EU leaders have agreed on a joint strategy to curb excessive bankers' bonus payments ahead of next week's G20 summit in Pittsburgh, putting pressure on US President Barack Obama to support fundamental financial reforms. At a special summit in Brussels European leaders on Thursday agreed that bonuses must be cancelled in case of negative development in the bank's performance. The proposed reforms would link compensation to a bank or business' performance and install a waiting period before stock options could be exercised. German Chancellor Angela Merkel described the meeting as a "success" and said that demands from Germany, France and Great Britain were fully implemented and adopted as a European position. The three countries had called for bonus payments to be paid in line with banks' profits and for "guaranteed bonuses" to be stopped. Merkel demanded a "charter for a sustainable economy" and British Prime Minister Gordon Brown called for a "new system of managing our global economy."
At a special summit in Brussels European leaders on Thursday agreed that bonuses must be cancelled in case of negative development in the bank's performance. The proposed reforms would link compensation to a bank or business' performance and install a waiting period before stock options could be exercised.
German Chancellor Angela Merkel described the meeting as a "success" and said that demands from Germany, France and Great Britain were fully implemented and adopted as a European position. The three countries had called for bonus payments to be paid in line with banks' profits and for "guaranteed bonuses" to be stopped.
Merkel demanded a "charter for a sustainable economy" and British Prime Minister Gordon Brown called for a "new system of managing our global economy."
European Union leaders have agreed to seek a global deal for bankers' bonuses to be clawed back if profits fall.The leaders meeting in Brussels approved the clause as part of a common EU position for next week's G20 summit in Pittsburgh in the US. They want the threat of sanctions to be used to force banks to link bonuses to long-term performance. There is concern the current system may encourage short-term risk-taking, which helped trigger the banking crisis. Speaking ahead of the meeting, UK Prime Minister Gordon Brown said there was broad backing for bonus restrictions.
European Union leaders have agreed to seek a global deal for bankers' bonuses to be clawed back if profits fall.
The leaders meeting in Brussels approved the clause as part of a common EU position for next week's G20 summit in Pittsburgh in the US.
They want the threat of sanctions to be used to force banks to link bonuses to long-term performance.
There is concern the current system may encourage short-term risk-taking, which helped trigger the banking crisis.
Speaking ahead of the meeting, UK Prime Minister Gordon Brown said there was broad backing for bonus restrictions.
EUOBSERVER / BRUSSELS - European Union leaders have agreed that their message for the G20 meeting next week is that the global economic recovery is still too fragile to begin a roll-back of economic stimulus packages. However, they believe that the turnaround does suggest that now is the time to begin drafting plans for a withdrawal of government support. "The bonus bubble burst tonight," said Swedish Prime Minister Fredrik Reinfeldt (r) "The G20 should reaffirm its determination to continue implementing coordinated policy measures in order to develop the basis for sustainable growth and to avoid a repetition of the present financial crisis. Efforts must be maintained until recovery is secured." The presidents and prime ministers of the EU's 27 member states European Union met in Brussels on Thursday evening for an informal dinner to prepare a common position to take to next week's G20 meeting of the world's leading industrialised and developing countries.
EUOBSERVER / BRUSSELS - European Union leaders have agreed that their message for the G20 meeting next week is that the global economic recovery is still too fragile to begin a roll-back of economic stimulus packages.
However, they believe that the turnaround does suggest that now is the time to begin drafting plans for a withdrawal of government support.
"The bonus bubble burst tonight," said Swedish Prime Minister Fredrik Reinfeldt (r)
"The G20 should reaffirm its determination to continue implementing coordinated policy measures in order to develop the basis for sustainable growth and to avoid a repetition of the present financial crisis. Efforts must be maintained until recovery is secured."
The presidents and prime ministers of the EU's 27 member states European Union met in Brussels on Thursday evening for an informal dinner to prepare a common position to take to next week's G20 meeting of the world's leading industrialised and developing countries.
Over 200,000 German industrial workers lost their jobs in the last year, the Federal Statistics Office announced on Thursday. This is the biggest employment slump in German industry in 12 years. The effects of the global economic crisis are becoming ever clearer in Germany, where the number of jobs in industry sank by 3.9 percent in July compared to the same month in 2008, according to a new report from Germany's statistics office. The new report shows that 5.03 million people are currently employed in German industry, compared to over 5.2 million last July. The number of actual man-hours sank by an even more alarming 10.4 percent, as more and more industrial workers have had their hours cut back. The gross income earned fell by eight percent to 16.6 billion euros ($24.5 billion). Worst hit were the metal, rubber and plastic industries, but Germany's beleagured automobile industry also took significant workforce losses of close to five percent.
The effects of the global economic crisis are becoming ever clearer in Germany, where the number of jobs in industry sank by 3.9 percent in July compared to the same month in 2008, according to a new report from Germany's statistics office. The new report shows that 5.03 million people are currently employed in German industry, compared to over 5.2 million last July.
The number of actual man-hours sank by an even more alarming 10.4 percent, as more and more industrial workers have had their hours cut back. The gross income earned fell by eight percent to 16.6 billion euros ($24.5 billion).
Worst hit were the metal, rubber and plastic industries, but Germany's beleagured automobile industry also took significant workforce losses of close to five percent.
The burst of the Danish housing bubble will be costing an extra 25,000 jobless, a major national deficit and lower growth in coming years. The housing bubble, that coupled with the government's rates freeze and repayment-free loans became inflated until 2007, has drastically worsened Denmark's economic crisis and its burst has weakened Denmark's ability to combat the crisis. According to calculations carried out by Nordea for Politiken, some 25,000 more people will lose their jobs as a result of the bubble than if the Danish housing market had not been hit by one of the worst price bubbles in the world. Growth would be a third higher in the next few years and the public finance deficit would be DKK 37 billion in 2011 instead of DKK 60 billion.
The housing bubble, that coupled with the government's rates freeze and repayment-free loans became inflated until 2007, has drastically worsened Denmark's economic crisis and its burst has weakened Denmark's ability to combat the crisis. According to calculations carried out by Nordea for Politiken, some 25,000 more people will lose their jobs as a result of the bubble than if the Danish housing market had not been hit by one of the worst price bubbles in the world. Growth would be a third higher in the next few years and the public finance deficit would be DKK 37 billion in 2011 instead of DKK 60 billion.
In response to demand stimulus over recent decades, with investors implicitly assuming that the future would be like the recent past, there has been a massive increase in supply potential in many industries. The upshot is that many of them are now too big and must be wound down. This applies to automobile production, banking services, construction, many parts of the transport and wholesale distribution industries, and often retail distribution as well. Similarly, many countries that relied heavily on exports as a growth strategy are now geared up to provide goods and services to heavily indebted countries that no longer have the will or the means to buy them.In this supply side context, policies such as "cash for clunkers" and value added tax cuts in countries with very low household saving rates and massive trade deficits are clearly suboptimal. So too, in countries with large trade surpluses, is resistance to exchange rate appreciation along with a continuing reliance on export demand. Such policies are equivalent to trying to resuscitate a patient long since dead. Not only will time prove that such attempts are futile, but they also impede the desirable adjustment from declining industries to those that should be expanding. In effect, relying solely on macroeconomic stimulus may well head off a more violent downturn, but only at the expense of a more protracted recession.
In this supply side context, policies such as "cash for clunkers" and value added tax cuts in countries with very low household saving rates and massive trade deficits are clearly suboptimal. So too, in countries with large trade surpluses, is resistance to exchange rate appreciation along with a continuing reliance on export demand. Such policies are equivalent to trying to resuscitate a patient long since dead. Not only will time prove that such attempts are futile, but they also impede the desirable adjustment from declining industries to those that should be expanding. In effect, relying solely on macroeconomic stimulus may well head off a more violent downturn, but only at the expense of a more protracted recession.
Despite the economic downturn, many firms cannot fill empty positions ranging from plumbers to pastry chefs. The reason? A stigma on blue-collar jobs.
In today's economic downturn, one might think that every new job posting would instantly draw a hoard of applicants. Not so in Italy. Of the 94,600 jobs small Italian firms have offered so far this year, about a third have gone unfilled, according to a recent report by Confartigianato, the association of Italy's family-owned businesses. It appears that the shame of working a blue-collar job is so great that Italians would rather risk twiddling their thumbs than using them to tailor fine European clothing, whip up delicious cannoli, or tinker with sports cars. This cultural stigma, unmoved by the fact that some skilled laborers earn substantially more than white-collar workers, has become a real "curse" for the Italian economy, says Giacomo Vaciago, an economic policy professor at the Catholic University of Milan.
It appears that the shame of working a blue-collar job is so great that Italians would rather risk twiddling their thumbs than using them to tailor fine European clothing, whip up delicious cannoli, or tinker with sports cars. This cultural stigma, unmoved by the fact that some skilled laborers earn substantially more than white-collar workers, has become a real "curse" for the Italian economy, says Giacomo Vaciago, an economic policy professor at the Catholic University of Milan.
From :Global Pensions UK/CANADA - Nomura has secured a six-year rent holiday after signing a 20 year lease in a new office development owned by Oxford Properties Group, a subsidiary of the Ontario Municipal Employees Retirement System (Omers). The investment bank - which was advised by Drivers Jonas - said the move into Watermark Place, located on Angel Lane in the City Riverside district, will complement Nomura's current European headquarters in St. Pauls. Nomura said that the deal is believed to be the largest ever non pre-let leasing transaction in the UK office market. Drivers Jonas partner Mark Lethbridge said: "We've got what's probably a record breaking deal of almost six years. It's fantastic timing - this is a historic opportunity, to get this kind of quality of building on these kinds of terms, which is something you see once in a generation." However, he conceded that the situation was worse for Omers - which is letting this property on a rent-free basis for six years. Yet he said: "On the other hand, to secure any tenant in today's market would require a substantial rent-free period to be granted, although probably not as long as six years." He added: "We were able to squeeze that bit extra because it's Nomura, which has taken the whole building for 20 years. For Omers, they wanted to secure this deal rather than go through a two-year painful period of letting the building."
UK/CANADA - Nomura has secured a six-year rent holiday after signing a 20 year lease in a new office development owned by Oxford Properties Group, a subsidiary of the Ontario Municipal Employees Retirement System (Omers).
The investment bank - which was advised by Drivers Jonas - said the move into Watermark Place, located on Angel Lane in the City Riverside district, will complement Nomura's current European headquarters in St. Pauls. Nomura said that the deal is believed to be the largest ever non pre-let leasing transaction in the UK office market.
Drivers Jonas partner Mark Lethbridge said: "We've got what's probably a record breaking deal of almost six years. It's fantastic timing - this is a historic opportunity, to get this kind of quality of building on these kinds of terms, which is something you see once in a generation."
However, he conceded that the situation was worse for Omers - which is letting this property on a rent-free basis for six years. Yet he said: "On the other hand, to secure any tenant in today's market would require a substantial rent-free period to be granted, although probably not as long as six years."
He added: "We were able to squeeze that bit extra because it's Nomura, which has taken the whole building for 20 years. For Omers, they wanted to secure this deal rather than go through a two-year painful period of letting the building."
North America Overtaken by Europe as the World's Richest Region, as Equity-Heavy U.S. Investors Are Hit with Steep Losses, Says Report by The Boston Consulting Group NEW YORK, September 15, 2009--The crisis is transforming the global map of the world's wealthiest people, with Europe nudging out North America as the richest region, according to a new report by The Boston Consulting Group (BCG). The report, titled Delivering on the Client Promise: Global Wealth 2009, is being released today. Global wealth fell from $104.7 trillion in 2007, measured in assets under management (AuM), to $92.4 trillion in 2008--a decline of 11.7 percent. It was the first decline since 2001
NEW YORK, September 15, 2009--The crisis is transforming the global map of the world's wealthiest people, with Europe nudging out North America as the richest region, according to a new report by The Boston Consulting Group (BCG). The report, titled Delivering on the Client Promise: Global Wealth 2009, is being released today.
Global wealth fell from $104.7 trillion in 2007, measured in assets under management (AuM), to $92.4 trillion in 2008--a decline of 11.7 percent. It was the first decline since 2001
The Year of the Ox or the Year of Fat Tails? In addition to the statistical outlier that the November 2008 and March 2009 lows were for the S&P 500 relative to its 200d MA, there appears yet another statistical oddity, one that is remaining far out on the distribution curve and doesn't seem to be interested in returning to normal. What I am referring to is the correlation between oil and the USD and the Euro. As the USD was selling off sharply last year it appeared as though oil was acting as an inflation hedge, or anti-USD hedge, as the decline in the USD was fueling commodity prices. You can see this dynamic when looking at crude oil prices which have been moving in lock step to the Euro, which makes up 57.6% of the USD Index.
In addition to the statistical outlier that the November 2008 and March 2009 lows were for the S&P 500 relative to its 200d MA, there appears yet another statistical oddity, one that is remaining far out on the distribution curve and doesn't seem to be interested in returning to normal. What I am referring to is the correlation between oil and the USD and the Euro. As the USD was selling off sharply last year it appeared as though oil was acting as an inflation hedge, or anti-USD hedge, as the decline in the USD was fueling commodity prices. You can see this dynamic when looking at crude oil prices which have been moving in lock step to the Euro, which makes up 57.6% of the USD Index.
Watch Barclays in the cellar by Gillian Tett A couple of years ago, when structured investment vehicles were sowing devastation in the financial world, I frantically searched for a way to explain to non-financiers how these entities worked. The analogy I resorted to was a garage or cellar. For just as a garage or cellar is usually attached to a house - but not truly inside a house - entities such as SIVs and conduits have traditionally had a semi-detached status with banks. That served the banks dangerously well in the years of the credit boom, since they used SIVs as a place to store irritating stuff which they did not want cluttering up their balance sheet - such as a household stuffing rubbish into a cellar, so that it does not mess up the smart front room. These days, of course, the word "SIV" has become almost as taboo as the phrase "subprime securitisation". Yet, as I perused this week's announcement that Barclays plans to sell $12.3bn of credit assets to a "newly established fund" called Protium Finance - which will be independent but mostly financed by a loan from Barclays - it was hard to escape a twinge of déjà vu.
A couple of years ago, when structured investment vehicles were sowing devastation in the financial world, I frantically searched for a way to explain to non-financiers how these entities worked. The analogy I resorted to was a garage or cellar.
For just as a garage or cellar is usually attached to a house - but not truly inside a house - entities such as SIVs and conduits have traditionally had a semi-detached status with banks. That served the banks dangerously well in the years of the credit boom, since they used SIVs as a place to store irritating stuff which they did not want cluttering up their balance sheet - such as a household stuffing rubbish into a cellar, so that it does not mess up the smart front room.
These days, of course, the word "SIV" has become almost as taboo as the phrase "subprime securitisation". Yet, as I perused this week's announcement that Barclays plans to sell $12.3bn of credit assets to a "newly established fund" called Protium Finance - which will be independent but mostly financed by a loan from Barclays - it was hard to escape a twinge of déjà vu.
Oil on the brain Game-changers locally, the finds do not alter things globally. They are much smaller than the supergiants of the last century, still producing at dwindling rates today (Ghawar, the world's largest field, was discovered in 1948). And while the industry is getting better at finding and producing oil - seismic surveys are more accurate and recovery rates higher - these are often incremental improvements rather than technological leaps. The world is still heading for an oil crunch, not necessarily due to physical scarcity of oil but because low investment and long lead-times mean it cannot keep up with demand. Averting such a crunch - and its economic consequences - is more about efficiency and government-mandated conservation than a few new finds. There is one bright spot. If the market works, sustained oil prices will encourage investment in alternatives, weaning us off the black stuff sooner and averting a still-worse crunch: climate change.
Game-changers locally, the finds do not alter things globally. They are much smaller than the supergiants of the last century, still producing at dwindling rates today (Ghawar, the world's largest field, was discovered in 1948). And while the industry is getting better at finding and producing oil - seismic surveys are more accurate and recovery rates higher - these are often incremental improvements rather than technological leaps.
The world is still heading for an oil crunch, not necessarily due to physical scarcity of oil but because low investment and long lead-times mean it cannot keep up with demand. Averting such a crunch - and its economic consequences - is more about efficiency and government-mandated conservation than a few new finds.
There is one bright spot. If the market works, sustained oil prices will encourage investment in alternatives, weaning us off the black stuff sooner and averting a still-worse crunch: climate change.
