Monday, 29 June 2015

Market uncertainty

Heading into the middle of 2015, Europe is at an impasse, with Greece saddled with debts it cannot pay and its creditors unwilling to hand over more cash without reforms.

It is now clear that there are no more bailouts for Greece so what is going to happen to world markets after Greece defaults?

Greece's economy has been in a shambles for six years. Unemployment tops 25 percent, and the rate of joblessness among the young hovers around 50 percent. Greece owes €9.7bn to the IMF this year alone!

Economists are pessimistic that the Greek financial drama will end happily even though Alexis Tsipras had recently offered concessions on key issues such as taxation and increasing the retirement age. Many expect Greek banks to implement capital controls to prevent a mass exodus of funds. Deposits have already slumped around 20 percent since the start of the year, and the banking system would probably collapse without further assistance of the ECB.

It should be expected that the ECB will probably do whatever it can to help the other 27 countries after Greece fails, however, how long will it take for Greece to reintroduce it’s own currency?

Taking the point one step further down the path, if Greece does leave or is kicked out of the single currency, it will most probably suffer inflation, layoffs, capital flight, shortages of essential commodities, and civil unrest. Of course it still will not have the money to pay for it's public services which includes the Police and Armed Forces, now we are looking at a scenario that could make some of the previous meetings in Brussels pale into insignificance.

Friday, 26 June 2015

To lax on our eastern border

Recently the Queen made a speech in Berlin where she tried to impress upon her audience that we should strive to keep our partners together not only in the West but the East to. Well, what is happening in the East and does anyone care?

Are we being too complacent about President Putin?

Why did we allow him to just stroll into the Crimea?

How has he paid for shooting down a civil airliner?

As you start answering these questions, you come to realise that nothing is being done, the situation isn't even being debated. At least we are talking about Iran's nuclear capability, but when it comes to President Putin and Russia, nothing, nada, null.

We cannot afford to allow the situation in the East to just run. The pressure they are putting on border countries is close to intolerable.

Saturday, 20 June 2015

Grexit continued...

Yesterday one billion Euros was withdrawn from the countries banks. It was not transferred from one bank to another, it has left the country or at least the official repositories and that is the start of the end. The domino effect will be too great for a recovery to be simple.

Somehow, Greece scraped together €1bn [£730m; $1.1bn] in debt payments to the International Monetary Fund in May, but Greece has already postponed June payments to the IMF and further hefty bills are due, to the IMF, European Central Bank and holders of short-term treasury bills.

However, the people are taking their money out and will probably not put it back.
Even if Greece leaves the Euro zone voluntarily or is thrown out, what future does it have?

Friday, 19 June 2015

American Race Relations

The question arises with every news story coming out of America, will race relations never improve?

It seems as though every time an incident occurs where someone with a gun faces off against people without guns the usual question arises. When will America realise that they have a unique problem that stems from their current gun laws.

There are obviously other factors that should be considered in the longer term like;- how many minority groups are represented by today's government, but the immediate action should be to introduce stronger gun controls.

This guy was given a gun for his birthday and then went out and shot people with it, that is ludicrous!

America is possibly the largest country in the world with the most mixed population of different ethnic backgrounds and still it has these type of issues...

Thursday, 18 June 2015

RBS again!

The 22 June 2012 is memorable for many RBS customers because that was the last time their computer system went down failing to place funds into customers accounts.

Now 17 June 2015 and it happens again. Why has it happened again?

The main reason is because the equipment used three years ago is still in place and is not fit for purpose.

Last week the Chancellor announced that he wants to sell off RBS quickly, now we know why...

Mr Osborne said: 'It's the right thing to do for British businesses and British taxpayers. Yes, we may get a lower price than Labour paid for it. Mr Carney, the Bank of England Governor said the sale would 'promote financial stability, a more competitive banking sector, and the interests of the wider economy' while avoiding 'considerable net costs to taxpayers of further delaying the start of a sale'.

Who ever buys it had better be computer savvy.

Wednesday, 17 June 2015


Everyone knows about Greece. Even if the low-probability event of an exit from the eurozone and default does take place, so what? Quantitative easing in Europe is in place, and presumably those "in the know" have insured themselves against a Greek exit [or Grexit].

The problem with Greece is not Greece leaving, but rather what kinds of ripple effects that might have in parts of the financial system that no one really is addressing or focusing on. For those who are naturally inclined to be contrarian in macro thinking, the contrarian trade isn't on betting that Greece defaults or not. The contrarian trade is actually on betting that everyone else's dismissal of such an event is the real threat to financial markets.

As the FT has reported that the British government is accelerating preparations for a possible Greek exit from the euro zone, as the Chancellor George Osborne said that Grexit would pose "serious economic risks" to the UK.

A spokeswoman said: "You can expect that we are continuing to make sure we have the right plans in place and stepping up preparations given where discussions have got to," adding that the potential impact on business, banks, the financial sector and tourists was being looked at. The FT reported that among scenarios prepared for were the possibility of British tourists being stranded on Greek islands without money. The report also said that home secretary Theresa May has previously looked into applying an emergency brake on migration from Greece if financial collapse led to a large movement of people.