ECB Lends Record Amount of Money to Eurozone Banks

The European Central Bank announced its intentions to lend European banks €489 billion. These loans are an indication that the banks are having a difficult time lending to each other. The ECB is looking to protect banks and other investors from the possibility of a major sovereign default among the PIIGS and other countries in the eurozone.

This is a major precaution as a number of investors are concerned that the sovereign debt crisis is spiraling out of control. This bailout is even larger than the bailout issued to Lehman Brothers in 2008. In fact, it is the largest bailout that has been issued since the euro formed in 1999.

The loans will be issued over a three year period to the 523 banks that applied. ECB vice president Christopher Noyer has suggested that banks use this money to purchase sovereign debt. However, many investors wonder if this is a good idea. One of the reasons the ECB issued the loans in the first place was to protect the banks in case the ECB defaulted on their sovereign debt.

The ECB also suggested that banks use about half of the money to refinance some of their existing loans. This will hopefully prevent banks from having to cut back on loans that the economy is depending on to grow and thrive.

Although the ECB’s actions are attacking one of the key problems in the eurozone, they do not address the core problem facing the region. European countries are facing unsustainable borrowing costs. Although the rates on Italian bonds have dropped below their high of 7 percent, the region is still going to have a difficult time repaying these loans. They will likely face even higher borrowing costs if rating agencies begin to cut ratings throughout the eurozone.

The European Central Bank continues to look for solutions to the massive financial crisis facing the EU. Thus far, they have helped increase liquidity, which may be a good indication of future economic growth. However, they may be limited in their ability to fix the problem facing Europe. The EU is going to need new ways to fix the sovereign debt crisis and fuel GDP growth throughout the region. Addressing both issues simultaneously is likely to be difficult, but will be necessary to fix the concerns facing the region.

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Law Commission Advocates Equal Inheritance Rights for Unmarried Couples

Under current law, only spouses may inherit from each other if one partner passes away. Their are no such inheritance laws for unmarried couples. The inheritance laws of the UK are very clear. In absence of a will, when an individual dies their closest relatives receive the inheritance. Distant relatives will receive a share only when there are no close relatives to inherit. A domestic partner is not recognized at all unless they have been formally married.

The Law Commission has recommended changing these policies to state that unmarried couples may inherit each other’s estates with out preparing a will. They propose these policies if these couples have been together for five or more years. Also, they believe that other policies should apply as well. For example, if the couple lived together for at least two years and had a child, the Law Commission argues that they should be eligible to inherit each other’s property in the event of  a death.

These proposals advocate protecting the interests of unmarried couples, but would have a few restrictions. The Law Commission suggests revising regulations so that a couple would not be able to benefit from this new regulation if they were separated from a spouse. In order to receive the new protections, that spouse would have to divorce their current spouse.

According to most recent figures, the majority of adults in the UK have not written a will. The Law Commission has a number of concerns over this issue. They say that without wills or formal grants, it is going to be very difficult for surviving significant others to receive any inheritance.

Family units headed by unmarried couples account for about 15% of all family units in the UK. At the same time, cohabitant families are statistically less likely to take out a will than other families.

If the revisions proposed by the Law Commission are enacted, then it will help families protect their assets in the event of a death. The Law Commission is clearly concerned about protecting the interests of all families, regardless of whether or not they have entered into a marriage contract.

The Guardian is also running a poll to ask its readers whether all couples should receive inheritance, regardless of their marital status.

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OFT Criticizes Private Healthcare Industry Over Lack of Competition

The Office of Fair Trading has expressed concerns over the way the private healthcare industry is being run. According to their data, there is a lack of competition in the market. As a result, private healthcare providers are not disclosing information to their customers about the costs and quality of services rendered by different healthcare providers.

The OFT has decided that a more thorough investigation needs to be conducted. Therefore, they have turned the case over to the Competition Commission. The OFT suggests that the industry lacks service providers, which allows customers to overcharge customers and remain evasive on the details.

The private healthcare industry can almost be described as an oligopoly. Five companies account for approximately 75% of the market. In many districts within the UK, a single service provider manages the only hospital. These figures have been even worse since the onset of the financial crisis.

One of the biggest problems with the structure of the industry is the fact there are a number of barriers to entry. Another threat to competition is the practice of engaging in incentive programs. Many health care providers have given bonuses to many consultants and physicians to work at a specific hospital. As a result, it is more difficult for new competitors to emerge.

As the head of the Office of Fair Trading, John Fingleton said the UK must find new ways to foster competition in the healthcare industry. He emphasizes that more competition will mean better service rates and higher quality services for patients across the country. He mentions that patients without private carrier insurance are unable to look for medical services. Approximately four-fifths of medical services are paid for with private medical insurance policies. However, fewer than 20% of patients in the country hold such policies. Therefore, many patients throughout the country cannot afford medical services.

The OFT is advocating changes to the way private medical insurance policies work. They reference a number of different problems with the fees insurance carriers issue. Fortunately, some progress has been made in pursuing fairer arrangements. Better terms with insurance companies may result in an increased demand for medical services, which is likely to increase competition. The OFT has cited progress in implementing changes to these policies, which may help fix many of the problems facing the private healthcare industry.

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State Pension Age to Raise to 67 by 2026

Chancellor of the Exchequer George Osborne has stated that the government will be changing the state pension age. This move should save the country approximately 60 billion pounds. The change is to be phased in over 2 years and will be initiated beginning 2026. This is a full 10 years earlier than the government intended. Meanwhile, the government is already evaluating plans to change the retirement age to 66 by the year 2020, as opposed to 2026 as originally planned.

Everyone between the ages of 42 and 51 will be impacted by this new ruling. Citizens in this age group expected to retire by the age of 66. As of this ruling, they will be forced to wait another year before they can start collecting their pensions. An estimated 8 million people will have to deal with the new changes. The law will not impact anyone within 14 years of retiring age.

Although the new laws will have a profound impact on many people, Osborne insists the laws are necessary. Without a major series of changes, taxpayers will be overburdened. The laws are necessary considering the life expectancy has been increasing. Osborne states that the Exchequer has been warned for years that paying these pensions will become more difficult and eventually unaffordable if these actions are not taken. Otherwise, subsequent generations will have to foot the bill.

Osborne asserts that the world has its doubts that governments in Europe and the United States have the backbone to make these kinds of tough decisions. He insists that the Britain is going to show the world that it is one of the countries that is willing to make the hard decisions rather than consistently kicking the can down the road.

Representatives from NGOs and nonprofit groups feel the decision is inevitable and necessary. With rising life expectancy, they don’t see any other solution and knew this day was coming. However, some groups such as Age UK don’t agree with the decision. They feel that the decision will hurt citizens from the lower class the hardest and don’t understand the rationale behind the new policy. Representatives from Age UK understand the need to address the increasing life expectancy. However, they criticize the government’s decision, as they failed to introduce any analysis to support their reasoning.

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Low Income Families Face Largest Drop in Household Wealth

The Markit Household Financial Index has been released for the month of November. During the past month, the index showed the largest drop in household finances since August.

This study highlights monthly changes in the household finances of families in all income groups. One of the main objectives of the study is to demonstrate disparities in income between different household groups throughout the UK. The results issued this month showed there is a larger gap between the financial positions of the wealthiest and poorest families in the country.

The Markit Household Financial Index uses 50 as a baseline. Anything under 50 indicates the financial position of households is deteriorating. The index for the month of November was 34.6, down from October’s index of 35. The average has been at 37.6 for the year.

The results of the Markit index highlight ongoing fears that the financial stability of households is declining. The results for 2011 have been significantly worse than those of 2009 or 2010. One of the primary factors has been inflation, which has been 5%. Meanwhile, wage growth has been stuck at 2%, significantly lower than the historical average.

Not surprisingly, the survey showed significant concern from respondents. The number of responses that showed a negative outlook on the future of household finances was almost half (48%). That figure was exactly twice that of positive responses (24%).

Investors, politicians and citizens of the UK are deeply concerned about the possibility of a double-dip recession. This new study serves as a reminder that they may have many other things to worry about as well. Although the economy as a whole has experienced a slight recovery, the Markit Household Financial Index shows many poorer UK citizens never felt like things got any better.

As the financial position remains uncertain, citizens have cut back on spending considerably. They do not expect to make larger purchases until the economy begins to show signs of improvement.

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