economic situation is dire

[Gringo]

Drug barons saved the world, not Gordon

Drug money saved banks in global crisis, claims UN advisor

Drugs and crime chief says $352bn in criminal proceeds was effectively laundered by financial institutions

Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations' drugs and crime tsar has told the Observer.

Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.

This will raise questions about crime's influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. "In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor," he said.

Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.

"Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities... There were signs that some banks were rescued that way." Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.

...more

Maybe this explains the increased US presence in Columbia. I wondered what happened to all the anti-money laundering checking?

[JulieB]

I'm glad the fact that £167BN worth of toxic overseas mortgages being dumped on the jolly old UK taxpayer this week got an airing on VT....c/o Sir Fred & his former band of merry men from RBS and that wonderful invention of Gordon Brown's - The Asset Protection Scheme... ho hum

To summarise..... The PBR on Wednesday published that the UK national budget deficit currently stands at a whopping £178BN...

If this latest addition to the collection goes belly up on the Treasury...it will have single handedly almost doubled our national debt, which is in a dire state as it is....AND that's not including ANY of the already mind boggling figures held in the asset protection scheme...

I've read a fair few alarmist columns in the past few weeks about a coming run on the pound (& dollar)...because of the TRUE state of UK PLC ....... TBH reading this lot these reports are starting to have slightly unnerving truthful undertones to them.

With the news that Dubai & Greek economies are teetering on bankruptcy this week...WATCH THIS SPACE!!!

[snowychap]

Inflation on its merry way back upwards (back up to 1.9%) and the RPI is back in positive territory (up to 0.3%) - BBC.

I wonder whether Darling is still claiming that the pension increase (the one that is only on the basic state pension and was the minimum required anyway, apparently) is an effective 4% real terms increase.

[Gringo]

With houses prices up, inflation back within target, it looks like we're all back to normal!

Now Mervyn is in trouble. Won't want to raise interest rates as that will cut the money supply to industry even further and hamper the banks work at improving equity levels. Don't raise rates and inflation will start chugging away and sterling will be under more pressure.

Another reason for a march election.

[Awol]

With the news that Dubai & Greek economies are teetering on bankruptcy this week...WATCH THIS SPACE!!!

Well we know RBS were exposed to billions in Dubai but it looks like Abu Dhabi are going to pick up the tab as predicted.

However... How much are our banks exposed to Greek sovereign debt, and if they do go pop does the EU step in? Is there any kind of structural fund in the Eurozone to bail out it's members if they are in the brown stuff? Basically what happens to the EU if Greece (or Spain) goes broke?

[snowychap]

Cheerio, Saab.

GM says it has failed to sell its Swedish car brand Saab and will begin "an orderly wind-down of Saab operations".

GM had been in talks with the Dutch speciality car maker Spyker over a sale. Talks with Sweden's Koenigsegg also fell through earlier this year.

"We regret that we are not able to complete this transaction with Spyker Cars," said GM Europe boss Nick Reilly.

GM has been trying to sell Saab as part of its turnaround plans since January.

It is the end of the road for Saab, the car that emerged from a company making fighter jets.

When its owner GM bought Saab, it was seen as a brand that could become the US automotive group's European luxury brand.

But the quirky cars did not attract a broad enough following, so it failed to make money.

GM's solution was to cut costs by sharing ever more cars with Opel while, at the same time, toning down their design.

Such moves alienated traditional Saab customers without gaining new ones. New product development ground to a halt and in the end, there was simply not enough left of Saab to make it worth preserving.

Mr Reilly added that all debts would be paid and that the winding-down would be "an orderly process".

On a conference call, GM vice-president John Smith said it became clear that there were serious problems with the Spyker talks that could not be resolved.

He said: "We reached a point of impasse, we decided to deal with it and move on."

A statement from the firm said that Saab would continue to honour all warranties, while providing service and spare parts to current Saab owners around the world.

Last week, Saab agreed a deal with Beijing Automotive to sell it some of Saab's technology. That deal will not be affected by the latest announcement.

Saab employs 3,400 people in Sweden and GM estimates 8,000 people will suffer indirectly.

...more on link

[wiganvillain]

With the news that Dubai & Greek economies are teetering on bankruptcy this week...WATCH THIS SPACE!!!

Well we know RBS were exposed to billions in Dubai but it looks like Abu Dhabi are going to pick up the tab as predicted.

However... How much are our banks exposed to Greek sovereign debt, and if they do go pop does the EU step in? Is there any kind of structural fund in the Eurozone to bail out it's members if they are in the brown stuff? Basically what happens to the EU if Greece (or Spain) goes broke?

According to Stephanie Flanders basically the European Central bank has been bailing the Greeks out by buying their paper at standard interest rates but the problem is it has to stop soon and that will cause Greek interest to rise dramatically and their rating to drop.

[Awol]

With the news that Dubai & Greek economies are teetering on bankruptcy this week...WATCH THIS SPACE!!!

Well we know RBS were exposed to billions in Dubai but it looks like Abu Dhabi are going to pick up the tab as predicted.

However... How much are our banks exposed to Greek sovereign debt, and if they do go pop does the EU step in? Is there any kind of structural fund in the Eurozone to bail out it's members if they are in the brown stuff? Basically what happens to the EU if Greece (or Spain) goes broke?

According to Stephanie Flanders basically the European Central bank has been bailing the Greeks out by buying their paper at standard interest rates but the problem is it has to stop soon and that will cause Greek interest to rise dramatically and their rating to drop.

Cheers bud. Well we are borrowing a higher percentage of our GDP than the Greeks but at least we can use the pound to take some of the hit through devaluation and worry about hyper inflation later. Thank christ we didn't go in or we'd be even more screwed now.

[privateer]

Cheerio, Saab.

GM says it has failed to sell its Swedish car brand Saab and will begin "an orderly wind-down of Saab operations".

GM had been in talks with the Dutch speciality car maker Spyker over a sale. Talks with Sweden's Koenigsegg also fell through earlier this year.

"We regret that we are not able to complete this transaction with Spyker Cars," said GM Europe boss Nick Reilly.

GM has been trying to sell Saab as part of its turnaround plans since January.

It is the end of the road for Saab, the car that emerged from a company making fighter jets.

When its owner GM bought Saab, it was seen as a brand that could become the US automotive group's European luxury brand.

But the quirky cars did not attract a broad enough following, so it failed to make money.

GM's solution was to cut costs by sharing ever more cars with Opel while, at the same time, toning down their design.

Such moves alienated traditional Saab customers without gaining new ones. New product development ground to a halt and in the end, there was simply not enough left of Saab to make it worth preserving.

Mr Reilly added that all debts would be paid and that the winding-down would be "an orderly process".

On a conference call, GM vice-president John Smith said it became clear that there were serious problems with the Spyker talks that could not be resolved.

He said: "We reached a point of impasse, we decided to deal with it and move on."

A statement from the firm said that Saab would continue to honour all warranties, while providing service and spare parts to current Saab owners around the world.

Last week, Saab agreed a deal with Beijing Automotive to sell it some of Saab's technology. That deal will not be affected by the latest announcement.

Saab employs 3,400 people in Sweden and GM estimates 8,000 people will suffer indirectly.

...more on link

As a SAAB owner for the last decade I'm **** outraged by this. Not content with slowly diluting the essence of a once-great marque by turning their models into Vauxhalls, they have now trashed the entire company. Absolute words removed.

[Gringo]

And now for the good news........the UK public borrowing for November was only £20bn, they had been predicting £23bn. The UK public borrowing for the whole of 2002 was......£20bn (which isn't really true as gordo wrote out a load of IOUs and hid them under the PFI foibles).

UK borrowing hits record monthly high of £20bn

[johnvillan]

federalreserve.gov

“In light of ongoing improvements in the functioning of financial markets, the Committee and the Board of Governors anticipate that most of the Federal Reserve’s special liquidity facilities will expire on February 1, 2010.”

link

Might be heading for a downturn in Feb 2010.

[johnvillan]

Forbes.com

Trillions Of Troubles Ahead

Bert Dohmen, 12.18.09, 05:50 PM EST

A crushing burden of debt threatens to sap America's growth for years to come.

Not too long ago, a billion dollars in a governmental budget was a lot of money. Then we got into hundreds of billions. People understood that this was a lot, just because of all the zeros. Now, unfortunately, the number has become small: the world "trillion," as in $1.2 trillion for health care reform, seems so tiny. But it has 12 zeroes behind it, which is so easy to forget.

If the government stays on the course it's been on for the past forty years without a radical change, the federal government will soon have a $10 trillion budget.

In other words, the federal budget deficit will be $1.4 trillion. Just to make the size more visible, that's $1,400 billion.

Our colleague Rob Arnott, who always does terrific research, wrote in his recent report that "at all levels, federal, state, local and GSEs, the total public debt is now at 141% of GDP. That puts the United States in some elite company--only Japan, Lebanon and Zimbabwe are higher. That's only the start. Add household debt (highest in the world at 99% of GDP) and corporate debt (highest in the world at 317% of GDP, not even counting off-balance-sheet swaps and derivatives) and our total debt is 557% of GDP. Less than three years ago our total indebtedness crossed 500% of GDP for the first time."

Add the unfunded portion of entitlement programs and we're at 840% of GDP.

link

[ender4]

wow, thats a lot of debt!

i wonder what the British level is at....

[johnvillan]

£1.3 trillion in various guarantees and investments behind the banking system in order to avoid the consequence of its fall.

£863 billion public debt & counting

A large chunk of our tax income is gained from the financal (pyramid debt selling ) sector, so we can expect that to fall . If the Torys get in Brown will have left them in the crap .The cuts in public spending will have to be brutal or our credit rating will have to be downgraded from AAA, insuring that who ever wins will be so unpopular that they will only be around for one term.

[Awol]

Families face years of pain, says Bank

Families must steel themselves for years of hardship even though the recession is all but over, the governor of the Bank of England has warned.

They will see their standard of living fall over the next two years as salary freezes and rising inflation eat into incomes, Mervyn King said.

“The patience of UK households is likely to be sorely tried over the next couple of years,” Mr King said, dashing hopes that Britain could recover quickly from the deepest slump in post-war history.

His comments are likely to infuriate Downing Street, which had hoped to campaign in the election on having set Britain back on the road to prosperity. The remarks also included a warning of interest rate rises. Hours before the governor’s speech, official statistics showed that the annual rate of inflation had surged by an unprecedented 1 per cent last month, pushing the Consumer Price Index up to 2.9 per cent.

Inflation is now rising almost twice as quickly as average earnings and the figures do not reflect the recent end to the VAT tax cut. With consumers facing even higher prices as a result of rising VAT in January, CPI is likely to go well above 3 per cent in the coming months, Mr King suggested.

Meanwhile, workers have seen salaries contract at an unprecedented rate. Although unemployment has not risen as high as in previous slumps, this has been at the cost of a significant reduction in household pay, with many staff accepting pay cuts, or voluntarily working part-time, to hang on to their jobs.

Mr King said that, although the recession was soon likely to be over in technical terms “there is little scope for growth in real take-home pay, which may remain weak even as output recovers”.

“It is clear that inflation is likely to pick up markedly in the first half of this year, a message reinforced by this morning’s news that CPI inflation reached 2.9 per cent in December . . . the rise in VAT back to 17.5 per cent means that CPI inflation is likely to rise to over 3 per cent for a while, or even higher for even longer were energy prices or indirect taxes to increase further.”

Although he said that inflation should eventually come back down, its increase prompted speculation that the Bank will start to raise interest rates in months.

Simon Ward, an economist at Henderson asset investors, said he expected higher rates before the election, causing further difficulty for borrowers and, by extension, for Gordon Brown.

Mr King’s comments, in a speech at the University of Exeter last night, prove particularly embarrassing for the Chancellor, Alistair Darling. He insisted in a newspaper interview this week that he was “totally relaxed about the governor talking about the wider economy”.

Mr King used the speech to warn the Chancellor that, unless he fulfils promises to present an austere Budget with spending cuts this spring, he may cause chaos in the capital markets where the Government raises its money.

He indicated that unless the Government is clearer about plans to slash the deficit, the Monetary Policy Committee could be spurred into raising interest rates even sooner.

He said: “Uncertainty about how and when fiscal policy will respond has a direct bearing on monetary policy. And markets can beunforgiving.” This year’s election is likely to hinge on the economy. Last year saw the deepest UK recession since 1931 and Britain is set to rack up one of the highest budget deficits in the West.

With the International Monetary Fund and others, Mr King has said current plans to reduce borrowing are too unambitious.

Throughout the past year, George Osborne, the shadow chancellor, has promised to cut public spending faster and deeper than the Government.

Last night he said: “This is a very important warning from the governor of the Bank of England, spelling out the consequences for this country of not having a credible plan to deal with the budget deficit.

“I agree with him.”

A Treasury spokesman insisted that families would soon see an improvement in take-home pay, crediting continued government spending and saying that independent forecasts of unemployment had been revised downwards.

Looking pretty shitty even if the politicians still don't want to admit it. Rising interst rates and wage stagnation isn't going to help anyone apart from retired savers - and inflation will scupper many of the benefits for them.

There is supposed to be an interest rate announcement of the 4th of Feb, funnily enough the same day that this is due to be published:

Hang the lot

The election results might bring some real shocks if all the main parties are still seen as sleazy, corrupt, clearings in the woods - which we obviously know they are!

[leviramsey]

USA relegated from the ranks of free economies (by arch-conservative think tank in association with Murdoch's Wall Street Journal)

Free economies

Hong Kong

Singapore

Australia

New Zealand

Ireland

Switzerland

Canada

Mostly free economies

USA

Denmark

Chile

UK

Mauritius

Bahrain

Luxembourg

The Netherlands

Estonia

Finland

Iceland

Japan

Macau

Sweden

Austria

Germany

Cyprus

Saint Lucia

Georgia

Taiwan

Botswana

Lithuania

Belgium

On the USA

The United States’ economic freedom score is 78.0, making its economy the 8th freest in the 2010 Index. Its score is 2.7 points lower than last year, reflecting notable decreases in financial freedom, monetary freedom, and property rights. The United States has fallen to 2nd place out of three countries in the North America region.

The U.S. government’s interventionist responses to the financial and economic crisis that began in 2008 have significantly undermined economic freedom and long-term prospects for economic growth. Economic freedom has declined in seven of the 10 categories measured in the Index.

Uncertainties caused by ongoing regulatory changes and politically influenced stimulus spending have discouraged entrepreneurship and job creation, slowing recovery. Leadership in free trade has been undercut by “Buy American” provisions in stimulus legislation and failure to pursue previously agreed free trade agreements with Panama, Colombia, and South Korea. Tax rates are increasingly uncompetitive, and massive stimulus spending is creating unprecedented deficits. Bailouts of financial and automotive firms have generated concerns about property rights.

On the UK

The United Kingdom’s economic freedom score is 76.5, making its economy the 11th freest in the 2010 Index. Its score is 2.5 points lower than last year, reflecting reduced scores particularly in freedom from corruption, financial freedom, and monetary freedom. The U.K. is ranked 4th out of 43 countries in the Europe region, and its overall score is much higher than the world average.

The U.K. has long benefited from openness to global trade and investment. Business formation is streamlined and efficient, and there is a long tradition of entrepreneurship. An independent and efficient judicial system enforces contracts and intellectual property rights.

The British economy has undergone far-reaching adjustments in reaction to the global financial and economic turmoil, and a dramatic expansion of state ownership has taken place since late 2008. The government has nationalized or seized considerable ownership in some of the major banks. Deterioration in public finances is worse than in other leading economies. Welfare benefits, the biggest component of government spending, have been rising. The government deficit is widening rapidly, and public debt has climbed to around 60 percent of GDP.

[leviramsey]

[rjw63]

You really don't expect anyone to sit through b7 and a half minutes of that crappy music do ye?

[tonyh29]

A top investment advisor has described Britain's economy as a 'must to avoid' and says 'gilts are resting on a bed of nitroglycerin'.

Bill Gross, manager of the world's biggest bond fund Pacific Investment Management Co made the comments as he warned investors to shy away from government debt, especially in the G7 industrialised nations.

Gross, in his February investment outlook posted on the website of Pimco, recommended shifting assets to Asia and developing countries.

The G7 industrialized nations have 'lost their position as drivers of the global economy' and will likely reel for years from the effects of increasing debt, Gross said.

Britain is a 'must to avoid' because of its high debt, which could devalue the pound and he said: "Gilts are resting on a bed of nitroglycerin."

Sky News

[Awol]

Tony there is a UK Gilts sale next week I think and we have officially stopped printing money. If investors decide not to buy our Gilts we can expect the printing presses to be running red hot by the end of the week. Inflation is going to catch us up sooner or later and Gordon knows it but pursues his scorched earth policy regardless. He doesn't give a damn about the country, only making life for the Tories as hard as possible.