Category Archives: Financial 💷 💲 🏦

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34 killed after police open fire at strikers outside mine in South Africa

17 Friday Aug 2012

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ANALYSIS

Platinum, along with gold, has done very well during the current financial crisis.

Try telling that to the people of South Africa, where eighty per cent of the world’s platinum comes from.

Policemen fired at protesters yesterday who were demanding a better wage from the British-owned Lonmin platinum producer.

They were asking for the equivalent of a thousand pounds a month from a company who will no doubt continue to profit from the rise in the value of platinum, despite the value of its own stock taking a dive as a result of the protests that have engulfed all of South Africa’s mines recently.

The images of the dead bodies reminded many observers of the days of apartheid.

Well, there is a difference – under apartheid an efficient white elite ran a system that benefitted the whites at the expense of the blacks.

Today’s black elite is corrupt and inefficient and has resulted in large numbers of whites joining the already poverty-stricken blacks at the bottom.

All the while, South Africa has continued to prosper as a powerhouse of Africa.

Jacob Zuma has cut short his holiday to visit the mine where 34 people were killed.

Perhaps, he should forget about holidays and start listening to what black people are saying on the street – that life under apartheid was better than the one secured through freedom.

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So, are the Olympics are a good deal for Great Britain?

25 Wednesday Jul 2012

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ANALYSIS

David Cameron says the Olympics will net Great Britain £13 billion.

The history of the games suggests otherwise.

And with the gloomy news that the UK recession is deeper following a worse than expected drop in economic growth, the games which start on Friday are already beginning to look like an expensive white elephant.

Already, the government’s budget has rocketed from to £2.4 billion to £9.3 bn and still counting.

And problems with the private security firm G4S that won a £284 million contract to protect the game will of course result in even more cost to the public purse as 1,200 extra troops are drafted in to do the job.

Generally though, the people who do best from the games are those who win the contracts, the Olympic bureaucracy which gets billions from broadcasters and of course the sponsors.

As for the rest, well the trickle down effect has meant the construction of the Olympic Park, the Velodrome – grand projects which will struggle to be useful once the roar of the Olympic crowd is long past.

Of course, east London needed regenerating, but tax payers money could have been much better spent than on a short-term resurrection of an ancient Roman custom.

When one thinks of the Olympics, one is of course reminded of Greece, a country that could not afford to host games but because of its own pretensions to the past went ahead with the project anyway.

At the time, no one of course really knew the depth of Greece’s economic problems.

And listening to George Osborne today, when he spoke of deep-rooted problems in the British economy, one fears that history may be about to repeat itself.

UK Recession has deepened following larger than expected drop in economy

25 Wednesday Jul 2012

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 ‘OVERALL PICTURE IS FRAGILE’

 

Between April and June, the output of the economy had fallen by 0.7%

This gloomy news follows a 0.3% drop in the first three months of the year.

The Office for National Statistics blamed the larger than expected fall in a sharp slowdown in the construction sector.

It said it was not yet sure of the size of the effect of the poor weather and the extra June bank holiday.

“The bottom line from all this is that the underlying performance of the economy was probably somewhat better than the headline figure of -0.7% would suggest, having regard to the extra bank holiday and to the poor weather,” said Joe Grice from the ONS.

“How much that effect might be is something we won’t be able to say or to quantify until we have further experience against which to judge.

“Nevertheless, the overall picture is of an economy that remains fragile.”

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US Trade Deficit ‘falls in May’

11 Wednesday Jul 2012

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The US Trade Deficit – the difference between imports and exports – fell 3.8% to $48.7bn (£31.3bn) in May.

The figure had stood at  $50.6bn in April.

This was due to a fall in oil price and a rise in exports to China and Europe.

According to the Commerce Department, imports fell 0.7% to $231.8bn, whilst exports rose 0.2% to $183.1bn, helped by heavy machinery and telecoms equipment sales.

The trade deficit with China increased to $26bn –  up from $24.5bn the month before. Exports to China rose 5.2%, but imports rose by a faster 5.8%.

Exports to the European Union were up 2.6% in May.

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Could Spain be joining Portugal, Greece and Ireland?

09 Monday Jul 2012

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Fears that Spain could be joining Portugal, Greece, and Ireland in need of a major European bailout rose today.

And there were also concerns about the state of Italian finances too.

The yield on Spanish 10-year bonds, which are taken as a strong indicator of the interest rate the government would have to pay to borrow money, rose above 7%.

Italian bond yields have also risen to 6.1%.

Yields above 7% are considered to be unsustainable in the long-term.

Details of the bailout of Spain’s banks are expected from eurozone ministers.

Eurozone finance ministers are meeting today, while those from the 27-nation EU will meet on Tuesday.

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Libor Rate-Fixing Scandal, Barclays release Bank of England memo following resignation of Bob Diamond

03 Tuesday Jul 2012

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Here is the e-mail that Barclays has released in which it discloses details of a phone call between Bob Diamond and the deputy governor of the Bank of England, Paul Tucker, in 2008.

Emailed to John Varley on 30/10/2008. Copied to Jerry del Missier.

Date: 29th October 2008

Further to our last call, Mr Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always toward the top end of the Libor pricing. His response was “you have to pay what you have to pay”. I asked if he could relay the reality, that not all banks were providing qutoes at the levels that represented real transactions, his response “oh, that would be worse”.

I explained again our market rate driven policy and that it had recently meant that we appeared in the top quartile and on occasion the top decile of the pricing. Equally I noted that we continued to see others in the market posting rates at levels that were not representative of where they would actually undertake business. This latter point has on occasion pushed us higher than would otherwise appear to be the case. In fact, we are not having to “pay up” for money at all.

Mr Tucker stated the levels of calls he was receiving from Whitehall were “senior” and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently.”

Bob Diamond, who resigned his position as Barclays Chief Executive over the Libor rate-fixing scandal, is to appear on Wednesday before the Treasury Committee.

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Banking System marked with “shoddy treatment of customers” needs reform, says Bank of England boss

29 Friday Jun 2012

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The Banking Industry needs urgent reform, Sir Mervyn King, Bank of England Governor said today.

Speaking at the launch of the Bank’s twice-yearly Financial Stability Report, Sir Mervyn said the banking culture and structure suffered from  “excessive levels of compensation, shoddy treatment of customers, as well as deceitful manipulation of one of the most important interest rates.”

His comments accompanied news today that the UK’s big four banks have been found to have mis-sold complicated financial products to thousands of small businesses.

Yesterday, Barclays was fined £290m for fixing a key interest rate.

And there was also the mis-selling personal payment insurance to people who either did not need it, would not be able to claim on it, or did not know they had been sold it.

Sir Mervyn said: “We can see we need a real change in the culture of the industry.

“We don’t need any inquiry to know what we should be doing. There must be many people who work in banking today who know that they are honest, hard-working and feel they have been let down by some of their colleagues and indeed their leaders. What I hope is that everyone – everyone – now understands that something went very wrong with the UK banking industry and we need to put it right.”

He called for the government to implement the recommendations of the Vickers Commission on banking, which said that more risky investment banking should be separated from day-to-day banking needs of individuals and small businesses.”

Simon Walker, the head of the Institute of Directors, said in a statement: “As well as ripping off their customers, they have also harmed the reputation of business as a whole – they should feel deep shame for the damage they have done.”

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Bank Share Prices hit by Fresh Scandal

28 Thursday Jun 2012

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Barclays shares ended trading down 15.5% following the news that the bank had been fined £290m by investigators probing how lending rates were manipulated during the financial crisis.

Barclays was fined £290m ($450m) after an investigation into claims that several banks manipulated the Libor rate at which they lend to each other.

HSBC, RBS, Citigroup and UBS are also under investigation.

Investigators say that Barclays’ traders lied to make the bank look more secure during the financial crisis and, sometimes – worked with traders at other banks – to make a profit.

Shares in other banks to fall include –  RBS losing 11.5%, Lloyds down 3.9%, and HSBC, 2.6%.

Barclays has acknowledged that its actions between 2005 and 2009 had fallen “well short of standards”.

LIBOR (London Inter Bank Offered Rate) is the rate at which banks in London lend money to each other for the short-term in a particular currency. A new Libor rate is calculated every morning by financial data firm Thomson Reuters based on interest rates provided by members of the British Bankers Association.

Shares in Banks Rise despite Moody’s Downgrade

22 Friday Jun 2012

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Friday’s trading saw a rise in the share prices of banks, despite a ratings agency Moody’s downgrade of 15 global banks and financial institutions.

The Credit Ratings Agency separated the 15 banks into three groupings, relative to its assessment of their resilience to any global financial market turmoil.

It put HSBC in its strongest “first group”, together with Royal Bank of Canada and JP Morgan, saying that these banks had “stronger buffers” than many of their peers, and “generally more stable businesses”.

Barclays was in its “second group” of banks which Moody’s says face “sometimes adverse factors”. Other banks at this level are BNP Paribas and Goldman Sachs.

RBS is in the bottom “third group”, which comprises banks which “have been affected by problems in risk management, or have a history of high volatility”. Other banks in this grouping include Bank of America and Citigroup.

Moody’s global banking managing director Greg Bauer said that all of the banks affected by the downgrades had “significant exposure to the volatility and risk of outsized losses”. Moody’s added that it was putting some of the banks on a negative outlook, which is a warning that they could be downgraded again in the future. Explaining this, it said governments around the world had shown a “clear intent” to reduce their support for banks going forward.

The !5 banks that were downgraded are

UK banks  – Royal Bank of Scotland, Barclays and HSBC. Lloyds also had its rating cut by Moody’s in a separate announcement.

Others – Goldman Sachs, Morgan Stanley, JP Morgan Chase, Credit Suisse, UBS, BNP Paribas, Credit Agricole, Societe Generale, Deutsche Bank, Royal Bank of Canada, Citi Group, Bank of America.

Despite the downgrades, shares in Royal Bank of Scotland were up 1.5%, HSBC had gained 0.7% and Barclays had risen 0.9%. Lloyds was 1.6% higher.

In France, Societe Generale was up 2.5%, while in Germany, shares in Deutsche Bank had gained 0.6%.

And on Wall Street, Bank of America was up 0.9% and Citigroup rose 1.2%.

UK Trade Deficit ‘at Highest Level for Seven Years’

15 Friday Jun 2012

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The UK’s trade deficit – the gap between imports and exports – has hit its highest level for almost seven years.

Official figures for this April put the deficit at £4.4bn – compared with £3bn in March.

The widening of the deficit has been blamed on a slump in car and chemical exports. There has also been a 8.6% fall in overall exports, which includes a 6.8% drop in exports to other European Union nations.

In April, the total goods trade deficit was £10.1bn – compared with £8.7bn in March.At the same time, the services surplus was £5.7bn in April, slightly lower than March’s £5.8bn.