According to their recently released annual report, the Financial Services Authority (FSA) Britain’s financial regulator, whose role in life is to supervise UK banks and help them to reduce debt; themselves have shown a deficit of £23 million pounds for the year.

In order to ease cash flow problems, the FSA have had to take up £100 million-pound loan from Lloyds Banking Group Plc As the FSA raises its revenue through fees that financial-services companies must pay to be regulated, and this latest bombshell is bound to mean some moments of discomfort for them. The agency announced that they will be raising their fees for the coming financial year to cover unexpected overheads.

Pension scheme burdens at U.K. banks HSBC and Barclays are reported to have increased dramatically during the first half of the year, largely due to an ongoing collapse in corporate bond yields. The deficit in HSBC’s main U.K. pension scheme was reported to have increased almost ten-fold from $392 million at the turn of the year to $3.9 billion at June 30.

It was announced on Tuesday that Australia’s ANZ have agreed to buy part of Royal Bank of Scotland’s Asian banking assets for $550 million. ANZ will be acquiring RBS units in Taiwan, Singapore, and Indonesia as well as in Hong Kong, the Philippines and Vietnam. The sale goes through as RBS continue in their drive to curtail their international activities after posting the biggest loss in UK history last year.

It was announced that nearly 75 percent of British shoppers now choose supermarket own labels, compared to only 25 percent a year ago. According to a recent survey, the rise was attributed supermarkets increasingly expanding their own ranges as well as cost-conscious consumers arriving at the conclusion that the fact that own brand ranges despite being cheaper do not fall for the quality of the “brand” products. In response, certain some private label brands such as Heinz, and Reckitt Benckiser (recently reported resurgence in demand for their branded products

Data centre provider Telecity announced an outstanding increase of pre-tax profits of 80 per cent for the first half of 2009 as their expansion program continues.
In the six months to June 30, revenue increased 33 per cent to £82.2 million, Telecity, are halfway through a three-year new-build programme that will almost double in its capacity, measured in megawatts of power available to customers.

The company announced that internet usage continues to grow, maintaining demand among Telecity’s customers, including technology services companies such as Hewlett-Packard as well as large telecommunications groups such as BT and AT&T.

Aerospace and defence stocks were under pressure on Tuesday as the FTSE 100 slipped from its 2009 high.

Defence contractor Qinetiq dropped 4.7 per cent to 135 pence after their interim trading statement reiterated profit would be weighted towards the second half due to US defence budget delays. Also shares in Rolls-Royce were down 1.8 per cent to 412 pence after brokers announced that the decline in demand for the company’s products would continue for several years.

Standard Chartered was the sharpest faller in the insurance sector, losing 7.5 per cent to 1328 pence after launching a surprise share issue to raise £1 billion in a drive to fund growth. Legal & General saw their shares down 4.8 per cent to 62 pence after their first-half operating profit were lower than market expectations due to investment losses as well as damped speculation that it might sell its asset management arm.

Pharmaceutical giant GlaxoSmithKline closed 0.1 per cent weaker at 1147½ pence after it was once again mooted as a potential bidder for Allergan, the Californian maker of breast implants and Botox.

After the announcement that they had struck oil in Uganda, shares in Tullow Oil outperformed a weak commodity sector, rising 2.6 per cent to 1021 pence.

Dana Petroleum was down 1.3 per cent to 1402 pence after Tethys Oil, its partner in Morocco, said it had plugged an exploration well after gas levels proved non-commercial.

Weakness among the banks and insurers led the FTSE 100 to close down 0.2 per cent, fading 11.09 points to 4,671.37.

Meanwhile the FTSE 250 continued to make considerable gains, climbing a further 84.4 points to close on 8,242.51

The pound has continued to gain against the dollar, rising as high as $1.7005 before falling back to $1.6938.

Pound/US dollar 1.6938
Pound/Euro 1.1763
Pound/Japanese Yen 160.6581
Pound/Swiss Franc 1.7985

US consumer spending climbed for the second consecutive month in June, despite growing unemployment and falling personal income.
Spending rose 0.4%, ahead of analysts’ estimates against 0.1% in May with rising food and fuel costs blamed.
Personal income fell 1.3% from the previous month – which had seen one-off stimulus payments from the government.
Consumer spending makes up about 70% of economic activity in the US.

Yesterday on Wall Street, the Dow Jones continued to climb up 33.63 points to 9320.19. The NASDAQ also crept up a little, 2.7 points to close on 2011.31.

The US House of Representatives has caused no little amount of consternation through inserting an amendment into their $33 billion spending bill that disallow any government money being spent on cars other than those made by the US “Big Three”, car manufacturing concerns. The proposed amendment has created considerable alarm from US trading partners in Europe and Japan, sparking claims of protectionism. A flurry of behind-the-scenes lobbying activity to make sure that the amendment is removed when the House bill is merged with a Senate version after Congress’s summer recess is already expected.

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Tags: AT&T, Bank, British Economy, BT, Economy, Financial News, Financial Services Authority, FSA, GlaxoSmithKline, HSBC, Legal & General, RBS, Retail, Rolls-Royce, Stocks and shares, Telecity, UK Banks

UK Chancellor Alistair Darling in an interview released over the weekend announced that an entirely new banking system is needed for the UK, to prevent a recurrence of financial institutions behaving in a “kamikaze” manner.

He went on to add that the UK government needed to learn lessons from the financial crisis in which banks behaved in a kamikaze manner causing the regulatory system to fail
The interview came as proposals on financial reform are due to be published this week. The proposals will be designed to prevent a repeat of the crisis that plunged Britain into recession.

Meanwhile it has been announced that UK’s business secretary Peter Mandelson has apparently postponed the part-privatisation of Royal Mail, with little or no prospect of the privitisation going ahead for the time being.

The proposed Royal Mail privitisation bill was to allow the sale of 30 per cent of Royal Mail, The bill has already been approved by through the House of Lords, despite being opposed by over 140 Labour MPs. Lord Mandelson was reported to have conceded that that now is not the time for privitisation although it a vital step in the Royal Mail’s modernisation program.

London-based private equity firm CVC Capital Partners was in the lead to take the 30 per cent stake in Royal Mail.

Newspaper group Trinity Mirror, owners of the Daily Mirror among others, is to close nine local newspapers in the Midlands according to a recent report. The closure, which will result in job losses for up to 120 of the papers’ employees, comes amid a severe downturn in advertising revenue. During the past year Trinity have closed 27 units and sold of four major newspapers.

On the FTSE Friday, Barclays increased 2.8 percent to 297 pence as the cost of three-month loans in dollars between banks fell for a 10th day

Europe’s largest bank, HSBC climbed 1.7 percent to 509 pence, while Lloyds Banking Group Plc, Britain’s biggest mortgage lender, added 2.4 percent to 67.5 pence.

News was good for the media sector. Magazine publishers Reed Elsevier, whose covers include the Variety and New Scientist magazines, rose 3.9 percent to 457.25 pence? BSkyB, the U.K.’s biggest pay-television provider, advanced 2.1 percent to 464.5 pence.

Daily Mail and General Trust Plc, which publishes Britain’s Daily Mail newspaper, increased 1.4 percent to 294.25 pence.

Europe’s third-largest airline, British Airways Plc rallied 5.5 percent to 125.5 pence on the announcement of a reduction of proposed 2009/10 capital expenditure by 20 percent/

The FTSE 100 Index closed for the weekend little changed as a rally in banks and media companies offset a sell-off in raw material and energy producers.

The benchmark FTSE 100 Index added 2.01, to 4,236.28 in London, bringing a total decline for this week’s off 0.1 percent. The FTSE 250 closed on 7,285.83 down 91.15 to end a topsy turvey week.

Sterling had another bad day against the leading currencies, falling heavily on all four fronts.
Pound/US dollar 1.6121
Pound/Euro 1.1572
Pound/Japanese Yen 153.6112
Pound/Swiss Franc 1.7583

Wall Street is gearing itself up to buying up some of cash strapped California’s registered warrants. The state and its obviously financially challenged Governor, Arnold Schwarzenegger, declared a fiscal emergency after announcing that they were unable close their $24 billion budget shortfall. Hedge funds, municipal bond investors and other institutions reportedly interested in taking a piece of the action, as the warrants pay an annual rate of 3.75 per cent, a prime rate these days.

On Wall Street, the Dow Jones took a further tumble in the wake of Thursday’s announcement of higher than expected unemployment figure. The index closed for the weekend down 43 points to 8280.74, while the NASDAQ closed down six points on 1796.52

In order to reduce their $38 billion debt burden, mining giant Rio Tinto has agreed to sell its food distribution wing, Alcan Food Americas division for around 800 million pounds. The move comes after the Rio Tinto raised $15.2 billion in a rights issue, after falling into heavy debt on the buyout of Canadian aluminium group Alcan in 2007.

According to a recent study Europe is likely to suffer a permanent loss in potential economic output as a result of the global crisis.
The report, commissioned by the European Economic Community (EEC) stated that the current market disruption in financial markets can be expected to have a permanent negative effect on potential growth, e.g. through reduced availability of capital for R&D and innovation activities.

There were reminisces of Nick Gleason on the oil markets this week as oil prices began to shoot through the roof. Later oil traders both in London and New York hastened to explain that “unauthorised trading” had caused an exceptional rise in business activity on Tuesday According to a leading New York oil trader “Trading volumes rose overnight and prices jumped more than $2 a barrel without apparent justification,”.

Oil futures contracts for more than 16 million barrels of oil changed hands in one hour, when the average is around 500,000 barrels.
A particular broker has been implicated for sparking off the rally, with other brokers racing to follow.

After the furore, oil prices on Thursday fell to $66.5 a barrel, down almost 10 per cent from Tuesday’s artificially induced peak. Brent crude for August settlement fell as much as 1.3 percent to $65.77 a barrel on London’s ICE Futures Europe exchange.

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Tags: Alcan Food, Arnold Schwarzenegger, Bank, Bank of England, Banking, BskyB, Daily Mail, Financial News, Mirror, Nick Gleason, Recession, Retail, Rio Tinto, Sky, UK Banks, UK Recession, Wall Street Journal

Anyone, whoever took the time to study modern history, will have heard the story of how the American “fathers” managed to purchase the island of Manhattan for two bottles of whisky and a few brightly coloured beads from the Red Indians. The fact that the island went on to become one of the most expensive pieces of real estate in the World must make that particular piece of business one of the greatest “snow jobs” in history. Yet it is possible to say that what Messrs. Brown, Blair and Bush did to the UK public over the last ten years or so doesn’t fade much by comparison.

Bush and Blair thankfully have been banished to the annals of history, but Brown seems to be hanging on for ever, or at least till the next elections.

And hanging on is the word, and a surprising side of Brown’s nature that we have never seen before is that, nothing seems to embarrass him. The recent round of political scandals, which at least for Brown’s sake, showed that politicians from both of the major UK political parties do have something very similar in common. They have absolutely no compunction in putting their hand in the government cash register to make sure that they are not deprived of even the most obscure form of home comfort, as long as it is at the expense of the British public.

Once the callous thinking behind this fact has been established and verified by the press then anything else seems possible. Were the UK public forced to accept expensive in terms of human lives and money on wars in Afghanistan and Iraq, which might have been justified as short term military campaigns but certainly have gone on too long and have basically achieved very little. Why did the UK government sit back and do nothing when crude oil prices shot through the roof, Did Bush and his cronies persuade them to sit on their hands and everything would be ok, while the government coffers emptied to pay the oil rich nations their ransom money? And who is to say how much that nasty side of corporate America, who backed George Bush into becoming probably the worst President in American political history made out of that deal.

And when the global financial crisis hit, Blair had already had the foresight to make himself scarce and Bush followed not too long after, as his second term of office slithered to a welcome halt. There is a new broom in the White House and he is sweeping clean. The recovery that is taking place there seems to be genuine, yet one wonders if it can really take such little time.

In the UK, financial recovery seems to be happening too but at a much slower and more cautious pace. If there is a recovery it is certainly not being felt by the majority of the public, who are struggling to survive. Their economic future looks grim for the next twenty years or so, but as is our nature, we seem not to complain about it too much. Instead the focus of attention is why Susan Boyle ( who does look a little like Gordon Brown in drag) didn’t win some pointless talent competition or will a newer, stronger version of Swine Flu come back and kill of half of the global population anyway. So why worry!

In other words, as Brown, Blair and Bush and their political predecessors long since discovered, the public will mostly always believe and accept just about anything you tell them. After all what do Red Indians know about property development?

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Tags: Blair, Brown, Bush, Economy, George Bush, Gordon Brown, Tony Blair

Not even the most fertile of imaginations could sit down and concoct a theory that the current global quagmire that the World finds itself in is part of a predetermined and conceived conspiracy conjured up by some fiendish and faceless financial guru who is now sitting in some hidden underground hiding place is counting his trillions. After all, even Bernard Madoff got caught in the end, and he only stole around $50 billion dollars.

Yet there are guilty parties in this mess and they are the leaders of the governments of the free World who ware only too aware that the world debt situation was veering rapidly out of control, yet sat back and did very little about it. And when you think about it, why should they. At the same time as the World’s assets were appreciating in value every year by around five percent, and banks and businesses were making vast profits on which they were paying company taxes and the white and blue collar workers had never had it so good, both spending money that they never really had as well as paying income tax on their earnings and value added tax on everything they bought, the situation as far as tax revenues for these governments was as high and as comfortable as it could possibly be.

And there les the crunch for even the most unsophisticated of economists will tell you that such a unnaturally long running seam of global prosperity is unnatural and could not have been maintained for as long as it had done by natural means, and had to end in tears. Which it certainly did. Governments throughout the Western World have had no option whatsoever but to press gang taxpayer’s money to prevent the US and UK banking system from totally collapsing, taking with them the hard earning savings of a relatively broad cross section of the population who are totally innocent of any wrong doing. Now the UK government, as evidenced in the last budget, have imposed on their citizens a period of austerity that is estimated to last for up to ten years.

So who can be called to task for this catastrophe? Some say they banks. However they are only doing what comes to them naturally. That is to soak up as much profit as they can and usually from the man in the street. This is the typical consumer who had neither the means nor more importantly the personal discipline to avoid the temptations of “buy today and pay tomorrow even if you don’t have it” mentality. These unfortunates generated trillions of dollars in paper profit for the banking system, which were worth considerably less than the paper they were printed on. But who knew, and even worse, who cared enough to put a stop to it before the damage to the very framework of our financial systems slewed totally out of control.

The banks certainly didn’t want to put a stop to the madness, as they were earning tremendous profits, on which they paid out generous dividends to their shareholders, who in turn authorized disproportionately high performance bonuses to bank officials. All of it in cash.

So where are these profits and bonuses now? Certainly not being returned to the now seriously ailing banks in an uncharacteristic fit of compassion and embarrassment. Instead probably stuck away in a bank account in another country, and probably one famous for its chocolate.

So who is to blame? If you haven’t guessed already, the answer is the Governments of the World. They are guilty by default for sitting back and letting it happen. They should have intervened in 2004 and 2005 when it was becoming obvious to all and sundry that this financial wheel of fortune was already being artificially driven. And what price should these people have to pay? There place in history should be forever tarnished for the role they played in this debacle. And don’t let anyone ever tell you that they were taken by surprise.

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Tags: Bank, Banking, Bernard Madoff, British Economy, conspiracy theory, Financial News, UK Banks

Is the global financial crisis a conspiracy?—or just a case of too many people who should have stopped the rot looking the other way.

When more talented and experienced writers than I sit down to write the history of the first global depression of the 21st century, the chances are that they will say that it all began with the collapse of the Bear Stearns Bank of Manhattan, New York, and attach much of the blame on the crash on the role of mortgage-backed securities that brought the global banking system to its knees.

In its prime Bear Stearns were the fifth-largest investment bank in all of the US, and had survived and even profited during every financial upset since their foundation in 1923. What symbolized the bank and attracted investors was their conservative management policy. However when money supply became easier in the early years of the third millennium, some new generation financial wizards saw the golden opportunity to earn some fairly massive paper profits for the bank, and some really fat bonuses for themselves as a result. In the space of a few years, Bear Stearns shed their conservative image and became the leader in securing loans against asset-backed securities. Other banks followed suit, however Bear Stearns exposed themselves very heavily, and enjoyed tremendous profits for the initial few years. However during 2006 and 2007, as interest rates began to rise and the public found it difficult to make payments, losses became to mount. Instead of curtailing their activities, the bank’s executives chased their losses by increasing their exposure, with similar disastrous results. In March 2008, the whistle was blown on their activities when the Bear Stearns’s board were forced to approach the Federal Reserve Bank of New York asking for an emergency bail- out. When no help was forthcoming, the bank was sold off at a bargain price of $10.00 a share, $120.00 a share less than the bank had been valued at just twelve months before. With the collapse of Bear Stearns, alarm bells and sirens began to sound along the entire length of Wall Street and eventually reverberated around the World.

In the UK, the first cry for help came from the Northern Rock Building Society, and later most of the major high street banks were also found to be in very shaky financial positions many of them due to excessive and indiscriminate lending. The UK public found themselves exposed to the sum of one trillion pounds, which at the time seemed like a colossal sum of money, but now fades into significance when compared to some of the figures being bandied about during the many global conferences being held to discuss the situation, how it happened, how is to blame for it and where did all the money go?

To try and discover the reasons and attach the blame we first have to acknowledge that the World is going through a situation of major change.

First of all global population is on a constant increase, and due to that fact the World’s natural resources are being exhausted. The great industrial nations of the Western World seem neither interested nor capable of finding viable alternatives. Secondly, the governments of the Western World have to come to terms with the fact that there will not be nearly enough jobs for everybody if they do not embark on some of form of protectionism. Not so much against each other, but against the emerging economies of India and China. It may be unpalatable for many to think that way, but the uneven flow of capital to these nations must be curtailed before further and deeper rooted financial disaster falls.

The UK taxpayer, as well as all their friends in the Western World, is both the biggest losers in the situation as well as one of its principal causes. The increasing dependency on the consumer on credit was allowed to reach epidemic proportions. Whilst the banks were allowed to make windfall profits on the back of Joe public’s impatience, naivety or stupidity, the government looked on.

And why not, as long as this irresponsible behaviour was allowed to continue and the economy was ostensibly booming, the UK treasury was earning unprecedented fortunes in the form of tax incomes. Now that the bubble has burst, the taxpayer of the Western World is being asked to mortgage his future yet again to prop up the banks and insurance companies, who have become vulnerable, yet cannot be allowed to fail.

When the history books are written, it will be difficult not to point a finger at those people who were at the helm before and during this crisis. First of all US President George W. Bush and our own PMs Tony Blair and Gordon Brown.

Tony Blair had either the good sense or the good fortune to abdicate his throne and left Gordon Brown to carry the blame for the mess that is now the UK economy. However he cannot come out of it with clear hands entirely, because you wouldn’t need to be a financial genius to see the writing on the wall at least two years before everything went belly up.

So when we take a look at the picture as it stands now, it is obvious that the worst is over, at least because we now know what to expect for the World economy in general and the UK economy in particular. A period of recession, of austerity, hopefully followed by a longer period of restraint, reconciliation and prudent financial management for the public and private sectors as well as the public at large.

There is only one question in my mind that for the UK public remains unanswered, and that is the most significant question of them all. Yet nobody wants to address the question and provide the answer.

Where did the money go!

People seem to have forgotten that during a period running from 2005 to 2008, the price of crude oil doubled and for a while even trebled and almost quadrupled.

It also may not be a coincidence that since the global financial collapse has reached it full force the price of crude oil has fallen to levels that were consistent for almost the previous ten years. Which means that the OPEC member nations simply pushed the prices through the roof, knowing that the World was in a state of false euphoria and would pay any price for a barrel of oil? Oil that began 2005 at $40 a barrel reached a peak of $150 in late 2008.

Just to consider some of the statistics that these facts generate is mind boggling. Current global consumption is around 85 million barrels of oil a day, making for an annual global demand for 31,000,000 barrels. If we take into account that the OPEC member countries are breaking even at $40 a barrel, that means that over the five year period from 2004 to 2008 inclusive, their overheads for producing the 150 million barrels of oil comes out to a staggering six trillion dollars. What is even more staggering is the fact that at a conservative estimate the OPEC countries sold us that oil for an average of $80 a barrel, which means that they made a 100% profit or six trillion dollars.

$6,000,000,000

That’s a lot nothings by anyone’s standards as well as being almost exactly the sum of money that the global economy is hanging out their tongue looking for.

While these figures are rough estimates, the numbers that generated them are accurate and even if they are out by five or even ten percent, they still make some pretty cruel reading.

So if there is a conspiracy behind the global financial crisis, there it may lie.

The question has to be why the leader of the World’s most powerful nation allowed that massive amount of capital flow through his government’s hands.

As readily as Bush and Blair formed an alliance to invade Iraq they could just have easily done so to put a stop to the Western dependency and by doing so forced the price of crude oil down. Their actions will have certainly caused a recession, but one that would surely have been nowhere as severe and painful as that which currently is upon us.

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Tags: Bear Stearns, conspiracy theory, Credit Crunch, Financial News, George W. Bush, Global Credit Crisis, Gordon Brown, Interest Rates, Tony Blair, UK Banks, UK Recession, UK taxpayer, UK treasury

What does Christianity, 911 and The Federal Reserve all have in common?
“Zeitgeist, the Movie is a 2007 documentary film released online free and on DVD, presenting Christianity, the September 11 attacks, and the US Federal Reserve Bank as being instrumental for social control. According to the website’s “statement”:

Zeitgeist, The Movie and Zeitgeist: Addendum were created as Not-for-Profit expressions to communicate what the author felt were highly important social understandings which most humans are generally not aware of. The first film focuses on suppressed historical & modern information about currently dominant social institutions, while also exploring what could be in store for humanity if the power structures at large continue their patterns of self-interest, corruption, and consolidation.” Source Wikipedia

Veiw Zeitgeist:

The second film, Zeitgeist: Addendum, attempts to locate the root causes of this pervasive social corruption, while offering a solution. This solution is not based on politics, morality, laws, or any other “establishment” notions of human affairs, but rather on a modern, non-superstitious based understanding of what we are and how we align with nature, to which we are a part. The work advocates a new social system which is updated to present day knowledge, highly influenced by the life long work of Jacque Fresco and The Venus Project.”

Veiw Zeitgeist: Addendum

http://www.zeitgeistmovie.com/

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Tags: 911, Banking, Christianity, conspiracy theory, Economy, Finance, Inflation, Money, Money Management, The Federal Reserve, Zeitgeist