Thursday, May 31, 2012

Facebook Shares Continue To Fall

Shares in Faecesbook, the IPO that just keeps giving, are now under $28 each.

Spain Haemorrhaging Cash

Data from the Bank of Spain shows that a net of Euro66.2BN was sent abroad last month, the most since records began in 1990.

Spain Effectively Insolvent

ZeroHedge has quoted Charles Diebel (Lloyds Head of Market Strategy) as saying that Spain is "effectively insolvent".

Wednesday, May 30, 2012

The EU Oversteps The Mark

The EU has said today that the Eurozone should consider setting up a banking union and allow a rescue fund to directly boost the capital of banks to further stop expensive bailouts from pulling down governments’ own finances.

That's all very nice, in theory. However, the EU is not the ECB; it is up to the ECB and central banks to determine the capitalisation levels of European banks.

Monday, May 28, 2012

Greece Seizes Up

As Greece spirals downwards towards financial oblivion, the caretaker government has suspended rebates and payments to suppliers of the public sector.

Additionally, according to The Slog, all loans by banks to any business, regardless of viability, have been stopped. The reason being that there has been a combined rush for credit alongside a massive hemorrhage of withdrawals from bank accounts.

Unsurprisingly, foreign companies importing to Greece are asking for cash in advance.

It is clear that this situation is unsustainable.

Friday, May 25, 2012

Grexit Imminent

The long awaited Grexit is now regarded as imminent, with the likely "planned" departure occurring on 2nd/3rd of June. Given that a Grexit ought to catch the markets and people by "surprise", be prepared for the "planned" departure date to be brought froward to this weekend.

French banks are in panic mode, and are now (somewhat late in the day) drafting plans for the Grexit.

In other news, Bankia has suspended its shares and has asked the Spanish government for a bailout of Euro15BN; to add to the pressure on the beleaguered Spanish government, the autonomous region of Catalonia has also asked to be bailed out to the tune of around Euro13BN.

Germany Ups The Ante On Greece

In the never ending game of chicken between Greece and Germany (the Eurozone's paymasters), Germany has just upped the ante by threatening to withhold the next tranche of bailout many.

The "threat" was of course "subtle", as per the use of the phrase "not problematic":

"German finance ministry spokesman says not problematic if the next Greek aid tranche is delayed beyond the end of June"

Thursday, May 24, 2012

The "Free" Banking Myth

Credit to Andrew Bailey, soon to become chief regulator of the financial service industry, for admitting to what everyone actually knows about banks namely that "free" banking is "a dangerous myth".

It is a pity that no one in the financial services industry has ever stated this before.

This does of course mean that in the near future the pretence of "free" banking will be removed and banks, as I have warned many times before, will start to openly charge for their "services".

Wednesday, May 23, 2012

Facebook Sued - The Faecesbook Clusterfuck

As I have noted twice today, the Faecesbook IPO is the IPO, for people who didn't touch the shares with a bargepole, that just keeps giving.

Reuters reports that Facebook Ince, Facebook Chief Executive Officer Mark Zuckerberg, and various banks including Morgan Stanley are now being sued by disgruntled investors. They are accused of concealing from the investors, during the IPO marketing process, "a severe and pronounced reduction" in revenue growth forecasts.

The Faecesbook IPO - Morgan Stanely Subpoenaed

Morgan Stanley have been subpoenaed as part of an investigation into whether its analysts communicated revisions of Faecesbook’s revenue forecasts broadly to all clients ahead of last week’s initial public offering.

As I said less than an hour ago, the Faecesbook IPO is the IPO that, for those who haven't touched these shares with a bargepole, that just keeps giving!

The Faecesbook Clusterfuck - The IPO That Just Keeps Giving

The clusterfuck IPO of Facebook last week is an IPO that, for those who haven't touched these shares with a bargepole, that just keeps giving.

Unsurprisingly these massively overvalued shares fell again yesterday, by 9%. However, Faecesbook mission to "find bottom" in the market is far from over.

The BBC reports that the SEC and Financial Industry Regulatory Authority (FINRA) are concerned about the way advisers disclosed information to investors, and may review the disclosure process to see if some investors got favourable access.

Reuters and the Wall Street Journal reported that Faecesbook's advisers may have revised their financial forecasts, but that only selected investors were told.

Oops, how very remiss of them!

Morgan Stanley said that the bank had:
"followed the same procedures for the Facebook offering that it follows for all initial public offerings".
In other news, Philip Goldberg (a private investor) has issued a writ against Nasdaq over technical problems on Friday that made a shambles of disrupted Faecesbook's first trading day.

Rest assured, the Faecesbook clusterfuck will run and run!

Tuesday, May 22, 2012

Snouts In The Trough - Bogus PPI Claims

The Financial Ombudsman has, according to the BBC, stated that nearly 6,000 people submitted bogus compensation claims for mis-sold Payment Protection Insurance (PPI) on policies that they had never taken out.

The problem has been exacerbated by the activities of certain claims firms, who appear to be less than honest/ethical.

This rather proves the old saying "what goes around, comes around", as companies that unethically sold these useless policies are now on the receiving end of equally unethical treatment/practices.

Inflation Down

For the first time in this Parliament, CPI inflation has fallen from 3.5% in March to 3% in April. For the record, RPI inflation fell from 3.6% to 3.5%.

This also means that it is the first time the George Osborne has not received a letter from the Governor of the Bank of England, to explain why the inflation target has been missed. An open letter is triggered if the CPI rate remains above 3% or below 1% for three months in a row.

Drinks all round!

Monday, May 21, 2012

Faecesbook Shares Tanking

In the event that anyone is interested, shares in Facebook are tanking; they are currently trading at around $33 compared to its offer price of $38 and Friday high of $45.

Friday's IPO was severely marred by the failure of Nasdaq to do what it was meant to do, ie provide up to date price and trade information, instead it wallowed in 2 hour trade confirmation delays.

Now that the technical "snafu" has been sorted, and Morgan Stanley have stopped supporting the price, people have woken up to the fact that Faecesbook was massively overpriced.

No surprises there then!

Friday, May 18, 2012

Start Printing The Drachma!

Reuters reports that De La Rue, the British bank note printer, has drawn up contingency plans to print drachma banknotes should Greece exit the Euro.

Unsurprisingly, shares in De La Rue have risen by 11% over the last month on anticipation of this news.

Why use a UK priner, as opposed to a Greek printer?

Well, as Zero Hedge states, Greece ran out of ink when it tried to print tax returns!

In other news EU trade commissioner, Karel De Gucht, has said that the European Commission and the European Central Bank are working on an emergency scenario in case Greece has to leave the Eurozone.

As befitting an organisation that couldn't run a whorehouse, let alone manage a crisis, this statement was denied later in the day by (a subordinate of Gucht) who claimed that no plan is in the works.

Suffice to say, no one believes Olivier.

Thursday, May 17, 2012

IMF Puts Greek Visit on Hold

The IMF has stated that it will not visit Greece, to review its financial situation, until after the next round of elections on 17th June. This means that the IMF will not be putting up anymore funding for Greece, if at all, until after it has completed its review.

The IMF, for good measure, then kicked the ball back to the ECB stating that the ECB has room for further aiding Greece.

In the meantime Greece may or may not run out of money.

Greeks To Have Their Cake and Eat It?

It seems that, according to The Slog, despite all public statement to the contrary Berlin (ie Chancellor Merkel) has drawn up a plan to keep Greece in the Eurozone at all costs:
"Merkel has decided to go all out for her Fiskal Pakt and keep France on board by bribing Greece to vote yes to the Eurozone and the Troika."
In other words the Greeks will have their cake and eat it.

We shall see!

Wednesday, May 16, 2012

Major Problems Ahead

The head of the Bank of England, Mervyn King, has said today that the Euro crisis is likely to get worse and that the UK and Bank of England are developing "contingency plans" to be implemented should the crisis spiral out of control.

He is quoted by Bloomberg:
"There are major problems ahead.

There are major credit losses to be realized. Whatever happens there will be difficulties ahead that will undoubtedly affect us."
Tin hats everyone!

Run On Greek Banks

Unsurprisingly, following the recent election which failed to produce a government, there has been a run on Greek banks.

Bloomberg reports that Greek President, Karolos Papoulias, has been told by the Greek Central Bank that at least Euro700M has been withdrawn by Greek citizens from Greek banks on Monday alone.

The situation may well worsen, posing a threat to the existence of the Greek banking system.

The only surprise here is that people were not withdrawing their funds before the election, or indeed last week after the results!

Tuesday, May 15, 2012

Heigh Ho Heigh Ho It's Off To The Polls We Go!

Greece will go to the polls again, after days of coalition talks failed to produce agreement on a new government.

A caretaker government will be appointed on Wednesday.

The outcome of the election will determine whether Greece accepts or rejects the terms of the March bailout.
A rejection of the bailout terms will lead to a cut off of funding, and the expulsion of Greece from the Eurozone.

The Eurozone Clusterfuck

Another day in the painfully slow demise of the Eurozone, and another round of depressing economic news.

Whilst the headlines boldly claim that the Eurozone has avoided recession by achieving zero growth (as opposed to a contraction), they ignore the fact that the Greek economy contracted by 6.2% in the first quarter of 2012 (according to the Hellenic Statistical Authority).

Five years of austerity have led to a 17% contraction of the Greek economy.

The "powerhouse" of the Eurozone is the German economy which managed to grow by 0.5%, thus pulling the rest of the Eurozone up by its boot straps. However, this merely highlights the sharp economic divide between members of the Eurozone. This economic divide is not sustainable in the long run, and something has to give.

Although Greece will repay fully a Euro450M bond that matures today (after failing to reach a deal with holdout investors), the Greek people and politicians are in no mood to continue with the terms of the bailout as they now stand.

Either the Eurozone renegotiates the bailout (which Germany will not do), or Greece will leave the Eurozone.

Monday, May 14, 2012

The End Game For Greece

Markets are falling and Greek debt yields are rising as a result of the failure of Greece to form a government. and the increasingly hostile attitude to Greece continuing to remain in the Euro from other Eurozone nations.

To add fuel to the fire Greek government spokesman, Pantelis Kapsis, has told the media that no decision has yet been made on repaying May 15 bond. This implied threat of default is Greece's attempt to raise the stakes in their game of poker with the Eurozone.

Finance ministers from the 17 Eurozone countries will meet this afternoon at 4pm GMT for talks that, one senior EU official told the Wall Street Journal, would be "very political".

It is clear that Greece will leave the Euro, it is not clear when this will happen. However, as and when Greece leaves, it will timed to "surprise" the markets and the population of Greece so that the necessary controls (eg prevention of mass capital flight) are in place.

Sunday, May 13, 2012

Greece To Get Money If It Leaves Eurozone

Spiegel Online notes that as Greece will still be a member of the EU, even if it leaves the Eurozone it will still receive aid from the EU.

I wonder if the article has been written with the intention of tempting the Greeks to leave the Eurozone?

Greece Out of Cash In Six Weeks

Theodoros Pangalos, the Greek Deputy Prime Minister, has issued his fellow countrymen a stark warning that unless they get real, the country will not receive any more money from the Eurozone and that it will run out of cash in six weeks.

Sadly, a prophet is rarely heeded in his own country!

Friday, May 11, 2012

The Return of The Drachma

Unsurprisingly, it seems that banks are preparing for the return of the Drachma.

Get those printing presses rolling!

Money Lenders Hated For Five Thousand Years

Stephen Hester, CEO of Royal Bank of Scotland, has been visiting a school and businesses in Streatham.

During a Q&A session it seems that Hester is resigned to being "unpopular", as he wryly noted that "people have hated money lenders for five thousand years".

Thursday, May 10, 2012

Ladbrokes Suspends Bets On Greek Exit

Ladbrokes, the UK betting group, has this morning suspended betting on Greece exiting the Euro by the end of the year.

A Ladbrokes spokesman told the Guardian that they took the decision after a steady stream of bets from punters, looking to profit from a Grexit. Ladbrokes had been offering 4-6 yesterday, but cut it to 1-3 this morning. He said:
"While we're not sure what is going on in Greece, it is safer for us to suspend betting rather than keep cutting the odds."
Ladbrokes will pay up on bets already placed, if there is an official government statement announcing the intention this year to leave the Euro.

Rather ominously for Greece, the Olympic flame was blown out this morning just after it had been lit at Olympia!

Wednesday, May 09, 2012

Troika Cancels Greek Inspection

The Troika has cancelled its Greek inspection visit planned for mid May.

It has not made any new appointments, and is awaiting political developments in Greece (ie the next election which will determine whether Greece leaves or stays in the Euro).

The Solution To All of Europe's Problems - Baroness Ashton

Baroness Ashton, the High Representative of the Union for Foreign Affairs and Security Policy and Vice-President of the Commission, is quoted today ("Europe Day"):
The coming year will be crucial for Europe's recovery – and for Europe's future. Not only the steps we take internally in the European Union on the economy and with Croatia joining in July but also how we engage globally.

Everywhere I go, I hear that others from outside Europe want to work with a Europe that is active and committed, so that is what I intend to do next”.
Problems solved!

Tuesday, May 08, 2012

New Greek Elections

As I noted earlier today, the ongoing political chaos in Greece will lead to new elections being held.

According to James Mates Greek MP Adonis Georgiadis has told him that the new elections will be held next month, and that they will be about being in or out of the Euro.

Wonga To Offer Business Loans

Wonga, which specialises in short-term personal loans, is launching a new product aimed at businesses.

It will, subject to checks, offer businesses loans of between £3,000 and £10,000 for up to a year with APR's rising from between 16.6% to 180%.

Whatever happened to Project Merlin (that was meant to make £190BN available to SME's) then?

Greek Chaos

As Greece endures ongoing political chaos, as no party or groups of parties are able to form a government, it is likely that a new election will need to be held to offer some means of resolving the deadlock and ending the chaos.

In the meantime it is clear that Greece will leave the Eurozone.

The only question remains, when?

Monday, May 07, 2012

Advice To The EU

You can always renegotiate anything, defaulting is a form of "renegotiation"!

Greece and France Reject Austerity

Greece and France have rejected austerity.

Unfortunately, they are still broke and the markets will now reject them!

Shares in Europe's banks are now falling, as it is clear that the Eurozone is going to become ungovernable in its present form.

Friday, May 04, 2012

King Rewrites History

Sir Mervyn King, Governor of The Bank of England, has stirred up a hornets nest after his recent BBC radio lecture in which he rewrote history and his/the Bank's role in the financial crisis.

Amongst other things, King said that the Bank would be very happy to co-operate with another inquiry into the collapse of Northern Rock (the bank that the Bank of England refused to bailout).

This willingness to co-operate rather took the breath away of Andew Tyrie, chairman of the Treasury Select Committee, who said that the Bank "should get on with it at the first available opportunity".

Others on the Select Committee expressed astonishment at the Governor's comments, given that the Committee has asked the Bank on numerous occasions to co-operate with an inquiry only to have their requests refused. The Bank remains the only member of the tri-partite system not to have published a review into its role in the crisis.

Thursday, May 03, 2012

It's All Greek

Those of you who expect that the Greek elections this Sunday will resolve the uncertainty over Greece keeping to the bailout conditions and remaining in the Euro will be severely disappointed.

It is widely expected that the results will bring chaos, and that more elections will be necessary later this year.

Whatever the results of the elections, Fitch are of the view that out of the alternative scenarios a Greek exit is the most likely.

Wednesday, May 02, 2012

EC Fiddles Whilst Europe Burns

Eurozone unemployment has hit a record high of 10.9% (17.3M people are now looking for work), with Greece clocking in at 21.7% and Spain at 24.1%.

The EC claims that it is taking the problem seriously, and will (by the end of May) publish "country specific recommendations".

Given that the rate of unemployment rose by 169K in the last month, this means that even if the recommendations were of any use (which of course they won't be) another 169K people will be out of work by then.

The EC's only real objective is to ensure that it obtains a budget increase of 6.8%, it is fiddling whilst Europe burns!

The EC is not fit for purpose, as the people of Europe are finding out to their cost.

Tuesday, May 01, 2012

Eurocrisis Takes A Day Off

Today being Mayday, means that the financial markets on the continent of Europe are closed. The result being a "lull", for a day anyway, in the crisis engulfing the Eurozone.