financial system

UK to borrow more than expected, debt to rise longer: Osborne

UK to borrow more than expected, debt to rise longer: Osborne

Reuters – Britain will borrow more in the coming years than official forecasts showed in December and will miss one of its two debt targets by another year, finance minister George Osborne said on Wednesday. Public sector net debt, excluding the transfer of Royal Mail pension assets, will amount to 7.4 percent of GDP in 2012-13, 6.8 percent in 2013-14 and 5.9 percent in 2014-15, according to the latest forecasts by the independent Office for Budget Responsibility cited by Osborne. In December, the OBR predicted that the deficit would stand at 6.9 percent of GDP in 2012-13, 6.1 percent of GDP in 2013-14 and 5.2 percent of GDP in 2014-15. Read Article

Australia: Single-parent move a ‘breach of human rights’

Sydney Morning Herald – A Labor-dominated parliamentary committee has found that the federal government’s move to force single parents off parenting payments, and onto the lower Newstart allowance, could be a breach of their human rights. It follows news that a group of furious MPs rounded on the changes in caucus on Tuesday, asking Prime Minister Julia Gillard to reconsider the cuts to payments of about 84,000 single parents, who were moved to the lower Newstart unemployment payment in January as a budget cost-saving measure. Read Article

Freddie Mac Sues Multiple Banks Over Libor Manipulation

Bloomberg – Freddie Mac (FMCC) sued Bank of America Corp., UBS AG (UBSN), JPMorgan Chase & Co. (JPM) and a dozen other banks over alleged manipulation of the London interbank offered rate, saying the mortgage financier suffered substantial losses as a result of the companies’ conduct. Government-owned Freddie Mac accuses the banks of acting collectively to hold down the U.S. dollar Libor to “hide their institutions’ financial problems and boost their profits,” according to a complaint filed in federal court in Alexandria, Virginia. Read Article

Chinese solar giant Suntech declares bankruptcy

DW – Once the world’s largest producer of solar panels, China’s Suntech has now filed for bankruptcy. Analysts said oversupply and dumping prices meant the company’s undoing, coupled with economic woes in Europe and the US. The New York-listed company on Wednesday officially declared itself bankrupt, the Xinhua news agency said. Suntech declined to immediately comment on the Xinhua report. The company last week defaulted on repayments for a $541 million (420 million euro) bond issue. Xinhua said the firm was seeking “bankruptcy reorganization” in a bid to save what could be saved through a restructuring plan. Read Article

European Companies Target Growing Population Of Affluent Consumers In Asia While Sourcing Labor From Asia’s Poor Workers

IBTimes – The Asian middle class is growing rapidly, and global businesses are busy pushing higher-end products to those segments of the population that are growing more affluent.The European luxury goods sector is forecast to grow between 6 percent and 7 percent over the next five years, and that growth largely depends on emerging markets, according to a recent report from research firm Sanford C. Bernstein. The firm’s findings indicate that, for Chinese consumers in particular, many shop while traveling to Europe to avoid huge markups on luxury items at home, and acquire more than 60 percent of their luxury goods abroad. Read Article

HSBC faces new money laundering claims in Argentina

BBC – Banking giant HSBC, which was hit with a US fine for money laundering last year, is facing fresh accusations of illegal activity in Argentina. Argentina has alleged that the bank used “fake receipts” to facilitate money laundering and tax evasion, and launder 392m pesos ($77m; £50m). The country’s tax authority said it had filed criminal charges against HSBC. HSBC said that it would cooperate with the investigation, adding that the allegations were “of great concern”. Read Article

Cypriot parliament rejects bailout ‘blackmail’

ABC – Politicians in Cyprus have overwhelmingly rejected a $13 billion eurozone bailout deal aimed at saving the Mediterranean island from bankruptcy, voting 36 against, 19 abstaining, and none in favour. Analysts fear the collapse of the deal could have consequences across the eurozone, throwing into doubt the country’s ability to resist banking collapse. Angry crowds gathered outside the emergency session of parliament as the MPs debated whether to accept the eurozone proposal. Banks in the country remain closed to prevent a run on savings in the face of strong public opposition to the proposed tax of up to 10 per cent on savings. Read Article

Energy bills push UK inflation to nine-month high

Guardian – The annual rate of inflation rose for the first time in five months in February as dearer energy bills added to the cost of living. The Office for National Statistics said inflation as measured by the consumer prices index stood at 2.8% last month, up from 2.7% and the highest for nine months. Officials blamed the increase on the latest hikes in domestic energy tariffs from the UK’s major suppliers and a rise in petrol prices. Housing costs rose by 0.5% between January and February due to the increase in domestic gas and electricity bills, while a 4p a litre increase in the cost of petrol added 1.2% to transport prices. Read Article

Gold Futures May Slide in New York as Fed Policy Makers Meet

Bloomberg – Gold may fall for the first time in four days as investor weigh whether the Federal Reserve will signal plans to end stimulus measures amid improving U.S. economic conditions. The Fed begins a two-day policy meeting today. Minutes released Feb. 20 of the previous meeting showed some policy makers said the central bank should be ready to vary the pace of its monthly $85 billion in bond purchases, while Chairman Ben S. Bernanke defended the program during congressional testimony last month. Through yesterday, gold slumped 4.2 percent this year as U.S. growth rebounded. Read Article

CANADA FX DEBT-C$ weaker as Cyprus deal pressures risk assets

Reuters – The Canadian dollar weakened against the U.S. dollar on Monday after a bailout plan for Cyprus, which will tax bank deposits in exchange for a 10 billion euro ($13 billion) bailout, sparked a sell-off in riskier assets. The weekend announcement broke with previous EU practice that depositors’ savings were sacrosanct and led to worried Cypriots emptying cash machines on the island. “It’s rather surprising news … It did prompt a bit of a risk-off reaction in the markets initially. That’s
understandable given the uncertainty we have still surrounding the situation there,” said Shaun Osborne, chief currency strategist at TD Securities. Read Article

Eurozone imports surpass exports, but not in Germany

DW – The 17-member eurozone has posted a trade deficit for the first four weeks of the year, with imports rising stronger than exports. But Germany is confident it can hit another record this year with shipments abroad. The euro area logged a trade deficit of 3.9 billion euros ($5.06 billion) in the first month of 2013, the European statistics office Eurostat announced Monday. In December, the single currency bloc still had a surplus of 10.8 billion euros. Exports rose by 2 percent in January, while imports increased by 3.1 percent in the same month. Read Article

Cyprus parliament delays vote on controversial bailout package

DW – An important vote in Cyprus’ parliament on a controversial levy on bank deposits has been postponed. Creditors have demanded the legislation in order to grant the country a 10 billion euro ($13 billion) bailout package. Cyprus parliament speaker Yiannakis Omirou told reporters Monday that the vote for a controversial EU bailout, which includes the levy on bank deposits, would be delayed until Tuesday evening. President Nicos Anastasiades had met with lawmakers Monday ahead of the vote, as police blocked off the road in front of the parliament amid heightened security to prevent protesters from disrupting proceedings. Read Article

Russian money in Cyprus hit by savings seizure

Associated Press – Cyprus has for decades been a favorite place for Russian businessmen to place their savings and for corrupt Russian officials to stash ill-gotten gains. Like all deposits in Cyprus, that money is expected to be taxed as part of a bailout deal that Cyprus is receiving from its fellow members in the eurozone. Russian President Vladimir Putin on Monday criticized the decision as “unjust, unprofessional and dangerous,” according to his spokesman. Here’s a glance at why Russians keep so much money in Cypriot banks and how Russia can be affected by the island nation’s crisis. Read Article

Xiao Quits Bank of China to Take Helm at Securities Watchdog

Bloomberg – Xiao Gang, who stepped down yesterday as chairman of Bank of China Ltd., will take on the challenge of restoring confidence in Asia’s third-largest stock market as head of the nation’s securities regulator. His appointment was announced to China Securities Regulatory Commission staff at a meeting yesterday, according to a person with direct knowledge of the matter who asked not to be identified because he isn’t authorized to speak to the media. The 54-year-old, who resigned from Beijing-based Bank of China because of “the needs of national financial work,” will succeed Guo Shuqing at the watchdog. Read Article

John Boehner Agrees With Obama: ‘We Don’t Have An Immediate Debt Crisis’

Business Insider – House Speaker John Boehner agreed with President Barack Obama on Sunday that the U.S. does not have an “immediate” debt crisis — but that’s where the agreement ends between the two leaders on how to reduce the deficit. “We do not have an immediate debt crisis,” Boehner said on ABC’s “This Week.” “But we all know that we have one looming. And we have one looming because we have entitlement programs that are not sustainable in their current form. They’re going to go bankrupt.” READ ARTICLE

Greek unemployment reaches record 26 percent

Associated Press – Unemployment in debt-crippled Greece rose to a record of 26 percent in the last quarter of 2012, as austerity measures combined with a deep recession took a harsh toll on the workforce. The figures were worse than the previous quarter’s 24.8 percent, and 20.7 percent a year earlier. The national statistical authority said Thursday that 1.29 million people were out of a job in October-December 2012. In the under 25 age group, unemployment was 57.8 percent. The rate for women was 29.7 percent, compared with 23.3 percent for men. Read Article

JPMorgan Downgrades Emerging Dollar Bonds

MoneyNews – JPMorgan Chase & Co. cut its recommendation on emerging market dollar-denominated government bonds to neutral, as investors withdraw funds and falling yields limit returns. JPMorgan downgraded the debt from overweight, analysts led by Joyce Chang wrote in a report dated yesterday. The New York-based bank kept a buy recommendation on local-currency bonds in developing nations and advised clients to maintain bets on gains in emerging-market currencies, including the South Korean won, the Indian rupee and South African rand. Read Article

Senate investigation finds JP Morgan hid mistakes as trade losses grew

Guardian – JP Morgan’s $6.2bn London Whale trading debacle was born out of secretive trades and creative bookkeeping as the bank attempted to limit losses using a practice that one regulator called “make believe voodoo magic”, a Senate investigation has concluded. The report by the Senate subcommittee on investigations, published on Thursday, detailed a series of failures in which accounts were hidden and trades were valued incorrectly to minimize losses. It also alleged that regulators were kept in the dark, a head trader’s concerns went unheeded and a $51bn trading portfolio ballooned to $157bn in three months. Read Article

World poverty is shrinking rapidly, new index reveals

Telegraph – Some of the poorest people in the world are becoming significantly less poor, according to a groundbreaking academic study which has taken a new approach to measuring deprivation. The report, by Oxford University’s poverty and human development initiative, predicts that countries among the most impoverished in the world could see acute poverty eradicated within 20 years if they continue at present rates. It identifies “star performer” nations such as Rwanda, Nepal and Bangladesh as places where deprivation could disappear within the lifetime of present generations. Close on their heels with reductions in poverty levels were Ghana, Tanzania, Cambodia and Bolivia. Read Article

Cyprus savings levy: UK government to compensate troops and civil servants

Guardian – The government is to protect the savings of British military personnel and civil servants in Cyprus who were facing the prospect of a levy as part of the €10bn (£8.7bn) eurozone bailout on the Mediterranean island, George Osborne has announced. The chancellor also told The Andrew Marr Show on BBC1 that Cypriot banks based in the UK would be unaffected by the 9.9% levy on savings over €100,000. There will also be a 6.75% levy on savings below €100,000. The chancellor said: “What I would say about the Cyprus situation is first of all we are not part of the bailout because David Cameron got us out of these euro bailouts when he became prime minister. “Second, the Cypriot banks in Britain are not going to be included in this bank tax. It is a very difficult situation for people who live in Cyprus. Read Article

Taxpayer faces £8bn bill for Bank of England’s quantitative easing bonds sale

This Is Money – Unwinding the £375billion quantitative easing monetary stimulus programme could take an £8billion chunk out of the public finances over two years, the Bank of England has said. It emerged last year that taxpayers are to benefit from a £35billion windfall in the next few years from scooping out money accrued by the Bank as interest on QE bonds and pouring it into the Exchequer’s sparse coffers. But the Bank said yesterday that when the bonds are sold back into private hands, a worst-case scenario could see the Treasury forced to channel an eye-watering £75billion back to the Bank between 2017 and 2019. Read Article

Cypriots rush to banks in wake of bailout levy

DW – Cypriots have rushed to local banks to drain their accounts following a bailout agreement that includes a tax on bank deposits. Cooperative banks have shut their doors in response to the rush. Cypriots headed to local cooperative banks and ATM machines Saturday in an effort to protect their savings from a new tax. The deal, agreed to as part of an international bailout, was brokered early Saturday morning. Eurozone lenders have agreed to give Cyprus a rescue package worth at least 10 billion euros ($13.08 billion) becoming the fourth country to receive a sovereign bailout. Read Article

Dow Average Snaps Rally as Consumer Confidence Declines

Bloomberg – U.S. stocks fell, sending the Dow Jones Industrial Average lower for the first time in 11 days, as a report showed consumer confidence unexpectedly fell in March. JPMorgan Chase & Co. lost 1.9 percent after a Senate panel said it hid losses and dodged regulators. Financial stocks reversed earlier losses in the wake of Federal Reserve stress tests, as Bank of America Corp. and Morgan Stanley added at least 3.5 percent. Carnival Corp. fell 2.2 percent after trimming its earnings forecast. DirectTV rose 4.5 percent after pulling out of a bidding war for Vivendi SA’s GVT division. Read Article

Cyprus eurozone bailout prompts anger as savers hand over possible 10% levy

Guardian – European finance ministers have agreed an £8.7bn bailout for Cyprus which includes all Cypriot bank customers handing over up to 10% of their savings. Cyprus becomes the fifth country after Greece, Ireland, Portugal and Spain to turn to the eurozone for financial help amid the region’s debt crisis, but also faces a possible run on its banks as depositors try to avoid losing up to 10% of their savings. The savers, half of whom are thought to be Russian, will raise almost €6bn. It is the first time a bailout has included such a measure. Read Article

Greece reforms show progress, but at the cost of jobs

DW – International lenders visiting Greece have said the Southern European nation has made progress in reforms it needs to implement to secure more loans. But some issues were reported to be outstanding. On Thursday, representatives of the International Monetary Fund, the European Commission and the European Central Bank said that Greece was doing well with the reforms it needed to implement in order to receive the next tranche of emergency loans. Read Article