Ireland's beleaguered banking sector has suffered a further blow after the nationalised Anglo Irish Bank revealed it will need further government loans following losses of €8.2bn (£6.7bn) for the first six months of this year.The bank, which was saved from bankruptcy with billions of euros from the Irish taxpayer, said the final bill would be near €25bn after accepting an average 40% loss on its commercial and residential loans.
Ireland's beleaguered banking sector has suffered a further blow after the nationalised Anglo Irish Bank revealed it will need further government loans following losses of €8.2bn (£6.7bn) for the first six months of this year.
The bank, which was saved from bankruptcy with billions of euros from the Irish taxpayer, said the final bill would be near €25bn after accepting an average 40% loss on its commercial and residential loans.
Mortgage lending fell sharply in July as activity in the housing market remained subdued, according to Bank of England figures released today.Net lending totalled £86m for the month, down from June's £518m and the second-lowest monthly lending figure since the Bank's records began in 1993, although there have been two months when net lending was negative.The number of mortgages approved for house purchases edged ahead slightly during the month, rising to 48,722 from 48,562, well down on the levels of more than 100,000 a month seen during the housing boom. The figure was also down on the high of slightly more than 59,000 in November.
Mortgage lending fell sharply in July as activity in the housing market remained subdued, according to Bank of England figures released today.
Net lending totalled £86m for the month, down from June's £518m and the second-lowest monthly lending figure since the Bank's records began in 1993, although there have been two months when net lending was negative.
The number of mortgages approved for house purchases edged ahead slightly during the month, rising to 48,722 from 48,562, well down on the levels of more than 100,000 a month seen during the housing boom. The figure was also down on the high of slightly more than 59,000 in November.
Adrian Coles, director-general of the BSA, said: "There remain significant challenges such as heightened uncertainty about job prospects and household incomes, potentially limiting future demand
The dominant meme is that people and businesses are not spending because of 'uncertainty' which is of course the government's fault and if only they got out of the way all would be well.
The truth is that 90% of the population are in debt to the other 10% who own the country and virtually everything in it.
So it's not a matter of uncertainty - it's a matter of fucking insolvency. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
India's economy has grown 8.8 per cent in the June quarter, its strongest performance in more than two years, official data show. Figures from India's Central Statistical Organisation released on Tuesday, also revealed an increase of 2.8 per cent in farm output, a 12.4 per cent growth in manufacturing, a 7.5 per cent increase in construction and an 8.9 per cent rise for mining. Before the international financial crisis, India was averaging annual growth of nine per cent. Speaking to Al Jazeera, Meghnad Desai, an economist and member of the UK's upper house of parliament, said that "for the last five years India has been growing at a rate of five per cent on average, and now it is beginning to look like it may get to double digit very soon".
India's economy has grown 8.8 per cent in the June quarter, its strongest performance in more than two years, official data show.
Figures from India's Central Statistical Organisation released on Tuesday, also revealed an increase of 2.8 per cent in farm output, a 12.4 per cent growth in manufacturing, a 7.5 per cent increase in construction and an 8.9 per cent rise for mining.
Before the international financial crisis, India was averaging annual growth of nine per cent.
Speaking to Al Jazeera, Meghnad Desai, an economist and member of the UK's upper house of parliament, said that "for the last five years India has been growing at a rate of five per cent on average, and now it is beginning to look like it may get to double digit very soon".
Credit Suisse was accused yesterday of "sophisticated and aggressive tax avoidance" after the investment bank and wealth management group briefed staff that an unexpected one-off bonus would be awarded to hundreds of its London-based bankers tomorrow - less than five months after the government's 50% levy on bank bonuses expired.The bank had initially won praise in some quarters for curbing 2009 bonuses in response to the tax on bankers' rewards announced by the then chancellor, Alistair Darling, last December.In effect, it appeared that Credit Suisse bankers were to shoulder this temporary tax burden, whereas several other investment banks chose to pass on the tax charge to shareholders.
Credit Suisse was accused yesterday of "sophisticated and aggressive tax avoidance" after the investment bank and wealth management group briefed staff that an unexpected one-off bonus would be awarded to hundreds of its London-based bankers tomorrow - less than five months after the government's 50% levy on bank bonuses expired.
The bank had initially won praise in some quarters for curbing 2009 bonuses in response to the tax on bankers' rewards announced by the then chancellor, Alistair Darling, last December.
In effect, it appeared that Credit Suisse bankers were to shoulder this temporary tax burden, whereas several other investment banks chose to pass on the tax charge to shareholders.
What If We Ditched Quantitative Easing and Just Printed (And Distributed) Cash? Charles Hugh Smith, Of Two Minds
What if the Federal Reserve and U.S. Treasury stopped trying to stimulate the economy by encouraging more borrowing with "quantitative easing" and instead "dropped money from helicopters" into households' accounts? .... What seems clear is that expanding bank credit through quantitative easing policies of funneling trillions of dollars into banks isn't working. Putting the same money thrown into banks ($4 trillion) into households' accounts would certainly put the money where it could either be spent or used to pay down debt--both of which are direct "cures" to over-indebtedness and a no-growth economy. The sums of money squandered on bailing out banks are difficult to grasp. So I'll make it easy: if the Treasury printed up $1.3 trillion in cash, that would be enough to give $10,000 to all 130 million households in the U.S. Even $10,000 to each household would enable a lot of debt to be paid off. Those without any debt could save/invest/spend it. That would certainly do more for the economy than throwing another $1.3 trillion to "extend and pretend" the banks' insolvency. .... Would some people squander a one-time "last chance to set a new course" helicopter drop? Of course some people will. But that's not the point. The point is that the nation has received zero value from trillions in quantitative easing, and so if even 10% of the 130 million households do something useful with their $10,000 in cash then that would be one heck of a lot more than we've gotten from the trillions thrown down the rathole of a venal, corrupted, insolvent banking sector. Throwing money at banks hasn't done anything but reward financial Power Elites via privatizing their gains and transferring their losses to the taxpayers. Throwing money at households won't solve the nation's problems either, but it would give households a one-time chance to do something useful with a chunk of cash. If 90% of the households blew it, then it would still end up somewhere in the economy, which is more than can be said of the trillions thrown away on QE. (Emphasis is from the original.)
....
What seems clear is that expanding bank credit through quantitative easing policies of funneling trillions of dollars into banks isn't working. Putting the same money thrown into banks ($4 trillion) into households' accounts would certainly put the money where it could either be spent or used to pay down debt--both of which are direct "cures" to over-indebtedness and a no-growth economy.
The sums of money squandered on bailing out banks are difficult to grasp. So I'll make it easy: if the Treasury printed up $1.3 trillion in cash, that would be enough to give $10,000 to all 130 million households in the U.S. Even $10,000 to each household would enable a lot of debt to be paid off. Those without any debt could save/invest/spend it. That would certainly do more for the economy than throwing another $1.3 trillion to "extend and pretend" the banks' insolvency.
Would some people squander a one-time "last chance to set a new course" helicopter drop? Of course some people will. But that's not the point. The point is that the nation has received zero value from trillions in quantitative easing, and so if even 10% of the 130 million households do something useful with their $10,000 in cash then that would be one heck of a lot more than we've gotten from the trillions thrown down the rathole of a venal, corrupted, insolvent banking sector.
Throwing money at banks hasn't done anything but reward financial Power Elites via privatizing their gains and transferring their losses to the taxpayers. Throwing money at households won't solve the nation's problems either, but it would give households a one-time chance to do something useful with a chunk of cash. If 90% of the households blew it, then it would still end up somewhere in the economy, which is more than can be said of the trillions thrown away on QE. (Emphasis is from the original.)
This is along the lines of what the Modern Monetary Theory, MMT, proponents say, for example. If there is unused labor available in the society a sovereign government with its own currency, which trades freely against other currencies, can always spend directly to employ that labor up to the point that it starts to cause wage inflation without other serious consequences - and should do so. If the government spends on important national priorities, such as making the country self sufficient in renewable energy and renewable based national transportation, it would be a strong positive development.
The problem with this is that it dilutes the perceived wealth of the elite and violates all of their ideas about how things should work. But those very ideas are what have led us into a financial catastrophe, from which only some of that elite has benefited.
Good to see such ideas presented on Business Insider!
Kooks of the world, UNITE! You have nothing to loose but your dysfunctional elites! As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
JPMorgan Chase & Co. told traders who bet on commodities for the firm's account that their unit will be closed as the company, the second-biggest U.S. bank by assets, starts to shut down all proprietary trading, according to a person briefed on the matter. The bank eventually will close all in-house trading to comply with new U.S. curbs on investment banks, said the person, who asked not to be identified because New York-based JPMorgan's decision hasn't been made public. .... Congress passed restrictions on financial firms this year designed to prevent a recurrence of the 2008 credit crisis, which almost caused the banking system to collapse. Proprietary trading involves transactions made on behalf of the bank rather than its customers. The curbs are known as the Volcker rule, named after former Federal Reserve Chairman Paul Volcker, who campaigned for limits on risk-taking by lenders. .... Coal derivatives trader Chan Bhima, who made a bad bet on coal prices that the New York Post said cost JPMorgan as much as $250 million in the second quarter, isn't affected by the cuts, the person said. The proprietary trading desk reports to commodities head Blythe Masters, who discussed Bhima's trade and other matters in a July conference call with her team. .... U.S. banks are exploring ways to comply with the new trading rules. Citigroup Inc. was looking at three options to meet the new rule, including moving a team of proprietary traders into its hedge-fund unit, people briefed on the matter said in July. The bank would set up the traders as hedge-fund managers and seed their funds, then raise money from outside investors to redeem its stakes, the people said.
The bank eventually will close all in-house trading to comply with new U.S. curbs on investment banks, said the person, who asked not to be identified because New York-based JPMorgan's decision hasn't been made public.
Congress passed restrictions on financial firms this year designed to prevent a recurrence of the 2008 credit crisis, which almost caused the banking system to collapse. Proprietary trading involves transactions made on behalf of the bank rather than its customers. The curbs are known as the Volcker rule, named after former Federal Reserve Chairman Paul Volcker, who campaigned for limits on risk-taking by lenders.
Coal derivatives trader Chan Bhima, who made a bad bet on coal prices that the New York Post said cost JPMorgan as much as $250 million in the second quarter, isn't affected by the cuts, the person said. The proprietary trading desk reports to commodities head Blythe Masters, who discussed Bhima's trade and other matters in a July conference call with her team.
U.S. banks are exploring ways to comply with the new trading rules. Citigroup Inc. was looking at three options to meet the new rule, including moving a team of proprietary traders into its hedge-fund unit, people briefed on the matter said in July. The bank would set up the traders as hedge-fund managers and seed their funds, then raise money from outside investors to redeem its stakes, the people said.
JPMorgan was embarrassed by its prop desk in Q2. That this action was necessitated by the recent financial reform bill will become clear when Goldman shuts down its prop desk. JesseJesse has some interesting questions on this move and has an earlier comment on Blythe Masters' blithe advice to her group back then: "Don't panic." Is it now time to panic? She assured her troops that: "We're not going to do crazy things on compensation at the end of the year." Now they can worry about even being employed at the end of the year. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
New Banks Needed #1 August 25, 2020
Banks are capital constrained. Balance sheets are loaded up with problem debt. Future losses are embedded in booked exposures. The banking sector is not sufficiently healthy to support economic expansion or to reverse deflationary pressures. So the question is how do we evolve? The government has propped up the banking sector, believing systemic impacts of bank failures would trigger a tidal wave of further liquidity contraction and trigger depression. The propping up has not worked. Yes, it has prevented a massive financial system collapse, but it has not supported economic growth. We need creative destruction in the banking sector. Let these existing banks reap the rewards of their policies. Create new banks with new fresh capital, unencumbered by toxic assets, headed by wise risk managers, but ready to lend.
So the question is how do we evolve? The government has propped up the banking sector, believing systemic impacts of bank failures would trigger a tidal wave of further liquidity contraction and trigger depression. The propping up has not worked. Yes, it has prevented a massive financial system collapse, but it has not supported economic growth. We need creative destruction in the banking sector. Let these existing banks reap the rewards of their policies. Create new banks with new fresh capital, unencumbered by toxic assets, headed by wise risk managers, but ready to lend.
New Banks Needed #2 August 31, 2010
The gist of what I am saying is this and is really not controversial. * Banks have embedded losses on their balance sheets * These imbedded losses impact profitability and capital * Because risks in the economy are large, banks are exceedingly careful about lending. * On an individual bank level, this is appropriate. * In aggregate, this reduces growth or recovery potential * This is in line with the "Zombie Bank" discussions that were all over the place during the depth of the financial crisis, which predicted just what we have going on today. * The Fed policy of low rates and other regulators complicity in "extend and pretend" does not solve this dilemma. It simply prevents the clearing of the market for financial assets and the development of new robust financial institutions that are capable of taking on risk. * New banks with new capital are needed. They would not be encumbered by imbedded bad assets or dependent on a super low rate environment. New banks would also provide the opportunity to shed the predatory financial model that imperils our future. The ability of bankers to be in denial about the state of affairs and to argue for the status quo is not a reason to believe them. That's it.
* Banks have embedded losses on their balance sheets * These imbedded losses impact profitability and capital * Because risks in the economy are large, banks are exceedingly careful about lending. * On an individual bank level, this is appropriate. * In aggregate, this reduces growth or recovery potential * This is in line with the "Zombie Bank" discussions that were all over the place during the depth of the financial crisis, which predicted just what we have going on today. * The Fed policy of low rates and other regulators complicity in "extend and pretend" does not solve this dilemma. It simply prevents the clearing of the market for financial assets and the development of new robust financial institutions that are capable of taking on risk. * New banks with new capital are needed. They would not be encumbered by imbedded bad assets or dependent on a super low rate environment.
New banks would also provide the opportunity to shed the predatory financial model that imperils our future. The ability of bankers to be in denial about the state of affairs and to argue for the status quo is not a reason to believe them. That's it.
We are now starting to get reports of credit worthy borrowers having difficulty financing homes and Wall Mart having set up a business brokering Small Business Agency loans to creditworthy business borrowers, so there is likely a market, but our government likely will put the desires of the TBTFs ahead of any move to actually help main street. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
On such chances the wheel of history turns. But this time was different: the crisis brought Barack Obama to power close to the beginning of the economic collapse. I (among others) then argued that policy needed to be hugely aggressive. Alas, it was not. I noted on February 4 2009, at the beginning of the new presidency: "Instead of an overwhelming fiscal stimulus, what is emerging is too small, too wasteful and too ill-focused." A week later, I asked: "Has Barack Obama's presidency already failed? In normal times, this would be a ludicrous question. But these are not normal times. They are times of great danger. Today, the new US administration can disown responsibility for its inheritance; tomorrow, it will own it. Today, it can offer solutions; tomorrow it will have become the problem. Today, it is in control of events; tomorrow, events will take control of it. Doing too little is now far riskier than doing too much." This was right.The direction of policy was not wrong: policymakers - though not all economists - had learnt a great deal from the 1930s. Sensible people knew that aggressive monetary and fiscal expansion was needed, together with reconstruction of the financial sector.But, as Larry Summers, Mr Obama's chief economic adviser, had said: "When markets overshoot, policymakers must overshoot too". Unfortunately, the administration failed to follow his excellent advice. This has allowed opponents to claim that policy has been ineffective when it has merely been inadequate.
The direction of policy was not wrong: policymakers - though not all economists - had learnt a great deal from the 1930s. Sensible people knew that aggressive monetary and fiscal expansion was needed, together with reconstruction of the financial sector.
But, as Larry Summers, Mr Obama's chief economic adviser, had said: "When markets overshoot, policymakers must overshoot too". Unfortunately, the administration failed to follow his excellent advice. This has allowed opponents to claim that policy has been ineffective when it has merely been inadequate.
UK manufacturing suffered a sharp slowdown last month amid uncertainty about the nature and extent of public spending cuts, adding to fears that the economy is weakening.The manufacturing sector purchasing managers index slipped from 56.9 to 54.3, where a figure above 50 means that companies are reporting rising activity. The fall in the index continues a trend of slowing growth in the sector since reaching a peak in May. Growth in activity is at its lowest in nine months and manufacturing output is now expanding at its slowest rate in 11 months.A rapid deceleration in new orders lay behind much of the slowing activity, which suggests that there may be further weakness ahead. Employment growth also slowed in the month to its weakest since March."The looming public sector spending cuts are keeping UK manufacturers on tenterhooks and slowing the pace of the recovery," said David Noble, chief executive of the Chartered Institute of Purchasing and Supply, which produces the data with polling company Markit.
The manufacturing sector purchasing managers index slipped from 56.9 to 54.3, where a figure above 50 means that companies are reporting rising activity. The fall in the index continues a trend of slowing growth in the sector since reaching a peak in May. Growth in activity is at its lowest in nine months and manufacturing output is now expanding at its slowest rate in 11 months.
A rapid deceleration in new orders lay behind much of the slowing activity, which suggests that there may be further weakness ahead. Employment growth also slowed in the month to its weakest since March.
"The looming public sector spending cuts are keeping UK manufacturers on tenterhooks and slowing the pace of the recovery," said David Noble, chief executive of the Chartered Institute of Purchasing and Supply, which produces the data with polling company Markit.
Sagging stock prices in the second quarter of 2010 attracted the interest of the Bill and Melinda Gates Foundation and the foundation added the Goldman Sachs Group and Monsanto to its portfolio, according to the Dow Jones Newswires. The foundation recently bought about 500,000 shares of the giant biotech company, according to another financial website.
