Markets slide on earnings concerns
Markets continued to slide around the world as companies announced disappointing earnings results. On Friday in New York the Standard & Poor’s 500 Index slid 2.3 per cent after President Obama talked about the environment being “tough”, and the falls continued in Asia. The MSCI Asia-Pacific Index lost 2.1 per cent with Hitachi and Mitsubishi Electric in Japan leading the market down. Hitachi shares plunged 17 per cent after it forecast a record loss and Mitsubishi fell 9.1 per cent on its lower forecast. In London the FTSE 100 opened over one per cent lower.
UK jobless numbers set to soar
Long-term unemployment is set to “rocket”, with 300,000 people expected to join the jobless who are without work for more than a year, reported the Financial Times. The forecast from the Department of Work and Pensions is “so dramatic” that bidders for the flagship £1.2bn welfare-to-work programme will have to “radically” re-work their tenders for the contracts. The DWP admission is a “stark recognition” by government ministers of just how quickly the employment market is deteriorating as it plans for a “worst-case” scenario.
Bankrupt Britain gets more likely 
Civil unrest is a shot across the bows for the ruling class
Ireland to pump €7bn into banks
The Irish government is to invest €7bn in the country’s two biggest banks as part of a recapitalisation scheme planned for this week, reported the Times. It is also set to insure Allied Irish Banks and Bank of Ireland against more than €24bn in bad loans, with the investment of €3.5bn each. The injection will take the form of preference shares with an interest rate of eight per cent, which entail an annual payment to the state of €560m. The bail-out comes “just two weeks” after Gordon Brown revealed the UK’s revised bank deal.
Greedy 'banksters' cause sympathy for new Bonnie and Clydes
US carmakers plan rise in UK prices
Ford Motor and General Motors plan to “counter the pound’s drop” by raising car prices in the UK, reported Bloomberg.com. The plan is more likely to “drive away buyers”, however, and accelerate the plunge in British car sales”. Ford is to raise prices by an average of 4.7 per cent from today, including a 5.2 per cent rise for the best-selling Ford Focus, and Vauxhall will release plans for a hike later in the month. Observers called the moves “suicidal” with auto sales in the UK falling 11 per cent last year and vehicle deliveries down 21 per cent in December.
Nobel winner says let banks fail
According to Nobel-Prize-winning professor Joseph Stiglitz the UK should allow all its distressed banks to go bankrupt and set up a “fresh banking system” under state control, reported the Daily Telegraph. The former chair of the White House Council of Economic Advisors told the newspaper that the banks should be allowed to default on their foreign operations and the UK should “start afresh” with a new set of healthy banks. He said the move could cause “turmoil” but it would be a cheaper way to deal with the problem for the taxpayer.
Tax avoidance costing billions
UK taxpayers are being left to “plug a multibillion-pound hole” in the country’s finances as hundreds of companies limit their tax payments, reported the Guardian. Many of the UK’s biggest groups are increasingly using “complex and secretive” tax arrangements to lower the tax they owe in “perfectly legal” corporate tax avoidance measures. HM Revenue & Customs estimates that the size of the “tax gap” could be anything between £3.7bn and £13bn as companies transfer operations and assets to tax-advantageous locations.
...in brief..................
Barclays ratings downgraded and luxury London homes plummet
Moody’s downgraded Barclays’ credit ratings on Sunday night after talking of “significant further losses” for the bank, reported the Financial Times. Moody’s said it expected credit-related writedowns to affect it adversely, a week after the bank maintained its profit forecasts…………
Rio Tinto is set to have further talks with Chinese state-owned miner Chinalco over a possible cash injection, reported the Independent. The boost could be worth as much as £10bn as Rio seeks to ease its £40bn debt “mountain”, by a number of means including a rights issue…………
High street chain Woolworths is to be relaunched as an online brand, after the name was bought by the UK’s biggest homeshopping retailer, said the Guardian. Shop Direct, which owns the Littlewood’s catalogue plans to launch Woolworths online this summer…………
US private equity group Clarion Capital has made an offer for bankrupt glassware and crockery group Waterford Wedgwood, reported the Times. The company, advised by former Waterford chief John Foley, is said to have put forward a “substantial” offer on Saturday night…………
Politicians are calling on the Financial Services Authority to conduct an overhaul of the UK deposit protection scheme, reported the Daily Telegraph. The 111 MPs are worried that building societies will shoulder a “disproportionately large” share of the annual £1bn bill…………
Luxury home prices in London had the “second-biggest decline on record” in January as buyers found it difficult to get mortgages, reported Bloomberg.com. The average cost of homes worth more than one million pounds fell 3.7 per cent from the month before, according to Knight Frank…………
Posts
