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

“Investors seem to be bracing themselves for a global depression that will not occur. Foreign stocks, particularly those exposed to China or natural resources, are trading at the lowest valuations I have seen in my entire career. Fears of a global meltdown are based on the misconception that the U.S. economy is the tent pole for economic activity around the world. The premise of my entire argument is that the U.S. economy, by consuming so much of the world’s resources and manufactured goods, and borrowing so much of the world’s savings, has in fact been a drag on the global economy. 
 
The enormous global vendor financing scheme is finally coming to an end as the vendors discover that their biggest customer is flat broke. In the short run, our creditors are experiencing some pain because they finally realize that they will never get their money back. 
 
Once the foreign stock markets take this hit, they will be far better poised to grow than their American counterpart. Foreigners will reclaim their productivity and savings for themselves, and will subsequently experience the biggest global economic boom in history. America on the other hand will fare much worse, as we will be left with a hollowed out manufacturing base, dilapidated infrastructure, no savings, and a gigantic Federal Government that will regulate, spend, borrow and print our economy into ruin. 
 
For an updated look at my investment strategy, order a copy of my just released book, “The Little Book of Bull Moves in Bear Markets.” While the “bull moves” I forecast have yet to materialize, I am confident that given time they will. The good news is that now you actually have some time to put my strategy in place at favourable prices and exchange rates! 
 
– Peter Schiff is the President, Founder and Chief Global Strategist for Euro Pacific Capital. He is widely acknowledged as an expert in international markets, and in global economic strategy. He is a speaker at all the major investment conferences. He is regularly featured on CNBC and Bloomberg TV, and often quoted in the Wall Street Journal, Barron’s, New York Times, the Financial Times, Investor’s Business Daily, and many others.”

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Tags: Banking, Barron's, Economy, Euro Pacific Capital, Global Credit Crisis, Investor's Business Daily, New York Times, Peter Schiff, the Financial Times, Wall Street Journal