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Spanish bank bailout - yet another Eurozone 'Leg-Up'
But Spanish construction firms, speculators and home buyers had taken on huge levels of debt in the expectation that the property boom would go on forever. House prices rose 44 per cent from 2004 to 2008 but the bubble then burst, property values crashed 2 per cent, and the economy plunged into a devastating recession. The borrowing binge left Spain’s reckless lenders nursing heavy losses and it is now estimated that the banking system is saddled with around £150billion of toxic property loans.
Spain is now the fourth member of the crisis- torn eurozone to require an international bailout to save it from financial collapse. Madrid has asked for up to €100billion (about £80billion) from its single currency partners to prop up its basket case banks – following in the footsteps of Greece, Ireland and Portugal. But hopes that the rescue deal would draw a line under the crisis quickly evaporated – leaving the entire region staring into the abyss of financial. Here we look at the problems in Spain’s £885billion economy – the fourth biggest in the single currency bloc – amid worries that the bailout is nothing more than a sticking plaster. Spain is more like Ireland than Greece in that the country’s financial problems stem from its battered banks rather than excessive state spending. Government borrowing was under control until the eve of the financial crisis in 2008.
With the country deep in recession and one in four Spaniards out of work, the government is unable to afford to rescue its banks – forcing it to go cap in hand to Europe for a bailout. Spain has asked for up to £80billion to shore up the banks and keep the economy afloat. Is £80bn enough? That is a matter of opinion. The IMF last week said Spain needed around £30bn. Ratings agency Fitch put the figure at closer to the £80billion requested. But others think this is just the tip of the iceberg and the scale of the crisis in Spain’s banking system will escalate as unemployed homeowners default on their mortgages and more business loans turn sour. JP Morgan reckons the country may eventually need a £280 BN bailout while RBS puts it at £360BN. Only time will tell whether £80billion is enough – but throughout the crisis so far the eurozone has tended to underestimate rather than overestimate the scale of the problem.
UK:
Britain's economy slipping backwards
With the Eurozone in crisis, the downturn will reverberate onto the UK, with a potential decline going on for years. Officially, the UK economy has slipped back into recession, according to figures released last week. Although an early estimate and more than likely to change, all future forecasts point to a further downturn. Rather than showing an increase in activity of the expected 0.1% in the first quarter, they showed a decline of 0.2%. The report predicts a sharp increase in insolvencies in north-east of England and Wales, and a rise in write-offs on corporate loans. Ed Balls interview with the Observer had him saying that without a change of direction from the chancellor, George Osborne, the economy could dip in and out of recession for a "very long time", as Japan's did from the early 1990s. "There are big choices to be made about how we get out of this very deep hole," he says. "We have to find a way to talk this through and try to get to a better place." Stating he invites the chancellor, to a televised debate about the issue. There is a wide spread thought, that growth is stalling over the sharp spending cuts and that they are too far, too fast. But the government has always been quick to say that when they took over office, there was no more money left in the kitty. However, the newly released figures come at a time which suggests the public are feeling increasingly anxious. Two out of five people believe the economy will worsen over the next year and their incomes will fall, according to TNS-BMRB, while
more than a third of employed people (37%) say their job feels less secure in April 2012, compared with 36% in August 2011. With Britains main export markets dependent on a strong Europe, this stagnation could go on for many years as they also struggle with a one currency one policy deal. While the PM reiterates that the UK's reliance on the City of London to get the country out of the mire has got to be redirected and with the eurozone also sliding back into recession, it only follows, that the UK will be piggy backed across the finishing line in the very same way.
The City of London; trying unsuccessfully to hold everything together, but the figures are in and the latest UK GDP data shows the British economy at grave risk of plunging into a Japanese style stagnation, unless the coalition slows down its austerity measures and drives home a massive plan for jobs and growth. David Cameron on the Andrew Marr Show was at great pains to illustrate the predicament the government was in by laying the blame on the European doorstep. He blamed the stalemate in Europe over the central bank for holding the UK economy back.
Budget news is out - but who benefits?
The British Chancellor, George Osborne has delivered his budget
with the usual amount of positive
and deliberate deliverance, that tells its own story. Of course he, along with the coalition, had to make "difficult choices" - they always do - but one thing is for certain, Osborne tells us that this budget embraces hard work and is fair to all.
When the announcement came Wednesday 21st of March, even though like previous years, portions of the trouser tightening budget were strategically leaked to the press. The purpose being perhaps, that the hard core truth hidden inside that not so benevolent red leather briefcase in its entirety, would prove to be less of a shock to the British system and therefore, allowing time for slow subtle wafts of the vital facts to sink in, rather than like a tumble weed, engulfing us in all its flatulant glory.
The scrapping of the 50p top rate of tax for people earning over £150,000 would be replaced by a rate of 45p from next year. Plus a push in the right direction for over 2 million low-paid workers with the announcement that they will see the largest ever increase in the personal allowance to £9,025 from next year. This means that by 2014 the personal allowance will rise to £10,000 of which will be non taxable income.
Osborne hammered home that millions of working people will be £220 a year better off when the personal allowances rise to £9,025 come into affect. He stated, "Every working person on low or middle income will benefit, because higher rate earners will also benefit, 24 million people earning less than
£100,000 a year will gain from this measure. We are in touching distance of the goal of £10,000 personal allowance that we all share."
Tough measures will also be taken to tackle tax avoidance and a £2.4bn saving as Britain winds down its operations in Afghanistan. The chancellor described tax evasion and aggressive tax avoidance as "morally repugnant" as he announced anti-tax avoidance measures to raise £500m – five times the amount he claimed the 50p top rate of tax had been raising.
Stamp duty on properties worth £2m and above will be increased from 5% to 7%.
The chancellor announced that wealthy property owners who pay a lower stamp duty of 0.5%, by "enveloping" properties in companies, will face an immediate stamp duty of 15% on residential properties worth £2m or above.
HOUSE STAR HUGH LAURIE:
BECAUSE I'M WORTH IT?
London shares followed other world markets down as new action from the US Federal Reserve was not enough to counter their downbeat message that the economy faces ‘significant downside risks’.
As the Fed delivered a more gloomy message
than it had just a month ago, the Dow Jones industrial average dropped 284 points, or 2.49%, to
11,125, while the Standard & Poor's 500 Index
lost 35 points, or 2.94%, to 1,167.
The Fed did however deliver ‘Operation Twist’, broadly as expected. The central bank will buy $400 billion
of long-dated government bonds (treasuries).
It will do this using the proceeds of sales of $400
billion of treasuries with remaining maturities
of three months or less.
The move is intended not only to boost the economy
in the near-term but to keep long term interest rates low, boosting the housing sector.
But with interest rates already near rock-bottom, economists cast doubts about the impact
this move would have.
‘We do not believe that
it is sufficient, either in light of performance
of the US economy, domestic political paralysis,
or indeed in the context of severe challenges
facing the eurozone,’commented Chetan
Seth of Samsung Securities.
Well L'Oreal obviously think he is after landing a lucrative role as the face of L'Oreal.
Hugh Laurie who plays the strongly independent, no-nonsense Doctor Gregory House on the US
top TV series House is the new face
of the cosmetics company.
He follows in the footsteps of
fellow Hollywood stars Gerard Butler
and Patrick Dempsey, who are
already ambassadors for
L'Oreal Paris Men Expert products.
IMF warns that if the USA cannot reach agreement of further Quantive agreement and tax structure the change in it's rating may affect entire world markets.
Moody's has said it may cut its ratings of 19 UK banks to reflect the lower chance of a future government bail-out. The rating agency said the change was likely to hit smaller lenders, including building societies, first.
The big four banks - typically seen as the most systemically important because of their size - will be assessed only in the second half of the year.
The banks currently enjoy ratings up to five notches higher than they would otherwise be due to "systemic support".
"This reassessment could trigger negative outlooks, reviews for possible downgrade, or downgrades for some ratings, and will be taking into consideration Moody's expectations on how the relevant banks' standalone credit strength will develop," said the rating agency.
The euro surged while stocks traded in narrow ranges after a successful Spanish bond auction
with indications Germany is ready to back fresh anti-crisis measures aimed at Europe's government debt woes.
A seemingly more hawkish tone from European Central Bank
President Jean-Claude Trichet
on inflationary pressures also gave the single currency a lift — the euro was
trading 1.8 percent higher on the day
at $1.3362, shy of an earlier high of $1.3376, its best since Jan. 4.
News that Spain managed to raise €3 billion ($4 billion) via auction eased tensions.
It's the sign of the times. Two Mega Giants of the Internet World fighting it out for Global superiority and all in public view. Facebook, the young kid on the block, not satisfied with it's mega Billions, has been sneakily attacking Google so that it can capture the 'Top Dog' status.
The irony of the situation stems from the fact that Facebook with it's openness and honesty presentation, encouraging people to disclose everything about themselves and yet they underhandedly hired a public relations firm to plant negative stories about Google's privacy policies, and then tried to hide it's involvement in the whisper campaign. Stealthy and devious blows below the belt. However, this sort of 'counter-intuitive espionage' always backfires and is out there, for the global network in this case, to see for themselves, with the federal regulators that Facebook undoubtedly is desperately trying to keep away from it's own business, but instead is encouraging major investigations.
Facebook and Google have been sparring for months over what level of access to information about their respective consumers each would allow the other. Some 600 million people give Facebook personal details about themselves in exchange for the ability to communicate instantly with relatives, friends and colleagues. Google, meanwhile, is trying to build a competitive social-media service to add to its core of search advertising.
It's a sneaky business, but someone's got to do it.
- THE UNITED KINGDOM EDUCATIONAL SYSTEM -
IS THIS TOO IDEALISTIC?
Price of oil drops,
but drivers not getting
the benefits, claims
consumers.
1. I believe the top 2% of our school leavers should be given a 100% cost of living grant by the Government (i.e. from us the taxpayer) as an investment in our future. NOT MEANS TESTED.
2. The Universities should also give free education to 5% of their students (the best of those who didn't quite manage to get the elusive 100% government grant)
3. Businesses should also be able to give grants/bursuries to those employees they consider worth investing in and get some sort of tax deduction in return.
4. The remaining indiginous school leavers should forget investing in higher education unless they are totally determined (in which case they'll find a way eventually).
5. Foreign students should be encouraged provided they can pay our huge fees or are eligible for a grant in our plan to pinch the best brains in the world. It counts financially as an export and is a market worth billions.
5. The government should instead invest in providing the 'non elite academically' with the very best skills as technicians, plumbers, electricians, builders etc so that we can have the most able, skilled and 'proud to be British' labour force possible.
The future of our country is with our youth.
To put the 'Great' back in Britain we need to be proud and dynamic and to be proud and dynamic we need to have something to be proud of rather than a huge pool of unemployed graduates and another huge pool of unskilled young men and women who have little hope for the future.
AND THEN THERE WAS OIL
It’s not surprising that the price of oil has shown sensitivity to the upheaval in the Middle East.
Investors have stood firm even as protests and deadly crackdowns spread across the region — from Tunisia and Egypt to Libya, Yemen, Algeria, Iran and Bahrain. The significance of the Middle East's uprisings to the energy market is a major consideration in the global economy.
Bahrain, Libya, Yemen, Algeria and Iran together account for 10% of global crude oil production, as well as for 10% of global refining capacity, according to Deutsche Bank analyst Soozhana Choi.
Half the economies in the 17-nation eurozone are forecast to shrink this year, raising concerns that government austerity programs introduced to combat unsustainable debt levels are holding back growth.
In its latest projections, the European Commission, the European Union’s executive body, forecast a 0.3 percent contraction in the eurozone economy for 2012, with Greece’s economy leading the way downward with a massive 4.4 percent decline.
In its last forecast in November, the Commission had predicted a 0.5 percent expansion across the eurozone economy following last year’s 1.4 percent growth. The difference this time is that it now expects the economies of Belgium, Spain, Italy, Cyprus, the Netherlands and Slovenia to contract in 2012, not just Greece and Portugal.
The overall decline is limited by resilient activity the eurozone’s two-largest economies, Germany and France. Growth in Germany for the coming year is expected to hit 0.6 percent while France is forecast to grow by 0.4 percent.
The new forecasts will add to fears about Europe’s prosperity and that government cutbacks to reign in spending and deficit levels are having a negative impact. Unemployment levels have been increasing across the region — the jobless rate in Spain has hit 23 per cent, for example — while European banks have been finding it increasingly hard to raise new funds.
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