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Darling’s report sounds more like a damp squib

July 9th, 2009 by admin | Filed under Daily News, Employment, Money Management, Recession.

governmentAlistair Darling’s blueprint for reforming the financial regulatory regime had no sooner hit the table on Wednesday than the Conservatives were vowing to reverse its main proposals even before they are implemented, assuming that they win the next general election.

The government paper, which also was the subject of withering criticism from the city, called for higher regulatory capital requirements for “systemically significant firms”, whilst entrusting the Financial Services Authority with the task of determining capital levels.

Darling’s report was regarded by most as an endorsement of Lord Turner the Financial Services Authority (FSA) chairman viewpoints on tightening rules on bank capital, liquidity and debt levels.

There should be no surprises when the Bank of England announces their interest rates for next month today. BOE is expected to keep them at their historic low of 0.5%. There is some speculation however that they may announce an extension of its quantitative easing scheme, this is the scheme where the BOE prints money to buy bonds in order to stimulate the economy.

It could be sound fiscal sense many feel to add a further £25 billion to the existing £125 billion in circulation, which could run out within the next few weeks.

Adding the extra £25 billion would allow the Bank of England some breathing spacing, before the next set of quarterly economic forecasts are issued

In what appears to be a step back to the bad old days of mortgage madness, the Nationwide Building Society has introduced a mortgage scheme that will allow borrowers loans that are worth 125% of the value of a property they are interested in buying. But before the sirens begin to go off, Nationwide have rushed to announce that the scheme will only be available to existing customers who find themselves in negative equity who want to move house.

In general Nationwide only provide mortgages worth 85% of the value of the home they want to buy to new customers.
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It may be a false comfort to many, but the news is that the continuing slump in the real estate market has forced the Crown Estate to write off more than one billion pounds from the value of its assets. The Crown Estate management announced that the capital value of its holdings has fallen by 18 percent to six billion pounds, while still managing to generate a net income surplus of 226.5 million pounds for the year ending March 31 2009, up more than six percent from 2008.

A rebellion by Marks and Spencer shareholders was successfully held back Sir Stuart Rose on Wednesday. The unrest was brought about by the M&S chairman’s controversial decision to carry out the roles of both chairman and chief executive of the high street retailing giant.

The shareholder’s motion was put before M&S’s annual meeting but won only 37.7 per cent of votes.

The UK’s second-largest recruiter personnel Michael Page has reported a steep decline in profits as the downturn in the global jobs market continues to plague all aspects of the recruitment industry.

With unemployment still rising, a spokesman for the company announced, that they had cut their global workforce by a third in the past year.

Gross profit for the company in the second quarter fell by 45 per cent to £83.8 million.

On the stock exchanges, energy and mining stocks continued their steady decline as optimism for a rapid return to financial normalcy waned.

Xstrata was down 3.8 percent to 587 pence and Anglo American lost 3.9 percent to 1563.
Rio Tinto was down 1.3 per cent to 1897 pence following the announcement that their top iron ore purchase negotiator was being held by Chinese authorities.

InterContinental Hotels fell 2.3 per cent to 592 pence after US Travel Research slashed room revenue forecasts for this year and next.

Software maker Autonomy lost 5 per cent to 1397 pence after issuing positive trading update on Tuesday that may have disguised a further slowdown in sales growth.

As the second quarter’s financial report season approaches, the Footsie appears to be moving into a state of nerve induced decline. The index fell for a third straight day, losing 1.1 per cent, or 46.77 points, to 4,140.23. The FTSE 250 continued to take a pounding, closing 121.70 points down on 7,196.81
Sterling also continued to retreat against all the leading currencies.

Pound/US dollar 1.6042
Pound/Euro 1.1569
Pound/Japanese Yen 149.1328
Pound/Swiss Franc 1.7509

The Dow and the NASDAQ continued to make some slow gains on Wednesday’s trading largely due to a late-stage rally fuelled by hopes that the quarterly earnings season would deliver good news.
Despite the rebound, a negative tone still characterized trade as investors worried whether an economic recovery would take hold.

The Dow Jones finished the day up 14.81 points to 8178.41 while the NASDAQ rose a measly one point to close on 1747.17

According to a recent report issued by none other than the Federal Bureau of Investigation (FBI) falling housing prices have caused a mark increase in cases of mortgage fraud. Their reports states that reported losses are up by 83 percent from the same period last year and climbing.

The FBI report explained that the downturn in the economy as well as increase in foreclosures and defaults and diminishing credit availability had fueled a climate that was fraught with rampant mortgage fraud carried out by people who were desperate to maintain or even increase their current standard of living.

Analysts at OPEC crude oil predict that global demand for oil will take five years to recover to pre-financial crisis levels. As a result investment spending on new production capacity will be sharply lower, a spokesman for the cartel announced on Wednesday.

OPEC said that average consumption of its oil reached a peak of 31 million barrels a day in 2008, before the crisis, and that it could be as far away as 2013 before this optimum figure is reached again.

In their World Oil Outlook Opec stated that it should be understandable that any country or investor would be unwilling to invest in capacity that is not needed, especially when they are affected by the global financial and economic crisis. They went on to announce that the organization would be cutting back in development of new capacity, reducing planned investments from $165 billion to $120 billion up to 2013.
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