The great interest rate rip off part 1

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UK manufacturing at three year high | | Guardian Unlimited Business

 

British manufacturing activity unexpectedly picked up in July to its fastest pace in three years, the key CIPS/NTC survey showed today, while factory gate inflation hit its highest since the survey began in 1992.The figures are likely to alarm the Bank of England's monetary policy committee which has been concerned about firms' renewed pricing power.

But the MPC is not expected to raise interest rates again tomorrow with global financial markets in such a nervous state.

The Chartered Institute of Purchasing and Supply/NTC purchasing managers' index rose to 55.7 last month from an upwardly revised 54.7 in June. That was the highest since July 2004 and compared with City forecasts of 54.0.

Any reading above 50.0 indicates expansion and the sector has now grown for 24 successive months.

Average factory gate prices rose at the fastest rate since the series began in January 1992 while input price inflation rose at its fastest rate in almost a year.

 

So the economy is booming and it isn't????

 

And the consumer is meant to be able to make a judgement about how much money to borrow. The system doesn't work, it's a complete failure and needs to be overhauled.

 

The central bank system has dismally failed it's time it was put out of it's misery before more people get made homeless for the perceived economic good!!!

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Business Viewpoint | Business | Guardian Unlimited Business

 

How bad was the action in financial markets last week? One rough measure appeared yesterday in the form of the weekly performance figure of AHL, the flagship hedge fund of Man Group. A normal reading would be up or down a percentage point or two. Yesterday Man said AHL fell 6.8% last week. That's big.True, it's not as much as the minus 8.2% that AHL saw in the last week of February, but the fund has now suffered two of its worst weeks for five years in the space of five months. Welcome to volatile markets.

The concern is not for AHL. It is run by computers programmed to be conservative and to cut losses early. After February's setback, AHL regained all the lost ground and more. But it's a safe guess that if AHL is down 6.8% other less-conservative funds will be down much more, and they won't all bounce back. Indeed, in the US, Sowood Capital, a hedge fund spun out of Harvard University's enormous endowment fund, has had to throw in the towel.

Sowood was managing $3bn at the start of the summer; now it is down $1.5bn and a rescue party has been summoned from Citadel Investments, the hedge fund powerhouse managed by Ken Griffin. Griffin helped to pick up the pieces last year when Amaranth blew $4.6bn by betting the wrong way on natural gas prices. The happy reading of events at Sowood is that there's enough spare capital within the hedge community to find solutions to these crises.

 

More promising news about the current financial situation, brought about by the lax central bank system, the greed of the banks and the gluttony of the city feeding on debt funded by outs.

 

If you leave a 5 year old in a sweet shop, they will eat and eat. The 5 year year old has the same mentality of the city and the banks all pursing higher profits regardless of the economic cost, adult supervision is required unfortunately there isn't any.

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Cadbury Schweppes melts amid profits gloom - Times Online

 

Nearly £760 million was wiped from the value of Cadbury Schweppes today as shares in the Dairy Milk group tumbled following a profit fall and fears that the planned sale of its American drinks empire may not happen.

The group, which was last week forced to delay the £7 billion sale because of “extreme volatility” in the leveraged debt market, admitted that, while interest from bidders remained strong, it was prepared simply to demerge the business.

Cadbury added that it was suffering from higher dairy prices around the world, which meant it was unlikely to see any “margin progression” over the year as a whole.

The group is famous for using a “glass and a half” of full-cream milk in every half pound of Dairy Milk chocolate.

 

Higher milk prices will affect us all and no amount of interest rate rises is going to correct it.

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FTSE loses £40bn in market turmoil - Times Online

 

Leading shares in the City suffered a £40 billion slide today as renewed fears about the credit crunch in the US sent the FTSE 100 reeling by as much as 173 points in early trading.

All but five blue chips on the index lost ground as investors took their lead from a rout on Wall Street last night.

The Dow Jones industrial average tumbled 146 points after a leading US mortgage firm, American Home Mortgage, pulled the plug on millions of dollars of home loans.

The fall followed an initial 140 point rally by the Dow, and sent tremors through stock markets around the world.

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Credit panic hits global markets - Times Online

 

Credit-market turmoil sent fresh shock waves around the globe today, with funds in America, Australia and France warning over losses or blocking redemptions to halt a fire-sale of assets. Equities tumbled in reaction across Asia and Europe.

Bear Stearns, the Wall Street bank that recently saw two of its hedge funds collapse, halted redemptions in a third – the $850 million (£420 million) Asset-Backed Securities Fund – after investors rushed to make withdrawals.

In Australia, shares in Macquarie Bank fell more than 10 per cent after it warned investors of losses in two bond funds, on the back of the recent strife in the credit markets sparked by the US sub-prime debt crisis.

Separately, shares in American Home Mortgage Investment plummeted 90 per cent yesterday after the US lender said it could no longer fund home loans.

 

Is there panic in the air over the economic climate created by our wonderfully knowledgeable central banks? All we need is for a oil price shock and the whole global economy could be screwed. It's like waiting for a bus, several turn up at once, although all of this was to be expected if anyone had actually put there brain into gear.

 

But interest rates work.....

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BBC NEWS | Business | Q&A: Zimbabwe's economy

 

Zimbabwe has just about the worst-performing economy in the world. Some say the economic problems could soon bring down the government of President Robert Mugabe, although that has been predicted many times before. People are struggling with soaring inflation, widespread joblessness and the exodus of millions of Zimbabweans, both to neighbouring countries and to Europe and the US.

What's going on with Zimbabwe's economy?

By any measure, Zimbabwe is in deep financial trouble.

In many stores, the shelves are nearly empty much of the time, and prices are skyrocketing for what goods remain as hyperinflation sets in.

About four out of five people are estimated to be out of work - at least as far as the official economy is concerned.

The situation is so bad that about 3,000 people a day are thought to be crossing Zimbabwe's borders into neighbouring countries.

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C&C warning as Magner sales collapse - Telegraph

 

The fizz has well and truly gone out of Magners after C&C, the Irish group that brews the cider, was forced to issue a second profits warning in just over two weeks, blaming a collapse in sales on the wet weather and growing competition from rival Scottish & Newcastle's Bulmers.

The news sent the shares tumbling by 26pc to €6 (£4), leaving investors with a nasty hangover. C&C's market value has more than halved over the past two months amid growing concern that Magners is just a craze.

C&C said trading "deteriorated at an unexpected rate" in late July and warned that first-half operating profits were likely to fall by 35pc compared with last year's €113.5m.

 

Lemming mentality again.

 

For those that offer premium products interest rate rises are a severe threat to profits, companies like Sky, Virgin Media etc... must be getting very worried if householders cut back spending there subscriptions will be among the first to go as householders will concentrate on the essentials to keep the roof over there heads.

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The State Of The NHS Explained

 

Once upon a time it was resolved to have a boat race between a BUPA team and a team representing the N.H.S. Both teams practised long and hard to reach their peak performance. On the big day they were as ready as they could be.

 

The BUPA team won by a mile.

 

Afterwards the N.H.S. team became very discouraged by the result and morale sagged. Senior management decided that the reason for the crushing defeat had to be found, and a working party was set up to investigate the problem and recommend appropriate action.

 

Their conclusion was that the BUPA team had eight people rowing and one person steering, whereas the N.H.S. team had eight people steering and one person rowing.

 

Senior management immediately hired a consultancy company to do a study on the team's structure. Thousands of pounds and several months later they concluded that: "Too many people were steering and not enough rowing."

 

To prevent losing to BUPA the next year, the team structure was changed to three "Assistant Steering Managers", three "Steering Managers", one "Executive Steering Manager" and a "Director of Steering Services". A performance and appraisal system was set up to give the person rowing the boat more incentive to work harder.

 

The next year BUPA won by two miles.

 

Following this, the N.H.S. laid off the rower for poor performance, sold off all the paddles, cancelled all capital investment in new equipment, and halted development of a new canoe. The money saved was used to fund higher than average pay awards to senior management.

 

 

Jack and Jill went up the hill to fetch a pail of water.

Jack fell down and broke his crown and Jill came tumbling after.

 

Both subsequently died in the ambulance and the PCT set up an enquiry, which came to the following conclusions:

 

1. The 50 mile journey to the nearest casualty department was in the couples' best interests.

 

2. The fact that there was no local bed in which Jack could mend his head was unfortunate but no targets had been breached and he had been offered a choice.

 

3. The lack of vinegar and brown paper was not material to the man's death as NICE had not yet decided whether it was cost-effective and in any case both the brown paper nurse and the vinegar nurse were away on courses.

 

4. The GP was most to blame and should be suspended and referred to the GMC as he had:

 

a. Not reported Jack and Jill's lack of water to social services;

 

b. Failed to recognise that anyone going UP the hill to fetch a pail of water must be seriously demented;

 

c. Had not involved the Falls Coordinator which resulted in Jill tumbling after Jack.

 

 

Dr Foster went to Gloucester in a shower of rain He stepped in a puddle right up to his middle and never went there again. This also resulted in major public debate.

 

The Press said it was outrageous that - given the fact that doctors were paid around half a million pounds for a 30 hour week - Dr. Foster should be put off by a mere soaking.

 

The politicians wanted to know why any doctors were going to Gloucester in the first place as it was an over-doctored middle class area unlikely to vote Labour at the next election.

 

The RCN said doctors weren't needed as nurses could do their job just as well, they were holistically trained and would have no problem with puddles as they could also walk on water.

 

The local nurse practitioners agreed that they would of course go to Gloucester after doing the appropriate course.

 

The Social workers said that no one had considered how the puddle might feel about being trodden into.

 

The managers decided to do a piece of work around rain and puddles.

 

The next time there was a problem in Gloucester it coincided with a large multidisciplinary stake holder conference and no one was available so NHS Direct advised calling the GP.

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FT.com / Markets / UK - FTSE off lows as Wall St finds poise

 

The FTSE moved off session lows on Wednesday after a steady start on Wall Street soothed lingering fears about the US subprime crisis.

But sentiment remained sour after significant losses during the previous session after American Home Mortgage Investment, the country’s 10th largest lender, admitted its lacked cash to fund new loans and said it was considering its options, including the sale of assets.

Asian markets ended sharply lower overnight, while European indices also felt the heat. The FTSE Eurofirst 300 was down 34.34 points, or 2.2 per cent, to 1,515.5.

 

It's steady until the next fart, then it will be panic stations again!!!

 

It could be that these are tremors before the real crisis, interest rates are still high and it won't be till later in the year what effective these will have on the UK economy. If enough people are struggling the situation could prove devastating coupled with high oil prices.

 

Demand for oil will not subside, even if OPEC produces more oil it so won't get rid of the long term problem it will merely delay it again. From the politicians point of view that will be good as they'll be able to put their heads in the sand and leave it for someone else to clear up.

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FT.com / World - Manufacturers shrug off rate rises

 

UK manufacturing grew at its fastest pace in three years in July as companies shrugged off higher interest rates and rode a robust domestic market, a survey released on Wednesday showed.

However, the soaring cost of many raw materials encouraged producers to increase prices sharply at the factory gate, adding to fears that the cost of borrowing may have to rise gain to dampen inflationary pressures.

The Bank of England’s monetary policy committee will announce its latest decision on interest rates at midday on Thursday. Although most City commentators believe the MPC will leave rates unchanged at 5.75 per cent, a majority also think another quarter point increase may be delivered before the year is out.

“UK manufacturers are facing sharp increases in their costs. And with demand robust, they plan on passing on these higher costs in higher prices. Not good news for the Bank of England,” said Karen Ward at HSBC.

 

Higher costs because of the high cost of energy (oil) putting up interest rates is not going to have any effect on these prices. Don't forget interest rates take 1-2 years to feed into the system, so what on earth where the BoE thinking 2 years ago. They obviously got it significantly wrong then, why has there judgement suddenly got better over what's happening now.

 

The BoE is just guessing it hasn't got a clue what's happening in reality as there are too many variables to control/influence economic activity which cannot be control with a simple interest rate rise. Interest rates simply do not work in a complex global system yet the BoE MCP persist in lying to the public that they do.

 

Part of the current economic uncertainty is down to their own gross negligence they may still get out of jail yet, but one suspects that there is going to be a major economic price to pay for their incompetence by the consumer.

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FT.com / World - Chancellor faces challenge over fiscal rules

 

Gordon Brown’s two fiscal rules, devised a decade ago, are looking well past their sell-by date. It is up to his successor as chancellor, Alistair Darling, to decide whether they deserve a new lease of life.

The consensus outside government is a resounding “no”. Academic experts and think-tanks, including the Institute for Fiscal Studies, have all suggested improvements. The lack of credibility in the rules was highlighted in an FT survey of more than 50 City economists in which almost none used them as a reference point in the assessment of the public finances.

 

Three main credibility problems hamper the rules’ effectiveness. First, the golden rule – only to borrow to invest over the economic cycle – is dependent on the Treasury’s definition of the cycle, which is something eminent public figures such as Mervyn King, the governor of the Bank of England, believe is simply unmeasurable with precision, even with the benefit of hindsight.

Second, this rule is backward looking. Last year, Mr Brown gave himself extra leeway to increase borrowing by £12bn on the basis of official revisions to the economic history of 1999.

Third, the golden rule and the sustainable investment rule, which limits public sector net debt to 40 per cent of gross domestic product, could give public bodies strong incentives to engage in creative accountancy.

 

More guess work and pseudo science, the stock of any true economist.

 

First, the golden rule – only to borrow to invest over the economic cycle – is dependent on the Treasury’s definition of the cycle a bit like measuring inflation and then excluding mortgage costs which have increased by 21% in a year slightly above the 2% inflation target of the BoE.

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The Market's Biggest Idiots

 

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This is not the first time the man has made the news. He was quoted in the papers as describing people who took out subprime mortgages as "big idiots." A moment's reflection might have brought the opprobrium closer to home, for Mr. Devaney's fund was buying up these big idiots' subprime mortgages, on a grand scale.

That is the problem with today's markets; it is so hard to figure out who is the biggest idiot. Surely, the fellow who buys a trashy barrack in a bad part of town using a subprime ARM is an idiot. Buying more of a house than he can afford, he's just asking for trouble. But so is the fellow who buys a whole inventory of these packaged mortgages - collateralized debt obligations - asking for trouble. If they were bad for the borrower, sooner or later they're going to be bad for the lender too. Making a loan to a guy who can't pay you back has never been good business. But then, in order to buy more CDOs than he can afford, the hedge fund sharpie borrows money. Often, he'll get even more leverage by means of the carry trade - borrowing yen or Swiss francs at a low rate and using the money to buy high-yielding subprime debt. As long as everything works out as planned, he'll have "positive carry."

And then, along comes an investor who puts his money in the hedge fund! And, get this, he pays the manager fees of "2 and 20" for the privilege of taking part. Is this guy an idiot, or what?

Everyone is passing the blame buck, as Strategic Investment's Dan Amoss points out:

"Rating agencies are now in the cross hairs of politicians seeking irresistible targets to blame for all of society's woes," This is an attractive populist issue for ambitious politicians; it pits 'greedy Wall Street financiers' against the constituents whom they argue are the victims of the "predatory" lending business, including all of its key enablers, like the rating agencies.

"In the midst of all this finger-pointing, it's important to remember that nearly everyone lauded the glories of the great housing bubble, thinking that everyone could get something for nothing and we could all get rich by selling houses to each other. But now that it's payback time, few want to admit the reality that we're still in the early stages of a prolonged housing recession."

 

More amazing yet the worlds Central Banks are being questioned by no one over this whole fiasco...

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BBC NEWS | Business | BA's price-fix fine reaches £270m

 

British Airways has been fined about £270m after it admitted collusion in fixing the prices of fuel surcharges. The US Department of Justice has fined it $300m (£148m) for colluding on how much extra to charge on passenger and cargo flights, to cover fuel costs.

It followed a decision by the UK's Office of Fair Trading to fine BA £121.5m, after it held illegal talks with rival Virgin Atlantic.

Surcharges were added to passenger fares in response to rising oil prices.

Virgin has been given immunity after it reported the collusion and is not expected to be fined, the OFT said.

 

Why haven't consumers got a refund, surely rather than fining BA all people who've paid an excessive surcharge should get a refund on the excessive amount?

 

BBC business editor Robert Peston said that the collusion between BA and Virgin Atlantic was "as blatant a breach of competition law as it's possible to imagine".

"This was not a careless accident. The two big birds... were not competing properly on price over an extended period: they were giving each other comfort that they would not undercut each other on the fuel surcharge."

He added: "Virgin won't pay a penny in fines and actually emerges as a winner, since all the opprobrium of the rule-breach has been heaped on BA."

 

Price fixing to keep the profit up, which keeps the share price up which makes the execs very happy if they can get away with it as they pick up a very nice salary. Whilst the consumer pays yet again.

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FT.com / MARKETS / Commodities - Oil hits new record

 

US oil prices on Wednesday rose to an all-time high, approaching $79 a barrel after a large and unexpected decline in US crude oil inventories.

Nymex September West Texas Intermediate rose 57 cents to $78.77 a barrel, above the previous record established last July of $78.40 a barrel.

Commerzbank analysts warned: “We envisage oil testing the $80 a barrel hurdle in the next few days.” WTI oil was later trading at $78.47 a barrel, up 25 cents on the day.

US crude oil inventories last week plunged by 6.5m barrels to 344.5m, according to the Energy Information Administration, the statistical arm of the US Department of Energy. Wall Street was forecasting a drop of about 1.3m barrels.

Inventories at the delivery point of the Nymex contract, in Cushing, Oklahoma, had fallen to the lowest point since 2005, according to Deutsche Bank data.

 

Is the brown stuff going to hit the fan? Around $83 is supposedly the magic number for economic disaster.

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FTSE slumps 110 points - Times Online

 

Oil prices jumped to a new record today in New York as the US reported of a steep drop in crude inventories, coupled with a surge in refinery activity.

Light, sweet crude for September delivery rose 24 cents to $78.45 a barrel on the New York Mercantile Exchange after rising as high as $78.77 earlier.

That beat the previous intraday record of $78.40, set in July 2006.

On the other side of the petroleum supply chain, refineries are producing more gasoline. That news sent September gasoline futures down 1.57 cents to $2.0902 a gallon on the Nymex.

 

In the equities markets, London's blue-chip index closed sharply lower, with Cadbury Schweppes falling more than 8 per cent after disappointing earnings news and fears the £7 billion sale of its drinks arm will be derailed by the current credit market chaos.

At the close, the FTSE 100 index was down 109.5 points at 6,250.6, off a low of 6,187.2. The FTSE 250 index closed 148.6 points lower at 11,188.

Wall Street traded tentatively, as the market tried to balance continued worries about US home loans and the credit market, against stronger-than-expected profit news.

 

No one is as of yet talking about what will happen if both the oil and credit crunch come together, central banks have got there eye on the wrong ball.

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FTSE 100 tumbles on credit worries - Telegraph

 

The tin hats were back on again as UK equity markets experienced a torrid day, with the FTSE 100 tumbling 109.5 to 6250.6.

There were fears that Tuesday's rise was just a "dead cat bounce" as there was also carnage on the FTSE 250, which ended down 148.6 at 11188.90.

Dealers laid the blame on renewed concerns about the US subprime mortgage market, which caused the Dow Jones to slump 146.3 to 13212 overnight.

There, two large home-loan insurers saw their shares tumble after saying they would together make a possible loss of more than $1bn (£495m). Mortgage lender American Home Mortgage Investment Corporation also unsettled the market after saying it was unable to finance mortgages and may be forced to liquidate its assets.

Dead Cat Bounce

A temporary recovery from a prolonged decline or bear market, after which the market continues to fall.

 

Dead cat bounce - Wikipedia, the free encyclopedia

 

How on earth can there be renewed worries, the facts haven't changed.

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BBC NEWS | Business | Further postal stoppages planned

 

Postal unions are planning another two weeks of strike action in a further escalation of their dispute with Royal Mail, the BBC has learned. The current period of staggered stoppages was due to end on 7 August.

But the Communication Workers Union is expected to announce on Thursday it will extend the action until 20 August.

The union has called for "serious negotiations" but the Royal Mail has said its pay demands threaten efforts to make the business more efficient.

Disruption

Workers are in the middle of a two-week period of staggered stoppages designed to maximise disruption to the business.

They have already staged two 24-hour strikes in protest at what they say is an inadequate 2.5% pay offer and modernisation plans which threaten 40,000 jobs.

 

2.5% probably doesn't cover inflation for the year, but hey it's not like there's been a 21% rise in the cost of your mortgage or anything!!!!

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BBC NEWS | Business | Oil price rises to all-time high

 

Oil prices have climbed to a record high of $78.71 a barrel amid worries about whether oil supplies can meet global demand. The price of a barrel of US light, sweet crude passed the previous high of $78.40 a barrel, reached in July 2006.

Prices have risen steadily in the past few weeks following disruption to output in Nigeria and the North Sea and set a new closing high on Tuesday.

The latest rise was triggered by data showing a fall in US crude stockpiles.

 

There needs to be serious action to cut oil consumption, it's just a pity we weren't warned about this in the 70's..... But once more our politicians failed us, they ducked the issue as it wasn't a current threat, now we pick up the tab.

 

Gross negligence again.

 

Interest rates aren't going to solve this problem, unfortunately interest rates are the only idea the BoE has got.

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FT.com / Companies / Financial services - Germany rescues subprime lender

 

The German government has pulled together a rescue operation – drawing in all three pillars of the country’s banking system – to shore up Europe’s first major casualty of the subprime crisis.

The rescue of IKB, a specialist lender based in Dusseldorf, began on Sunday when Peer Steinbrück, the German finance minister, called leading banking executives to discuss a bailout. According to people who took part in the conference call, Jochen Sanio, head of Germany’s financial regulator, is said to have warned of the worst banking crisis since 1931.

IKB announced a big fall in its earnings because of subprime exposure. The news sent its shares plunging and prompted KfW, the state-owned development bank, to step in with a pledge to guarantee obligations of more than €8bn ($10.93bn) – more than five times IKB’s stock market value.

The intervention suggested that the problems at IKB are much worse than thought. Mr Steinbrück phoned several banking executives, including Josef Ackermann, chief executive of Deutsche Bank, on Sunday to bring them on board.

Deutsche Bank, Commerzbank, and a number of publicly-owned Landesbanken and Sparkassen, as well as several other private banks, are taking a 30 per cent stake in a rescue fund worth €3.5bn, FT Deutschland, the FT’s sister paper has learned, with the rest being shouldered by KfW.

 

The central banks have failed to do there duty they have sat by and watched this happen. With only ever using interest rates your just asking for trouble when you allow record debt and then put up the borrowing rates.

 

However the Central Bankers won't acknowledge they've got it wrong and none of this is there fault, god it's not like there charged with regulating the banking industry or anything.

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FT.com / Capital markets - Liquidity alarm bells sound

 

When an ordinary sounding Australian mutual fund run by Macquarie Bank’s asset management division warned investors they could lose up to 25 per cent of their money this week it was shocking for two reasons.

First, it was a retail fund, so the investors were everyday people. Second, their money had not been anywhere near US subprime mortgages, which have been at the centre of recent market turmoil.

The fund was actually invested in senior secured corporate loans, which are mainly the leveraged debt used in private equity-backed buy-outs – and these assets were fundamentally sound and performing well, the fund insisted.

What caused the embarrassing loss was “supply-demand imbalances“ in the market – which in plain English means many need to sell but few want to buy.

The saga illustrates an ominous point, namely that as market turmoil rises, financial problems are no longer simply confined to a risky corner of the US mortgage market. This stems from another key theme now haunting the markets: namely that liquidity is evaporating from numerous corners of the financial world, as both investors in hedge funds and the banks that lend to them try to cut and run from recent losses.

 

Does anyone want to seriously argue that the central banks have done there job and that interest rates work?? Perhaps this is "recession to correct the excesses of the market?" It's nothing of the sort there has been a cataclysmic failure of trust and unfortunately for the central banks the buck ultimately stops with them, they aren't solely to blame but they've sat back and watched as greed has taken over the City.

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FT.com / Wealth - Increased liquidity fuels competition

 

Increased liquidity in the international equity markets is driving innovation and intense competition between index providers in what used to be a sleepy corner of the financial industry.

MSCI Barra has revealed plans to change its two sets of global equity indices – MSCI Standard and Small Cap – to a new single set of Global Investable Market Indices.

The two-phase transition includes an overhaul of the stock selection process, size segregation to remove an overlap between the two indices, and the inclusion of emerging markets in the small cap index for the first time.

MSCI claims the new methodology reflects the changing nature of international equity markets and the evolution of investment processes globally. It aims to provide a broader coverage of the investable equity universe.

However, the changes have come under scrutiny from all corners of the indexing space because of the potential for rebalancing activity from passive and active managers, with some $3,000bn benchmarked against the MSCI indices.

It is the second time in six years that the US-based index provider has given a facelift to its coverage and underlying methodology, having switched to free float-adjusted market capitalisation in 2001.

Vijay Sumon, derivative analyst at HSBC, says the new methodology results in significant turnover for no real benefit. “They are forcing index followers to change the composition of their portfolios at a considerable cost,” he says.

“We estimate that for a typical portfolio of about $100m, it will cost about 0.5 basis points of the value of the portfolio for developed markets large and mid-caps.”

Competitors claim the transformation is merely an attempt by MSCI to stay afloat in an evolving and highly competitive market.

 

Moving the goalposts, if you move them often enough hopefully no one will spot what's going on........ Always trying to improve profit..

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£2bn mortgage exit fees may be refunded - Telegraph

 

Millions of homeowners are in line for refunds totalling £2 billion on ''unfair'' mortgage exit fees.

Banks are already starting to pay back the money ahead of a report by the City watchdog into the charges. It is expected to be highly critical of their practices.

 

They are entitled to levy the charge, but some banks have been increasing the fees after mortgage contracts have been signed, which the watchdog says is unfair.

Some customers have been hit by fees of up to £300 for switching or paying off their home loans.

Keep the profit and share price up that's the name of the game and hope no one finds out. Companies are always looking how they can charge more, charge for a service to keep the gravy train following and increase the profit for the next financial year..

 

Problem is you can't do it forever, reality about what profit can be made has to hit home eventually unfortunately the City isn't interested in it.

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BBC NEWS | Business | Enron scandal at-a-glance

 

The Enron scandal has far-reaching political and financial implications. BBC News Online reviews the key facts to help you make sense of developments. In just 15 years, Enron grew from nowhere to be America's seventh largest company, employing 21,000 staff in more than 40 countries.

But the firm's success turned out to have involved an elaborate [problem].

Enron lied about its profits and stands accused of a range of shady dealings, including concealing debts so they didn't show up in the company's accounts.

As the depth of the deception unfolded, investors and creditors retreated, forcing the firm into Chapter 11 bankruptcy in December.

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BBC NEWS | Business | No change expected for UK rates

 

The Bank of England is expected to keep interest rates on hold at 5.75% when it makes a rate announcement on Thursday. After raising rates by a quarter point last month, the fifth rise in the past year, policymakers are expected to pause for breath to gauge the impact.

Whatever the outcome of the meeting, many experts believe rates will rise to 6% before the end of the year.

Despite falling back to 2.4% last month, inflation still remains well above the government's 2% target.

 

More to do with the fact they have absolutely no idea as to what's going on in the global economy. No one does know what's going to happen from one month to the next let alone knowing what it will be like in 2 years time, which is supposedly whey they are setting interest rates for!!!!

 

The world is now moving too fast for these economic dinosaurs who still believe interest rates somehow have a magic control over the economy.

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BBC NEWS | Business | Barclays profits increase sharply

 

Barclays Bank has become the latest UK bank to post strong half-year profits, though this was partially offset by settlements on UK overdraft fees. Pre-tax profit at the bank rose 12% to £4bn, supported heavily by record earnings at its investment bank arm.

Profits at its UK retail banking business grew 9% to £651m.

 

So the consumer gets to foot the bill for city excesses with higher interest rates... Still think interest rates are fair?

 

They only had a increase of 12%.......