Unsecured debt has traditionally been a core part of the business of many european banks. In the face of the eurozone crisis, and looming new regulation, those banks are shifting to secured debt (“covered bonds”) but also new financial instruments that sit somewhere between ‘covered’ and ‘uncovered’.
Category archives: Problems
Meanwhile, in an emerging economy not far away…
Brazil’s inflation is above target. The central bank cut interest rates by 0.5% at the end of August, on the expectation that slower global growth would hurt Brazil’s exporters. That may well happen, but the immediate impact has been a rise in domestic inflation, to just over 7%.
Expected long term US inflation falls
Projetions for US inflation over the next 30 years have fallen to just under 2%. You might say that growth expectations are similarly low. http://www.ft.com/cms/s/0/cdfa208e-e912-11e0-ac9c-00144feab49a.html
New taxation “would benefit investors”
Discussion around the introduction of a ‘Tobin Tax’ is increasing. The tax would benefit long term investors and increase transaction costs of short-term investors. This would bring more (systemic) stability to the markets. The German and French governments are in favour, as is Bill Gates. The UK government wants London to opt out.
Google joins “East London Tech City”
As jobs go at BAE Systems, Google has taken out a (minimum) ten year lease on a seven storey building in East London joining Amazon, Intel, and Facebook in the Government’s high tech scheme. Dublin is competing for the same investments, with a Euro cost base and lower tax rates. http://www.ft.com/cms/s/2/3aa3812e-e929-11e0-af7b-00144feab49a.html
Stagnating UK defence budgets lead to job losses
The 3,000 job losses announced by BAE Systems will “devastate” local economies according to politicians and union leaders. Defence budgets are stagnating. As the chief executive of BAE Systems put it, “Our customers are facing huge pressures on their defence budgets and affordability has become an increasing priority.” http://www.ft.com/cms/s/0/ea51a2ac-e8ea-11e0-ac9c-00144feab49a.html
ABI warns on executive pay
The Association of British Insurers has in the past criticised the structure of executive pay packages, but for the first time has now criticised the size of such packages. They emphasised the principle of paying for “sustainable long term value-creation”, and warned that shareholders will not tolerate departing executives who have performed poorly. http://www.ft.com/cms/s/0/366ec3e0-e91d-11e0-9817-00144feab49a.html
Ride-sharing increasing in the UK
The number of people sharing car journeys is increasing, not just for commuting, but more significantly for leisure journeys. http://www.ft.com/cms/s/0/8808ba5e-e435-11e0-b4e9-00144feabdc0.html
Eurozone: A corner turned?
Shares in Asia and Europe have rallied on anticipation that Greece’s debt can be handled. The FTSE All-World index is up 1.7%. “Industrial bellweather, copper” is up 2.6%.
Volatility and Stability
Industrial metals such as copper, zinc and platinum had until recently escaped the volatility of the metals market — whatever the financial markets might do, these metals were connected to a real world of real demand: real contracts for electrical wiring, galvanised steel and catalytic converters in car exhausts. Yesterday, however, on the assumption of …