George Soros, the billionaire investor, believes the banking sector is a “parasite” holding back the economic recovery and an “incestuous” relationship with regulators means little has been done to resolve the issues behind the 2008 crisis. “The banking sector is acting as a parasite on the real economy,” Mr Soros said in his new book “The Tragedy of the European Union”.
“The profitability of the finance industry has been excessive. For a while 35pc of all corporate profits in the United Kingdom and the United States came from the financial sector. That’s absurd.” Mr Soros outlined how the problems that caused the Eurozone economic crisis remain largely unresolved.
The city has changed. The buses are still dirty, the people are still passive-aggressive, but something about London has changed. You can see signs of it everywhere. The townhouses in the capital’s poshest districts are empty; they have been sold to Russian oligarchs and Qatari princes.
England’s establishment is not what it was; the old imperial elite has become crude and mercenary. On Monday, a British civil servant was photographed arriving in Downing Street for a national security council meeting with an open document in his hand. We could read for ourselves lines from a confidential report on how Prime Minister David Cameron’s government should respond to the Crimea crisis. It recommended that Britain should “not support, for now, trade sanctions,” nor should it “close London’s financial center to Russians.”
The White House has imposed visa restrictions on some Russian officials, and President Obama has issued an executive order enabling further sanctions. But Britain has already undermined any unified action by putting profit first. It boils down to this: Britain is ready to betray the United States to protect the City of London’s hold on dirty Russian money. And forget about Ukraine.
Britain, open for business, no longer has a “mission.” Any moralizing remnant of the British Empire is gone; it has turned back to the pirate England of Sir Walter Raleigh. Britain’s ruling class has decayed to the point where its first priority is protecting its cut of Russian money — even as Russian armored personnel carriers rumble around the streets of Sevastopol. But the establishment understands that, in the 21st century, what matters are banks, not tanks. The Russians also understand this. They know that London is a center of Russian corruption, that their loot plunges into Britain’s empire of tax havens — from Gibraltar to Jersey, from the Cayman Islands to the British Virgin Islands — on which the sun never sets.
Fearing its latest round of bonuses would create negative headlines and trigger a backlash, Barclays decided to act. But rather than rein in fat-cat remuneration, it came up with a novel way to head off public anger – turn off televisions in branches so customers couldn’t watch the news. Earlier his week Barclays announced that 500 super-rich bankers pocketed at least £1million each last year. Concerned about ‘negative coverage’ it urged staff in its high-street branches to turn over from news channels and, in a last resort, to unplug the screens.
Last night bank bosses denied they had made a direct instruction to change the channels but spoke of their regret over the memo in which the ploy was outlined. The memo read: ‘It’s likely there will be some media interest. We’d like to give you the heads up so you can change the channel in your branch to support colleagues in the event there is negative coverage.’ It recommended a couple of channels, adding ‘as a last resort find the power source and turn off the TV’. Yesterday customers at Barclays said they were ‘stunned and outraged’ by the directive and accused the bank of trying to mask a fat cat culture.
Privately schooled, Oxford educated and a former editor of arguably the world’s poshest magazine The Lady, it’s perhaps unsurprising that Rachel Johnson rarely mixes with ordinary proles. That all changed, however, when as part of a new documentary from the BBC, Ms Johnson, who is the sister of London Mayor Boris Johnson, joined a family in Deptford, south-east London, where the budget for food was little more than a £1 a day. Chastened by the experience Ms Johnson said it had left her feeling guilty about how much money she wasted and that she would now think twice about spending £3 for a “flat white coffee” when that money could feed a family for a day. The experience changed her initial view that poor people spent all their money on cigarettes, television and alcohol. “The poor people you see on the box are all fat. How, in God’s name, can you be overweight and hungry? Now I know.” Ms Johnson told the Radio Times: “There’s this terrible sense of human waste. They’re existing, rather than living, like battery hens. Apart from the telly and the cigarettes, they are living like animals.
Housing and consumer activists warn that Wall Street is about to crash the housing market — again. The activists said they are particularly concerned about the growing number of companies looking to issue bonds backed by rental properties — bonds that a coalition of groups described as “eerily like” those mortgage-backed securities that helped fuel the last housing bubble.
“We are poised to experience another crisis if federal regulators fail to recognize and take corrective action to address red flags that are all too familiar,” more than 75 housing and consumer groups wrote in a letter Tuesday to federal bank and housing regulators. The 2008 housing crisis happened because banks were willing to give even risky borrowers a mortgage, driving home prices to unsustainable peaks. Those mortgages got sold into bonds that defaulted once homebuyers stopped making their monthly payments.
This time, gun-shy bankers are hard-pressed to give anyone but the most stellar borrowers a mortgage, said the groups, which include California Reinvestment Coalition and the National Consumer Law Center. Yet, home prices are rising again. That’s because Wall Street investors with deep pockets and the ability to pay cash for homes are muscling out ordinary buyers in places hard-hit by the housing crisis, like Phoenix and Atlanta. Once these wealthy investors have bought the homes, they flip them into rentals — often covering up large issues like plumbing and mold with cosmetic fixes.
The West is blinking in disbelief – Vladimir Putin just invaded Ukraine. German diplomats, French Eurocrats and American pundits are all stunned. Why has Russia chosen to gamble its trillion-dollar ties with the West? Western leaders are stunned because they haven’t realized Russia’s owners no longer respect Europeans the way they once did after the Cold War. Russia thinks the West is no longer a crusading alliance. Russia thinks the West is now all about the money.
Putin’s henchmen know this personally. Russia’s rulers have been buying up Europe for years. They have mansions and luxury flats from London’s West End to France’s Cote d’Azure. Their children are safe at British boarding and Swiss finishing schools. And their money is squirrelled away in Austrian banks and British tax havens. Putin’s inner circle no longer fear the European establishment. They once imagined them all in MI6. Now they know better. They have seen firsthand how obsequious Western aristocrats and corporate tycoons suddenly turn when their billions come into play. They now view them as hypocrites—the same European elites who help them hide their fortunes.
Last month, the Federal Reserve confirmed the ominous news. The decline in US household debt from sky-high 2008 levels has halted, and the figures are on the rise again – up by $241bn (or 2.1%) in the fourth quarter of 2013, following a smaller increase in the third quarter. Unlike auto loans, mortgages, and credit card balances, student debt never fell at all, and is fast approaching $1.2 tn. Economists seem to have decided that the “debt overhang” from the crash has now been resolved; not only is it safe to start borrowing again, it’s a must if we are to get back on track with GDP-driven growth. With aggregate debt still at a staggering $11.5tn, this is bad analysis and bad advice. As for reviving GDP business as usual, all the evidence suggests this kind of growth is a recipe for eco-collapse.
Confronted with these exorbitant numbers, it’s natural to gripe that debts of such magnitude will never be paid off in our lifetimes. But that’s to miss the point. In a creditocracy – the kind of society we now live in – debts are not supposed to be paid down entirely, for the same reason that credit card issuers don’t want us to clear our credit card balance every month. Those who diligently pay up are derided in industry circles as “deadbeats”. The preferred customers are “revolvers,” who can’t quite make ends meet but who pay the monthly minimum along with penalties or late fees, ensuring a steady flow of revenue to banks. Creditors’ profits depend on keeping us in debt for as long as we live, and even beyond the grave in the case of parental co-signers for student debtors who die before they have performed less than an average lifetime of debt service.
A senior Kremlin advisor has said Russia could respond to threatened U.S. economic sanctions by abandoning the U.S. dollar as a reserve currency and not repaying loans to U.S. banks, Russian media outlets reported Tuesday. “We have wonderful economic and trade relations with our southern and eastern partners,” said presidential aide Sergei Glazyev, who is an advisor rather than a policy maker, according to Voice of Russia . “We will find a way not just to eliminate our dependence on the U.S., but also profit from these sanctions.” Late Monday, U.S. President Barack Obama said the U.S. plans to impose penalties on Russia unless it withdraws its military forces, and on Tuesday, Russia reportedly called troops on military exercises back to their bases. However, a senior source in the Kremlin told RIA Novosti Glazyev’s comments were only “personal opinion” and not the Kremlin’s position, according to reports .
Free consumer banking in the UK is coming to an end, Royal Bank of Scotland’s chief executive has warned. Ross McEwan said that customers need to realise that they will have to pay for accounts, whilst also warning that further job cuts are inevitable at the taxpayer-owned bank. His comments, which came just days after the bank announced £576 million of bonuses for its executives, prompted an angry response from the Labour Party which raised concerns that the less well off will be excluded from the banking system.
Anti-poverty campaigners have claimed that 11 per cent of low income households do not have access to a bank account which makes it harder for them to receive welfare payments under the UK government’s benefit reforms. Mr McEwan insisted that paid-for accounts should be “addressed in the market place.” His comments came after he announced that RBS, which is 80 per cent owned by the taxpayer, has dumped its so called teaser rates for accounts.
Royal Bank of Scotland has lost all the money invested in it by the taxpayer six years ago when the lender came close to collapse. The bank has confirmed its total losses since its bailout have now drawn level with the £46bn pumped into it in 2008 in return for an 81pc stake. RBS made a loss last year of £8.2bn, its sixth consecutive annual loss, taking its cumulative losses to £46bn.
The scale of the losses means that all the capital provided by the taxpayer has now been used up dealing with the toxic legacy assets on the bank’s balance sheet. Losses at the bank came after it took a £3.8bn bill for customer mis-selling compensation and a £4.8bn impairment charge against the continued run down of its bad loans.
Excluding these costs, RBS reported an operating loss for the year of £2.5bn, with profits from its retail and commercial business falling 4pc year-on-year to £4.1bn, while its markets division reported a 58pc fall compared to 2012 making a profit of £638m. Despite, the loss RBS said it had put aside £576m to pay staff bonuses for 2013.
The London gold fix, the benchmark used by miners, jewelers and central banks to value the metal, may have been manipulated for a decade by the banks setting it, researchers say. Unusual trading patterns around 3 p.m. in London, when the so-called afternoon fix is set on a private conference call between five of the biggest gold dealers, are a sign of collusive behavior and should be investigated, New York University’s Stern School of Business Professor Rosa Abrantes-Metz and Albert Metz, a managing director at Moody’s Investors Service, wrote in a draft research paper.
“The structure of the benchmark is certainly conducive to collusion and manipulation, and the empirical data are consistent with price artificiality,” they say in the report, which hasn’t yet been submitted for publication. “It is likely that co-operation between participants may be occurring.” The paper is the first to raise the possibility that the five banks overseeing the century-old rate — Barclays Plc, Deutsche Bank AG (DBK), Bank of Nova Scotia (BNS), HSBC Holdings Plc (HSBA) and Societe Generale SA (GLE) – may have been actively working together to manipulate the benchmark. It also adds to pressure on the firms to overhaul the way the rate is calculated. Authorities around the world, already investigating the manipulation of benchmarks from interest rates to foreign exchange, are examining the $20 trillion gold market for signs of wrongdoing.
Britain is drawing up plans to ensure that any EU action against Russia over Ukraine will exempt the City of London, according to a secret government document photographed in Downing Street. As David Cameron said Britain and its EU partners would put pressure on Moscow after it assumed control of Crimea, a government document drawn up for a meeting of senior ministers said that “London’s financial centre” should not be closed to Russians.
The picture of the document was taken by the freelance photographer Steve Back, who specialises in spotting secret documents carried openly by officials entering Downing Street. The document was in the hands of an unnamed official attending a meeting of the national security council called by the prime minister to discuss the Ukrainian crisis.
- Ukraine crisis sends Russian stock market tumbling
- Ukraine crisis hits shares around world and sends oil and wheat prices soaring
- US, EU can put economic pressure on Russia (Video)
- Russia’s Ukraine actions ‘incompatible’ with G8 membership, west says
- Britain pulls out of G8 preparatory talks
- U.S. ‘Suspends’ Role in Russia G8 Summit After Obama, Putin Speak
Two popular labels are being ascribed to events in Ukraine: it was either a democratic – or even social – revolution, or it was a rightwing – or even neo-Nazi – coup. In fact, both characterisations are wrong. What we have have seen is a mass rebellion, overwhelmingly supported in western and central Ukraine without majority support in the eastern and southern regions, leading to a change of political elites. But there are no prospects for democratic, radical change, at least under the new government. Why was it neither a social, nor democratic revolution? Some of the demands of the Maidan movement have been implemented. For example, the notorious Berkut regiment – the riot police who killed most of the dead protesters – was disbanded and the most odious of the former Yanukovych officials have been sacked.
However, this does not mean the start of systematic democratic change, or that the new government is in any way going to challenge the root of pervasive corruption in Ukraine: poverty and inequality. Moreover, it is likely only to aggravate these problems, putting the burden of the economic crisis on the shoulders of Ukraine’s poor, not on the rich Ukrainian oligarchs. The socioeconomic demands of the Maidan movement have been replaced with the neoliberal agenda of the new government. The cabinet, approved on Thursday, consists mainly of neoliberals and nationalists. Its official programme of action presented to parliament declares the need for “unpopular decisions” on prices and tariffs and its readiness to fulfill all the conditions of the loan from the International Monetary Fund.
- Ukraine Seeking $15 Billion Rescue From IMF
- Kiev government gives oligarchs top jobs
- Lew Says Ukraine’s Leaders Ready to Tackle ‘Market Reforms’
- Lew and Aso Agree Ukraine Must Rely on IMF Aid
- IMF mission to start work in Ukraine on Tuesday
- Ukraine hopes for aid soon, PM says will meet IMF reform conditions
- George Soros: Sustaining Ukraine’s breakthrough, EU expertise and markets are essential
- The Mansions of Euromaidan leaders
- This Isn’t A Revolution – It’s Regime Change
Near-Bankrupt Rome Bailed Out As Italy Unemployment Rises To All Time High, Grows By Most On Record In 2013
A few days ago, we reported that, seemingly out of the blue, the city of Rome was on the verge of a “Detroit-style bankruptcy.” In the article, Guido Guidesi, a parliamentarian from the Northern League, was quoted as saying “It’s time to stop the accounting tricks and declare Rome’s default.” Of course, that would be unthinkable: we said that if “if one stops the accounting tricks, not only Rome, but all of Europe, as well as the US and China would all be swept under a global bankruptcy tsunami. So it is safe to assume that the tricks will continue. Especially when one considers that as Mirko Coratti, head of Rome’s city council said on Wednesday, “A default of Italy’s capital city would trigger a chain reaction that could sweep across the national economy.” Well we can’t have that, especially not with everyone in Europe living with their head stuck in the sand of universal denial, assisted by the soothing lies of Mario Draghi and all the other European spin masters.” And just as expected, yesterday Rome was bailed out.
As Reuters reported, Matteo Renzi’s new Italian government on Friday approved an emergency decree to bail out Rome city council whose mayor had warned the capital would have to halt essential services unless it got financial help.
The decree transfers 570 million euros ($787 million) to the city to pay the salaries of municipal workers and ensure services such as public transport and garbage collection. Renzi, under pressure from critics who say Rome is getting favorable treatment, attached conditions to the bailout.
Rome must spell out how it will rein in its debt, justify its current levels of staff, seek more efficient ways of running its public services and sell off some of its real estate, the government decree said. Rome’s finances have been in a parlous state for years and it has debts of almost 14 billion euros which it plans to pay off gradually by 2048.
The city has around 25,000 employees of its own with another 30,000 or so working for some 20 municipal companies providing services running from electricity to garbage collection. ATAC, which runs the city’s loss-making buses and metros, employs more than 12,000 staff, almost as many as national airline Alitalia. Rome’s administrators say it needs help with extra costs associated with housing the central government, such as ensuring public order for political demonstrations, and to provide services for millions of tourists.
Here is the punchline, about Rome’s viability, not to mention Italy’s and Europe’s solvency:
The city of some 2.6 million people has been bailed out by the central government each year since 2008.
What is certain is that this year will not be the last one Rome is bailed out either. In fact, it will continue getting rescued for years to come because contrary to the propaganda, the Italian economy continues to get worse with every passing month, yields on Italian bonds notwithstanding.
The FDIC Quarterly Banking Profile for the fourth quarter of 2013 shows a continued reduction in the number of problem banks. The total number of banks on the FDIC Problem Bank List decreased for the 11th consecutive quarter to 467 banks as of December 31, 2013 compared to 515 problem banks in the previous quarter.
Despite the favorable trend, the number of problem banks remains extremely elevated compared to the number of troubled banks prior to the financial crisis. For the five year period 2003 to 2007 the problem bank list averaged only 75 banks per year. The current number of 467 problem banks is 622% higher than in the easy lending years prior to the financial crash.
A notorious British hacker faces up to 12 years in jail after US authorities revealed an indictment that accuses him of hacking into Federal Reserve Bank computers and disclosing personal information of those that use it. Lauri Love, from Suffolk, stands accused of one count each of computer hacking and aggravated identity theft with the first charge carrying a maximum sentence of 10 years in jail and the latter charge carries a two-year jail term.
More specifically the indictment, which was unsealed in Manhattan, accuses Love of stealing information concerning users of the New York Federal computer system before bragging about his actions online. The hackers are thought to have infiltrated the Federal Reserve computer between October 2012 and February 2013 using a method called “sequel injection” to access names, email addresses and phone numbers before posting them online.
Ukraine’s interim prime minister, Arseniy “Yats” Yatsenyuk, may prove to be arsenic to the beleaguered nation. “Recall the phone exchange between the Ukraine ambassador and Victoria Nuland (Assistant Secretary of State for European Affairs) that got leaked out, where she basically said ‘we want Yats in there.’ They like him because he’s pro Western,” says Vladimir Signorelli, president of boutique investment research firm Bretton Woods Research LLC in New Jersey. “Yatsenyuk is the the kind of technocrat you want if you want austerity, with the veneer of professionalism,” Signorelli said. “He’s the type of guy who can hobnob with the European elite. A Mario Monti type: unelected and willing to do the IMFs bidding,” he said.
[...] Despite these ominous signs, Ukraine Ambassador Geoffrey Pyatt hailed the current crisis as “a day for the history books.” Most of the mainstream media have leaned decisively in the anti-Yanukovych camp. Ukraine’s new 450-seat parliament approved the appointment of the former Central Banker Yatsenyuk on Thursday by a vote of 371 to 1. Oddly enough, earlier this month, the pro-Western Yats trailed behind popular opposition leaders such as former heavyweight boxer Viltali Klitschko and the leader of the nationalist, Svoboda Party, Oleh Tyahnybok. But Yats had friends in high places and while he does not have strong support of the electorate, and would have no chance of winning an election, he is pro-IMF austerity and apparently the bulk of parliament is as well.
“Yatsenyuk was saying that what the Greeks did to themselves we are going to do ourselves,” said Signorelli. “He wants to follow the Greek economic model. Who the hell wants to follow that?” Also today, Yatsenyuk promised to implement “very unpopular measures” to stabilize the country’s finances. The government said it needs $35 billion to support the country over the next two years. His language in a news report broadcast by Bloomberg today indicates he is heading toward a potentially destabilizing austerity campaign
- The not-so-revolutionary new Ukraine government
- Naming of Officials in Ukraine Reflects Homage to Power of the Street
- Ukraine asks IMF for help on new financial aid program
- US’s Lew, IMF’s Lagarde Agree Ukraine Needs IMF, Bilateral Help
- Europeans question Brussels’ plan to bail out Ukraine (Video)
- Expert discusses Ukraine’s financial woes (Video)
- US experts in Ukraine to help tackle economic crisis
- Biden at center of US diplomacy with Ukraine
- Mikhail Gorbachev: Bulldoze EU & US aides from Ukraine and let the people decide
- Transcript of leaked Nuland-Pyatt call: ‘I think Yats is the guy…’
- Greg Palast: IMF’s four steps to damnation
- Symonenko: Interest on IMF loans paid from pensions of ordinary Ukrainians
- Ukraine: An unstable economy, but with great resources
Ivory Coast is re-emerging as the prime investment destination in French-speaking West Africa after a decade of political turmoil but President Alassane Ouattara must weed out corruption and promote reconciliation to keep cash flowing in. Long considered the jewel in the crown of France’s former West African territories, a 1999 coup destroyed the reputation of Ivory Coast – the world’s largest cocoa producer – as an island of stability in a troubled region. A bloody presidential election in 2000 and a rebellion two years later triggered an exodus of capital that undid decades of development, dubbed the Ivorian Miracle.
With peace finally restored, French construction firm Bouyges, oil companies such as Tullow and Lukoil, and South Africa’s Standard Bank are among those flocking to invest. ”We lost half of our companies during that time. The level of poverty increased from 10 percent to almost 50 percent,” Trade Minister Jean-Louis Billon told Reuters. “Now we want to move forward.” A brief civil war in 2011 allowed Ouattara, who won an election that sparked the fighting, to secure the presidency and reunite a nation still divided between a rebel north and government-controlled south despite years of peace overtures.
With the former International Monetary Fund official at the helm, Ivory Coast’s $40 billion economy – comprising nearly half West Africa’s six-nation CFA currency bloc – embarked on a dramatic revival. It posted growth of over 9 percent the past two years and the government is targeting double-digits in 2014 as it seeks to make up ground on neighbouring Ghana, a new oil exporter. ”Ivory Coast could become one of the motors of economic growth in Africa again,” IMF Managing Director Christine Lagarde told a conference in Abidjan last week that drew 4,000 delegates and more than $800 million in investment pledges.
Large-scale infrastructure projects, shelved during a decade of political deadlock, are springing back to life. A motorway linking the port of Abidjan to the administrative capital Yamoussoukro opened late last year. Bouyges is pressing ahead with a long-delayed third bridge across Abidjan’s lagoon to unlock congestion. Heavy investment in electricity generation aims to boost output from 1,600 megawatts to 4,000 by 2020 as Ivory Coast, already a power exporter, seeks to become a regional energy hub.
The U.S. wars in Afghanistan and Iraq will cost taxpayers $4 trillion to $6 trillion, taking into account the medical care of wounded veterans and expensive repairs to a force depleted by more than a decade of fighting, according to a new study by a Harvard researcher. Washington increased military benefits in late 2001 as the nation went to war, seeking to quickly bolster its talent pool and expand its ranks. Those decisions and the protracted nation-building efforts launched in both countries will generate expenses for years to come, Linda J. Bilmes, a public policy professor, wrote in the report that was released Thursday.
“As a consequence of these wartime spending choices, the United States will face constraints in funding investments in personnel and diplomacy, research and development and new military initiatives,”the report says. “The legacy of decisions taken during the Iraq and Afghanistan wars will dominate future federal budgets for decades to come.” Bilmes said the United States has spent almost $2 trillion already for the military campaigns in Afghanistan and Iraq. Those costs, she said, are only a fraction of the ultimate price tag. The biggest ongoing expense will be providing medical care and disability benefits to veterans of the two conflicts.
Three former Barclays employees have been charged over the alleged manipulation of Libor benchmark interest rates. The Serious Fraud Office (SFO) named them as Peter Charles Johnson, Jonathan James Mathew and Stylianos Contouglas. The men are accused of conspiracy to defraud between 2005 and 2007 and are due to appear at London’s Westminster Magistrates’ Court on a date still to be announced. The SFO said its Libor investigation was continuing.
Just in case you hadn’t noticed recently, the City and its banks have been continuing to live down to their shabby reputations and men like these represent but the visible tip of an iceberg-sized problem of alleged criminogenisis within the Square Mile. The City of London has, over the past few years, become synonymous with every kind of skulduggery, sharp practice, flaky conduct and downright criminality it is possible to imagine. The banking sector has developed into a mafia-like organised criminal enterprise, where every kind of wrongdoing has been permitted and encouraged in order to earn profit for the organisation.
Oh, there are many who will cavil at this description and who will accuse me of hyperbole, but what other description can you apply to a business sector which repeatedly has to set aside many millions of pounds in order to pay penalties and fines imposed for its criminal conduct, and which has had to repay billions of pounds in restitution for criminally-acquired revenues arising out of downright fraud, deceit and lies.
Despite all the attempts by Government to soft-soap the criminal activities committed by the banks by calling their wrong-doing ‘mis-selling’, a concept hitherto completely unknown to English criminal jurisprudence, the fact is that someone has been committing the crimes which have penalised so many innocent clients or investors. The banksters have been receiving their bonuses, that’s for sure, and they couldn’t have been paid these figures unless they had delivered the level of profits to justify them.
According to the stock market, the UK economy is in a boom. Not just any old boom, but a historic one. On 28 October 2013, the FTSE 100 index hit 6,734, breaching the level achieved at the height of the economic boom before the 2008 global financial crisis (that was 6,730, recorded in October 2007). Since then, it has had ups and downs, but on 21 February 2014 the FTSE 100 climbed to a new height of 6,838. At this rate, it may soon surpass the highest ever level reached since the index began in 1984 – that was 6,930, recorded in December 1999, during the heady days of the dotcom bubble. The current levels of share prices are extraordinary considering the UK economy has not yet recovered the ground lost since the 2008 crash; per capita income in the UK today is still lower than it was in 2007. And let us not forget that share prices back in 2007 were themselves definitely in bubble territory of the first order.
The situation is even more worrying in the US. In March 2013, the Standard & Poor 500 stock market index reached the highest ever level, surpassing the 2007 peak (which was higher than the peak during the dotcom boom), despite the fact that the country’s per capita income had not yet recovered to its 2007 level. Since then, the index has risen about 20%, although the US per capita income has not increased even by 2% during the same period. This is definitely the biggest stock market bubble in modern history. Even more extraordinary than the inflated prices is that, unlike in the two previous share price booms, no one is offering a plausible narrative explaining why the evidently unsustainable levels of share prices are actually justified.
Workers at Cyprus’s state electricity utility have clashed with police in a rare explosion of anger over government privatisation plans under a $13.7bn international bailout. In a rowdy protest at parliament on Monday, up to 400 demonstrators burst through police barricades in central Nicosia while politicians were debating provisions of a privatisation law with the island’s finance minister. After electricity was cut to parliament, the finance committee meeting was moved to another part of the building.
Cyprus is required to approve legislation governing the future disposal of state assets under a three-year economic reform programme brokered with the International Monetary Fund and the European Commission a year ago. Monday’s protest, which left two demonstrators slightly injured, is unusual. The island has seen little of the unrest stirred by bailouts in other euro zone nations, even though its aid conditions were among the harshest and involved closure of a failing bank and forcing large depositors in a second to help recapitalise the lender. Under bailout conditions, Cyprus is called upon to privatise the electricity authority EAC, the Cyprus Ports Authority and Cyprus telecoms CyTA by 2018, raising $1.9bn.
More than 11m homes lie empty across Europe – enough to house all of the continent’s homeless twice over – according to figures collated by the Guardian from across the EU. In Spain more than 3.4m homes lie vacant, in excess of 2m homes are empty in each of France and Italy, 1.8m in Germany and more than 700,000 in the UK. There are also a large numbers of vacant homes in Ireland, Greece, Portugal and several other countries, according to information collated by the Guardian.
Many of the homes are in vast holiday resorts built in the feverish housing boom in the run up to the 2007-08 financial crisis – and have never been occupied. On top of the 11m empty homes – many of which were bought as investments by people who never intended to live in them – hundreds of thousands of half-built homes have been bulldozed in an attempt to shore up the prices of existing properties. Housing campaigners said the “incredible number” of homes lying empty while millions of poor people were crying out for shelter was a “shocking waste”.
Things have gone from bad to abysmal at Mt. Gox, long the largest and most popular Bitcoin exchange: Its CEO on Sunday resigned from the board of the Bitcoin Foundation; a day later the exchange deleted all of its tweets and went offline, displaying only a blank page, as an unverified document leaked that indicated it has been the victim of a debilitating theft, reports the AP. Mt. Gox initially suspended withdrawals earlier this month after discovering a bug in the Bitcoin software that hackers could exploit. Apparently hackers had been exploiting that bug, unnoticed, for two years, ultimately stealing 744,408 Bitcoins from the exchange, Wired reports, citing a leaked “crisis strategy draft plan” said to be created by Mt. Gox but not independently confirmed as authentic.
If the document is genuine, that’s a theft equivalent to about $350 million at yesterday’s prices and the largest Bitcoin theft ever, representing about 6% of the 12.4 million Bitcoins in circulation, reports the New York Times. Yesterday six major exchanges issued a joint statement meant to shore up confidence in the currency, writing, “As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.” CNBC reports the statement initially suggested Mt. Gox was insolvent, but that detail was later removed due to a lack of “verifiable evidence.”
‘Conflict minerals’ will no longer be used in Intel processors, the technology company announced in January. The move comes as US regulators prepare to implement new rules requiring about 6,000 manufacturers to disclose information about their use of minerals such as gold, tin, tantalum and tungsten, which are essential in the manufacture of consumer electronics such as mobile phones and laptops.
The metals are frequently sourced from the eastern Democratic Republic of Congo and surrounding countries, where many mines are operated by militia and rebel groups, sometimes with the collusion of corrupt government officials. Income from the mines helps to fund the continuing conflict in the region, which has been marked by widespread human rights abuses.
Speaking at this year’s Consumer Electronics Show (CES) in Las Vegas, Intel’s new chief executive Brian Krzanich told the audience that they had been attempting to establish the sources of the metals used in their chips for years. Krzanich said it was an important issue for the company. “You begin to think about the impact of the supply chain and the potential issues you can be causing,” he said.
Intel’s move goes further than is required under the 2010 Dodd-Frank Act, which included a measure – due to be implemented this spring – requiring companies that make US regulatory filings to disclose, but not halt, their use of conflict minerals. The law is being disputed by several powerful trade associations, including the US Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers. These associations claim the act infringes on their constitutional rights.
Historically the nation’s largest trading partner by far, Russia has been Ukraine’s go-to financier in times of trouble, a role that has often been criticized by Western nations as giving them undue influence over Ukraine’s internal affairs. Having just gone through an apparent regime change, which sent long-time Russian ally President Yanukovych into hiding, the United States and Britain are hoping to establish ties with the “new Ukraine” and, unsurprisingly, they’re going the exact same route Russia has.
US and British officials were quick to promise financial aid to “cushion the impact of reforms” by the new government, with Britain’s Chancellor George Osborne saying he was “ready with a checkbook” to rebuild Ukraine. Bizarrely, US officials interspersed their promises for aid with warnings to Russia not to “intervene militarily,” even though there has been no indication anyone had even raised that as a possibility.
- Ukraine leadership vows to steer toward EU
- EU aims to woo new leadership with aid deal
- Osborne says ready to open cheque book for Ukraine through IMF, EU
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A Tory MP worth £110million is raking in £625,000 a year from his hard-up tenants’ housing benefit – despite blasting the “something for nothing” welfare state. Richard Benyon – Britain’s richest MP – runs his vast property empire from a mansion on his sprawling country pile. But last night he was accused of cashing in off the back of the very handouts his party pledged to slash – as it emerged a string of other Tories were doing the same.
Just last month the MP, 53, said: “The average household spends £3,000 per year on the welfare state. This figure had been rising inexorably and unaffordably.” Mr Benyon has also attacked the Labour Party over payments and said: “Labour want benefits to go up more than the earnings of people in work. It isn’t fair and we will not let them bring back their something for nothing culture.” He is a director of the Englefield Estate Trust Corporation Limited, which owns most of the land and property linked to his family. It got £625,964 in housing benefit from West Berkshire council last year, more than any other private landlord in the area.