The great interest rate rip off part 1

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Goldsmith backs BAE Systems deal

The former attorney general says he "strongly supported" the plea bargain made by BAE Systems to end corruption investigations.

Peston: Embarrassment for BAE

BAE hopes for new chapter

Chairman looks to the future

Tax staff expose IT failures

 

Millions of people could pay more tax than they should due to a computer programme glitch which can double-tax benefits.

 

Debt and job worries hit shares

 

Global shares fall sharply for the second straight day amid continued concerns about government debt levels

 

 

OTHER TOP BUSINESS STORIES

BA's £50m loss beats expectations

 

Personal insolvency 'record high'

 

Profit warning hits Icap shares

 

Housing shortage 'risks crowding'

 

Challenge to debt payoff tactics

 

Toyota boss apologises for recall

 

BAE: 'a knowing and wilful misleading of the US government'

 

MORE FROM BUSINESS

West Ham seek financial backers

 

Surprise fall in US unemployment

 

Oil fuels UK producer prices rise

 

OFT reopens pub sector probe

 

China to put duties on US chicken

 

Cadbury shares to be de-listed

 

Blacks in share sale recovery bid

 

BG Group hit by lower oil price

 

Euro MPs shun data deal with US

 

Panasonic profits after cost cuts

 

Poor sales push EMI to heavy loss

 

Bank of America sued over Merrill

 

Pompey takeover challenged

 

YOUR MONEY

House prices rise another 0.6%

 

British Gas cuts gas prices by 7%

 

Older Toyotas will be fixed first

 

ECONOMY

Pause for £200bn UK stimulus plan

 

Greek officials strike over cuts

 

China hits back at US over trade

 

COMPANIES

'Outrage' as deal ends BAE probes

 

Glaxo jobs fear amid profit rise

 

Car sales up by 29.8% in January

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Big Six banks urge Ottawa to tighten mortgage rules - The Globe and Mail

 

Canada's top bankers are pushing the government to clamp down on the mortgage market to cool off the rise in home prices.

The heads of the country's six largest banks have privately told policy makers that they fear the wide-ranging economic fallout of a U.S. style binge-and-collapse in housing. To head off any chance of that happening, they are willing to accept tighter rules on mortgages that would slow the real estate market, even though it would mean forgoing some short-term profits from giving out ever bigger mortgages as home prices jump.

The chief executives of the Big Six made their point last November, when they met with Bank of Canada Governor Mark Carney. The country's top commercial bankers, who between them control more than three-quarters of the country's $940-billion mortgage market, said then that they wanted the government to look at far-reaching options, such as raising the minimum down payment to as much as 10 per cent and shortening the maximum amortization period to 30 years.

 

Perhaps the banks are short of cash?

 

House price growth in the long term is not good for the economy, it drains valuable money away from investment.

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Santander now issues half of all new UK mortgages ? and plans to expand even further | Business | The Guardian

 

Santander is planning to accelerate its expansion in Britain after reporting bumper profits in a market where it is now issuing 50% of all new mortgages.

The Spanish bank saw its share of new and existing mortgage lending peak at 20.4% over the last three months of last year, as its red flame logo began to replace the brands it has bought on Britain's high streets.

Santander's UK net lending – which strips out remortgaging – reached £7.6bn in 2009, estimated to be half the net lending of the entire market. Gross mortgage lending of £26.4bn gave the bank an overall market share for the year of 18.6%, a level it believes is its highest ever.

After acquiring Bradford & Bingley and Alliance & Leicester in the depths of the financial crisis, Santander is now Britain's third-largest bank, in terms of deposits, after RBS and Lloyds Banking Group. The UK market now provides 16% of the group's profits.

 

FT Alphaville Santander’s deteriorating ratio

 

So what could have spooked shareholders?

While we can’t be sure of the reason, we would like to draw your attention to the bank’s Texas ratio (H/T Diapson Commodities’ Sean Corrigan).

For those unfamiliar, the Texas ratio looks at provisions in the context of a bank’s tangible common equity — a measure banking analysts particularly liked for gauging solvency at the peak of 2008 bank crisis. You can read more about the importance of TCE in FT Alphaville’s coverage here, here and here.

The problem at Santander, it transpires, is that the bank’s so-called TCE ratio — as derived from TCE — has not shifted that much since 2007, standing at about 2.9 per cent (according to our rough calculations).

Which happens to put the bank’s current Texas ratio at 35 per cent — a whopping deterioration compared to December 2007, when it was only 12 per cent.

Anything close to 100 per cent, meanwhile, is considered a clear warning signal in terms of banking solvency.

 

And if Santander goes pop who gets to pick up the bill? The UK taxpayer or the Spanish?

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The Global Debt Bomb - Forbes.com

 

Kyle Bass has bet the house against Japan--his own house, that is. The Dallas hedge fund manager (no relation to the famous Bass family of Fort Worth) is so convinced the Japanese government's profligate spending will drive the nation to the brink of default that he financed his home with a five-year loan denominated in yen, which he hopes will be cheaper to pay back than dollars. Through his hedge fund, Hayman Advisors, Bass has also bought $6 million worth of securities that will jump in value if interest rates on ten-year Japanese government bonds, currently a minuscule 1.3%, rise to something more like ten-year Treasuries in the U.S. (a recent 3.4%). A former Bear Stearns trader, Bass turned $110 million into $700 million by betting against subprime debt in 2006. "Japan is the most asymmetric opportunity I have ever seen," he says, "way better than subprime."

 

Bass could be wrong on Japan. The island nation (and the world's second-largest economy) has defied skeptics for so long that experienced traders call betting against it "the widowmaker." But he may be right on the bigger picture. If 2008 was the year of the subprime meltdown, 2010, he thinks, will be the year entire nations start going broke.

The world has issued so much debt in the past two years fighting the Great Recession that paying it all back is going to be hell--for Americans, along with everybody else. Taxes will have to rise around the globe, hobbling job growth and economic recovery. Traders like Bass could make a lot of money betting against sovereign debt the way they shorted subprime loans at the peak of the housing bubble.

National governments will issue an estimated $4.5 trillion in debt this year, almost triple the average for mature economies over the preceding five years. The U.S. has allowed the total federal debt (including debt held by government agencies, like the Social Security fund) to balloon by 50% since 2006 to $12.3 trillion. The pain of repayment is not yet being felt, because interest rates are so low--close to 0% on short-term Treasury bills. Someday those rates are going to rise. Then the taxpayer will have the devil to pay.

 

Much more at the link.

 

Debt is wealth.

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PLAN TO SELL DOVER PORT TO FRANCE | News Of The World

 

WELLINGTON put the boot into Napoleon at Waterloo, Drake said bowls to the Spanish armada, and Churchill stuck two fingers up to Hitler's German invaders.

 

But zut alors! Gordon Brown is SURRENDERING a chunk of England to the French by flogging them the port of Dover.

 

Sorry Vera, but if the PM gets his way you'll be singing...

 

There'll be bleu birds over,

 

Le blanc cliffs de Dover,

 

Tomorrow, just vous wait et see

 

Because broke Britain needs the cash and Dover - with a price tag in the region of £500 million - is just one of the nation's treasures up for sale.

 

We can reveal the leading bidder is the Nord-pas-de-Calais regional council, which also owns the port of Calais. The government is being advised by blue chip merchant bank Rothschild and a source there said: "This is an exciting sale.

 

"Selling Dover to Calais is a very logical move as that is where most of the business is directed.

 

"Dover made an operating profit of £15.1 million in 2008. Now it is seeking £400m to expand, as it anticipates a doubling in freight traffic by 2040." But the move has sparked outrage. Conservative Party prospective MP for Dover Charles Elphicke said: "In trying to sell off our port and the White Cliffs, it's clear Gordon Brown has no sense of the history of our nation or the pride of our town.

 

"How dare he consider selling it all off to the French? Dover is the English border. We stood proud in defending our nation in times past.

 

"We are the nation's front line. The people of Dover have a clear message for him - hands off our port, hands off the English border, hands off the White Cliffs. He can take a hike."

 

£500m will go far in reducing the total of UK govt debt.....

 

It would appear Brown is already scraping the barrel.

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Terry's £4m mortgage mystery: Why did disgraced £170k-a-week star need huge cash loan? | Mail Online

 

Questions were raised last night about the state of John Terry’s finances after it was revealed that the mortgage on his Surrey mansion is now almost twice the value of the property when he bought it.

Land registry documents show that the Chelsea star – sacked as captain of England on Friday – purchased the house in Oxshott for £2.25million in July 2003.

 

But in January last year he took out a mortgage with Queen’s banker Coutts to the value of £3.95million.

Financial experts believe the move is unusual, particularly for a man earning £170,000 a week.

 

Denying any suggestion of money problems, however, his agent insisted last night that the footballer was simply taking advantage of a generous rate of interest to fund other property deals.

 

At the same time Terry continues to be beset by rumours about gambling problems, although sources close to the defender say he ‘doesn’t bet on the scale he did in the past’.

 

Why would he need a mortgage anyway?

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Wrong time for Tories to start wobbling over spending cuts - Telegraph

 

The Western world's sovereign debt crisis can no longer be denied. The cracks are now showing and soon the dam could burst. Europe's public sector incontinence has reached – literally – epic proportions. Greece has outlined plans to reduce its deficit over two years, but few believe the numbers. Portugal's opposition parties have rejected austerity, passing bill allowing the country's regions to rack up even more debt. Spain's budgetary shortfalls are also under serious market scrutiny.

 

Fears of a new systemic crisis pushed the euro to a nine-month dollar low last week. The fiscal stability of the 16-member currency bloc is in question. Even the euro's most ardent cheer-leaders worry it could break up.

 

While Greece, Portugal and Spain have budget deficits close to 10pc of national income, the UK's situation is even worse. Our fiscal shortfall – more than 13pc of GDP – is the world's largest.

 

The speed of the UK's debt run-up is even more alarming. This year, and for the next two years, gilt sales will average around £200bn annually. If official GDP growth estimates don't come true, the funding gap will be wider still.

 

During the decade before sub-prime, the UK borrowed an average of £20bn a year – chunky by historic standards, but manageable. So we're now looking to sell gilts at 10 times recent levels, three years in a row. During the fiscal year that ends this April, the UK has relied on "funny money" – sorry, "quantitative easing" – with HM Government buying most of its gilt issue from itself. But we've just learnt that QE won't be extended.

Against this woeful background, the Tories have chosen to "wobble". Having previously highlighted the dangers of our debt crisis, David Cameron last week said spending reductions during the early part of a Conservative government wouldn't be "particularly extensive". The Tory Leader was rightly accused of "complete confusion".

 

Woolly thinkers are now lining up to support Cameron, insisting the Tories should wait until they're in office and have "seen the books" before explaining how they'll get the UK's public finances under control. This is nonsense – the scale of the problem is obvious. It is vital the Tories not only reassure the bonds markets, but also win a mandate to impose painful measures to come.

 

The vast majority of the electorate knows the game is up and that drastic action is needed. Voters aren't looking forward to cuts and won't relish them, but they're not stupid. Vociferous public sector union leaders aside, there is a general desire for our "leaders" to be honest and open about where the axe should fall and then, in a non-ideological manner, to get on with it.

 

As Cameron retreated last week, shadow chancellor George Osborne confirmed a Tory government would stick to a 2pc inflation target. He should have proposed a different measure – the CPI is deeply discredited. We also need some measure of asset prices in our inflation target, to encourage early action against bubbles.

 

Osborne was right, though, to bring anti-inflationary discipline back into focus. The gilts market is worried not only about the UK's ability to service its debts given depleted tax revenues but also that nominal bonds (the vast majority of gilts we sell) are a bad bet when inflationary pressures are rising.

 

If you believe in UK deflation – and there are still a few economists who do, most of them working at investment banks that have been using QE as an oxygen mask – then nominal gilts are attractive. When you're looking at 4pc-plus inflation in the coming years, as I believe we are, then selling "ordinary" gilts requires a high yield, causing knock-on interest rate rises across the economy.

 

Just imagine if there is a UK gilts strike during the current pre-election "phoney war". The electorate would be incandescent. The Tories' latest claims they'll make cuts "faster and further" than Labour but not "faster and deeper" are, frankly, absurd. On hearing them, voters – and gilt traders – raise their eyes to the sky.

 

The UK's total debts, including the private sector, stand at a colossal 466pc. Our systemic weakness is unique. Politicians need to understand that and stop playing political parlour games.

 

Not sure that I agree with his assertion that most voters know the game is up, the most people I speak too appear clueless or are just in denial or don't know how the system works.

 

Luckily Halligan is wrong the debt based economic model is flawless and clearly hasn't run out of steam. If it had the US wouldn't be borrowing $1.6tr this year because if this system had faltered that would be insane.

 

More debt is needed not less. I mean how can we support house prices if people aren't prepared to take on ever higher debt, how will the bankers prosper if this doesn't happen!

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Breaking news:

 

• Germany says public demands crackdown on tax evasion - Reuters
  
• Berlusconi popularity slips, Italy more upbeat-poll - Reuters
  
• 'Avatar' dethroned at box office by 'Dear John' - Reuters
  
• G7 talk on Greece will not soothe global investors - Reuters
  
• 'Avatar' dethroned at box office by 'Dear John' - Reuters
  
• Dexia sees tough 2010, to refocus on retail banking - Reuters
  
• Greece sticks to austerity plan, Q1 crucial-finmin - Reuters
  
• Official think-tank sees China 2010 GDP up 10 pct - Reuters
  
• Saudi consumers demand gov't action on Toyota - Reuters
  
• UAE inflation hits 9-yr low in 2009 - Reuters
  

 

 

 

• Taxpayer to make £5bn profit from protecting RBS loans
   
   
  Asset protection scheme likely to make £5bn in less than three years, according to new projections
   
  
• End tax breaks for polluters to cut budget deficit, thinktank urges
   
   
  Green Alliance says £12bn could be saved by ending support for high-carbon industries such as aviation and building fewer roads
   
  
• Santander may float in UK if it buys Williams & Glyn's branches from RBS
   
   
  Speculation mounts over UK flotation by Spanish bank if it buys network that EU is forcing RBS to sell
   
  
• Tories hold talks with National Express over return to railways
   
   
  Transport group likely to be allowed to bid for contracts in two years' time
   
  
• Toyota poised to recall Prius hybrid cars over brake defect
   
   
  Expected recall of flagship green vehicle risks inflicting further damage to reputation of the world's biggest carmaker
   
  
  • How did Toyota veer so far off course?
    
  • Toyota under fire for its handling of safety recall
    
  • Interactive: Toyota's sticky problem
    
  • Q&A: Does Toyota pedal glitch affect you?
    
  • Timeline: Toyota's recall woes
    

   

 

 

• 
  Can eurozone avoid a Greek tragedy?
   
   
  As the country plunges into the red again, the IMF is itching to march into the eurozone and intervene. How long can Brussels hold the currency together?
   
  
  • Spain battles to convince markets it is 'solid'
    
  • Bond markets hurting Europe's weaker economies
    

   

  [*] Belize faces G20 sanctions over tax data

   

   

  Development could embarrass Conservatives, whose donor is chairman of country's biggest bank

   

  [*] Industry and unions in Ireland join forces to oppose budget cuts

   

   

  Brian Cowen's government accused of relying on emigration to keep Irish unemployment figures under 500,000

   

 

 

• More business news
   
   
  
  • Goldman cuts Blankfein's bonus to $9m
     
     
     
    
  • Insurers 'overpay for pensions business'
     
     
     
    
  • Walsh upbeat as BA posts surprise profit
     
     
     
    
  • Jeweller Tiffany targeted over game park grant
     
     
     
    
  • Arch Cru boss blames managers of failed funds
     
     
     
    

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France's GDF to sweeten UK generator offer

 

GDF Suez, the French power giant, is considering a revamped bid for International Power (IP), a £5bn independent power generator.

 

 

• Spanish PM's crisis talks to bolster economy
  
• Citi hits back as Hands tries to block trial move
  
• HSBC denies US Senate accusations of corruption
  
• Miners optimistic about Chinese iron ore price talks
  
• Chaarat says 'low valuations' in London prompted move for secondary listing
  
• FSA switches auditors
  
• Uproar as Germany pays €2.5m for stolen Credit Suisse data
  

 

Hamish McRae: Yes, the eurozone will bail out Greece, but its currency has taken a battering

 

Economic view

 

 

• Margareta Pagano: Stock markets declare war on the politicians
  
• Stephen Foley: Big Pharma ignores R&D at its peril
  
• Hamish McRae: Europe's weakest states will be bailed out, but we'll all pay the price
  
• Stephen Foley: Bankers' actions a crime of passion
  
• Sean O'Grady: Mervyn King didn't quite get the temperature right
  

 

Any green shoots wither in Spain as jobless figures rise

 

Fears rise for the country's stability as unemployment reaches a 40-year high. Alasdair Fotheringham reports from Granada

 

 

• Hit turns to miss as Hands sues Citigroup over EMI deal
  
• With better handling Toyota can get its brand back on track
  
• Masterprice: The top ten recession-defying artworks
  
• Time seeks closure on the worst deal in history
  
• Ahmed al-Jaber: Oil-rich Abu Dhabi pins its hopes on dreams of a green future
  
• London's Tube deal can't close the gap
  

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[/url]

 

Mandelson attacks US and Europe

 

The full scale of world tension between governments over the way to deal with the banking crisis has been revealed by Peter Mandelson.

General Election 2010: Welcome to Berlin, Peter. And the future

 

 

General Election 2010: Give us stablility, then let business do the rest

 

 

G7: no need for IMF to bail out eurozone

 

 

ABI slams Brown's bank tax

 

 

 

EMI draws up fresh plan for cuts

 

Troubled music group is seeking more redundancies in an effort to persuade investors to hand over a £120m lifeline.

'Young Davos' to give world's youth a voice

 

 

 

Toyota woes: Staring into the abyss

 

Toyota's president came to power on a wave of optimism but, after the biggest recall in automotive history, his and his company's future is in doubt.

 

The man who keeps the GSK ball rolling

 

Andrew Witty, chief executive officer of GSK, talks about tackling malaria in Africa and that George Osborne "endorsement"

 

Rose defends M&S chief's £15m package

 

 

 

 

BAE still advised by architect of Saudi Tornados deal

 

 

 

 

Resurgent Lloyds looks for shake-up

 

 

 

 

UK companies fear recession despite upturn

 

 

 

 

British banker faces death over fraud charges

 

 

 

• Deferred bonuses are a pretty leaky lifeboat
  

 

• Wrong time for Tories to start wobbling over spending cuts
  

 

 

• Seek divergent views for better investment
  

 

UK plans to tax banks for bail-outs gain ground with G7 finance ministers

 

 

 

Chinese growth may hit 11pc, says think tank

 

 

 

 

Cut spending before there is a financial disaster

 

 

 

 

European markets fall as ERM echoes intensify

 

 

 

 

UK in line for blistering economic recovery, OECD suggests

[interestrateripoff]

Bonus storm as RBS £7bn down

 

Treasury expected to approve a total bonus pool of about £1.3 billion despite bad debts driving state bank into the red 68 Comments

 

• State banks cost the borrower
  

 

• Obama ruling throws cold water on RBS unit sale
  

 

Santander readies £15bn float of British banks

 

Santander is considering a number of capital-raising options to buy a network of 300 Royal Bank of Scotland branches 12 Comments

 

• Santander beats rivals to boost profits 30%
  

 

• Santander’s profits increase 30% in UK
  

 

Activist takes aim at Pinewood bosses

 

Crystal Amber wants Pinewood to develop aggressively its property assets, which include unused land on its back lot 2 Comments

 

• Pinewood sets up in Malaysia
  

 

• UK’s biggest development plan on the way
  

 

EMI boss in last-ditch bid for survival

 

The Italian chief executive is also scrambling to hang on to Robbie Williams, whose contract is up

 

• Blue notes from EMI amid £1.75bn loss
  

 

• Fears for EMI as it slumps to £1.75bn loss
  

 

 

G7: Greece must be rescued by Europe

 

A "European" solution promised to the problems affecting Greece, Portugal and Spain

 

Tories to torpedo Tesco growth plans

 

Britain’s biggest retailer is facing a double blow from proposals by the Conservative party to shake up the planning system

 

New Star name is dumped

 

New Star, one of Britain’s best-known personal finance brands, will be removed from Henderson products from April

 

• Unloved New Star fund builds its way back up
  

 

• New Star's Richard Pease to join Henderson
  

JP Morgan to face Lehman crash probe

 

A whitecollar crime specialist is this week expected to shine fresh light on the role of JP Morgan in the Lehman collapse

Barclays star back hunting for banks

 

The former Barclays executive is plotting a series of deals to buy portfolios of distressed loans or property assets

 

 

QE2 sets sail in Dubai sell-off

 

The ailing emirate is forced to sell Cirque du Soleil and the QE2s to keep creditors at bay and tackle its £14 billion debt mountain

 

Tullow nearing $2.5bn windfall

 

Tullow Oil will this week sell half its $5 billion stake in one of the biggest oil finds in Africa to a Chinese state company

 

• Tullow oil raises £925m in readiness for project
  

 

• Italians try to spoil Tullow’s Ugandan deal
  

Google develops the translating telephone

 

The internet giant is creating software for the first phone capable of translating foreign languages almost instantly

Toyota drivers warn of new risk

 

Carmaker faces a raft of legal actions alleging that drivers have been killed because of electronic throttle control systems problems

Chief executives can’t justify their soaring pay

 

People don’t understand why a small group of top managers should get paid hundreds of times more than a brain surgeon

 

 

Sharpening the knives to avoid a Greek tragedy

 

Tackling the deficit is one political priority. Getting growth going is another. Balancing the two will be tricky

 

 

Reality takes a bite out of Obama recovery plan -Times Online

[interestrateripoff]

Toyota 'planning recall of Prius'

Toyota is to recalling the latest model of its flagship Prius cars because of braking problems, reports from Japan say.

Toyota image harmed for years?

Q&A: Toyota recalls

Recalls: US readers' comments

Ex-IMF economist warns on UK debt

 

Britain should be seen in the same category of highly indebted countries such as Greece, a leading economist says.

 

Santander fault hits customers

 

A power cut knocked out cash machine and online services for customers with Santander bank on Sunday

 

 

OTHER TOP BUSINESS STORIES

Goldsmith backs BAE Systems deal

 

IT glitch causes more tax errors

 

BA's £50m loss beats expectations

 

Debt and job worries hit shares

 

Personal insolvency 'record high'

 

Profit warning hits Icap shares

 

MORE FROM BUSINESS

Housing shortage 'risks crowding'

 

Challenge to debt payoff tactics

 

Toyota boss apologises for recall

 

West Ham seek financial backers

 

Surprise fall in US unemployment

 

Oil fuels UK producer prices rise

 

OFT reopens pub sector probe

 

China to put duties on US chicken

 

Cadbury shares to be de-listed

 

Blacks in share sale recovery bid

 

BG Group hit by lower oil price

 

Euro MPs shun data deal with US

 

Panasonic profits after cost cuts

 

Poor sales push EMI to heavy loss

 

[interestrateripoff]

Toyota Has Pattern of Slow Response on Safety Issues

 

 

Testy Conflict With Goldman Helped Push A.I.G. to Edge

 

By GRETCHEN MORGENSON and LOUISE STORY

 

The bank’s demands for billions of dollars from the insurer bled it of cash, which the government later provided.

 

 

Is Greece’s Debt Trashing the Euro?

 

By LANDON THOMAS Jr.

 

Greece’s problems, and those looming over its neighbors, have laid bare the dangers of divergent fiscal and political policies in the euro zone.

 

 

Battle of the Bands: Citigroup Is Up Next

 

By DEVIN LEONARD

 

A private equity firm, Terra Firma, and its lender, Citigroup, are fighting in court over possession of the music company EMI.

 

 

 

Mortgages

 

Loans for Green Homes

 

By BOB TEDESCHI

 

Fannie Mae said that by this summer it would unveil incentives for those who use part of their mortgages for energy-related improvements.

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Quiet Conflict With Goldman Helped Push A.I.G. to Precipice - NYTimes.com

 

Billions of dollars were at stake when 21 executives of Goldman Sachs and the American International Group convened a conference call on Jan. 28, 2008, to try to resolve a rancorous dispute that had been escalating for months.

 

A.I.G. had long insured complex mortgage securities owned by Goldman and other firms against possible defaults. With the housing crisis deepening, A.I.G., once the world’s biggest insurer, had already paid Goldman $2 billion to cover losses the bank said it might suffer.

 

A.I.G. executives wanted some of its money back, insisting that Goldman — like a homeowner overestimating the damages in a storm to get a bigger insurance payment — had inflated the potential losses. Goldman countered that it was owed even more, while also resisting consulting with third parties to help estimate a value for the securities.

 

After more than an hour of debate, the two sides on the call signed off with nothing settled, according to internal A.I.G. documents and an audio recording reviewed by The New York Times.

 

Behind-the-scenes disputes over huge sums are common in banking, but the standoff between A.I.G. and Goldman would become one of the most momentous in Wall Street history. Well before the federal government bailed out A.I.G. in September 2008, Goldman’s demands for billions of dollars from the insurer helped put it in a precarious financial position by bleeding much-needed cash. That ultimately provoked the government to step in.

 

With taxpayer assistance to A.I.G. currently totaling $180 billion, regulatory and Congressional scrutiny of Goldman’s role in the insurer’s downfall is increasing. The Securities and Exchange Commission is examining the payment demands that a number of firms — most prominently Goldman — made during 2007 and 2008 as the mortgage market imploded.

 

The S.E.C. wants to know whether any of the demands improperly distressed the mortgage market, according to people briefed on the matter who requested anonymity because the inquiry was intended to be confidential.

In just the year before the A.I.G. bailout, Goldman collected more than $7 billion from A.I.G. And Goldman received billions more after the rescue. Though other banks also benefited, Goldman received more taxpayer money, $12.9 billion, than any other firm.

 

In addition, according to two people with knowledge of the positions, a portion of the $11 billion in taxpayer money that went to Société Générale, a French bank that traded with A.I.G., was subsequently transferred to Goldman under a deal the two banks had struck.

 

Goldman stood to gain from the housing market’s implosion because in late 2006, the firm had begun to make huge trades that would pay off if the mortgage market soured. The further mortgage securities’ prices fell, the greater were Goldman’s profits.

 

In its dispute with A.I.G., Goldman invariably argued that the securities in dispute were worth less than A.I.G. estimated — and in many cases, less than the prices at which other dealers valued the securities.

 

There's several more pages of this at the link.

 

It appears that the Giant Squid has killed the host with it's greed.

 

Has the giant squid over extended itself this time?

[interestrateripoff]

Mortgages - Loans for Green Homes - NYTimes.com

 

BORROWERS looking to make energy upgrades in their homes that will lower utility bills, along with their environmental impact, may soon find additional options available to them.

 

Fannie Mae, the government-backed company that sets lending standards for mortgages, said that by this summer it would unveil incentives for those who use part of their mortgages for energy-related improvements. And EnergyStar, a joint effort of the Department of Energy and the Environmental Protection Agency, is expected to introduce borrower incentives in New York, after running pilot programs in Colorado, Maine and Pennsylvania.

 

At the same time, the Appraisal Institute, an industry trade group, said it was training members to better quantify the value of energy-efficient homes. It also said that it was developing a certification program for appraisers who want to specialize in energy-efficient homes.

 

For years, the only option for borrowers was a so-called energy-efficient mortgage from the Federal Housing Administration. Under that program, borrowers who obtained F.H.A.-insured mortgages could qualify for larger loans if they earmarked additional funds for energy-related improvements, and if those upgrades yielded long-term savings. The F.H.A. has varying formulas for determining the maximum amount for energy improvements, but for many homeowners, the limit is 5 percent above what they could have qualified for in a conventional loan.

 

As with all F.H.A. loans, energy-efficient mortgages are marginally more expensive, because borrowers must pay the F.H.A. insurance premium. Borrowers have flocked to F.H.A. loans in the past two years, because the qualifications are less stringent than for non-F.H.A. loans. But just 3,088 borrowers chose energy-efficient mortgages last year, according to the agency.

 

Some mortgage executives have complained that these loans are more complicated than others, because borrowers have to complete an energy audit of their homes and use an appraiser with expertise in evaluating energy-efficient properties, among other things. But Susan Barber, the senior vice president for Wells Fargo’s new construction and renovation programs, said the approval process was on par with those for other loans.

 

Looks like they are going to try and create a green bubble, your going to have to make some huge saving to justify the outlay. I'd want a house with near zero energy consumption for forking out thousands.

 

Bubbles all the way.

[interestrateripoff]

BBC News - IT problems at the Revenue cause more tax code errors

 

Millions of people could pay more tax than they should from April, unless HM Revenue & Customs fixes its new computer system.

 

Revenue employees have told the BBC that in some cases it is double-taxing the value of benefits such as company cars.

 

Married couples and civil partners aged 75 or more could lose an allowance worth nearly £700.

 

The Revenue says it is working to resolve the problems before April.

 

Frustrations

 

But frontline Revenue staff who use the new system have told BBC Radio 4's Money Box programme how bad the problems are.

 

They said that the computer cannot be relied upon to generate the correct tax codes in numerous cases.

 

One employee - who spoke on condition of anonymity - said the situation is getting worse

 

"When it first started, we were all getting terribly frustrated with the new system, and we didn't know if it was us or it that was the problem," she said.

 

"But as it's gone on and on it's evident it's the system.

 

"We're waiting to see if things are put right in April.

 

"But none of us believe that they will be, because we've heard it all before."

 

Now I'm sure all of this is a genuine mistake and the govt isn't conspiring to steal even more from it's people. Why bother putting up taxes when you can get the computer to charge everyone more tax by "mistake".

[interestrateripoff]

Two-year dividend famine is set to continue - Times Online

 

Stock market experts are warning of another year of dividend famine as some of Britain’s biggest dividend mainstays struggle to maintain payments to shareholders.

 

Dividends from British-listed companies fell by £10 billion, or 15 per cent, last year to £56.9 billion and, while they may creep up this year, they will still fall well short of the £66 billion distributed in 2008, according to the Capita Registrars Dividend Monitor.

 

Because of rights issues and other recent capital-raisings, shareholders have been in the unusual position of being net payers to companies rather than recipients. Last year, listed UK companies tapped shareholders for £73 billion in new equity, £16 billion more than they paid out in dividends.

 

Adjusted for all cash calls, Capita said that, in effect, shareholders had had nothing from companies since December 2007. According to Paul Taylor, of Capita Registrars, “2010 looks set to be another grim year for dividends, with UK companies unable to match what they distributed in 2007”.

 

Shares can only go up today on this news, I mean it's not like people buy shares to earn money from them.

[interestrateripoff]

Greek Ouzo crisis escalates into global margin call as confidence ebbs - Telegraph

 

Flow data shows an abrupt withdrawal of German and Asian capital from Club Med debt markets. The EU's refusal to offer Greece anything beyond stern words and a one-month deadline for harsher austerity – while admirable in one sense – is to misjudge how fast confidence is ebbing. Greece's drama has already metastasised into a wider systemic crisis. The world risks a replay of the Lehman collapse if this runs unchecked, this time involving sovereign dominoes.

 

Barclays Capital says the net external liabilities of Greece are 87pc of GDP, or €208bn (£182bn). Spain is worse at 91pc (€950bn), and Portugal worse yet at 108pc (€177bn); Ireland is 68pc (€123bn), Italy is 23pc, (€347bn). Add East Europe's bubble and foreign debts top €2 trillion.

 

The scale matches America's sub-prime/Alt-A adventure and assorted CDOs and SIVS of the Greenspan fling. The parallels are closer than Europe cares to admit. Just as Benelux funds and German Landesbanken bought subprime debt for high yield with AAA gloss, they bought Spanish Cedulas because these too had a safe gloss – even though Spain's property boom broke world records. They thought EMU had eliminated risk: it merely switched exchange risk into credit risk.

 

A fat chunk of Club Med debt has to be rolled over soon. Capital Economics said the share of state debt maturing this year is even higher in Spain (17pc) than in Greece (12pc), though Spain's Achilles' Heel is mortgage debt.

 

The risk is the EMU version of Mexico's Tequila crisis or Asia's crisis in 1998. This Ouzo crisis is coming to a head just as tougher bank rules cause German lenders to restrict loans, and it touches on the most neuralgic issue of our day: that governments themselves are running low. Britain, France, Japan, and the US are all vulnerable. All must retrench. The great "reflation trade" of 2009 is over.

 

Far from containing the crisis, Europe's response recalls the Lehman/AIG events of 2008 when Brussels sat frozen, and Germany dragged its feet. On that occasion France took charge, in the nick of time.

 

Today's events will not wait. The rocketing cost of (CDS) default insurance on Iberian debt speaks for itself. Lisbon retreated from a €500m bond issue last week, even before the government lost a crucial finance vote. Can Athens raise money at all on viable terms?

 

There are echoes of early 2009 when East Europe blew up, with contagion hitting global bourses, commodities, and iTraxx credit indices. That episode was halted by the G20 deal to triple the IMF's fire-fighting fund to $750bn. The odd twist today is that Greece cannot turn to the IMF because that offends EMU pride, yet no other help is on offer because the EU has no fiscal authority. Greece lies prostrate between two stools.

 

Both the City and Brussels seem certain that Europe will conjure a rescue, crossing the Rubicon towards fiscal federalism and a debt union. The emergency aid clause of Article 122 is on everybody's lips. Insiders talk of a "Eurobond".

 

On balance, such a rescue is likely. Yet leaving aside whether North Europe can afford to guarantee Club Med debt – or whether a bail-out pollutes more countries, as HBOS polluted Lloyds – there is one overwhelming fact missing from the debate: Germany has not endorsed any such rescue.

 

Does the flow data support what's being said here?

 

Looks like the next few weeks might be interesting.

[interestrateripoff]

With Few Policy Tools, Trichet Faces Crisis in Greece - NYTimes.com

 

Whether he likes it or not, Jean-Claude Trichet is not just the president of the European Central Bank. Mr. Trichet, 67, is also the de facto president of Europe, at least for the 16 nations that rely on the euro as their common currency.

 

On paper, the European Union has just established a new president in Brussels, and the central bank’s sole responsibility is to keep inflation in check. Moreover, the bank, based here, has almost no formal policy tools to help an ailing member country like Greece.

 

But as investor alarm about Greek, Spanish and Portuguese indebtedness increases, the crisis has highlighted the fundamental weakness of the European monetary union. With no strong political arm to ensure that members observe debt limits set by treaty, the responsibility falls to Mr. Trichet to try to resolve the crisis.

 

In the current situation, said Jörg Krämer, chief economist at Commerzbank in Frankfurt, only the bank’s president “has the authority and the expertise” to manage the situation.

 

On Saturday, Mr. Trichet told reporters at a meeting in Canada of the Group of 7 finance ministers and central bank presidents that he was confident that Greece would meet tough new belt-tightening goals.

 

“We expect and we are confident that the Greek government will take all the decisions that will permit it to reach that goal,” Mr. Trichet said, according to Reuters.

 

Just a couple of days earlier, Mr. Trichet lectured European governments on the need to swiftly pare their budget deficits. “When you share a single currency with others, the counterpart is that you have to have a sound fiscal policy,” he said during a briefing in conjunction with the bank’s monthly policy meeting.

 

But then, in a gesture that did little initially to calm nervous investors, Mr. Trichet pointed out that the overall deficit level among euro countries, at about 6 percent of gross domestic product, was still well below that of the United States and Japan, which are each set to borrow more than 10 percent of their G.D.P.’s this year.

 

The NY Times joins in. A bad day for the Euro looming on the currency markets?

[interestrateripoff]

Breaking news:

 

• US STOCKS-S&P, Nasdaq rise, but debt worries limit gains - Reuters
  
• Euro rises vs dollar, but stays near multi-month low - Reuters
  
• Greece invites bids for Vevi lignite mine - Reuters
  
• Top four brewers account for over half world's beer - Reuters
  
• Oil rises toward $72 on weak dollar, cold - Reuters
  
• European shares snap losing streak; drugmakers up - Reuters
  
• Dexia faces big challenges after EU relief - Reuters
  
• German strike action continues ahead of wage talks - Reuters
  
• Becton Dickinson recalls intravenous devices - Reuters
  
• Gold turns higher as dollar surrenders gains - Reuters
  

 

 

 

• Indian tribe appeals for Avatar director's help to stop Vedanta
   
   
  The Dongria Kondh say plot of James Cameron's blockbuster reflects their plight as they struggle to stop company from opening bauxite mine on sacred mountain. By Kathryn Hopkins 1 comment
   
  
  • Dear John knocks Avatar off the top spot – finally
    

   

  [*] Ethel Austin goes into administration

   

   

  Discount clothing chain and its sister firm Au Naturale have called in administrators after last month's heavy snow damaged trading

   

  [*] Branson: oil crunch by 2015

   

   

  Richard Branson and fellow business leaders will tell the government this week that it needs to act 129 comments

   

  [*] Toyota poised to recall Prius

   

   

  Expected recall of flagship green vehicle over brake defect risks inflicting further damage to reputation of the world's biggest carmaker

   

  • Interactive: Toyota's sticky problem
    
  • Q&A: Does Toyota pedal glitch affect you?
    
  • Timeline: Toyota's recall woes
    

   

  [*] Merrill's John Thain lands new job

   

   

  Former boss of Wall Street firm was criticised over bonuses and expensive office refurbishment but has secured a job as head of troubled US lender CIT

   

 

 

• 
  Merv the swerve? King goes dog sledding at G7 summit in Canada
   
   
  The Bank of England governor said he had a 'whale' of a time, but all the visitors managed to avoid the seal meat at the finance ministers' gathering in the snowy wastes, says Andrew Clark 5 comments
   
  
  • G7 close to accord on banks paying for recession
    

   

  [*] Google spends $5m on Super Bowl ad

   

   

  Google's aversion to TV advertising ended with a one-minute commercial during the Super Bowl 11 comments

   

  • Google's Nexus phone faces cut-price challenger
    

   

 

 

• More business news
   
   
  
  • Is Ireland a glimpse of Tory-led UK?
     
     
     
    
  • 15% fall in share dividends leaves pensions exposed
     
     
     
    
  • New Star property fund opens door to redemptions
     
     
     
    
  • Kirin and Suntory scrap merger plans
     
     
     
    
  • Santander may float in UK
     
     
     
    

[interestrateripoff]

Santander mulls over partial sale of UK banking business

 

Flotation would help to fund bid for Williams & Glyn's and inject capital into bank

 

 

• 'Tidal wave' of business failure feared
  
• UK company dividends cut by £10bn as downturn bites
  
• Toyota prepares to make announcement on Prius
  
• Weak 2010 forecast for construction industry
  
• Employers set to keep squeezing pay
  
• Business leaders say they plan expansion
  
• France's GDF to sweeten UK generator offer
  

 

Stephen King: Another Greek tragedy unfolds

 

It's not difficult to generate a vicious downward spiral leading to unrest

 

 

• James Moore: If the taxman plays hardball we're all in trouble
  
• James Moore: The price is right – but not for British taxpayers
  
• Hamish McRae: Yes, the eurozone will bail out Greece, but its currency has taken a battering
  
• Margareta Pagano: Stock markets declare war on the politicians
  
• Stephen Foley: Big Pharma ignores R&D at its peril
  

 

Any green shoots wither in Spain as jobless figures rise

 

Fears rise for the country's stability as unemployment reaches a 40-year high. Alasdair Fotheringham reports from Granada

 

 

• Hit turns to miss as Hands sues Citigroup over EMI deal
  
• With better handling Toyota can get its brand back on track
  
• Masterprice: The top ten recession-defying artworks
  
• Time seeks closure on the worst deal in history
  
• Ahmed al-Jaber: Oil-rich Abu Dhabi pins its hopes on dreams of a green future
  
• London's Tube deal can't close the gap
  

[interestrateripoff]

Toyota recall fears spread to Lexus brand

 

Imminent recall of the Prius over brake problems could be expanded to cover a flagship model from the Lexus range 16 Comments

 

• Toyota recalls Prius hybrid over brake failure
  

 

• The fall of mighty Toyota
  

 

Greek unions threaten austerity moves

 

Prime Minister Papandreou's budget-cutting measures are under pressure as a 24-hour strike looms on Wednesday 7 Comments

 

• G7: Greece must be rescued by Europe
  

 

• Sharpening the knives to avoid a Greek tragedy
  

 

Markets: Intl. Power sparked up by bid talk

 

Randgold Resources reports strong figures and International Power gains on mounting EDF bid speculation

 

• Avanti Communications looks ready for lift off
  

 

• Northgate loses ground as it takes on a new driver
  

 

Xstrata resumes payouts despite profits slide

 

Anglo-Swiss miner today reinstated its dividend as Mick Davis predicts a continuing recovery in metal demand

 

• Xstrata boss mines £14m seam of share options
  

 

• Xstrata walks away from Anglo American bid
  

 

 

SAP software chief in surprise exit

 

Leo Apotheker leaves the German software giant just eight months after taking sole charge as chief executive

 

Two-year dividend famine is set to continue

 

Because of capital raisings, shareholders have been in the position of being net payers to companies rather than recipients

 

Plus Markets leadership duo stand aside

 

Simon Brickles moves from chief executive to vice-chairman while chairman Stephen Hazell-Smith resigns

 

• Big shot: Simon Brickles, Plus Markets
  

 

• LSE on the attack to safeguard its future
  

Listing could fund Santander's RBS bid

 

Santander is one of a number of banks to submit initial expressions of interest in the auction of the RBS branches

BP faces protest over oil sands development

 

A resolution by disaffected investors has been tabled for the oil giant's AGM decrying 'environmental and social risks'

 

 

John Thain appointed head of CIT Group

 

The former head of Merrill Lynch has been appointed CEO of CIT Group with a remuneration package worth up to $7.5 million

 

 

Allen & Overy opens in Australia

 

The UK's fifth-biggest legal firm to open in Sydney and Perth as London's elite target growth chances in Asia

 

• Allen & Overy adapts to encourage women
  

 

• Allen & Overy income falls as law firms suffer
  

Panama Canal enlargement is boost for China

 

Enlarging the Panama Canal will make it a prime route for Chinese-driven trade, but may hit Warren Buffett's railway

QE2 sets sail in Dubai sell-off

 

The ailing emirate is forced to sell Cirque du Soleil and the QE2s to keep creditors at bay and tackle its £14 billion debt mountain

 

 

Visible benefits always trump invisible costs

 

Receiving payment is not restricted to money. Anything of value counts, including ‘free’ minding of your own child

 

Corruption is the killer that we all ignore

 

BAE Systems has escaped prosecution for bribery. But where does that leave the poor of Africa?

[interestrateripoff]

Administration for Ethel Austin

Clothing retailer Ethel Austin and its sister firm Au Naturale go into administration, raising fears about the future of 3,700 staff.

UK firms 'cut dividends by £10bn'

 

Shareholders in UK companies saw their dividend payments cut by £10bn last year, according to a report.

 

More pay freezes expected in 2010

 

Workers face a second year of pay freezes despite rising inflation and the UK's emergence from recession, a report says

 

 

OTHER TOP BUSINESS STORIES

Pensioners warned over tax codes

 

Xstrata resumes dividend payments

 

Toyota 'planning recall of Prius'

 

SAP chief Leo Apotheker resigns

 

Tullow close to Ugandan oil deal

 

Japanese brewers call off merger

 

MORE FROM BUSINESS

Nokia dismisses US legal action

 

Santander fault hits customers

 

Ex-IMF economist warns on debt

 

IT glitch causes more tax errors

 

Goldsmith backs BAE deal

 

Personal insolvency 'record high'

 

BA: £50m loss beats expectations

 

Housing shortage 'risks crowding'

 

Challenge to debt payoff tactics

 

Toyota boss apologises for recall

 

West Ham seek financial backers

 

Surprise fall in US unemployment

 

YOUR MONEY

House prices rise another 0.6%

 

British Gas cuts gas prices by 7%

 

Older Toyotas will be fixed first

 

ECONOMY

Indian economy 'to grow by 7.2%'

 

China to put duties on US chicken

 

Debt and job worries hit shares

 

COMPANIES

'Outrage' as deal ends BAE probes

 

Profit warning hits Icap shares

 

Cadbury shares to be de-listed

[interestrateripoff]

[/url]

 

Euro under pressure over Greek crisis

 

Single currency faced renewed selling on Monday morning as doubts remain about the ability of Greece to cut its deficit.

 

Toyota executive faces Digg users as recall escalates

 

Car maker steps up efforts to repair the public relations disaster caused by the mass recall of cars by answering questions on Digg.

 

Chinese skiing boom fails to materialise

 

The cafe in Yabuli is packed with well-heeled visitors, finds Peter Foster, but the runs are eerily quiet.

 

Saudi Arabia opens to outsiders

 

 

 

 

UK companies cut dividends by £10bn

 

 

 

 

Xstrata reinstates final dividend

 

 

 

 

A man not afraid to tackle rugby's problems

 

 

 

 

Santander now looking at float of UK business

 

 

 

 

Petrol production may be moving away for good

 

 

 

• Greek Ouzo crisis escalates into global margin call
  

 

• If annuities are such a great deal, why are we compelled to buy?
  

 

 

• Maybe cut the army of bureaucrats, not defence spending
  

 

Ex-Fed chairman Alan Greenspan says he's 'very concerned' over fall in stock markets

 

 

 

Gordon Brown to attend crisis talks over Greece

 

 

 

 

General Election 2010: Tories see vote winner in reform of tax system for self-employed

 

 

 

 

UK plans to tax banks for bail-outs gain ground with G7

 

 

 

 

Chinese growth may hit 11pc, says think tank

[interestrateripoff]

European Central Bank in a Squeeze

 

By JACK EWING

 

 

Petros Giannakouris/Associated Press; Qilai Shen/European Pressphoto Agency

 

Left, shoppers browsing second-hand goods in Athens. Right, construction workers in the financial district of Shanghai.

 

As alarm about Greek debt increases, a weakness of the European monetary union has been exposed: its lack of a strong political arm.

 

Asia Sails Smoothly Through Debt Waters

 

By VIKAS BAJAJ and KEITH BRADSHER

 

The Asian financial crisis of 1997 led many countries to be more conservative about borrowing and spending than Western nations.

 

 

After Buying Spree, China Owns Stakes in Top U.S. Firms

 

By DAVID BARBOZA and KEITH BRADSHER 7:35 AM ET

 

China’s $300 billion investment fund now owns stock in some of America’s best-known brands, including Apple, Coca-Cola, and Motorola.

 

Wall Street Mixed on Economy and Debt Worries

 

By JAVIER C. HERNANDEZ 13 minutes ago

 

In what is expected to be a quiet week in terms of economic news, traders are still grappling with concerns over some European countries’ debt.

 

Toyota Is Expected to Add 2010 Prius to Recalls

 

By HIROKO TABUCHI

 

The decision to recall at least 311,000 2010 Prius cars will be announced early this week, adding to the automaker’s woes after recalls of other models.