the expenditure of consumers ,income and output but after going through my colleagues note I learned it.I was also facing the difficulty in finding the appropriate article for the topic but after taking help from my older brother I found the solution.

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Week 8: Presentation

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Self Reflection

In this week I learned about the difference between inflation and deflation and what is the difference between the GDP and PPP.And from this presentation I learned that how Bangladesh is running their economics program and what is their main source of income and what are their future plans for developing the country’s economy .It was quite difficult to make a whole presentation in one hour so me and my group mate were going through a lot of anxiety that we will not be able to complete the presentation but due to our hard work we make it the main difficulty was to find the key points about Bangladesh because it is developing country so we can’t find enough information or it’s too hard to find the information in one hour According to me each and every country should have their future planning to boost their economy and GDP

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Week: 9 ; Exchange Rates

Topic

Exchange Rates

Currency Exchange rate- Nov-2013 Exchange rate- Nov-2014US Dollar 109.65/109.90 102.40/102.65Euro 147.75/148 127.35/127.65Pound sterling 177.40/177.65 160.25/160.50

The above exchange rates are in the Pakistan Rupees. Most of Pakistan International trade is done in the US Dollar terms. Many exports such textiles are send to the UK, EU and USA. So, whenever, demand for Pakistan Rupee increases then its value rise in terms of other currency. In contrast to the increase when demand for the USD, UK pound and Euro increases then the value of rupees decline. In the past few years Pakistan socio-economic conditions are not well to attract direct foreign investments so; domestic business activities are also declining which put pressure on the rupee value to volatile in the foreign currency. Imports are more than the exports so as the exchange rate changes with the political economic deficiencies in the economy. Other reasons include;

Investments

Import exports

Profit trading currency

Impact on the Travelers

If say $1=0.7 Euros, then it would be expensive for the US travelers to send holidays in the European countries. Similarly, European travelers would love to send business and pleasure trips across the borders. As the UK Pound exchange rate in Euros was 1pound-1.5 Euros but now the more volatile exchange rate left a beer price in France equals 5pounds. So in this case it would be expensive for the UK travelers to spend holidays in France sunny environment. In contrast to depreciation in the pound value in case of appreciation, turned travelers to spend their holidays in India, Australia, Egypt and Turkey. It will be better including for UK holiday visitors to spend holidays in low cost budget.

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Interactive currency-comparison tool

The Big Mac index

Global exchange rates, to go

JULY 24TH 2014, BY D.H. & R.L.W

THE Big Mac index was invented by The Economist  in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries. For example, the average price of a Big Mac in America in July 2014 was $4.80; in China it was only $2.73 at market exchange rates. So the "raw" Big Mac index says that the yuan was undervalued by 43% at that time. 

Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible. Yet the Big Mac index has become a global standard, included in several economic textbooks and the subject of at least 20 academic studies. For those who take their fast food more seriously, we have also calculated a gourmet version of the index we have also calculated a gourmet version of the index

This adjusted index addresses the criticism that you would expect average burger prices to be cheaper in poor countries than in rich ones because labour costs are lower. PPP signals where exchange rates should be heading in the long run, as a country like China gets richer, but it says little about today's equilibrium rate. The relationship between prices and GDP per person may be a better guide to the current fair value of a currency. The adjusted index uses the “line of best fit” between Big Mac prices and GDP per person for 48 countries (plus the euro area). The difference between the price predicted by the red line for each country, given its income per person, and its actual price gives a supersized measure of currency under- and over-valuation.

Country

local price

dollar_ex

dollar price

dollar_ppp

dollar valuation

dollar_adj_valuation

euro_adj_valuation

sterling_adj_valuation

yen_adj_valuation

yuan_adj_valuation

Arge 21 8.17 2. 4.38 - -18.12 -30.85 -29.00 2.93 -12.53

86

ntina 5746.39

Australia 5.1 1.06

4.81 1.06 0.40 -11.85 -25.55 -23.56 10.82 -5.83

Brazil 13 2.225.86 2.71

22.11 86.84 57.80 62.02 134.89 99.60

Britain

2.89 0.59

4.93 0.60 2.71 15.32 -2.60 0.00 44.98 23.19

Canada

5.64 1.07

5.25 1.18 9.51 8.78 -8.12 -5.67 36.76 16.21

Chile2100

564.14

3.72

437.96

-22.37 13.04 -4.53 -1.98 42.11 20.75

China16.9 6.20

2.73 3.52

-43.14 -6.39 -20.94 -18.83 17.68 0.00

Colombia

8600

1847.65

4.65

1793.53

-2.93 55.71 31.51 35.02 95.75 66.33

Costa Rica

2150

537.30

4.00

448.38

-16.55

Czech Republic

70.45

20.39

3.46

14.69

-27.94 0.65 -15.00 -12.73 26.53 7.52

Denmark

28.5 5.54

5.15 5.94 7.31 3.08 -12.94 -10.61 29.59 10.12

Egypt16.93 7.15

2.37 3.53

-50.62 -15.22 -28.40 -26.49 6.58 -9.44

Euro area

3.6792 0.74

4.95 0.77 3.31 18.40 0.00 2.67 48.85 26.48

Hong 18. 7.75 2. 3.92 - -41.85 -50.89 -49.58 -26.90 -37.88

87

Kong 8 4349.41

Hungary

860

228.31

3.77

179.35

-21.44 18.48 0.06 2.74 48.95 26.56

India105

60.09

1.75

21.90

-63.56 -35.86 -45.83 -44.38 -19.37 -31.48

Indonesia

27939

######

2.43

5826.69

-49.36 -13.58 -27.01 -25.06 8.64 -7.68

Israel17.5 3.41

5.13 3.65 6.91 26.83 7.12 9.98 59.45 35.49

Japan370

101.53

3.64

77.16

-24.00 -20.46 -32.82 -31.02 0.00 -15.03

Lithuania

8.95 2.56

3.49 1.87

-27.22

Malaysia

7.63 3.17

2.41 1.59

-49.76 -22.05 -34.17 -32.41 -2.01 -16.73

Mexico 42

12.93

3.25 8.76

-32.27 5.48 -10.92 -8.54 32.60 12.67

New Zealand 5.7 1.15

4.94 1.19 3.12 16.47 -1.63 1.00 46.43 24.42

Norway 48 6.19

7.76

10.01

61.79 14.83 -3.02 -0.43 44.35 22.66

Pakistan

300

98.68

3.04

62.57

-36.60 12.02 -5.39 -2.87 40.83 19.66

88

Peru 10 2.793.59 2.09

-25.20 22.33 3.32 6.07 53.79 30.68

Philippines

160

43.21

3.70

33.37

-22.77 33.71 12.93 15.94 68.09 42.83

Poland 9.2 3.07

3.00 1.92

-37.53 -5.99 -20.60 -18.48 18.19 0.43

Russia 89

34.84

2.55

18.56

-46.72 -21.15 -33.41 -31.63 -0.88 -15.77

Saudi Arabia 11 3.75

2.93 2.29

-38.83 -20.71 -33.03 -31.24 -0.31 -15.29

Singapore 4.7 1.24

3.80 0.98

-20.82 -22.04 -34.15 -32.40 -1.99 -16.72

South Africa

24.5

10.51

2.33 5.11

-51.41 -21.38 -33.60 -31.82 -1.16 -16.01

South Korea

4100

1023.75

4.00

855.06

-16.48 11.44 -5.88 -3.37 40.10 19.04

Sri Lanka

350

130.26

2.69

72.99

-43.96

Sweden

40.7 6.84

5.95 8.49

24.17 20.92 2.13 4.85 52.02 29.17

Switzerland

6.16 0.90

6.83 1.28

42.36 15.02 -2.86 -0.27 44.59 22.87

Taiwan

79 29.98

2.63

16.48

-45.0

-24.78 -36.47 -34.77 -5.44 -19.65

89

5

Thailand 99

31.78

3.12

20.65

-35.03 8.01 -8.78 -6.35 35.78 15.38

Turkey

9.25 2.09

4.42 1.93

-7.75 42.87 20.66 23.88 79.61 52.62

UAE 13 3.673.54 2.71

-26.19

Ukraine 19

11.69

1.63 3.96

-66.09

United States

4.795 1.00

4.80 1.00 0.00 0.00 -15.54 -13.29 25.72 6.82

Uruguay

113

22.97

4.92

23.57 2.60

Venezuela 75

11.00

6.82

15.64

42.19

Vietnam

60000

######

2.83

######

-41.06

Austria

3.39 0.74

4.56 0.71

-4.81 -0.46 -15.93 -13.68 25.14 6.34

Belgium 3.7 0.74

4.98 0.77 3.89 11.73 -5.64 -3.12 40.46 19.35

Estonia 2.9 0.74

3.90 0.60

-18.57 15.67 -2.31 0.30 45.42 23.57

Finland 4.1 0.74

5.52 0.86

15.12 21.54 2.65 5.39 52.80 29.84

Franc 3.9 0.74 5. 0.81 9.51 20.36 1.66 4.37 51.31 28.58

90

e 25

Germany

3.67 0.74

4.94 0.77 3.05 11.84 -5.54 -3.02 40.60 19.47

Greece

3.05 0.74

4.11 0.64

-14.36 14.58 -3.23 -0.64 44.05 22.40

Ireland

3.49 0.74

4.70 0.73

-2.01 3.09 -12.93 -10.61 29.60 10.13

Italy3.85 0.74

5.18 0.80 8.10 27.64 7.80 10.68 60.46 36.35

Netherlands

3.45 0.74

4.64 0.72

-3.13 1.88 -13.95 -11.65 28.08 8.84

Portugal 3 0.74

4.04 0.63

-15.77 15.81 -2.19 0.42 45.59 23.71

Spain3.65 0.74

4.91 0.76 2.49 28.34 8.39 11.28 61.34 37.10

User guide:

The 'Select base currency' button allows you to choose from five base currencies: the yuan, the euro, the yen, sterling and the US dollar. You can also choose to see the index in its original 'raw' form, or adjusted for GDP per person. By default, the panel at the bottom displays a scatter chart plotting the local price of a Big Mac (expressed in the current base currency) against GDP per person in that country. Select individual points for details.

As you explore the map, the scatter chart will be replaced by a line chart plotting the highlighted country's under- or over-valuation against the current base currency over time. You can select a country on the map to 'freeze' it (with the exception of Internet Explorer), allowing you to mouse over/tap the line chart and see detailed indicators for your selection over time. To 'unfreeze' the map, click/tap on the highlighted country again.

Summary: Article

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In 1986, The Economist revealed a perky guide which was called “The Big Mac Index” to estimate currencies at their correct exchange rates. Purchasing Power Parity (PPP) was taken as a theoretical base for this Index. The logic behind the introduction of this index was to equalize the prices of the same basket of goods such burgers in two different countries.

The economic term “Burgerniomics” was given to The Big Mac Index to explain the exchange theory more playfully. Therefore, the Big Mac Index was revealed in my textbooks and academic literature. According to The Big Mac Index the logic behind the lower and higher prices of burgers in the rich and poor country is the lower labor costs in the poor country. The Big Mac Index criticized the PPP exchange rate explanation. Finally, the prices comparison between two countries was taken on the bases of GDP and Big Mac Index prices. The price difference was explained with the help of line of best fit in the Index.

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Article

12 November 2014 Last updated at 16:24

Ross McEwan, chief executive of RBS, talks about his "anger" with a "small group of people"

The chief executive of the Royal Bank of Scotland (RBS) has told me that he "cringed" when he saw copies of the chat room messages which talk of "making free money" and "keeping numpties out of the market".

Groups of bankers who went by the exotic names of The A Team, The 3 Musketeers and The Players colluded to fix foreign exchange rates for the advantage of their banks.

And themselves.

The Financial Conduct Authority (FCA) helpfully published a selection of the messages - just so we could all see what was going on.

Mr McEwan is one banking chief executive who has actually faced the media music today. Of course, his bank is 80% owned by the taxpayer, so he has more responsibility than most.

But the approach is certainly in contrast to the response of others. HSBC, for example, put out a one line statement this morning after the announcement of the record fines for foreign exchange manipulation.

"HSBC does not tolerate improper conduct and will take whatever action is appropriate," it said.

'Totally unacceptable'

In his interview with me, Mr McEwan was slightly more expansive.

"The chat room articles talk about the individual looking after themselves and not looking after the customer and that's the thing that makes me cringe," he said.

"We are building an organisation centred around the customer and these are a few people looking after themselves and their mates at other firms - unacceptable, totally unacceptable."

He said disciplinary action could follow and I understand that three people have already been suspended by RBS with a further six under what is known as "serious review". Over 50 present and former staff are having their work investigated.

"We have a major accountability review that started some months ago," Mr McEwan said.

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"We've been looking through the millions and millions of emails and files and chat room conversations. That process is underway today to look at who is accountable.

RBS was bailed out by the government after being deemed "too big to fail"

"As an organisation we do want to hold people accountable for good behaviour and rewards - and bad behaviour. We will be clawing back [pay awards] and taking disciplinary proceedings where wrongdoing has been done."

Complaints pushed aside

This has been another grim day for banking.

Despite protestations that things are changing, there is evidence published by the FCA today suggesting that, before the official investigation, whistle-blowers were ignored by banks and complaints from customers (the global businesses and pension funds that rely on foreign exchange markets) pushed aside.

Interviewing the Governor of the Bank of England on Monday, I was struck when he said issues of misconduct were now so widespread they could have an impact on financial stability.

And the banks are nowhere near out of this peculiar Groundhog Day - where fines arrive as regularly as London buses.

Banks are still setting aside billions of pounds to deal with the mis-selling of payment protection insurance.

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Further, banks have paid out £1.4bn to settle claims they mis-sold interest rate hedging products to small businesses. There will be more to come.

On foreign exchange, criminal investigations are ongoing by the Serious Fraud Office and the Department of Justice in America.

They could drag on to 2016 with trials and possible jail sentences.

Many major banks have faced a series of investigations over misconduct

There are also investigations into the operation of the commodities market and the US housing market at the time of the financial crisis.

Legal action is pending over efforts by RBS to raise £12bn of capital in 2008 and Lloyds calamitous takeover of Halifax Bank of Scotland the same year.

And RBS will soon hear the details of millions of pounds of fines it is facing over the collapse of its IT systems in 2012 which led to people being locked out of their accounts.

Barclays is also facing regulatory misconduct claims over its capital raising, also in 2008, from Qatari and Abu Dhabi investors.

And so it goes on. And on.

Public frustration is understandable. At the top - the likes of Mr McEwan - there seems genuine desire for change.

95

And of course, the vast majority of people working in banking - traders included - are simply trying to do a good job.

But while a handful of influential "Musketeers" and "Players" are talking about screwing the opposition and doing collusive deals (remember, the evidence published today is from as recently as last year) the public will remain sceptical that the banking stables can ever be cleaned out.

Article written by Kamal Ahmed

Summary: News

Mr. Ross McEwan, the chief executive of Royal Bank of Scotland has said that it is totally unacceptable that few people care only for themselves but not for the costumers. Because we aim to build an organization that is completely based on costumer interest. He said that strict disciplinary action will be taken about such people in the future. Bank has already suspended three people in this regard and investigation is still going on. According to Mr. McEwan, millions of emails and char room conversations are being reviewed to find who is answerable.

Complaints are being ignored:

The Bank of England’s Governor has said that the delinquency issues have increased so much that they may affect the financial stability.

There are hundreds of workers who are doing their job well but the misconduct of few creates confusion in public.

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Bibliography

The Economist. 2014. The Big Mac index. [online] Available at: http://www.economist.com/content/big-mac-index [Accessed: 3 Dec 2014].

BBC News. 2014. RBS boss admits – I cringed when I read forex chat room messages. [online] Available at: http://www.bbc.com/news/business-30027544 [Accessed: 3 Dec 2014].

Hamariweb.com. 2014. Currency Rates in Pakistan (1 USD = 102.35) | Today's Open Market Currency Exchange Rates. [online] Available at: http://hamariweb.com/finance/forex/open_market_rates.aspx [Accessed: 3 Dec 2014].

Hyde, D. 2013. How currency swings have affected your holiday costs - Telegraph. [online] Available at: http://www.telegraph.co.uk/finance/personalfinance/money-saving-tips/10210974/How-currency-swings-have-affected-your-holiday-costs.html [Accessed: 3 Dec 2014].

BBC News. 2014. Exchange rate woe for travellers. [online] Available at: http://www.bbc.co.uk/news/business-13811549 [Accessed: 3 Dec 2014].

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Self-Reflection

In this week I learned about Agricultural revolution and the exchange rates .There was some difficulty in understanding the Agricultural Revolution but after seeing the video in the class room about this topic I got to know that how trade was started and when and from where it started. This week was a bit easy for me

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Week 10 ; Self ReflectionSelf-Reflection

In the end of all weeks I learned a lot about economics what economics basically is about and how it plays a role in our daily lives and what are its consequences and Advantages in our lives

How market runs and what is economy and how many types of economy are?? Basically I was having problem in Mixed Economy that how it runs but after going through some articles and information from internet I get the whole image of it

When there is recession we peoples or citizens should not take our money out of our bank accounts. if we will do this we will go further in recession because banks will have no money to invest so definitely that particular country will go into recession like Tesco and Morrison’s make money by their Tesco club card .I also learned about the way they make money by giving loans and by their interest rate each and every bank and company have their own interest rate. I was having problem with interest rate table but after requesting my tutor for explaining me again I understand the whole phenomenon. According to me I will never take any loan from any bank or company because it increase day by day

I also learned in recession time when all other banks are collapsing Central bank which is the government bank helps the other bank by providing the loan on interest and they also generate money to overcome recession and its Central Bank which balance the whole economy of the whole country. If the amount of money start increasing in the country they produce less money to stay in equilibrium. And stock exchange plays a key role in the country’s economy. According to me each and every country should have their future planning to boost their economy and GDP

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