It caused quite a stir at the Barclays bank branch in Enfield, north London. It was 1967 and actor Reg Varney, popular at the time in the hit TV sitcom On The Buses, opened the first hole in the wall cash machine.

It was the brainwave of John Shepherd-Barron, then CEO of banknote maker De La Rue plc. He “hit upon the idea of a chocolate bar dispenser, but replacing chocolate with cash”. Barclays was quick to take up the innovation and the rest, as they say, is history.

When interviewed by the BBC last year in celebration of its 40 th anniversary, Mr. Shepherd-Barron predicted the demise of cash altogether in 3-5 years noting a problem that hasn’t escaped even bank robbers: “money costs money to transport”. That day looks to be getting closer, according to a Sunday Times report at the week-end. Once again Barclays is the innovator.

Barclaycard has been testing out a system of “contactless” cards that will, if adopted by retailers, permit secure payment on items up to £10. The card is also an Oyster card meaning it can be used on London’s transport network. Barclays has an ambitious roll-out plan and counts EAT, Coffee Republic, Books Etc, Krispy Creme and Yo Sushi amongst outlets already adopting the technology.

Cappuccino, doughnuts, sandwiches and sushi…a useful start for the City worker.So, just as the Royal Mint unveils proudly its new coin design range, the creative destruction of coinage itself probably means this the last time it does so for anything other than commemorative purposes. So much for the future cashless society. The present is looking increasingly cashless too in another sense. The rapid evaporation of credit is testing the strongest nerve and causing big problems. A third of housing deals are falling through, reports the FT at the week-end, because even willing buyers can’t get a mortgage. What a difference a credit crunch makes. In the pre-crunch days of July 2007 there were 15,599 mortgage deals to choose from. Today there are little over a quarter of that number – 4,270.

If it’s tough for the buyers out there it’s certainly no time to be an estate agent. The number of estate agents closing their doors has doubled to 10%, according to Rightmove, and blue chip agency Hamptons has asked investors to stump up £5m to tide it over during the sales drought. Over at national chain Countrywide, their takeover generated debt is now being trading at 50% of face value, reports the Sunday Times.

And this week the subject of interest rates will be centre stage again as both the Bank of England and the European Central Bank decide to stick or twist with 5.25% and 4% respectively. The Institute of Economic Affairs dubbed the “shadow” monetary policy committee – which has a pretty good track record with its calls – has voted 6-3 in favour of a twenty five basis point cut, writes David Smith in The Sunday Times. CPI inflation at 2.5% – half a point over target – is the drag, but slowing growth should mean slowing inflation shouldn’t it Mervyn? Let’s hope so. Certainly if you take out the pesky volatile elements that play with the numbers but just happen to be the basics we cannot do without – food and energy – core inflation should be sliding along with the fortunes of the UK consumer.

Over in the Euro zone, Jean-Claude Trichet has done a great job in scaring the pants off the financial markets about inflation, now 1.5% above target, says Marco Annunziato, economist at Unicredit, so no change is expected this time around. Though Unicredit think Euro zone inflation peaked last month at 3.5% – its highest rate since the inception of monetary union – and will fall to 2.5% by year end so paving the way for monetary easing in the second half. Currency traders will likely be positioning for a cooling euro.

For all the gloom in the credit and housing market, stocks have continued to rally. European markets are all positive this morning with the FTSE 100 just 22 points shy of recapturing the 6,000 level. This may yet prove to be a bear market rally but for sharp-eyed value investors it looks to have thrown up some opportunities.

Charles Stanley noted recently the prospective PE of the FTSE 100 is 10.9x against a historic average of 14x. And the latest issue of the Investors Chronicle finds a stock that even the godfather of value investing – Ben Graham – might have liked. (Warren Buffett was a keen pupil of Ben Graham’s ideas.) Graham liked to build in a “margin of safety” to his stock purchases. Ideally he would like to pay no more for a company’s shares than the value of its current assets minus all its debt. At that bargain basement price the investor picks up all the company’s fixed assets – plant, property and equipment – for free. Usually such stocks are rare if not impossible to find these days, but these are interesting times and the IC unearths one. Unsurprisingly, it’s in a bombed out sector – house building. Still the house building business should have a future, no?

Regards,

Rob Mackrill
The Daily Reckoning

P.S. Each month we ask your views on a current talking point.
This months question is:

Which out of these precious metals will be the star player in April and have the highest price rise?

Gold, Silver, Platinum or Palladium.

Click here if you would like to have your say