Lloyds Banking Group is to cut 5,000 more jobs by the end of next year as it continues to reduce overlap following its merger with HBOS last year.Some of these cuts are temporary staff, but Lloyds said 2,600 permanent jobs would be lost in the UK. Most of the cuts will come in its operations unit, which includes IT, collections and payment services. The union Unite accused the bank of "corporate arrogance" and short-termism following the announcement. Lloyds has now announced more than 10,000 job cuts so far this year.
Lloyds Banking Group is to cut 5,000 more jobs by the end of next year as it continues to reduce overlap following its merger with HBOS last year.
Some of these cuts are temporary staff, but Lloyds said 2,600 permanent jobs would be lost in the UK.
Most of the cuts will come in its operations unit, which includes IT, collections and payment services.
The union Unite accused the bank of "corporate arrogance" and short-termism following the announcement.
Lloyds has now announced more than 10,000 job cuts so far this year.
I imagined for a moment I was living in a country where the govt ran the place for the benefit of the citizens.
EXACTLY what hallucinogen are you mixing with your beer? It seems to be working. In the end, might makes right. Nothing has changed since the caveman.
UK banks Barclays and HSBC have both reported continuing profits, and indicated that the worst of their bad debts may be coming to an end.Barclays made a pre-tax profit of £1.56bn in the three months to 30 September, down 45% from a year ago. While HSBC did not give any figures, it said profits for the same period were "significantly ahead" of last year. HSBC said its bad debts had now fallen to their lowest level since the the second quarter of 2008.
UK banks Barclays and HSBC have both reported continuing profits, and indicated that the worst of their bad debts may be coming to an end.
Barclays made a pre-tax profit of £1.56bn in the three months to 30 September, down 45% from a year ago.
While HSBC did not give any figures, it said profits for the same period were "significantly ahead" of last year.
HSBC said its bad debts had now fallen to their lowest level since the the second quarter of 2008.
They moved their main office back to Hong Kong recently after 15 years in London. A sign of the times...
How do you interpret this "sign"? In the end, might makes right. Nothing has changed since the caveman.
NEW YORK (Reuters) - Two former Bear Stearns Cos hedge fund managers were acquitted on Tuesday of fraud charges in the first criminal trial of prominent Wall Street executives stemming from subprime mortgage securities that fueled a market meltdown. A jury in U.S. District Court in Brooklyn, New York, reached its verdict in the month-long trial of hedge fund managers Ralph Cioffi, 53, and Matthew Tannin, 48, after less than six hours of deliberations. "I'm happy," Cioffi said, as the families of both men shed tears of relief after the verdict was read. The verdict is a blow for government prosecutors and could have implications for government investigations of possible wrongdoing at other companies at the center of the global financial crisis, including bailed-out giant insurer American International Group Inc and the bankruptcy of Lehman Brothers Holdings Inc.
NEW YORK (Reuters) - Two former Bear Stearns Cos hedge fund managers were acquitted on Tuesday of fraud charges in the first criminal trial of prominent Wall Street executives stemming from subprime mortgage securities that fueled a market meltdown.
A jury in U.S. District Court in Brooklyn, New York, reached its verdict in the month-long trial of hedge fund managers Ralph Cioffi, 53, and Matthew Tannin, 48, after less than six hours of deliberations.
"I'm happy," Cioffi said, as the families of both men shed tears of relief after the verdict was read.
The verdict is a blow for government prosecutors and could have implications for government investigations of possible wrongdoing at other companies at the center of the global financial crisis, including bailed-out giant insurer American International Group Inc and the bankruptcy of Lehman Brothers Holdings Inc.
Shares in Volkswagen have plunged 8% on news that Qatar's sovereign wealth fund plans to sell 25 million preference shares in the carmaker.Qatar has built up a sizeable stake in VW and, despite the sale, said it was committed to investing in the company. Earlier this year, it said it planned to become the third-biggest shareholder in what is Europe's largest carmaker. Last month, Barclays shares were hit hard when Qatar sold £1.3bn worth of shares in the UK bank.
Shares in Volkswagen have plunged 8% on news that Qatar's sovereign wealth fund plans to sell 25 million preference shares in the carmaker.
Qatar has built up a sizeable stake in VW and, despite the sale, said it was committed to investing in the company.
Earlier this year, it said it planned to become the third-biggest shareholder in what is Europe's largest carmaker.
Last month, Barclays shares were hit hard when Qatar sold £1.3bn worth of shares in the UK bank.
The European Commission (EC) has objected to Oracle's proposed takeover of Sun Microsystems, casting doubt on the $7.4bn (£4.4bn) deal.The commission has issued a preliminary assessment raising concerns that the takeover could hurt competition in the computer database market. Oracle said that it would "vigorously oppose" the EC objections. The deal between business software firm Oracle and hardware and software maker Sun was first announced in April.
The European Commission (EC) has objected to Oracle's proposed takeover of Sun Microsystems, casting doubt on the $7.4bn (£4.4bn) deal.
The commission has issued a preliminary assessment raising concerns that the takeover could hurt competition in the computer database market.
Oracle said that it would "vigorously oppose" the EC objections.
The deal between business software firm Oracle and hardware and software maker Sun was first announced in April.
Nov. 10 (Bloomberg) -- Monsanto Co., reeling from its first market-share losses to DuPont Co. in a decade, may be losing the confidence of some investors based on early results from the new modified seeds it's counting on to beat competitors. DuPont, the second-biggest seed maker, grabbed U.S. sales from Monsanto this year, showing its larger rival that farmers won't always pay for the most advanced seeds. Monsanto aims to regain market share with corn that contains eight genetic changes and the first update of its herbicide-resistant soybeans in 13 years. Monsanto Chief Executive Officer Hugh Grant is counting on the new soy and corn varieties to add $1 billion to profit by 2012. A survey of growers early in the harvest now under way indicates the seeds aren't meeting yield expectations, contributing to an 11 percent decline in Monsanto's shares the week the results were circulated. "The distrust that could be building in the market is very negative for Monsanto," Paul Baiocchi, a senior market strategist at Delta Global Advisors, which manages $1.5 billion, including Monsanto shares, said in a telephone interview from San Francisco.
Nov. 10 (Bloomberg) -- Monsanto Co., reeling from its first market-share losses to DuPont Co. in a decade, may be losing the confidence of some investors based on early results from the new modified seeds it's counting on to beat competitors.
DuPont, the second-biggest seed maker, grabbed U.S. sales from Monsanto this year, showing its larger rival that farmers won't always pay for the most advanced seeds. Monsanto aims to regain market share with corn that contains eight genetic changes and the first update of its herbicide-resistant soybeans in 13 years.
Monsanto Chief Executive Officer Hugh Grant is counting on the new soy and corn varieties to add $1 billion to profit by 2012. A survey of growers early in the harvest now under way indicates the seeds aren't meeting yield expectations, contributing to an 11 percent decline in Monsanto's shares the week the results were circulated.
"The distrust that could be building in the market is very negative for Monsanto," Paul Baiocchi, a senior market strategist at Delta Global Advisors, which manages $1.5 billion, including Monsanto shares, said in a telephone interview from San Francisco.
Tens of thousands of training places could be axed under plans to claw back £340m from England's further education and skills budget.A leaked government document suggests a proposal to axe at least 133,000 training places - some for the most deprived areas in the country. Adult apprenticeship budgets and further education college places are also being ear-marked for savings. The government said it was consulting on how best to make efficiency savings.
Tens of thousands of training places could be axed under plans to claw back £340m from England's further education and skills budget.
A leaked government document suggests a proposal to axe at least 133,000 training places - some for the most deprived areas in the country.
Adult apprenticeship budgets and further education college places are also being ear-marked for savings.
The government said it was consulting on how best to make efficiency savings.
won't see a cutback in the Defence budget will we ? No shortage of biscuits in the commons tearooms !! No taxes on parasitical bankers ? Nuclear power stations a-plenty.
But trianing ? No mate, too risky. keep to the Fen Causeway
</chicago economics> Any idiot can face a crisis - it's day to day living that wears you out.
In September, David Cameron stood before the Tory Party conference, took out a lighter, and tried to set fire to the safety net that protects the British poor from splattering into extreme poverty. Nobody noticed at the time: he mentioned in a few throwaway lines that he wants to look westward and copy the Wisconisn model of welfare reform. These distant-sounding proposals might sound attractive at first, because they have latched on to a real problem. There are great swathes of British cities where everyone is jobless, often for life.
In September, David Cameron stood before the Tory Party conference, took out a lighter, and tried to set fire to the safety net that protects the British poor from splattering into extreme poverty.
Nobody noticed at the time: he mentioned in a few throwaway lines that he wants to look westward and copy the Wisconisn model of welfare reform. These distant-sounding proposals might sound attractive at first, because they have latched on to a real problem. There are great swathes of British cities where everyone is jobless, often for life.
en. Christopher J. Dodd (D-Conn.) introduced sweeping legislation Tuesday to reform financial regulation, in part by stripping the Federal Reserve of its regulatory responsibilities and creating a new federal agency charged with keeping banks in good health.
Best to kill that non-functioning aspect and create a new authority from scratch. Staff the new organization with people who are committed to actively regulating and who have appropriate backgrounds, including prosecuting fraud. Write such requirements into the enabling legislation and make them grounds for rejection of proposed candidates by congressional review. The needed organization would, for the first five years, more resemble a slaughterhouse than the Fed. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
If Washington can't pass a bill to audit the Fed, it's certainly not going to pass a bill to kill it.
Washington can't pass a bill to audit the Fed
The appropriate financial stability objectives of the central bank are those that involve providing liquidity, at a cost covering the central bank's opportunity cost of non-monetary financing, to illiquid but solvent financial institutions. Any action going beyond that, such as the recapitalisation of insolvent banks through quasi-fiscal subsidies, ought to be funded by the Treasury. The central bank should be involved only as an agent of the Treasury - an expert assistant. It should not put its own conventional or comprehensive balance sheet at risk. The two arguments against the central bank acting as a quasi-fiscal agent are, first, that acting as a quasi-fiscal agent may impair the central bank's ability to fulfil its macroeconomic stability mandate and, second, that it obscures responsibility and impedes accountability for what are in substance fiscal transfers. In the US such actions subvert the Constitution, which clearly states in Section 8, Clause 1, that the power to tax and spend rests with the Congress: "The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.". If, as happened in the USA on a vast scale, the central bank allows itself to be used as an off-budget and off-balance-sheet special purpose vehicle of the Treasury, and refuses to provide to the Congress some of the information essential for the quantification of the fiscal transfers it has made, the central bank not only subverts the constitution. By attempting to hide contingent commitments and to disguise de-facto subsidies by not divulging relevant information on the terms on which the central bank has offered financial assistance, it undermines its own independence and legitimacy and impairs political accountability for the use of public funds - `tax payers' money'. It is surprising that a country whose creation folklore attributes considerable significance to the principle of `no taxation without representation' would have condoned without much outcry such a blatant violation of the equally important principle of `no use of public funds without accountability'. This indeed amounts to a quiet usurpation of the power of the legislature by the central bank.
The appropriate financial stability objectives of the central bank are those that involve providing liquidity, at a cost covering the central bank's opportunity cost of non-monetary financing, to illiquid but solvent financial institutions.
Any action going beyond that, such as the recapitalisation of insolvent banks through quasi-fiscal subsidies, ought to be funded by the Treasury. The central bank should be involved only as an agent of the Treasury - an expert assistant. It should not put its own conventional or comprehensive balance sheet at risk.
The two arguments against the central bank acting as a quasi-fiscal agent are, first, that acting as a quasi-fiscal agent may impair the central bank's ability to fulfil its macroeconomic stability mandate and, second, that it obscures responsibility and impedes accountability for what are in substance fiscal transfers. In the US such actions subvert the Constitution, which clearly states in Section 8, Clause 1, that the power to tax and spend rests with the Congress: "The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.".
If, as happened in the USA on a vast scale, the central bank allows itself to be used as an off-budget and off-balance-sheet special purpose vehicle of the Treasury, and refuses to provide to the Congress some of the information essential for the quantification of the fiscal transfers it has made, the central bank not only subverts the constitution. By attempting to hide contingent commitments and to disguise de-facto subsidies by not divulging relevant information on the terms on which the central bank has offered financial assistance, it undermines its own independence and legitimacy and impairs political accountability for the use of public funds - `tax payers' money'. It is surprising that a country whose creation folklore attributes considerable significance to the principle of `no taxation without representation' would have condoned without much outcry such a blatant violation of the equally important principle of `no use of public funds without accountability'. This indeed amounts to a quiet usurpation of the power of the legislature by the central bank.
Reporting from Washington - The influential chairman of the Senate Banking Committee, often criticized for being too cozy with Wall Street, unveiled a sweeping new plan Tuesday to toughen oversight of the financial industry -- proposing changes even more dramatic than the Obama administration's at the risk of delaying passage of new rules this year. The plan by Sen. Christopher J. Dodd (D-Conn.) would shatter the existing regulatory structure, installing a new federal banking authority to take the place of four agencies, a bold step the Obama administration declined to take. "The financial crisis exposed a financial regulatory structure that was the product of historic accidents, one after another, over the past 80 years," Dodd said. "For decades, Washington has failed to deliver . . . substantial reform we need. If we fail again at this hour, our economy will be vulnerable to yet another crisis." But Dodd's decision to offer a plan significantly different than legislation moving through the House further complicates White House efforts to pass an overhaul by year's end, efforts already hampered by Republican opposition. It also promises to ratchet up the intense lobbying on Capitol Hill over the most far-reaching changes to financial rules since the Great Depression. Industry lobbyists have amassed a $200-million war chest to try to derail measures that threaten banking profits. Critics say Dodd's zeal to rein in Wall Street stands in stark contrast to a career spent as an ally of the financial industry, suggesting that his pro-consumer stance may stem from a difficult reelection fight looming next year.
The plan by Sen. Christopher J. Dodd (D-Conn.) would shatter the existing regulatory structure, installing a new federal banking authority to take the place of four agencies, a bold step the Obama administration declined to take.
"The financial crisis exposed a financial regulatory structure that was the product of historic accidents, one after another, over the past 80 years," Dodd said. "For decades, Washington has failed to deliver . . . substantial reform we need. If we fail again at this hour, our economy will be vulnerable to yet another crisis."
But Dodd's decision to offer a plan significantly different than legislation moving through the House further complicates White House efforts to pass an overhaul by year's end, efforts already hampered by Republican opposition. It also promises to ratchet up the intense lobbying on Capitol Hill over the most far-reaching changes to financial rules since the Great Depression. Industry lobbyists have amassed a $200-million war chest to try to derail measures that threaten banking profits.
Critics say Dodd's zeal to rein in Wall Street stands in stark contrast to a career spent as an ally of the financial industry, suggesting that his pro-consumer stance may stem from a difficult reelection fight looming next year.
Let's not forget either the source of this bold unification ideology or allies in the pews.
Sen. Schumer is quoted, "He [Paulson] is on the money when he calls for a more unified regulatory structure, although we would prefer a single regulator to the three he proposes." But Mr Paulson is quoted, "I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years." ... The fact that business classifications have multiplied exponentially during the the past 40 years should indicate the necessity of specialization in enforcement. But here we are, contemplating reinforcement of executive unitary theory as if three totalizing, central authorities appointed by a president could, actually, provide requisite regulatory relief to the market consumers whose purchasing "power" constitutes the GNP.
The fact that business classifications have multiplied exponentially during the the past 40 years should indicate the necessity of specialization in enforcement. But here we are, contemplating reinforcement of executive unitary theory as if three totalizing, central authorities appointed by a president could, actually, provide requisite regulatory relief to the market consumers whose purchasing "power" constitutes the GNP.
Othewise it's tempting to fall for the um lone revolting pimp plot. Diversity is the key to economic and political evolution.
First I gotta watch La Commune though. It's three disks and the borrowing period is seven days. I'm pretty sure I'll fall asleep during the screening of each DVD at least twice, and no way is the Militant Electrician going to turn over time after school but before my bedtime. I'm pre-senior, you know.
Keep me informed. Diversity is the key to economic and political evolution.
WASHINGTON (Reuters) - Top Blackwater executives authorized about $1 million in payments to Iraqi officials to buy support and silence criticism of the private security firm after a deadly shooting in Baghdad in 2007, The New York Times reported on Tuesday. In September 2007, Blackwater workers fatally shot at least 14 Iraqi civilians in Baghdad's Nisour Square, an incident that provoked protests in Iraq and prompted the Iraqi government to deny Blackwater a license. Four former executives said in interviews that Blackwater approved the payments in December 2007 but they did not know whether the cash was delivered to Iraqi officials or the identities of potential recipients, the Times reported. Blackwater's strategy, which would have been illegal under U.S. law, created a deep rift inside the company, the sources told the newspaper.
In September 2007, Blackwater workers fatally shot at least 14 Iraqi civilians in Baghdad's Nisour Square, an incident that provoked protests in Iraq and prompted the Iraqi government to deny Blackwater a license.
Four former executives said in interviews that Blackwater approved the payments in December 2007 but they did not know whether the cash was delivered to Iraqi officials or the identities of potential recipients, the Times reported.
Blackwater's strategy, which would have been illegal under U.S. law, created a deep rift inside the company, the sources told the newspaper.
Not all groups have felt the recession equally.
Saudi Aramco, national oil company of the world's largest oil producer and exporter, decided earlier this month it will drop West Texas Intermediate (WTI) as the benchmark for pricing its oil for sale in the US market. In January 2010, Aramco will use the Argus Sour Crude Index (ASCI) to price its oil for the market; it's heavier and has higher sulfur content than WTI. The index, launched in May, uses the volume-weighted average of daily spot sales of the three U.S. Gulf Coast medium sour crudes: Mars, Poseidon, and Southern Green Canyon. .... In principle, the movement in WTI prices is supposed to reflect supply-demand conditions in the US, the largest consumer in the world, burning almost one quarter of the of the 86.14 million b/d consumed worldwide in 2007. And sour crudes usually should sell at a discount to light crudes such as WTI because the latter are cheaper to refine. However, distortions caused by logistical or inventory constraints at Cushing, Oklahoma, the WTI delivery and pricing point, can dislocate WTI prices away from North Sea Brent and US gulf crude prices. Historically, WTI has traded pretty much in line with Brent and gulf sour crudes. But WTI price movement has become increasingly volatile in recent years. The recent inventory glut at Cushing, OK due to the demand slump, coupled with new pipelines transporting Canadian Oil Sands crudes has distorted the WTI price against other benchmarks throwing the global oil market into disarray.
In January 2010, Aramco will use the Argus Sour Crude Index (ASCI) to price its oil for the market; it's heavier and has higher sulfur content than WTI. The index, launched in May, uses the volume-weighted average of daily spot sales of the three U.S. Gulf Coast medium sour crudes: Mars, Poseidon, and Southern Green Canyon.
....
In principle, the movement in WTI prices is supposed to reflect supply-demand conditions in the US, the largest consumer in the world, burning almost one quarter of the of the 86.14 million b/d consumed worldwide in 2007. And sour crudes usually should sell at a discount to light crudes such as WTI because the latter are cheaper to refine.
However, distortions caused by logistical or inventory constraints at Cushing, Oklahoma, the WTI delivery and pricing point, can dislocate WTI prices away from North Sea Brent and US gulf crude prices.
Historically, WTI has traded pretty much in line with Brent and gulf sour crudes. But WTI price movement has become increasingly volatile in recent years. The recent inventory glut at Cushing, OK due to the demand slump, coupled with new pipelines transporting Canadian Oil Sands crudes has distorted the WTI price against other benchmarks throwing the global oil market into disarray.
Another sign that we're running out of the good stuff and doing with less good substitutes. In the long run, we're all dead. John Maynard Keynes
But no-one bothers about that because the BFOE complex is making everyone too much money, at the expense of people who know they are losing but wrongly blame the futures market for the loss.
As I said to ARG in another thread...
It's far from heresy, ARG, and lots of people agree with you: but I regret that I think you, and they, are under a misapprehension. The futures markets are the tail, not the dog. Systemic manipulation has been going on in the Brent/BFOE physical/OTC complex for years, and was transmitted to the WTI market by the arbitrage available on the ICE trading platform. This manipulation is now entirely out of control. It was IMHO responsible for the 'spike' last year and is responsible for the bubble now. Essentially what is happening, I think, is that producers - who are able (unlike speculators) to store oil for nothing in the ground - are able to borrow money from the funds and to lend oil to the funds in return. Just as is happening in the other asset classes - particularly equities - we are seeing the physical market price (and it doesn't take that much in the BFOE market these days) gradually pumped up with borrowed money. The correlation between WTI and the S&P was almost perfect recently, and last year we saw pretty much all of the other commodities spiking in the same way. This proves beyond doubt that supply and demand for the commodities had nothing to do with it, and that another factor was at work. That factor is the shape of the yield curve at the zero bound. ie at the moment the forward curves on commodities react almost precisely to movements on the forward curve on money. In the oil market, I believe that it is BP and Goldman who combine to lead the arbitrage between money and oil, but everyone else will be doing the same. The necessity to be in both the physical/OTC and the futures to avoid getting screwed in one or the other is the motive behind the move by GLG (hedge fund) into the physical market. It is probably also why Occidental acquired Citigroup's Phibro trading unit, and why Vitol acquired some Petroplus infrastructure assets recently. It is only those participants capable of making and taking delivery who can affect the physical market price, which in turn affects the futures price - and not vice versa as you, and almost everyone else, assume. I managed IPE Gas Oil contract deliveries for six years - of anything up to 800,000 tonnes in the second half of the contract month - and while I kept a close eye on who was doing what in Europe's biggest game of 'chicken', no broker in his right mind allowed investors unable to make or take delivery to participate in the 'spot' month. The reason being of course that if the client cannot perform, it is the broker's arse on the line to the clearing house. The fact is that for producers trying to hedge energy prices (in dollars) then funds whose purpose is to hedge the dollar priced in energy (ie 'energy inflation') are precisely the genuine liquidity needed in the futures market. It is the Wall Street Refiners in particular who are causing the problems in league with one or two producers - quite possibly the Saudis, which may help to account for their wish to move from the WTI futures contract, where the Brent/WTI arbitrage had broken down badly. I believe that a practical first step to solving the problem is a big breath of transparency.
The futures markets are the tail, not the dog. Systemic manipulation has been going on in the Brent/BFOE physical/OTC complex for years, and was transmitted to the WTI market by the arbitrage available on the ICE trading platform. This manipulation is now entirely out of control. It was IMHO responsible for the 'spike' last year and is responsible for the bubble now.
Essentially what is happening, I think, is that producers - who are able (unlike speculators) to store oil for nothing in the ground - are able to borrow money from the funds and to lend oil to the funds in return.
Just as is happening in the other asset classes - particularly equities - we are seeing the physical market price (and it doesn't take that much in the BFOE market these days) gradually pumped up with borrowed money. The correlation between WTI and the S&P was almost perfect recently, and last year we saw pretty much all of the other commodities spiking in the same way. This proves beyond doubt that supply and demand for the commodities had nothing to do with it, and that another factor was at work.
That factor is the shape of the yield curve at the zero bound. ie at the moment the forward curves on commodities react almost precisely to movements on the forward curve on money. In the oil market, I believe that it is BP and Goldman who combine to lead the arbitrage between money and oil, but everyone else will be doing the same.
The necessity to be in both the physical/OTC and the futures to avoid getting screwed in one or the other is the motive behind the move by GLG (hedge fund) into the physical market. It is probably also why Occidental acquired Citigroup's Phibro trading unit, and why Vitol acquired some Petroplus infrastructure assets recently.
It is only those participants capable of making and taking delivery who can affect the physical market price, which in turn affects the futures price - and not vice versa as you, and almost everyone else, assume.
I managed IPE Gas Oil contract deliveries for six years - of anything up to 800,000 tonnes in the second half of the contract month - and while I kept a close eye on who was doing what in Europe's biggest game of 'chicken', no broker in his right mind allowed investors unable to make or take delivery to participate in the 'spot' month. The reason being of course that if the client cannot perform, it is the broker's arse on the line to the clearing house.
The fact is that for producers trying to hedge energy prices (in dollars) then funds whose purpose is to hedge the dollar priced in energy (ie 'energy inflation') are precisely the genuine liquidity needed in the futures market.
It is the Wall Street Refiners in particular who are causing the problems in league with one or two producers - quite possibly the Saudis, which may help to account for their wish to move from the WTI futures contract, where the Brent/WTI arbitrage had broken down badly.
I believe that a practical first step to solving the problem is a big breath of transparency.
As Jerome says there has been a move to refining heavy and sour crudes, and massive investment in refineries to accommodate these. The result has been that the historic differentials have shrunk.
The need for a benchmark sour crude has been around for ages, and the IPE launched a Dubai benchmark two weeks before Saddam invaded Kuwait... We tried again later. but even then there was insufficient liquidity in the underlying, and production has declined further since.
The deliverable Dubai contract that exists is used mainly by Shell as a means of guaranteeing payment from counterparties with whom they would not otherwise deal....
The contract is not really being used as a benchmark much at all, because it's too easy to manipulate the underlying. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
SPY gunning was part of the Fed's spring/summer collection. Fall/Winter is all about the ES. With all the SPY IOIAs broadcast for the world to see, and JPM's clients not too happy that pop media like Zero Hedge makes it all too obvious when Jamie Dimon's boys are executing market manipulation orders for their prime quant clients, the latest way to drive the market higher, especially on days like, well, everyday when there is no volume to speak of, is by (gunning up) the futures market. Our friend, he Pragmatic Capitalist does a pretty, pretty, pretty convicing job of demonstrating just how that happens. I don't know if any characteristic of this massive 6 month rally has been more apparent than the huge futures run-ups we've seen at random points during the trading day. Without news, the S&P 500 futures get gunned on huge volume and surge higher. I've seen it at least every other day for 6 months. It tends to occur on low volume days such as the one we're currently experiencing. As you can see in the chart below, the futures are getting gunned on massive volume without any coinciding volume in SPY. This means an institution is jamming the futures higher knowing that they can drive the market higher on no volume. Effectively, they can take out every asking price with a large enough order and immediately create a 0.25% bump in the market in no time. If you've been wondering why we've seen huge surges on low volume days and conviction high volume selling on down days this explains much of it. I don't know if there is malfeasance behind this or if the buyer is simply too stupid to input trades at the bid (like most rational investors do as they try to achieve the best low price), but this is certainly an odd phenomenon that I cannot recall occurring so routinely over the course of my career. Who is the mystery institutional buyer that just needs to place their huge block orders with such urgency? (Bold in original) And in the "more tin-foil hat" category we present this report by the black helicopter fearing men of Grant Thornton which summarizes many of our, Themis Trading, as well as Senator Kaufman and Schumer's concerns about what is happening to the no-longer free markets, and in fact, the overall economy, courtesy of the casino style strategies that have become the norm with the advent of high frequency trading. It may have cost 22 million jobs, but at least HFT provides liquidity and tightens spreads in AIG, C and FNM. Fair tradeoff. (ARG says: "Make those Zombies dance!") Some highlights: * The decline in the number of U.S. listed companies has cost our economy millions of potential jobs. * Market structure changes began to erode support for small cap stocks and eventually worked their way up to damage the support for larger companies. * The results of low transaction-cost Casino Capitalism are that short-term, high-frequency traders are squeezing out long-term investors, the listed market for public companies is in decline, and this decline is taking the U.S. economy with it. * The small and micro cap markets have in many ways become a Hotel California - companies check in but they can't check out by going private (except through delisting, bankruptcy or acquisition). * The need for improved stock markets has never been greater. Bridging the widening gap between small cap and large cap issuer needs should be a national imperative.(Bold in original)
I don't know if any characteristic of this massive 6 month rally has been more apparent than the huge futures run-ups we've seen at random points during the trading day. Without news, the S&P 500 futures get gunned on huge volume and surge higher. I've seen it at least every other day for 6 months. It tends to occur on low volume days such as the one we're currently experiencing. As you can see in the chart below, the futures are getting gunned on massive volume without any coinciding volume in SPY. This means an institution is jamming the futures higher knowing that they can drive the market higher on no volume. Effectively, they can take out every asking price with a large enough order and immediately create a 0.25% bump in the market in no time. If you've been wondering why we've seen huge surges on low volume days and conviction high volume selling on down days this explains much of it. I don't know if there is malfeasance behind this or if the buyer is simply too stupid to input trades at the bid (like most rational investors do as they try to achieve the best low price), but this is certainly an odd phenomenon that I cannot recall occurring so routinely over the course of my career. Who is the mystery institutional buyer that just needs to place their huge block orders with such urgency? (Bold in original)
And in the "more tin-foil hat" category we present this report by the black helicopter fearing men of Grant Thornton which summarizes many of our, Themis Trading, as well as Senator Kaufman and Schumer's concerns about what is happening to the no-longer free markets, and in fact, the overall economy, courtesy of the casino style strategies that have become the norm with the advent of high frequency trading. It may have cost 22 million jobs, but at least HFT provides liquidity and tightens spreads in AIG, C and FNM. Fair tradeoff. (ARG says: "Make those Zombies dance!")
Some highlights:
* The decline in the number of U.S. listed companies has cost our economy millions of potential jobs. * Market structure changes began to erode support for small cap stocks and eventually worked their way up to damage the support for larger companies. * The results of low transaction-cost Casino Capitalism are that short-term, high-frequency traders are squeezing out long-term investors, the listed market for public companies is in decline, and this decline is taking the U.S. economy with it. * The small and micro cap markets have in many ways become a Hotel California - companies check in but they can't check out by going private (except through delisting, bankruptcy or acquisition). * The need for improved stock markets has never been greater. Bridging the widening gap between small cap and large cap issuer needs should be a national imperative.(Bold in original)
The Grant Thornton Report has some very good points, but also includes the following:
There is a depression in U.S. stock markets, evidenced by the precipitous decline in the number of publicly listed companies. This is not a global phenomenon; the United States is seriously lagging other industrialized nations in the formation of such "listed" companies. The culprit is changes to market structure that have inhibited economic recovery, impaired the job market and undermined U.S. competitiveness. The problem is dire, but solutions are attainable. We can fix market structure to support the IPO and listed markets and to drive growth -- and Congress and the SEC can lead the way toward adding billions in tax revenue to the U.S. Treasury without costing taxpayers a dime.(My bold)
All in all, more evidence in support of NBBooks' diary Debunking the Myth of the Financial Markets As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Gold is unlike any other commodity. It is costly to extract from the earth and to refine to a reasonable degree of purity. It is costly to store. It has no remaining uses as a producer good - equivalent or superior alternatives exist for all its industrial uses. It may have some value as a consumer good - somewhat surprisingly people like to attach it to their earlobes or nostrils or to hang it around their necks. I have always considered it a rather vulgar metal, made for the Saturday Night Fever crowd, all shiny and in-your-face, as opposed to the much classier silver, but de gustibus... . ... Because to a reasonable first approximation gold has no intrinsic value as a consumption good or a producer good, it is an example of what I call a fiat (physical) commodity. You will be familiar with fiat currency. Unlike what Wikipedia says on the subject, the essence of fiat money is not that it is money declared by a government to be legal tender. It need not derive its value from the government demanding it in payment of taxes or insisting it should be accepted within the national jurisdiction in settlement of debt. Instead the defining property of fiat money is that it has no intrinsic value and derives any value it has only from the shared belief by a sufficient number of economic actors that it has that value. ... In a world with multiple fiat moneys, the zero value of money equilibrium lurks for each of the fiat currencies, including gold. Admittedly, as regards gold, so far so good. Gold has positive value. It has had positive value for nigh-on 6000 years. That must make it the longest-lasting bubble in human history.
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Because to a reasonable first approximation gold has no intrinsic value as a consumption good or a producer good, it is an example of what I call a fiat (physical) commodity. You will be familiar with fiat currency. Unlike what Wikipedia says on the subject, the essence of fiat money is not that it is money declared by a government to be legal tender. It need not derive its value from the government demanding it in payment of taxes or insisting it should be accepted within the national jurisdiction in settlement of debt. Instead the defining property of fiat money is that it has no intrinsic value and derives any value it has only from the shared belief by a sufficient number of economic actors that it has that value.
In a world with multiple fiat moneys, the zero value of money equilibrium lurks for each of the fiat currencies, including gold. Admittedly, as regards gold, so far so good. Gold has positive value. It has had positive value for nigh-on 6000 years. That must make it the longest-lasting bubble in human history.
We need an EU level macro-prudential stability board. The current proposals for the ESRB are, however, deeply misguided, as they make the central banks the dominant players in the systemic risk game. Central banks have neither the technical knowledge, nor the tools and instruments nor the legitimacy to dominate the macro-prudential financial stability framework. Back to the drawing board.
When we don't really know how the object of regulation looks like, it might be useful to research it first or in parallel, and here CBs do have an advantage.
Almost every CB in Europe or USA now is dying to hire 'macro-prudential' specialists. The problem is - no one really knows how these specialists would look like...
There was a WSJ feature several days ago on introducing financial considerations (fin markets, banking industry, housing, frictions of different kinds) into DSGE (mostly) models. This is an extremely active area of research right now (couldn't get enough students to engage), shows some promise.
There are three parts of a long-term solution. The first is to promote greater exports, partly through dollar depreciation and partly through expanded government support for export financing, for example extended to credit-constrained low-income countries that want to purchase US-produced technology. Dollar depreciation is under way but other kinds of export promotion have not begun. A second component is a massive expansion of education spending and job training. The unemployment rate among college graduates is only 4.7 per cent, while it is 15.5 per cent among those without a high-school diploma. The US woefully under-invests in education outlays for the poor, who drop out of school and then cannot find gainful employment. ... The third component is to spur an investment boom in areas of high social return that are currently blocked by the lack of clear policies. The conversion to a low-carbon economy would create jobs in the short run, a more productive economy in the medium run, and US technological leadership in the longer run.
A second component is a massive expansion of education spending and job training. The unemployment rate among college graduates is only 4.7 per cent, while it is 15.5 per cent among those without a high-school diploma. The US woefully under-invests in education outlays for the poor, who drop out of school and then cannot find gainful employment.
The third component is to spur an investment boom in areas of high social return that are currently blocked by the lack of clear policies. The conversion to a low-carbon economy would create jobs in the short run, a more productive economy in the medium run, and US technological leadership in the longer run.
Obama has lost his way on jobs
EXACTLY what "way" did he ever have? All of his campaign promises were just BS to get him into office. Multinational corps still run everything. The trappings have changed, the substance hasn't budged. In the end, might makes right. Nothing has changed since the caveman.
