The great interest rate rip off part 1

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ECB Bini Smaghi: EMU Needs More Effective Crisis Framework | iMarketNews.com

 

The Eurozone needs a more effective crisis management framework, European Central Bank Executive Board member Lorenzo Bini Smaghi said Friday.

 

While the responsibility for reforms lies primarily with member states, the European framework does need to be strengthened, Bini Smaghi said during a presentation at the ECB And Its Watchers Conference.

 

The European Commission's recent reform proposal "is not going far enough," Bini Smaghi warned.

 

In future crises, he said, we "can't wait another three month before decisions are taken. We have to be able to take decisions very quickly."

 

He called for a strengthening of surveillance "over budgetary policies and more effective prevention and correction of excessive deficits and debts."

 

In addition, there needs to be an improvement in the "framework for competitiveness surveillance and the correction of economic imbalances via a traffic light system," he said.

 

Overall, "we need to strengthen the E of the EMU," Bini Smaghi asserted.

 

 

Something like this then?

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Retail Sales in U.S. Probably Fell for Second Month as Economy Moderated - Bloomberg

 

Retail sales in the U.S. fell in June for a second month and industrial production cooled, signs the expansion will moderate in the second half, economists said before reports this week.

 

Purchases fell 0.3 percent after a 1.2 percent decline in May, according to the median estimate of 59 economists in a Bloomberg News survey ahead of figures due July 14. Production at factories, mines and utilities declined 0.1 percent last month, the Federal Reserve may report the next day.

 

Target Corp. and Gap Inc. were among retailers whose sales in June trailed forecasts as limited hiring and reduced housing wealth restrain spending, which accounts for 70 percent of the economy. Few price pressures and signs of slower growth encouraged Fed policy makers last month to renew a pledge to hold interest rates close to zero.

 

“Consumer spending is subdued and economic growth isn’t going to be as strong as we’ve had,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Massachusetts. “With employment still weak and asset prices under pressure, the drumbeat of downbeat news is holding things down. Inflation isn’t an issue for the Fed.”

 

The Commerce Department’s retail sales report will show purchases excluding automobiles were unchanged last month, according to the survey median.

 

Auto sales fell to an annual pace of 11.1 million vehicles last month from May, industry data showed. General Motors Co. and Ford Motor Co., the two largest U.S. automakers, reported lower-than-anticipated sales.

 

European Debt Crisis

 

Europe’s debt crisis, which has pushed share prices lower and shaken consumer and business confidence, poses a risk to the U.S. recovery. The Standard & Poor’s 500 Index has fallen 11 percent from its April 23 high. The S&P Supercomposite Retailing gauge is down 20 percent from this year’s peak on April 26.

 

“Less supportive” financial conditions were cited by Fed officials on June 23, when they reaffirmed forecasts for a “moderate” pace of growth and kept interest rates unchanged. Minutes of the meeting are due on July 14, and policy makers will also release their updated economic forecasts.

The outlook for household spending also reflects the waning of government incentives such as rebates to buy energy-efficient appliances that spurred retail sales earlier this year.

 

While an industrywide measure of sales at stores open at least a year rose in June for the 10th consecutive month, results trailed analysts’ estimates. Sales last month at 30 chains rose 3.1 percent after a 2.7 percent gain in May, Retail Metrics Inc. said on July 8. Analysts estimated a 3.5 percent increase.

 

It will be interesting to see if the figures support these predictions. Do any of these economists have access to preliminary data to come to these conclusions or is it just made up?

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Speculators' new craze for chocolate leaves a bitter taste

 

European cocoa traders threaten to quit the London market over 'manipulation'

 

• Hoban reveals 'twin peaks' City regulation
  
• Standard Chartered behind BP's crisis fund
  
• Prudent M&S puts market research first
  
• Lord Levene’s new bank plans FTSE 100 listing by year end
  
• England's loss: Retailers hold £100m in unsold merchandise
  
• Investors query Fairview listing
  
• Britons batten down the hatches as they expect economic storms ahead
  

 

Hamish McRae: Let's pay attention to our service sector: you know it makes sense

 

Economic view

 

 

• Margareta Pagano: So, our banking system is in rehab – but will it work?
  
• David Prosser: The Chancellor is running out of time to save the OBR
  
• David Prosser: The City chooses another one of its own
  
• David Prosser: BT and CWU prove it's good to talk
  
• David Prosser: Roll up, roll up, for the great banking auction
  

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Breaking news:

 

• China won't kickstart Google but shares attractive - Reuters
  
• 'Despicable Me' leads North American box office - Reuters
  
• White House: Republicans could win control of House - Reuters
  
• No margin for error in Wall St bill's final test - Reuters
  
• UK's Food Standards Agency to be abolished-source - Reuters
  
• Japan markets may face some pressure after vote - Reuters
  
• BP sees progress on new oil-containment system - Reuters
  
• BP sees progrhess on new oil-containment system - Reuters
  
• Iraq Kurds say to crack down on fuel smuggling - Reuters
  
• Dubai World to meet creditors July 22-sources - Reuters
  

 

 

 

• Bank reform will drain £1tn from economy, Osborne told
   
   
  Banks claim new research shows changes will slice two percentage points off economic growth 152 comments
   
  
• OBR's figures under fire again
   
   
  Labour claims omission in OBR job loss calculations will make 50,000 further public sector posts redundant 20 comments
   
  
• Eurozone break-up 'would speed recovery'
   
   
  Capital Economics believes return to national currencies will boost competitiveness of weakest eurozone states
   
  
• BP starts work on new gulf spill cap
   
   
  Work begins on installing better device to collect more of the crude spilling out of blown well
   
  
  • Cairn's Arctic oil drilling attacked
    
  • US appeals court opens door to new gulf drilling
    

   

  [*] Lloyd's adds its voice to dire 'peak oil' warnings

   

   

  Business underestimating catastrophic consequences of declining oil, says Lloyd's of London/ISS report 9 comments

   

  [*] Creators of Who Wants to be a Millionaire? consider suing Hollywood talent agency William Morris

   

   

  Fresh from its victory over Disney's ABC network, Celador sets sights on firm that set up US deal for Millionaire Post your comment

   

 

 

• 
  Economic fears fuel new gold rush
   
   
  Gold price may go beyond record high to top $2,000 an ounce as bullion sales rocket and central banks stock up 11 comments
   
  
• Hedge funds cash in on uncertainty around European banks
   
   
  Results of stress-testing at banks in EU countries will be published on 23 July, as speculators chase profits Post your comment
   
  
• Promethean backs Bloodhound supersonic car for landspeed record
   
   
  Education equipment company Promethean has backed a landspeed attempt that aims to hit 1,000mph 1 comment
   
  
• Jarvis staff set to lose £28m in back pay
   
   
  Former employees of failed engineering firm unlikely to get any of the money they are owed 4 comments
   
  

 

 

• More business news
   
   
  
  • Harrods ponders Shanghai branch
     
     
     
    
  • UK trade gap hits two-year high
     
     
     
    

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[/url]

 

Budd plan for OBR 'triple lock'

 

The chairman of the Office for Budget Responsibility (OBR) is to lay out a blueprint to make the watchdog more independent after its figures on the UK economy were accused of being too pro-Government.

 

Kent Reliance in talks with JC Flowers

 

One of Britain's oldest building societies is in advanced talks with an American financial investor about a multi-million-pound injection of capital.

 

The West should fear the growth of state capitalism - Ian Bremmer

 

As his latest book hits the shelves, author Ian Bremmer says, 'In the last two years, if we've learnt anything at all, it's that the state is back'.

 

HSBC chief warns over plans to break up banks

 

 

 

 

Hester to take on Turner's 'socially useless' banks jibe

 

 

 

 

Osborne defies EU over base for regulator

 

 

 

 

Nuclear targets 'at risk'

 

 

 

 

Chinese export surge fuels trade surplus

 

 

 

 

UK firms suffer after BP oil spill

 

 

 

• Best model for OBR is the Bank of England
  

 

• Public sector pensions: unfunded and heading rapidly off the rails
  

 

 

• Why history takes the side of the optimists
  

 

Breaking up eurozone would benefit economy, say experts

 

 

 

Start-ups and benefit cuts 'can add £120bn to the economy'

 

 

 

 

Bull vs Bear: Who's right about FTSE's recovery?

 

 

 

 

If the UK is to compete with China and India, we have to pick winners

 

 

 

 

Inflation pressures ease but UK trade deficit widens

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UK profit warning numbers 'fall'

The number of UK companies issuing profit warnings during the second quarter is at its lowest level since 2003, a report says.

UK rates kept at 0.5%

UK manufacturing sees growth

Job market growth eases in June

BP's new oil leak plan under way

 

Underwater robots successfully remove a leaking cap as BP tries again to halt the Gulf of Mexico oil leak.

 

Vatican sees third straight loss

 

The Vatican reports its third consecutive loss, despite a 9% rise in donations from Catholic Church congregations.

 

 

OTHER TOP STORIES

Airlines 'fail to refund taxes'

 

China renews Google web licence

 

BP partner refuses oil spill bill

 

Insolvencies highest in North East

 

Smartphone firms face patent row

 

Five quits Project Canvas scheme

 

MORE FROM BUSINESS

Next broke online refunds rules

 

Osborne: OBR is independent

 

BT pay deal averts strike action

 

Boeing submits US air tanker bid

 

Card cancelling woe warning

 

Peugeot seals China joint venture

 

Bovis Homes to resume dividends

 

Canada employment up sharply

 

Plan to change private pensions

 

South Korea in surprise rate hike

 

US releases delayed yuan report

 

UK rates kept at record low 0.5%

 

IMF raises global growth estimate

 

UK house prices wilting in summer

 

YOUR MONEY

Quicker mobile switching planned

 

Pension cuts for university staff

 

Public sector pension reform call

 

ECONOMY

Banks optimism spurs market rally

 

Eurozone rates held at 1%

 

UK manufacturing sees growth

 

COMPANIES

EADS submits new US tanker bid

 

Government in supplier cuts talks

 

Rolls-Royce car production rises

[interestrateripoff]

BBC News - UK profit warnings 'at seven year low'

 

The number of UK-listed companies issuing profit warnings during the second quarter of 2010 was at its lowest level for almost seven years, a report has said.

 

Between April and June, 45 firms warned profits would be lower than expected, according to Ernst & Young, compared with 53 in the previous three months.

 

It was the first time this number had fallen below 50 since 2003.

 

But public spending cuts mean this is set to rise, the accountants added.

 

"UK plc could be in for another rough ride," said Keith McGregor, restructuring partner at the accountancy firm.

 

"A number of companies have already cautioned that they expect much tougher times ahead when further fiscal tightening reins in public sector and consumer spending."

'Crunch year'

 

There were six warnings from the travel and leisure sector, though the report said that four of these were directly linked to disruption caused by the volcanic ash cloud in May.

 

Other sectors to issue several warnings included construction and software and computer services.

 

Contract amendments or cancellations were the main reason for profit warnings, the firm said.

 

And of the 45 warnings, six were from businesses whose contracts were subject to cancellation or delay in the early stages of government spending cuts.

 

It's the profit recovery.

 

Still I'm sure increases in profit is down to excellent trading conditions and has nothing at all to do with lots of businesses failing meaning less competition for those still trading.

 

Clearly this profit is down to the sustainable recovery that's been locked in.

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Volcker Pushes for Reform, Regretting Past Silence

 

By LOUIS UCHITELLE

 

 

Despite his efforts on financial legislation aiming to correct years of deregulation, Paul Volcker is concerned that banks will still have too much wiggle room.

 

• Potent Issue for Fall Elections: Bank Bailout
  

 

 

 

Fred R. Conrad/The New York Times

 

Paul Volcker, a White House adviser and former Fed chairman, is worried that Congress may not do enough to prevent financial crises.

 

 

 

 

 

 

Wall St. Hiring in Anticipation of an Economic Recovery

 

By NELSON D. SCHWARTZ

 

While much of the country remains fixated on the bleak employment picture, hiring is beginning to pick up in the place that led the economy into recession.

 

• Read Comments (260)
  

 

Factory Efficiency Comes to the Hospital

 

By JULIE WEED

 

Seattle Children’s Hospital says it has improved patient care, and its bottom line, by incorporating practices made famous in manufacturing.

 

Ambitious Effort Begins to Contain All Spill Oil

 

By HENRY FOUNTAIN

 

Engineers removed a cap that had been diverting about 15,000 barrels of oil a day, planning to replace it with a new one to collect more oil.

 

• Live Video
  

 

Everybody’s Business

 

Online, We Pay With Our Time Spent Searching

 

By DAMON DARLIN

 

Even if you don’t pay for TV shows, they aren’t exactly gratis: you can spend 5 to 10 minutes searching, on sites like Hulu.com or Clicker.com.

 

Prototype

 

Whose Idea Was the Dry-Cleaning Bag Anyway?

 

By AMY WALLACE

 

The entrepreneurs behind two makers of reusable dry-cleaning bags dispute who deserves credit for the idea.

 

Fundamentally

 

Ways to Protect Your Portfolio From Market Volatility

 

By PAUL J. LIM

 

For more stability in rough markets, investors might look for strong large-cap companies, as well as those that pay steady dividends.

 

Practical Traveler

 

Airlines Play the No-Fault Card

 

By SUSAN STELLIN

 

Cash-strapped airlines rarely pay for hotels and meals, even when cancellations are their fault.

 

Mortgages

 

Reform Bill Retools Lending

 

By BOB TEDESCHI

 

Lenders are already changing practices in anticipation of the financial reform bill, which awaits final tweaking by the Senate.

 

 

Bank Bailout Is Potent Issue for Both Parties in Fall Races

 

By CARL HULSE and DAVID M. HERSZENHORN

 

Lawmakers who backed the Troubled Asset Relief Program to rescue the banking system in 2008 are haunted by the vote.

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Public sector debt 'around £2 trillion' - Telegraph

 

A study by the Institute of Chartered Accountants in England and Wales (ICAEW) and the Centre for Economics and Business Research (CEBR) has revealed that there could be a further £1.13 trillion of liabilities above the current estimate that puts public sector net debt at £932bn.

 

Researchers said their figure incorporated liabilities that are currently considered to be "off-balance sheet" or not covered in the official national debt measure, such as public private partnerships or private finance initiatives and public sector pensions.

The researchers said that their report illustrated the need for transparency in the public finances and called on the Office for Budget Responsibility to raise awareness of why contingent liabilities are currently not considered part of public sector debt assessments.

 

Michael Izza, ICAEW chief executive, said: "While there are important debates to be had about specific spending cuts, I believe that meaningful reform is necessary to underpin sustainable public finances over the long term and create a culture of fiscal responsibility."

 

Charles Davis, managing economist for CEBR, said that public sector pension liabilities were by far the biggest consideration. The Treasury has estimated the public sector pension liabilities to be £770bn.

 

"Our research draws upon existing publicly available data and previously undertaken analysis to illustrate that the liabilities that are not included in the official public sector net debt figure are large but, in many cases, uncertain," he added.

 

Wow imagine what doubling the national debt overnight would do...

 

Our politicians for decades have been lying to the people. Still everyone enjoyed the fraud whilst it lasted.

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http://www.nytimes.com/2010/07/12/business/12census.html?_r=1&ref=business

 

It was a finely honed machine, this United States Census team, and it had a good run. But in the coming days and weeks, many of its members will experience the pain of unemployment — once again.

 

Christine Egan, a 31-year-old massage therapist, says her census job offered shelter from the economic storm last year. “The economy was terrible; there was nothing,” she says. “I’ve already gone through ‘horrific,’ so I’m immunized.” She smiles, optimism almost extending to her eyes. “It must be better now, right?”

 

When the Census Bureau hired upward of 700,000 Americans over the last two years — most in the last six months — it landed more experienced workers with more sophisticated skills than any time in recent memory. This was the unintended upside of the nastiest recession of the last 70 years.

 

Now, its decennial work largely done, the Census Bureau is shedding hundreds of thousands of workers — about 225,000 in just the last few weeks, enough to account for a jot or two in the unemployment rate, say federal economists. Most of those remaining will be gone by August; a few will last into September.

 

In past decades, the bureau faced a challenge just keeping workers around to close up shop, as most dashed for new jobs that might pay better. Not this time around. Jobs remain scarce. In Rhode Island, the unemployment rate stands at 12.3 percent, higher than a year ago. The national rate, too, has not budged.

 

As most census workers have nowhere to go, rushed farewells are rare. Self-reflection, and a touch of anxiety, mark the mood.

 

“Typically, at this point in the process, we’re losing a lot of people because they’re taking jobs,” said Kathleen Ludgate, the regional director in Boston. “I wish we had that problem now.”

 

Ms. Ludgate receives notes from departing workers, some by e-mail, others in ink. They thank her for the chance to learn something about themselves and their country. They write to say their confidence had picked up, that they can again meet the gaze of friends and neighbors.

 

These are the missives of hard-working people who found themselves in a tighter spot than they ever expected, and who came to view census work as a lifeline.

 

Still I'm sure there will be shock and horror over the next unemployment stats.

 

Perhaps they need a census every six months?

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Can Mervyn King save the UK banking system? | Business | The Guardian

 

Wanted: tough, non-nonsense regulators to cast a beady eye over Britain's banks. Competitive salaries. Wisdom and hard-headedness more highly prized than youth. Those seeking a future career with Goldman Sachs will not be considered. Apply to M King, Bank of England, Threadneedle Street.

 

Unlike the rest of the public sector, the Bank is about to get bigger. It needs to recruit a cadre of officials to police the City following the decision by George Osborne to reform a regulatory system that contributed to the worst financial crisis since the 1930s.

 

Emergency measures helped to prevent deep recession turning into a second Great Depression but – as the Bank for International Settlements noted last month – the running repair job has delayed necessary reforms to both the real economy and to the financial system.

 

Nowhere is change more needed than in the UK, which during the bubble years became too dependent on the speculative activities of banks that were far too lightly regulated for the risks they were taking with the deposits of their retail customers.

 

Work is under way in three areas; in ascending degrees of importance these are tax, regulation and structure. Osborne announced in the budget a levy on bank balance sheets that is designed to raise £2.4bn.

 

At a time when the government's priority is to get the banks to lend more, he believes this represents a fair contribution, even allowing for the phased cut in corporation tax announced in the budget.

 

The International Monetary Fund has floated the idea of a financial activities tax – effectively a form of VAT – but Osborne would only seriously consider introducing one if other major western countries did so as well. He has rejected the idea of a financial transaction tax as impracticable.

 

The regulatory changes involve giving the Bank of England extensive new powers to supervise not just individual institutions but also the City as a whole. It will be the job of Threadneedle Street to tighten up credit conditions if and when the banks again succumb to collective euphoria.

 

It is almost three years to the day since Chuck Prince, then running Citigroup, boasted that the financial industry would keep dancing until the music stopped. King noted in his Mansion House speech last month that the Bank would have to "turn down the music when the dancing gets a little too wild".

 

There are risks involved in abandoning Labour's regulatory regime. Scrapping the Financial Services Authority and handing supervision to the Bank makes Threadneedle Street immensely powerful. There are those who wonder whether King and his team can adequately monitor what is going on in the fast-moving world of the City while at the same time getting the big decisions on interest rates right.

 

Others are concerned that there may be a conflict of interest between monetary policy and financial stability should the Bank discover that a big institution was in trouble at a time it was contemplating raising rates.

 

Yet a glance back at the Bank's half-yearly Financial Stability Report released in the summer of 2006 shows why a different approach is needed. A full year before the crisis erupted, the FSR noted the widening global imbalances, the build-up in debt, and the expansion in bank balance sheets, reflecting "position-taking in risky and prospectively illiquid instruments including structured credit products".

 

It noted the herd behaviour of banks that, while aware prices of certain assets were too high, carried on trading for fear of harming short-term profits or losing market share.

 

It noted that heavily leveraged banks could no longer fund their activities from their retail depositors and were increasingly dependent on wholesale money markets, leaving them "vulnerable to falls in market liquidity".

 

It noted that the stability of the financial system relied on investors knowing what risks they were taking, and that the complexity of the instruments that were being traded made it "difficult for investors to determine precisely how exposed they are to particular risk factors".

 

It's all there, in other words. The Bank clearly identified all the ingredients that would form a toxic cocktail a year later, even if, at that stage, it did not envisage the biggest financial crisis since the 1930s. What it lacked in 2006 was the ability to translate misgivings about banks' activities into action.

 

Under the new system, the Bank will have those powers. Its financial policy committee (FPC) will look at conditions in the market and decide whether banks collectively should be obliged to hold more capital or change the balance of their portfolios so that they become less risky. Beneath the FPC there is to be a Prudential Regulatory Authority, which will have the task of looking at individual banks.

 

Here the plan is to change both the personnel and the law. If the grizzled old hands King wants to appoint do not like the smell of what a bank is doing, they will have the right to impose tougher controls, and the institution concerned will have no right to appeal.

 

Inevitably, this puts a responsibility on the Bank to get it right, at a collective and individual level. Even so, the new arrangements are more robust than those they are replacing. During the years before the crisis, the FSA had its hands full dealing with consumer protection issues such as the collapse of Equitable Life; if there was no immediate crisis in the banking system there was not a lot of thought given to the possibility that the City might be exposing itself – and the wider economy – to an excessive amount of risk.

 

The Bank will have no such excuse. Consumer protection is being hived off into a separate agency, the Consumer Protection and Markets Authority, so Threadneedle Street will only be dealing with the big picture and the resilience of the banks.

 

Finally, and crucially, there is the structure of the banking industry, which will be looked at by a banking commission headed by Sir John Vickers. This had its first meeting last week and will report back next year. Britain's banks are worried about what this commission might propose, and with good reason. It is made up of men and women of independent stamp and has not – unlike the reports commissioned by Gordon Brown – been set up with a preordained conclusion in mind.

 

Quite conceivably, the commission could suggest the break-up of the banks, which would end the absurdity of banks taking in deposits from their retail customers, using them for highly leveraged speculative activities and then expecting the taxpayer to pick up the tab.

 

Those sceptical of a division between retail and investment banking doubt that such a clean break can be made, and that the price of a safer system will be to drive business out of London. But without structural reform of the financial sector any attempts to toughen up City supervision, let alone to rebalance the economy, will be blunted.

 

Now we get to trust the BoE in policing the system.

 

So the power to regulate is given to the people who failed to spot what was going to happen.

[interestrateripoff]

A Quick Primer On Why Everyone Thinks The Economy Is Headed Into The Toilet Again

 

Three months ago, everyone was jubilant: The economy was headed for a v-shaped recovery, job growth was kicking in, and consumers were about to start spending, spending, spending again.

 

But now, suddenly, everyone thinks the economy is headed back into the tank.

 

Aside from noting the obvious--when it comes to economics, the consensus is usually wrong--it's worth reviewing why everyone has suddenly become so pessimistic again.

 

20 charts at the link.

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How Foreign Nations Now Pay For All Of America's Defense And Education

 

Here's an ugly dose of perspective. America is so dependent on foreign financing for its budget, that things like defense, homeland security, education, and unemployment benefits are pretty much funded by foreign nations such as China.

 

Why?

 

According to former Republican senator and committee co-chairman Alan Simpson, federal revenue is, already, completely chewed up by the three nasties: Social Security, Medicare, and Medicaid. "The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans -- the whole rest of the discretionary budget is being financed by China and other countries."

 

Foreigner creditors truly hold America by the neck these days. They effectively finance everything beyond the three programs above.

 

Worse yet, even strong GDP growth wouldn't be enough to save the U.S. from its debt proglem. Committee co-chairman and former Clinton chief of staff Erskine Bowles estimates, "We can't grow our way out of this. We could have decades of double-digit growth and not grow our way out of this enormous debt problem. We can't tax our way out. . . . The reality is we've got to do exactly what you all do every day as governors. We've got to cut spending or increase revenues or do some combination of that."

 

The other reality is that we won't get double digit GDP growth. So the cuts will need to be deep.

 

Still I'm sure it's all contained....

 

So China is financing the American war machine. I wonder what happens when they ask for the cash back, will they get the Carriers?

[interestrateripoff]

Breaking news:

 

• BP in talks to sell assets, new drill ban pending - Reuters
  
• Euro EFSF seen ready in July, Slovaks to discuss Wed - Reuters
  
• Consumer Reports will not recommend Apple iPhone 4 - Reuters
  
• Consumer Reports will not recommend Apple iPhone 4 - Reuters
  
• RPT FOREX-Technical factors stall euro rally - Reuters
  
• Techincal factors stall euro rally - Reuters
  
• CDS quotes for Iraq, other illiquid credits on rise - Reuters
  
• US STOCKS-Wall St flat as global worries drag before earnings - Reuters
  
• EU govts should help viable banks in stress -IMF - Reuters
  
• S&P keeps threat of ratings downgrade hanging over UK - Reuters
  

 

 

 

• Britain's recession was even deeper than first thought
   
   
  ONS data shows peak to trough decline in economy was 6.4% rather than the original 6.2% estimate 326 comments
   
  
  • Pound slips after revised GDP figures
    
  • Revised GDP figures: what the experts say
    
  • Larry Elliott: Slow growth probably as good as it gets
    
  • Datablog: UK GDP since 1948
    

   

  [*] Falkland Oil and Gas shares plunge after its Toroa well proves empty

   

   

  The rush to find new oil reserves has brought a political issue to the fore, sovereignty over the islands is claimed by Britain and Argentina

   

  [*] BP shares rise as takeover talk grows

   

   

  Exxon takeover talk boost shares as BP says latest attempts to plug the oil well going 'as planned' 53 comments

   

  • Obama 'won't stand in way' of Exxon takeover
    
  • BP begins new operation to seal off well
    
  • BP starts work on new gulf spill cap
    
  • Cairn's Arctic oil drilling attacked
    
  • US appeals court opens door to new gulf drilling
    
  • Lloyd's adds its voice to dire 'peak oil' warnings
    

   

  [*] Shareholders fight back over executive pay and bonuses

   

   

  The boards at Marks & Spencer, Burberry, British Land and Sainsbury's will face investor wrath over executive pay this week 6 comments

   

  [*] Glaxo on red alert as FDA scrutinises diabetes drug Avandia

   

   

  The FDA is holding a hearing into Glaxo's controversial blockbuster diabetes drug Avandia to decide if is a potential killer

   

 

 

• 
  OBR 'must show independence by moving out of the Treasury' - Budd
   
   
  The tax and spending watchdog needs to have its own staff and offices, says outgoing OBR boss, Sir Alan Budd 2 comments
   
  
  • OBR's job loss figures under fire again
    

   

  [*] Bank reform will drain £1tn from economy, Osborne told

   

   

  Banks claim new research shows changes will slice two percentage points off economic growth 171 comments

   

  • Hedge funds cash in on European uncertainty
    

   

  [*] Upturn in commercial property may have run its course

   

   

  Land Securities' chief executive Francis Salway, expects 'ripples' in the market for the next few years 3 comments

   

 

 

• More business news
   
   
  
  • JC Flowers comes to rescue of Kent Reliance with £50m deal
     
     
     
    
  • Minister seeks broadband access ideas
     
     
     
    
  • Jarvis staff set to lose £28m in back pay
     
     
     
    

[interestrateripoff]

Nationwide calls time on fresh bailouts of rival societies

 

Nationwide has called time on any further deals with rival building societies after coming to the rescue of three of its smaller competitors during the financial crisis, The Independent has learnt.

 

 

• Former Anglo Irish Bank chief declared bankrupt
  
• Union urges BA to end 'fixation with conflict'
  
• Economy plummeted 6.4% during recession
  
• Kent could sign £50m deal with private equity firm tomorrow
  
• Britain at risk of energy crisis, engineers warn
  
• Government washes its hands of BP takeover
  
• Debt management firm ordered to stop 'inaccurate ads'
  

 

James Moore: Solution needed for this mutual funding crisis

 

For the past few years, any building society facing hard times has had a readily available solution – call on a larger rival, usually Nationwide.

 

 

• David Prosser: FTSE chairmen must keep a closer eye on their executives
  
• Hamish McRae: Let's pay attention to our service sector: you know it makes sense
  
• Margareta Pagano: So, our banking system is in rehab – but will it work?
  
• David Prosser: The Chancellor is running out of time to save the OBR
  
• David Prosser: The City chooses another one of its own
  

[interestrateripoff]

Nationwide calls time on fresh bailouts of rival societies - Business News, Business - The Independent

 

Nationwide has called time on any further deals with rival building societies after coming to the rescue of three of its smaller competitors during the financial crisis, The Independent has learnt.

 

The decision has been taken because of the potential negative impact on the society's members were it to step in to rescue another struggling rival. It comes at a time when wafer-thin margins have left many societies in difficulties while the Financial Services Authority wants them to raise more capital.

 

In its recent financial stability report, the Bank of England also raised concerns about the health of the sector and warned that building societies have found it harder to reduce their debt levels than the major UK banks. The report said: "Cyclical challenges have put further downward pressure on building societies' earnings during the course of the crisis. The low interest rate environment has squeezed interest margins, an effect exacerbated, in some cases, by contractual limits on societies' ability to raise interest rates on existing loans."

 

It has cited consolidation among building societies as one way to ease the difficulties. But it admits that "in the near term cyclical pressures and the fact that most large societies have recently been involved in mergers are likely to limit the scope for further consolidation somewhat".

 

While Nationwide's financial strength remains robust, Britain's biggest building society has not been immune from the margin squeeze, and 2009 profits fell by almost a half compared with the previous year.

 

It also suffered an outflow of deposits while mortgage lending fell by a third as it warned that it expected "lower levels of profitability" to continue through 2010-11.

 

Nationwide, led by its chief executive, Graham Beale, has been an active consolidator in the past three years merging with the Portman building society in 2007, before the financial crisis hit. Subsequently it added the Derbyshire and Cheshire building societies and effectively rescued the Dunfirmline as the sector was buffeted by the banking crisis.

 

So it would appear that the Nationwide has left the game and won't bail anyone else out.

 

Question is who will intervene now if another mutual gets in to trouble. Does the BoE have any remit to help the building societies or is it purely a fund for Bankers to access.

 

No wonder the banks have a healthier balance sheet as the BoE has been running monetary policy to try and get them out of the craphole they are in.

[interestrateripoff]

S&P keeps threat of ratings downgrade hanging over UK

 

NEW YORK/LONDON (Reuters) - Britain is still in danger of losing its triple-A rating despite the ambitious fiscal tightening announced by the country's new coalition government last month, Standard & Poor's said on Monday.

Continue Reading

 

 

 

Bank's Posen sees risk of renewed recession

 

LONDON (Reuters) - Bank of England policymaker Adam Posen said that Britain was at risk of returning to recession, in part because of looming fiscal austerity and problems in the euro zone, according to an interview published on Monday.

6:24pm BST

 

OBR watchdog rejects political meddling accusations

 

LONDON (Reuters) - The new fiscal watchdog rejected on Monday accusations that it had been subjected to political interference but set out plans to increase its independence and overcome doubts about the credibility of its forecasts.

5:25pm BST

 

Pound falls on UK economy and credit rating concerns

 

NEW YORK/LONDON (Reuters) - Sterling fell against the dollar on Monday amid concerns about Britain's economy and after Standard & Poor's said the country is still in danger of losing its triple-A rating because of its large public debt.

6:39pm BST

 

Recession worse than previously thought

 

LONDON (Reuters) - Britain's recession was deeper than previously thought, new data showed on Monday, while a top central banker warned that euro zone weakness and looming government spending cuts could send the recovery into reverse. | Video

7:50pm BST

 

Aon to buy Hewitt for $4.9 billion

 

NEW YORK/BANGALORE (Reuters) - Aon Corp , the world's largest insurance brokerage, said Monday it will buy Hewitt Associates Inc for $4.9 billion (3.3 billion pounds) in cash and stock to create the world's largest human resources company.

4:36pm BST

 

Buoyant BP boosts FTSE 100, but gains seen brittle

 

LONDON (Reuters) - A jump in the share price of BP on hopes that the Gulf of Mexico oil leak will soon be capped outweighed a weakness in miners to push the FTSE 100 share index higher for a fifth session on Monday. | Video

7:50pm BST

 

EU plans to toughen investor protection

 

BRUSSELS (Reuters) - Account holders in the European Union who are faced with a run on their bank would get their money back within a week under a draft EU law published on Monday to protect consumers in the wake of the global crisis. | Video

7:36pm BST

 

Government to keep lid on budget

 

BUDAPEST (Reuters) - The government will not give the European Commission an advance view of its budget or cede any more power to Brussels under the current parliament, the British minister for Europe said.

6:30pm BST

 

BP in talks to sell assets as new drill ban pending

 

NEW ORLEANS/NEW YORK (Reuters) - BP Plc is in talks with U.S. oil and gas company Apache Corp and others to sell assets worth up to $10 billion (6 billion pounds) as it grapples with the costs of its spill in the Gulf of Mexico.

[interestrateripoff]

BBC News - What might the UK economy be like in future?

 

Rebalancing the economy - it has become a mantra in Whitehall, the Bank of England and the world of economic think tanks.

In essence, what it seems to mean is making more things and exporting them, and relying less on services.

To put it another way, manufacturing good - financial services bad.

Ministers also promote the idea of rebalancing away from the South East of England.

Hence a David Cameron speech on the economy in a former West Yorkshire textile mill and the announcement of a regional growth fund after a Cabinet meeting in Bradford.

People often hark back to a golden age when the UK was the "workshop of the world" rather than a "nation of shopkeepers".

This was a time when millions of workers streamed into factory gates in the morning and home again later in the day.

Most expected to have a job for life in their local community's dominant industry, just like their parents and grandparents.

The UK exported and made a surplus on its trade with the rest of the world.

'Financial sector at fault' Under this argument, the golden age was tarnished as manufacturing declined under competitive pressure from developing economies.

Skilled workers were obliged to downgrade to shelf-stacking jobs.

The UK, so this line of thinking goes, had to resort to making money from a bloated financial sector that dragged the economy into boom then bust.

Chart 1 demonstrates the decline in manufacturing as a share of economic output (GDP) from 1970 to 2000 using official data and then forecasts from 2009 to 2020.

Chart 2 using official data shows a similar pattern for employment from 1980 to 2009.

Some of the rebalancing proponents would like to see manufacturing restored to its former glory with millions more jobs created, while the services sector is allowed to wither on the vine.

Others believe its sensible for a new-look economy to evolve - less reliant on borrowing and imports and more focussed on exporting to balance the international trading account.

 

 

 

......

 

 

The coalition has made rebalancing a high priority.

So where are current policies taking the economy?

We asked the forecasting group Cambridge Econometrics to look at the future shape of the economy.

Its modelling incorporates the important measures set out in the June Budget, for example the spending cuts and VAT increase.

The Cambridge forecasts are intriguing (also shown in Chart 1).

They suggest that manufacturing's share of economic output will continue to decline.

Financial and business services will carry on expanding to the highest share in modern times.

The government share (education, health and public administration) falls back to roughly where it was in 2000 before the big spending increases under Labour.

So in 2020, under these projections, the UK will be even more of a service based economy.

 

More at the link.

 

Looks like the economy is going to need to radical reworking.

[interestrateripoff]

Kent Reliance in buy-out talks

US private equity firm JC Flowers is in talks to take a stake in Kent Reliance building society and gain a foothold in UK banking.

Ross and Virgin Money in RBS bid

Metro Bank gets official approval

BP shares rise on asset sale talk

 

BP shares rise sharply on speculation it may have buyers for asset sales needed to fund the Gulf of Mexico clean-up.

 

UK GDP growth unchanged at 0.3%

 

The UK economy grew by 0.3% in the quarter from January to March, but the recession was worse than first thought.

 

 

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[interestrateripoff]

nebusiness.co.uk - News - Business News - UK may return to recession, says MPC's Posen

 

THERE is a "chance" the country may fall back into recession, says one of the country’s leading financial decision-makers on a visit to the North East today.

 

Bank of England Monetary Policy Committee member Adam Posen also said the banks need to be broken up so businesses can get the capital to begin investing and growing.

 

And he went on to say he had been left disappointed by the UK’s recent export performance, as he arrived in Newcastle for a two-day North East visit today.

 

Mr Posen, who has been on the MPC for little over a year, said: "There is a chance we could slip back into recession. I hope it is not the case.

"There is going to be a lot of drag on the economy, with the problems of the eurozone and the public sector contraction in the UK.

 

"However, the recovery has been under way for almost a year, although it has been slow. We hope it will continue but it cannot be guaranteed."

He went on to say new regulatory tools are needed to prevent a repeat of the recent property asset price bubble, which was at the heart of the global financial crisis.

 

He added: "Light touch regulation did not work. We all messed up."

 

He repeated his calls for a cyclical real estate tax which would be designed to take the steam out of the property market if it began to overheat.

 

With the coalition highlighting exports has been one of the key drivers of the country’s future economic performance, he said he had been left "disappointed" by our recent overseas trade performance.

 

"There is room to do more," he said. "The eurozone is our major trading partner but we need to look elsewhere. The BRIC (Brazil, Russia, India and China) countries are on an amazing course and will continue to be at the forefront of global economic growth.

 

"This is good news for the UK. We need to look at shifting our over-reliance on the US and the eurozone to the emerging economies."

 

Read more in tomorrow's Journal

 

I wonder what more exciting insights there will be tomorrow.

 

Is the ground work being laid for yet more QE to be given to the bankers?

 

It's almost comical him talking about the "recovery" which has been "slow" and yet he fails to mention it is purely down to govt deficit spending.

 

Still he's a highly paid expert so he knows what he's doing.

[interestrateripoff]

[/url]

 

UK recession was deeper than thought, says ONS

 

Britain's economy grew at an unrevised 0.3pc in the first three months of teh year, but the recession was deeper than thought, says ONS.

 

EC moves to protect savers' deposits

 

People holding accounts at banks that fail could soon have their savings of up to €100,000 (£84,000) returned to them within a week, under new EU plans.

 

Hugh Hefner seeks to take Playboy private

 

Playboy, publisher of the well-known adult magazines, has received a $185m offer from its founder.

 

FTSE rises, but mining groups hit by falling Chinese imports

 

 

 

 

BP oil spill costs hit $3.5bn, work on new cap continues

 

 

 

 

Tycoon seeks funding to revive NY Cosmos

 

 

 

 

Aon agrees $4.9bn purchase of Hewitt

 

 

 

 

BA takes delivery of its first Boeing 777-300

 

 

 

 

Domino's Pizza profits boosted by World Cup

 

 

• Deutschland über alles doesn't mean EMU trickledown recovery
  

 

• PIIGS may yet fly, but not while trapped in this rickety eurozone
  

 

 

• Tighter rules required to prevent abuse of pre-pack administrations
  

 

GDP figures: UK would still be in recession without Government spending

 

 

 

Public sector debt 'around £2 trillion'

 

 

 

 

Budd plan for OBR 'triple lock'

 

 

 

 

Breaking up eurozone would benefit economy, say experts

 

 

 

 

Start-ups and benefit cuts 'can add £120bn to the economy'

[interestrateripoff]

GDP figures: UK would still be in recession without Government spending - Telegraph

 

It also confirmed that GDP grew by 0.3 per cent during the first three months of this year, a slight dip on the 0.4 per cent of growth in the last four months of last year.

 

However, the figures for the first quarter, revealed the economy was worryingly reliant on Government spending, while consumers had stopped spending.

 

There was a 1.5 per cent rise in Government spending, adding 0.4 per cent to the total growth figures. Meanwhile, household expenditure actually fell by 0.1 per cent. The ONS said the fall in household expenditure was particularly marked in transport, culture and recreation – suggesting people had cut back on flying, holidays and trips to the cinema.

 

This means that without Government spending on the NHS and social services, the economy would have technically been back in a recession during the first three months of the year.

 

Economists warned that with the Treasury planning severe public sector cuts, and families appearing to tighten their belts like never before, the economy was in a perilous position. Brenden Barber, the TUC general secretary, said that spending cuts were "the worst medicine possible for a sickly patient".

 

Still it's contained...

[interestrateripoff]

In BP’s Record, a History of Boldness and Costly Blunders

 

By SARAH LYALL 19 minutes ago

 

 

In pursuit of growth and profits, BP has taken monumental risks and suffered the consequences. But its record shows that it has been unable or unwilling to learn from its expensive mistakes.

 

• New Culture of Caution at Exxon After Valdez
  
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Richard Perry/The New York Times

 

BP chief executive Tony Hayward during recovery operations over the Gulf of Mexico. Although the accident is still under investigation, preliminary findings by investigators indicate that BP made a series of decisions that compounded the chances of disaster.

 

 

 

 

 

 

With a Broad Product Line, Panasonic Bucks Trend

 

By HIROKO TABUCHI 1:53 PM ET

 

Critics say the Japanese manufacturer is losing markets to more focused and agile companies.

 

• Times Topics: Panasonic Corporation
  

 

On Wall Street, a Market Without Clear Direction

 

By CHRISTINE HAUSER 8 minutes ago

 

Alcoa will kick off the earnings reports later on Monday, and investors will try to glean information about the economy.

 

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Johnson & Johnson to Acquire Micrus, a Stroke Treatment Company

 

By NATASHA SINGER 31 minutes ago

 

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Aon Buys Hewitt in Move to Expand Consulting Unit

 

By THE ASSOCIATED PRESS 1 minute ago

 

The insurance broker agreed to pay $4.9 billion in cash and stock for the human resources company.

 

Bernanke Calls Loans to Small Business Critical to Recovery

 

By THE ASSOCIATED PRESS 10:42 AM ET

 

The Fed chief said that stepped up lending to creditworthy businesses would bolster the recovery and reduce unemployment.

 

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Hefner Offers to Take Playboy Private

 

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Playboy Enterprises said on Monday that it has received a take-private proposal by Hugh M. Hefner, its founder and biggest shareholder, and Rizvi Traverse Management.

 

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[interestrateripoff]

FT Jumps The Shark (The IMF)

 

I'm amused.....

The use of the swap lines has subsided, but the speed and scale of their use at the time seems to have inspired some creative thinking at the IMF. Thus was born the MSL, or Multicountry Swap Lines, which would be intermediated by the Fund. Since no legislature has said you can’t have such an open-ended facility with no limits on size, it would seem that you can.

So when the next crisis comes, the IMF’s contingency plans will almost certainly have been pre-approved, and quickly put into effect. When you are making a one-way bet against risk assets, consider the avalanche of official money that will crush you at the moment you expect to cash in.

This, of course, implies that the IMF can actually fund such things.

Yes, I know, Bernanke loves swap lines. But anyone who thinks that such didn't attract attention (e.g. Mr. Grayson, for one) is simply nuts. It did, and further, the premise of a swap line is that it is a short-term liquidity facility with no credit risk.

Well, that goes out the window and fast if it's used as a funding mechanism.

Not that the IMF might not try such a trick. But wars have started over less, and the IMF should be well-aware of both that and that being "headquartered" here in the United States it has some rather unique risks in this regard, since the US is the vast majority of its funding (just as is true for the UN.)

Yeah, the "get us out of the UN!" folks have for years sounded like a bunch of shrill crooners. But are they really wrong, in point of fact? That all depends on what the UN - or IMF - is doing at any given point in time.

At the point the IMF decides that it would like to write its own appropriation bills without Congressional approval there might be some push-back in a form and fashion they don't quite expect.

All lawful, incidentally.

At least I think it would be.

For examples one can look to Germany, where the challenge to the EU bailout fund has hardly gone away. Indeed, there's a prima-facie case there that the alleged "fund" violates the German Constitution and was so declared in public by those who negotiated it.

Now this doesn't necessarily guarantee that the court will uphold the law, but as MERS has discovered out in California and a number of other states, that which the "powers that be" construct in violation of said law can be, and sometimes is, struck down by the judiciary - much to the chagrin of those who thought they were "in control."

 

Secret gold swap has spooked the market

 

Then today we have this? Was it the IMF?

[interestrateripoff]

Get Ready For More Bank Threats

 

Be prepared for a new round of "tanks in the streets if you don't cut that crap out!"

The Federal Housing Finance Agency on Monday said it had issued 64 subpoenas to unnamed firms in an effort to uncover misleading statements that Wall Street banks and others may have made when they bought and packaged risky mortgages into securities. Fannie and Freddie were two of the largest investors in those securities.

And why would the FHFA have to issue subpoenas? I mean, couldn't Fannie and Freddie just ask for the data they wanted?

The FHFA said that it had opted to issue the subpoenas after being rebuffed in earlier efforts to collect loan files.

Oh, I see. The banks were asked, and replied: middle finger

 

 

 

Well now why would they do something like that? You don't think there might be something to hide, do you?

Like, perhaps, that they didn't have good recordable titles? That they had endorsements-in-blank and thus couldn't record them? That they either knew or had every reason to believe that the claimed levels of income and/or assets didn't exist? That the appraisals were doctored?

Naw, none of that stuff happened, right? There weren't any straw buyers, there weren't any second-home riders executed on investment properties, why there wasn't any fraud at all that was perpetrated during these years and then sold off to Fannie and Freddie, pocketing a spread and (attempting to) stick the taxpayer with a few hundred billion in losses, right?

This ought to get good.