English newspapers today (8 February) took command of a campaign to completely write off a proposed EU regulation which would limit the activity of hedge funds, the Alternative Investment Fund Managers Directive (AIFMD), saying it will hurt the London-based financial sector. London-based conservative newspaper the Daily Telegraph and its free rival, City AM, launched campaigns against the EU's proposed regulation of alternative invetsment funds. The Telegraph has coined its campaign 'Ditch the Directive'. Both newspapers enjoy healthy penetration rates in London's City as they focus on financial news. City AM, founded in 2005, litters London's business districts as it is handed out on the streets and in underground stations.
London-based conservative newspaper the Daily Telegraph and its free rival, City AM, launched campaigns against the EU's proposed regulation of alternative invetsment funds.
The Telegraph has coined its campaign 'Ditch the Directive'.
Both newspapers enjoy healthy penetration rates in London's City as they focus on financial news. City AM, founded in 2005, litters London's business districts as it is handed out on the streets and in underground stations.
With any reasonable budget
That's your problem right there.
Also, media ownership. Ordinary non-City folk don't own newspapers.
Conversely City folk do own political parties - both of the ones that really matter.
And the other ones are too incoherent to make it a policy issue.
The European Commission today approved a multi-billion euro package of aid provided by the Dutch government to ABN Amro in the process of breaking up the bank. The €6.9 billion provided by the Dutch government will be used to separate Dutch assets belonging to ABN Amro from the remainder of the bank. These assets will then be integrated into Fortis Bank Nederland, which is owned by the Dutch state.
The €6.9 billion provided by the Dutch government will be used to separate Dutch assets belonging to ABN Amro from the remainder of the bank.
These assets will then be integrated into Fortis Bank Nederland, which is owned by the Dutch state.
The European Commission today approved a loan guarantee offered by the Swedish government to the troubled Swedish carmaker Saab. The aid will guarantee a €400 million loan that Saab is to receive from the European Investment Bank (EIB). Neelie Kroes, the European commissioner for competition, said the Swedish government's guarantee would "contribute to the implementation of Saab's business plan without giving rise to any undue distortions of competition".
The aid will guarantee a €400 million loan that Saab is to receive from the European Investment Bank (EIB).
Neelie Kroes, the European commissioner for competition, said the Swedish government's guarantee would "contribute to the implementation of Saab's business plan without giving rise to any undue distortions of competition".
Greek civil servants threatened on Monday to stage more strikes in protest at government austerity measures, heightening fears debt-laden members of the euro zone may struggle to deliver on promises to tackle stretched budgets. The euro was mired near 8-month lows against the dollar and the bonds of economically weak members of the 16-nation currency bloc remained under pressure as investors continued to fret about their ability to service their debt. In Spain, the government of Prime Minister Jose Luis Rodriguez Zapatero said it was sticking with a plan to raise the retirement age despite the threat of union protests there which would mark the end of a period of relative social harmony.
The euro was mired near 8-month lows against the dollar and the bonds of economically weak members of the 16-nation currency bloc remained under pressure as investors continued to fret about their ability to service their debt.
In Spain, the government of Prime Minister Jose Luis Rodriguez Zapatero said it was sticking with a plan to raise the retirement age despite the threat of union protests there which would mark the end of a period of relative social harmony.
A couple of points: first, Greece, which is making most of the headlines, is a tiny economy. So are Portugal and Ireland. The only sizable player among the countries in the news right now is Spain. (If Italy really gets caught up in the crisis, that will change).... Overall, the group of stressed economies account for about 20 percent of the eurozone's GDP. So even a sharp fiscal retrenchment wouldn't be all that big a shock; still, it certainly wouldn't help.
Yen, Dollar Decline on Speculation Europe Will Assist Greece The yen and dollar fell on speculation European officials will agree to assist Greece in tackling its fiscal deficit, reducing demand for the two currencies as a refuge. The euro rallied from near a year low versus the yen after a European Central Bank spokeswoman said President Jean-Claude Trichet will leave a central bankers' meeting in Sydney a day early, sparking optimism policy makers will help Greece address its fiscal woes. The yen declined for a third day against the dollar on speculation that Japanese companies sold the currency.
The yen and dollar fell on speculation European officials will agree to assist Greece in tackling its fiscal deficit, reducing demand for the two currencies as a refuge.
The euro rallied from near a year low versus the yen after a European Central Bank spokeswoman said President Jean-Claude Trichet will leave a central bankers' meeting in Sydney a day early, sparking optimism policy makers will help Greece address its fiscal woes. The yen declined for a third day against the dollar on speculation that Japanese companies sold the currency.
The US is essentially Washington and Wall St. The states and their populations are entirely peripheral. They could all go bankrupt locally, but as long as Washington still has tanks and Wall St still has bullies, thieves and rating agencies, the US will continue to appear solvent.
The EU is essentially everyone. Without a single centre of power or centre of finance - and neither Brussels nor the ECB count - this creates the perception of decentralised vulnerability.
The reality is that both Washington and Wall St are rigid and stupid to the point of smug catonia. They only appear solvent because of fraud and bluster.
Currently the plan is to talk down the Euro precisely because the dollar is getting its arse kicked, and both the Fed's and Wall St's finances are so precarious.
There's a small but non-zero chance this attack - and it's not a talking point, it's a deliberate economic attack - is going to backfire badly.
I suspect Greece will roll over on this one.
But there will be future attacks. And all that's needed to implode the dollar is one significant failure.
On the other hand:
Euro Falling, US Recovery Under Threat « The Baseline Scenario
Competitive depreciation is of course a no-no in international policy circles. But if your dissolute neighbors - with whom you happen to share a credit union - threaten to implode their debt rollovers, and makets react negatively, how can you be held responsible? Germany and France have no objection to euro depreciation - they are confident that the European Central Bank can prevent this from turning into inflation.
Competitive depreciation is of course a no-no in international policy circles. But if your dissolute neighbors - with whom you happen to share a credit union - threaten to implode their debt rollovers, and makets react negatively, how can you be held responsible?
Germany and France have no objection to euro depreciation - they are confident that the European Central Bank can prevent this from turning into inflation.
As Germany steps up its plan to buy stolen Swiss bank data, a Liechtenstein court has awarded milions of euros in damages to a tax evader, who complained notification about the stolen data came too late. Liechtenstein trust company LGT Treuhand must pay a former client 7.3 million euros ($10 million) in damages because bankers failed to notify him about stolen data in time, the high court in the capital Vaduz said. The plaintiff is a property developer from Bad Homburg, Germany, who claimed that he could have declared himself to German authorities had he known, and avoided a more costly fine for tax fraud. Details in the case, which was brought against LGT in 2008, were just released to the parties last week. But the decision came down in early January. The property developer had asked for 13 million euros but the court awarded it 7.3 million.
Liechtenstein trust company LGT Treuhand must pay a former client 7.3 million euros ($10 million) in damages because bankers failed to notify him about stolen data in time, the high court in the capital Vaduz said.
The plaintiff is a property developer from Bad Homburg, Germany, who claimed that he could have declared himself to German authorities had he known, and avoided a more costly fine for tax fraud.
Details in the case, which was brought against LGT in 2008, were just released to the parties last week. But the decision came down in early January. The property developer had asked for 13 million euros but the court awarded it 7.3 million.
Companies with fewer than 500 employees, such as Phoenix Technologies Ltd. and Sonic Corp., helped lead the economy out of the four recessions since 1980. This time, they continue to cut capital spending and dismiss workers, eliminating 3,000 jobs in January, according to Roseland, New Jersey-based Automatic Data Processing Inc., the world's largest payroll processor. Improvement in the unemployment rate, which fell to 9.7 in January from 10 percent in December, may stall later this year if these firms aren't hiring, and growth likely won't meet the median 2.7 percent annual rate forecast for 2010 by 67 economists in a Jan. 14 Bloomberg News survey....The Russell 2000 Index of small-cap stocks has risen 4 percent in the past six months, lagging behind a 6 percent increase in the Standard & Poor's 500 Index. Coming out of previous recessions, shares of companies with market capitalization between $250 million and $1 billion generally led markets higher... The Russell Index gained 17 percent in the six months following the end of the 2001 recession, compared with 0.2 percent for the S&P 500. ...Because few economic reports capture small-business statistics, some economists say investors are being misled about the strength of recovery from the longest, deepest recession since the Great Depression. Recent numbers suggest "the official data are too heavily weighted towards bigger companies, which are doing better than credit-constrained smaller firms," said Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York. "The latter employ half the workforce." ...The nation's monthly payroll figures are inflated because the Labor Department model that estimates small-business hiring has overstated the number of jobs added during the recession, Shepherdson says. According to the model, small companies created an average of 113,000 jobs a month from February through December -- a period when total employment fell by a nonseasonally adjusted 3.7 million, Labor Department statistics show. The model "is creating jobs out of thin air that are not actually being generated," ...
Improvement in the unemployment rate, which fell to 9.7 in January from 10 percent in December, may stall later this year if these firms aren't hiring, and growth likely won't meet the median 2.7 percent annual rate forecast for 2010 by 67 economists in a Jan. 14 Bloomberg News survey....The Russell 2000 Index of small-cap stocks has risen 4 percent in the past six months, lagging behind a 6 percent increase in the Standard & Poor's 500 Index. Coming out of previous recessions, shares of companies with market capitalization between $250 million and $1 billion generally led markets higher... The Russell Index gained 17 percent in the six months following the end of the 2001 recession, compared with 0.2 percent for the S&P 500. ...Because few economic reports capture small-business statistics, some economists say investors are being misled about the strength of recovery from the longest, deepest recession since the Great Depression.
Recent numbers suggest "the official data are too heavily weighted towards bigger companies, which are doing better than credit-constrained smaller firms," said Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York. "The latter employ half the workforce." ...The nation's monthly payroll figures are inflated because the Labor Department model that estimates small-business hiring has overstated the number of jobs added during the recession, Shepherdson says.
According to the model, small companies created an average of 113,000 jobs a month from February through December -- a period when total employment fell by a nonseasonally adjusted 3.7 million, Labor Department statistics show.
The model "is creating jobs out of thin air that are not actually being generated," ...
Traders and hedge funds have bet nearly $8bn (€5.9bn) against the euro, amassing the biggest ever short position in the single currency on fears of a eurozone debt crisis. Figures from the Chicago Mercantile Exchange, which are often used as a proxy of hedge fund activity, showed investors had increased their positions against the euro to record levels in the week to February 2.The build-up in net short positions represents more than 40,000 contracts traded against the euro, equivalent to $7.6bn....The single currency fell to an eight-month low of $1.3583 on Friday but recovered a little on Monday to $1.3683. Analysts said sentiment towards the euro had soured because of the increasing concern over Greece's fiscal problems.
Figures from the Chicago Mercantile Exchange, which are often used as a proxy of hedge fund activity, showed investors had increased their positions against the euro to record levels in the week to February 2.
The build-up in net short positions represents more than 40,000 contracts traded against the euro, equivalent to $7.6bn....The single currency fell to an eight-month low of $1.3583 on Friday but recovered a little on Monday to $1.3683. Analysts said sentiment towards the euro had soured because of the increasing concern over Greece's fiscal problems.
As we look forward, we ask, who now determines the variation margin on Greek CDS (and Portugal, and Dubai, and Spain, and, pretty soon, Japan and the US), the associated recovery rate, and how much collateral should be posted by sellers of Greek protection? If Greek banks, as the rumors goes, indeed sold Greek protection, and, as the rumor also goes, Goldman was the bulk buyer, either in prop or flow capacity, it is precisely Goldman, just like in the AIG case, that can now dictate what the collateral margin that Greek counterparties, and by extension the very nation of Greece, have to post on billions of dollars of Greek insurance. Let's say Goldman thinks Greece's debt recovery is 75 cents and the CDS should be trading at 700 bps, instead of the "prevailing" consensus of a 90 recovery and 450 spread, then it will very likely get its way when demanding extra capital to cover potential shortfalls, since Goldman itself has been instrumental in covering up Greece's catastrophic financial state and continues to be a critical factor in any future refinancing efforts on behalf of Greece. Obviously this incremental margin, which only Goldman will ever see, even if the CDS was purchased on a flow basis, will never be downstreamed on behalf of its clients, and instead will be used to [buy futures|buy steepeners|prepay 2011 bonuses|buy more treasuries for the BONY $60 billion Treasury rainy day fund]. In essence, through its conflict of interest, its unshakable negotiating position, and its facility to determine collateral requirements and variation margin, Goldman can expand its previous position of strength from dictating merely AIG and Federal Reserve decision making, to one which determines sovereign policy! This is unmitigated lunacy and a recipe for financial collapse at the global level. In essence, through its conflict of interest, its unshakable negotiating position, and its facility to determine collateral requirements and variation margin, Goldman can expand its previous position of strength from dictating merely AIG and Federal Reserve decision making, to one which determines sovereign policy! This is unmitigated lunacy and a recipe for financial collapse at the global level. This is yet another AIG in the making, with Goldman this time likely threatening to accelerate the collapse not merely of the US financial system, but of the global one, in order to attain virtually infinite negotiating leverage. Of course, the world will not allow a Greece-initiated domino, allowing Goldman to call everyone's bluff once again.
In essence, through its conflict of interest, its unshakable negotiating position, and its facility to determine collateral requirements and variation margin, Goldman can expand its previous position of strength from dictating merely AIG and Federal Reserve decision making, to one which determines sovereign policy! This is unmitigated lunacy and a recipe for financial collapse at the global level.
This is yet another AIG in the making, with Goldman this time likely threatening to accelerate the collapse not merely of the US financial system, but of the global one, in order to attain virtually infinite negotiating leverage. Of course, the world will not allow a Greece-initiated domino, allowing Goldman to call everyone's bluff once again.
If there is an agency of the European Union that acts to protect Union members from financial fraud and predation, it could do Greece, the EU and the world a giant favor by declaring the whole CDS market corrupt and unenforcable. That would greatly lessen the pressure on Greece, Ireland, Spain and Portugal AND, as a feature, not a bug, possibly blow up Goldman-Sachs. But I dream. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Isn't it perhaps not completely wise to advertise a short position when it would be so easy to subvert it?
I suppose it would be criminal of the ECB to take a counter-stake and then announce a debt guarantee.
Incidentally, doesn't Goldman's position and media campaign meet the definition of economic warfare?
doesn't Goldman's position and media campaign meet the definition of economic warfare?
wouldn't the EU or even Germany stepping in to guarantee Greek debts blow up Goldmans,then?
However, if the Commission suspects that Goldman or any other player has cornered the market, or is attempting to do so, it is perfectly within its mandate to bring the competition and inner market hammer down, like it did on Intel and Microsoft. Given the - ah - less than perfectly transparent, shall we say, nature of these instruments, it is possible that simply making vigorous noise about punitive measures will suffice to stimulate a run on the target.
That might be a more productive venue.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
if the Commission suspects that Goldman or any other player has cornered the market, or is attempting to do so, it is perfectly within its mandate to bring the competition and inner market hammer down, like it did on Intel and Microsoft
Times Online [UK]: Citigroup agrees to pay £14m over bond scandal (June 29, 2005)
Last August Citigroup sent shockwaves through the eurobond market after executing a series of huge bond trades, which destabilised the market and for a moment sent prices plunging. By exploiting the price moves and the ensuing panic, Citigroup traders made profits of £9.96 million in the course of the day. The bank's reconfigured computer program, designed to stun the market with a blast of 188 simultaneous sell orders, was known by the traders as "Dr Evil".
The market was thrown into confusion on 2 August 2004 when Citigroup pushed through EUR11 billion in paper sales in two minutes over the automated MTS platform. As the value of futures contracts fell and traders moved to cover their positions, Citigroup re-entered the market and bought back about EUR4 billion of the paper at cheaper prices. The strategy was dubbed Dr Evil, after the Austin Powers character, in an internal e-mail circulated by the traders. Immediately afterwards MTS moved to impose temporary limits on the value and volume any one dealer can push through the system at a time. MTS also suspended Citigroup from trading on its bond network for one month after finding that the UK bank breached certain market regulations. The UK's Financial Services Authority later fined Citigroup £13.9 million following its investigation into the controversial trading.
Immediately afterwards MTS moved to impose temporary limits on the value and volume any one dealer can push through the system at a time. MTS also suspended Citigroup from trading on its bond network for one month after finding that the UK bank breached certain market regulations.
The UK's Financial Services Authority later fined Citigroup £13.9 million following its investigation into the controversial trading.
I'm sure these traders have a lot of fun at their job, but shouldn't it occur to them that what you're doing might be a shade on the grey side of acceptable behaviour when the most apt pet name for the scheme makes reference to a wave-motion gun or earth-shattering kaboom?
What is it with trading desks and code names?
