Loans and Finance

Loans and Finance

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

Thursday, December 05, 2013

Autumn Statement 2013

Today is Autumn Statement day, when the Chancellor of the Exchequer (George Osborne) outlines spending plans and related matters for the coming years.

By happenstance, Iain Duncan Smith has slipped out a statement that the Universal Credit programme may not meet its 2017 deadline. Ironically, in September, IDS had told MPs that the 2017 deadline remained in place.

Wednesday, December 04, 2013

Eight Banks Fined For Rate Rigging

As per the BBC, the European Commission has fined eight banks a total of 1.7bn euros for forming illegal cartels to rig interest rates.

Thursday, November 21, 2013

UK Grows Whilst Eurozone Stagnates

According to a survey of 350 manufacturers carried out by the CBI, Britain's manufacturing sector is growing at its fastest rate for nearly two decades. The Telegraph reports that total order books relative to normal levels were at their strongest since March 1995.

The CBI survey's total order book balance rose to +11 this month to from -4 in October, well above expectations of 0 and the long-run average of -17. 

Meanwhile in the Eurozone things are somewhat different. Markit Economics said that its Eurozone Composite Purchasing Managers Index (PMI) for November (published today) fell to a three-month low of 51.5 points from 51.9 points in October.

France, the Eurozone's second largest economy, is dragging the zone down whilst the other smaller economies are all but stagnant.

Such is the effect of using one economic policy (via the single currency) for multiple economies that face different problems.

Tuesday, November 05, 2013

Britain Is Booming?

The Telegraph reports that the Markit/CIPS UK Services Purchasing Managers' Index rose to 62.5 in October from 60.3 in September. This was the highest level since May 1997.

As I noted the other week, it is the service sector that is driving the growth.

Now if the government could only bring itself to simplify the tax system, and indeed lower taxes, we might be assured that this growth can be maintained!

Wednesday, October 30, 2013

Some Royal Mail Share Certificates Issued In Error

The Telegraph reports that an employee of Equiniti, the firm handling Royal Mail shares bought via the Government's website, has admitted that a software error was responsible for investors being mistakenly issued with share certificates, according to one shareholder.

The shareholder contacted The Telegraph to say that a member of the company's call centre staff, had "spilt the beans" about the error on the Equiniti web page on which customers chose how they wanted to hold the shares.

The receipt of physical certificates can delay the speed at which an investor wishes to sell/receive the proceeds from the sale of his/her share allocation.

When asked previously about the large numbers of people who claimed to have received unwanted certificates, Equiniti said:
"We have investigated cases which have been brought to our attention and in these cases our records show that share certificates were opted for."

Friday, October 25, 2013

UK Economy Grows By 0.8%

ONS statistics published today show that Britain's economy grew by 0.8% between July and September of this year, that is the best performance since Q2 2010. The services sector accounted for the majority of the growth, itself growing by 0.7%.

It is encouraging to note that Mark Carney, the Governor of the Bank of England, has said that the Bank will not rush to raise interest rates or withdraw support for banks.

Now if the government could only bring itself to simplify the tax system, and indeed lower taxes, we might be assured that this growth can be maintained!

Wednesday, October 23, 2013

The Dangers of Contactless Cards

There has been some controversy over the security of "contactless" payment cards (which don't require Pin numbers, merely contact with a reader for payments of up to £20).

All well and good, so long as the right card makes the payment and the wrong one doesn't make a payment when it merely passes by a reader (primed to deduct a payment) because it is in someone's pocket/wallet.

The banking industry have denied there is such a problem.

However, First Direct has written to its customers, as per the Telegraph:
"We have made changes to clarify that if you have a contactless debit card you must remove it from your wallet or purse before using it to make a contactless payment."
A spokeswoman said:
"If you don't remove cards from your wallet there is a danger the payment may be taken from the wrong card. It could be a bit of a nightmare if it came from a card where there wasn't enough money."
In other words there is a potential problem with these cards, not least the possibility that a suitably well positioned felon (ie standing near a person who has a contactless card) with technical knowledge could electronically pick your pocket!

Monday, October 21, 2013

Greece's Budget Deficit Falls

Apparently, if statistics from eurostat can be believed, Greece's budget deficit for 2012 has been revised down from 10% of GDP to 9%

However, before popping the champagne corks, it should be remembered that debt stands at 156.9% of GDP.

Wednesday, October 16, 2013

Royal Mail Shares

Shares in Royal Mail closed at 489p on the company's first day of full trading on Tuesday, as at the time of writing they currently stand at 475p.

They were priced at 330p.

Friday, October 11, 2013

Royal Mail Bonanza

Conditional dealings in Royal Mail that began to day for City institutions produced an initial rise of 38% (456p on the offer price of 330p), this fell back to around 444p.

Private investors will receive 227 shares each, and official listing/trading will commence next Tuesday.

Back to the 1980's we come!

Thursday, October 10, 2013

Wednesday, October 09, 2013

Royal Mail Sell Off

Sky News reports that over 100,000 members of the public have applied to buy shares in Royal Mail ahead of last night's deadline. This makes the £3.3BN sale one of the largest privatisations for decades.

Approximately 150,000 Royal Mail staff will receive about £2200 of free shares.

Tuesday, October 01, 2013

USA In Shutdown

The USA is in financial shutdown, as Congress has failed to find a solution to the ongoing financial impasse (ie increasing the debt ceiling).

As a result, hundreds of thousands of federal workers will be put on leave without pay and all but the most critical government services will be halted for the first time in 17 years.

Methinks the voters of America will be less than impressed with the antics of their politicians.

Tuesday, September 17, 2013

Barclays Bank Error In Your Favour - Collect £100M

I see that Barclays is fond of playing Monopoly, and has managed to create a bank error (for once in its customers' favour) that will entail a refund to affected customers (estimated at being around 300,000) of around £100M.

Barclays customers are to receive compensation because it miscalculated the interest owed on personal loans, the errors date back to October 2008.

Other divisions (Barclaycard, Barclays Wealth and Barclays Corporate) are now undertaking a review to see if customers were short-changed by the errors ("technical documentary errors").

Barclays will write to customers in the coming weeks. Barclays is quoted by the Telegraph saying that said it had "identified certain issues with the information contained in historic statements and arrears notices relating to consumer loan accounts. It is therefore implementing a plan to return interest incorrectly charged to customers".

A spokesman for the bank said:
"Barclays has proactively reviewed information it has historically sent to its customers relating to interest charges, where we have found technical documentary errors. As a result Barclays has identified certain issues with the information contained in some statements and arrears notices relating to consumer loan accounts. 

Due to these notification errors, interest was not due on certain accounts during the period that Barclays made this mistake, and whilst no one has been mis-sold to, customers are entitled to have their interest payments returned. No customer will pay more than they were ever contractually expected to. 

Barclays has notified the Office of Fair Trading (OFT), which is responsible for consumer credit issues, and is implementing a plan to return interest payments to customers as swiftly and efficiently as possible. Barclays is undertaking a review of all its businesses where similar issues could arise to assess any related issues. 

Any affected customer will be contacted by Barclays and customers do not need to take any action."
To add to Barclays shame, campaign group Move Your Money said that Barclays was the lowest scoring financial institution out of 70 assessed, scoring four out of 100 possible points for honesty and customer service.

Well done Barclays!

Friday, September 13, 2013

The TSB Goes From Strength To Strength

Following last week's website crash on its relaunch, the TSB has yet again managed to drop the ball; this time by mis-spelling Ashtead on a billboard advert aimed at the residents of Ashtead.

As per getSURREY:
"‘Welcome back to local banking’ was the message displayed to commuters on a TSB advertising board erected at Ashtead railway station this week.

But something rather important to local people got lost in translation - the spelling of the village they live in.

Now TSB bosses will be hoping that villagers can forgive their 'Hello Ashstead' howler.

A spokesman said on Thursday: 
“We apologise to local residents for the incorrect spelling.

"We are looking to rectify the poster as soon as possible.”

The company later tweeted an apology for the mistake."

Thursday, September 12, 2013

The Interminable Rise of Greek Youth Unemployment

In May Greek youth unemployment was almsot 65%, in June it showed a slight "improevment" falling to 58.8%.

However, when compared to previous years the level of youth unemployment has worsened (as per Efthimia Efthimiou):

- June 2012 it was 54.8%
- June 2011 it was 44.4%
- June 2010 it was 31.3%
- June 2009 it was 23.2%
- June 2008 it was 20%

Levels of unemployment such as this are normally associated with third world countries in the midst of a civil war, or the equivalent. Yet Greece is, allegedly, a first world country and is meant to be an "equal" member of a powerful and prosperous economic block (ie the Eurozone).

The reality is that Greece is not treated as an equal, it should never have joined or been allowed to join the Eurozone and the prosperity within the Eurozone is not evenly spread but confined to the wealthy Northern economies.

As such it is clear that as an experiment the Eurozone is destined to fail, indeed the world will be a better place without it. However, with levels of unemployment such as this in Greece the real danger is that of a plague of dictatorships and civil unrest spreading country by country in the Southern members of the Eurozone.

In order to survive as a democracy and civilised society Greece needs to exit the Eurozone now, others such as Cyprus need also to consider their positions. 

Wednesday, September 11, 2013

The Greek Problem - Two More Bailouts Needed

European Central Bank Governing Council member, Luc Coene, is quoted by Reuters:
"It's clear that we are not yet at the end of the Greek problem. 

We will need to make further efforts, certainly once, perhaps twice more. 

We will see how the situation develops."
My advice to Greece stands, leave the Eurozone and devalue your currency.

Unemployment Falls as Estate Agents Hire Staff

As I have noted before, the British economy is driven by the property market and people's confidence (usually misplaced, given that property prices are relative) that an increase in house prices is an increase in personal liquid wealth.

Thus it should come as no surprise to see that today's announcement that unemployment dropped to 7.7%, from 7.8% in the three months to April, is largely due to an upturn in confidence in the property market.

Overall 80,000 jobs were created over the period, significantly above the predictions by "experts" and economists of an increase of 55,000. However, accounting for a large part of this 80,000 increase was a rise in the number of "real estate" jobs (on the back of a surge in confidence in the property market) of 50,000.

NB: "Real estate" jobs are in the main estate agents.

Tuesday, September 10, 2013

Wheatley Lambasts Outrageous PPI Mis-selling

Martin Wheatley, the CEO of the Financial Conduct Authority (FCA), is currently appearing before the Treasury Select Committee. He is less than impressed with the fallout from the PPI mis-selling scandal and the way that the banks are handling complaints.

Currently the FOS is upholding 90% of PPI mis-selling cases referred to it after they had been rejected by the banks.

Wheatley says it is "absolutely not acceptable" and that it is "outrageous" that the number upheld by the FOS is so high. He stated that the FCA has been looking into how banks handle complaints, as per the Telegraph:
"We have taken action and we will take more action and we will continue to look at how banks handle complaints. 

We've got two large investigations underway and have two cases where we have issued strong fines."
Sadly PPI mis-selling is but one of many areas where Britain's financial services industry mired itself in its own shit.

Monday, September 09, 2013

TSB Website Crashes

The newly launched TSB bank (split for Lloyds) has had a less than stellar first day, as its website has crashed.

Hardly a good augury for the future!

Monday, September 02, 2013

Fred The Shred and The Round Topped Filing Cabinets

The Telegraph reports that Fred Goodwin, erstwhile CEO of RBS, was so obsessed with tidiness and so irritated with piles of paper on filing cabinets that he ordered thousands of custom-made round-topped storage units to be rolled out across the bank.

A senior manager told Iain Martin, the author of Making it Happen: Fred Goodwin, RBS and the Men Who Blew Up the British Economy being published next week.
Somewhere in a warehouse are thousands of old flat-top RBS filing cabinets that were not Fred-compliant.” 
In pre RBS days as chief executive of Clydesdale Bank, Goodwin apparently interrupted a meeting to take a call from his mother who had seen a cigarette butt left on the steps of the bank’s headquarters in Glasgow. Goodwin immediately arranged to have the butt removed.

Sadly this obsessive attention to detail didn't manifest itself in the more "mundane" activities of the bank such as credit, risk and how much is lent and to whom.

Tuesday, August 27, 2013

Greece Wants To Renegotiate Bailout Terms

Yannis Stournaras, the Greek finance minister, told German newspaper Handelsblatt on Monday that Greece may seek to ease its debt burden by renegotiating its bailout terms.

The renegotiation could involve lower interest payments and more time to repay 240bn euros in loans.

The BBC reports that on Sunday he admitted that Greece may face a hole in its finances of up to 10bn euros.

As I have noted before, the only real solution for Greece's financial and social woes are for it to leave the Eurozone and devalue its currency.

Thursday, August 22, 2013

Banks Embroiled In Another Mis-selling Scandal

As loyal readers know, I have on numerous occasions noted that the financial services industry in the UK has tarnished its image because of its greed and corruption, and seems intent on bringing about its own self destruction.

Today we see yet another example wherein its greed has been exposed because of yet another mis-selling scandal.

This time the mis-selling relates to card protection and identity theft insurance products by CPP Group. The BBC reports that UK banks have agreed to set up a £1.3BN fund to compensate the victims.

The Financial Conduct Authority (FCA) said that customers had been "given misleading and unclear information about the policies".

CPP Group and 13 banks and credit card firms will pay for the compensation.

Some seven million customers could now expect to receive letters from CPP from 29 August 2013, explaining how to claim compensation. Victims will receive 8% interest on the amounts being reimbursed.

During the period of mis-selling between January 2005 and March 2011, CPP sold 4.4 million policies and generated £354M in gross profit. A further 18.7 million policies were renewed during the same period, generating an income of £656M.

Many customers were put in contact with CPP when they rang a number on their new bank card in order to activate it. Many thought they were talking to their bank, but they were in fact being put in touch with a salesperson from CPP.

CPP then used the opportunity of the call to offer card protection insurance. If the customer bought the product, the bank got a commission.

CPP Group sold a card protection product costing about £30 a year, that was designed to cover losses if a card was lost or stolen. It said customers would benefit from up to £100,000 of insurance cover, but customers were already covered by their banks. Generally, cardholders are not liable for unauthorised card payments on lost or stolen credit and debit cards; ie the product was unnecessary.

Needless to say we can expect to see the "ambulance chasing" financial compensation firms jumping on this bandwagon and offering to reclaim victims' money back in exchange for a percentage; which of course is completely unnecessary,as the victims can reclaim the money themselves.

Tuesday, August 20, 2013

Greece Needs Another Aid Programme

According to the Twitterverse, German Finance Minister Wolfgang Schaeuble has said that Greece will need another aid programme.

This should come as no surprise, given that the Bundesbank said the self same thing the other week.

Friday, August 16, 2013

Banks Play The Old Switcheroo

Banks and building societies are begrudgingly upping one very modest aspect of their customer "service"; namely that of guaranteeing to switch customers' bank accounts and direct debits (if requested) within seven working days as from September 16.

The Telegraph reports that 33 banks and building societies have signed up to the agreement, which will cut the length of time it takes to move accounts from up to 30 working days to seven working days.

Customers will be refunded interest and charges if anything goes wrong.

Whilst banks are offering cash incentives to people to switch their accounts (usually £100-£125) there is of course a sting in the tail; customers have to shut down their old current account if they choose to avail themselves of this guarantee (customers are entitled to opt out of it and manually change their accounts and payments).

As to whether this new guarantee improves the level of customer service wrt bank charges, products, rates etc remains to be seen; given that the banks operate in their own interests, rather than in the interests of their customers, any dramatic improvements in customer service are unlikely to see for quite some time if at all.

Wednesday, August 14, 2013

Eurozone Out Of Recession?

The media and Europhiles are hugely excited at the headlines today that proclaim that the eurozone is out of recession.

As per the BBC, the eurozone has emerged from recession after a record 18 months of economic contraction.

GDP grew by 0.3% in the second quarter of 2013, slightly ahead of forecasts. Germany and France dragged the eurozone out of the recession with growth of 0.7% and 0.5% respectively. However, Spain experienced contraction of 0.1% on the quarter, and Italy and the Netherlands both saw output drop by 0.2%.

The eurozone cannot survive in its present form where the rich Northern countries prosper whilst the poor Southern ones collapse, just ask the good people of Greece (with close to 65% youth unemployment) if they feel that they are now out of the recession.

Tuesday, August 13, 2013

Pre Election House Price Bubble On Its Way

According to the Office for National Statistics (ONS) House prices rose 0.4% in June compared to the previous month, the year on year rise now stands at 3.1% compared with 2.9% in May.

This increase outstrips price inflation (CPI) which was 2.9% in June.

Howard Archer, chief UK economist at IHS Global Insight, is quoted in the Telegraph:
"We now expect house prices to rise by at least 3pc over the rest of 2013 and to then increase by 7pc in 2014."
House price bubbles of course will benefit the government in the run up to the election, as people (rather foolishly, given that the rise is relative) feel better off when the house that they live in rises in value.

Monday, August 12, 2013

Greece Imploding

Greece is continuing on its downward spiral to financial implosion.

To add to the woes of the good people of Greece, on top of last week's truly shocking youth unemployment statistics (close to 65%), Reuters reports that Greece's economy shrank at annual pace of 4.6% in the second quarter, contributing to a slump of more than 20% in real terms since 2008.

Ironically, in the delusional world of economists, these figures were slightly better than the 5% contraction forecast.

Delusions aside, Der Spiegel has blown the whole charade of bailing out the Greek economy wide open. It quoted an internal document prepared by the Bundesbank as saying that Europe "will certainly agree a new aid programme for Greece" by early next year at the latest.

The Bundesbank also described the risks associated with the existing aid package for Greece as "extremely high", and said the approval last month of a 5.8 billion euro aid instalment to Athens had been "politically motivated".

As I have noted many times before, in order to survive as a democracy and civilised society Greece needs to exit the Eurozone now; others such as Cyprus need also to consider their positions. 

Thursday, August 08, 2013

Greek Youth Unemployment Close to 65%

Youth unemployment in Greece has risen to a shocking 64.9% in May.

Levels of unemployment such as this are normally associated with third world countries in the midst of a civil war, or the equivalent. Yet Greece is, allegedly, a first world country and is meant to be an "equal" member of a powerful and prosperous economic block (ie the Eurozone).

The reality is that Greece is not treated as an equal, it should never have joined or been allowed to join the Eurozone and the prosperity within the Eurozone is not evenly spread but confined to the wealthy Northern economies.

As such it is clear that as an experiment the Eurozone is destined to fail, indeed the world will be a better place without it. However, with levels of unemployment such as this in Greece the real danger is that of a plague of dictatorships and civil unrest spreading country by country in the Southern members of the Eurozone.

In order to survive as a democracy and civilised society Greece needs to exit the Eurozone now, others such as Cyprus need also to consider their positions.

Monday, August 05, 2013

UK Economy Heads Towards Escape Velocity

Following last week's jump in the UK's construction PMI, there is further good economic news.

The UK services sector grew at its fastest pace in more than six years in July. The Markit/CIPS services purchasing managers' index (PMI) rose to 60.2 in July from 56.9 in June, its highest level since December 2006. This is a larger gain than forecast by any of the economists polled by Reuters.

Paul Smith, senior economist at Markit is quoted by Reuters:
"Although an early call on one month's data, the forward-looking elements from the survey point to a further strengthening of GDP in Q3 as the UK heads towards 'escape velocity' and self-sustaining economic expansion."
The PMI survey showed a continued increase in services employment. However, the increase in demand is also causing firms to increase prices; ie people's incomes will remain "under pressure".

Friday, August 02, 2013

UK Construction Jumps

UK construction activity rose in July to its highest level since June 2010.

Reuters reports that the Markit/CIPS construction PMI rose to 57.0 July, up from 51.0 in June. The rise is mainly on the back of an increase in residential construction which has spurred an increase in confidence of purchasing managers.

Whilst the increase in residential construction is hardly surprising, given the increased stimuli to the sector offered by the Chancellor, the size of the increase in PMI is above expectations and as such is very welcome.

Tim Moore, senior economist at Markit said:
"July's survey highlights a new wave of optimism across the UK construction sector, with companies reporting a pace of expansion in excess of anything seen over the past three years."
Like it or not, the UK economy's bedrock is the property sector; by stimulating that sector the Chancellor has in effect stimulated the economy.

The question is, will this stimulation create an inflationary asset bubble?

Thursday, August 01, 2013

Lloyds Back In Profit

Lloyds Banking Group has returned to profit, and has made £2.1bn in the six months to the end of June. This compares very favourably with the loss of £456m for the same period last year.

The BBC reports that the bank stated that it had made substantial progress on strengthening its balance sheet, although "further work remains to be done".

Lloyds is 39% owned by the UK government (ie the taxpayer) and, based on the good results and the fact that bank said it would be talking to regulators in the coming months about resuming paying a dividend on its shares, people are now betting that the publicly held shares will be sold off (ie the bank will be privatised) and that the announcement of the privatisation will be made within the coming days.

The Treasury have just stated that there is no set target price or timetable for privatisation. However, it also stated (as per Reuters):
"..we have said that we are now actively considering options for sales of the taxpayer's shares in Lloyds."
Shares in Lloyds are up around 4% on the day.

Tuesday, July 30, 2013

Barclays £12.8BN Hole

Barclays has gone cap in hand to its shareholders today for £5.8BN via a rights issue, in order to help it plug a £12.8BN capital shortfall arising from the new Prudential Regulation Authority (PRA) imposed safety buffer.

The Telegraph reports that rights issue will allow existing investors to buy one new share for every four they currently own at a price of 185p, a discount of 40% to they bank's closing share price yesterday. 

Barclays will also issue £2BN of bonds that are turned into shares or wiped out if the bank gets into trouble.

Additionally in its six months results for the first half of this year, Barclays has set aside £1.35BN against further PPI claims, bringing its total compensation fund to just under £4BN, and a further £650M for interest rate swap redress, increasing its provision to £1.5BN.

Barclays chief executive Antony Jenkins is quoted by the BBC, in a dig at the PRA, warns that plugging the hole will have a negative impact on the economy:
"It means Barclays will provide fewer financial transactions to big companies, life insurers and pension funds, inter alia, to help those giant institutions reduce their risks. And to be clear that will represent a tightening of credit for those customers, so there may be a negative economic impact."
Barclays share price is currently down 7% on the day.

Monday, July 29, 2013

Ever Rising Energy Bills

Ed Davey, the Energy Secretary, has pleaded with energy companies to explain their profits ie to be more "transparent".

Ofgem has also been criticised in a report by MPs on the Energy Committee, for failing to do enough to tackle profiteering by energy companies.

That's all very well, up to a point. However, the MPs seem to forget that taxes and green energy surcharges also add to the financial burdens of the hapless energy consumers.

Thursday, July 25, 2013

UK Economy Grows By 0.6%

The UK economy grew by 0.6% in the second quarter compared to the first three months of the year, according to the Office for National Statistics (ONS).

George Osborne tweeted the following reaction:
"GDP stats better than forecast.Britain's holding its nerve, we're sticking to our plan, the economy's on the mend.But still a long way to go"
However, as I always caution, when it comes to ONS statistics never trust them. They are always out of date and subject to revision.

In the meantime whilst people crack open a can of lager to celebrate the modest signs of economic recovery in the UK, let us not forget that China frets when growth bumps along at a "mere" 7%!

Wednesday, July 24, 2013

Local Lending Data For 10,000 Postcodes

The government have announced that the UK’s biggest lenders will reveal how much they lend at a local level across 10,000 postcodes.

The new data, published for the first time by the end of this year, will allow businesses and the public to see how the banking and building society sectors are serving the wider economy, and in what areas of the UK there less lending.

The data will be published by the British Bankers’ Association (BBA) and the Council of Mortgage Lenders on a quarterly basis and show the outstanding stock of lending that has been committed to customers across three categories:
  • loans and overdrafts to SMEs
  • mortgages
  • unsecured personal loans (excluding credit cards)
Each postcode will be broken down by category to show the exact lending being made to each.

All very well maybe, but why delay it until the end of the year?

RBS Fined £5.6M

RBS has been fined £5.6M by the Financial Conduct Authority (FCA) for "incorrectly reporting transactions they made in wholesale markets".

Seemingly, between 2007 and 2013, RBS either didn't report or incorrectly reported approximately 45 million transactions!

Tuesday, July 23, 2013

China's 7% Bottom Line

China's Premier, Li Keqiang, has underpinned global markets by stating that China’s “bottom line” for GDP growth is 7%, and the nation can’t let growth go below that.

Seven percent is not too shabby at all!

I would note that had a similar statement been issued by the ECB, wrt there being a bottom line for growth for the Eurozone (albeit with a bottom line of growth of far less than 7%), no one would have believed it!

Monday, July 15, 2013

Chinese Growth Falls To 7.5%

As expected China's economic growth slowed to 7.5% in the second quarter of the year.

The Chinese statistics bureau said the slowdown was partially due to deliberate efforts for structural reform and that a slower pace of growth was preferable in the long term.

Sheng Laiyun, spokesman for the National Bureau of Statistics, is quoted by the Telegraph:
"Some measures, including the intensified property tightening campaign, new rules to curb misuse of public funds and the exit some previous stimulus policies, will inevitably have some impact on growth in the short term, but they will benefit our economy in the long run."
Were this any other country such a rate of growth would be considered to be excellent.

The reality is that exceptional levels of growth, such as this, cannot continue indefinitely. Given the size of China and its economy, growth in excess of 7% isn't too shabby at all.
 

Wednesday, July 10, 2013

One In 20 Households Rely On Payday Loans

The Telegraph reports that the Aviva Family Finances Report published today notes that one in 20 households is "relying" on payday loans to get by.

Two weeks ago the Office of Fair Trading referred the £2BN industry to the Competition Commission, after uncovering evidence of "widespread irresponsible lending".
Last week the Financial Conduct Authority warned that it was considering a total advertising ban on payday loan companies as one of the options when it takes over regulation of the sector next April.

Controls and increased regulation are all very well. However, if hard pressed families who are not well served by mainstream lenders are unable to raise loans from payday loan companies their only other resort will be loan sharks.

Monday, July 08, 2013

The Verdict on Greece

Last week I wrote that Greece had been given a three day deadline to reassure Europe and the International Monetary Fund that it could deliver on conditions attached to its international bailout in order to receive the next tranche of aid.

Unsurprisingly, post deadline, the EU and IMF have given Greece a less than ringing endorsement noting that the outlook for Greece's bailout programme remains uncertain.

Reuters quotes the Troika:
"While important progress continues to be made, policy implementation is behind in some areas.

The authorities have committed to take corrective actions to ensure deliver of the fiscal targets for 2013-14 and achieve primary balance this year.

The mission and the authorities agreed that the macroeconomic outlook remains broadly in line with programme projections, with prospects for a gradual return to growth in 2014. The outlook remains uncertain, however."
As I warned last week, those with money in Greek bank accounts would be advised to withdraw it now before the jackals pounce. 

Thursday, July 04, 2013

Careless Talk Costs Dollars

The Australian Dollar plunged to a three year low following a "light hearted slip of the tongue" by Glenn Stevens the Governor of Australia's Reserve Bank.

His crime?

In a "Ratner" moment Mr Stevens said in a speech on Wednesday that the bank’s board “deliberated for a very long time” before leaving the cash rate steady at its monthly meeting on Tuesday.

This comment caused the dollar to drop to US90.37 cent, and prompted some bank economists to change their forecasts and predict an interest rate cut in August.

In a damage limitation exercise the Reserve Bank insisted that the comment was “light-hearted”, this in turn lifted the dollar and prompted banks to withdraw their revised forecasts.

The bank’s deputy governor, Philip Lowe, was quoted by the Telegraph saying that the financial markets and the media had “misinterpreted” the comments, which were not supposed to be taken seriously.
"They were meant to be a light-hearted remark after what, he [Mr Stevens] reports to me, was a very light-hearted introduction.

I can confirm for you that the board did deliberate for a very long time. I can also confirm for you that it always deliberates for a very long time.”
Professionals such as Mr Steven should know that financial markets do not posses a sense of humour, especially in the current febrile atmosphere!

Tuesday, July 02, 2013

Greece's Day of The Jackal Looms

Reuters reports that Greece has been given three days to reassure Europe and the International Monetary Fund it can deliver on conditions attached to its international bailout in order to receive the next tranche of aid.

Europe and the IMF are unhappy with the progress that Greece has made towards reforming its public sector and improving its tax collection.

In the event that Greece misses the deadline or its promises fail to assuage its "bankers", then as sure as eggs are eggs the "solution" that was foisted upon Cyprus (ie a raid on bank accounts) will be foisted upon Greece.

Those with money in Greek bank accounts would be advised to withdraw it now, before the jackals pounce. 

Monday, July 01, 2013

David Drumm Apologises



David Drumm, ex CEO of the now defunct Anglo Irish Bank, has apologised for the language used in a phone call released by the Irish Independent.

All sorted then!

Happy Canada Day

Mark Carney starts work today as Governor of the Bank of England, ironically it is also Canada Day!

Thursday, June 27, 2013

No Double Dipper

As sure as eggs are eggs, the Office for National Statistics (ONS) has revised its figures yet again.

This time the revision brings some good news, it appears that Britain never had a double dip recession:
"GDP growth between Q4 2011 and Q1 2012 has been revised from a fall of 0.1% to flat, thereby removing the phenomenon of two consecutive quarters of negative growth."
As I have noted many times before it is extremely unwise to rely on figures provided by the ONS, they are always out of date and invariably wrong.

Wednesday, June 26, 2013

£11.5BN Cuts

The chancellor is to unveil £11.5BN of cuts for 2015/16 to help reduce the deficit.

Local government is expected to be hardest hit.

Watch Osborne's speech live at 12:30 here.

The Dangers Posed By Rising Interest Rates

The Bank of England's Financial Stability reports arises a red flag about the dangers from a rise in interest rates.

The Executive Summary notes:
"In the near term, risks could crystallise if global long-term interest rates were to rise abruptly from current still historically low levels.."
Hidden away in the report itself, the Bank notes that:
"The impact of higher global interest rates on borrowers will depend on the cause of the increase....a significant cohort of UK borrowers could experience financial difficulties if interest rates were to rise during a period of subdued income growth.."
Will interest rates rise?

Sir Mervyn King, thinks not (not at least in the foreseeable future).


Tuesday, June 25, 2013

Cyprus NOT Seeking Renegotiation of Bailout

Q: When is a renegotiation not a renegotiation?

A: When it is a "tweaking".

Farewell Sir Mervyn

Sir Mervyn King is giving evidence to the Commons Treasury committee for the last time as governor of the Bank of England.

During his valedictory appearance he hinted that Jane Austen will appear on future £10 notes, he also welcomed the responsibility for bank supervision being returned to the Bank of England.

He is no fan of austerity for countries with no other means of promoting growth, and noted that it had been a disaster for those countries; in the meantime QE in the UK, in his opinion, will continue to run for the foreseeable future as will the current low levels of interest rates.

Monday, June 24, 2013

A Nice Little Earner For Barclays

Barclays has decided to start selling on data from its customers to other companies.

The Telegraph reports that Barclays has told savers that it intends to package together "information about the transactions on your account" with data on groups of other customers to compile reports on spending trends across Britain. This could then be passed on other companies or Government departments.

In addition to these changes, which will take effect in the autumn, Barclays will also start tracking customers through their mobile phones or other "devices" allegedly to help protect them from fraud. If a payment is made in a certain country, Barclays will "ping" the customer's mobile number to check if the phone is in that country.

Barclays claims that any customer data it sells would never be sold on in such a way that an individual customers was "identifiable".

Everyone happy with this?

If not, aside from closing your account, there's not much you can do about it; as Barclays is only allowing you to opt out of having your mobile tracked.

Friday, June 21, 2013

Greece Stares Into the Abyss Again

The International Monetary Fund (IMF) is preparing to suspend aid payments to Greece by the end of next month unless eurozone leaders plug a €3bn-€4bn shortfall that has opened up in Greece’s €172bn rescue programme, according to a report in the FT.

The shortfall has arisen as a result of a decision by  eurozone central banks not to roll over Greek bonds they hold, and comes amid signs that even the scaled-back privatisation plan Athens agreed to last year is falling behind schedule.

There is still a chance for Greece to receive the next tranche of aid if it manages to reach a deal with the troika before the end of June. However, the coalition government in Greece is on the verge of collapse as a result of its failure to internally agree on how to resolve the crisis caused by the decision to close the state broadcaster.

As ever with bailouts, they are not solutions but merely vehicles for kicking the can down the round and buying time for the incumbent government to resolve the original crisis. In Greece's case there may well soon be no government to hold talks or resolve the crisis.

Wednesday, June 12, 2013

Greek General Strike Call

Greek unions have called for a general strike in Greece tomorrow over the closure of state TV.

Monday, June 10, 2013

Crisis Over? - Hollande's Delusion

According to Francois Hollande, President of France, the Eurozone crisis is over.

His upbeat and, frankly, delusional view is at odds with reality.

Istat, Italy's statistics office, has released data that shows the recession in Italy is in fact worse than previously thought; with revised figures for the first three months of the year showing that Italian GDP shank by 0.6%, not 0.5% as previously thought.

Friday, June 07, 2013

Banks Retry Debits

Banks, as we all know, love to make money out of their customers' financial cock ups. Therefore it should come as no surprise to learn that banks make around £200M per annum from penalty fees on unpaid items.

Step forward, in the manner of a knight on a plodding donkey, the FCA which has done what the FSA should have done years ago; namely force banks to take full account of the money customers pay into their accounts each day, even if it arrives after direct debits and standing orders have been paid out.

The FCA has decided, quite correctly, that because direct debits tend to be taken from accounts first thing in the morning (before receipts are credited) the banks had stacked the rules of the house in their favour.

Simon Gompertz reports that the UK's seven largest banks, including Barclays, HSBC and RBS, have agreed to operate a retry system in the afternoon, probably between 3pm and 4pm, which takes accounts of new credits, salary payments and cheques which have cleared during the day.

Lloyds Banking Group has also signed up, but is being tardy and claims that it is as yet unable to retry all payments in the afternoon. However, any Lloyds customer who incurs a late payment charge because money hasn't been properly credited will be able to claim a refund (if they remember to).

Thursday, June 06, 2013

The Bungled Bailout

The IMF has issued a report that concludes that the bailout of Greece was bungled, because it was an attempt to save the single currency rather than Greece itself.

Very true indeed.

Unsurprisingly the Gnomes of Brussels flatly reject the report.

Well they would, wouldn't they?

That being said, given that the IMF thinks that the bailout was bungled, why did the IMF agree to participate in bailing Greece out twice?

Wednesday, June 05, 2013

EU On Strike

Despite the fact that the rate of Eurozone unemployment is at a record high of 12.2%, and that large swathes of Europe are suffering under years of imposed austerity, EU officials went on strike in Brussels today in a protest against planned EU administrative cuts.

I wonder if anyone living in the real world will notice this strike?

Tuesday, June 04, 2013

Third Bailout For Greece?

Jean-Claude Juncker, former Eurogroup chief and Prime Minister of Luxembourg has given an interview to MNI in which he speculates that a third loan to Greece cannot be excluded. 

No surprises there then!

Monday, June 03, 2013

Retire At 70

Tom McPhail of Hargreaves Lansdown has said that, wealthy footballers and celebs aside, in 10 years’ time 70 will be the normal retirement age.

This should hardly come as a surprise, given that people are living longer and that pensions (both state and private) cannot keep pace with the increase in longevity.

However, the Times quotes a report from Scottish Widows that says that households are prioritising living expenses, paying off debts and mortgage repayments over saving for retirement in the current uncertain economic climate.

At this point I would ask exactly what it is that Scottish Widows expect people to do?

Defaulting on mortgage payments or increasing debts (in order to save for the future) will simply add to the financial burden of people in later years as they grow older.

Friday, May 31, 2013

Eurozone Unemployment Hits 12.2%

Eurostat reports that the rate of unemployment in the Eurozone hit 12.2% in April 2013, up from 12.1% in March. This compares very unfavourably with the levels of unemployment in the UK (7.7%) and the USA (7.5%).

The level of youth unemployment in certain countries is particularly shocking, the highest being in Greece (62.5% in February 2013), Spain (56.4%), Portugal (42.5%) and Italy (40.5%).

As I have said before, this level of unemployment is not sustainable and is a threat to democracy.

Thursday, May 30, 2013

House Prices Overvalued?

According to the OECD, house prices in the UK are too high.

The Telegraph reports that a study by the OECD, which compared prices with local wages and rents, suggests that British house prices are 31% too high compared to rents and 21% over-priced against incomes.

Given that housing is the bedrock of the British economy, providing a credit hungry public with the raison d'etre to borrow ever increasingly large sums of money, people would be forgiven for thinking that this analysis is grim news for the economy.

Fear not!

The British government cannot help itself when it comes to meddling in the housing market and, via its Help To Buy Scheme announced in the March Budget, has already taken actions to underpin and further stimulate the housing market.

Friday, May 24, 2013

Judgement Day For Lagarde

Christine Lagarde, head of the IMF, will find out today if she will be put under formal investigation for her role in a payout made to Bernard Tapie when she was finance minister.

Tapie, a supporter of the former President Nicolas Sarkozy, was awarded 400M euros in 2007, in a dispute with the bank Credit Lyonnais.

Lagarde protests her innocence and, according to the BBC, claims that the payout was the best solution at the time.

Suffice to say, given the economic malaise within Europe this issue could not have come at a worse time for Lagarde, the IMF and the global economy.

Wednesday, May 22, 2013

Be Bold!

Mark Carney, the incoming Bank of England Governor, has warned that Europe could face a decade of stagnation unless it takes the kind of bold measures seen in Japan.

Carney is quoted by the Telegraph, whilst making his last speech as Governor of the Bank of Canada:
Europe can draw lessons from Japan on the dangers of half measures... Europe remains in recession. Deep challenges persist in its financial system. Without sustained and significant reforms, a decade of stagnation threatens.”
His comments give more traction to the rumours that the ECB is considering negative interest rates.

Tuesday, May 21, 2013

Inflation Falls

Inflation has taken a surprisingly sharp turn downwards from 2.8% in March to 2.4% in April, the so called "experts" had predicted 2.7%.

The fall has been caused by sharp falls in transport costs (eg air fares which fell by 6.4%). Unfortunately, the cost of food and non alcoholic beverages has increased by 0.7%.

In other words, those who are on tight budgets will continue to be squeezed.

Monday, May 20, 2013

Brexit - Good or Bad For Britain?

Britain's "love affair" with the EU, much like the seasons, turns hot and cold on a regular basis. More often than not the feelings towards the EU are frigid, to say the least.

In response to the never ending wrangling with the Tory party over Britain's role within (or without) the EU, Britain's leading businessmen have penned a letter to the Independent warning that a Brexit would severely damage Britain's economy and standing within the world:
"The benefits of membership overwhelmingly outweigh the costs, and to suggest otherwise is putting politics before economics."
The economic costs/benefits of leaving the EU are not clear cut. However, the political consequences of remaining in the EU are clear; Britain's independence will continue to be eroded.

Does this erosion of independence matter?

Ask the good people of Greece or Cyprus!

Like it or not politics does play a role in this, because if politics fails we lose our democracy and there will be either dictatorship or anarchy. Businesses may well do well under certain forms of dictatorship, but the people of Britain won't.

Friday, May 17, 2013

Turning Japanese



In echoes of Japan in the 1980's/90's, it seems that the ECB is going down the path of negative interest rates.

As per Financial Acrobat:
"More rumours about negative rates from ECB. Said to have contacted German bank to ask if they could cope with it. It is likely true."
I loved the 80's!

Osborne Encounters Resistance

Poor old George Osborne appears to be encountering some resistance form other ministers to his plans to slash spending by £11.5BN.

As yet, according to the FT, his "colleagues" in government have only come up with £2.5BN in cuts; with some ministers failing to provide Osborne with the list of 10% in proposed departmental cuts he ordered before last month’s deadline.

Could it be that they don't think that he will still be in office in a year, and that as such he can "safely" be ignored?

As with any business, there will always be resistance to cuts. However, also as with any business, if the person who is demanding them is deemed to be "on his way out" the cuts will never materialise.

Thursday, May 16, 2013

RBS Sacks 1,400 Staff

The newswires are reporting that RBS has told staff that 1,400 of them will lose their jobs over the coming two years.

Monday, May 13, 2013

Negative Interest rates

It seems that the ECB is considering negative deposit rates, ie charging banks for their deposits.

The purpose of such a move?

To encourage/force banks to lend money in order to boost the flagging Eurozone economy.

Will it work?

No one knows!

Friday, May 10, 2013

ONS Screw Up Again

In September 2012 I wrote the following about the unreliability of ONS data:
"As I have noted many times before it is extremely unwise to rely on figures provided by the ONS, they are always out of date and invariably wrong; eg in February this year inflation figures spiked partly because the ONS (as per usual) had been erroneously under reporting inflation (clothing) for several years, and the resulting correction caused a spike in inflation.

Instead of the government and the Bank of England relying on and using ONS figures to to try to manage the economy, they may as well rely on reading goat entrails as these would be more accurate, timely and easier to interpret!
"
Here we are in May 2013, and yet again the ONS have been forced to revise their figures. It seems that Q1 construction figures reported by the ONS were wrong, and need to be revised upwards. As such the UK was not in recession in Q1 2013.

As per the Telegraph:
"The ONS now believes that output in the quarter contracted by 5pc, not the 5.4pc previously thought. In terms of levels of GDP, it has revised construction output for the quarter up by £108m to £25.273bn. 

Philip Shaw, UK economist at Investec, has calculated that an increase of just £70m in national output in the first three months of 2012 would cause growth to be revised from -0.1pc to 0.0pc.
All else being equal, the construction industry revisions would suggest that the economy did deliver just enough activity to escape the technical double dip recession."
As I noted above, it is extremely unwise to rely on figures provided by the ONS!

Thursday, May 09, 2013

Greek Youth Unemployment Hits 64.2%

In a damning indictment of the Eurozone's economic policies, and of the folly of joining a single currency system, the youth unemployment (18-24) level in Greece has risen to a disgusting 64.2%.

Levels of unemployment such as this are normally associated with third world countries in the midst of a civil war, or the equivalent. Yet Greece is, allegedly, a first world country and is meant to be an "equal" member of a powerful and prosperous economic block (ie the Eurozone).

The reality is that Greece is not treated as an equal, it should never have joined or been allowed to join the Eurozone and the prosperity within the Eurozone is not evenly spread but confined to the wealthy Northern economies.

As such it is clear that as an experiment the Eurozone is destined to fail, indeed the world will be a better place without it. However, with levels of unemployment such as this in Greece the real danger is that of a plague of dictatorships and civil unrest spreading country by country in the Southern members of the Eurozone.

In order to survive as a democracy and civilised society Greece needs to exit the Eurozone now, others such as Cyprus need also to consider their positions.

Oh and by the way, in case anyone cares, today is Europe Day!

Wednesday, May 08, 2013

Euro Downright Dangerous

Kudos to Lars Seier Christensen, chief executive of Saxo Bank, who has vented his spleen on the Eurozone.

He said that it was clear that the eurozone would eventually break up, as Brussels claimed even more power and used it “ever more poorly”.  He also, wisely and correctly, noted that "short term" capital restrictions are always introduced as "short term" but end up being long term; and warned that there will be many more.

As per the Telegraph, he said:
"Euro denominated assets will remain unattractive, and downright dangerous, to hold for years to come."
A wise man indeed!

Wednesday, May 01, 2013

Cable Calls For Decision on Fred Goodwin

Vince Cable, the Business Secretary, is less than pleased that action has yet to be taken by Scottish prosecutors against Fred "the shred" Goodwin (the former CEO of RBS) and other senior directors of RBS for their role in its demise.

The Telegraph reports that Cable has written to Lord Wallace, the Government’s chief legal adviser in Scotland, demanding to know when a decision will be made on whether to ban the former bankers from sitting on company boards.

Cable first asked Scotland’s Crown Office and Procurator Fiscal Service to consider prosecutions in January 2012.

The irony being of course, despite Cable's desire for speed, if a decision to prosecute was taken the trial would be lengthy and extremely complex. Any successful prosecution would then be appealed, and the resulting quagmire of appeals and counter appeals/hearings would take years to resolve, not to mention cost a small fortune.

The question that Cable needs to ask himself is will such a lengthy prosecution really serve the public interest?

A cynic might argue that Cable is playing to the gallery.

Tuesday, April 30, 2013

Eurozone Unemployment Hits New High

Unsurprisingly, given that monetary policy within the Eurozone is being conducted by unelected and unaccountable anti inflation zealots from the ECB, unemployment levels within the Eurozone hit a record high of 12.1% in March.

The highest increases were registered in Greece (2 1.5% to 27.2% between January 2012 and January 2013), Cyprus (10.7% to 14. 2 %), Spain (24.1% to 26.7%) and Portugal (15.1% to 17.5%) .

Eurostat estimates that there are over 19 million people unemployed within the Eurozone, 3.6 million of them being under 25.

This level of unemployment is not sustainable and is a threat to democracy.

Cyprus Parliament Votes

Today the Cyprus parliament will be finally given an opportunity to vote on the bailout plan imposed on it by the IMF/EU.

Pundits expect that the bill will pass.

However, if it doesn't, the EU/IMF will simply delay the bailout until the parliament votes in favour of it.

"Democracy" in action, the EU way!

Monday, April 29, 2013

Eurozone Economic Sentiment Decreases

Unsurprisingly confidence in the Eurozone fell for a second straight month in April.

The Economic Sentiment Indicator (ESI) decreased by 1.5 points in the euro area (to 88.6) according to the European Commission's latest Business and Consumer Survey results.
"In the euro area, the ESI's decline was broad - based across all business sectors, with services witnessing the sharpest drop, while consumer confidence went up. Among the five largest euro area economies,  economic sentiment worsened significantly in Germany (- 2.3) , France (- 2.0) and Italy (- 1.9), while remaining broadly stable in the Netherlands (+0.2 ) and improving in Spain (+ 0. 9). 

The decrease in industry confidence ( - 1. 5 ) resulted from a much more negative assessment of the current level of overall order books and lower production expectations. Managers' assessment of stocks of finished products remained virtually unchanged. The past production and, to a lesser extent, the current level of export order books, which are not included in the confidence indicator, were also assessed more negatively . 

Services confidence dropped abruptly by 4.1 percentage points, driven by significantly worsened assessments of the business situation and demand over the past three months. Demand expectations deteriorated to a lesser extent. 

Consumer confidence increased by 1.2 points, based on a marked easing of unemployment expectations and slightly better expectations concerning households' future financial situation, the future general economic situation and savings over the next 12 months. Retail trade confidence decreased by one point, driven by worsened business expectations and views on the adequacy of current stocks. The assessment of the present business situation worsened only slightly. Also construction confidence decreased (- 1.3), based on weaker employment expectations and assessment s of order books. 

Financial services confidence (not included in the ESI) improved markedly (+ 5.0), fuelled by considerably better assessments of the business situation and demand over the past three months. Demand expectations improved slightly. Employment plans were revised downwards across business sectors, contrasting with the easing of consumers' unemployment expectations. Selling price expectations decreased in industry, retail trade and construction, and increased marginally in services."
According to the Telegraph, "experts" had forecast a decline to 89.3.

The pressure is now on the ECB to cut rates this Thursday. However, given that the ECB is dogmatically sticking to its anti inflation monetary policy, at the cost of millions of jobs in the Eurozone, I do not expect to see any cut in rates.

Saturday, April 27, 2013

Cyprus To Maintain Capital Controls

In a remarkably unsurprising development, Cyprus has decided to maintain capital controls during the summer.

The Eurozone finance ministers and ECB will of course be delighted, as this will enable them to continue to crow that there there has been no bank run in Cyprus.

My sympathies to the people of Cyprus, it will be a long hot summer!

Friday, April 26, 2013

The Pain In Spain

Unsurprisingly Spain has had to delay reaching it budget deficit reduction targets by two years, to 2016.

Additionally, it foresees its unemployment rate as being 27.1% in 2013 and 26.7% in 2014.

At what stage will the Europhiles wake up and realise that levels of unemployment such as these are not sustainable in a Western democracy without there being serious blowback?

The above figures are of course subject to revision!

Thursday, April 25, 2013

UK Avoids Triple Dipper

In a small ray of sunshine, the Office for National Statistics (ONS) reports that Britain's economy grew by 0.3% in Q1 of this year; thus the UK has avoided entering its third technical recession by the skin of its teeth.

The 0.3% rate of growth even managed to be larger than the 0.1% predicted by economists.

However, before people break open the Bollinger, it should be remembered that 0.3% is not exactly "stellar" and that China is feeling very sorry for itself having "only" managed to grow by 7.7%!

However, as I always say, never rely on ONS statistics they are out of date and will be revised upwards/downwards in due course.

Tuesday, April 23, 2013

Banks Delay PPI Claims

In March I noted that the financial ombudsman service (FOS) was taking on 2,000 new PPI complaint cases a day, with numbers rising at "unprecedented" rates.

I went on to note that it was clear that the banks were trying to delay payouts:
"Needless to say, as the number of referrals to the FOS rises, so does the length of time it takes for the ombudsman to make a determination. It seems that the delays are also increasing because some companies are causing unnecessary delays.

Natalie Ceeney, chief financial ombudsman, is quoted by the BBC:
"As the complaint levels show no sign of slowing, consumers are increasingly having to wait longer to get their complaints sorted - with many businesses still continuing to cause unnecessary delays.
Where businesses have shown a real commitment to better customer service and diligent complaints handling - including actively engaging with the ombudsman - cases are resolved more quickly and easily, to the benefit of everyone."
None of this is surprising, those who were sold PPI will see this as an opportunity to try to obtain a refund (irrespective of whether they were mis-sold PPI or not) and the banks will do everything they can to try to reduce the costs of the claims.

That being said, had the banks not incentivised their staff to sell policies that were in many cases clearly inappropriate to people who didn't need them/couldn't claim on them when they needed to, then this entire mess could have been avoided.

The greed of the banks is now being repaid by the perspective that the banks' customers have that there is "free" money to be made.
As the old saying goes, "what goes around, comes around".
A claims management company, Emcas, has now also said that banks are rejecting around a third of claims from customers. Ironically, as per the Telegraph, the Financial Ombudsman Service (FOS), which deals with complaints rejected by the banks, is upholding the majority of PPI claims.

Why such an anomaly?

A cynic would argue that the banks are trying to slow things down in the hope that those claiming simply give up.

Needless to say the British Bankers' Association denies that banks were deliberately turning down legitimate claims in the hope that they would avoid having to pay up.

Make of that what you will.

Irrespective of what obstacles (real and imaginary) are put in your way by the banks, do not give up; if rejected by the bank make a claim direct to the FOS, do not use a claims management company (which will charge you a percentage of any compensation that you receive).

Monday, April 22, 2013

Fitch Downgrades UK

Last week Fitch downgraded the UK to AA+ owing to a weakened economic outlook.

This follows on from Moody's downgrade in February. The BBC quote Fitch as saying that the downgrade:
"Primarily reflects a weaker economic and fiscal outlook".
However, it has placed the UK's outlook as being "stable"; ie it does not expect to downgrade the UK again in the foreseeable future.

As to whether austerity is the corset means of bringing about growth, only time will tell.

Monday, April 15, 2013

China's 7.7% Growth Not Too Shabby!

China's GDP grew by 7.7% in Q1 2013, down from 7.9% in Q4 2012.

Were this any other country such a rate of growth would be considered to be excellent.

However, analysts have programmed themselves to expect ever improved levels of growth in China; thus many have been disappointed by the figures.

The reality is that exceptional levels of growth, such as this, cannot continue indefinitely. Given the size of China and its economy, growth in excess of 7% isn't too shabby at all.

The doom sayers need to calm down and take a more measured view.

Friday, April 12, 2013

Wheels Fall Off Cyprus Bailout Agreement

It seems that the wheels are falling off the Cyprus bailout deal.

The cost of the rescue has risen from Euro17.5BN to Euro23BN, but Germany remains adamant that the size of the bailout will not increase. 

Meanwhile the BBC reports that Cyprus president Nicos Anastasiades has said that he will appeal for extra assistance from the European Union, even though he claims he does not want more money.

What does he want?

Help from EU to reduce the burden of the conditions to make the bailout possible.

In other words Cyprus is trying to renegotiate the terms of the bailout, ie the wheels have fallen off the agreement!

Thursday, April 11, 2013

The Voice of The People of The Eurozone


This one pensioner from Ireland sums up the feelings of the people of the Eurozone towards thier political and financial "elite".

Wednesday, April 10, 2013

Crosby Damage Limitation

Sir James Crosby et al are now on a damage limitation exercise, albeit one that is portrayed as being contrition and repentance.

Sir James has asked to have his knighthood removed, and has offered to give up 30% of his £580K per annum pension.

The Telegraph quotes him saying that he was "deeply sorry for what happened at HBOS and the ensuing consequences for former colleagues, shareholders, taxpayers and society in general”.

Andry Hornby, who succeeded Crosby in HBOS in 2006, is under pressure to do something similar.

All very well, maybe but will it be enough to avoid further investigations/retribution?


Wednesday, April 03, 2013

Farewell The FSA - You Won't Be Missed!

At long last the hapless FSA has been disbanded, and replaced by a three pronged system of governance (dare I say "Tripartite"?). As per the FT, the three prongs are:

1 The Prudential Regulation Authority, an arm of the Bank of England headed by Andrew Bailey, will supervise 1,700 banks, insurers and large investment firms.

2 The Financial Conduct Authority, an independent agency led by Martin Wheatley, will supervise behaviour at the same firms and have sole responsibility for 25,000 more, most of them brokers, investment advisers and money managers. The FCA’s multifaceted task includes protecting investors, policing the markets and promoting competition.

3 Mr Wheatley and Mr Bailey will also sit on the third new UK regulator, the Financial Policy Committee, a consensual body charged with spotting and disarming broad threats to financial stability.

Let's see how this all works then!