News links for 4 March 2013
“Non possiamo più permetterci un governo di cialtroni“ | Linkiesta.it
Ricolfi: “Grillo has his roots in a part of society that the left does not understand, the only solution is Renzi.”
BBC News – Banks reduce loans, in spite of Funding for Lending
“The number of loans being offered by banks has continued to fall in spite of the Funding for Lending Scheme (FLS).
The scheme, which began in August last year, was designed to encourage banks to lend more money, both to individuals and businesses, and boost the economy.
But the Bank of England has announced that net lending fell by £2.4bn in the final quarter of last year compared with the previous three months.
However, UK banks have taken up nearly £14bn since the scheme started.”
ShopSavvy Partners With Capital One, Turns Its Mobile Wallet Into A Platform For Deals | TechCrunch
“ShopSavvy, the mobile application best known for its barcode-scanning and price comparison features, is today moving into personalized deals, through a new relationship with Capital One. The app will now show Capital One deals to any of the app’s users, provided they first add their Capital One credit card to ShopSavvy’s mobile wallet. In addition to the discount the deal provides, users will also receive a $20 credit on their Capital One bill when they make their initial purchase using their card within ShopSavvy’s application.”
HSBC Lifts Dividend, but Misses Targets – WSJ.com
“Return on equity slipped to 8.4% from 10.9% last year, short of a 12%-15% target the bank hopes to start hitting this year. The cost-efficiency ratio, reflecting expenses in the business, deteriorated to 62.8% in 2012 from 57.5% in 2011, above a medium-term target of 48%-52%.
The bank said both targets were affected by charges to reimburse customers for faulty products, and regulatory payments including a $1.9 billion settlement for breaching compliance with U.S. anti-money-laundering laws.
The return on equity was also dented by changes in the fair value of HSBC’s debt. Banks book accounting gains or losses on their own debt to reflect price falls or rises if they were to buy it back in the open market.
HSBC’s capital position improved, though, after selling assets and businesses including its shareholding in Chinese insurer Ping An. The Core Tier 1 ratio—a key measure of a bank’s financial strength made of only top-quality capital such as equity and retained profit—was 12.3% at the end of 2012, up from 10.1% a year earlier.
It paid out $0.45 in dividends in the year, totaling $8.3 billion, and said it would raise dividends in the first three quarters of 2013 by $0.01 per quarter, to $0.10 for each of the three-month periods.”
HSBC disappoints with fall in profits to $20.6bn – Telegraph
“Profits were down 6pc year-on-year, missing City expectations by nearly $3bn.
The fall was largely due to a $5.2bn charge against changes in the value of the bank’s own debt, as well a $1.9bn fine related to a US money-laundering investigation, and $1.4bn of provisions for the mis-selling of payment protection insurance and interest rate swaps.
Bonuses across the bank totalled $3.7bn, down from $4.2bn, while the bonus pool for staff in the lender investment banking arm rose slightly from $1.21bn to $1.27bn.”
Portugal Seeks Easing in Bailout Terms – WSJ.com
“Portugal is seeking to renegotiate parts of its international bailout agreement amid worse-than-expected forecasts for an economy in recession and growing popular protest over deficit-cutting austerity measures imposed by its lenders.
On Monday, euro-zone finance ministers are expected to discuss in Brussels a request by Portugal for more time to repay its loans, a concession that would help the country finance itself after the €78 billion ($99.8 billion) bailout program expires.The request, along with a similar one by Ireland, would mirror the terms Greece obtained under its latest bailout agreement.”
Obama renews offer to cut social safety nets | Reuters
Liberals are very much against this tactic and see it as selling out. The President will get a backlash within his party
“President Barack Obama raised anew the issue of cutting entitlements such as Medicare and Social Security as a way out of damaging budget cuts, a White House official said on Sunday, as both sides in Washington tried to limit a fiscal crisis that may soon hit millions of Americans.”
Bank of Japan eyes QE-style balance sheet expansion | South China Morning Post
“Ahead of a Bank of Japan leadership change, central bankers are considering the possibility of shifting policy closer to the quantitative easing campaign of the last decade, hoping it will give policy the kick demanded by Prime Minister Shinzo Abe.
Instead of focusing on reducing interest rates – which many see as a policy of diminishing returns since they are already at rock bottom – the central bank would shift to expanding its balance sheet, said sources familiar with its thinking.
Such a shift would bring the central bank a step closer to making the purchase of longer-dated bonds a central part of policy and partly echoes Japan’s five-year quantitative easing campaign that lasted until 2006, under which it aggressively pumped cash into the economy.”
Los extranjeros vuelven a comprar casas en España como antes de la crisis | Economía | Cinco Días
Foreigners are coming back to the Spanish property market. I am not sure if this is good or bad news at this point but I tend to see it positively in that it puts a floor on housing by increasing demand.
See here where I reported the Swedes dabbling in Spanish property back in October: https://www.creditwritedowns.com/2012/10/due-to-rising-currency-value-swedes-now-speculating-in-spains-housing-market.html
Bank of Ireland losses widen to a massive €2.1bn – Independent.ie
“The bank blamed the massive increase in losses, up from €190m in 2011, on the impairment charges it has been hit with.
Its report for 2012 revealed losses of 1.7bn on asset sales, redundancy charges, and buying back its subordinated bonds.
Some 5,000 members of staff have left the bank on a special redundancy programme enforced after Ireland’s banking collapse.
The bank said its impairment charges were 11pc lower than in 2011.
A further breakdown of figures showed areas where impairment charges were hitting hardest, with losses for the residential mortgage sector of €462m and property and construction at €797m.
The State owns 15pc of Bank of Ireland.”
Third of mortgage holders in arrears ‘choosing not to pay’ – Independent.ie
“Gregory Connor, professor of Finance at NUI Maynooth, said that 35pc – or close to 40,000 – of residential and buy-to-let mortgage holders who are three months or more behind on their payments could meet their payments but were choosing not to.
This is known as strategic defaulting, where funds to pay a mortgage are spent on other debts or goods and services.”
Banks Find More Wrongful Foreclosures Among Military Members – NYTimes.com
“The nation’s biggest banks wrongfully foreclosed on more than 700 military members during the housing crisis and seized homes from roughly two dozen other borrowers who were current on their mortgage payments, findings that eclipse earlier estimates of the improper evictions.
Bank of America, Citigroup, JPMorgan Chase and Wells Fargo uncovered the foreclosures while analyzing mortgages as part of a multibillion-dollar settlement deal with federal authorities, according to people with direct knowledge of the findings. In January, regulators ordered the banks to identify military members and other borrowers who were evicted in violation of federal law.”
Skat: Microsoft skylder Danmark 5,8 milliarder kroner – Politiken.dk
This Danish article explains that Microsoft has a pretty hefty back tax bill in Denmark: 5.8 billion kroner. That’s over $1 billion. The bill is being negotiated with the Danish government.
Moody’s downgrades BBC-related securities – Telegraph
“The Jimmy Savile scandal has caused a “degree of strategic uncertainty” at the BBC leading to Moody’s downgrading three mortgage bonds where the corporation is the sole tenant.”
Student Loan Bubble So Big It’s Trumping Credit Cards as a Spending Driver « naked capitalism
“when you integrate this with the just-released New York Fed quarterly household credit survey, you reach some not pretty conclusions. Student debt is now a bigger source of consumer borrowing than credit cards (we are speaking in terms of macroecomoic impact)”
Asian-Americans Solidly Prefer Democrats
This analysis is interesting because it shows Asians being in the same camp with Blacks and Hispanics for Democrats. The numbers are not as skewed but it does show you the demographic problems Republicans now have.
“Asian-Americans — who were a key part, if sometimes overlooked, of President Barack Obama’s 2012 electoral coalition — solidly back the Democratic Party, with 57% identifying as or leaning Democratic, compared with 28% identifying as or leaning Republican. Thirteen percent are “pure” independents. However, the data suggest that a substantial portion of Asian-Americans are not entirely wedded to either of the major political parties: 46% first describe themselves as independent or other, and only when asked if they “lean” Republican or Democratic does the Democratic Party garner its majority support within this group.”
Le Figaro – Mon Figaro : En France, le chômage est pire que dans les années 1930
This article is available only to Figaro subscribers but the headline says it all: In France unemployment is worse than during the 1930s.
El paro registrado supera los cinco millones tras sumar 59.444 personas | Economía | EL PAÍS
Unemployment in Spain ticked up an additional 7% in 2012, adding over 300,000 to the unemployment rolls. There are now 5 million Spanish unemployed. The chart here shows you the numbers in a graphical way.
This is a partisan take on the Republicans’ electoral quandary. I have talked a lot about this in the past and the key is that Republicans’ base want no new taxes. The Republicans had already been defeated twice on tax and spending. They had to get a victory here or face being “primaried”.
See here from early February: https://www.creditwritedowns.com/2013/02/sequester-will-happen.html
And note that the damage done to growth WILL be enough to cause recession if government shuts down but we aren’t there yet. I don’t have a view yet if we will get there given the political situation.
Santander y Banesto proponen prejubilaciones a partir de los 58 años con el 70% del salario – ABC.es
Santander and Banesto are looking to buy people out of the company starting at 58 in return for 70% of their salary. Consider it an early retirement at a cut salary in lieu of firing people.
Robert Samuelson: How JFK’s mistake led to the sequester mess – The Washington Post
I don’t buy this history
“Blame it on JFK.
Fifty years ago, President Kennedy made a decision that, with hindsight, ranks as the biggest mistake of domestic policy since World War II. In many ways, it led directly to today’s “sequester” debacle.
What Kennedy did was this: In early 1963, he proposed a $13.6 billion tax cut (today: about $320 billion) even though the economy was not in recession and the tax cut would enlarge the budget deficit. Kennedy adopted the theory that government could, by manipulating its budgets, increase economic growth, reach “full employment” (then a 4 percent unemployment rate) and reduce — or eliminate — recessions.
It was a disaster.
High inflation was the first shock. An initial boom (by 1969, unemployment was 3.5 percent) spawned a wage-price spiral. With government seeming to guarantee 4 percent unemployment, workers and businesses had little reason to restrain wages and prices. “
Dutch unions attack fresh austerity plan – FT.com
This is more about 2014 than 2013. The Dutch have already said they aren’t making new cuts to meet the 2013 targets and they expect to get a free pass.
Why Every Office Should Switch To Walking Desks | TechCrunch
“Man was not meant to spend all day hunched over a dimly lit screen; disturbingly high incidences of obesity, joint pain and fatigue are our bodies’ not-so-subtle ways of saying they want to get up and move around. After piloting a walking desk – a standing desk attached to a treadmill – for a month, I’m convinced they should become the default workstation. Immediately, my daily calorie burn jumped 30.7 percent, and I lost 3 pounds and a percent of body fat in a week. I also experienced less joint pain throughout the day.”
CloudFlare goes down, cites router issue in DDoS attack — Tech News and Analysis
“Given that the number of DDoS attacks is on the rise, web sites had better gird themselves and hope their security vendors are taking proactive steps to keep ahead of the problem.”
The US economy after sequestration | Gavyn Davies
“Taken together with other measures which were already in the baseline for policy, the cumulative fiscal tightening will amount to 4.8 per cent of GDP from 2010-14, of which 1.5 percentage points will occur this year, and 0.6 percentage points will come from the sequestration order itself.”
Italy May Need New Election With No Deal on Bersani – Bloomberg
“Italy may hold new elections within months should Democratic Party leader Pier Luigi Bersani fail to win support in parliament to form a government after inconclusive elections.
There are no alternatives to a vote “in a few months” if Bersani doesn’t get a majority in parliament, Stefano Fassina, economic-policy spokesman for Bersani, said today on Sky TG24 TV. “We should name a new president, change the electoral law and then return to polls as soon as possible.””
Switzerland backs curbs on executive pay – Telegraph
“Voters in Switzerland have backed some of the world’s toughest controls on executive pay, forcing public companies to give shareholders a binding vote on remuneration.”
Heard on the Street: Google’s Chrome and Punishment for PCs – WSJ.com
“Chromebooks’ main advantage is cost. Take the most popular model from Samsung, which retails for $249. It has Google’s free operating system, instead of expensive Microsoft Windows, and a cheap Samsung processor, instead of a pricey Intel chip. Samsung also cuts the cost of the device by not including much storage. That is less of an inconvenience than it seems given users are storing more of their files, photos and music remotely with services like Google Drive or Dropbox.
Strategically, Chrome is cut from the same cloth as Android. In giving away software, Google is able to promote the use of its services, particularly search. “
Greece rules out more public sector job cuts | Business | The Guardian
“International creditors told that mass layoffs out of the question with unemployment at European high of 27%”
Anger builds in Italy as old guard plots fresh technocrat take-over – Telegraph
“Italy’s president Giorgio Napolitano is exploring the creation of a second technocrat government to break the political log-jam and calm markets after key parties failed to reach an accord, risking a serious popular backlash.”
The US Economy In One Tweet – Business Insider
“For the moment, it seems like the tailwind from real estate (both in terms of construction jobs and the rising wealth effect) is solid enough such that the modest austerity from the sequestration won’t put the US into recession.”
How and why LinkedIn is becoming an engineering powerhouse — Tech News and Analysis
Stephen Kinsella: EU version of our crisis is totally wrong and must be challenged – Independent.ie
“The European authorities may claim that Ireland’s problem is home-grown, and ignored by the Irish authorities, particularly the regulator, and so the solution should be Irish, with Ireland’s taxpayers taking the pain.
This view ignores the fact that the Irish banks were lent huge sums of cheap money at low rates by German and French banks, which allowed Irish households to buy French and German products, pushing the difference between our imports and exports highly negative, and theirs highly positive.
They benefited from the Irish boom, their banking systems benefited from the Irish rescue of Ireland’s banks, because the systems are so interconnected.”