The Finance Thread

[Stive Pesley]

I don't think we should be under any illusions as to why a "settlement" was made.

As Wolfie says "They surely either pay what is legally owed or they don't - and they get prosecuted"

They are clearly playing the rules, and aggressively avoiding tax within the bounds of the law, else we would just have them up in court.

And we know that the government is under pressure to close loopholes and amend rules to make this harder for multi-national companies.

So the "settlement" is almost a bung to the government. A complete sop. Expect a few more of these token payments and any changes to tax loopholes to be *very* minor

 

 

[LesterRam]

On ‎24‎/‎01‎/‎2016 at 11:03, uttoxram75 said:

The unemployment rate in East Staffs is remarkably low, in Uttoxeter itself, its around 2% according to official figures.

A new Waitrose store due to open this spring has been inundated with hundreds of job applications.

We recently took extra staff on and were swamped by applicants for minimum wage jobs, mostly on unsociable hours/shifts - in an area with virtually no unemployment.

Somebody is telling porkies about the unemployment figures or maybe people are in zero hour contracts and want regular hours, whatever the reason, there are a lot of desperate people out there.

I cant comment on the unemployment rate in any particular part of the country, what I will say is that my missus wrapped up her consultancy business last July and she is still struggling to find work, she has lowered her expectations regarding pay and still no offers, the last job she applied for had 385 applications

[SillyBilly]

Seems like Draghi's old boys network is alive and well with a big donation coming from Goldman to the Pro-EU campaign. Suspect the donations will start rolling in from all the banking giants, they know a good deal when they see one. So do the CBI.

[Stive Pesley]

23 hours ago, StivePesley said:

I don't think we should be under any illusions as to why a "settlement" was made.

As Wolfie says "They surely either pay what is legally owed or they don't - and they get prosecuted"

They are clearly playing the rules, and aggressively avoiding tax within the bounds of the law, else we would just have them up in court.

And we know that the government is under pressure to close loopholes and amend rules to make this harder for multi-national companies.

So the "settlement" is almost a bung to the government. A complete sop. Expect a few more of these token payments and any changes to tax loopholes to be *very* minor

Found this interesting article from 2013 where the author totally called it:

"So here's my prediction. Because Google knows the tax campaigners are satisfied with symbolic, largely meaningless gestures - it will make a symbolic and largely meaningless gesture"

http://www.theregister.co.uk/2013/05/28/google_and_tax/

The article is actually really interesting and makes some good points about how avoiding corporation tax is not really the heart of the problem. Google remaining free completely blocks the market place for a lot of digital innovation, and all it really does is harvest data about billions of people - serving adverts on the back of it

 

[SillyBilly]

An uptick in oil and the markets (exception of China) in last few days. Europe's rally IMO has come from Draghi's recent comments about QE and I note there are even more articles today about him attacking "QE critics". Nicely setting the foundations. I imagine the Davos meeting got the "whatever it takes" speech again which means throwing more printed money at the stock markets until armageddon.

Fed are meeting today so be interested to see what comes of that, sure the markets are looking for a backtrack on the rate tightening cycle or lets see if we get subtle hints about QE4 (likely termed as something opaque as a review of "monetary policy levers" or some bo**cks)!

What I am looking out for specifically atm:

- Another Chinese devaluation

- Continued pressure on Sterling. Even Carney said this week that we can't rely on the "kindness of strangers" indefinitely. In other words he is now acknowledging the UK's perpetual current account deficit is approaching a critical mass for the pound. Someone has to plug it or the currency weakens...

- Europe to adopt Japan's model of QE infinity

 

Might not be of interest to anyone but if people do like gold or silver stocks it is worth specifically targeting $ traded stocks through your broker (if you think the £ will weaken throughout 16 and 17 as I do).

 

[LesterRam]

http://www.bbc.co.uk/news/business-35400872

nice to see the bbc being allowed to write about lowering wages across the UK, they attempted a few times previous but was told to remove the articles within 20 minutes.

It suggested the north-south divide is "wide as ever" and that salaries across the UK have fallen by £1,300 a year, obviously its much larger than that but its a move in the right direction.

[SillyBilly]

Can't make this up...

So the first bail out has been done now, on the Italian banking system in this case:

Copied and pasted this:

"Under the terms of the agreement, Italian lenders will be allowed to offload up to €337bn in non-performing loans - 17.5% of Italian banks´ total loans) to a special purpose vehicle which in turn will securitise them - including special incentives - and sell them" -  http://www.digitallook.com/news/international-economic/european-commission-and-italian-banks-reach-deal-on-bad-bank--1012193.html#sthash.HPAnNcwg.dpuf

So basically this means the Italian government (substitute for TAX-PAYER) is attaching guarantees to sales of tranches of non performing loans to 'clean up' bank balance sheets. The 'CDS' will be priced at 'market rates' so it avoids EU rules on state intervention.

Plain English: Italian banks making dodgy loans get the tax-payer to back the **** and free them up to carry on creating the dodgy loans (...to support "growth"). 2008/2009 all over. Not learned a thing. Bail-in legislation (the Cyprus model) of depositors now in place. As if you needed any more confirmation of where this is going.

Absolute madness.

[Ramarena]

1 hour ago, SillyBilly said:

Can't make this up...

So the first bail out has been done now, on the Italian banking system in this case:

Copied and pasted this:

"Under the terms of the agreement, Italian lenders will be allowed to offload up to €337bn in non-performing loans - 17.5% of Italian banks´ total loans) to a special purpose vehicle which in turn will securitise them - including special incentives - and sell them" -  http://www.digitallook.com/news/international-economic/european-commission-and-italian-banks-reach-deal-on-bad-bank--1012193.html#sthash.HPAnNcwg.dpuf

So basically this means the Italian government (substitute for TAX-PAYER) is attaching guarantees to sales of tranches of non performing loans to 'clean up' bank balance sheets. The 'CDS' will be priced at 'market rates' so it avoids EU rules on state intervention.

Plain English: Italian banks making dodgy loans get the tax-payer to back the **** and free them up to carry on creating the dodgy loans (...to support "growth"). 2008/2009 all over. Not learned a thing. Bail-in legislation (the Cyprus model) of depositors now in place. As if you needed any more confirmation of where this is going.

Absolute madness.

Very little mainstream media coverage of this farce either.

[ketteringram]

Should I  start queing in the morning? 

[SillyBilly]

58 minutes ago, Ramarena said:

Very little mainstream media coverage of this farce either.

No, there isn't. Perhaps no appetite for it, Big Brother is on after all .

Well...my view is they invent technical terms such as "quantitative easing" and come out with spiel such as "special purpose vehicle to securitise NPLs" to make fraud or unscrupulous activity too hard to understand to the average Joe or legitimatise it by its seemingly never-ending complexity..."it sounds like they know what they are on about". I suppose that is why this stuff doesn't go mainstream, nobody understands what the hell they are talking about half the time! If they were to translate the BS and say something like "we are printing money to pay our debt" people may take notice or take an interest.

The Federal Reserve incidentally was named so as not to arouse any more suspicion than necessary from ordinary Americans of central control....by a central bank. Naturally, an anathema to Americans. The International Monetary Fund carefully named so not as to give away its status as a global central bank. Fund sounds like an investment portfolio allocating invested monies to chosen markets to most people. Can't have people thinking there may be an unelected bunch of global bankers who can actually print their own currency from thin air and control democratically appointed governments of nation states with it...no... "IMF" sounds good. All deliberately opaque and deceptive.

One would think Janet Yellen doesn't speak English when describing the economy there is so much BS terminology. The language is invented to dissuade people from taking an interest IMO and basically to leave them to it. Anyway...I am rambling on a rant lol.

[Ramarena]

UK GDP 0.5%- about what I expected, although when looking at the initial breakdown production and construction are down, with services pretty much holding the economy out of recession in these calculations. As a side note productivity seems to be a right mess. 

[ketteringram]

Japan now gone NIRP. 

[Ramarena]

2 hours ago, ketteringram said:

Japan now gone NIRP. 

Was just about to post the same, your on it early. Looks like the Nikkei appreciates it. 

[GeneralRam]

1 hour ago, Ramarena said:

Was just about to post the same, your on it early. Looks like the Nikkei appreciates it. 

And the FTSE, looks like we could be over 6000 again.

[Ramarena]

33 minutes ago, GeneralRam said:

And the FTSE, looks like we could be over 6000 again.

It's just gone over the marker 6008, bask in the glow of the Ponzi! 

I wonder how this will play out, Asia is an interesting area at the moment, could we see a currency war, hyperinflation, accelerating deflation?

The system is so screwed, it's hard to know what may come next. 

[Stive Pesley]

So the Japanese NIRP is only applicable  to business not consumers, and intended to encourage the businesses to spend/invest/lend. Will this be a more effectice policy than QE?

[Shang]

3 hours ago, StivePesley said:

So the Japanese NIRP is only applicable  to business not consumers, and intended to encourage the businesses to spend/invest/lend. Will this be a more effectice policy than QE?

Is it because everyone is stockpiling money at the moment, so it's not being spent? 

[SillyBilly]

On ‎29‎/‎01‎/‎2016 at 12:14, StivePesley said:

So the Japanese NIRP is only applicable  to business not consumers, and intended to encourage the businesses to spend/invest/lend. Will this be a more effectice policy than QE?

It is the same as the European NIRP, its charged on bank reserves, not consumers. They are not stupid, they will not move to that level until they have convinced the public to accept the "benefits" of a 100% cashless society - that is the current plan. A Scandinavian country like Denmark or Sweden will likely set the precedent IMO. If they imposed negative rates to consumers it would lead to the collapse of the banking industry as people would withdraw to cash (like Northern Rock or Greece) and the banks only have a fraction of the cash on deposit. They would be insolvent in days. Banning cash is the ultimate control mechanism to banker-led serfdom. It will of course be pitched as limiting tax evasion and black market activity though so therefore the sheeple will go for it.

QE money is accumulated in bank reserves and hasn't moved, up until now it has been parked as free money earning interest for the banking industry. All this represents is a desperate attempt to get inflation into the economy, effectively increasing the M1 money supply by getting those reserves made into loans. Isn't it interesting that the real economy is experiencing deflationary conditions yet we have printed currency like there is no tomorrow?

It won't be an effective policy because we have reached PEAK DEBT. Look at the historical return on debt figures, we have never been lower. If you issue a dollar worth of debt and get 10 cents worth of growth it doesn't allow you to service the debt unless you print the difference (and create more debt via the process). All this does is double down on the problem of too much debt. It is an extend and pretend policy, nothing more.

From 1917 to 1952 each new Dollar of US debt realised $4 worth of GDP. From 2000-2010, that was seven cents of GDP growth for every $1 in new debt issued. We're now approaching a cent. What does this trend show to you?

[SillyBilly]

On ‎29‎/‎01‎/‎2016 at 10:20, Ramarena said:

It's just gone over the marker 6008, bask in the glow of the Ponzi! 

I wonder how this will play out, Asia is an interesting area at the moment, could we see a currency war, hyperinflation, accelerating deflation?

The system is so screwed, it's hard to know what may come next. 

Yes, Asia will lead this. Currency war has been in full swing for 5 years, the Euro was taken down deliberately, as was the Yen. Just the Chinese hitched their wagon to the dollar and have found their currency appreciate 60% relative to the basket of global currencies. They are late to the party. I suspect the negative rates in Japan is as much about weakening the Yen as it is to boost lending, they will be anticipating the next Yuan devaluation. That send the markets down on a tailspin again, be very bad for commodities (nowhere near the low in these stocks to my mind), send crude crashing and be very bullish for the dollar in my view. That is my outlook anyway.

I personally think Crude's recent bounce will reverse shortly and will break new lows before we're done in this quarter.

Can't see much change to inflation with a dearth of global economic demand and everyone maxed out on debt.

[Zag zig]

Funny how things are slowly skirted around, quietly drift and no doubt before you know it, someone will say it's all been debated, accepted or somehow becomes a policy shoe-in.

Britain should scrap the savings safety net of £75,000 to strengthen the British economy, a think-tank has argued in a report.

http://www.thisismoney.co.uk/money/saving/article-3401359/Scrap-75k-safety-net-savers-deposits-says-Centre-Policy-Studies.html

Hmm ... "'The abolition of deposit insurance, supported by legislation outlawing such compensation payments, combined with the establishment of National Savings and Investments as a bank offering a full range of current account and savings products would trigger a significant strengthening and improvement of the UK banking sector." 

http://www.adamsmith.org/blog/economics/scrapping-deposit-insurance-is-a-perfectly-respectable-idea/

Quote

But whatever the overall tenor of the research, it’s clearly an academically popular position that deposit insurance brings with it clear dangers. So I’d ask O’Rourke and others to tone down the shock and horror—abolishing deposit insurance is a perfectly respectable position. 

Footnote to EU debate "The abolition of deposit insurance would require either a British opt-out from European Union regulations – or for the policy to be adopted across the EU."

Bail-ins ever nearer and all encompassing if this happens.