Continued uncertainty regarding cash-strapped Greece’s ability to be granted loans from their Eurozone partners, and if they are granted them if they will agree to accept them, continues to cause uncertainty in both the currency markets and stock exchanges not only in the UK but in all of the Eurozone member countries. Recent reports coming out of Athens have stated that Greece is lacking in confidence that their partners in Europe are either willing or able to provide sufficient and timely aid, and that they may have no option but to turn to the International Monetary Fund (IMF) for a bail out. The principal stumbling block to the EU loan is Angela Merkel, the German chancellor who HAS repeatedly stated that any other form of loan agreement would be impossible in terms of the European Union’s Maastricht treaty and German constitutional law. Berlin has shared widespread EU hostility towards any involvement of the fund, fearing that such a move would demonstrate Europe’s inability to regulate its own economic and monetary union.

After the release of more positive figures for February and the revision of data for January, it begins to appear that UK government borrowing for 2010 could be less than forecast. According to official figures, government borrowing for February was £12.4, much less than economists had expected.

Borrowing figures for January were also reviewed and sharply downwards, to £43 million from £4.3 billion.

Analysts now predict that UK’s full-year borrowing total may work out a lot less than the government’s original £178 billion forecast.

The Office for National Statistics also announced that the overall effect of the latest revisions to historical data for the year had cut overall borrowing for 2009/10 by £2.9 billion.

The Co-operative which traces its roots to the founding of the co-operative movement in 1844 has reported a major profits surge in its banking division, on the back of thousands of bank account customers disillusioned with Britain’s big banks switching their allegiance to the "co". In addition, the acquisition of the Somerfield supermarket chain coupled with the merger of the Cooperative’s financial services arm with Britannia Building Society have provided a major boost in turnover and profit for the company. As part of a revised tradition, the Co-op will be paying their five million members- a dividend of £55 million, up 16% from 2008. The dividend scheme or "divi" as it is widely known was re-introduced by the group in 2006 after a break of 30 years. The Coop’s banking division reported a 38% jump in new current or 140,000 new customers, taking the total to 1.2 million. The increase effectively doubled their share of the current account market to reach 4%.

To scenes of great excitement, Japanese care manufacturer Nissan have announced that they are to build its new electric car, to be known as the Leaf, at their UK plant in Sunderland. Once production begins in 2013, it will mean that hundreds of jobs are expected to be safeguarded as part of the company’s £420 million investment in electric cars. Nissan’s investment will be backed by a £20.7 million government grant and up to £220 million from the European Investment Bank. About 50,000 Nissan Leaf hatchbacks, which will run entirely on lithium-ion batteries, will roll off the Sunderland production line each year. Business Secretary Lord Mandelson said the development was a "fantastic vote of confidence" in the plant and its "excellent workforce". Mandelson also confirmed the UK government will be providing £360 million in loan guarantees for Ford’s planned £1.5 billion investment in cleaner engines.

At a hearing of the Commons business, innovation and skills committee held on Tuesday, representatives of Kraft Foods made a commitment not to close any more Cadbury factories in the UK or make compulsory redundancies in its domestic manufacturing operations for at least two years, The promises came as Kraft were seen trying to placate furious MPs and union members over its broken promise to save a Bristol factory from closure.

The US food group came under heavy fire for reneging on a pledge made last September to keep open the Somerdale factory, near Bristol, within days of agreeing an £11.7 billion take¬over of Cadbury in January, having overcome hostility from the UK-based maker some of the UK’s favorite chocolates.

On the FTSE, the Royal Bank of Scotland Group Plc had a bad day, their shares dropped by more than 3 percent as the biggest government-controlled bank issued warnings that their £2.9 billion pound ($4.45 billion) pension deficit looks likely to rise. The bank today reported a 46 percent rise in its pension deficit. .

Sterling fell to $1.5229, with the Euro coming under heavy pressure at €1.1181

The FTSE 100 jumped 17 points to close on 5,642.62.

According to official figures US consumer prices have risen very little between January and February.

The report issued by the US Labor Department showed the consumer price index was flat in February, though prices were 2.1% higher than a year ago , indicating that there were little sign of inflationary pressures in the offing for the US economy, allowing interest rates to remain low.

US stocks closed modestly higher on Thursday, aided by some strong corporate results. At close of trade the Dow Jones Industrial Average was up 0.4 per cent at 10,779.17 and the NASDAQ Composite index rose 0.1 per cent at 2,391.28.

Crude oil prices have fallen to an average of $81.85 a barrel, yet still placing them within levels are within Opec’s preferred price band of about $75-85 a barrel. The cartel reasons prices below that band risk choking off investment in new oil projects while prices above it could threaten the recovery of world economies

The fall came after the OPEC oil cartel announced on Wednesday their intention to hold production quotas at the same level for the time being.

The price of gold rose 0.1 per cent to $1,126 a troy ounce after ending Wednesday’s session in New York at $1,124.05.

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Tags: Angela Merkel, Bank, Banking, British Economy, Cadbury, Credit Crunch, Dow Jones, Economics, Economy, electric car, Employment, Financial News, FTSE, Gold, International Monetary Fund, Kraft Foods, Lord Mandelson, Money, NASDAQ, Nissan, Office for National Statistics, OPEC, Recession, Retail, Royal Bank of Scotland, Somerfield, Stock Markets, Stocks and shares, The Co-operative, UK Banks, UK Economy, UK government, UK Recession, US labor Department

The Royal Institution of Chartered Surveyors (RICS) has predicted that house prices are unlikely to rise by much more than one to two percent in 2010. The nation’s chief surveyors’ body did however raise the possibility that more properties would change hands in 2010. In their report, RICS pointed out that the housing market had come through the past year in better shape than many had predicted but said it believed several factors would limit price rises.

According to figures issued by the British Chambers of Commerce (BCC), the UK economy shrank by 0.2% between July and September, which is less than the previous estimate of a 0.3% contraction. While the news confirms that the country is not yet out of the recession, it does add weight to predictions that fourth quarter figures will show the economy is finally returning to growth.

The UK recession, which began in the second quarter of 2008, has seen the UK economy contract by 6%. Meanwhile the Confederation of British Industry (CBI) has forecast that in 2010 recovery for the UK economy will be at best ‘fragile’. The CBI confirmed that the UK economy was likely to come out of recession in the fourth quarter this year, driven by increased spending from consumers looking to buy before the January VAT increase. However, they went on to warn that economic growth would be weak, at around 0.3%, for the first two quarters of 2010, with wage freezes continuing into spring and job losses until the autumn

Lehman Brothers, one of the first major investment banks to collapse during the current financial downturn are back to their old ways, is hiring new staff on fat salary/bonus packages as well as paying generous bonuses in London to existing staff, to stop them from defecting. The bank is reportedly recruiting middle and back office staff in order that their administrators PwC can wade through the millions of transactions that must be reconciled with clients and trading partners to determine what is owed or can be claimed. Meanwhile the judge overseeing Lehman’s US bankruptcy in New York last week approved an extra $50 million (£30 million) in bonus pay-outs to some 230 derivatives traders working to help to untangle the dead bank’s $10 billion portfolio. The bonus pay-outs come as bankers face anger and derision over probable bonuses at the end of this year.

British Telecom (BT) are reported to by pushing forward the launch of its super fast broadband network to make sure that the infrastructure is completed in time for the 2012 Olympic Games in London. Britain’s broadband speeds lag behind those of many industrialized countries and BT is under pressure to fix the problem. The company is planning to spend £1.5 billion on a new broadband network based on optical fiber, but it will run past only 40 per cent of homes, mainly in towns and cities. BT originally pronounced that it could take until March 2013 to build the urban-focused network, but, following successful trials, it now appears that the project will be completed by June 2012, with the Olympics beginning the following month. When it does get going, the new network is designed to increase broadband download speeds 10-fold, to about 40 megabits per second, to cope with the rise of bandwidth-hungry services such as high-definition video.

BAA has won its appeal against the Competition Commission but remains unsure whether the judgment means the company will have to sell airports in London and Scotland. In March of this year, the UK’s largest airport operator was ordered to sell three of its seven airports: Gatwick, Stansted and either Glasgow or Edinburgh. The company won their appeal on a number of arguments, one of them that a decline in passenger numbers should have been considered in the decision

The Competition Commission (CC) has finally cleared the merger of ticket agent Ticketmaster and concert promoter Live Nation. The UK regulator has confirmed that the merger would "not result in a substantial lessening of competition in the market" in the UK.

CC’s decision marks a reversal from their provisional ruling, where they vetoed the merger, stating that they were concerned about its ramifications.

The US Justice Department is also investigating the proposed merger, which was originally closed in February.

According to a new poll by the Auto Trader magazine, the Ford Focus has been voted the UK’s most popular car of the decade. The small family car beat our sports cars, SUVs and city cars to take first place. Despite the company being rocked by financial issues in the past ten years, Ford has retained its place as an iconic motoring brand, with two of its other models, the Fiesta and Mondeo, ranking high in the list of most loved cars by the British public. The Auto Trader poll, designed to analyse the key motoring trends over the past ten years, also looked at categories including ‘greenest’ car and ‘best value for money’ car.

Sterling was seen to be weakening in mid week trading against the dollar and the Euro.

• Dollar 1.5956
• Euro 1.111922

On the FTSE house builders edged higher after analysts announced that the sector valuation was looking brighter after a period of under performance that left them trading below book value. Forecasts are that UK house prices are to fall by 5 to 10 per cent as unemployment peaks in the second quarter of 2010, and saw rising interest rates damping the recovery for the next two years. Despite the less than encouraging forecasts, Taylor Wimpey was up 4 percent to 35¾ pence while Barratt rose 1.7 per cent to 116 pence. However, Redrow fell 0.2 per cent to 131½ pence.

The FTSE 100 gained for a second day, adding 34.67 points to close on 5,328.66, just 54 points off its 2009 high.

Official figures show that the US economy grew by less than originally estimated in the third quarter, with the latest estimate showing an annual growth pace of 2.2%, the figure was down from the previous estimate of 2.8%. In any case, July- September was the first quarter in which the US economy returned to growth, after four quarters of decline.

On Wall Street, the Dow Jones Industrial Average gained 0.8 per cent to 10,414.14 while the Nasdaq Composite was 1.2 per cent higher at 2,237.66, a welcome recovery after losses last week as the dollar strengthened and concern grew over the prospect of a tighter monetary policy.

A report issued by the National Association of Realtors (NAOR) showed new home sales in the US rose 7.4% in November, apparently spurred on by government incentives. NAOR also announced that property sales rose in the month to an annual rate of 6.5 million, making for the highest level in more than two years.

On Tuesday the OPEC oil cartel provided its strongest indication yet that it aims to keep oil prices at $70-$80 a barrel next year as it tries to support the economic recovery. As a first step, the cartel, which controls more than 40 per cent of the world’s oil output, agreed to leave its production levels unchanged at least until the end of the first quarter of 2010.

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Tags: 2012 Olympic Games, Auto Trader, BAA, Bank, Barrat, Barratt, Barratt Developments, BCC, British Chambers of Commerce, British Economy, British Pound, British Telecom, BT, CBI, Competition Commission, Confederation of British Industry, Currency, Dow Jones, Economics, Economy, Financial News, FTSE, Gatwick, House Prices, Lehman Brothers, Money, Money Markets, Mortgage, Mortgages, NASDAQ, National Association of Realtors, OPEC, Property Prices, Recession, Redrow, RICS, Royal Institution of Chartered Surveyors, Stansted, Taylor Wimpey, Ticketmaster, UK Banks, UK Economy, UK government, UK Recession, US Justice Department, Wall Street

“A cartel is a formal (explicit) agreement among firms. Cartels usually occur in an oligopolistic industry, where there are a small number of sellers and usually involve homogeneous products. Cartel members may agree on such matters as price fixing, total industry output, market shares, allocation of customers, allocation of territories, bid rigging, establishment of common sales agencies, and the division of profits or combination of these.” Source – Wikipedia

By far the largest Cartel is the oil cartel. In most other industries, the competition authorities would be up in arms at such behaviour. Yet, with home values plummeting, and stock market diving to its worst week in history and the inflation rate sitting uncomfortably outside central bank’s target areas, OPEC has signalled that it will cut production in an attempt to keep oil prices artificially high.

Why is there no outrage across suffering economies at such blatant profiteering? Why do the media and governments sit on their hands and say nothing about one of the most widely used commodity prices being rigged and not subject to open market forces on the downside? Why are ordinary people allowed to suffer from increasingly unaffordable fuel prices as unemployment rises and the cost of basics like food and energy surges?

The oil prices weren’t subject to any cartel controls when they went to $147 a barrel, but yet when economic activity slows, every person on the planet is forced to pay more than they should at a time when they can least afford it.

The answer is that the game is rigged, as the very nature of OPEC suggests. Allowing oil prices to fall with market forces as they rose with market forces would cost oil producers a lot of money. OPEC couldn’t raise output in a meaningful way when the oil price was rising to help offset the higher prices and stop the economies from falling into recession during the inflationary spike.

Maybe the peak oil crowd is right…may be the end of oil is in sight, and the oil producers are determined to squeeze every single dollar of profit from their dwindling resources before the game ends and our love affair with oil finishes. If that is true, looking at the current market turmoil, baby, you ain’t seen nothing yet.

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Tags: Cartel, Money Management, Oil, OPEC