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.

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.

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.

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. 

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.

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?

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.

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!

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.

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?

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?

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.

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.

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.

Frau Merkel Goes To Athens

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

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!

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!

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.

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.

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!

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.