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| | | | | | | | Notices | PLEASE HELP US TO KEEP THIS SITE RUNNING Every pound donated to this site helps us to keep on helping others. Click Here to Donate | PayDay loans An essential way of making ends meet? - or just another expensive way climbing onto the spiral of debt?
The British Cheque Cashers Association says that it receives very few complaints from borrowers. | 
22nd May 2009, 08:44
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#10261 (permalink)
| | Royalties Account Holder |  Re: The great interest rate rip off
With Oil Prices Poised to Jump as Much as 70%, Every Investor Needs an Energy Strategy Quote:
The U.S. news media has convinced many investors that oil consumption is falling because of the global recession. While that may be true, it’s a disservice to millions of investors because production is declining at a pace that’s actually three times faster.
And that suggests higher oil and gasoline prices in coming months - perhaps as much as 50% - 70% higher, or more - particularly if a U.S. economic recovery is truly in the offing.
To really see what I’m talking about, let’s start with a close look at consumption. I’m asked about this frequently in my global wanderings, most recently at the Las Vegas Money Show last week.
For months we’ve been hearing about a drop in global demand. It’s a popular story and one that sounds credible: After all, it seems logical to assume that during economic chaos, consumers and businesses alike will rethink their budgets and ratchet back their spending.
For consumers, the continued economic malaise will mean fewer trips to the store, less-ambitious vacations, and car-pooling to school or work . For businesses, the cutbacks by consumers will clearly translate into canceling trips where conference calls will suffice and using lower-cost shipping alternatives for the decreased sales volumes most U.S. companies will experience.
According to the U.S. Energy Information Administration, oil consumption fell by nearly 50,000 barrels a day throughout 2008. According to the latest figures, the EIA suggests that global oil demand may slump to 83.4 million barrels a day in 2009 - nearly 2.4 million barrels below 2008 consumption levels. On a percentage basis, that’s almost a 3% drop. I have my doubts that we’ll actually see a decline of this magnitude, but if it does occur, it will be the first time ever that consumption has declined for two straight years. That alone is pretty noteworthy in this era of cohesive and powerful global growth.
The reason I have my doubts about such a steep decline in demand is this: While overall consumption is dropping in such developed economies as the United States, Europe and Australia, it’s being at least partially offset by continued growth in China, the Middle East and Latin America. Because the data produced there is less than transparent, I can’t help but think that analysts are underestimating the growth we’ll be seeing in those markets, where consumption is accelerating strongly. And it’s entirely possible that growth in those markets will outstrip any fall here in the developed world.
Even if the growth in the emerging markets doesn’t quite offset the decline in their developed brethren, analysts seem to be forgetting that oil prices are a function of two variables - consumption and production. And it’s the change in production that’s going to catch a lot of people by surprise.
After a run of record high oil prices punctuated by frantic resources development, we’re now seeing the opposite scenario. The long period of lower than anticipated oil prices following oil’s meteoric rise last year means that the entire industry is no longer making the investments needed to sustain production capacity or actual production.
And not many folks recognize this fact.
For instance, direct project investment in drilling may be down as much as 20%, while the number of drill rigs in operation in America alone has dropped by more than 40%. Various estimates from the EIA and private sources suggest that actual U.S. production may fall by as much as 320,000 barrels a day. While the amount is a matter of debate, the fact that production is declining is not.
More than 20% of total U.S. oil production comes from tiny wells located in remote areas that were marginally profitable producers when crude oil was trading at $100 a barrel. With oil currently at about $61 a barrel, those producers are practically worthless now. So the “mom-and-pop” shops that own them are actually abandoning entire fields and equipment without a moment’s thought.
To be fair, at least part of the drop in demand can be attributed to increased reliance on methanol, ethanol and other types of biofuel, but that’s hard to quantify at the moment because the long period of low oil prices has eroded the economic viability of alternative fuels - at least for now.
The story is much the same with new exploration projects being cancelled left, right and center. The trend is particularly apparent in the Canadian oil sands that were everybody’s fancy only 24 months ago. Now we’re seeing Royal Dutch Shell PLC (NYSE ADR: RDS.A, RDS.B), StatoilHydro ASA (NYSE ADR: STO) and Petro-Canada USA (NYSE: PCZ) each backing away from multi-million dollar investments that were to bring online an estimated 500,000 barrels a day.
Russian, Saudi and Mexican producers are reporting the biggest production drops seen in 50 years. Even Venezuelan leader President Hugo Chavez - the perennial motor mouth and longtime U.S. critic - is eating crow. He’s begrudgingly invited (read that to mean “is begging”) the oil companies whose assets he nationalized only a year ago to “come back” into the market.
| Much more at the link.
Oil is another huge problem we face, it's been far too cheap for far too long but the global economy is based on cheap oil.
This adjustment is going to be very painful, to extract more oil costs money, money that the system simply hasn't got.
The coming decades are going to be very difficult. | 
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22nd May 2009, 09:11
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#10262 (permalink)
| | Royalties Account Holder | Re: The great interest rate rip off
http://www.bloomberg.com/apps/news?p...p9o&refer=home Quote:
The U.K. refused to release the results of stress tests conducted on British banks, two weeks after the Federal Reserve said similar reviews showed 10 U.S. lenders needed to raise a total of $74.6 billion. Publishing the information may increase instability and force the government to take further action to shore up the U.K. financial system, the Treasury said in response to a Freedom of Information Act request by Bloomberg News that sought the test results and criteria used to evaluate banks. U.S regulators said publishing their findings would ease concerns about lenders.
“Keeping the information under wraps will only serve to create more uncertainty in the long term,” Vince Cable, the opposition Liberal Democrats’ spokesman on treasury issues, said in an e-mailed statement. “We need a system that is as open and as transparent as that in the United States.”
The Financial Services Authority carried out stress tests on U.K. banks earlier this year to determine their ability to withstand losses amid the worst recession in 60 years. Barclays Plc is the only bank to have disclosed its results, saying the in will continue to meet the regulator’s capital requirements under various credit risk, market risk and economic scenarios.
Disclosure of the results “at this time may lead to uncertainty in financial markets, either in relation to specific institutions or more generally,” the Treasury said in its response to Bloomberg. “Such instability could require further action by the authorities.”
The same request to the FSA was rejected on the grounds it would be too costly to retrieve the documents. Lesley Richardson, an FSA freedom of information officer, said the results wouldn’t be released in any case because the information was confidential.
| Trying to keep what our MP's have been spending our money on secret worked so well.
You can only infer that the information is incredible bad, if it was neutral or positive I doubt the govt would want to keep it a secret.
The banks must be haemorrhaging money. | |
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22nd May 2009, 15:42
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#10263 (permalink)
| | Royalties Account Holder | Re: The great interest rate rip off
BA plummets into record losses
British Airways today announced record annual losses of £401 million after suffering a near-£3 billion fuel bill in last year's oil price bubble. Hamish McRae: America's fiscal position is even worse – will it lose its AAA rating?
Economic Life
__________________
If DEBT is the problem REPAYMENT is the solution
Debt revenue doesn't equal tax revenue
I will pay for my own stupidity but not for the stupidity of others.
Remember, profits are privatised, losses are socialised.
That's the 21-century Free Market.
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22nd May 2009, 16:41
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#10268 (permalink)
| | Royalties Account Holder | Re: The great interest rate rip off
Our powerless MPs, overwhelmed with trivia | Camilla Cavendish - Times Online Quote:
Power corrupts, we like to say - wringing our hands over MPs' expenses. It certainly does. Look at Gordon Brown, using the new row over capital gains tax to destabilise his critic Hazel Blears, while saying that the same mud should not stick to James Purnell and Geoff Hoon. It's a nasty game, politics.
But it is the absence of power, it seems to me, that is an important part of public outrage. Westminster has given up so much power - to Europe, to quangos, to judges - that people wonder what they are paying for. Half the time, a big issue comes up and politicians say it's not their responsibility.
Take this week's ruling by the Court of Appeal that soldiers serving abroad must be covered by human rights law. Clearly the MoD should have a duty of care. But what will happen if soldiers in battle claim a “right to life”? The ruling - and the resulting confusion - is a direct consequence of the Blair Government's rush to incorporate the European Convention on Human Rights into British law.
You don't see other ECHR signatory countries in such a pickle. France regularly deports people it considers to be a threat to national security, for example. But British home secretaries are often forced to keep them here on benefits. Our legislators have created a bonanza for lawyers while tying their own hands - and now perhaps even those of the Army, one of our last great institutions.
The readiness of politicians to relinquish power amazes me. Take the European constitution, now rebranded as the Lisbon treaty. I read all the drafts of that document, spoke to lawyers and became convinced that its calculated opacity was a charter for the creeping takeover of national policy by bureaucrats and judges. There were brilliant MPs who could debate every inch of the detail - David Miliband, Gisela Stuart, David Heathcoat-Amory, Chris Huhne. But I met others who hadn't even read the document and looked incredulous that I had.
I once ran a construction company. I didn't sign contracts that I didn't understand, especially when they involved other people's money. So I could not believe that on an issue of such consequence - for their own role as well as for the nation - MPs had not done their homework. When the annual EU membership fee is £6.5 billion, when EU directives have driven almost half of the regulations passed here since 1998, and when implementing those regulations has cost £106 billion (according to a recent study by Open Europe), it is not surprising that people ask what MPs are doing.
It is not that politicians are incapable. Far from it. Most of those I meet are intelligent, thoughtful and accomplished. People who say that MPs are “out of touch” have never seen Kate Hoey recognising constituents by name in a packed hall. They have not talked to David Cameron about the NHS or Frank Field about the benefits system or Jack Straw about social services. That does not mean there is no room for independent MPs. But independent MPs coming in with big ideas will find themselves up against not just party machines but unreachable bureaucracies.
Who, for instance, do you think should control £12 billion of taxpayers' money: elected politicians or a quango? Last month there was an outcry when 144 further education colleges discovered there was no money to finish off their buildings. The relevant minister went on the radio and blamed the Learning and Skills Council. This quango has an annual budget of £11.6 billion and a vast, sprawling bureaucracy but has not noticeably improved the nation's skills. The minister effectively said he was not responsible for the budget. In which case he should not have been on the radio. Nor employed by voters.
Some of what appears to be bureaucratic capture is, of course, buck-passing. When the marking of 1.2 million SATs exam papers collapsed last year, ministers blamed the Qualifications and Curriculum Authority and its head, Ken Boston, who resigned. They were so keen to avoid responsibility that they even criticised his performance at a crucial meeting he had not attended. Frankly, you can't help feeling it would be better to reduce the tests, the quangos and the need for such wrangling.
There sometimes seems to be an inverse correlation between the complexity of government and its importance. Last year a junior minister told me she was not really on top of something I had gone to see her about, because her portfolio was “too big”. She was probably working 12-hour days but seemed to be swamped by trivia. It struck me that she felt as powerless as I did.
As fast as it has handed power to other bodies, this Government has filled up its time with the inconsequential. It has increasingly made politics a matter of placating interest groups. I didn't elect my MP to make it easier for ambulance chasers to advertise, or to change the planning rules in favour of lap-dancing clubs, or to create the database of 11 million children, launched this week to “help the vulnerable”, on which a determined paedophile can now find my sons' names, ages and school address. But having done so, Parliament will no doubt eventually spend time curbing the perverse consequences.
Many decent MPs are dismayed at being lumped together with the crooks. But one of the reasons public anger goes a lot deeper than Sir Peter Viggers's duck pond is because we feel we can no longer change our laws by voting out politicians. The EU machine marches on, constraining everything from the future of the Post Office to what vitamins we can take. The promised referendum on the Lisbon treaty has been ditched. The quango nanny state has acquired a momentum of its own. Politicians have given away powers that they held in trust for the people. They cannot be altogether surprised if people now lump them all together in impotent fury.
| Interesting article.
Why are MP's voting on things they haven't even read?
Party whips are corrupting democracy. | |
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23rd May 2009, 07:59
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#10269 (permalink)
| | Royalties Account Holder | Re: The great interest rate rip off
FT Alphaville » Blog Archive » On the not-unlimited investor appetite for government bonds Quote:
What a difference a day makes - at least to the holders of US and UK government bonds, and analysts.
Since S&P said it would lower its outlook on the UK to negative from stable - which sparked suggestions the US might face a similar fate - Treasurys have faced tremendous selling pressure.
In lunchtime trade in New York, the dollar plumbed multi-month lows against a range of currencies, which David Woo at BarCap attributed to “increased concern about the magnitude of US debt issuance.”
But on Thursday, some commentators were still relatively sanguine about what S&P’s revision would do to investor appetite for UK government debt, and that of the US.
As noted earlier here on FT Alphaville, Michael Riddell of Bond Vigilantes argued that healthy investor appetite for a massive gilt issue on Thursday suggested investors would shrug off a UK downgrade - much less a mere outlook change:
The UK’s Debt Management Office issued £5bn of UK gilts maturing in 2014, and the issue attracted bids for 2.6 times the amount offered. This was impressive considering that, as RBC have pointed out, it was the biggest ever nominal amount of bonds sold in a single operation.
But the tone has changed somewhat overnight.
Jim Reid at Deutsche Bank argued thus in a note issued early on Friday morning (emphasis ours):
There is not an insubstantial tail risk that we’ll all wake up one day and find that the appetite to fund the generally unparalleled peace time Government spending is suddenly reduced. We think that we are going to have this tail risk hanging over us for many quarters and even years and predicting if and when that day comes is going to prove very difficult.
The best possible (actually least bad) solution for the economy is for inflation to come back quickly enough for the huge Western World debt burdens to be eroded. However for this to succeed the bond market perhaps needs to be totally fooled. If it gets wind of higher inflation then we may be back to square one as funding problems arise or panic ensues. We think that it is inevitable that inflation eventually comes back in a fiat currency world but that it is going to be much harder to create than the market thinks. But perception is often more important than reality so we need to be aware of that.
Hours later, Reuters columnist John Kemp flagged up the following headlines:
UK DMO SAYS TO HOLD 19 OUTRIGHT GILT AUCTIONS BETWEEN JUNE AND SEPT
UK DMO SAYS TO HOLD 4 MINI TENDERS AND 3 SYNDICATED OFFERINGS JUNE-SEPT
UK DMO SAYS TO SELL NEW CONVENTIONAL SEP 2019 GILT ON JULY 7
UK DMO SAYS TO auction LONG CONVENTIONAL GILT IN 25 YR AREA BY SYNDICATION IN JUNE 15 WEEK
UK DMO SAYS TO SELL 30-40 YR LINKER VIA SYNDICATION IN 2ND HALF OF JULY
UK DMO SAYS PLANS TO SELL ADDITIONAL INDEX LINKED GILT VIA SYNDICATION IN SEPT, DETAILS TBA”
According to Kemp, “the DMO’s decision to start selling debt via syndications and to offer very long-term issues in index-linked form is a sign the UK government is running into resistance from investors to its huge borrowing needs.”
That reduction in investor appetite for government debt of which Deutsche’s Reid warned may well manifest sooner rather than later.
| O dear looks like Labour are going to have a bit of a problem......
Too much debt and no way of paying it back especially if we do enter a deflationary period. | |
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23rd May 2009, 08:02
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#10270 (permalink)
| | Royalties Account Holder | Re: The great interest rate rip off
U.S. 10-Year Note Falls Most Since June on Supply, Credit - Bloomberg.com Quote:
Treasuries fell, pushing 10-year notes to their biggest weekly loss since June 2008, as investors prepared for the U.S. government to resume debt sales after a two-week hiatus. Ten-year yields rose above 3.4 percent for the first time since November amid concern the record supply of Treasuries to pay for a mounting budget deficit may jeopardize the U.S.’s AAA credit rating. Longer-maturity notes and bonds led the declines, sending yields on 10-year securities to 2.56 percentage points above those on two-year notes, the most since November.
“We are testing key levels on the long end of the market,” said Hicham Hajhamou, a trader in New York at BNP Paribas, one of the 16 primary dealers that trade with the Federal Reserve. “There’s a lack of confidence in dollar assets and the bond market is repricing itself.”
The yield on the 10-year note rose nine basis points, or 0.09 percentage point, to 3.45 percent at 2:15 p.m. in New York, according to BGCantor Market Data. The price of the 3.125 percent security due in May 2019 fell 3/4, or $7.50 per $1,000 face amount, to 97 1/4.
The yield has surged 32 basis points this week, the most since gaining 35 basis points to 4.26 percent in the period ended June 13 on concern about inflation.
| U.S. Stocks Decline, Bonds Fall on Government Funding Concern - Bloomberg.com Quote:
U.S. stocks dropped, erasing gains in the final hour of trading for the third time this week, as government borrowing costs climbed to a six-month high and investors sold shares before the holiday weekend. Bank of America Corp. and American Express Co. slumped at least 3 percent and banks in the Standard & Poor’s 500 Index lost 1.4 percent in the last half hour as the government prepared to raise $162 billion. Salesforce.com Inc. fell 8.8 percent, the most since December, after its revenue forecast missed analysts’ estimates. General Motors Corp. tumbled 26 percent after surging 76 percent in the prior four days.
The S&P 500 retreated 0.2 percent to 887 at 4 p.m. in New York after gaining as much as 0.9 percent. The Dow Jones Industrial Average lost 14.81 points, or 0.2 percent, to 8,277.32. Treasury 10-year notes fell, pushing the yield to 3.45 percent. The dollar slipped beyond $1.40 against the euro for the first time in four months.
“There’s concern about the credit outlook,” said Frank Ingarra, the Stamford, Connecticut-based manager of the $160 million Hennessy Focus 30 Fund that beat 99 percent of its peers in the past five years. With U.S. markets closed on May 25 for Memorial Day, “it makes sense that people don’t want to be long over the weekend,” he said.
| Bear Stearns to Algebra I Means Lost Dollars in Trickle-Down - Bloomberg.com Quote:
After former Bear Stearns Cos. trader Guy Irace lost his job on the bond desk a year ago, he moved back to Long Island to teach high school math and dropped 40 pounds. Jack Yang’s deli in Manhattan cut three employees. Cavonberry’s, Yang’s 46th Street shop near the headquarters of the New York firm taken over by JPMorgan Chase & Co., once bustled with finance workers jostling to buy a barbeque chicken chopped salad and bottled water for $12. “They used to be turning them away at the door,” Irace said.
Last week, slow enough that one cashier instead of the usual two operated the register at midday, Yang tallied up the ripple effect of the financial slump that cost Bear Stearns its independence: He negotiated a $4,000 monthly decrease in rent with Sierra Realty Corp., to $17,000, and is spending 35 percent less a week with Fischer Foods of New York Inc. for such things as artichokes and ham.
“Since January, everything’s dead,” said Yang, 52.
The biggest Wall Street crisis since the Great Depression isn’t just a setback for New York or bankers. The finance industry’s contraction may wipe out $185 billion in wages and profits, or $600 for every man, woman and child in the U.S., according to Thomas Philippon, a finance professor at New York University’s Stern School of Business. The trail of reduced income affects car mechanics, waiters, sports teams, hair stylists, jewelers, housecleaners and watch repair shops.
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23rd May 2009, 08:05
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#10271 (permalink)
| | Royalties Account Holder | Re: The great interest rate rip off
The Mysteries of the Treasury Market Revealed! at SmartMoney.com Quote:
Oh boy. Just what we need now that the economy is finally getting back up on its feet: More end-of-the-world rumors.
On Thursday Treasury bonds experienced a massive selloff, with the yield on the 10-year bond rising to its highest level since last November. The stock market took a big hit in response. The U.S. dollar fell against every major currency. It was a bad day.
It was because a rumor got started in the professional bond trading community that China is starting to dump its massive horde of Treasury bonds. It's a portfolio worth almost $2 trillion, and it would surely destroy the bond market and the U.S. dollar if the Chinese ever really decided to dump it.
The rumor arose when some unusual trading patterns emerged in a weekly bond auction conducted by the New York Federal Reserve Bank. Each week the New York Fed buys Treasurys, as part of the $300 billion buy program that began about a month ago. It's the Fed's way of keeping long-term interest rates low, to help the economy and the housing market recovery.
Apparently, for the first time since these auctions began, the particular bonds being offered to the Fed were the type that foreign central banks — especially China's — tend to hold. I'm not sure I really believe that foreign central banks hold Treasurys that are any different looking than anyone else's. But that's what the bond experts tell me, and true or not, it was enough to get a rumor started.
As far as I know China hasn't denied it. I'm not sure they ever would. But common sense tells you that they have no possible sane reason to dump Treasury bonds in the first place.
For one thing, when you dump any investment you own, you are shooting yourself in the foot. You are destroying the value of your investment through your own careless and hasty action. If China really wanted to sell, it would have every interest in doing so very gently, very gradually and very quietly.
And surely they know that any big catastrophe in the Treasury market would cause the U.S. dollar's value to fall. And China definitely doesn't want that. The last thing an export-driven economy like China wants is a weak dollar, because it makes it harder for the U.S. to buy their manufactured goods. In fact, most economists believe China is assiduously manipulating its exchange rate in just the opposite direction — to make the dollar as strong as possible.
Oh... and then there's the statistical evidence. Every month the Treasury Department publishes statistics on how much of our government debt is held by various nations. As of the last report, on March 31, China was buying, not selling. In fact, China's portfolio of U.S. Treasury bonds has been growing over the last three months at better than a 20% annual rate. Maybe they changed their minds since March 31, but I really doubt it.
If it's not China or some other central bank dumping, then what caused Treasurys to sell off so hard Thursday?
I don't think it takes a genius to figure that one out. It's a sad fact that the U.S. is running record government deficits, and is issuing record amounts of debt to cover them. Last year, our outstanding debt was 40% of gross domestic product — by the end of this year, it will be 70%. And according to White House estimates, which I believe are wildly optimistic, it will stay at 70% pretty much forever.
There's good news, too, but it also is a reason for Treasury yields to move a lot higher. The good news is that the credit crisis is over, so investors the world around no longer need the safe haven of U.S. Treasury securities. Now that the panic has passed, it's only natural that yields will move up.
But there's also more bad news. Another reason for yields to rise is inflation. Just as we had to run up a lot of debt to end the credit crisis and set the economy on the road to recovery, the Federal Reserve also had to print a lot of money. That's causing inflation to start ramping up. When inflation rises, bond yields have to rise too, to compensate investors for the loss of future purchasing power.
Now here's where it gets tricky. The Federal Reserve can see what's happening to Treasury yields, and it doesn't like it one bit. With short-term interest rates already at zero, all the Fed can to now to help the economy start growing again is the keep long term rates low. That's why the Fed is buying $300 billion of Treasury bonds in those auctions. As yields move higher despite the Fed's buying, the Fed is going to have no choice but to buy even more.
But that leads to trouble. Because when the Fed buys more, it has to print money to do it. That means even more inflation. And that means yields will need to move higher still, caused by the Fed's very attempt to keep them from rising. It's a classic vicious cycle.
Famed investor George Soros calls that particular kind of vicious cycle “reflexivity.” It happens when events in the financial markets (bonds) influence the real world (inflation), and that in turn affects the financial markets all over again, which then affect the real word all over again (and so on and so on).
| Catch 22???
We have idiots running the show and creating even more debt to pay debt off.
Have you ever advised anyone to increase their debt to pay off their current debt? | |
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23rd May 2009, 08:12
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#10272 (permalink)
| | Royalties Account Holder | Re: The great interest rate rip off
PRESS RELEASE: Fitch Downgrades 5 UK Building Societies Quote:
22 May 2009: Fitch Ratings has today downgraded the Long- term Issuer Default Ratings (IDRs) of five UK building societies: Chelsea Building Society, Newcastle Building Society, Principality Building Society, West Bromwich Building Society and Yorkshire Building Society. The Long-term IDRs of Britannia Building Society, Coventry Building Society, Leeds Building Society and Norwich & Peterborough Building Society are affirmed, while the Long-term IDR of Skipton Building Society is placed on Rating Watch Negative. A full list of rating actions follows at the end of this announcement. A separate press release will address any rating actions on covered bonds issued by the societies. "Fitch's concerns are concentrated on higher-risk lending by societies, which includes buy-to-let, self-cert, adverse, purchased loans and commercial mortgages," said Matthew Taylor, Senior Director, in Fitch's Financial Institutions team. The weakening economic environment has increased the credit risk of the societies, as unemployment has risen and continues to rise, and house prices have fallen.
"Fitch expects larger loan impairment charges to erode earnings, making societies more vulnerable in the case of further deterioration in loan quality or other shocks," added Andrea Jaehne, Director, in Fitch's Financial Institutions team.
The loan books of most institutions are composed mainly of low-risk, owner- occupied residential mortgages, which yield low profit margins. Societies have offered higher-risk buy- to-let, self-cert, second charge and adverse mortgages, which produce slightly greater revenues but which are also showing signs of strain as unemployment rises. Often a small percentage of the riskiest loans generates a significant proportion of the loan impairment charge. Commercial loans form a small part of some societies' lending but the type of loan (for example, subordinated or syndicated) and large size of some counterparties mean that the risks may be large in relation to the other credit risks and pre- impairment operating profitability in a society.
| More at the link.
Building society bailout looming amidst the green shoots? | |
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23rd May 2009, 08:24
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#10273 (permalink)
| | Royalties Account Holder
Where else can you earn 8% interest on your money?
Start your County Court claim NOW!!!
Cagger since
: May 2007
Posts: 14,717
| Re: The great interest rate rip off
FT.com / UK - Brown to Bank: lighten up Quote: The Bank of England’s gloomy outlook for the economy has stoked tensions between Gordon Brown and Mervyn King, the Bank’s governor, with senior government officials complaining that the central bank is handing ammunition to the Tories.
There is growing irritation in Downing Street and the Treasury towards Mr King. The prime minister and Alistair Darling, chancellor, have been left fuming by the governor’s interventions, most notably after his downbeat assessment this month of the economic outlook, a viewpoint pounced on by the Conservatives.
Although Mr King’s forecasts were broadly similar to those set out by Mr Darling in last month’s Budget, the governor’s gloom-laden press conference at the launch of the central bank’s latest quarterly inflation report was watched with dismay in government circles.
“If you’d watched Mervyn on the news you’d have thought the world was a terrible place,” said one official in the Brown administration. Another talked of barely disguised dislike between the prime minister and governor when they met.
Official data on Friday confirmed the severity of the downturn. Household spending fell at its fastest for almost 30 years in the first quarter, while the biggest drop in wages and benefits for more than half a century pointed to further economic weakness ahead.
The data came a day after Standard & Poor’s warned that Britain might lose triple A credit rating for its debt.
Mr Brown has been advised by US president Barack Obama’s campaign team – now working for Labour – that he must fight the next election with an optimistic outlook, contrasting with Tory leader David Cameron’s rhetoric on the need for “an age of austerity”.
| Surely if the bank is independent it doesn't have to follow the govt line and lie about the economy???? | |
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23rd May 2009, 08:57
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#10274 (permalink)
| | Royalties Account Holder | Re: The great interest rate rip off
Professor Robert Shiller warns Britain may suffer a double recession - Times Online Quote:
One of the world's most influential economists warns today that Britain faces the prospect of two recessions in quick succession.
Robert Shiller, Professor of Economics at Yale University, said that the recent stock market bounce should be treated with caution.
He likened the current sense of optimism to a marital row. “You don't know whether the argument with your wife is really over or not. Is the problem something that your spouse will bring up again, and again?”
The apparent upturn could soon go into reverse, he told The Times, marking a repeat of economic patterns in the 1930s and the 1980s. Such a double-dip slowdown has been nicknamed by economists a “W-shaped” recession, where recovery is so fragile, the country could be plunged into another slowdown as soon as it emerged from the last.
Since March the stock market has rebounded by 27 per cent, raising hopes that the recession may not be as severe and protracted as many economists had feared. Some have interpreted the recent rally as a sign that the banking system - which imploded after Lehman Brothers, the US investment bank, went bust in September - has stabilised and that confidence is returning.
Last week Alistair Darling, the Chancellor, brushed aside doubts that his Budget forecasts had been overoptimistic and predicted that the recession would be over by Christmas. Many economists in the City believe that Britain will stagnate until the end of 2010 and that unemployment will continue to rise well after that.
Speaking to The Times this week, Professor Shiller said: “I was last here [in London] in the fall and there is definitely a sense of optimism now. The Fed [US central bank] and the Bank of England seem to have things under control. Everything seems to be getting better.”
However, he warned that “there is a real possiblity of another recession. We may well see more bad news. It is a real failure of the imagination to think otherwise.”
He said that there were a number of issues that threatened any long-term recovery for the British economy - rising unemployment, mortgage defaults, and another wave of new company failures that “could surprise us yet”.
Professor Shiller also said that the banks were still harbouring large portfolios of troubled assets.
“We all want to lick this problem — there's been a burst of confidence over the last few months, but really it's not based on any news. A lot of people think this recession is coming to an end. But I'm not so sure. A resurgence in confidence may not translate into new jobs. We are still in uncertain times.”
He added: “In 1931 in the US, President Hoover unveiled his recovery plan - there was a huge stock market rally — the market improved but it didn't hold because bad news kept coming in. Increased confidence can be a self-fulfilling prophecy but it doesn't always hold.” | More at the link.
Green shoots? | |
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23rd May 2009, 08:57
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#10275 (permalink)
| | Royalties Account Holder | Re: The great interest rate rip off
Housing market 'still has 10pc to fall' - Telegraph Quote:
In a comprehensive note on the housebuilding sector, the investment bank said it would be year before house prices found the bottom of the market in the second quarter of 2010.
Shares in house builders have rallied so far in 2009 as the likes of as Taylor Wimpey and Persimmon completed key refinancing packages and reported improved visitor levels and sales volumes compared to the depths of the financial crisis last Autumn.
However, Goldman analysts warned that, although sales volumes could rise by 12pc next year, prices will remain under pressure because of rising unemployment and the fact that property values are still well above the historical average of affordability of 3.8 times salary.
"Improving volumes may support house prices in the short term, but the negative outlook for unemployment into 1H10 [first half of 2010] and an above-average affordability ratio will limit the potential for a sustained improvement in our view," analysts said.
Goldman's forecast mean a peak-to-trough fall in house prices of roughly 30pc from summer 2007 to 2010.
The housing market has suffered dramatically since the onset of the credit crisis through a dramatic fall in mortgage availability. It is now also under pressure as business struggle in the recession and lay-off staff.
Yolanda Barnes, head of residential research at Savills, said it was too early to talk about "green shoots". She added: "The seeds have been planted but haven't been watered yet."
Ms Barnes' forecasts are broadly in line with Goldman's, explaining that a recovery is likely to be hook-shaped as unemployment and low mortgage availability also hinder a sharp upturn.
| More at the link. | |
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23rd May 2009, 09:04
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#10277 (permalink)
| | Royalties Account Holder | Re: The great interest rate rip off
FSA mulls more data on bank bail-outs - Telegraph Quote: The regulator is under growing pressure to disclose which UK banks were given a clean bill of health in the tests, which were conducted earlier this year to determine how well they could withstand
certain negative economic conditions.
It refused to give any details to Bloomberg, the news agency, when it submitted a Freedom of Information request asking how UK banks had fared. However, officials are now believed to be in negotiations over releasing the tests' criteria without compromising commercial sensitivities. It is understood that the Treasury is reluctant to publish exact figures showing the degree to which individual banks passed or failed.
The tests were designed to see how much extra capital each bank needed and the amount of assets they ought to put into the Government's "asset protection" insurance scheme.
The results for UK banks have not been released despite the admission from the US government two weeks ago that similar tests showed 10 lenders needed to boost their reserves by a total of $74.6bn (£47bn). Barclays is the only bank to have been open about its test results. It is thought to have been asked questions such as what would happen if there was a 50pc fall in house prices or a recession lasting more than two years.
Sources close to one major UK bank subjected to stress testing suggested that the decision to withhold the information was "political rather than financial".
"The Treasury wasn't keen because the banks were tested according to the worst-case scenario," the source said. "Publishing the criteria shows how bad the Government thinks it is possible for the financial crisis to get."
Analysts last night said that failing to release the results would only make the market nervous about what the banks were hiding. "Keeping the information under wraps will only serve to create more uncertainty," said Vince Cable, the Liberal Democrats' treasury spokesman.
The UK has already pumped £1.4 trillion into strengthening the banking system through investments, asset insurance and underwriting loans.
"The transparency of companies over the last few months has significantly improved so it is ironic that the one body not joining in the transparency is the regulator itself," said Ian Gordon, an analyst at BNP Paribas.
| Are they really fearing people will say the worst case scenario wasn't bad enough and we are currently heading to a far worse situation that wasn't stress tested for? | |
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23rd May 2009, 09:07
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#10278 (permalink)
| | Royalties Account Holder | Re: The great interest rate rip off
MPs' expenses: Why should MPs retain risk-free pensions while the rest of us face an uncertain future? - Telegraph Quote:
There aren't that many former sheet metal workers in the House of Commons – indeed, precious few who ever had what you might call a proper job – and there will be one fewer when his resignation takes effect next month.
Some of the criticism to which he was subjected when first appointed reeked of snobbery. But that was rendered irrelevant by a series of sensational scoops about MPs' expenses and the abuse of their allowances exposed by The Daily Telegraph.
It was odd, given his background, that Speaker Martin failed to understand public anger about the misappropriation of millions of pounds of taxpayers' funds in the middle of a recession.
Politicians' greed looks particularly odious when more than 2m people have lost their jobs and we are told there is insufficient money to properly equip our brave young men and women in Afghanistan.
So I was already in two minds about the sad spectacle of an old man being hounded from office when Harriet Harman, Leader of the House of Commons, issued this statement on Tuesday: "Michael Martin's resignation as Speaker is an act of great generosity to the House of Commons that MPs from all parties will respect."
Hold on a moment, I thought, who is being generous to whom here? Speaker Martin's premature retirement at the age of 63 will be amply cushioned by the good old taxpayer with a pension worth just under £2.1m.
That's how much retirement experts Origen tell me ordinary people would have to save to buy an annuity – or guaranteed income for life – of about £71,000 a year, or half the Speaker's salary of £141,866.
This is the figure shown in official documents dated April last year but, when I contacted the Commons to find out the current figure, my calls were not returned. Too busy with the paper shredder, perhaps.
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23rd May 2009, 09:59
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#10279 (permalink)
| | Basic Account Holder | Re: The great interest rate rip off
My problem is that l am convinced that the 18 or so chinless wonder boys from eaton will not do anything to solve the problem. lf you trust Mr Osborne et al to come up with a comprehensive long term solution to our world problems you are, in my opinion, gambling with your and your offsprings life and future. After all, Mrs Tathcher was and is the mother of our woes. She was the person who created the ''greed is good'' philosophy and thereby laid the ground work for what we have today. Not one Tory opposed the government and it's policies during the boom years and most of the MP's are sitting on the board of one bank or another. That is, when they are not cleaning moats and undertaking major work on their duck houses.
Conservatives in general actually manages to screw things up and this can be evidenced by studying the performance of various administrations in the US since the great depression. Rooseweldt, Clinton and now Obama have all benn forced to clean up after the devastating performance of previous republican administrations. As a matter of fact, l for one do not know of one single really good republican prisident. Everyone holds up Ronald Reagan as an example of a good republican president and l say rubbish. Reagan managed to virtually ruin the country by borrowing, something Clinton was left to clean up.
So, do l think a conservative government will do the trick? No, not at all and l am further, convinced that their solutions and actions will be ad hoc, knee jerk and in the end only adding to the current situation. The only person with a knowledge, foresight and determination that would have a positive impact is, again, in my opinion Vince Cable and the liberals.
GGR | |
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25th May 2009, 09:07
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#10280 (permalink)
| | Royalties Account Holder
Posts: 14,717
| Re: The great interest rate rip off
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