Advertisements

UK Citizens Look To Withdraw Funds From EU Countries After Cypriot Decision

Comments Off on UK Citizens Look To Withdraw Funds From EU Countries After Cypriot Decision

The decision in Cyprus to rob depositors was always going to have a negative outcome. The following story from ZeroHedge should come as no surprise that worried UK expats are looking to move their funds away from countries that have perceived banking weaknesses. We clearly have entered a new era which can only have a positive outcome for precious metals as a way to preserve your wealth from confiscation.

UK’s deVere advisory group reports, “more and more expats in Spain, Italy, Portugal and Greece are now not unreasonably worried for their deposits in these countries,” and are seeing a “surge” in the number of British expats seeking advice about moving funds out of eurozone’s most troubled economies. As EUBusiness reports, “Whether the institutions like it and accept it or not, there is a real risk of a major deposit flight from these countries as people feel their accounts could be plundered next.” It is hardly surprising obviously (as we noted earlier the bid in German bunds) but we fear this escalation in cash exodus from the periphery will increase the need for a broader EU capital control scheme sooner rather than later.

 

Via EUBusiness,

Independent financial advisory company deVere Group on Tuesday reported a “surge” in the number of British expats seeking advice about moving funds out of some of the eurozone’s most troubled economies following the Cyprus bailout deal.

According to deVere Group chief executive Nigel Green, “more and more expats in Spain, Italy, Portugal and Greece are now not unreasonably worried for their deposits in these countries.”

He added: “Over the last week, since the messy deal to bailout Cypriot banks began, our financial advisers in these areas have reported a significant surge in enquiries from expats who are looking to safeguard their funds in other jurisdictions which are perceived to be safer.

Whether the institutions like it and accept it or not, there is a real risk of a major deposit flight from these countries as people feel their accounts could be plundered next.”

Jeroen Dijsselbloem, who heads the Eurogroup of finance ministers, said the costs of bank recapitalisations should not fall on tax payers, but on bondholders, shareholders and, if necessary, uninsured deposit holders.

Source: ZeroHedge

Advertisements

UK: Triple Dip Recession To Trigger More QE

Comments Off on UK: Triple Dip Recession To Trigger More QE

A number of weeks ago Max Keiser made the statement on the BBCs program that “the UK economy is screwed“. Certainly the signs are not good and George Osbourne does not inspire confidence. After the losing its AAA status and signs of moving back into a triple dip recession it looks like the only solution as usual is to crank up the printing presses.
The Bank of England will be under pressure to unleash further emergency measures this week amid signs the UK is on course for an unprecedented triple-dip recession.

A shock fall in manufacturing activity in February helped shorten odds that the Bank’s nine-strong Monetary Policy Committee (MPC) will push the button on a further £25 billion of quantitative easing (QE) – also known as money printing – when they meet on Wednesday and Thursday.

Last month’s MPC minutes saw governor Sir Mervyn King and Paul Fisher join previously lone voice David Miles in calls to restart the printing presses.

Interest rates, which have remained unchanged at 0.5% for four years, will also be in the spotlight after Bank of England deputy governor Paul Tucker told MPs on the Treasury Committee that he had put negative interest rates up for consideration.

While he admitted it was an idea that needed to be thought through carefully, the Bank is expected to look for other measures to kick-start the UK economy, which has weaved in and out of recession since the 2008 banking crisis.

More QE looks to be the inevitable solution.

Alan Clarke, UK and eurozone economist at Scotiabank, said: “The recent noises from MPC members suggest that the MPC want to do something, but it is not yet clear what. The default policy tool has tended to be more QE and a £25 billion expansion at this week’s meeting seems to be the most likely outcome.”

But Howard Archer, chief UK and European economist at IHS Global, said he thought the Bank would hold fire on more QE at its March meeting, partly because the recent sharp weakening of the pound was stimulative in itself.

He said: “Furthermore, there is a danger that doing further QE at a time when sterling is already under serious downward pressure could cause the pound to fall too far too fast which would be both destabilising and perhaps over-stoke inflation risks.”

On Friday the pound dropped below 1.50 US dollars for the first time in more than two-and-a-half years.

Philip Shaw, chief economist at Investec, said that while he thought it was likely the MPC would keep policy on hold, the weak figures gave the case for further QE “a certain degree of extra momentum”.

Source: Irish Independent

6 UK Water Firms Pay No Tax

Comments Off on 6 UK Water Firms Pay No Tax

What a sweet deal for some UK water firms whereby they pay no tax following in the footsteps of many other corporations like Starbucks. Over the past decade, water bills have soared by 82%, more than double the rate of inflation. Despite making over £1.5 billion in profits, water bills are set to rise again this year.

British water companies are evading millions of pounds in tax by the fraudulent method of getting loans from their owners abroad and listing themselves as under debt.

Following a public outcry over billions of pounds of corporate tax avoidance in Britain, involving names such as Google and Starbucks, research group Corporate Watch said that six British water companies have taken out high-interest loans from their owners through the Channel Islands stock exchange so that they could dodge tax using a legal loophole that reduces taxable profits in proportion to interest payments abroad.

That means their owners get fully untaxed profits from Britain by pretending that their subsidiaries in the country are under debt.

According to Corporate Watch, the six water companies of Northumbria, Yorkshire, Anglia, Thames, South Staffs and Sutton and East Surrey have got £3.4 billion in loans from overseas.

The group said the Northumbrian case is the “most brazen” as it has promised an 11 percent interest on a loan of over £1 billion from a Hong Kong-based group that belongs to Li Ka-shing, the world’s ninth-richest person.

The situation also directly affects British tax-payers who should foot the bill for the high-interest loans taken out by water companies.

Corporate Watch said water companies could secure loans with much lower interests if they were government-run adding the current situation is costing British consumers an additional £2 billion a year.

Source: PressTV

British Economy Now Worse Than When In The Great Depression

Comments Off on British Economy Now Worse Than When In The Great Depression

A few days ago Max Keiser on the BBC’s flagship Daily Politics show explained why in his opinion the UK economy is “screwed”. The Washington’s Blog has put forward its reasons for why the UK is in a worse position now than it was in the Great Depression. As usual, a chart can say it best and the velocity of money graph below does just that.

Royal Bank of Scotland Says Worst Economy Since Before Queen Victoria Was Crowned

Leading British newspaper the Telegraph reports today:

Ministers today admitted Britain is facing “very, very grave difficulties” after figures showed the economy did not grow at all in 2012.

***

Economists from the Royal Bank of Scotland said the last four years have produced the worst economic performance in a non post-war period since records started being collected in the 1830s.

***

It’s the worst economic performance since at least 1830, outside of post-war demobilisations,” he told The Daily Telegraph. “It’s worse than the 1920s, it’s worse than the Great Depression.”

He said the economy has been “heading this way for a long time” because of the scale of the problems that came to a head in the 2008 financial crash.

***

The top economist at RBS, which is mostly owned by the Government, said it is difficult to recover when much of the world is facing similar problems.

“It’s the scale of what happened in 2008 but also the build-up to that,” he said. “Compared with other recessions [like in the 1980s and 1990s], this is happening all over the world. There’s not a quick and easy way to export your way out of this.”

(In a separate article, the Telegraph notes that the UK is heading for an unprecedented triple dip, as its economy shrunk .3 percent in the fourth quarter of 2012).

We’ve repeatedly warned that this is worse than the Great Depression …

What Do Economic Indicators Say?

We’ve repeatedly pointed out that there are many indicators which show that the last 5 years have been worse than the Great Depression of the 1930s, including:

Mark McHugh reports:

Velocity of money is the frequency with which a unit of money is spent on new goods and services. It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling). In a healthy economy, the same dollar is collected as payment and subsequently spent many times over. In a depression, the velocity of money goes catatonic. Velocity of money is calculated by simply dividing GDP by a given money supply. This VoM chart using monetary base should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face:

 British Economy Is WORSE than During the Great Depression

In just four short years, our “enlightened” policy-makers have slowed money velocity to depths never seen in the Great Depression.

(As we’ve previously explained, the Fed has intentionally squashed money multipliers and money velocity as a way to battle inflation. And see this)

Indeed, the number of Americans relying on government assistance to obtain basic food may be higher now that during the Great Depression. The only reason we don’t see “soup lines” like we did in the 30s is because of the massive food stamp program.

And while apologists for government and bank policy point to unemployment as being better than during the 1930s, even that claim is debatable.

What Do Economists Say?

Indeed, many economists agree that this could be worse than the Great Depression, including:

Bad Policy Has Us Stuck

We are stuck in a depression because the government has done all of the wrong things, and has failed to address the core problems.

Instead of bringing in new legs, we keep on recycling the same old re-treads who caused the problem in the first place.

For example:

  • The government is doing everything else wrong, as well. See this and this

This isn’t an issue of left versus right … it’s corruption and bad policies which help the super-elite but are causing a depression for the vast majority of the people.

Source: Washinton’s Blog

UK Economy Is Screwed

1 Comment

Trust Max Keiser to say it straight in this clip from the BBC’s Daily Politics when asked about the state of the UK’s economy. A quick 4min clip, but key points are as follows:

  • UK made the wrong decision in supporting bondholders and banks instead of the economy.
  • Bond market on verge of collapsing.
  • Sterling is selling off.
  • Bond yields are moving up.
  • Rating agencies are going to downgrade the UK.
  • Borrowing costs will rise which will affect mortgages.
  • All currencies are depreciating against Gold.
  • Gold is becoming the World’s Reserve Currency.
  • Sterling heading for sharp devaluation which won’t help exports.

Goldman Sachs Takeover of Bank Of England

Comments Off on Goldman Sachs Takeover of Bank Of England

Finally the successor to Mervyn King is announced. In one corner was Goldman Sachs Jim O’Neil and in the other was Goldman Sachs Mark Carney who was the lucky winner.  Carney is not due to takeover from King until next June but ZeroHedge put forward a theory of Carney being picked for damage limitations purposes.

“Why not get a head that’s global? Bankers aren’t very popular, and a Canadian sounds like a good choice,” said Kent Matthews, a professor at Cardiff University and former Bank of England researcher. “It may well be that to restore credibility they have to look outside.”

 

So that’s the strategy: play Carney off as a Canadian, instead of as Goldman. We wonder how many minutes the general public will be fooled by that particular strawman.

Click here for map of Goldman Sach’s European domination so far.

Remember the trader Alessio Rastani on the BBC declare

“The governments don’t rule the world, Goldman Sachs rules the world.”

Check out the clip at 2:38

source: ZeroHedge, Guardian, Huffington Post

UK: Bank of England Has New Money Printing Trick

Comments Off on UK: Bank of England Has New Money Printing Trick

You can always count on bankers to find new ways of bending accounting rules but in this case the Bank of England is now able to supply the UK Government with £35bn via the back door at the same time it has announced a halt to QE.

 

 

 

So now we know why the Bank of England’s Monetary Policy Committee called a halt to more Quantitative Easing this week – it’s because the Chancellor and the Governor of the Bank of England have concocted a backdoor way of doing the same thing.

The latest little (actually quite big at a tidy £35bn) money printing wheeze comes about as close to outright monetising of government spending as it is possible for the Bank of England to go without simply creating the money and handing it by the lorry load to the Treasury, a la Weimar.

What the Treasury has decided to do is take the accumulated interest payments on the stock of government debt the Bank of England has bought under quantitative easing, and credit it to the Government’s books rather than the Bank of England’s. The total is £35bn, of which the government intends to take £11bn this financial year and £24bn next.

This obviously helps the deficit in these two years quite a lot, creating space, should the Chancellor wish to take it, to ease back a little on the fiscal squeeze. For instance, he might choose to take the shadow Chancellor’s advice and further delay a scheduled increase in fuel duties. It also makes it easier for Mr Osborne to meet his fiscal mandate of eliminating the structural deficit within five years. Even the supplementary target of falling debt as a percentage of GDP by the end of the parliament – the one which City forecasters now widely believe Osborne will miss without further austerity – is marginally benefited by the latest piece of sleight of hand. It’s as if Osborne has died and been reborn as Gordon Brown, who famously manipulated his own fiscal rules to destruction.

The Government excuses its actions by saying that it is only bringing itself into line with practice in Japan and the US, the other major economies to be practicing substantial QE right now. It might also be argued that to the extent the European Central Bank indulges in bond purchases, it practices something quite similar too.

In any case, you might reasonably think that it doesn’t really matter how the government accounts for the interest on the Bank’s stock of gilts. Since the Bank of England is 100pc owned by the Treasury, the government has in essence only been paying interest to itself, so why not just stop the charade and save the money?

Wrong, wrong, wrong. The justification for keeping the interest is that it creates a buffer to fund expected losses on the gilts when the Bank of England comes to unwind its quantitative easing programme. These losses are now going to have to be met by the government directly at some stage in the future. Alternatively, the government could simply ignore them or write-them off. The Government is transferring the losses from today until tomorrow. The thin line which separates monetary from fiscal policy is being crossed in a way which substantially undermines the Bank of England’s claim to independence.

Source: Telegraph

Older Entries

%d bloggers like this: