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Tough Times Ahead say Business School

London Business School

With London Business School experts saying don’t expect returns of more than 3 or 4 per cent a year from equities over the next decade, and negative returns from bonds, savers should keep about half their capital in cash or near-cash securities, says Money Management adviser Russell Taylor.

Big Bank Warning

He warns: “Banks are bigger, less profitable and more dangerous than ever.”

Quantitative easing, he says, has inflated asset prices but done nothing for economic growth.

The ongoing revolution in technology has reduced the power of labour relative to capital, “so ensuring that the return on capital is at its highest level ever.” But growing dividends make the rich richer without adding to demand for goods and services as their needs are already satisfied.

“Without growing demand from mass consumption markets, businesses see no urgency to invest and few new jobs are created.”

In Europe, although current policies are pushing economies into a deflationary spiral, “politicians are understandably worried about making supply-side reforms that will free labour markets when employment growth is so weak,” while “financial orthodoxy prevents them from implementing spending on such basic essentials as transport, power, water and communications.”

source OnTarget by Martin Spring

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