The Obama addministration is doing all it can to battle the deepening recession and to do this, it has decided
to adopt a 3-pronged approach to rid the financial system of what are called ‘toxic assets’. The approach aims
to carry out plans to purchase mortgage-backed securities and other forms of securities by use of public and
private funds and have them run by private investment managers. These funds will reach a staggering $1 trillion
and are expected to clean the balance sheets off bad assets. This comes amid public outrage that have seen
large corporations like AIG issue out-sized bonuses to its executives despite their financial state. These efforts have
however been faced with a measure of worry over new tough rules of engagement.
Posted by Shue on April 18th, 2009 :: Filed under
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The ongoing financial crisis may have hit developed countries severely and crippled some major
financial giants. However, the developing countries are not out of the woods. A report by the World
Bank reveals that developing countries will also likely feel the pinch. Investors have put aside
these emerging markets to resolve investments in developed regions and this may severely impact the
economies of these countries. It is expected that, as a result of lost investment, mostly from private
sector creditors, developing countries will loose up to $700 for this year alone. According to the World
Bank managing director Mr Ngozi, “Poorer countries such as Latin America, Central Europe, Asia and Africa
were the innocent bystanders in this crisis, yet they have no choice but to bear its harsh consequences.”
Posted by Shue on April 17th, 2009 :: Filed under
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The long-awaited government bailout plan was finally announced on March 23. This is the latest in the government’s efforts to stabilize banks and to have frozen credit markets up and running again. The plan will use between $75 billion and $100 billion of federal bailout funds together with federal loans, guarantees and an almost equal amount of private-sector money to buy questionable and mostly mortgage-backed assets from banks. The total investment package could come to close $1 trillion. While the financial industry hailed the plan as a solid fix that is expected to unlock the frozen credit market, critics called the move a series of opaque subsidies that would, at best, only prop up banks and their shareholders but do little in reviving lending. Indeed, huge challenges still lie ahead for the Treasury.
Posted by Shue on April 15th, 2009 :: Filed under
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As part of the bank’s ongoing cost-cutting campaigns, the technology staff at RBS could see their jobs outsourced to India. A whistle-blower told High Tech Scotland that an entire floor had already been outsourced. Infosys, the Indian IT outsourcing firm that has been carrying out the bank’s technology services since 2002 could see their business increase as the bank considers tendering more IT work. This year, a number of banks have been considering outsourcing their technology functions and it will not be a massive shock to hear that RBS is considering the option further. The majority of the roles that are likely to be outsourced are centered on applications management and software development and with some 6,500 IT staff at RBS, this could result in significant cost cuts for the beleaguered RBS and job losses for many.
Posted by Shue on April 11th, 2009 :: Filed under
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Nationwide Building Society released their new online savings product. The new E-Savings Plus accounts are run just
like FlexAccounts from Nationwide and they offer up to a 3.75% gross AER for savers. This new account allows savers
to access their savings while still having a competitive interest rate. Customers are allowed to make withdrawals
up to three times per year and still benefit from a 3.75% top rate gross per annum. Withdrawals excedding 3 will
result in lower interest rates either, backdated to the time of the account opening or the account’s opening anniversary.
Nationwide celebrated its 10th anniversary of internet banking last year since its launch in 1997. Matthew Carter, the
Nationwide’s director of Savings said that this new savings account gives savers more choices of where to put their money.
Posted by Shue on April 10th, 2009 :: Filed under
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Official data has shown that the British consumer inflation rose to unexpected levels in February and hit the 3.2% mark.
Another measure of prices, the retail price inflation, also remained flat with one of the weakest readings since 1960.
In a letter to the finance minister, Bank of England governor, Mervyn King explained that the figures could be
explained by the transmission of weak sterling to consumer prices. The price inflation is however expected to fall
into negative territory later in the year as high energy prices experienced last year fall out of the statistics.
Lower housing costs and interest rates have contributed to pushing down of the retail price inflation to zero. The
U.K. government expected target is to have the inflation below the 2% target mark.
Posted by Shue on April 9th, 2009 :: Filed under
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The safe government bonds seemed to have been on the defensive as global stocks rallied. The central banks have
supported the bonds immeasurably to buy chunks of debt to keep the market yields from escalating. These purchases
serve as a means to boost economic growth. They have short-term interest rates that have recently come down to near zero.
Investors seized the Federal Reserve’s decison to buy amounts of Treasuries as a clear sign of the erosion of the
dollar as the world’s reserve currency following a 2-month low hit against other major world’s currencies. The IMF’s
Special Drawing Right may replace the world’s main reserve as the debate over the dollar’s role intensifies.
Posted by Shue on April 8th, 2009 :: Filed under
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In an effort to free banks of up to $1 trillion in loans and troubled mortgage securities, the U.S. Treasury
was cheered by investors, all of this being part of an array of measures that are designed to jump start lending
as well as get the economy back on its feet. Investors have started to pick up riskier assets and this has spurred
hopes that the battered housing market could be in for a recovery. For 2 months now, the Asian stocks have seen
an upward trend with higher-yielding currencies jumping against the yen. Japan’s Nikkei has struck a 2-month high
after experiencing a 3.3% climb. the Nikkei has seen a 21% rise from its lows and this market trend meets the
traditional definition of a bear market rally. Some technical indicators also suggest that the benchmark index
has reached overbought levels.
Posted by Shue on April 7th, 2009 :: Filed under
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The former RBS boss Sir Fred Goodwin’s pension package has come under scrutiny and critisism by the organisation
responsible for setting up taxpayer’s interest in UK banks. Sir Fred was being offered an astounding 630,000 pounds
as his annual pension package. As it stands, the former RBS chief was awarded a pension that is worth 16 million pounds.
This figure has been highly criticised especially since Fred and former ex-chairman Sir Tom McKillop both confessed to
making a ‘big mistake’ over the purchase of Dutch Bank and ABN Amro. RBS has reported a 24.1 billion pounds in losses
over 2008 – the largest corporate loss in a year in UK history. As acting chairman Glen Morino said, Sir Fred’s pension
payout was a ‘reward for failure’.
Posted by Shue on April 6th, 2009 :: Filed under
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The online savings provider Egg recently launched an ISA with a paying interest of 2.5%. However, savings from
existing ISAs cannot be transferred into this new account. The account is easy to set up and can
be done over the interet in minutes. Customers can then keep track of their money by use of Egg’s telephone and
internet baning services. The head of savings and investments at Egg, Dean Proctor said, “With the new tax year
now under way, people should be looking for ways to make the most out of their savings. Our new cash ISA offers
an attractive rate of interest with no catches and is quick and easy for people to open and manage online.” He added
that with interest rates at an all-time-low, it was vital for people to make the most out of their savings now.
Posted by Shue on April 5th, 2009 :: Filed under
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