Europe Out of Recession
Europe, or rather the 16 countries that use the Euro, have officially pulled out of recession (their economies expanded by 0.4% in Q3 of this year).
Germany and France expanded by 0.7% and 0.3%, whilst Spain shrank further.
However, Britain is still stuck in recession (even Italy has pulled out of recession) if the recent figures from the Office of National Statistics are to be believed.
Europe should hold back on celebrations though. The recovery is fragile, and consumer spending actually fell by 0.7% during Q3.
Labels: EU, ons, recession
Banks Revert To Bad Old ways
It seems that old habits die hard and, hardly a great surprise, the banks are reverting to their old ways of forcing staff (via sales targets) to sell products to people who don't need then and cannot afford them.
That, at least, is the view of the union Unite.
Unite claims that sales targets for banking staff have not changed since before the credit crunch.
Fair point, maybe. However, the banks do need to set sales targets if they are to remain in business and continue to employ members of Unite.
The question is, are the sales targets reasonable and achievable without recourse to mis-selling and "harassment" of customers via cold calls?
Labels: banks, cold calling, recession
Don't Believe The Hype - Slowing Unemployment
The Office of National Statistics (ONS) released figures today that purport to show that the ongoing rise in unemployment is slowing, climbing by a "mere" 30,000 in Q3 of this year to 2.46M ("experts" had been predicting 2.5M).
Doubtless the government and other organisations may well spin this as signs of a recovery. However, before popping the champagne corks, the following needs to be taken into account:
1 There are still 30,00 more people out of work than there were in Q2.
2 ONS figures are notoriously unreliable.
3 Q3 ended two months ago, the figures are not real time and are irrelevant for decision making.
4 The true number of "unemployed" are hidden by government schemes that hold people off the register (eg work experience schemes, creation of "non" universities etc).
The figures are meaningless.
Labels: government, ons, recession, unemployment
Lloyds Job Cuts
Lloyds Bank, the 43% taxpayer rescued wreck of a once proud bank, has announced that it will cut a further 5,000 jobs by the end of next year.
Lloyds, at the behest of Gordon Brown, rescued HBOS last year at the height of the banking crisis; it now faces having to "eliminate" a total of 12,500 jobs from a total of 129,000 staff employed in Britain.
Meanwhile HSBC and Barclays both issued positive trading statements, in which they claimed the rise in bad debts has peaked and profits are sustainable.
Labels: banks, HBOS, HSBC, Lloyds, recession, redundancy
Prostrate Cows
Those UK citizens who rely on credit cards to fund their day to day living are in for an unpleasant shock, as rates will increase and annual fees will be introduced.
PricewaterhouseCooper says that the increase in rates and imposition of fees is because lenders face extra regulation, difficulties in obtaining cheap funding and significant increases in bad debts (estimated at being around 9%).
That maybe so.
However, given that the rates on many cards are already close to 30% exactly how much of the increase is out of true necessity (in order for the card companies to remain in business) and how much is down to the fact that the card companies view and treat their customers as prostrate milch cows?
Labels: credit cards, debt, loans, recession
RBS Slips Deeper Into The Mire IV
Finishing off what has been a truly appalling week for the wreck of the once proud Royal Bank of Scotland (RBS), it announced losses today of £1.5BN for Q3 of this year.
Bad debt write offs (£10.8BN) are over three times that of the same period last year (when they were a "mere" £2.7BN).
RBS "hope" to return to profit in 2011.
Sir Fred "The Shred" Goodwin has certainly left a legacy, I wonder if this is the one he dreamed of?
Quite why some his acolytes still hold senior positions in RBS, and are to receive bonuses (albeit deferred) remains a mystery.
Labels: bankruptcy, banks, bonus, debt, fred the shred, RBS, recession
Financial Prisoners
Keith Morgan, head of wholly owned investments for UKFI, gave evidence to the Treasury Select Committee yesterday. He painted a bleak picture for those hapless 85% of Northern Rock borrowers trapped in the wreck of that once respected bank.
Seemingly they will become financial "prisoners" when they are assigned to Northern Rock's "bad" bank.
Some 476,000 mortgage borrowers (some of whom were foolish enough to borrow up to 125% of their property value) will be transferred to the "bad" bank (hereinafter called Northern Rock Assets Management), because they will be unable to remortgage elsewhere.
Approximately 10% of the loans are in arrears.
Gordon Brown, in rare display of decision making and speed, is rushing to return the "good" part of the bank to the private sector.
For why?
So that the Tories cannot claim credit for doing so, when they win the election next year.
Hardly a noble motivation!
Labels: debt, Gordon Brown, loans, mortgages, Northern Rock, property, recession, Treasury Select Committee, ukfi
RBS Slips Deeper Into The Mire III
It would seem that, despite being given a further £33.5BN of taxpayers' money yesterday, the Royal Bank of Scotland may in fact sink even further into the mire.
Alistair Darling warned that this wreck of a bank may in fact need more taxpayer funds, estimated at being at least £8BN, at some stage in the not too distant future.
The taxpayer now owns 84% of this wreck.
Why are some of the senior management who destroyed this once proud bank still in situ?
Labels: Alistair Darling, banks, nationalisation, RBS, recession, tax
RBS Slips Deeper Into The Mire II
Hot on the heels of the news that the Royal Bank of Scotland (RBS) will have to conduct a forced sale of some of its well known brands (eg Churchill) and that a further 3700 jobs (on top of the 16000 already lost) will have to go, RBS have also announced that it will be deferring the bonuses of higher paid members of staff (over £39K per annum) and board members until 2012.
RBS and Lloyds will defer bonuses in return for an additional £40BN of our money.
Part of the bonus payments will be deferred, and part will be paid in shares; ie there is no "bonus cut" as such, merely an adjustment as to how and when the bonuses will be paid.
Given that these two banks are in a complete mess, I don't fully "grasp" how it is that any senior manager is entitled to receive a bonus.
I would also note that by paying part of the bonuses in shares, the current shareholders will find their holdings diluted, and the management will be incentivised to talk the value of the shares up in future in order to maximise their personal gains.
Is this really an improvement in the corporate governance of these two failed banks?
Labels: bankruptcy, banks, bonus, Churchill, corporate governance, Lloyds, RBS, recession
RBS Slips Deeper Into The Mire
Royal Bank of Scotland (RBS), the wreck of a once fine bank now 70% owned by the taxpayer, saw its shares fall by up to 14% this morning as it announced that it may be forced by the EU to sell more assets than planned.
Quote:
"
It remains RBS's goal that any required divestments do not threaten its recovery plan."
Up for possible sale are Churchill, Direct Line and Green Flag insurance operations; along with more than 300 bank branches and its Global Merchant Acquiring card-processing unit. It may also have to downsize its investment banking arm.
Whilst these brands all have value, being part of the forced sale will inevitably reduce much of that value and the price that RBS hopes to be able to extract from any deal.
The forced sale is in order to satisfy EU policy that attempts to ensure that RBS doesn't have an unfair advantage in the market. The EU is also gunning for Lloyds Banking Group, which may have to sell assets and branches, and Northern Rock which is splitting into two.
Alistair Darling tried to spin this positively yesterday, by saying that the creation of three new banks will stimulate competition.
All very well, but if this is such an important issue, why did the government not intervene some years earlier in order to stimulate competition and provide consumers with more choice?
Labels: Alistair Darling, Churchill, Direct Line, EU, Lloyds, nationalisation, RBS, recession
