Loans and Finance

Loans and Finance


News and information about loans, money, debt, finance and business issues.

Wednesday, December 17, 2014

Rouble Freefall

As I predicted sometime ago, Russia would end up raising rates (as it did yesterday to 17%) in order to try to fend off the reality of the market.

As I also predicted, raising rates would not work (as the UK learned to its cost when it raised rates to try to prevent it being thrown out of the ERM in 1992). The rouble is in freefall and Russia now faces imposing capital controls, further wrecking the economy.

The question that the West needs to ask itself is this, is pushing Russia to the brink of economic collapse really a sensible policy both economically and geopolitically?

Monday, December 15, 2014

The Great Amazon 1p Giveaway

The dangers of relying on software and algorithms was brought home on Friday when a software error on Friday has led to hundreds of items being sold for just 1p on Amazon, and now businesses say they risk going bankrupt if they are forced to follow through with the sales.

The glitch occurred between 7pm and 8pm on Friday, and affected firms that use the tool RepricerExpress.

RepricerExpress software automatically reprices items of stock if a cheaper version becomes available elsewhere online and is designed to keep businesses competitive.

A Facebook group for those traders who last money from this has been set up.

Traders both online sellers and those who deal with billions of dollars of share trades etc should take heed from this!

Tuesday, December 09, 2014

Greece Knobbles Its Economy

Greece has been granted a two month bailout extension by the EU, and in light of this Greece has decided to knobble its economy by holding presidential elections two months early. Thus ensuring that Greece is at the top of everyone's mind in the coming weeks.

Friday, December 05, 2014

Premier Foods' Nice Little Earner

In a sure sign that it is in financial difficulties, Premier Foods (owner of brands that include Mr Kipling, Ambrosia, Bisto and Oxo) has been asking its suppliers for payments to continue doing business with the firm. 

The official term for this practice is "pay and stay". However, one supplier quoted by the BBC referred to it as "blackmail".

Premier Foods is of the view that the scheme did not break any rules under competition law. However, the government said it was "concerned by recent reports".

Newsnight has seen a letter sent by chief executive Gavin Darby, dated 18 November.
"We are aiming to work with a smaller number of strategic suppliers in the future that can better support and invest in our growth ideas.

We will now require you to make an investment payment to support our growth.

I understand that this approach may lead to some questions.

However, it is important that we take the right steps now to support our future growth."
All very well and seemingly "polite". However, the reality is that if a supplier doesn't cough up, they are "de-listed". As per the BBC, when a supplier raised questions in an email about the annual payments, a member of Premier's staff replied:
"We are looking to obtain an investment payment from our entire supply base and unfortunately those who do not participate will be nominated for de-list."
As to whether Premier can legally get away with this, is a question for legal experts.

However, what its suppliers needs to ask Premier is given Premier's financial problems, what happens to the "pay and stay investments" already handed over by suppliers if Premier goes bust?

Thursday, December 04, 2014

Putin Issues SOS

In a sign that the Russian economy is in dire straits, President Putin has offered an amnesty on capital returning to Russia.
This is all very well. However, if people were to heed the call to return their capital they would never be able to get it out of the country again.

Wednesday, December 03, 2014

Chancellor's Autumn Statement Live

Tuesday, December 02, 2014

Russian Economy Going Down The Toilet

The Russian economy, as a result of sanctions, is going down the toilet; the rouble is falling and inflation is kicking in.

Thusfar the Russian Central Bank has staved off using capital/currency controls. However, there is growing internal political pressure within Russia to stave off the decline in the rouble.

It is of course only a short term solution to artificially prop up a failing currency, in the end market forces (or in this case, closed market forces) will have their way.

As to whether it is wise to destroy the Russian economy via sanctions, is of course another question. Whilst the West thinks that this will persuade Moscow to pull back from its Ukrainian adventure, the policy in the Kremlin is geared to a long term (ten year) siege. This is a very dangerous situation for both the global economy and global peace.

Let us hope that the policy makers in the West and in the Kremlin know have plans to pull back from the abyss.

Monday, December 01, 2014

Barclays Introduce Bank Cam Technology

Barclays, in an effort to reduce people's dependency on branches (so that it can close them), intends to introduce a “Skype-like” video calling system to enable staff and customers to communicate with each other.

The Telegraph understands that the service will be introduced in the coming weeks.
The system will be available outside usual bank opening times.

The idea has merits, for those customers with the technology capable of video conferencing. However, it does pose security issues (eg there most certainly will be a risk of hacking).

Thursday, November 27, 2014

The £259BN EU Black Hole

The European Court of Auditors has identified a £259BN black hole in the EU budget that will cost Britain £34BN over the next six years to fund.

Is there another way that this hole can be filled?

Yes, governments can decommit from spending programmes that they have already committed to.

However, in the Lah Lah Land of the EU that will never happen.

Like it or not we are screwed by our membership of the EU, and most likely screwed if we leave it.

Tuesday, November 25, 2014

Turning Japanese

Andrew Roberts, RBS's credit strategist, is quoted by the Telegraph:
We are seeing `Japanification’ setting in across Europe.

We expect 10-year Bund yields to cross the 10-year Japanese government bond and we are amply positioned for such an outcome.” 
In theory, as economic predictions are always "theoretical", either the ECB launches massive QE in which case it will buy bonds, or it won't in which case bond yields will collapse further.

Either way, in theory, bond prices will rise.

Theory and reality have, of course, a nasty habit of becoming disconnected!

Monday, November 24, 2014

Yorkshire Bank £2BN Float

Yorkshire Bank will be floated for £2BN by its current owners, National Australia Bank as part of their strategy to exit the UK market after making significant losses here.

Yorkshire and Clydesdale, both of which are owned by National Australia Bank and both of which will be floated, have (according to the Telegraph) 2.7m customers and 330 branches. As with many other banks, they have had to write off billions of pounds of bad debts and compensate customers mis-sold payment protection insurance and complex interest rate derivatives.

Tuesday, November 18, 2014

Greece's Bailout Negotiations Stall

As I noted a couple of weeks ago, Greece is looking for another bailout in order for it to be able to exit its current bailout cleanly when it matures on 31 December.

Unfortunately, the negotiations between Greece and its international creditors have become deadlocked over a final round of measures required to release the last tranche of the country’s bailout.

According to Bloomberg the Greek government is resisting pressure from the troika for additional budget savings in 2015 of about 2.5BN euros.

Seemingly Greece now risks missing the 8 December deadline to reach agreement on the steps required to unlock the aid and what comes after. Dutch Finance Minister Jeroen Dijsselbloem said:
It’s crucial that Greek authorities work with the troika to complete the current review and the program so we have a clear cut between the finishing of the program and any instruments that will follow up on that from Jan. 1.
As I have noted many time before, Greece's best path to economic stability and growth lies outwith the Eurozone.

Monday, November 17, 2014

Japan Slides Back Into Recession

Japan has slid back into recession after reporting a third quarter fall in GDP of 0.4%.

Apparently this has "shocked" analysts and those who claim to be experts in economics.


Japan introduced a sales tax earlier this year which, quite obviously, would have (and indeed did) negatively impact consumer spending.

For reasons that only Prime Minister Shinzo Abe can know, the sales tax hikes (another is planned) were meant to bring the economy out of its decades long slump.

Quite why increases in consumer taxes were meant to stimulate the economy is beyond me, even more so why "experts" didn't see the increase in taxes as a threat to any form of nascent economic recovery!

Friday, November 14, 2014

Twitter Bonds Junk

Apparently Twitter bonds are "junk".

Who would have thought that!

Thursday, November 13, 2014

We're Going To Crush Greece!

As per The Telegraph's quote of Tim Geithner:
"'We’re going to teach the Greeks a lesson. They are really terrible. They lied to us. They suck and they were profligate and took advantage of the whole basic thing and we’re going to crush them.' [That] was their basic attitude, all of them."
The Greeks knew this at the time, and it was indeed self evident to anyone who took more than a passing interest in the death throws of the Eurozone.

However, seeing it in black and white four and half years on is still shocking!