Monday, December 31, 2012

Happy Fiscal Cliff Day

Good luck to the people of the world relying on American politicians not tipping the USA back into recession today!

Friday, December 21, 2012

The #economia50

My thanks to those who voted for me in economia’s (the official magazine of the ICAEW) list of the top 50 most influential sources of finance news and information in social media.

I am number 30 on the list.

As per economia:
We asked, and you responded. Here are the top 50 most influential sources of finance news and information in social media, voted for by economia readers and ordered by PeerIndex…

Using the hastag #economia50, readers sent us their nominations, we counted the votes and ranked them according to influence in association with PeerIndex, to reveal the economia Finance Twitter 50.

Topping the list is Michel Barnier, the EU commissioner who oversees financial regulation. The bilingual bureaucrat’s presence at the top of the list suggests the significance of the ongoing EU audit debate as well as the general uncertainty over the eurozone.

Aside from the influence of Europe, the list is dominated by journalists, with Newsnight’s economics editor Paul Mason coming in at number seven. The energetic tweeter offers insight to the UK economy and the political machinations behind it.

Flying the flag for chartered accountants in the top ten is Richard Murphy, founder of the Tax Justice Network and an advisor to the TUC on taxation and economic issues. A sometime columnist for The Guardian and, he offers his followers forthright views on the profession.

Never afraid to express his opinions on HMRC or the profession in general, Ken Frost rounds out the top 30. Frost writes regularly on his own website and blogs for Metro.

Given her role as chair of the Public Accounts Committee, which has spent the last month lambasting tax avoidance schemes used by large companies in the UK, it’s no surprise that MP Margaret Hodge features on our list at 37.”
The full list can be seen here economia.

Wednesday, December 19, 2012

UBS Fined $1.5BN

Last Friday I wrote that UBS was to be fined $1Bn for its role in the LIBOR rate fixing scandal.

I was wrong, UBS has in fact been fined $1.5BN.

Mea culpa!

Tuesday, December 18, 2012

RBS and NatWest To Refund £10M

It appears that some bank customers when withdrawing cash from an ATM are a tad forgetful and, believe it or not, don't actually take the cash dispensed from the machine.

What happens then?

The ATM sucks the cash back in and recredits the customer's account.

Well that's how most banks treat it, except NatWest and RBS which don't; instead, up until now, they have been crediting a "dump account".

However, that seems set to change as Finextra reports that Royal Bank of Scotland and NatWest have set aside a £10M reserve to refund up to 300,000 customers who made a withdrawal at the ATM but walked away without the cash.

The bank is apparently checking its records over the past seven years and will repay the money, plus the interest earned on the sum, to customers who forgot their cash. 
This brings a whole new meaning the phrase "bank error in your favour".

Cyprus To Default

According to Cyprus Finance Ministry Secretary Christos Patsalides Cyprus is going to default within days unless it receives Euro300BN.

Oddly enough there are some people who have been taken by surprise by this development.

I don't understand why, in August I wrote the following:
"Cyprus has barely managed to sell Euro23.1M of government bonds.

It achieved a "bid to cover ratio" of 1 (ie there were only just enough "punters" prepared to buy them), at a yield of 7% (the last auction in June achieved a yield of 6.25%).

A yield of 7% is "the point of no return"; it is the level at which Greece, Portugal and Ireland went with their begging bowls to others asking for a bailout.

Why is Cyprus having problems?

Around 40% of its largest banks' exposures are to Greece
Therefore this should come as no surprise to anyone.

Monday, December 17, 2012

Greece's New Fence

Today's announcement by Greece that it has completed its "anti immigration" fence along its border with Turkey could not have come at a better time, for it seems that it is still struggling to collect back dated taxes.

The Washington Post reports:
"The European Union says that Greek tax collection is still falling well short of some key targets that need to be met to reduce the government’s staggering debt pile.

The EU’s task force to help Greece overcome the crisis that brought it to the brink of bankruptcy said in Monday’s quarterly report that Athens still has trouble to deal with old, outstanding tax claims. With 2 months to go in 2012, it was still about a billion euros behind the EU target of recovering €2 billion."
The fence will not only help prevent immigration, but also stop Greek citizens escaping from their own country.

Friday, December 14, 2012

UBS $1BN LIBOR Settlement

UBS is, according to the Telegraph, close to agreeing a settlement with UK and US regulators on LIBOR rigging.

The bank is expected to announce next week that it has reached a combined $1BN deal with US and British authorities to settle an investigation into the role it is alleged to have played in rigging global borrowing rates.

To put the $1BN into context, LIBOR is the basis for $800 TRILLION of financial products. The banks that participated in its rigging would have made billions out of this over the years.

Additionally, UBS's bonus pool was $2.79BN in 2011.

Therefore shed no tears for them!

Wednesday, December 12, 2012

Merkel Downplays Euro Summit

Another week another European summit to, allegedly, save the Eurozone etc.

This summit (scheduled for Thursday and Friday), as with all the others, has no chance of success. Indeed even Angela Merkel realises it is a waste of time, as she has warned members of her Christian Democrat party that the' summit is unlikely to result in an agreement on deepening economic and monetary union in the Eurozone.

The only purpose, and tangible outcome, of these summits is to provide a recurring source of revenue for the catering companies.

Tuesday, December 11, 2012

Northern Rock Customers To Receive Windfall

In the spirit of a game of Monopoly, where a "bank error in your favour" has occurred, some of Northern Rock's customers are to receive an unexpected windfall.

Reuters reports that Northern Rock Asset Management, the state-owned remnant of defunct lender Northern Rock plc, is refunding £270M of interest payments to approximately 152,000 customers.

For why?

Northern Rock failed for some reason to make mandatory disclosures in loan documentation and customer letters in 2008. The mistakes pre-date the separation of Northern Rock plc and Northern Rock Asset Management.

There is of course a downside, the refund according to Treasury Economic Secretary Sajid Javid is "likely to increase public sector net borrowing for 2012/2013".

HSBC On Probation

Congratulations to HSBC for entering the record books, wrt the size of settlement that it has agreed to for money laundering.

The BBC reports that HSBC has confirmed it is to pay US authorities $1.9BN in a settlement over money laundering, the largest paid in such a case.

A US Senate investigation said the UK-based bank had been a conduit for "drug kingpins and rogue nations".

HSBC has announced it has appointed a former US official to work as its head of financial crime compliance, which is a new position.

Bob Werner was previously the head of the US Treasury's Office of Foreign Assets Control (OFAC) - the agency responsible for enforcing the US sanctions on countries including Iran.

He will be responsible for beefing up HSBC's anti-money laundering and sanctions compliance systems.

As per HSBC's statement on the matter, it is now effectively on probation for the next five years:
"Over the five-year term of the agreement with the Department of Justice, an independent monitor will evaluate HSBC's progress in fully implementing these and other measures it recommends, and will produce regular assessments of the effectiveness of HSBC's compliance function."
The full text of the statement is reproduced below:
"HSBC has reached agreement with United States authorities in relation to investigations regarding inadequate compliance with anti-money laundering and sanctions laws. This includes a Deferred Prosecution Agreement (DPA) with the US Department of Justice. HSBC has also reached agreement to achieve a global resolution with all other US government agencies that have investigated HSBC's past conduct related to these issues1 and anticipates finalising an undertaking with the United Kingdom Financial Services Authority shortly.

Under these agreements, HSBC will make payments totaling US$1.921bn, continue to cooperate fully with regulatory and law enforcement authorities, and take further action to strengthen its compliance policies and procedures.

Stuart Gulliver, Group Chief Executive, said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organisation from the one that made those mistakes. Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters.
"While we welcome the clarity that these agreements bring, ensuring the highest standards wherever we do business is an ongoing process. We are committed to protecting the integrity of the global financial system. To this end we will continue to work closely with governments and regulators around the world."

In the past several years, the Board of HSBC Holdings plc has taken decisive action to direct management to fix past shortcomings as they have come to light. Since 2011, with new senior leadership teams in place at both HSBC Group and HSBC North America, HSBC has taken extensive and concerted steps to put in place the highest standards for the future.

The Department of Justice has recognised these efforts in the DPA: "Management has made significant strides in improving 'tone from the top' and ensuring that a culture of compliance permeates the institution. The efforts of management have dramatically improved HSBC Bank USA's and HSBC Group's Bank Secrecy Act / Anti-Money Laundering and Office of Foreign Assets Control compliance programs."

As noted in the DPA, HSBC Bank USA already has, over the past several years, undertaken the following voluntary remedial measures:
  • increased its spending on anti-money laundering (AML) approximately nine-fold between 2009 and 2011;
  • increased its AML staffing nearly ten-fold between 2010 and 2012;
  • revamped its Know Your Customer programme, including treating non-US HSBC Group Affiliates as third parties subject to the same due diligence as all other customers;
  • exited 109 correspondent relationships for risk reasons;
  • clawed back bonuses for a number of senior officers, and
  • spent over US$290m on remedial measures.
HSBC Group has also undertaken a comprehensive overhaul of its structure, controls, and procedures. A number of these improvements is included in the DPA. Among other measures, HSBC Group has:
  • simplified its control structure, allowing the Group to manage risks worldwide more effectively;
  • elevated the role of Group Compliance and given it direct oversight over every compliance officer globally, so that both accountability and escalation now flow directly to and from HSBC Group Compliance;
  • created the new role of Head of Group Financial Crime Compliance and Group Money Laundering Reporting Officer, who will help to establish a Global Financial Intelligence Unit;
  • made other new senior hires with extensive experience handling relevant international legal and regulatory issues, including a new Chief Legal Officer and a new Global General Counsel for Litigation and Regulatory Affairs;
  • adopted a set of guidelines limiting business in those countries that pose a high financial crime risk;
  • issued a new global sanctions policy using a more extensive and consistent set of lists to screen all cross-border payments;
  • commenced a review of all Know Your Customer files across the entire Group - the first phase of this remediation will cost an estimated US$700m over five years, and
  • undertaken to implement single global standards shaped by the highest or most effective anti-money laundering standards available in any location where the HSBC Group operates.
Over the five-year term of the agreement with the Department of Justice, an independent monitor will evaluate HSBC's progress in fully implementing these and other measures it recommends, and will produce regular assessments of the effectiveness of HSBC's compliance function.

The agreement notes that HSBC Bank USA and HSBC Group have "provided valuable assistance to law enforcement." HSBC conducted multiple extensive internal investigations, voluntarily made employees available for interviews, and collected, analysed and organised voluminous evidence and information.

HSBC is firmly committed to putting in place robust standards that will help promote the integrity of the global financial system. 
Media enquiries to:
Patrick Humphris
+44 (0)20 7992 1631

New York
Robert A Sherman
+1 212 525 6901

Hong Kong 
Gareth Hewett
+ 852 2822 4929

Investor Relations enquiries to:
Guy Lewis
+44 (0)20 7992 1938

Robert Quinlan
+44 (0)20 7991 3643

Hong Kong
Hugh Pye
+852 2822 4908

1 These include: (i) a deferred prosecution agreement with the New York County District Attorney's Office; (ii) consent orders with the Board of Governors of the U.S. Federal Reserve System; (iii) an agreement with the U.S. Department of the Treasury's Office of Foreign Assets Control; (iv) agreements and consent orders with the Office of the Comptroller of the Currency (the "OCC"); and (v) a consent order with the Financial Crimes Enforcement Network ("FinCEN") of the Treasury Department. 
Notes to editors:
The websites of the agencies involved in these agreements are as follows:
US Department of Justice: Financial Services Authority:
The New York County District Attorney's Office:
The Board of Governors of the US Federal Reserve System: US Department of the Treasury's Office of Foreign Assets Control:
Office of the Comptroller of the Currency:
Financial Crimes Enforcement Network of the Treasury Department:

The HSBC Group
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 6,900 offices in over 80 countries and territories in Europe, the Asia-Pacific region, North and Latin America, the Middle East and Africa. With assets of US$2,721bn at 30 September 2012, the HSBC Group is one of the world's largest banking and financial services organisations."

Monday, December 10, 2012

Christmas Windfall For Barnsley Building Society

Members of Barnsley Building Society are in for an unexpected Christmas present as they will receive up to £5,000, after the building society recovered money tied up in failed Icelandic banks.

Barnsley was forced to merge with Yorkshire Building Society after £10M it had deposited with two Icelandic banks, Kaupthing Singer & Friedlander and Heritable Bank, was feared lost.

However, as per the Telegraph, it promised that any money it recovered from the banks' administrators would be returned to its savers and borrowers. Approximately £8.8M has been recovered.

Barnsley's savers will receive 3.31% of their total savings balance held with the society on October 21 2008, subject to a minimum of £25 and a maximum of £5,000. Borrowers will get a flat payment of £250, although all payments will be taxed at source. Approximately 28,000 account holders will benefit.

To qualify for the windfalls, savers and borrowers are required to have maintained continuous membership between October 21 2008 and October 21 this year with one or more of the brands in the Yorkshire Group, which also includes Chelsea and Norwich & Peterborough building societies and Egg.

The payments are expected to be completed by 21 December, just in time for Christmas.

Greece Extends Bond Buyback Deadline

Friday was the alleged "deadline" for the Greek bond buyback. However, as I stated at the time:
"Note the use of the word "expected". Doubtless if insufficient bondholders have come forward the deadline will be extended."
Unsurprisingly, the deadline has indeed been extended to noon GMT Tuesday, in the hopes of selling another Euro3-4BN of bonds.

Friday, December 07, 2012

D Day For Greek Bondholders

Today is D Day for those who wish to sell their Greek bonds.

As per the Hellenic Republic Ministry of Finance:
"The invitation is expected to expire at 5:00pm, London time..The expected settlement date of the invitation is 17 December 2012."
Note the use of the word "expected". Doubtless if insufficient bondholders have come forward the deadline will be extended.

Thursday, December 06, 2012

Eurozone Languishes In Recession

EU GDP figures have confirmed that the Eurozone is languishing in recession for the second time in four years.

GDP in the Eurozone fell by 0.1% in Q3, having fallen 0.2% in the previous three months.

Meanwhile in Greece the unemployment rate in September rose to 26%, up from 25.3% in August (in September 2011 it was 18.9%).

Not all was doom and gloom, Italy continues to provide "comic relief" in the shape of ex Prime Minster Berlusconi's antics. He is now openly speculating that may well stand for Prime Minister for the fifth time in next March's elections.
Market rumours also abound that Mario Monti will resign as Prime Minister today.

Well done Italy for trying to provide a much need distraction form the financial chaos, sadly though this merely adds to it!

Wednesday, December 05, 2012

Live Coverage of George Osborne's Autumn Statement

Greece Most Corrupt EU Country

The Corruption Perception Index 2012 has, unsurprisingly, ranked Greece as being perceived as being the most corrupt EU country out of the 27 member states.

Greece's global ranking also took a knock, and has fallen from 80th in 2011 to 94th in 2012.

Osborne Rearranges The Deckchairs On The Titanic

George Osborne is set to deliver his Autumn Statement 2012 today at 12.30pm, in which he will rearrange the deckchairs.

Tuesday, December 04, 2012

Boris Johnson's Wise Words On The Euro

Boris Johnson has given a most concise and effective summary of the Euro:
"It will limp on with sclerotic growth rates continuing to immiserate loads of uncompetitive parts of the eurozone and it will be a bad business. It will eventually blow up but I wouldn't care to bet when."
It would appear that Angela Merkel agrees with him:
"I could take it easy and say the euro is saved. But I am very cautious about saying the worst of the crisis is over." 
In fact it would appear that Merkel believes that things are going to become worse.

Monday, December 03, 2012

Spain Requests Bailout That Is Not A Bailout

Spain has requested a €39.5bn bailout for its banks, which is likely to be approved later today at a meeting of eurozone finance ministers in Brussels.

However, this is not a "bailout" in the Greek sense of the word. Spain will use this money only for its banks, it will not use it to prop up its ailing economy.

The request for a full bailout, in the Greek sense of the word, has yet to come. However, be patient it will come!

Banks Trouser Taxpayers' Money

The Telegraph reports that banks drew down £4.36BN from the Bank of England's Funding for Lending Scheme in its first two months and increased net lending by £496M.

The scheme does not help firms access credit (it should be noted that banks are in fact tightening their lending criteria), it only makes credit cheaper to those successful in their loan applications.

Friday, November 30, 2012

Wheels Fall Off Greek Bailout Plan

Unsurprisingly the wheels have fallen off the Greek bailout plan.

For why?

Eurozone banks do not want to take the losses that will arise from the Greek bond buyback plan.

The IMF will not release the next tranche of bailout money until the Eurozone delivers on the bond buyback plan.

See the problem?

Wednesday, November 28, 2012

Greece - The Never Ending Story

Despite Eurozone hyperbole that the Greek crisis has been "solved", via a debt write down, bond buyback and probable gifting of the next tranche of bailout money, it appears that this is not the end of the story.

German Finance Minister Wolfgang Schaeuble has in fact warned that Greece may need additional help.

As per, Euro-area governments may provide additional funding through the European Union structural fund and further interest payment reduction as long as Greece meets all its obligations under the agreement.

In other words there is an open ended commitment to prop Greece up.

Tuesday, November 27, 2012

It's All At The Co-op Now!

Simon Gompertz writes that as a result of an order from our European overlords (requiring Lloyds to hive off a large number of branches) 3.5 million customers of Lloyds TSB will start receiving letters from the bank from tomorrow, informing them that their accounts will be moved to a new bank (TSB) owned by the Co-op.

Monday, November 26, 2012

Mark Carney Named As Governor of The Bank of England

Mark Carney, the Governor of the Bank of Canada, has been named the new Governor of the Bank of England.

He will take over from Sir Mervyn King next June.

D Day For Greece?

Another day, and other summit to "resolve" the Greek crisis. In theory Eurozone finance ministers will meet in Brussels today to discuss Greece's debt problems. However, it is possible that given there is no likelihood of any tangible outcome that the meeting will be delayed until December.

Despite the certainty of failure, the Eurorcrats continue to spout the "party line" that a solution needs to be/will be found. ECB vice president Vitor Constancio says that he expects a deal on Greece to be reached today.

However, EU Commissioner Olli Rehn is a little more "Delphic" and according to the Telegraph has stated that a decision must be taken on the next tranche of aid to "get rid of uncertainty hanging over Greece".

That of course is true, but uncertainty can be ended in two ways:

1 Give Greece more money, or

2 Cut Greece off and force it to default and exit the Eurozone.

Either way the uncertainty is ended!

Friday, November 23, 2012

EU Budget Summit Cancelled

Unsurprisingly the EU budget summit has been cancelled.

A waste of time, effort and money (our money!).

EU Draft Budget Proposal Leaked

Courtesy of Open Europe a draft of the latest HermanVan Rompuy (HvR) proposal for the EU budget has been published.

The headline spending figure remains broadly unchanged in the new proposal, standing at €1,014BN (a €4BN increase), but more is spent on farm subsidies and structural funds, in a move designed to appease France, Poland, Italy and Spain.

Thus the budget in its present form will not pass, as the UK will veto it.

Thursday, November 22, 2012

Eurozone Imploding At Alarming Pace

Chris Williamson, chief economist at Markit is quoted by the Telegraph as saying that the Eurozone is deteriorating at an "alarming pace".

Meanwhile the "Gnomes of Brussels" continue to demand an increase in their bloated budget.

This will not end well for the hapless citizens of the Eurozone.

Wednesday, November 21, 2012

Of Mice and Men - Samaras Cancels Begging Bowl Qatar Trip

Lats Friday I wrote of  a begging bowl trip by Greek PM to Qatar (and possibly Asia Pacific and Russia) that was "definitely" going ahead:
"In the meantime, hoping to delay the arrival of the fat lady, Antonis Samaras Greece's PM is to go on a tour of the Middle East, China and Russia to try to attract investment.

However, whilst the trip to Qatar is
definitely going ahead the other ports of call have yet to be confirmed; not everyone likes people turning up on their doorstep begging for money."
Less than a week later and it seems that the "definite" trip has been cancelled.

As per Zerohedge:
"Greek Premier Cancels Planned Visit to Qatar on Nov. 26: Office. So much for that bailout plan."
As I noted last Friday, not everyone likes people turning up on their doorstep begging for money.

The Troika's Stark Choice

Despite Greece's doom laden warnings that it would run out of cash by 16 November,  as at the time of writing this article it hasn't.

In other unsurprising news Eurozone finance ministers, the IMF and the ECB (aka the Troika) have failed, for the second week running, to reach an agreement as to how/whether to bail Greece out again.

The bottom line is that Greece's debt is unsustainable.

The Troika face a stark choice, either the debt is written off or Greece is written off.

Tuesday, November 20, 2012

UBS Banker Kweku Adoboli Guilty of Fraud

A former UBS banker, Kweku Adoboli, has been found guilty of fraud after losing the bank $2.3BN in unauthorised trading.

Ooh La La Moody's Downgrades France

Moody's has downgraded France from AAA to Aa1.

Moody's rationale for the downgrade being that France’s long-term economic growth has been hit by its inflexible labour market and low levels of innovation eroding its competitiveness and industrial base.

It also cited France's exposure to the ongoing Eurozone crisis.

Moody’s is quoted by the Telegraph:
Further shocks to sovereign and bank credit markets would further undermine financial and economic stability in France as well as in other euro area countries. 

The impact of such shocks would be expected to be felt disproportionately by more highly indebted governments such as France.

Monday, November 19, 2012

Barclays Purges Thought Crimes

Echoing an Orwellian dictatorship, Barclays is attempting to "cleanse" the minds of its executives of their aggressive money making thoughts.

The Mail reports that Antony Jenkins, the CEO of Barclays, has ordered more than 100 of the bank's most senior executives to attend a two-day re-education event.

The process is designed to cleanse their minds of the aggressive culture instilled by his predecessor Bob Diamond.

The re-education event, to be held in North London, is part of a drive by Jenkins to win back the trust of customers and regulators by making a decisive break with the Diamond era.

The attendees will participate in a series of seminars and bonding exercises aimed at instilling ethical values. The executives will then be expected to act as evangelists for the new culture throughout the organisation. During the two days they will be immersed in sessions including history lessons on the bank’s heritage as a Quaker institution.

They will also be subjected to ‘360 degree feedback’ on their performance, with people both above and below them contributing to their bonus assessments. The process is designed to penalise self-serving or unethical behaviour.

Let's see how that goes then!

Friday, November 16, 2012

Lagarde and Greece Wait For The Fat Lady

Christine Lagarde (CEO of the IMF) is quoted by the Telegraph wrt a possible deal being brokered for Greece next week:
"You know, it's not over until the fat lady sings, as the saying goes.

It's a question of working hard, putting our mind to it, making sure that we focus on the same objective, which is that... Greece can operate on a sustainable basis, can recover, can get back on its feet, can re-access markets as early as possible.
That is what is driving the IMF's determination."
In the meantime, hoping to delay the arrival of the fat lady, Antonis Samaras Greece's PM is to go on a tour of the Middle East, China and Russia to try to attract investment.

However, whilst the trip to Qatar is definitely going ahead the other ports of call have yet to be confirmed; not everyone likes people turning up on their doorstep begging for money.

Thursday, November 15, 2012

Eurozone Driven Into Recession Again

The Eurozone has fallen back into recession again.

As per Eurostat:
"GDP fell by 0.1% in the euro area1 (EA17) and increased by 0.1% in the EU271 during the third quarter of 2012, compared with the previous quarter, according to flash estimates published by Eurostat, the statistical office of the European Union. In the second quarter of 2012, growth rates were -0.2% in both zones.

Compared with the same quarter of the previous year, seasonally adjusted GDP fell by 0.6% in the euro area and by 0.4% in the EU27 in the third quarter of 2012, after -0.4% and -0.3% respectively in the previous quarter.

During the third quarter of 2012, GDP increased by 0.5% in the United States compared with the previous quarter (after +0.3% in the second quarter of 2012) and fell by 0.9% in Japan (after +0.1%).

Compared with the same quarter of the previous year, GDP rose by 2.3% in the United States (after +2.1% in the previous quarter) and by 0.2% in Japan (after +3.4%).
Could it be that the dogmatic policy of austerity, being pursued by unelected bureaucrats and vainglorious politicians, is driving the Eurozone onto the rocks?

Surely not?!

Wednesday, November 14, 2012

The Eurozone Tinderbox

The growing backlash against the economic dogma of Eurozone austerity has found physical form today, as unions stage a series of demonstrations and "general strikes" across the European Union.

By way of an example, Greece continues to suffer. The Hellenic Statistical Authority has released data that shows that the Greek economy shrank by 7.2% on an annual basis in the three months to the end of September.

Driving economies and people into the ground for the sake of an economic doctrine imposed by unelected bureaucrats will backfire on those who pursue this misguided policy.

Tuesday, November 13, 2012

Allegations of Gas Market Rigging Akin To LIBOR

The FSA and Ofgem are looking into allegations that some of the UK's largest utilities have manipulated the UK physical natural gas markets.

Seth Freedman, a whistleblower, told them that he saw evidence that wholesale gas prices, used as the basis for domestic energy bills, were manipulated by some of the big power companies.

Mr Freedman, who worked at ICIS Heren (a firm which reports gas prices), said he saw what he took to be suspect trading on September 28 (the end of the gas industry’s financial year).
The fact that gas is traded like all other commodities makes it susceptible to speculation.

In the event that Mr Freedman's allegations are proven to be true, then this would be a scandal equivalent to the LIBOR rigging by the banks.

You can almost hear the lawyers rubbing their hands with glee at the thought of the lawsuits that are going to come from this.

Greek Bond Auction Falls Short

Greece's t-bill auction fell Euro1BN short of raising the Euro5BN due for Friday's bond deadline, although it was almost Euro1BN above its target.

However, it may well manage to sell some more and make up the shortfall before then.

Monday, November 12, 2012

Greece Needs Another Euro32BN

The Troika draft report on Greece states that Greece needs another Euro15BN to get it through to 2014.

For good measure the report goes on to say that Greece may need extra Euro17.6BN in 2015/16.

Whilst the powers that be ponder where that money is going to come from, of more pressing need to Greece is this Friday's bond maturity deadline; yet still no sign of the next tranche of bailout money!

Euro1.4BN EU Fraud

Bruno Waterfield has just tweeted that the EC has confirmed that 'part of' the proposed roll over of €1.4BN from 2012 to next year are funds 'under investigation'.

Which basically means there is a suspicion of fraud wrt this sum of money.

Don't you just love the EU's budgetary process and financial "controls", the stories that just keep giving.

Friday, November 09, 2012

Greece Faces D Day - Again

Today Euro of Greek bonds mature, next Friday 16th November a further Euro4BN mature.

Greece has issued, as it often does, a warning that if it dopes not receive bailout money by then it may default on those bonds.

However, Wolfgang Schaeuble, Germany's finance minister, is not so easily cowed by these threats; he told reporters yesterday that a decision on Greece next week "would be too soon".

Thus, as ever, the Eurozone crisis drags on as the politicians and bureaucrats dither over whether to continue to fund Greece or expel it.

Thursday, November 08, 2012

Rehn Writes Greece Off

Olli Rehn, the European Economic and Monetary Affairs Commissioner, has written Greece off by stating that Greece's debt (expected to reach at least 189% of GDP in 2013) is unsustainable whilst at the same time ruling out the possibility of an official sector debt restructuring.

Rehn negelected to state that the level of unemployment in Greece is also unsustainable. Youth unemployment now stands at a staggering 58% in August vs 45% in August 2011.

The only option remaining for Greece is to leave the Euro.

Tuesday, November 06, 2012

EU Budget Qualified Again

The European Court of Auditors found that controls over 86% of the EU budget are only "partially effective", this makes the 18th year running that the budget has been qualified.

To add to this annual disgrace, it transpires that the frequency rate for "material error" rose by 8% in 2011 from 36% to 44%, with £4BN in EU payments directly affected by irregularities.

The EU's response?

They intend to increase their expenditure by £95BN over the next eight years.

Who pays for this?

The hapless citizens of the EU, who are themselves being told by their EU overlords to endure years of austerity!

Friday, November 02, 2012

RBS Take PPI Hit

Yesterday I wrote about Lloyds upping its PPI claims provision, today it's the turn of RBS.

Royal Bank of Scotland this morning reported a £1.38BN Q3 loss after taking a £400M provision against the cost of payment protection insurance compensation costs, for good measure it also booked a £1BN charge against the value of its own bonds.

The Telegraph reports that the total amount of money put aside by the bank to pay claims now stands at £1.7BN, having paid out £1BN thusfar.

RBS said that it was possible the cost of PPI compensation could grow further still.

Thursday, November 01, 2012

Lloyds PPI Chickens Coming Home To Roost

The old saying "what goes around, comes around" springs to mind when reading that Lloyds has been forced to make an additional PPI provision in Q3 of £1BN.

The total amount set aside by Lloyds for the PPI mis-selling scandal is £5.3BN, giving rise to a Q3 loss of £144M.

Lloyds has paid out £3.7BN in compensation thus far. However, it may have to make further additional provisions next year.

The Telegraph reports that Lloyds is less than pleased to be on the receiving end of fraudulent claims for compensation, driven in part by the plethora of claims management companies that are pushing people to make claims. Lloyds has written to the Financial Ombudsman Service asking for claims management companies to be forced to meet the cost of spurious requests for compensation.

Wednesday, October 31, 2012

The Economic Wasteland That Is The Eurozone

The September unemployment figures for the Eurozone make grim reading, for the Eurozone as whole the unemployment rate hit a record high of 11.6%.

That is a figure that is both shameful and dangerous.

However, dig deeper and it can be seen that Spain and Greece are suffering even more with rates of 25.8% and 25.1% respectively.

To add to the woes of the Greek people Greek finance Minister, Yiannis Stournaras, has submitted the 2013 budget to parliament. If the current policies of austerity, being imposed to assuage the Troika, are maintained/pursued:

-Public debt to GDP will hit 189.1%
-There will be a general government deficit of 5.2%
-There will be an economic contraction of 4.5%

It is clear that with rates of unemployment and debt at these levels democracy will be hard pressed to survive, as people will reach out for any ideology other than Eurozone austerity to save them.

Yet what does the European Commission do?

It asks for a budget increase of 5% to feed its bloated bureaucracy and those that serve it, whilst forcing the people of Greece and other Southern European states into penury.

This is a recipe for revolution.

Tuesday, October 30, 2012

UBS Redundancies Smokescreen

Whilst UBS is enveloped by the smokescreen of publicity derived from its mass culling (and handling of that mass culling) of staff today, it seems to have been a "good" day for it to also let the world know that it is under investigation in Singapore, along with other banks, for possible manipulation of Libor and other benchmark rates.

As per Reuters:
"These investigations focus on whether there were improper attempts by UBS (among others), either acting on our own or together with others, to manipulate LIBOR and other benchmark rates at certain times."

UBS - U've Been Sacked

UBS may well regret how it has handled informing its staff about their redundancies today.

The FT reports that UBS was one of the most popular trends on twitter, as the blogosphere flooded with comments describing the shock and resentment of staff.

According to the PR bullshit being spouted by UBS the redundancies are a ‘strategic acceleration from position of strength.

Who hires these people, and why are they still in their jobs?

UBS Redundancies Update

Ralph Sinclair has tweeted the follwoing:
"From inside 100 Liverpool Street: "Whole desks are gone and there are people stood outside without access to the building."

UBS Redundancies

It seems that UBS is making some people redundant today and over the next three years (10,000 in total).

Sadly, as per Owen Callan, UBS is using the "old school" method of informing them.

People arrive at work, if their passes don't work they are ushered into a special room where they are told that they are on special leave.

Monday, October 29, 2012

Greece Riskier Than Syria

The Washington Post reports that an annual survey of finance directors by BDO has found that Greece is considered a riskier place to invest and set up business in than Syria.

Only Iran and Iraq are considered more risky than Greece.

Friday, October 26, 2012

Greece Fails To Meet Targets

Unsurprisingly Greece is failing to meet its debt targets.

Reuters reports:
"Greek debt will be above the target of 120 percent of GDP in 2020, a preliminary report by the IMF showed on Thursday, and Athens will need more reforms before emergency credit from international lenders can start flowing again."
What now then?

Exit or political fudge?

Cynthia Carroll To Leave Anglo American

Anglo American, the mining giant, has announced that Cynthia Carroll will step down as chief executive after six years at the helm, once a replacement has been found.

She has come under increasing pressure from investors over Anglo's deteriorating share price and the company's industrial relations at its platinum operations in South Africa. Earlier this year shareholders asked the chairman to look for a new chief executive. 

Wednesday, October 24, 2012

Pensioners To Work For Pensions

In an admission as to how parlous the finances of the UK are, especially wrt funding pensions, Lord Bichard a former benefits chief has suggested that retired people should be encouraged to do community work such as caring for the "very old" or face losing some of their pension.

He is right to prompt a discussion about how pensions can be funded. However, I am not so sure that this is a viable solution.

Aside from the obvious political difficulties of "selling" it to the public, a good many fit retired people play an active role in their local communities already. As such, it is unlikely that even if this idea ever came to fruition it would achieve any measurable financial benefits.

Legs Kicked From Under Property Market

New rules to be announced tomorrow by the FSA wrt conditions on which mortgages can be granted will kick the legs out from under the struggling property market and, by definition (since the British economy is underpinned by the property market), the economy.

The new rules will make it much harder for the following to take out a mortgage:

- those over 50
- the self employed
- those wishing to use an interest only mortgage

Thus, at a stroke, the tenuous recovery that might be occurring within the economy has been stymied.

Tuesday, October 23, 2012

Das Rheingold - The Funeral of Siegfried?

Germany, the economic "powerhouse" of Europe, is experiencing a crisis of confidence; so much so that in order to assuage some of the more extreme doubters, the Bundesbank audited its gold held in Frankfurt (lest people doubt that it had been sold off) and even allowed MPs to visit it to check for themselves.

So far so wunderbar!

Unfortunately, Germany also holds gold deposits abroad. The FT reports that Suddeutsche estimates about 1500 tonnes are held by the Fed, and about 800 tonnes by the central banks of England and France. The total value being approximately €133BN.

The German court of auditors has, not unreasonably, demanded regular audits of Germany's gold reserves abroad.

Fair enough, and perfectly reasonable, were it not for one "small" problem.

The last audits in New York were in 1979/80, and since then whilst the Bundesbank has been allowed into vault it has not been allowed to open the boxes in which the gold is allegedly stored.

As we all know markets are driven sentiment, and sentiment is affected by fear and doubt. Unless a full audit is conducted in the near future, the fear and doubt will grow to a critical mass and Siegfried may well meet his end.

Rumour has it that the US gold reserves in Fort Knox haven't been audited either, maybe the US needs to do the same as Germany and lance the boil of doubt?

Friday, October 19, 2012

Greece Runs Out of Cash

Greek Prime Minister Samaras has warned that Greece will run out of cash on November 16 unless it receives additional funds before then.

Thursday, October 18, 2012

Nokia Rumours

Unsubstantiated rumours are going around that Nokia is to file a chapter 11 in the face of Q3 losses of €576 million.

Merkel Frets About Greece's Schneckentempo

Chancellor Merkel is, not unsurprisingly, becoming a tad peeved at the schneckentempo (snail's pace) of economic reforms in Greece. So peeved in fact that she told the German Lower House of Parliament so this morning, ahead of today's EU summit on the ongoing Eurocrisis.

Sadly, the only ones who will benefit from today's summit are the caterers!

Wednesday, October 17, 2012

Heil Our EU Overlords!

Germany has demanded an EU “currency commissioner” with sweeping powers to strike down national budgets; a “large step towards fiscal union”; and yet another EU treaty.

Crisis? What Crisis?

Those of you who are worried about the Eurozone crisis, and the increasing levels of unemployment and poverty within that blighted region should worry no longer.

The beleaguered and embattled President of France, Francois Hollande, has told the world that the Eurozone is "close, very close" to exiting its self inflicted financial crisis.

So that's alright then!

Apparently this close exit from financial Armageddon is all thanks to the decisions made at June's EU summit. One might care to remind Hollande that June was 5 months ago, and since then the situation has in fact worsened.

Tuesday, October 16, 2012

Troika Greece Talks Breakdown

The Troika have walked out of talks with Greek Labour Minister Yiannis Vroutsis this afternoon, after reaching deadlock for the second time today.

Hollande Leads Eurozone Breakaway Movement

For reasons that are unclear President Francois Hollande appears intent on destroying the French economy.

Why does he want to do that?

Could it be that he wants to lock in France's fate fully with Greece, Portugal, Spain et al thereby creating a level of economic failure so great (a form of critical mass) that the Eurozone cannot afford to expel these countries without an economic implosion, and using this as an opportunity to lead a breakaway movement from German dominance of the Eurozone?

Monday, October 15, 2012

The Eurozone Readies Its Big Bazooka

Spain appears ready to ask for a bailout next month, as the eye of the financial storm engulfing the Eurozone moves from Greece to Spain.

According to Eurozone insiders, quoted by the Telegraph, the bailout will be bundled together with a revised loan programme for Greece and a bailout for Cyprus.

Maybe this is the big bazooka that the politicians have been blathering about for the last two years?

Friday, October 12, 2012

British Gas Raises Prices

As we face another winter, British Gas has announced that it will raise the prices that it charges for gas and electricity by 6% as from 16 November.

Npower are expected to announce its price rises (rumoured to be higher than 6%) this afternoon.

Thursday, October 11, 2012

Greece's Coke Crash

Sadly for Greece, its love affair with coke (it's largest company) is to come to an abrupt end as Coke moves its listing from Athens to London.

As per Reuters:
"Coca Cola Hellenic, Greece's biggest company by market value, said on Thursday it would switch its main bourse listing to London, where it hopes to tap more liquidity from investors.
Coca Cola Hellenic said in a bourse filing that shareholders would exchange all their stock into shares of Coca Cola HBC AG, a Swiss-based firm.

"The purpose of the public share exchange offer ... is to facilitate the listing of Coca Cola Hellenic into the premium category of the London Stock Exchange and the introduction to the New York Stock Exchange." 
The party's over!

Scam PPI Claim Company

Beware calls from this number 02392997556, according to this thread it is a scam designed to acquire your bank details.

Wednesday, October 10, 2012

IMF Loses Patience With Eurozone

The IMF has warned that the Eurozone still poses the greatest threat to global financial stability, and has urged the Eurozone to "do whatever it takes" to protect the Euro.

All very nice, maybe, but experience has shown that the politicians and bureaucrats of the Eurozone are not capable of decisive action. Hence the fact that the IMF in the report issued the warning that the lack of decisive action by European governments and institutions risked tearing the Eurozone apart:
"Incremental policy making has been insufficient to fully allay market tensions, despite the recent market rally since end July.

Merely muddling through imposes increasingly higher costs, as the unchecked forces of fragmentation continue to gather speed and undermine the very foundations of the union – a common monetary policy, and economic and financial integration....

The existing strains in the markets require a leap to better policies if the euro area is to stabilise funding markets and reduce spreads, arrest capital flight, and begin to reintegrate financially."
The advice is sound, and the warning valid. However, the leaders and bureaucrats of the Eurozone are simply not up to the job; as the millions who are unemployed and living in poverty in the Eurozone can attest to.

Tuesday, October 09, 2012

Frau Merkel Goes To Athens

German Chancellor Angela Merkel has arrived in Athens, this is her first visit there since the Eurozone crisis began.

Monday, October 08, 2012

The Empty Vessel That Is The ESM

In case you didn't realise it, today is the official launch of the European Stability Mechanism (ESM), allegedly this is the permanent bailout fund which offers a pot of cash that can be used to bailout troubled nations.

Eurozone finance ministers, who form the ESM's board of governors, will hold the inaugural meeting in Luxembourg today, two years after the idea of setting up such a fund was endorsed.

Who says that EU politicians don't move "quickly" when there is a crisis?

Reuters reports that the fund's lending capacity will be:
"based on 80 billion euros of paid-in capital and 620 billion of callable capital, against which the ESM will borrow money on the market to lend it on to governments cut off from sustainable market funding".
Oh, and it won't reach its full capacity gradually by 2014.

What does that mean?

It means that even "fully funded" at Euro620BN it hasn't enough money to staunch the tsunami ripping through the Eurozone's finances.

Oh, but as already noted, it hasn't got Euro620BN anyway; ie it is an empty vessel!

Friday, October 05, 2012

NatWest Systems Upgrades

As per the NatWest site, there will be some systems upgrades this weekend:
"We have some planned system upgrades happening over the weekend which means some of our services will be unavailable for short time periods.

- On Saturday 6th October, our Mobile Banking apps will be unavailable between 2am and 6am.
- On Sunday 7th October, our Online and Telephone banking services will be unavailable between 1am and 7am.

We're sorry for any trouble that this may cause you. You can still withdraw cash from an ATM and point of sale transactions are also unaffected.

Please remember it's vital to keep your personal details safe. Never reveal your personal information, including online and card security details to anyone. You should also never respond to any unsolicited or suspicious emails, phone calls or text messages or click on any attach ments [sic] that might be included in these
Good luck everyone!

Samaras Likens Greece To Weimer Republic

In February I wrote the following:
"Let us be clear that the 50 page "agreement" (written in English) that the Greek political establishment has to agree, in order to receive Euro 130BN, will (if it is accepted) have the same consequences for Greece as the Treaty of Versailles did for the Weimer Republic."
Today, Greek Prime Minister Antonis Samaras told Handelsblatt:
"The cohesion of Greek society was the "endangered rising unemployment, as towards the end of the Weimar Republic in Germany was".
Evidently he has been reading this site!

Thursday, October 04, 2012

Banks Issue Threat

Sky reports that Britain's banks have issued a thinly disguised threat to the FSA and other regulatory agencies, that if they are continually fined their lending capacity and ability to rebuild their capital bases will be severely jeopardised.

The warning was given at a meeting between bank CEO's and officials from the Financial Services Authority (FSA) last week.

Bank of England Holds Rates

The Bank of England has held interest rates at 0.5%, as expected.

Wednesday, October 03, 2012

Greece Being Destroyed By The Eurozone

Despite the fact that the Greek economy will contract by 6.1% this year and 3.8% next year, and that youth unemployment in Greece in August was 55.4%, the Troika are demanding the imposition of even tougher austerity measures above and beyond Antonio Samara’s Euro13.5BN package of cuts.

The Troika wants Greece to make deeper cuts to the minimum wage and pensions, while imposing longer working hours.

Until an "agreement" is reached, or imposed, the next tranche of bailout money will not be released and Greece will be starved of liquidity.

As I noted on Monday, the people of Greece, if they have any sense, should flee the Eurozone as fast as their legs will carry them.

Tuesday, October 02, 2012

The Collapse of The Rial - A Warning To The Eurozone

Iran's rial is collapsing, following an "innovation" last week by the Iranian government to supply importers with dollars via an "exchange centre".

Unsurprisingly, people have scrambled to exchange rials for dollars.

Reuters reports that the rial fell by at least 9% today:
"The rial was trading at about 37,500 to the dollar, down from around 34,200 at the close of business on Monday, a foreign exchange trader in Tehran told Reuters. Other Tehran traders said the rial had dropped even further, to 38,000 or 40,000."
The Iranian industry minister, demonstrating a typical politician's lack of understanding of how markets work, said that he hoped security services would root out speculators whom he blamed for the drop.

It would be ironic if the downfall of the Iranian government was brought about, not directly by sanctions or war, but by their lack of understanding of how markets work; ie their own hand.

The bureaucrats of the Eurozone should take note, markets are driven by fear and greed; ill advised attempts to control and manipulate them always end in tears!

Monday, October 01, 2012

25 Million Europeans Unemployed

As at August (as per Eurostat) a staggering 25.466 million Europeans were unemployed, with 18 million of them residing in the Eurozone. As if these figures were not bad enough, youth unemployment in Greece in August was 55.4%, and in Spain the rate was 52.9%.

Rest assured that the unemployment rates have worsened since then!

This is a situation that must not be allowed to continue, as the social consequences in those countries where their democracies are being undermined by the economic doctrines of Eurozone bureaucrats will be unimaginable.

As if things were not already bad in Greece, it appears that they will become worse. Greece's Net TV has obtained a draft budget that shows that the Greek economy will contract by 6.1% this year and 3.8% next year.

This is in stark contrast to the view of the European Commission, which expects the Greek economy to display "an insignificant improvement in activity in 2013" (European Economic Forecast Spring 2012 page 71).

The people of Greece, if they have any sense, should flee the Eurozone as fast as their legs will carry them.

Friday, September 28, 2012

Spanish Stress Test Results

Here are the results of the stress test conducted on Spanish banks, as per the FT.

Seven banks failed and seven passed.

The shortfall comes in at under Euro60BN which, bizarrely, Juncker finds comforting!

Here is the reaction of the European Commission:
"The European Commission welcomes today’s publication by the Spanish authorities of the results of the independent valuation of Spanish banks. This is a major step in implementing the financial-assistance programme and towards strengthening the viability of and confidence in the Spanish banking sector.

In line with the Memorandum of Understanding governing the financial-sector programme for Spain, an external consultant conducted over the past few months a stringent bank-by-bank (bottom-up) stress test and a thorough asset quality review. The European Commission was closely involved in this process, as were the ECB, the EBA and the IMF.

The capital needs for individual banks disclosed today are a key step in the process of restoring and strengthening the soundness of the Spanish banks. They will form the basis for the eventual recapitalisation of banks with the help of the programme. The necessary State aid provided to Spanish banks will be determined in the coming months. It will be based on today's published results. It will also reflect measures to be taken by the banks, such as the disposal of assets, other restructuring measures and tapping funding markets, and subordinated liability exercises. In addition, the capital shortfall of credit institutions receiving public funds will be adjusted as a consequence of the transfer of assets to the Asset Management Company.

Banks with a capital shortfall will present recapitalisation plans. Upon approval of these recapitalisation plans by the Bank of Spain and the European Commission, banks requiring state aid will present restructuring or orderly resolution plans to the Spanish authorities, which will notify these to the European Commission for approval under EU state aid rules. Upon approval of these restructuring and/or orderly resolution plans, the recapitalisation of a first group of banks is scheduled to occur by November. "

Thursday, September 27, 2012

ONS Revises Its Figures Yet Again!

On July 25 I wrote the following:

"UK GDP has contracted by 0.7% in the second quarter of 2012, thus bringing the UK into a double dip recession.

However, this figure needs to be taken with a pinch of salt, ONS figures are out of date and are invariably wrong
In August I wrote the following:
"As predicted, it transpires that the ONS figures were of course wrong. Economia reports that the ONS has revised its figures upwards from -0.7% to -0.5%."
One month on and the hapless and hopeless Office for National Statistics (ONS) have yet again revised their figures upwards, this time to -0.4%.

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!

Tuesday, September 25, 2012

Greece's Euro30BN Blackhole

In February I noted that the Troika had have discovered that Greece needed an extra Euro15BN on top of the Euro130BN second bailout that it had yet to receive. In August I noted that the Troika's assessment was that there is a Euro14BN hole in Greece's finances for 2013/14.

A grand total of around Euro29BN in blackholes!

Now Süddeutsche reports that according to senior EU officials, Greece will require an additional two years and additional funding of Euro30BN in order to meet the conditions of its second bailout package. It is not clear as to whether this blackhole is the combination of the two blackholes I wrote about in February and August, or a new blackhole over and above those already highlighted.

Either way it is now unclear if/when Greece will receive its next tranche from the package. Seemingly any decision is being delayed until after the results of the US Presidential election, lest a financially destabilising event propels Romney into office.

Thursday, September 20, 2012

Stagnation Abounds

The purchasing managers indexes (PMIs), released today make depressing reading.

Reuters reports that the composite Eurozone PMI fell to 45.9 in September, from 46.3 in August. A level of less than 50 denotes contraction.

The ongoing decline in PMI indicates that the ECB "plan" to buy Eurozone debt has not impressed companies, or restored their faith in an upturn.

It is not just Europe that is suffering, the ongoing recession in Europe has negatively impacted China (seen by many as the last best hope for pump priming a global economic recovery). Although the China manufacturing PMI rose in September to 47.8 from August's nine-month low of 47.6, it remains below 50 which indicates that Chinese growth is slowing/stalling.

In theory China and the Eurozone should work together to try to address their mutual problems. Unfortunately, China is less than pleased that there is still an arms embargo and that its products are subject to tariffs.

Wednesday, September 19, 2012

Financial Sector Receives 36% of All Bonuses

The Office for National Statistics (ONS) reports that the total level of bonus payments received across the whole economy, during the financial year April 2011 to March 2012 (2011/12), came to £37BN. This is an increase of 3% compared with 2010/11, and equates to an average of around £1,400 per employee in 2011/12.

Those of you who are wondering why you did not receive a £1.4K bonus will be "relieved" to learn that it hasn't got "lost in the post", but has in fact contributed to the higher than average bonuses paid to those working the in the finance and insurance industry who received a total of £13BN in bonuses. This accounts for 36% of all bonuses in 2011/12, even though the sector only accounts for 4% of all UK employees.

Monday, September 17, 2012

Merkel's Bleeding Heart

Doubtless the people of Greece who are facing destitution, courtesy of their country's ill fated and suicidal dalliance with the Eurozone, will be heartened to learn that Chancellor Angela Merkel's "heart bleeds" for the Greeks who are facing hardship.

Does this mean that she will lighten up on the Eurozone's austerity package?


Friday, September 14, 2012

Greek Brinkmanship

As the game of brinkmanship between Greece and the Eurozone continues, it s not surprising to see Greece play its "we need a third bailout" card.

Thanos Catsambas, who represent Greece at meetings with the Troika, told the Troika that Greece will require additional financing, which may take the form either of official-sector involvement or of additional loans, hopefully on more favourable terms.

To try to add some "credibility" to his request for more money, he noted that the previous coalition government estimated that "only 22% of the commitments under the troika-supported program were implemented" in 2011.

That admission, from the Troika's perspective, hardly adds credibility to Greece's commitment to implement change.

Brinkmanship aside, the Greek economy is collapsing as yesterday's figures for unemployment show; they rose to 23.6% (they were at 16.3% this time last year).

Thursday, September 13, 2012

Peter Cummings Fined £500K

The FSA has fined former HBOS director Peter Cummings £500K, and banned him for life from working in the City.

Tracey McDermott, director of enforcement and financial crime at the FSA is quoted in the Telegraph:
Despite being aware of the weaknesses in his division and growing problems in the economy, Cummings presided over a culture of aggressive growth without the controls in place to manage the risks associated with that strategy.

Instead of reacting to the worsening environment, he raised his targets as other banks pulled out of the same markets
However, do not shed too many tears for Cummings, Cummings left HBOS in 2009 with a payout of £600K; so he's still £100K up on the deal!

Wednesday, September 12, 2012

German Court Approves Fiscal Pact With Cap

The German Constitutional Court has cleared the way for the fiscal pact and the eurozone's permanent rescue fund to be implemented.

However, and there is always a "however", the court has limited German liability to the ESM to a maximum of Euro190BN.

Any excess over and above that figure must first be approved by the German parliament.

Tuesday, September 11, 2012

DDDY Rises From The Ashes

ODDY, the Organisation for Public Property Management, the Greek government department tasked with selling off unwanted assets and property confiscated from criminals had been disbanded. Thus there is no means by which those assets can be turned into cash.

Ironically Reuters reports that ODDY, although it has been disbanded, still exists in another form. Out of the ashes DDDY has risen, DDDY is now the Directorate for Public Property Management and is an office of the Greek Finance Ministry.

The cost of salaries are now apparently being booked to pensions. However, because of the chaos caused by the closure and resurrection, DDDY is paralysed and assets are left to rot.

The future of the Euro is in the hands of people who have engineered this shambles!

Monday, September 10, 2012

Merkel's Grexit U-Turn?

Chancellor Angela Merkel has, apparently, made a U-turn wrt her policy on Greece.

Faced with the political fallout from a Greek exit before German national elections in 2013, she now wants to stop Athens from leaving the euro zone at all costs (even if it means massaging the figures in the upcoming troika report).

That at least is the theory according to Der Spiegel.

However, I remain unconvinced. The elections are not new or a surprise, and Merkel would have been well aware of the potential political fallout from a Grexit. Indeed, if anything, a Grexit may enhance her standing more than if she were to be seen to prop up Greece at the cost of German financial stability.

Friday, September 07, 2012

NatWest To Update Systems

NatWest will be updating various systems this weekend:
"On 8 September 2012, due to planned system updates, our Online, Mobile and Telephone banking services will be unavailable between 2am and 6am. We apologise for any inconvenience caused. Withdrawals can still be made via an ATM, and point of sale transactions are unaffected."
In light of what happened during another recent upgrade, let us trust it goes a little more smoothly this time around!

Beware The Dead Cat Bounce

Markets are rising on the self delusional hopes that "this time" the ECB really will do something tangible to stop the rot, and will buy bonds willy nilly.

Be warned, this is nothing more than a dead cat bounce based on the false delusion of ECB action.

Repeat after me:

- There is no plan
- There never was a plan
- There will never be a plan

Wednesday, September 05, 2012

Schaeuble's Line In The Sand

The EC is refusing to deny or confirm the story that the Troika will ask private Greek companies to introduce a six day working week.

Meanwhile Wolfgang Schaeuble, the German finance minister, has ruled out a third Greek bailout package:
"The costs for Greece are already very high and therefore we cannot have a new programme for Greece."
Whether this is a sop for the domestic audience, to keep it docile, or a genuine line in the sand is not yet clear.

Tuesday, September 04, 2012

Moody's Cuts EU's Rating

Moody's has cut its outlook on the triple A rating of the European Union to negative.

The cut reflects the credit risks of the EU's key budget contributors.

Moody's is quoted by the Telegraph:
"The outlook change to negative reflects the negative outlooks now assigned to the Aaa sovereign ratings of key contributors to the EU budget: Germany, France, the UK and the Netherlands, which together account for around 45pc of the EU's budget revenue. 
Moody's believes that it is reasonable to assume that the EU's creditworthiness should move in line with the creditworthiness of its strongest key member states."

Monday, September 03, 2012

Greeks Pressed Into Servitude

The media are awash with rumours that the Troika have requested that private companies in Greece introduce a six day working week.

Let's see how well that "suggestion" goes down with the Greek people.

Thursday, August 30, 2012

Barroso To Unveil European Banking Union

The European Commission President, Jose Barroso, has said that the EU will unveil its proposals for banking union on September 12.

Tuesday, August 28, 2012

Draghi Digs Himself Out of a Hole

European Central Bank President Mario Draghi will not attend the annual Jackson Hole meeting of central bankers at the end of this week the ECB said, citing a heavy workload.

Friday, August 24, 2012

ONS Screws Up Again

On July 25 I wrote the following:
"UK GDP has contracted by 0.7% in the second quarter of 2012, thus bringing the UK into a double dip recession.

However, this figure needs to be taken with a pinch of salt, ONS figures are out of date and are invariably wrong
One month on and, as predicted, it transpires that the ONS figures were of course wrong. Economia reports that the ONS has revised its figures upwards from -0.7% to -0.5%.

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.

Thursday, August 23, 2012

Time Is Not a Healer For Greece

Wolfgang Schaeuble, Germany's finance minister, has told SWR that time (in Greece's case anyway) is not a healer.

In his view granting Greece more time to implement spending cuts would not solve its problems, the Telegraph quotes him:
"More time is not a solution to the problems."
Why draw such a line in the sand?

Schaeuble is no fool, he knows that with Greece it is never just a matter of "time" but also money. He knows that, at some stage, Greece will come back and ask for more money.

As I have already noted it is highly likely that Greece will ask for more money, given the Euro3.5BN black hole in Greece's finances.

Wednesday, August 22, 2012

Greece Pleads For Time

As I noted on Monday, Greek Prime Minister Antonis Samaras is asking Eurozone leaders for Greece to be granted "a little room to breathe" on its austerity targets.

Interestingly he is not asking, as yet, for more money. The Telegraph quotes him:
"Let me be very clear: We require no additional money.
All we want is a little room to breathe, to get the economy going and to increase government revenues. 

More time does not automatically mean more money." 
All very well, maybe. However, as I also noted on Monday, there is a Euro3.5BN black hole in Greece's fiances for 2013/14.

Where will the money come from to fill that?

Tuesday, August 21, 2012

Euro Burnout

The hapless citizens of the Eurozone who feel that they are forever condemned to a lifetime of austerity and recession until their political masters finally admit that the Euro (in its current form) is destined to fail, may be forgiven for thinking that no Eurocrat understands what they are going through.

Step forward the very empathetic folks at the ECB.

For they too are suffering from "Euroburnout".

According to Welt Online the burnout amongst ECB staff trying to cope with the Euro crisis is a "serious potential operational risk for the ECB".

The "good" news for the staff of the ECB and the citizens of the Eurozone is that 40 new jobs will be created within the ECB to address this issue.


Admittedly 40 new jobs is but a gnat's piss against the millions of jobs destroyed by the Eurocrisis, but a job's a job!

The bad news is that these jobs won't be created until 2013, by which time the Euro and the Eurozone economy will have all but collapsed.

Monday, August 20, 2012

Greece's Bottomless Pit

The Greek Prime Minister, Antonis Samaras, will meet with various Eurozone leaders during the coming week in order to beg for more time (an extension of two years) for Greece to try to enact its austerity programme.

His renegotiation mission comes on the eve of next month's Troika report into Greece's economic progress (or lack of it).

Der Spiegel has reported that the Troika's initial assessment is that there is a Euro14BN hole in Greec's finances for 2013/14. This hole being Euro3.5BN larger than the previously identified hole of Euro11BN.

The abundance of black holes is rather alarming, given that the Troika found a Euro15BN in Greece's finances in February 2012.

Therefore will Greece be given more time and more money?

The German Finance Minister, Wolfgang Schaeuble, as per the BBC sums up the situation perfectly:
"I have always said that we can help the Greeks, but we cannot responsibly throw money into a bottomless pit."
The question is, at what stage do those funding Greece realise that the Greek economy is a "bottomless pit"?

Friday, August 17, 2012

Finland Preparing For Eurozone Breakup

Erkki Tuomioja, Finland's Foreign Minister, has stated that Finland is preparing for the breakup of the Eurozone. He is quoted in the Telegraph:
"Our officials, like everybody else and like every general staff, have some sort of operational plan for any eventuality."
He wisely and honestly notes that the end of the Eurozone does not mean the end of the EU. Other politicians in the Eurozone would have us believe that the end of the Euro will sound the death knell for the EU, this is of course scaremongering nonsense.

Kudos to Mr Tuomioja for speaking the truth and for shooting the fox of the lying Europhiles!

Thursday, August 16, 2012


Liborgate, despite the brief interlude provided by the chaff from the DFS over Standard Chartered, rumbles on.

The BBC reports that seven banks (HSBC, Royal Bank of Scotland Barclays, Citigroup, Deutsche Bank, JPMorgan and UBS), are to be questioned in the US for alleged Libor manipulation.

The US authorities will look to see if there is sufficient evidence to support a criminal prosecution.

The coming weeks will see much behind the scenes haggling between the banks, the regulatory authorities and governments, in order to avoid this going to court.

Wednesday, August 15, 2012

#Grexit Next Month?

I see that with the depressing inevitability of the return of an unloved season, there is renewed speculation (which frankly has never gone away) that Greece will exit the Eurozone possibly as early as next month.

CNBC quote Paul Day, Chief Strategist, at Market Securities:
It’s a question of when, not if. 

Next month there is the ratification of the ESM [European Stability Mechanism] in Germany and you may well see a situation where Greece leaves the euro, the ESM is ratified and Spain and Italy then go in and ask for the money. 

There is a feeling that time is running out.
He is of course correct, Greece will exit the Euro. The trouble is no one can know for sure when. As I have noted before, as and when it happens, it will have to take the markets and the citizens of Greece "by surprise".

When Greece leaves the Euro there will be, at the very least, the following "events":

- an imposition of capital and border controls,
- atms will run out of cash
- foreign banks and companies will treat Greece as a "plague ship", and stop all financial dealings in the short-term
- credit cards will not be accepted by many establishments (in fact this is already the case)
- there will be issues of street and civil disorder to contend with
- airports will be full, as foreigners rush to leave

Will Greece leave next month?

I don't know.

However, pressure is mounting; eg Greece is seeking a two year extension to its austerity program.

It is just a matter of time.

Tuesday, August 14, 2012

Spain Looking For Another Bailout

It seems that Spain (unsurprisingly) is looking for another bailout.

According to Spanish Economy Ministry sources quoted by La Vanguardia, Spain could make a formal request for the early disbursement of €30BN from its bank rescue package this Thursday or Friday.

The money, apparently, will be used to help Bankia and other nationalised savings banks.

Monday, August 13, 2012

Bank of England Clueless

Unfortunately, it appears that according to former MPC member Danny Blanchflower:
"The MPC didn't know where the economy had been, didn't know where it was when they made the forecast, and had no clue where it was going and still doesn't."
The  most alarming question that arises from the above is that, if the Bank of England (which has been relatively proactive in trying to reboot the economy) is so clueless, what does that say about the ECB?

Friday, August 10, 2012

Scrap Libor

Martin Wheatley has called for Libor to be scrapped, and for the fictitious Libor rates be replaced with "reality".

What an excellent recommendation!

Read his full report below:

Thursday, August 09, 2012

Greece Sacrifices Jobs To Appease The Euro Gods

Greek unemployment has risen to an all time high of 23.1%, from 22.6%.

It is quite clear that Greece cannot remain in the Euro under the present terms and conditions, However, the politicians will continue to sacrifice jobs and people's lives in order to feed their egos and vanity with the continuation of the Euro monolith.

Wednesday, August 08, 2012

Mervyn King Chides US Authorities

Mervyn King is less than impressed with the US over its "shoot first, ask questions later" approach to financial regulation, wrt dragging Standard Chartered through the mire of public opinion before even completing its investigation.

King is quoted in
"I think all that the U.K. authorities would ask is that various regulatory bodies that are investigating a particular case try to work together and refrain from making too many public statements until the investigation is completed."
King is too polite to say that this is in fact a trade war between the US and UK.

Tuesday, August 07, 2012

The USA's Little List

Standard Chartered (a British bank) finds itself on an ever growing American list of British banks that have been accused of all manner of "dastardly" deeds of alleged money laundering etc, that "in theory" threaten the safety of the USA.

Unsurprisingly, as a result of the public witch hunt and accusations, shares in Standard Chartered have fallen by 24%; as the USA lets loose in the media in a concerted attempt to bring the bank to heal before any evidence has actually been presented in court.

Standard Chartered deny the accusations.

Does anyone else not find it a tad "odd" that the US authorities are not pursuing US banks with such vigour through the courts and the media?

As one unnamed London based director allegedly emailed in 2006:
"You f****** Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.”

Monday, August 06, 2012

Sentix Predicts 73% Chance of Euro Breakup

The sentix Euro Break-up Index for July has risen by 22% to 73%. The index mirrors the investors' perceived probability of at least one country leaving the Euro within the next twelve months.

The index predicts that there is a 97% probability that Greece will exit the Euro.

Unsurprisingly, Euro politicians (who have much to lose when the Euro collapses; eg status, ego and salaries) have been quick to panic and have been trying to talk markets up. Step forward Germany's foreign minister, Guido Westerwelle, who has warned Europe's politicians "not to talk Europe apart". He is quoted in the Telegraph:
"We need a strengthening, not a weakening of democratic legitimacy in Europe.
This is all very well, but the markets will only now believe actions not words (as even Draghi must now realise after last week's dismal showing by the ECB has proven).