The great interest rate rip off part 1

[interestrateripoff]

Buy-to-let hit hard by the recession|myfinances.co.uk

 

According to a survey by Unbiased.co.uk looking at property investment, nearly a third of Brits believe buy-to-let will make a loss in the current economic environment, with a further quarter believing investors will just about break even.

 

The research highlighted a generation gap, with one in ten of over-55's cautious of the buy-to-let market, and expecting those with investments to "lose a lot of money". At the younger end of the survey, one in ten 18 to 43-year-olds believe the investment will still make money, according to the Unbiased.co.uk research.

 

David Elms, chief executive of Unbiased.co.uk, said: "The years of the booming property market made investing in bricks and mortar very attractive. But unfortunately this boom couldn’t continue forever and those invested in the buy-to-let property market may now be facing losses due to the current economic climate.

 

"Furthermore, the number of buy-to-let mortgages on offer has greatly reduced, meaning those lenders remaining in the buy-to-let space have tightened their lending criteria making funding even harder to find for potential landlords."

 

Some eight per cent of Londoners surveyed said buy-to-let was still a good opportunity to make a lot of money.

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Insolvency figures ?are far worse than they look? (From The Northern Echo)

 

PERSONAL debt figures are looking grimmer than ever, with newly-released survey results revealing that the total number of insolvent individuals in Britain is now approaching the million mark.

Jim James, North-East regional chairman of insolvency trade body R3, is warning those struggling with debt to be careful who they turn to for help.

The latest estimate from the YouGov Debt Tracker survey, carried out in consultation with R3, revealed that there are 700,000 Britons who are left off the official insolvency statistics, even though they are technically insolvent.

This is because they are in Debt Management Plans (DMPs), which are an unofficial but formalised agreements with creditors.

The number of these plans identified by the survey jumped 17 per cent between August 2008 and February 2009.

The 700,000 DMPs dwarf the combined total of 190,000 people in either an Individual Voluntary Arrangement (IVA) or who were declared bankrupt in 2008.

Mr James, also head of the Insolvency and Corporate Recovery Unit at Newcastlebased law firm Ward Hadaway, said: “This survey shows that the official statistics are just the tip of the iceberg of those who are in severe financial difficulty, and it is particularly worrying in light of increased predatory behavior from unregulated ‘debt solution’ companies, and even criminal loan sharks.

 

More at the link.

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Cheltenham & Gloucester axed - 1,660 jobs to go - Times Online

 

Thomas Cook stake up for grabs as Arcandor fails - Times Online

 

Lloyds boosts FTSE bounce back - Times Online

Yeah the recovery is back.

 

UK house prices rise 1.1% as buyers return - Times Online

 

Fiat reassures on Chrysler deal despite delay - Times Online

 

Bank Deputy warns on 'uncertain' outlook

 

Paul Tucker will tell the ABI that it remains unclear if UK banks are lending enough to sustain recovery

 

 

Summer strikes fear as BA axes 2,000 cabin crew

 

Company working on contingency plans after telling 14,000 crew cuts may be compulsory if volunteers do not come forward

 

• Airlines to lose $9bn as recession bites
  

 

• BA pilots to take voluntary pay cut as air traffic falls
  

Horlick named as mystery bidder for Bramdean

 

New twist in fight with Vincent Tchenguiz over Bramdean Alternatives as Nicola Horlick is revealed as suitor

 

• Bramdean starts countdown to break-up
  

 

• Unfolding drama moves to second act at Bramdean
  

Punch pockets further £30m from pub sale

 

Embattled group chips away at £5bn debt mountain and edges away from precipice with sale of 11 top-end pubs to Greene King

 

 

Rio risks Japanese probe over BHP deal

 

Metals giant under growing pressure from the East after Japan's watchdog raises question mark over joint venture

 

Latvian spending review calms Sweden's banks

 

Relief for bankers in Stockholm with exposure to Baltic state, but Standard and Poor's keeps economy on watch

 

 

Barclays: You can’t have too much capital - Times Online

 

 

Gordon Brown’s legacy is a nation more divided than ever - Times Online

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Lloyds jobs cuts hit 4,500 with closure of Cheltenham & Gloucester branches - Telegraph

 

Whoops! Browser Settings Incompatible

 

Pessina's masterstroke on Andy Hornby is appointing a man with much to prove - Telegraph

Or not as time will tell.

 

House prices recovering as buyers return, say estate agents - Telegraph

 

Former HBOS boss Andy Hornby set for £1m salary at Boots - Telegraph

 

More business news

 

 

• IMF tells Europe to come clean of bank losses
  
• Lloyds repays £2.3bn to taxpayers
  
• Chrysler creditors delay sale to Fiat
  
• Ex HBOS boss to get £1m at Boots
  

British Airways takes survival fight to its unions

 

 

LDV administrator axes 810 staff

 

 

Loans start-up Wonga gets $22m

 

 

Ex-banker Bob Wigley to chair Yell

 

 

Small companies told to be more adventurous in Asia

 

 

Chrysler creditors win court order to delay sale to Fiat - Telegraph

 

Sterling rebounds as political instability recedes - Telegraph

 

http://www.telegraph.co.uk/sport/football/leagues/premierleague/5486210/Setanta-appears-doomed-as-subscription-services-withdrawn.html

Another company about to fail?

Edited June 9, 2009 by interestrateripoff

[interestrateripoff]

US banks to repay $68bn under Tarp | Business | guardian.co.uk

 

Strike fears after British Airways targets 2,000 job cuts | Business | guardian.co.uk

 

Lloyds closes Cheltenham & Gloucester branch network | Business | guardian.co.uk

 

Drop in retail sales hits hopes of economic recovery | Business | The Guardian

 

Thomas Cook's majority owner Arcandor files for bankruptcy | Business | guardian.co.uk

Good job holidays are recession proof.

 

Darling to cut public spending, admitting difficult choices lie ahead | Politics | guardian.co.uk

 

British travellers benefit as major airlines slash fares to fill planes | Business | guardian.co.uk

 

Unpaid taxes rise to over £17bn, says Public Accounts Committee | Money | guardian.co.uk

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Setanta 'is on brink of collapse'

Setanta is facing administration "within days" reports suggest, while would-be subscribers have hit difficulties.

Q&A: Setanta and you

Why Setanta Sports is in trouble

SPL pays in lieu of TV money

 

BBC NEWS | Business | Germany's Arcandor in bankruptcy

 

BBC NEWS | Business | Lloyds closing all C&G branches

 

OTHER TOP BUSINESS STORIES

Mobile phone directory to launch

 

Ten US banks to pay back bail-out

 

Investors hail taxi share plans

 

Brazil's economy enters recession

 

Shell boss calls for pay reforms

 

Public sector productivity falls

 

MORE FROM BUSINESS

Interest in property 'up again'

 

Pension fund deficit eases in May

 

Banks 'lending more to business'

 

Criminal gangs target car buyers

 

Greene King seals £30m pub deal

 

Retail sales take a knock in May

 

Revenue 'too slow chasing debts'

 

EU finance chiefs tackle Latvia

 

Qatar may buy VW stake

 

German exports fall 29% in April

 

Swiss mulling sale of UBS stake

 

Fiat dismisses Chrysler deadline

 

Lloyds set to pay back taxpayers

 

Shell settles Nigeria deaths case

 

Pound slides more against dollar

 

Apple cuts price of basic iPhone

 

Virgin to sell Nigerian airline

 

YOUR MONEY

Postal pensions face more change

 

Revenue extends new tax campaign

 

Shops to tackle underage betting

 

 

ECONOMY

Obama pledges 600,000 summer jobs

 

OECD says global recession easing

 

S&P cuts Irish debt rating again

 

 

COMPANIES

US banks submit funding plans

 

State rejects Arcandor aid claim

 

Taxman 'faces £500m bingo bill'

[interestrateripoff]

FT Alphaville » Blog Archive » Lex: UK housing

 

Set aside the nonsense about the return of gazumping. Ignore the men and women driving green minis telling homebuyers they’ll have to move fast to snap up the bargain that’s languished unsold since last summer. As far as “signs of stabilisation” go, this is pretty unconvincing. The balance of surveyors reporting house prices drooping further rather than zooming off again is indeed falling, but the proportion is still fairly spectacular.

Dig into the numbers of the Royal Institution of Chartered Surveyors’s May housing market survey and it is clear that most valuers remain congenitally gloomy.

The seasonally adjusted net balance of surveyors reporting falling prices narrowed again in May and is now almost half the levels it reached in June last year. But the latest reading of -44.1 remains well in negative territory and is still at levels seen in much of the early 1990s’ correction. Celebrate that if you like. True, more forward-looking measures are picking up. The RICS survey also contains more definitive signs that the rebound in enquiries underway for the last seven months is now feeding thorough into increased transactions. But the extraordinary jump in two year swap rates - up 50 basis points in the last week - is pushing up bank financing costs. If lenders try to recapture the lost margin, particularly on fixed-rate deals, many borrowers will find it increasingly difficult to make the maths work on purchases of a slice of Britain’s still overvalued housing stock.

Two year futures for the Halifax house price index, which notched up an unexpected, and perhaps one-off, rise last month, no longer suggest a further fall of the order of 20-25 per cent, but merely one of about 10 per cent. But as affordability ratios deteriorate because of higher financing costs, and as rising unemployment increases the supply of property for sale, putative homebuyers have little reason to fear a return of the housing bubble, nor homesellers to expect one. The correction still has further to run.

 

It's the recovery remember.

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BBC NEWS | Health | NHS 'faces huge budget shortfall'

 

The health service will face the most severe and sustained financial shortfall in its history after 2011, a report by NHS managers warns.

 

The NHS Confederation report says the health service in England will not survive unchanged, the BBC has learned.

 

Managers at its conference will be told they face an "extremely challenging" financial outlook.

 

Health Secretary Andy Burnham said NHS funding had tripled since 1997, putting it on a strong financial footing.

 

The report, to be published on Wednesday, warns any modest cash increases could be outstripped by rising costs within the health service.

 

This would leave the NHS in England facing a real-terms reduction of between £8bn and 10bn over the three years after 2011.

 

'Urgent action'

 

The cost of new treatments and the ageing population are two of the factors causing the inflation in the health service, the report says.

 

The shortfall means a cut in staff numbers is unavoidable and it may be time for a cap on the budget for new drugs to be considered, it adds.

 

The confederation says urgent action needs to be taken to find innovative ways of making the service more efficient before the financial pressure increases.

 

Unions representing NHS staff are warning that short term cuts and increased use of private companies is not the answer.

 

The head of policy at the NHS Confederation, Nigel Edwards, said: "Having had seven years of plenty it now looks like seven years of famine from 2011 onwards.

 

"We are really going to have to think very deeply and carefully about everything we do and subject it to very rigorous scrutiny - and enlist all of our doctors, our front line clinical staff in rethinking the way we do things."

 

The confederation warns against previous strategies such as "slash and burn" indiscriminate savings, letting waiting lists grow or allowing health service pay to fall out of line with the rest of the economy.

 

The report is flawed it's assuming that there will be modest growth in income. I find it hard to believe the NHS will be getting any new money, it will be lucky to keep it's current level of spending commitment.

 

What happens if there isn't the modest growth?

 

And like any govt report they are likely to have got the estimate wrong, I predict it will be more like £16bn - £20bn.

 

The govt has ramped up borrowing which requires interest payments which will suck even more money out of the budget good job the authors covered that.

 

I've been banging on about this at work as we are a mixed dept with the NHS luckily I work with really intelligent people so I've just been ignored although they do apparently discuss these issues just not with me so they get to keep living on La La land.

[interestrateripoff]

U.S. Debt Crisis as Treasury Bond Prices Collapsing and Interest Rates Surging :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

 

Martin Weiss writes: Just as we’ve been warning, the United States Treasury is the next and largest victim of this great debt crisis. Right now, the Treasury’s finances are collapsing … its bond prices plunging … its interest rates surging.

 

Indeed, the Treasury’s financial crisis looms so large, it could wreck more havoc on the economy and deliver more pain to average Americans than the subprime mortgage disaster, the housing bust, the banking crisis, and the collapse of General Motors put together …

It could create a rising tide of interest rates that wipes out the effects of any stimulus, undermines any recovery, and sabotages any new bailouts …

But unlike GM, Fannie Mae, Citigroup, AIG, and the many others that the U.S. Treasury has bailed out in recent months, there is no institution on the planet big or rich enough to bail out the U.S. Treasury itself.

Further, unlike all prior episodes in this great debt crisis, the Treasury’s financial troubles cannot be covered up, papered over, or kicked down the road like an empty tin can.

 

 

Already, Treasury bond prices are crashing, and doing so with greater speed that at any time in history.

Already, interest rates, which automatically go up when bond prices fall, are surging, with the rate on 10-year U.S. Treasuries nearly DOUBLING in a half year — the most dramatic surge during any recession since the founding of the Republic.

And already, the interest rates on 30-year fixed mortgages, auto loans, commercial loans, and other debt are going through the roof.

This Is a Game Changer!

If you’re not paying attention to this new phase of the debt crisis, you’re making a grave error. And if you’re not taking swift action to protect yourself, you’re taking your financial life in your hands.

In this issue, I’ll show why it’s going to get worse, why the Federal Reserve is powerless to stop it, how it will impact each major sector of the economy, and what you must do immediately to protect yourself and your family from the inevitable fallout.

Why This Is Just the Beginning of the Treasury’s Crisis. Why It’s Going to Get a Heck of a Lot Worse This Year. And Why It Could Continue for Years Beyond 2009.

It’s widely known that America’s federal deficit is out of control.

But so many dire deficit warnings have been issued so often, they now fall mostly on deaf ears. Wall Street pundits roll their eyes. Washington politicians laugh at those who would cry “wolf.”

What they don’t realize is that this time, due to a series of devastating facts they’ve chosen to ignore, the day of reckoning is here:

Fact #1. Sheer size. According to the government’s official estimate, the federal deficit for fiscal year 2009 will be $1.84 trillion, or 13.4 percent of GDP!*

It is the worst deficit in U.S. history.

It means the deficit has now exploded to a level which is so far beyond the range of anything we’ve experienced before, it’s impossible to imagine any scenario in which it does not have a devastating impact.

Fact #2. The actual deficit could be much larger. The administration’s $1.84 trillion deficit forecast presupposes a dramatic turnaround in the economy, which, by definition, is virtually impossible with the government running trillion-dollar deficits!

How can the administration possibly predict an economic turnaround when its own Treasury Department is sucking nearly $2 trillion in funds out of credit markets — the same credit markets that derailed the economy late last year?

Similarly, how can the government predict a turnaround when its own borrowing frenzy is already driving up mortgage rates and undermining real estate, the one sector that’s most responsible for the economy’s decline in the first place?

Fact #3. No end in sight. Since the United States declared its independence nearly 233 years ago, the only time the federal deficit approached or exceeded 10 percent of GDP was during major wars — the Civil War, World War I, and World War II. But in each case, the deficit financing began promptly — and ended promptly — with the war.

Unfortunately, that’s not the case this time. Although the U.S. is fighting wars in Iraq and Afghanistan, their cost represents only a small fraction of the budget shortfall. Even if the Iraqi and Afghan wars could be ended tomorrow, America’s great budget crisis would still be just beginning.

 

More at the link.

 

The green shoots of recovery.

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Roubini: Those Are Yellow Weeds, Not Green Shoots - Real Time Economics - WSJ

 

The still-pessimistic Nouriel Roubini offers *nine* reasons for pessimism:

 

• First, employment is still falling sharply in the U.S. and other economies. This will be bad news for consumption and the size of bank losses.
  
• Second, this is a crisis of solvency, not just liquidity, but true deleveraging has not really started, because private losses and debts of households, financial institutions, and even corporations are not being reduced, but rather socialized and put on government balance sheets. Lack of deleveraging will limit the ability of banks to lend, households to spend, and firms to invest.
  
• Third, in countries running current-account deficits, consumers need to cut spending and save much more for many years. Shopped out, savings-less, and debt-burdened consumers have been hit by a wealth shock (falling home prices and stock markets), rising debt-service ratios, and falling incomes and employment.
  
• Fourth, the financial system — despite the policy backstop — is severely damaged. So the credit crunch will not ease quickly.
  
• Fifth, weak profitability, owing to high debts and default risk, low economic — and thus revenue — growth, and persistent deflationary pressure on companies’ margins, will continue to constrain firms’ willingness to produce, hire workers, and invest.
  
• Sixth, rising government debt ratios will eventually lead to increases in real interest rates that may crowd out private spending and even lead to sovereign refinancing risk.
  
• Seventh, monetization of fiscal deficits is not inflationary in the short run… slack product and labor markets imply massive deflationary forces. But if central banks don’t find a clear exit strategy from policies that double or triple the monetary base, eventually either goods-price inflation or another dangerous asset and credit bubble (or both) will ensue.
  
• Eighth, some emerging-market economies with weaker economic fundamentals may not be able to avoid a severe financial crisis, despite massive IMF support.
  
• Finally, the reduction of global imbalances implies that the current-account deficits of profligate economies (the U.S. and other Anglo-Saxon countries) will narrow the current-account surpluses of over-saving countries (China and other emerging markets, Germany, and Japan). But if domestic demand does not grow fast enough in surplus countries, the resulting lack of global demand relative to supply — or, equivalently, the excess of global savings relative to investment spending — will lead to a weaker recovery in global growth, with most economies growing far more slowly than their potential.
  

So, green shoots of stabilization may be replaced by yellow weeds of stagnation if several medium-term factors constrain the global economy’s ability to return to sustained growth. Unless these structural weaknesses are resolved, the global economy may grow in 2010-2011, but at an anemic rate.

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Repeat Bank Stress Tests 'Right Now': TARP Panel Chair - Politics and Government * US * News * Story - CNBC.com

 

The Congressionally-appointed panel overseeing the Troubled Asset Relief Program (TARP) recommends running again the stress tests on US banks, as economic conditions have worsened, its chair, Harvard University professor Elizabeth Warren, told CNBC Tuesday.

"We actually make recommendations to do it all over again right now," Warren told "Squawk Box.""We've already blown past the worst-case scenario on unemployment," she added.

Under the tests, whose results were released in May, the Obama administration asked federal regulators to examine how financial institutions would hold up under two different economic scenarios as well as how much new capital they would need to raise to shore up their balance sheets.

 

• Click Here for the Full Interview with professor Elizabeth Warren
  

The tests concluded that ten banks — including some of the biggest, such as Citigroup [C 3.41 -0.01 (-0.29%) ], Bank of America [bAC 12.06 --- UNCH (0) ] and Wells Fargo [WFC 25.66 0.27 (+1.06%) ] — would need to raise almost $75 billion in capital; the firms were also required to present plans on how to do so by June 8. The government is prepared to loan money to those companies that are unable to raise capital from private sources.

 

More at the link.

[interestrateripoff]

Setanta board in emergency talks to avert collapse

 

Setanta could call in the administrators as early as today after the board was locked in an emergency board meeting late last night trying to stave off the group's collapse.

 

• Thomas Cook in play after Arcandor files for insolvency
  
• Halfords sees more growth as year profit rises
  
• UK industrial output rises unexpectedly
  
• Sainsbury's chief Justin King reaps rewards of supermarket success
  
• Plot thickens in Bramdean battle after Horlick is revealed as bidder
  
• BA chief plays down prospect of strike
  
• Ad revenues could fall 8 per cent, says Publicis
  

 

Jeremy Warner: Sky in the spotlight as Setanta teeters

 

Outlook Ofcom's efforts to force BSkyB to make its sport and other premium content available to rival pay TV providers on a wholesale basis have been so long drawn out that whatever the eventual outcome, it will come too late to save Setanta, the sports broadcaster which is threatening to collapse into administration under a mountain of unpaid bills. Setanta stopped taking new subscriptions yesterday. Not that there were many anyway, but it would seem to be the beginning of the end.

 

 

• Jeremy Warner: C&G pays the price for Lloyds banking merger
  
• Jeremy Warner: Horlick applies the due diligence to herself
  
• Jeremy Warner: Best not to count on those green shoots
  
• Jeremy Warner: Taxpayer gets £2.3bn payback from Lloyds
  
• Jeremy Warner: Tories must engage in Europe to defend the City
  

 

Sarkozy's plan to muscle in on the City?

 

A reordering of the regulation of Europe's financial services is fuelling fears among financiers that Paris is trying to steal London's thunder. Sean O'Grady reports

 

 

• Why the UK's van makers are disappearing over the horizon
  

[interestrateripoff]

Setanta halts new subscriptions

Broadcaster Setanta confirms it has stopped taking on new customers as it attempts to secure its future.

Q&A: Setanta and you

Why Setanta Sports is in trouble

Last-ditch effort to save Setanta

 

BBC NEWS | Business | Chrysler and Fiat complete deal

 

OTHER TOP BUSINESS STORIES

Buy-to-let landlords 'hit harder'

 

UK output sees surprise increase

 

Fraud risk for 'young and single'

 

US trade deficit widens further

 

Oil prices rise to new 2009 high

Looks like this recovery will stall.

 

UK aerospace 'facing job cuts'

 

MORE FROM BUSINESS

Camping sales boost for Halfords

 

First fall in oil use since 1993

 

Shell sells straw-based biofuel

 

Ten US banks to pay back bail-out

 

Tax plan to tackle fuel poverty

 

Anti-union attacks 'on the rise'

 

LSE and 3i may rejoin FTSE 100

 

Treasury 'may sell Northern Rock'

 

Germany approves 'bad bank'

 

Metro seeks takeover of Arcandor

 

Zara net profit down 15%

 

Chinese inflation declines again

 

Lloyds closing all C&G branches

 

Osborne and a corporate tax revolution

 

Executive rewards, for what?

[interestrateripoff]

Chrysler's sale to Fiat completed | Business | guardian.co.uk

 

China leads escalation of coal consumption | Business | guardian.co.uk

 

US banks to repay $68bn under Tarp | Business | guardian.co.uk

 

Sweden forced to take emergency loan amid Latvia crisis | Business | guardian.co.uk

 

Slender signs of growth but too early to sound all-clear | Business | guardian.co.uk

 

Oil price creeps back towards $100 a barrel | Business | guardian.co.uk

 

Industrial production growth raises recovery hopes | Business | guardian.co.uk

 

Economy: Too much happy talk | Editorial | Comment is free | The Guardian

 

Industrial output: What the economists say | Business | guardian.co.uk

 

Interest rates to stay low despite signs of recovery, says MPC member, Kate Barker | Business | guardian.co.uk

 

Healing the NHS| Sarah Boseley | Comment is free | guardian.co.uk

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[url=http://www.bankofengland.co.uk/publications/externalmpcpapers/extmpcpaper0027.pdf][/url]http://www.bankofengland.co.uk/publications/externalmpcpapers/extmpcpaper0027.pdf

 

 

Abstract

 

The recent financial crisis has put the spotlight on the rapid rise in credit which preceded it. In this

paper, we provide an empirical and theoretical analysis of the credit boom and the macroeconomic

context in which it developed. We find that the boom was unusually long and associated with neither

particularly strong growth nor rising inflation in the economies in which it took place. We show that

this type of credit and financial cycle is hard to reconcile with existing economic theory and argue that,

while the ‘global savings glut’ may account for the cycle’s initial phase, other factors — such as the

conduct of monetary policy and perceptions of declining macroeconomic risk — were more important

from the mid-2000s onwards. We conclude by identifying some of the challenges now facing

macroeconomics and policy.

 

Key words: Credit, business cycle, financial crisis, monetary policy, asset prices, boom and bust.

[interestrateripoff]

Global Confidence Climbs for Third Month on Signs Worst Is Over - Bloomberg.com

 

Confidence in the world economy rose for a third month as U.S. job losses slowed and global production improved, adding to signs the worst of the crisis is over, a Bloomberg survey of users on six continents showed. The Bloomberg Professional Global Confidence Index climbed to 43.57 in June from 38.72 in May, reaching the highest level since the survey began in November 2007. A reading below 50 means pessimists still outnumber optimists.

Rising confidence may support the equity rally that added more than $11 trillion to the value of global stocks in the past three months as reports showed Chinese and Japanese producers increased output, and declines in Europe’s manufacturing and service industries eased. Treasury Secretary Timothy Geithner said yesterday the “global storm” is showing signs of receding.

“There’s more daylight in the economic recovery story this month,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, who participated in the survey. “The financial markets are healing, and for the first time, it looks like the world recession could end in 2009 instead of the 2010 story the market was fixated on earlier.”

The survey of more than 2,400 Bloomberg users was conducted between June 1 and June 5. Since the previous survey, a U.S. Labor Department report showed the economy lost the fewest number of jobs since September, and credit markets thawed with the London interbank offered rate, or Libor, for three-month dollar loans falling to a record low of 0.629 percent on June 4.

[interestrateripoff]

British economy grew in April and May, says NIESR - Times Online

Due to the year end effect of everyone wanting to spend their money before they lose it? How many govt dept's have had their year end this quarter.

 

It could give a nice boost to the GDP numbers.

 

Nationwide hits buyers with mortgage rate rise

 

Wall Street mixed on oil surge - Times Online

The paradox being that some reports have oil at $95 a barrel is recession inducing.

 

BP warns of dwindling demand for oil - Times Online

And yet oil demand is dwindling!!!

 

Crunch time looms over future of Setanta - Times Online

 

Northern Rock investors step up payout fight

 

Shareholders begin appeal over Government decision not to provide compensation following the state's rescue of the bank

 

Surprise rise in output fuels hope worst is over

 

New figures show the first rise in industrial production for 14 months, raising positive sentiment of economic revival

 

• Tempus analysis: Keep calm
  

 

• Manufacturing decline hits lowest level in a year
  

BA pays cabin crew twice as much as Virgin

 

Average cabin crew salary is £29,900, compared with Virgin's £14,400, prompting BA to demand cuts from staff

Charter warns on profits on tool downturn

 

Engineering group says demand for welding equipment has fallen with no signs of an upturn in demand

 

 

 

Obama taskforce faces Congress over car industry rescue

 

US Senate will raise questions over why billions of dollars in taxpayers' money was used to bailout GM and Chrysler

 

US banks to pay back $68bn in rescue funds

 

Ten American banks will buy back Government shares in a move to reduce the Treasury's grip on lenders' independence

 

• Citigroup to halt executive severance payments
  

 

• US banks wait to hear when they can pay back Tarp
  

Geithner hints at US regulatory reforms

 

The SEC may be given new powers under the President's wide-ranging regulatory reforms expected to be revealed next week

Valeo shareholders reject ex-chief's payout

 

Shareholders of the French car parts maker voted against the €3.26m golden parachute Thierry Morin was awarded

 

 

 

Failing the mathematical test of quality, not quantity - Times Online

[interestrateripoff]

Treasuries Tumble After Auction, Russian Threat to Cut Holdings - Bloomberg.com

 

Treasuries fell, pushing 10-year yields to the highest level since October, as the government sold $19 billion of the securities and Russia said it may switch some reserves from U.S. debt. The notes drew a yield of 3.99 percent at the sale, the highest since August 2008. The offering was the second of three sales this week that will raise $65 billion, part of the U.S.’s record borrowing program. A Russian central bank official said the nation may buy International Monetary Fund bonds.

“There are an awful lot of Treasuries being auctioned and there’s going to be more and more and more and more,” said Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management in Milwaukee.

The yield on the 10-year note rose nine basis points, or 0.09 percentage point, to 3.95 percent at 4:50 p.m. in New York, according to BGCantor Market Data. It earlier reached 3.99 percent, the highest since Oct. 16. The 3.125 percent security maturing in May 2019 declined 23/32, or $7.19 per $1,000 face amount, to 93 10/32.

“Four percent’s going to be seen as a very good entry point,” said George Goncalves, chief fixed-income rates strategist at Cantor Fitzgerald LP, one of 16 primary dealers that trade with the Federal Reserve. “It’s proving to be a good spot to draw out value players.”

The 30-year bond yield touched 4.8327 percent, the highest since Oct. 17, 2007. The government is scheduled to sell $11 billion of the securities tomorrow.

[interestrateripoff]

Russia to cut holdings of U.S. Treasuries | U.S. | Reuters

 

MOSCOW (Reuters) - Russia on Wednesday pledged to cut the share of U.S. treasuries in its $400 billion reserves, driving the dollar lower on global markets, although it said the move would be gradual and only replace bonds as they expire.

Central bank First Deputy Chairman Alexei Ulyukayev said it would buy bonds issued by the International Monetary Fund and also up the share of reserves held in foreign bank deposits, also reduced in the wake of the banking crisis last year.

Russia holds around 30 percent of its reserves in treasuries after central bank asset managers last year cut their holdings of riskier assets such as bonds of U.S. agencies Fannie Mae and Freddie Mac.

"Now this share (of treasuries) will fall because the window of opportunity is opening, the situation with banks is becoming clearer," Ulyukayev said. "We will increase the share of bank deposits, the share of repos will be bigger as well."

He said Russia would not immediately sell its treasury holdings but would rather wait until the securities mature, gradually replacing them with other assets. Russian officials earlier said they were concerned about U.S. inflation.

Russia earlier pledged to buy about $10 billion worth of bonds to be issued by the IMF as part of a fundraising effort to help countries hit by the global financial crisis but there is no firm timetable for such an issue.

Russia increased its investment in liquid treasuries during the peak months of the crisis to have the money readily available to support the rouble and is ready to retrace those moves now that the pressure on the rouble has eased.

The country keeps most of its sovereign debt holdings in short-term paper. It took the country less than a year to cut its position in papers of Fannie and Freddie from $100 billion to virtually zero.

 

Bond strike getting nearer?

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Fed Unveils Lending Details After Lawmaker Pressure (Update2) - Bloomberg.com

 

The Federal Reserve unveiled its most detailed picture yet of its record $1 trillion expansion of credit, as Chairman Ben S. Bernanke responds to congressional pressure for greater transparency from the central bank. For the first time, the Fed announced details on the number of borrowers and the ratings of securities pledged as collateral for loans. The data come in a new monthly report released by the central bank today in Washington.

The Fed said a total of 378 banks borrowed from its discount window in May or got funds from auctions of cash aimed at combating the liquidity crisis. Officials still stopped short of identifying the firms, a measure called for by some lawmakers and the subject of freedom-of-information requests and lawsuits.

Fed officials believe naming companies would undermine the central bank’s efforts to stabilize the economy, a senior Fed official said at a press briefing today.

“We will continue to look for opportunities to broaden the scope of information and analysis we provide,” Bernanke said in a statement today. The Fed statement said the central bank is providing “considerable new information.” Bernanke said in congressional testimony last week that the monthly reports would begin “soon.”

The 20-page document combines new data on collateral and the concentration of borrowers with information the central bank began disclosing in other reports on its Web site earlier this year as well as weekly balance-sheet figures.

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U.S. mortgage demand withers as loan rates spike | U.S. | Reuters

 

Spiking U.S. mortgage rates drove down total home loan applications last week as demand for refinancing shriveled to the lowest level since November, the Mortgage Bankers Association said on Wednesday. The swift rate rise crimps affordability, likely cutting offer prices on home sales and prolonging a housing turnaround.

Borrowing costs have soared as bond yields have risen, even as the Federal Reserve has sopped up hundreds of billions of dollars in bonds to keep rates low and stimulate the housing market.

The average 30-year fixed mortgage rate jumped 0.32 percentage point in the June 5 week to 5.57 percent. That was nearly a full point, about 100 basis points, above the record low rate of 4.61 percent in March, the trade group said.

"Clearly, 50 or 100 basis points more on mortgage rates is enough to matter. It effects what people can afford to buy," said Bill Cheney, chief economist at John Hancock Financial Services in Boston.

The vast majority of mortgage activity this year has been from homeowners cutting costs with new loans at rock-bottom rates.

The Mortgage Bankers Association's seasonally adjusted index of total applications dropped 7.2 percent to a four-month low of 611.0 in the latest week.

The refinancing index slumped 11.8 percent to a nearly seven-month low of 2,605.7 last week, and refinancing accounted for about 59 percent of all applications, the lowest share since November. As recently as April, refinancings accounted for almost 80 percent of all home loan applications.

Purchasers have been slower to act in the current housing market, with some waiting in hopes that prices will fall further and others paralyzed by unemployment or wage cuts.

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Mortgage lenders wipe thousands off borrowers' debts - 10 June 2009

 

GMAC-RFC is offering to wipe thousands off borrowers’ mortgage debts if they remortgage elsewhere.

 

GMAC-RFC- which stopped lending to new customers last year - says it is piloting the move with around 300 borrowers in a bid to free up funding and also help borrowers reduce the loan to value of their mortgage to 80 per cent following falls in property prices.

 

Former Morgan Stanley lender Advantage, which stopped lending in 2008, is understood to be offering borrowers a similar deal, although no one at Morgan Stanley was available to confirm the details at the time of writing.MoneySavingExpert.com reports that Advantage offered one borrower the chance to wipe £25,000 off their mortgage.

Meanwhile, nationalised lender Bradford & Bingley is offering borrowers the chance to remortgage elsewhere without paying an early redemption charge if they do so before June 30.

Edeus offered a similar "golden goodbye" scheme last year to help borrowers in negative equity and Exact offers a mortgage asset reduction strategy which it white labels for other lenders.

GMAC-RFC director of marketing Jeff Knight says: “How much people are able to wipe off their mortgage will vary for different borrowers and the offer will not necessarily be available to everyone.

“It will help people who want to remortgage away and, from our point of view, it will free up funding.”

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Spending cuts start to bite as hospitals lose £500 million - Times Online

 

Funding of £500 million for hospital building and refurbishment is being withheld by the Government in the first sign of the severe cuts likely to be forced on the NHS in the recession.

 

A letter between health chiefs, seen by The Times, suggests that “the Treasury is unlikely to agree further releases of funding” for the building of a new generation of community hospitals, announced to much fanfare three years ago.

 

The problems facing the project have emerged as Andy Burnham prepares for his first speech as Health Secretary today at the NHS Confederation annual conference. Mr Burnham, a cheerleader for community hospitals as a junior minister, admitted yesterday that the NHS would face a challenge over the next five to ten years. But he sought to allay fears of closures or job cuts after a confederation report warned of a multibillion-pound budget shortfall over the next decade.

 

There were angry words in the Commons over public spending after the next election. Gordon Brown accused the Tories of planning deep cuts in public services after Andrew Lansley, the Shadow Health Secretary, said that most departments would have to cut budgets by 10 per cent in the three years after 2011 to give real-terms increases to the NHS, schools and foreign aid. David Cameron said the Government’s own plans would result in a 7 per cent cut for some departments.

 

While Mr Burnham played down fears of a funding crisis, a letter from a strategic health authority revealed that plans were already under way to curb spending.

 

A total of £750 million was allocated in 2007 for the five-year community hospitals programme, hailed as the centrepiece of the drive to bring NHS services to local communities. The units take on cases that do not require the fully equipped intensive care wards found in larger hospitals. Work carried out includes elective day cases, X-rays and post-operative rehabilitation for procedures such as hip replacements. Only £250 million of funds has been spent to date.

 

The letter about funding for Ludlow Hospital — sent by Peter Spilsbury, of NHS West Midlands, to Jo Chambers, head of Shropshire County Primary Care Trust — says “the Department of Health is advising SHAs to take forward schemes through alternative funding routes to the community hospitals programme”. It states that Andy Stubbing, a senior official at the Department of Health, has said that “the Treasury is unlikely to agree further releases of funding for this programme”. It concludes that trusts will have to find funding through other means, such as Private Finance Initiatives or “some form of joint venture with another funding body”.

 

Pity the NHS isn't a bank it could then have several hundred billion in a matter of days from the govt.

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Bondholders Face Commercial Mortgage Losses as Principal Is Due - Bloomberg.com

 

Investors in bonds that packaged $62 billion of debt for U.S. offices, hotels and shopping malls are bracing for more loan defaults through 2010 as Bank of America Merrill Lynch says landlords’ monthly payments may jump 20 percent or more. Principal is coming due on the so-called partial interest- only loans as an 18-month-old recession saps demand for commercial real estate. About $179 billion of such loans were written between 2005 and 2007 and bundled into bonds, according to data from Bank of America Merrill Lynch.

With soaring vacancies and falling rents, some cash- strapped borrowers will fail to cover the higher costs, said Andy Day, a commercial mortgage-backed securities analyst at Morgan Stanley in New York. About 87 percent of mortgages sold as securities in 2007 allowed owners to put off paying principal for several years or until maturity, compared with 48 percent in 2004, Morgan Stanley data show.

“The worst is yet to come,” MetLife Inc. Chief Investment Officer Steven Kandarian said yesterday in a Bloomberg Television interview. “Typically there’s a lag between when the economy softens and when the defaults actually occur.”

Investors have already seen prices on top-rated senior debt drop below 70 cents on the dollar from 95 cents a year ago, according to Aaron Bryson, a commercial mortgage-backed securities analyst at Barclays Capital in New York.

Just a Stopgap

Interest-only mortgages were designed as a stopgap to allow owners to do renovations and absorb other costs. Owners delay paying principal for the first several years, lowering their initial monthly expenses. Partial interest-only loans allow for postponement of principal payments for a portion of the term. Full-term interest-only deals require the principal at maturity.

Loans that postpone principal payments had become the norm by the time the commercial-mortgage bond market peaked two years ago, said Frank Innaurato, managing director of analytical services at Realpoint LLC, a Horsham, Pennsylvania-based credit- rating service.