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.