Welcome to Peston’s Picks - the home of my reports and analysis of the issues in business that matter to us all
22 hours ago
So where are we on this bloomin' deal to save the eurozone and, in theory, the world?
Well, the German government has been busy hosing down expectations that this weekend's eurozone summit will deliver anything more than progress, presumably so that investors don't defenestrate themselves on Monday morning at the blinding realisation that many of the currency union's structural flaws are not amenable to overnight remedies.
08:38 UK time, Wednesday, 19 October 2011
There are two perspectives given this morning on households' spending habits under the burden of their still-big debts and insecurity about prospects for jobs, earnings and disposable income.
Home Retail Group, owner of Argos, saw a slump in profit from £103m to £29.4m in the first half of its financial year. As for Argos itself, which is the UK's largest general merchandise retailer, its so-called "benchmark" profits collapsed from £54.4m to £3.4m in the six months to the end of August, as like-for-like or underlying sales dropped a painful 9.1%.
21:56 UK time, Monday, 17 October 2011
Liam Fox personally solicited a substantial donation from Jon Moulton, the multi-millionaire private-equity tycoon, for Pargav.
He requested the money verbally and in an email.
09:44 UK time, Monday, 17 October 2011
Something slightly odd is going on.
Markets are behaving as though European governments will definitely agree a rescue package for the eurozone next weekend and that the rescue package will sort all Europe's financial and economic woes.
09:00 UK time, Thursday, 13 October 2011
The European Banking Authority is proposing that eurozone banks should hold capital equivalent to between 9% and 10% of their risk-weighted assets, on a Basel 2.5 basis, with sovereign debt in trading books and banking books marked down to market prices.
Having just read that gobbledygook, you have probably lost the will to live. So I had better explain what it means and why it matters.
18:41 UK time, Wednesday, 12 October 2011
The president of the European Commission has confirmed an intention to negotiate a bolder solution to the eurozone's financial crisis over the coming fortnight.
Jose Manuel Barroso's three main pillars of such a rescue are, however, much as anticipated.
09:18 UK time, Tuesday, 11 October 2011
European governments have been kicking and screaming against injecting taxpayers' money into their banks - and are now only likely to do so because Dexia's near-collapse sounded the alarm about a possible and devastating chain-reaction of collapsing banks.
Whether they will ultimately inject sufficient capital into banks perceived to be weaker, well we'll just have to wait and see. And, as importantly, whether they will be able to do so in a way that doesn't significantly increase the indebtedness and perceived liabilities of the governments standing behind the banks, such that the perceived credit worthiness of those governments will simultaneously deteriorate, well that's also moot.
07:36 UK time, Monday, 10 October 2011
The near collapse of the Franco-Belgian bank Dexia is the event that focused the minds of eurozone leaders on the urgency of putting in place a comprehensive plan to strengthen European banks in general.
Dexia won't need to be part of that plan, itself, because today it has been rescued by Belgian, French and Luxembourg governments.
09:18 UK time, Friday, 7 October 2011
The news for Europe's banks doesn't get a lot better, with this morning's downgrade of the credit ratings of Portugal's banks by Moody's - on concerns about the quality of their big loans to the Portuguese government (inter alia).
And for the UK, the long expected downgrade (also by Moody's) of the credit ratings of Royal Bank of Scotland, Lloyds TSB (sic), Santander and a number of smaller banks and building societies has taken place - which, I have to say, I regard as of lesser significance.
09:15 UK time, Thursday, 6 October 2011
My colleague Rory Cellan-Jones will I am sure write a proper appreciation of Steve Jobs.
All I would say is that he was one of the towering industrialists of our age - and I think "industrialist" is the right word, even if none of his employees ever handled a monkey wrench.
09:58 UK time, Wednesday, 5 October 2011
In calling for consumers to cut their big debts, should David Cameron be careful what he wishes for?
With even the UK's biggest and most fearsome retailer, Tesco, reporting lacklustre performance in Britain today, many consumer-facing businesses won't thank him for urging thrift on the nation.
08:33 UK time, Wednesday, 5 October 2011
There are some European regulators and politicians who regard the downgrade of Italy and the woes of the Franco-Belgian bank Dexia as positive events (oh yes) - because they hope that these serious but containable shocks will speed eurozone governments into taking credible, evasive action ahead of more devastating shocks.
And there were signs from yesterday's Ecofin meeting that European finance ministers increasingly recognise the need to strengthen European banks, so that the banks can better absorb losses on loans to European nations with excessive debts.
23:08 UK time, Tuesday, 4 October 2011
The downgrading by Moody's of Italy's credit rating could not have come at a worse time for the eurozone.
The crisis of confidence in the ability of eurozone countries with huge borrowings to repay all they owe has already deteriorated into a banking crisis - whose most serious manifestation to date has been talks to rescue the big Franco-Belgian bank Dexia.
08:56 UK time, Tuesday, 4 October 2011
You might think that today's announcement from UBS that it will make a small profit in its third financial quarter, in spite of its $2.3bn (£1.5bn) loss from alleged rogue trading, would be good for confidence in UBS and other big international banks.
And it is not terrible news. Except for one thing: the biggest contributor to UBS's unexpected profit is what it is known as "credit gains on financial liabilities measured at fair value" to the tune of $1.6bn or £1.1bn.
20:40 UK time, Monday, 3 October 2011
Equity and debt markets haven't imploded today, but my goodness bankers are feeling jumpy.
Having spoken to a load of them, there is a presumption that something bad and inescapable is round the next corner.
13:12 UK time, Monday, 3 October 2011
The chancellor's announcement that the Treasury is preparing to engage in what he called "credit easing" is potentially very significant.
It would involve the public sector buying bonds issues by companies - in an attempt to cut the cost of credit for companies, and also boost the supply of credit.
09:09 UK time, Monday, 3 October 2011
Many of those who work in banks and financial institutions equate support for a European financial transactions tax with a vindictive desire to see the City of London shrink.
But the argument, accepted by the Treasury (although not in quite so emotive terms), that if the tax were implemented in Europe alone, there would be an exodus of important firms to homes outside the EU - which would be particularly damaging to the City as Europe's leading financial centre - may not be quite as clear cut as it seems.
17:42 UK time, Friday, 30 September 2011
I may have under-estimated, by more than £1bn, the loss that Lloyds is likely to incur from the forced sale of branches, loans and deposits that collectively it has christened Verde (see Wednesday's post for more on this).
My probable error was to be too sanguine about the capital that regulators at the Financial Services Authority will force Lloyds to inject into Verde prior to the disposal.
17:32 UK time, Thursday, 29 September 2011
Lord Turner has once again tried to put a sizeable bomb under the economic orthodoxy that has determined government and regulatory policies towards banks (as I noted in my post this morning, a couple of years ago he suggested that a financial transaction tax might be a decent idea, and argued that some financial innovation and trading might well be "socially useless").
In a speech delivered this afternoon at Southampton University, the chairman of the Financial Services Authority argues that the free market cannot be trusted to deliver either the socially optimal aggregate amount of credit creation by banks, in boom times and bust times, or that bank credit will go to the right parts of the economy
07:45 UK time, Thursday, 29 September 2011
Since it is the British government which may end up as the main obstacle to the introduction of a financial transactions tax, it may be worth pointing out that (more than two years ago) the first serious figure in Europe to argue for such a tax in the wake of the great crash of 2008 was Adair Turner, the UK's most powerful regulator as chairman of the Financial Services Authority.
His point was that much of the explosive growth in the trading of complex financial products - CDOs, ABSs, CDS, EFTs and so on, until we were all alphabetty crazy - may have been (in his words) socially useless.
Robert has won numerous awards for his journalism, including Journalist of the Year, Specialist Journalist of the Year and Scoop of the Year (twice) from the Royal Television Society, Performer of the Year from the Broadcasting Press Guild, and Broadcaster of the Year and Journalist of the Year from the Wincott Foundation.
Prior to joining the BBC, he was political editor and financial editor of the Financial Times, City Editor of the Sunday Telegraph and a columnist for the New Statesman and Sunday Times.
He broadcast and published a series of influential reports about the causes and consequences of the global financial crisis.
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