Loans and Finance

Loans and Finance

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

Friday, July 29, 2011

Playing Politics With People's Lives - Republicans Fail

With 96 hours left to raise the debt ceiling, and in a sense save the world economy, the Republican Party has failed to gain sufficient internal consensus to support its plan that was scheduled to be put before Congress yesterday.

The leader of the Republicans in the House of Representatives, John Boehner, has lost his political credibility as he failed to persuade the Tea Party faction to support him.

As such, the vote and plan have been abandoned and the markets have continued to fall.

Proof, if ever it were needed, that the politicians care more about partisan politics than people's lives.

The Greek Tragdey - The Irony!

Spanish government debt has been put on review for downgrade by Moody's.

For why?

It seems that the Greek bailout has increased risks for lenders to Spain.

Oh the irony!

Thursday, July 28, 2011

Playing Poltics With People's Lives

US politicians on Capitol Hill continue to play politics with people's lives, and as yet refuse to agree to raise the debt ceiling.

Ideology may give comfort to those who live and breath politics. However, the rest of the world needs a real job in order to feed and cloth itself. The damage being done to the world economy by the intransigence of the Prima Donna's on Capitol Hill is putting the livelihoods of millions at risk.

Irrespective of whether or not the debt ceiling is raised in time to avoid default, none of those involved in this disgrace deserve to be re-elected.

Wednesday, July 27, 2011

The British Gas Price Fix Offer

In the wake of the rather paltry £2.5M fine levied by Ofgem against British Gas failing consumers who complain (British Gas made operating profits of £585M for the first half of 2010).

Watch out for the nice little rip off they tried on my dear old mum recently.

British Gas offer to fix your prices until 2013.

Good offer?

No....you have to pay an extra 5% on top of their new standard tariffs if you wish to fix.

Also, "oddly enough", there is no mention of what happens if prices fall (even if that is unlikely). It seems the hapless customers lock themselves into a fixed price which won't fall if British Gas drop their prices.

Rip off Britain!

Playing Politics With People's Lives - The People Fight Back

I am pleased to see that the American people have woken up to the fact that the politicians on Capitol Hill have let them down.

The switchboard at Congress almost crashed as Americans voiced their anger at the stalemate in Washington over raising the country's $14.3 trillion debt ceiling.

The vote on raising the debt ceiling has been postponed until Thursday.

The message to the politicians is simple, don't play politics with people's lives!

Tuesday, July 26, 2011

Playing Politics With People's Lives -The Columbian Stand-off

Sadly, for those of us who live in the real world, the politicians in the US have so far failed to reach any form of agreement wrt raising the debt ceiling.

Partisan hatreds and ideology are driving this protracted Columbian stand-off, whilst the economic well being of real people who have to earn a living in the real world is being held hostage by the antics of those on Capitol Hill.

he risk of a US default is increasing, as talks between President Obama and Boehner (the leading Republican in Congress) collapsed acrimoniously.

Needless to say, the politicians are blaming each other for this mess.

President Obama made a television address in which he stated:

"We risk a deep economic crisis - this one almost entirely caused by Washington."

Boehner claims that he "had made a sincere effort to work" with the White House but that divisions could not be narrowed.

Playing politics with people's lives will lead to economic disaster, and will cost both the Democrats and Republicans dear in the next elections.

Monday, July 25, 2011

Playing Politics With People's Lives

The markets are beginning to realise that, thanks to the intransigence of the politicians, the US may well default on its debts. The opening sessions in all major countries this week saw falls in their key indexes.

Sadly, the politicians are more concerned with playing politics with people's lives rather than raising the country's $14.3 trillion debt ceiling.

Some cynics are of the view that the chaos caused (and flight to gold - today it touched an all time high of $1,622.49 per ounce) by the ongoing impasse in raising the debt ceiling is benefiting those with an interest in gold.

Let us trust that those politicians who are blocking a deal are not found to have significant holdings of gold.

Friday, July 22, 2011

Greece To Default

The markets have been, for the moment, calmed by the EU bailout "plan" that kicks the can of systemic failures of Europe further down the road.

However, the fact that Greece will default and the fact that the wealthier nations in Europe (ie Germany) will have to pay more to prop up Greece has not gone down well with the taxpayers.

Germany's largest taxpayers lobby (Germany’s League of Taxpayers) is not happy, and says that the decision reveals "negligence" toward taxpayers' interests and an unacceptable lack of accountability for indebted states

Reiner Holznagel, vice president of Germany’s League of Taxpayers, told Handelblatt newspaper:

"There has to be improvement in this respect so that taxpayers aren’t constantly faced with new liability risks. The EU decision that the bailout fund in the future can buy debt of states in crisis by itself seals the transformation into a liability union. "

Whatever the political "elite" of Europe claim, there is not the political will on the ground to support unification or unlimited bailouts; especially when those bailouts are applied to a country that knowingly committed fraud in order to join the Euro.

The markets, for the moment, may be appeased. However, be under no illusions, this deal will unravel and along with it the Euro.

Thursday, July 21, 2011

The EU Hail Mary

Kick Can
The EU's Hail Mary (wrt "solving" the Euro crisis) has been leaked by the Telegraph.

Key elements:

1 More money will be thrown at Greece.

2 "We call on the IMF to contribute to the financing of the new Greek programme in line with current practices." The IMF are far from guaranteed to support this.

3 Lower interest rates and extended maturities means default.

4 "We call for a comprehensive strategy for growth and investment in Greece." Fat chance of this happening!

5 "All euro area Member States will adhere strictly to the agreed fiscal targets, improve competitiveness and address macro-economic imbalances. Deficits in all countries except those under a programme will be brought below 3% by 2013 at the latest." Fat chance of this happening!

This Hail Mary response will not impress the markets.

Friday will be an "interesting" day!

Foresight

The Last Chance Saloon

The European experiment and the US economy both face zero hour.

This morning Germany and France claim to have reached a common position on a second bailout of Greece. However, unsurprisingly, no details have been released.

Notwithstanding the economic viability/credibility of this "accord", European leaders are holding a crisis summit today in Brussels in the vain hope that a solution that will save the Euro experiment will be found.

Meanwhile, across the Atlantic, as the politicians on Capitol Hill hold the US and world economy to ransom whilst they continue to bicker; the Federal Reserve is pro-actively preparing for the US to default on its debt.

Politicians on both sides of the Atlantic have failed the people that they claim to represent. As and when the Euro collapses and (quite probably) when the US defaults, the politicians will then engage in an exercise of passing the plate of blame whilst the people of the world suffer from the economic effects of their failure to show leadership.

This is the last chance saloon for the world economy, sadly the fate of the world economy is in the hands of politicians.

Wednesday, July 20, 2011

48 Hours To Save The Euro

The Telegraph reports that Chancellor Angela Merkel seemed in little hurry on Tuesday to resolve the Euro crisis.

There will be no "spectacular step" at the Justus Lipsius building on Thursday; just a "controlled process of gradual steps and measures", she said with unflappable calm.

All very well, if the markets were operating at "EU political speed". However, unlike the politicians, the markets have realised some time ago that there are only two solutions for the crisis:

1 The collapse of the Euro, or

2 The complete fiscal and political integration of the EU.

Merkel's statement will confirm to the markets that in fact there is no way that option 2 is possible. Hence, it is but a matter of time before the Euro collapses.

Tuesday, July 19, 2011

The Mad Hatter's Tea Party

The world economy stands on the precipice, thanks in no small part to the dishonesty and incompetence of politicians around the globe.

Europe faces the collapse of the Euro; as countries such as Greece, Italy, Portugal (which has just "discovered" a Euron2BN budget hole), Spain and Ireland are going to default on their debts.

Meanwhile in the USA, politicians (thanks in no small part to the pig headed intransigence of the Tea Party) continue to fail to raise the debt ceiling.

Wall Street has at last woken up to the very real danger that the politicians will fail the country, and fail to raise the debt ceiling in time, before the USA defaults on its debts. With no signs of progress from Capitol Hill Wall Street is now falling.

Welcome to the Mad Hatter's Tea Party!

Monday, July 18, 2011

The Greek Tragedy - Politicians Dither

As the results of the "stress tests" on European banks are digested, the markets have started the week in negative territory.

Aside from the fact that the "stress tests" appear to have been very "biased" in favour of a positive result, and the fact that Greece is quite clearly going to default, markets are particularly spooked by the fact that the EU continues to dither over what to do about the ongoing crisis.

Splits at the heart of Europe have developed over whether to cut Greece lose, or support it.

Realistically the EU faces two choices; either abandon the Euro experiment as it currently stands, or opt for full speed fiscal and political union.

Given that the latter requires significant political will, and given that the leaders of Europe cannot agree, it is clear that full-scale union will not happen.

Therefore the markets know full well that, at the very least, countries such as Greece will leave the Euro.

Thursday, July 14, 2011

Helaba Throws Hissy Fit

German bank Helaba has stated that it will pull out of the EU's bank stress tests this week, in order to avoid public failure.

By stating that the bank will fail the stress test the bank has ensured that there will be a run on the bank (and probably others in Germany), thus causing the bank to fail.

Helaba were very foolish to make this statement, clearly they do not understand how markets work.

It is clear that the EU experiment is now reaching "crunch time" where it either falls apart, or moves towards full and complete centralised control of taxes, budgets, laws etc.

Greece Lowest in The World

Fitch has cut Greece's credit rating by three levels to CCC.

This rating gives Greece the lowest grade for any country in the world.

Default is now a certainty.

Wednesday, July 13, 2011

Ireland Downgraded To Junk

Moody's has downgraded Ireland's rating to junk, from Ba1 from Baa3. They are of the view that Ireland will need a secondary bailout.

Ireland now joins Portugal and Greece in the non investment grade hall of shame.

Unsurprisingly the European Commission has issued a statement "regretting" Moody's decision. However, as with all ratings agencies' predictions of doom, there is a very real danger that they become self fulfilling prophecies. The fact the the EC "regrets" it is irrelevant.

Tuesday, July 12, 2011

Corporate Culture Run Amok

The Telegraph reports that three investors in News Corp (Amalgamated Bank, the Central Laborers Pension Fund and the New Orleans Employees Retirement System) have filed a lawsuit against the company citing a corporate culture that "had run amok".

The possibility that News Corp paid money to the police in Britain could prompt an official investigation by US authorities into the company under anti–bribery rules. Needless to say there is now mounting pressure for News Corp to be run by people who are not part of the Murdoch family.

The lawsuit states:

"Throughout his tenure, Murdoch has treated News Corp like a family candy jar, which he raids whenever his appetite strikes."

News Corp now needs to ask itself, instead of ditching papers would it not be best to ditch the Murdochs?

Monday, July 11, 2011

The Long Hot Financial Summer

Italy is now in the firing line of the markets, as fear of Europe wide contagion spreads.

Meanwhile the clock is ticking on the debt ceiling farce in the US as a result of the childish and partisan stand off between the Republicans and Democrats.

It's going to be a long hot summer in the markets!

Friday, July 08, 2011

ECB Raises Rates

The European Central Bank (ECB) has raised interest rates by a quarter point to 1.5%, citing its fear of inflation (over recession) as the rationale for the decision.

The ECB's actions have, needless to say, pushed the financially beleaguered Eurozone nations such as Greece and Portugal further towards the precipice.

Cynics are of the view that the ECB's actions deliberately designed to force the weaker nations from the Eurozone.

Whatever the rationale, the decision in the face of the ongoing recession, is utter madness and will end in tears.

Thursday, July 07, 2011

The EU "Does a Canute"

I am more than amused to see that the EU has taken mighty umbrage at the downgrades by the ratings agencies of Greece and Portugal.

Indeed the EU is so annoyed with the ratings agencies that Jose Manuel Barroso, the European Commission president, all but declared that it was an Anglo Saxon conspiracy by all ratings agencies.

All very nice for the soundbites, maybe. However, he conveniently forgot that Fitch is in fact French.

The EU and its whinging ministers have as much chance of turning the ebbs and flows of the markets as Canute did the sea. Unless the EU understands that point, the EU experiment is doomed to fail.

Wednesday, July 06, 2011

Portugal Goes The Way of Greece

Moody's have cut Portugal's credit rating by a "whopping" four notches, from Baa1 to Ba2, with a negative outlook.

There are now expectations in the markets that Portugal will need a Greek style second bailout.

Self fulling prophecies are very dangerous!

Tuesday, July 05, 2011

The Great Energy Rip Off

Energy companies regularly use rising wholesale prices as a justification for why they raise energy bills for customers.

However, the calculations by which the "justify" their price increases are utterly incomprehensible. As such OFGEM have hired forensic accountants to scrutinise the wholesale fuel prices paid by the "Big Six" energy companies.

Given that OFGEM can't understand the pricing structure of the energy industry, how are we poor saps (the end users) meant to understand it?

Q: Why do the energy companies make it so complicated?

A: RIP OFF!

Monday, July 04, 2011

The Tragedy of Joining The Euro

Standard & Poor's (S&P) have stated that the French plan to allow Greece to voluntarily change the terms on some of its debts would constitute a default "under our criteria", albeit a selective default (as the change would only apply to French banks).

Couple this with the privatisation plans and changes required to the tax system etc, in order to ensure that it receives a second bailout, Greece has all but relinquished sovereignty over its own affairs.

That is the price for wanting to be part of the Euro club, and for committing fraud in order to join it!

Friday, July 01, 2011

IDS Backing Britain

Iain Duncan Smith, the Work and Pensions Secretary, has called for business leaders to take on young people coming off welfare and "not just fall back on labour from abroad".

That's all very well, and all very patriotic. However, it ignores the elephant in the room concerning the quality of British youth.

The Telegraph quotes The Director General of the British Chambers of Commerce, David Frost, who said business leaders knew there was a problem with youth unemployment but they could not afford to ignore cheaper skilled foreign workers.

He said businesses expected "young people to come forward to them who are able to read, write, communicate and have a strong work ethic and too often that's not the case.

There's a stream of highly able eastern European migrants who are able to take those jobs and that's why they're taking them on.

They are skilled, they speak good English and, more importantly, they want to work.
"

IDS has also ignored another issue, namely the fact that membership of the EU (in theory) entitles British people to move freely around Europe looking for work and vice versa.

Is he calling for us to leave the EU?