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Money - Oxfam exposes the Fat Cats Tax Haven, costing us a cool £100billion every year
Updated: 19 Jun 2013
Oxfam: Fat cats' tax havens cost us £100bn every year
Wednesday 22 May 2013
by Rory MacKinnon
Tax havens are robbing us of £100 billion every year warned Oxfam yesterday - and that's just from the bosses'
personal bank accounts.
Prime Minister David Cameron penned an open letter to the governments of Britain's crown dependencies and
overseas territories earlier this week, insisting he had "made fighting the scourge of tax evasion and aggressive
tax avoidance a priority" at June's G8 summit in Northern Ireland.
But Oxfam's head of development finance and public services Emma Seery said yesterday that "talking tough"
was no substitute for action.
The NGO's conservative estimates suggest that around £100bn in governments' revenue is lost worldwide
through tax havens every year - more than double the amount needed to end extreme poverty.
But that figure only accounted for individuals' tax-dodging, Ms Seery said, with company vehicles boosting the
total tax haven figure to an estimated £12 trillion.
Campaigners said more than a third of that cash funnels into British territories and dependencies, such as
Jersey and the Cayman Islands.
"These figures put the UK at the centre of a global tax system that is a colossal betrayal of people here and in the
poorest countries who are struggling to get by, and put the government on the side of the privileged few," Ms
The Tax Justice Network's John Christensen, who said that Oxfam's estimates were on the conservative side,
added: "We think, given the extraordinary level of corruption, that is now the only way forward is a registry of tax
information accessible to researchers, journalists and the public."
Money- The Britain, at the Centre of Major Tax Havens
Updated: 19 Jun 2013
Cameron accused of undermining plans to stop tax evasion
Monday 17 June 2013
by Paddy McGuffin Home Affairs Reporter in Belfast
Anti-poverty campaigners hit out at David Cameron at the G8 summit today, accusing him of undermining plans
to tackle tax evasion.
War on Want pointed out that many of the world's major tax havens are British, including overseas territories
such as the Cayman Islands, Bermuda and British Virgin Islands, and the Crown Dependencies of Jersey,
Guernsey and the Isle of Man.
This weekend Mr Cameron invited senior ministers from the overseas territories to sign a tax information-sharing
treaty before the G8 summit which began in Fermanagh today.
But campaigners have criticised the treaty for not requiring tax havens to share information automatically and
only forcing jurisdictions to share information they already collect.
The coalition has a less than glowing track record on the issue of tax. It removed Britain's main anti-tax haven
rules in 2012 in a decision set to cost £1 billion a year and developing countries £4bn a year.
In the same year it signed a controversial deal with the Swiss government allowing Swiss banks to keep details
of British account-holders secret.
In this year's Budget Chancellor George Osborne announced new rules which he claimed were intended to
clamp down on tax avoidance, but which campaigners say will instead give a green light to companies to avoid
billions in tax.
War on Want tax campaigner Murray Worthy said: "It is an outrage that the government continues to allow
multinational companies and rich individuals to use Britain's tax havens to dodge taxes around the world,
robbing the world's poorest countries of vital revenue.
"It has let the UK's tax havens keep their secrecy intact and made it easier for UK multinationals to use tax
Meanwhile the Archbishop of York condemned tax avoidance by multinationals and wealthy individuals in a
sermon in Enniskillen.
Dr John Sentamu said people could stop "tax dodging if our G8 governments step up to close the international
"Too many unscrupulous businesses and individuals manage to avoid paying the taxes they owe particularly in
developing countries," he said.
He added that decisions affecting millions of people "were being made behind closed doors, without the
participation of those affected."
Money-Time to Abolish Tax Havens-a means of Tax avoidance for the Cheating Rich
Updated: 19 Jun 2013
Rhetoric and reality on tax
Monday 13 May 2013
Actionaid's revelation of the scale of British corporate involvement with tax havens exposes the yawning gap
between government rhetoric and reality.
Both the Prime Minister and the Chancellor, who have benefited personally from the tax-dodging antics of family
members, have waffled about the duty of companies and individuals to pay tax.
But big business knows that this is just political play-acting, so it has taken no action.
There has been no reduction over the past 18 months in the proportion of subsidiary and associate companies
of FTSE 100 listed businesses that are registered in offshore tax avoidance havens.
Every FTSE 100 new entrant company since 2011 has tax haven offshoots or associates.
David Cameron has been talking up his plan to raise the question of action on tax havens at this year's G8
gathering, but how seriously will his words be taken by his international partners?
They cannot be unaware that Britain's conservative coalition government, which is responsible directly for more
tax havens than any other country, has done little to clamp down on this tax-dodging mechanism.
Recent transparency deals cobbled together with a number of tax havens may increase slightly the level of
taxation paid to advanced industrial nations, but they will do absolutely nothing for the poorest countries in the
world that are the hardest hit.
By allowing the plunder of developing nations to continue unimpeded, Britain and other wealthy states are
complicit in their exploitation.
Labour's demand that the government should adopt its proposed measures "to increase transparency and end
the era of tax secrecy" is insufficient.
There is no justification for the continued existence of tax havens.
Their sole function is to reduce the amount of tax paid by big business.
Tax havens should be closed down and companies doing business in Britain should pay their tax liability in full
with no right to transfer payments.
Cameron and George Osborne seek easy electoral pickings in return for cosmetic changes that will allow their
City of London friends to continue minimising their tax liability while working people cop their full whack by
direct deductions from their pay packet through PAYE.
Recent decades have seen the burden of taxation transferred from big business and the rich to working people,
both by slashing the upper payment rate bands and by increasing indirect taxation that affects lower-income
families most acutely.
Labour has nothing to gain from a halfway house approach to the question of taxation.
It should commit itself to abolishing tax havens, reversing the process of reducing corporate taxation, increasing
the amount paid in income tax by those with incomes over £100,000 a year and instituting a wealth tax to tap in
to the riches accumulated over years of cosseting enjoyed by the gilded elite.
Politicians of all stripes have resorted to glib generalisations about finance being too scarce to fund socially
There is no shortage of wealth in Britain.
It is simply in the wrong hands, either being frittered away on expensive
status symbols or assigned to inflationary property portfolios and financial speculation.
Another ruling class fallacy is that raising taxes on the rich would cause them to leave Britain for a better life
They should be told that everyone is free to go, but their property isn't and it will attract taxation in the cause of
economic justice and fairness.
Money-Offshore Tax- A Central Register on Beneficial Ownership ? -Cameron's Integrity in Question
Updated: 19 Jun 2013
One of David Cameron’s main aims for the G8 has been to get central registries of the beneficial ownership of all
companies and maybe trusts.
Osborne flagged it up on the Today programme this morning.
Paul Collier, Cameron’s adviser on this issue, made clear it’s the lowest hanging fruit that exists to beat offshore
secret tax abuse and seemed optimistic we’d get it – if not on public record.
But rumour has it that right now we may only get a requirement that companies know who
their beneficial owners are if enquiry is made of them.
That is only the existing Financial Action Task Force standard- and it does not work.
It can’t work.
For a start, findings many companies is nigh on impossible.
And the crooks just won’t comply, as a matter of fact.
This would be a disaster for Cameron.
He will have made this issue central to the G8 – and will not have delivered.
He will have been seen to accept the NGO agenda that this G8 has to tackle this issue – and then will have failed
to do so.
I will still think from the NGO and tax justice view point this G8 will have been successful: what the G8 has
conceded via David Cameron is that we have won the debate and have been right all along.
They know now that country-by-country reporting is essential – and it is getting support apparently. And they
have conceded – as the OECD has done this morning – that there is a vast amount of untaxed money in tax
havens that could be taxed if only the will existed.
And they will have said – collectively – that the will to do that does not exist is they will not create these registers.
As political disasters go that will be a big one – for all the G8 leaders.
Let’s see what happens.
Money- What is a Tax Haven
Updated: 19 Jun 2013
What’s a tax haven?
Tax havens – also known as ‘secrecy jurisdictions’ or ‘offshore’ – provide any of the following:
- Escape from tax (of course)
- Secrecy, in various forms
- Avoidance of financial regulations
- Avoidance of criminal laws
- Escape from other rules of society, such as inheritance or corporate governance rules
Tax havens can be whole countries, dependencies of bigger countries, or even areas within countries.
The City of London is a whopping tax haven, for example.
Grab the Prezi here.
Drill down into what tax havens provide, and two core elements stand out: escape, and elsewhere.
Secrecy jurisdictions offer the chance to avoid scrutiny, tax, financial regulations, criminal laws and more.
The ‘escape’ feature helps powerful individuals and organisations avoid the responsibilities and costs
associated with the things that made them rich in the first place.
You know, things like educated and healthy workforces, smooth roads, police protection and the courts of law
that uphold their contracts.
They leave the riff-raff to actually pay for all of that stuff.
This burden takes the form of higher taxes that make the daily shop more expensive for those to whom every
penny counts, and it means degraded public services.
Secrecy jurisdictions change their laws for individuals and organisations who are actually located somewhere
else! Hence the term ‘offshore’. See, it makes sense now, doesn’t it?
But the citizens who live within tax havens and are affected by these laws are not consulted. In fact, that is the
whole point of offshore.
This is about insiders talking to other insiders, in secret.
The exclusion of local populations in favour of wealthy foreign interests represents a pretty big smack down of
Tax havens like to boast about their ‘flexibility.’
Take the rather creepy Luxembourg Bankers’ Association for example, who proudly state that a key attraction is the “easy access to decision-makers” and “limited red tape”.
What ever happened to theme parks and castles?
We’re even more flexible!
As more and more capital flows into one tax haven, lining the pockets of local movers and shakers, other countries look on in envy.
So they deregulate their economies ever further and cut their taxes on the rich even more. It’s a ‘race to the bottom’! Except the race is against other countries, and their citizens are going down too, whether they like it or not.
So who wins?
The biggest users of secrecy jurisdictions are, contrary to long-held popular views, not celebrity tax exiles or mafiosi, but big corporations and wealthy individuals.
In multiple surveys, the biggest corporate user in every jurisdiction surveyed was a bank. Their ability to operate in zones of extreme secrecy has proved to be profoundly dangerous.
Indeed, a whopping 98% of the companies listed on the London Stock Exchange are using tax havens.
To find out who else wins, see our What’s the problem section.
*The Tax Justice Network knew
Money- The Mortgage Market - Cash Rich Banks -Homeowner ? Read the Last Line
Updated: 02 Jun 2013
At last, some good news: UK mortgage market is on the up again
The mortgage market's moving again, rates are at an all-time low, lenders are flush with government cash, and – at
last – they're keen to hand it over
Julian Knight Sunday 02 June 2013
Whisper it quietly, but there is just a touch of boom-times about the UK mortgage market. Cash-rich lenders,
flushed with £80bn of readies from the Bank of England's Funding for Lending scheme, are once again competing
for borrowers' attention with eye-catching deals. It's not quite 2006 and 2007 all over again, but for a fair few credit-
worthy borrowers it sort of feels that way.
Take Tesco's new deal, launched last week. A newcomer to the mortgage market, the supermarket giant offers a
two-year, fixed-rate deal at 1.75 per cent. It comes with a hefty £1,300 arrangement fee, but, nevertheless, the rate is
below inflation. Elsewhere, Norwich and Peterborough Building Society offers two- and five-year fixed-rate
mortgage deals with ultra-low fees at just 2.24 per cent and 2.74 per cent respectively. "Banks are taking
advantage of cheap money courtesy of the Government's Funding for Lending Scheme," said Ashley Brown,
director of the independent mortgage broker Moneysprite. "That's why we're seeing record low rates."
Sylvia Waycot, of the financial information firm Moneyfacts, subscribes to the idea that some mortgage borrowers
have never had it so good: "The Funding scheme has kick-started the mortgage market in a way previous
quantitative easing has not. Today's market is all about enticing the less-risky borrower [who has] a large deposit.
There's less chance of things going sour."
Less-risky borrowers are those who have been a salaried employee for, say, three years or more, have kept up all
their loan and credit repayments during the past few years, have a hefty deposit – 25 per cent and above – or have
a large amount of equity in their current home. These winners from the global financial crisis and recession are the
ones best placed to scoop all-time low mortgage rates. And rates may go lower still. Mark Harris, chief executive of
the mortgage broker SPF Private Clients, said: "Rates are likely to fall further still, but we also expect lenders to
loosen criteria as they get fed up with competing with each other over pricing. Some of the smaller lenders may not
have the capacity for big battles on the rate front and are likely to tweak criteria instead, which will be welcome."
This could mean that lower rates for first-time buyers, who generally have smaller deposits, are on the way.
But does all this mean the UK is on the cusp of another house-price boom, fuelled by the lenders again? Probably
not. First, there is still a huge debt hangover from the last boom, nearly £1.2 trillion of mortgage debt remains to be
paid off and several hundred billion of loans and credit cards. All that has happened since the global financial
crisis of 2007 and 2008 is that consumers have slowed their rate of new debt accumulation, rather than paying off
substantial amounts. Any major rise in interest rates, for instance, would still have a potentially catastrophic impact
on family finances in millions of British homes.
What's more, property transaction levels are still historically low. During the boom years new mortgages would top
100,000 a month. In figures for April, released on Friday, the Bank of England says that there were 53,710 new
mortgages granted for house purchase. By far the fastest-growing sector is existing homeowners staying put and
moving to one of the new ultra-low rate deals, with 30,313 remortgages taken out in April compared with 25,766 in
More generally, house prices are rising in London and the South-east owing to the better economy, greater
mortgage availability and the torrent of property investment cash ploughed in from wealthy foreigners. Outside the
capital, commuter towns and second-home destinations such as the South-west, the market is still in a state of
torpor. Prices are edging lower in much of the North and West, with the backdrop of a struggling economy and
The mortgage boom doesn't quite equal higher house prices – yet.
Money- In 1950 you could fix for 25 year @ 3% -Why not to-day ?
Updated: 01 Jun 2013
Santander launches record-low 10 year fixed rate mortgage under 4% –
but should you fix for a decade?
By Victoria Bischoff
PUBLISHED: 10:21, 22 May 2013 | UPDATED: 16:42, 23 May 2013
Santander has launched a record-low 10 year, fixed-rate mortgage at under four per cent. Those with a 40 per
cent deposit can lock into a 3.94 per cent rate for a decade.
On a typical £150,000 loan, monthly repayments will work out at £787. The total cost over the 10 years, including a
£995 fee, will be £95,435.
Homebuyers will get a free valuation and £250 cashback. Those remortgaging will get a free valuation and can
then choose between free legal work and £250 cashback.
However, borrowers may be better off opting for a slightly higher rate and lower fee. Yorkshire BS offers
borrowers with a 25 per cent deposit a ten-year deal at 3.99 per cent with a £130 fee.
Monthly repayments are £791 and total cost, including the £130 fee, is £95,050 - £385 less than the Santander
deal. However, there are no freebies.
Homeowners should bear in mind that if they want to ditch their deal before the 10 years are up, they will be hit
with steep early repayment charges.
Santander charges six per cent of your loan value if you want to remortgage before 2023. Yorkshire BS charges
seven per cent until June 2016, six per cent until 2018, four per cent until 2020, two per cent until 2022 and one
per cent in the final year.
Borrowers who want to secure their rate but don’t want to be tied in for 10 years should note that five-year fixes
have never been so cheap.
First Direct is offering borrowers with a 35 per cent deposit a rate as low as 2.49 per cent.
Repayments work out at £672 - more than £100 cheaper than Santander’s ten-year deal. Total cost over the five
years, including £1,999 fee, is £42,319.
Money-Mortgage Rates - Fix or Fixed
Updated: 01 Jun 2013
Rates fall for first-time buyers and the best five-year fix for big deposits is below 2.5%.
What next for mortgage rates and should you fix?
By Simon Lambert
UPDATED: 17:22, 24 May 2013
Mortgage rates for those with smaller deposits are on the way down, while those with plenty to put down can
secure a five-year fix below 2.5 per cent.
So how low can rates go?
Simon Lambert rounds up the latest predictions, tips, analysis and the best mortgage rates
Fixed rates at record low levels
Standout deal: The Co-op Bank's 2.79 per cent five-year fix substantially undercuts rivals offers.
Mortgage rates have taken a substantial dip for home buyers and borrowers with small deposits, giving first-time
buyers and those with low amounts of equity a shot in the arm.
More deals for those with just a 5 per cent deposit are emerging, while rates for those with a 10 per cent deposit
have fallen up to 1.5 per cent in a year.
Data firm Moneyfacts says that, on average, two-year fixed rates for buyers with smaller deposits have fallen from
5.44 per cent a year ago to 4.50 per cent today.
And the average five-year fix has also dropped — from 5.65 per cent last May to 4.83 per cent.
One in four first-time buyers put down a deposit of 10 per cent or less in the first three months of the year,
compared with one in five in the same period last year, according to the Council of Mortgage Lenders.
Among the top deals, Yorkshire Building Society has a two-year fixed rate of 3.64 per cent for those with a 10 per
cent deposit. First Direct offers 4.19 per cent for five years.
For borrowers with big deposits both HSBC and First Direct still have the lowest rates on five-year fixes at 2.49
per cent, but those carry £1,999 fees, so borrowers may be better off plumping for Norwich and Peterborough's
2.74 per cent five-year fix with a £385 in total fees.
Those with big mortgages will find it most worthwhile paying a hefty fee for a low rate, while borrowers with
smaller loans should look elsewhere.
It is also important to weigh up the benefits of deals offering cashback and free legal and valuation work -
common on remortgages and some do this even for purchases. The value of this can swiftly add up.
What next for rates?
The good news for borrowers is that not only are banks and building societies cutting mortgage rates but they
are also easing back on tough checks that have been making it tough for even those with good credit and
employment histories to get mortgages.
While Britain's property boom and bust highlighted that there was no doubt that lenders needed to become far
more prudent, many have also been using checks to weed out only the best prospects for their limited funds -
leaving first-time buyers and those with small deposits somewhat in the lurch.
The Funding For Lending scheme aims to lift that burden and reopen the mortgage market to those without
substantial equity or cash reserves. The signs so far are that it is having some effect, however, it is too early to
judge it properly and rates are still not falling as fast as many had hoped for those with ten per cent deposits.
Banks are sitting on a pile of cash from the scheme and have the firepower to boost lending and cut rates further,
whether those for borrowers with big deposits can go any lower remains to be seen. There is certainly plenty of
wriggle room for cutting rates for smaller deposits.
But ultimately whether mortgage rates have further to drop will be heavily influenced not just by the Bank of
England's cheap money but by how long the relative calm in the banking sector lasts.
What is Funding For Lending?
The BoE has said it will lend cheap money to banks who then pass this on to borrowers with its funding for
Banks and building societies can access finance at rates from around 0.75% - far cheaper than the equivalent
money market rates or what they must pay to attract savings deposits - rates on savings accounts have tumbled
in response to this.
They will be able to borrow up to 5% of their existing lending stock, and for every £1 of additional lending made
by a bank, it will be able to access an extra £1 of cheap funding from the scheme.
Fix vs tracker: where are the best rates?
Borrowers should have a quick look at the rates below for our favoured mortgage options - the lifetime tracker
and five-year fix.
For a fuller rate check use This is Money's mortgage finder service and best buy tables, these are supplied by our
independent broker partner London & Country. When dealing with any broker, remember some lenders will not
usually be included as they do not pay commission, some of these such as HSBC, First Direct, Post Office
consistently offer top rates, so check their deals.
HSBChas a five-year fix at 2.49 per cent for those with a 40 per cent deposit paying a £1,999 fee- fee-free it is 2.99 per cent.
First Direct also has a five-year fix at 2.49 per cent for those with a 40 per cent deposit paying a £1,999
Yorkshire Building Society has a five year fix at 2.59 per cent deal for those with 40 per cent deposits or equity and £1,475 in fees.
N&P BS has a five-year fix at 2.74 per cent with a £295 fee for those with a 40 per cent deposit, this comes with £200 cashback on purchases. Borrow less than £230,000 and this proves cheaper over five years than the YBS deal above.
Yorkshire Building Society is offering a five-year fix at 2.89 per cent for borrowers with a 25 per cent deposit paying £975 in fees.
Nationwide has a four-year fix Flexclusive for its Flexaccount holders at 2.49 per cent with a £999 fee for those with a 40 per cent deposit, or 2.79 per cent with a £99 fee. Or at 2.59 per cent with a £999 fee for those with a 30 per cent deposit, or 2.89 per cent with a £99 fee.
Yorkshire BS has a two-year fix at 1.79 per cent for those with a 40 per cent deposit, with £1,475 in fees.
HSBC has a two-year fix at 1.79 per cent for those paying a £1,999 fee with a 40 per cent deposit.
Chelsea BS has a two-year fix at just 1.74 per cent for those with a 40 per cent deposit paying fees of £1,675.
The margin between five-year and two-year fixes has trimmed but a shorter fix remains cheaper. Be warned you
may end up coming off a two-year fixed rate just as rates are rising though if a move comes earlier than markets
forecast, that is why This is Money prefers five-year fixes. However, if you think you will move in that period you
may face large early repayment charges if your mortgage cannot go with you.
Co-op Bank has a five-year fixed rate at 3.69 per cent with a £999 fee for those with a 15 per cent deposit, or at
4.09 per cent fee-free.
Those with just 10 per cent to put down can also get a 4.20 per cent five-year fix from Hanley Economic BS, with
Yorkshire BS has a two-year fix at 3.74 per cent for borrowers with a 10 per cent deposit, paying a £975 in fees. It
also has a 3.99 per cent deal for those paying £475.
Co-op has a two-year fix at 3.59 per cent for purchases only for those with a 15 per cent deposit, fee-free, or at
3.79 per cent fee-free.
This is Money likes lifetime trackers, or longer-term trackers, with no early repayment charges in case you need
to bail out if rates rise sharply.
HSBChas a lifetime tracker at 2.38 per cent with a £1,499 fee for those with a 40 per cent deposit, or at 2.69 per
At 30 per cent equity or deposit you can get a lifetime tracker with a £599 fee with HSBC at 2.69 per cent, pegged
at 2.29 per cent above base for the entire mortgage term. Fee-free the rate rises to 2.99 per cent.
Nationwide has a five-year tracker at 2.59 per cent for new borrowers with a 30 per cent deposit, with a £99 fee
and a free legal and valuation package, but you must have or take out its FlexAccount current account to qualify.
Existing borrowers can get a 2.49 per cent rate.
If you have a 20 per cent deposit you can get a 3.49 per cent lifetime tracker from HSBC for a £599 fee, or 3.79 per
Nationwide has a five-year tracker at 3.49 per cent for new borrowers with a 20 per cent deposit, with a £99 fee
and a free legal and valuation package, but you must have or take out its FlexAccount current account to qualify.
- A note on changing rates: Our mortgage rates round-up is kept regularly updated. We do not simply pick the absolute lowest rates but instead scour the market for the best overall deals, using a combination of rates, fees and other extras. Rates can change on mortgages at short notice and sadly lenders do not always inform us when they alter them (especially if they raise rates rather than lower them). This can lead to occasions when the rates listed above are not available. If you ever spot this situation - or a good rate we have not listed - please email email@example.com with mortgage rates in the subject line and we will update the round-up asap.
What is a standard variable rate and why have they risen?
Santander announced recently that its standard variable rate would rise for an estimated 300,000 borrowers from
the start of October - moving up from 4.24 per cent to 4.74 per cent.
It's move followed a raft of lenders raising their standard variable rates earlier this year - more than 1m borrowers
saw theirs go up from 1 May, which the Bank of England said affected 10 per cent of existing borrowers.
An SVR is the default rate that most mortgages switch to once an initial fix or tracker deal period ends, and
unless there is a cast-iron clause preventing it, lenders are free to raise them at any time - independent of the
Bank of England base rate.
Where next for mortgage rates?
Mortgage rates have fallen again as lenders compete a little more and the Bank of England's Funding for Lending
scheme has helped push down money market borrowing costs.
Prior to this they had been pushed up by the lack of competition in the market and yet more bad news from the eurozone and banks.
As SVR hikes arrived and more borrowers were pushed to remortgage, lenders raised prices to both take
advantage and try and limit the new business coming to them.
The good news is that cuts have finally arrived and rates have now slipped back. Interestingly, the gap between
fixes and trackers has narrowed substantially over this period - you can fix for five years at 2.64 per cent while the
best lifetime tracker is at 2.38 per cent.
These are the major factors affecting rates right now.
The eurozone crisis
Interest rates and the money markets
Money markets now forecast the first hike from the record low 0.5% base rate may come as late as 2018.
Economists call a rate rise slightly earlier, but the consensus is not before 2015 to 2016.
After this, base rate is expected to rise slowly and gradually, as the Bank of England fears damaging the weak
That revision of how soon rates will rise has led money market swap rates - which influence fixed rate mortgage
costs - to slip back.
Five-year swaps have plummeted since they stood at above 3 per cent two years ago and are now at 0.93 per
cent. (17 April 2013)
[More on interest rate predictions and swap rates]
Economic gloom means interest rates are likely to stay low for longer.
The eurozone debt crisis had taken a dramatic turn for the worse, with Spain dominating the headlines and talk of
Greece falling out of the currency continuing. A fix of sorts has been found with the European Central Bank's
bond-buying plan, critics say this may only be a sticking plaster though and that the problem is not solved.
Inflation has been stuck at 2.7 per cent since October but the BoE insists this is not a concern and once
temporary pressure falls back out it will resume its trend towards the 2 per cent target.
Latest Bank minutes suggest base rate will not go any lower than 0.5 per cent but the money markets do not
price in a rise until 2017.
But the base rate does not really drive new mortgage rates anymore.
Lenders' funding costs
A number of things influence mortgage rates: the price of funding on the wholesale money markets, the cost of
getting funds in from savers and also the amount of capital regulators demand banks hold against their loans.
While the Bank of England base rate has remained at a rock bottom 0.5 per cent, banks and building societies
must pay just below 3 per cent rate to attract new cash from easy access savers.
The financial authorities have also tightened how much capital banks must hold, thus raising funding costs.
The good news is that money market funding costs have fallen and not only is the Funding For Lending scheme
pushing cheap money through to lenders, they are also having capital requirements eased. Swap rates, which
heavily influence fixed rate mortgages, are at 1.11 per cent over five years, while Libor, which influences variable
rate deals, has fallen to 0.51 per cent.
Competing not to compete
Lenders have been opting to maintain their healthy profit margins and squeeze borrowers to cover their extra
Even with the latest round of cuts they are only really targeting the best borrowers
Until proper competition returns to the mortgage market lenders will hold all the cards and rates will be twitchy. It
is likely that they could fall back again if a bit of confidence returns, or the Bank of England's funding for lending
scheme works, but borrowers angling for a new mortgage may like to consider snapping a deal up, if they feel
they will be disappointed if rates head north.
Should you get a new mortgage? And what to get?
Certainly, those on standard variable rates of 4 per cent or higher with reasonable equity in their home should
seriously consider moving.
One option is a fee-free, early repayment charge free, life-time tracker. This could shave money off their monthly
repayments - or leave them equal - and ensure their rate will only rise when base rate does.
Many could grab a fix and pay less than they are now, or just slightly more. If you are on an SVR you should
seriously think about moving, unless you have a Nationwide / C&G-style guarantee capping it at a certain level
above base rate.
Events have highlighted the vulnerability of standard variable rates and discount rates linked to them, with
Santander's rise following mortgage giant Halifax raising its SVR, along with Bank of Ireland, Co-op and
Clydesdale/Yorkshire Banks. RBS also raised rates for 200,000 borrowers with Offset and One Account
mortgages. Unlike standard variable rates, which are at the mercy of bank's whims, trackers will only move up if
the base rate rises.)
[Latest charts and predictions on wholesale borrowing markets]
HOW FUNDING FOR LENDING WORKS
Funding for Lending allows banks to swap assets such as existing loans with the Bank of England for up to four
years in exchange for gilts, which they can then use to borrow money for their lending at close to base rate.
They pay a small fee to access the scheme, of 0.25 per cent per year. This will remain the same if they keep grow
net lending or keep it stable. If they shrink it the fee will rise by 0.25 per cent for every 1 per cent decline in net
lending up to a maximum of 1.25 per cent.
The price of each bank’s borrowing in the Scheme will depend on its net lending between 30 June 2012 and the
end of 2013.
Banks can borrow up to 5% of their existing lending stock, and for every £1 of additional lending made by a bank,
it will be able to access an extra £1 of cheap funding from the scheme.
The way the scheme is set up means that with base rate at 0.5 per cent banks can access funding at a rate of just
0.75 per cent and even if they shrink net lending they will not pay more than 2 per cent for it.
Why fix for five years or track for life?
At This is Money we have typically favoured five-year fixes and lifetime trackers over two or three year deals. The
first give a good rate and security over a medium term period for those who want it, the second should allow
borrowers to leave without incurring early repayment charges.
By contrast two or three year deals have slightly lower rates but will incur more remortgage fees and require
borrowers to be looking around for a new mortgage just as rates may be starting to rise.
That said two-year fixes are offering some extremely low rates at the moment - below 2 per cent - and so could be
worth a look, however, you must make sure paying fees makes them worth it.
The gap between a top five-year fix and a best lifetime tracker has substantially narrowed: with decent equity or
deposits the former sit at about 3 per cent and the latter just under.
Five-year fixes are cheap money locked in for a decent term and very tempting, but make sure you read the small
print - ensure it can move home with you if needed - and compare costs including fees to see what is best for
Safety first or take a gamble
Locked in: A five-year fix offers the security that your payments will not rise.
The appeal of a five-year fix to both buyers and remortgagers is the longer term security it gives and that there is
no need to remortgage in a short period of time, when rates are likely to be higher.
Homeowners should check that deals they are looking at are portable, and can therefore go with them if they move home.
Never forget the pay rate on trackers will rise when the base rate does.
The bigger margin on fixed rates means that borrowers willing to take a gamble on rates rising slowly are being
tempted by tracker rate mortgages.
Those happy to take a punt on rates rising slowly can save money over time by opting for a tracker,but they need
to be comfortable with the risk of higher payments and factor in a decent safety margin when working out future
Big fees vs rates
The best rates require big fees, but in most instances, fee-free or low-fee options are available and that highlights
how vital it is for borrowers to work out if a big fee-low rate mortgage is worth it for them.
Typically, the bigger your mortgage the more worthwhile it is paying a large fee, although watch out for those that
are a percentage of your loan.
Should I wait to see if rates go lower?
The problem for borrowers in recent years is that they don't know when mortgage rates will hit the bottom.
The past year is a case in point. Just as it looked like we had already seen the best mortgages ever that were
around a year ago vanish with months of hikes, rates then headed back lower again. Of course, they then jumped
again and are now back at record lows.
Lenders certainly have room to push rates down further with more money to lend, but there is no guarantee that
they will do so though and many are likely to use chunky margins to rebuild balance sheets.
The Bank of England believes that the way it has structured the Funding For Lending scheme will achieve the
desired falls, however, there is no guarantee this money will end up with those who need help the most -
borrowers with smaller deposits.
Borrowers need to be aware that in these repeated financial crisis days there is something else factored in to
mortgage rates: risk.
Lenders are boosting rates to cover their fear of bad debts and the financial authorities' demands that they cover
themselves adequately.That fear factor will remain for years to come, so don't expect a return to the easy credit
days before 2007.
A brief guide to what decides rates
Mortgage rates and savings rates are part of a complex financial web that draws on official lending costs, ie base
rate, money market funding costs, and competition for savers' deposits.
The traditional influence on fixed rate mortgages over the past decade has been swap rates [latest on swap
rates], the cost of obtaining fixed term funding on the money markets for lenders.
Meanwhile, the traditional influence on tracker rates over the same period has been Libor, the cost of floating rate
funding on the money markets.
Banks use savings deposits to fund mortgages as well as money market borrowing, while building societies are
heavily limited in how much of the latter they can use.
This means fixed savings rates are also influenced by swap rates, while instant access savings are influenced by
variable interest costs - base rate and Libor.
How the financial crisis changed things
Typically money market costs tended to move in line with the Bank of England's base rate, with Libor about 0.1
per cent above it and swap rates reflecting what the market thinks interest rates will be over a set period of time,
ie two years, five years etc.
The credit crunch put paid to this relationship temporarily, but things then returned almost back to normal.
However, Libor rose once more, from its level at about 0.8 per cent, as the Eurozone debt crisis has deepened to
reach almost 1.09 per cent in early 2012. It has since fallen back to 0.57 per cent.
Swap rates stood at 0.60 per cent over two years and 0.93 per cent over five years on 17 April 2013.
Generally, a rise in Libor or swap rates will push up mortgage costs and a fall will allow lenders to cut them. [Latest on Libor rates]
However, at the moment mortgage lenders' levels of confidence and their access to funding are equally important
to rates, this has manifested itself in demands for big deposits and high margins on mortgages above money
If confidence increases, in the economy, the banking sector and the outlook for house prices, lenders will find it
easier to raise funding and borrowers can expect rates to come down and deposit requirements to ease.
This would ironically be bad news for savers, even if base rate rose slightly, as the unfreezing of the money
markets would make their deposits less important to lenders - leading to worse rates being offered.
Choosing a mortgage - the essential quick guide
1. Mortgages are still being rationed - but you can get them
The problem is that rates are being used not just to make money but also to ration mortgages - most lenders
could not cope with the demand that offering say 3 per cent over five years to those with a 25 per cent deposit
If you are in the position of needing to fix, remember if you have a 25 per cent deposit or equity, despite the doom
and gloom, now is not a bad time to be looking for a mortgage. After all, any rates below 5 per cent are
2. How big a deposit do I need?
To get the full choice of deals raising a decent deposit is still vital. The benchmark figure is 25 per cent, if you
have this then you'll be getting close to the best rates, although for an absolute cheapest deal you're still likely to
need 40 per cent.
However, things are looking up for homemovers and first-time buyers who can't raise that hefty quarter of a
property's value. A selection of better deals for 15 per cent deposits are available and even the 10 per cent
deposit market is looking perkier.
The most consistent rates in recent times come from YBS, Nationwide, First Direct, HSBC, the Co-op / Britannia
and the Post Office. Tesco has also recently added itself to this list. Check them out if you are searching for a
3. Should I take a fixed rate?
Borrowers face a tough decision on this, as fixed rates still remain comparatively expensive by comparison with
tracker deals. That leaves the big question: when will interest rates rise?
The consensus is that there will be no dramatic sudden increases. However, these forecasts are no guarantee
that rates won't rise and when rates rise trackers will get more expensive. [Remember almost no one forecast
base rate heading down to 0.5 per cent]
Borrowers needing security should consider the extra cost of a fix as worthwhile. If you are taking a tracker
because you couldn't afford the equivalent fixed rate then you are putting yourself in a very dangerous position.
For those remortgaging, or buying and able to take their mortgage with them, if you don't need to act right now,
i.e. you are on an existing low tracker rate or guaranteed standard variable rate, it might be worth keeping your
cheap deal - but remember you are taking a punt on low rates and setting aside some savings that you make is a wise move.
4. Should I take a tracker rate?
Tracker rates look good right now. They are cheaper than fixes but they should come with a massive warning
sign attached, as essentially they are a gamble.
What looks like a bargain rate now, could soon get very expensive when interest rates rise.
Even the best trackers are at about 2 to 3 per cent above base rate. That's fine when base rate is 0.5 per cent, but
a whole a lot more expensive if it rises to just 2.5 per cent, which would still be a historically low level.
Anyone considering a tracker needs to make sure they are not just storing up a problem for the future. If the
tracker comes with an early redemption penalty that would make it expensive to jump ship, then make sure your
finances could take a rise of at least 2 per cent to 3 per cent in interest rates.
Of course, that may not happen. Inflation may subside, the UK may remain mired in economic gloom and rates
may stay below 1% for many years to come. If that happens a tracker looks a good bet, but just to reiterate - it is a
For that reason we at This is Money like tracker deals that fit into one of these three categories: no early
redemption penalties, a cap to how high the rate will go, or that let you jump ship for a fixed rate if rates rise.
5. Will my lender hike my standard variable rate?
A number of mortgage borrowers have fallen victim to lenders hiking their standard variable rates, despite the
base rate remaining stable.
Santander announced it would raise its SVR for an estimated 300,000 borrowers in mid-August
Halifax had been the biggest name to do this when it announced it was bumping its SVR from 3.5 per cent to 3.99
per cent in spring.
Some RBS and NatWest borrowers also suffered a recent hike, as have Co-op, Clydesdale and Yorkshire Bank
customers and Bank of Ireland borrowers.
Skipton Building Society did it too when its SVR soared from 3.5 per cent to 4.95 per cent. It had previously
pledged its SVR would never be more than 3 per cent above base rate and had reduced it accordingly as the
Bank of England cut rates. To change its SVR, Skipton had to cite 'exceptional circumstances'.
A number of small building societies, including Marsden, Scottish, Cambidge, Kent Reliance and Accord
Mortgages, have also raised SVRs since the base rate hit rock bottom.
Other lenders like Nationwide have introduced a new SVR - it has a new one at 3.99 per cent, instead of 2.5 per
cent, for new borrowers and those remortgaging.
Borrowers with smaller societies or lenders shut to new business are most at risk of seeing SVRs raised.
Previously it was thought that those with larger societies or banks should be safe but the Halifax and RBS moves
put paid to that view.
Never forget than without a Nationwide-style base rate lock guarantee, your SVR could be hiked at any time, as
could a discount rate linked to it
Money- Weak Pound- Holiday Costs Soar
Updated: 25 May 2013
Weak pound sends holiday costs soaring
Sterling has weakened against 38 out of 50 of the biggest currencies over the past 12 months
By Lana Clements | Yahoo! Finance UK – 4 hours ago
Yahoo! Finance UK - Time spent in the sun is set to cost a little more
Brits heading overseas this Bank Holiday weekend can expect to pay more for their ice cream on the beach, as
the pound has weakened against 80% of the top global currencies over the last year.A slow start to summer in
Britain has boosted demand for trips abroad over the coming months. But holidaymakers will find their money
won't stretch nearly as far as it did this time last year.Sterling has lost value against 38 out of 50 major currencies,
including the euro and American dollar, according to analysis Moneycorp. The spending power of those travelling
to the continent this weekend is 6% lower than last May, meaning Brits will have to spend approximately £30 more
Sterling has dropped 4% against the American dollar, costing Brits an extra £20 for every £500. Top 10 currencies
sterling has weakened most against
% decrease in pound over 12 months
Amount lost on £500
New Zealand Dollar
Sri Lanka Rupee
Chinese Yuan Renminbi
Source: MoneycorpThose looking to make their money stretch further will have to head further afield to
destinations in the Far East and South America. The pound has increased by 14% against the Japanese yen,
saving Brits £74 to achieve the same spending power as £500 a year ago.Sterling has also picked-up against the
South African rand and Argentinean peso.However, holidaymakers heading to Europe later this summer could
find rates have improved. One pound currently buys €1.17 but it could edge up to €1.20, according to Richard
Driver from Caxton FX. He said: "There’s a good possibility that we’ll see sterling improve against the euro in the
months ahead, so now isn’t particularly an opportune moment to buy your euro spending money.’’
Top 10 currencies sterling has strengthened most against:
% increase in pound over 12 months
Amount gained on £500
Money- 20% of those Retiring in 2013 will do so below the Poverty Line-14% have no Pension
Updated: 24 May 2013
Britain's pension crisis revealed:
Fifth of those retiring this year will be below the poverty line -
and 14% have no pension at all
- Joseph Rowntree Foundation says tens of thousands to retire on less than £8,254
- Fifth of women expected to retire below the poverty line this year, compared to 14% of men
- State pension expected to account for 36% of the average retirement income in 2013
By Adam Uren
PUBLISHED: 12:08, 22 May 2013 | UPDATED: 12:30, 22 May 2013
Shock research from insurance giant Prudential has claimed that tens of thousands of Britons will retire into
poverty this year.
Almost a fifth of people taking their state pension this year will be entering retirement on a total income of less
than the current poverty line, which according to the Joseph Rowntree Foundation is estimated at £8,254.
Some of those have inadequate private pension pots that will pay out at best a couple of thousand pounds a year,
but 14 per cent of those surveyed by the Pru will retire with no private pension at all and will instead rely solely on
the state pension.
Elderly crisis: One in seven people retiring this year expect to rely solely on the state pension for income.
Prudential retirement expert Vince Smith-Hughes said: 'Against a backdrop of rising living costs, the basic state
pension alone is not nearly enough to provide a comfortable standard of living.
'While it’s a very valuable source of additional income for millions of pensioners, the state pension should ideally
only represent a part of someone’s retirement income, not all of it.
'Relying on the state will see many people retiring below the poverty line this year, which shows the importance of
building up a personal pension.'
The findings also highlight a gender divide, with 21 per cent of women expected to retire below the poverty line
this year, compared to 14 per cent of men, which reflects the fact that men are more likely to have workplace or
The state pension - which is worth around £5,750-a-year, not including any additional second state pension
payments - is expected to account for 36 per cent of the average retirement income in 2013.
PENSION POT OF £220,000 NEEDED TO GET MINIMUM WAGE INCOME
Pensioners will have to have build up a retirement pot worth more than £200,000 to retire on a private pension
income of higher than the minimum wage.
Figures from Liberty Sipp estimate that in order to get an annual income equivalent to the minimum wage of
£12,115.20, a 65-year-old with a money purchase pension pot will need to have saved £220,276.
This figure too is based on the 100 per cent GAD income drawdown rate, so the figure could be much higher for
those taking out annuities.
Liberty Sipp MD John Fox said: 'These simple calculations drive home just how extreme the current pension
'The average pension pot at retirement, estimated to be around £30,000, is a fraction of the £220,000 required to
generate an income equivalent of the minimum wage.'
But a worrying number will rely on the state pension alone, meaning they could turn to their families or forms of
credit to see them through their twilight years.
Gordon Morris, of Age UK Enterprises, told This is Money that those who are in trouble should ask them for
advice, as there may be ways to boost their income.
He said: 'We help people who go into retirement with quite a lot of debts on credit cards or loans, and the first
thing we do for them is a benefits check.
'I would say probably nine out of 10 people who come to us come away with an additional £40 to £60-a-week in
benefits they did not realise they could claim.'
Mr Smith-Hughes said the figures show the importance of people saving early for their retirement.
He added: 'Virtually everyone with the option of a company pension should take advantage of that, and the tax
relief and employer contributions that go with it.
'If people want to enjoy a comfortable retirement, saving as much as possible as early as possible is important,
while seeking advice from a financial adviser or retirement specialist can also help to make the most of retirement income.'
The problem is one that is not likely to be confined just to 2013 either, with research from pension provider
Hymans Robertson finding that two thirds of employers think half of their workforce will be unable to retire at state
pension age because of inadequate retirement savings.
The increase in workplace defined contribution schemes replacing the more generous defined benefit schemes
means many workers not have build up sufficient savings to guarantee a comfortable retirement.
Hymans' Lee Hollingworth said: 'It is essential that we take action now.
'Employees care about how much they will get in retirement, but often aren’t saving enough.
'There is a clear need for a new approach to defined contributions governance practice which enables employees
to easily manage their pension saving more effectively to stay on track to achieve an appropriate retirement
Read more: http://www.thisismoney.co.uk/money/pensions/article-2327474/Fifth-retiring-year-poverty-line.html#ixzz2UA7wvg1k
Money- Having a Clear Out ?
Updated: 15 May 2013
How to make money from your wardrobe
Last updated: Jan 3rd, 2013
Feature by Emma Gunn
Selling, mending and swapping all offer solutions to your
wardrobe overload and could make you money too, as
Emma Gunn discovers.
The average woman owns £204 worth of clothes that they have only worn once, while 70% of Brits have bought
an item of clothing this year they have not worn at all, according to recycle website Musicmagpie.
On top of that the average family in Britain has around 134 unwanted items in their home, worth around £850, the
But there are ways you can get rid of these unwanted items - and make some dosh at the same time.
One of the most common ways to flog old rags is to sell them on eBay, the auction site.
The bidding process will most likely get you the best price, and it allows you to sell almost anything.
However, it can be hard to predict how much you'll get for an item, and with eBay charging you for posting the item and take a percentage of the cut, it can be a hassle.
2. Gumtree & Preloved
You could also consider posting an ad on classified ad websites such as gumtree.co.uk, which helps sellers find local buyers, or preloved.co.uk which specialises in second-hand items.
The website has recently launched a new service meaning you can now sell your unwanted clothes to it as well as DVDs, games, electronics and technology.
The site prices your stuff according to size, brand and type. For example, it offers £3.93 for a dress from Whistles, £11.33 for a mens Barbour jacket or £0.95 for a Mini Boden kids jumper. After the website has given you your price, you then box it all up and send it off for free.
4. Stuffusell & Sellyourstuffonebay
If you don't have the time to sell it yourself, you could also try using sites such as stuffusell.co.uk and sellyourstuffonebay.co.uk. These sites sell your items on eBay for you, they will charge you about a third of the selling price, but stuffusell.co.uk for example, claims to get you a price 25% higher than regular eBay sellers.
If you would rather recycle your unwanted items, check out recycleforcash.co.uk, which lists the best recycling websites for each different category of item you might want to sell.
Money -Surprise Surprise-Puff- The UK Rich's Ill Gotten Gains have Gone
Updated: 10 May 2013
100 of UK's richest people concealing billions in offshore tax havens
Global investigation gets under way as HM Revenue and Customs acts on leaked data
HMRC has warned alleged tax evaders they may face 'criminal prosecution or significant penalties'
Photograph: Michael Kemp/Alamy
More than 100 of Britain's richest people have been caught hiding billions of pounds in secretive offshore
havens, sparking an unprecedented global tax evasion investigation.
George Osborne, the chancellor, warned the alleged tax evaders, and a further 200 accountants and advisers
accused of helping them cheat the taxman: "The message is simple: if you evade tax, we're coming after you."
HM Revenue & Customs warned those involved, who were named in offshore data first offered to the authorities
by a whistleblower in 2009, that they will face "criminal prosecution or significant penalties" if they do not
voluntarily disclose their tax irregularities, as the UK steps up its efforts to clamp down on avoidance ahead of
the G8 summit in June.
The 400-gigabyte cache of data leaked to the authorities is understood to be the same information seen by the
Guardian in its Offshore Secrets series in November 2012 and March this year. It reveals complicated financial
structures using companies and trusts stretching from Singapore and the British Virgin Islands to the Cayman
Islands and the Cook Islands.
The Treasury is working in collaboration with American and Australian tax authorities in the biggest ever cross-
border tax evasion investigation, and warned that the alleged evaders may be publicly named and shamed if
they fail to come clean and explain their tax affairs.
Osborne described the data as "another weapon in HMRC's arsenal" in the fight against global tax evasion.
HMRC added it "reveals extensive use of complex offshore structures to conceal assets by wealthy individuals
The Revenue said it was continuing to analyse the material, the equivalent of more than 200 lorry-loads of
printed A4 sheets, but it has already "identified over 100 people who benefit from these structures". A number of
those "had already been identified and are under investigation for offshore tax evasion".
It urged those who use offshore tax structures to urgently review their taxation arrangements to ensure they
comply with the law, and encouraged those that don't to ensure "early disclosure of tax irregularities. Failure to
do so may result in a criminal prosecution or significant financial penalties and the possibility of their identities
being published," HMRC warned.
It is also investigating more than 200 UK accountants, lawyers and other professional advisers named in the
data as advising the wealthy on setting up the elaborate offshore tax arrangements. HMRC declined to name any
of the individuals, advisers or companies it is investigating.
An HMRC source said it was first offered a "taster" of the cache in 2009, but received the bulk in late 2010. A
spokesman declined to state if it paid a reward to the whistleblower.
The Guardian, BBC Panorama and the International Consortium of Investigative Journalists (ICIJ) have been
releasing details of UK citizens and companies acting as offshore middlemen.
Gerard Ryle, director of the ICIJ, said he expected the collaboration between taxmen in the UK, US and Australia to lead to "the largest tax investigation in history".
He added: "We know from the data we obtained there are names of people from more than 170 countries. Some
are prominent citizens – politicians, celebrities, businessmen, the elite of some societies.
"To have three major tax agencies collaborating – with the possibility of many more doing the same – is
potentially a major blow to the secrecy of offshore jurisdictions."
Among those identified by ICIJ data in the joint investigation was James Turner of York-based company
formation agents Turner Little, who told undercover reporters how to set up a foundation in Belize: "It doesn't link back to you, it doesn't link back to your family. So it gives you complete confidentiality."
A representative of Atlas Corporate Services, another company run by Britons but operating from Mauritius,
explained to reporters how to avoid tax on a hypothetical £6m sitting in a Swiss bank account. He suggested,
"off the record", that they use an offshore entity in Panama. "If there's a tax issue … they won't disclose any
information on that foundation under Panamanian law," he said.
Another middleman, Russell Lebe of Readymade Companies Worldwide, advising a reporter posing as an Indian
businessman, assured his client that "If we were approached by the Indian tax authority … and they're doing tax
evasion, we wouldn't give a monkey's."
The Guardian, in its investigation, identified 28 individuals with ties to the UK acting as "sham" directors for
more than 21,000 companies across the world, keeping the true owners of the companies off official paperwork
and thus making them invisible to authorities.
However, there is no suggestion that any of the individuals identified in the Guardian/ICIJ investigation are
among those being examined by HMRC.
Jenny Granger, HMRC's director general for enforcement and compliance, cautioned that not all the individuals
using offshore accounts were seeking to evade tax. "There is nothing illegal about an international structure,
especially in a globally integrated economy and these arrangements may be perfectly legitimate and may have
already been declared to HMRC," she said. "However, they may involve tax evasion, avoidance or other serious
offences by taxpayers. What has got to stop is using offshore structures to illegally hide assets and income."
David Cameron has pledged to make tackling the "staggering" levels of tax evasion a key priority of the UK's
presidency of the G8 this year. The EU will hold a summit on tax evasion on 22 May. It will be followed by a G8
summit under British chairmanship in June
Money- Make or Break time ?
Updated: 05 May 2013
Could you make it as an entrepreneur?
Have you got what it takes to be an extraordinary entrepreneur -
or are you doomed to failure before you even really get going?
With a record number of new start-ups, astonishingly generous tax breaks for investors and ever-more
crowdfunding sites gaining traction, more and more entrepreneurs are queuing up to get backing.
Now, I can’t claim to know which entrepreneurs and businesses will definitely make it - and anybody who claims
they do is pulling your leg.
But one thing I have worked out is the knack of identifying in a few minutes (and in most cases, a few seconds)
the entrepreneurs and businesses that definitely won’t make it big and therefore aren’t right for investment.
Of course, I can’t claim this is an exact science - and a lot comes down to the personality, passion and
persistence of the entrepreneur when you meet them. I must have met hundreds of entrepreneurs over the last
few years and seen hundreds of others make presentations. So I’ve put together a quick quiz so you can find out
if you have what it takes to make it in business on your own.
So, entrepreneurs, here are 10 questions that could change your life (or not, as the case may be).
1: Why do you want to start up your own business?
a. To make a difference.
b. To make a lifestyle choice.
c. To make a bundle of cash.
2: How committed are you?
a. Whatever it takes.
b. Whatever time I can manage.
c. Whatever makes sense - I have a lot of things on the go.
3: Are you a team player?
a. I know I can’t do this all alone - I do, or will, work with experienced people with complementary skills.
b. I know I can work on my own or with other people.
c. I know what I am doing and I can take this on myself - after all, the reason I am in this business is that I can do it better than other people.
4: Where do you want to be in five years' time?
a. I want to see my product or service used by thousands of people.
b. I want to be happy.
c. I want to be sitting on a beach.
5: How are you going to make money?
a. I have spoken to customers, know what they want and what they would pay and worked out my supply and distribution costs.
b. I have spoken to suppliers, worked out the costs and reckon I can make a margin.
c. I will provide it, customers will come.
6: How are you going to grow sales?
a. I am going to lead initial sales and then hire more experienced people.
b. I am not a sales person, so I will get focus on getting the product right and sort out the rest later.
c. I will provide it, customers will come.
7: Have you got any competitors?
a. Yes, but we have identified the gap in the market, understand the market size and opportunity and outlined clear reasons why people would buy from us.
b. Yes, there are some big competitors but we know who they are and we will watch them closely.
c. No, we haven’t got any competitors - we are unique.
8: How much profit is the business going to make in five years' time?
a. We are ambitious and forecast strong growth based on reasonable assumptions from what we already know of the market and the opportunity.
b. As long as we pay the bills and do our best to grow, we should make profits.
c. We are going to be massive. Revenues are going to go through the roof, while costs will stay really low.
9: How much do you know about your industry or sector?
a. I and/or my team have experience and contacts in this sector.
b. I have done a bit of work in this area and reckon I should be OK.
c. I know what I am doing. How hard can it be?
10: What have you achieved so far?
a. I have sorted out my initial product/service and got some initial sales/traction/data/PR/social media followers/marketing exposure.
b. I have done a lot of research.
c. I have a brilliant idea.
If you answered mostly As: Well done. You are on the right track to getting outside help, backing or investment.
If you answered mostly Bs: Think carefully about what you really want. You may be a lifestyle or consultancy
business - which is great and can give you the freedom and control you want. But to get backing or investment
you may need to be more ambitious.
If you answered mostly Cs: Business is much harder than you think. You might get lucky and you may have
struck gold. But don’t be in a gold rush to give up the day job.
Money-"Developed countries mired by huge debt & anaemic growth- inflation a risk " say Capitalists
Updated: 02 May 2013
Where next for gold: What the experts say
Last updated: May 1st, 2013
Feature by Ceri Jones
Gold has been under pressure recently, but although the downward move has intensified spectacularly in recent days, it's nothing new, say most of the experts we canvassed, and very possibly represents a buying opportunity.
Below we show a snapshot of expert opinions on the yellow metal.
Mike Turner, head of global strategy and asset allocation, Aberdeen Asset Management
Gold's fall from grace is arguably puzzling. Developed countries remain mired by huge debt and anaemic growth, and even in relatively buoyant emerging markets expansion has slowed. In such uncertain times, one would think gold would be seen as a safe haven.
No one really knows the long-term consequences of the huge monetary stimulus packages. Inflation remains a risk, however distant, and gold remains one of its best insurance policies.
Speculation that Cyprus may set a trend for eurozone central banks to sell off gold reserves and an easing in inflation concerns have weighed on sentiment. But more important is the fact that the yellow metal has "morphed" in recent years from being seen purely as a good store of value to merely another risk asset and now trades more like other commodities.
But investors should not forget the attractions of gold. No one really knows the long-term consequences of the huge monetary stimulus packages. Inflation remains a risk, however distant, and gold remains one of its best insurance policies. Equally if deflation prevails this brings into question the soundness of fiat money, in particular currencies such as the euro which seems less stable at the moment and gold represents the best store of value against that prospect.
Central banks, particularly in emerging markets, are only just beginning to increase their exposure to gold as they diversify away from US Treasuries and the dollar.
Gary Dugan, chief investment officer Asia and Middle East, Coutts
We believe an attractive entry opportunity is unfolding, especially if gold consolidates around its next technical support level of around $1,250 per ounce.
Part of the reason is the robust performance of the dollar. The currency has been buoyed by suggestions that the Federal Reserve might pull back on its quantitative easing (QE) efforts, by the Bank of Japan's commitment to pushing the yen lower and ongoing worries in the eurozone. As a result, there is less reason to hold gold.
In recent days, the dramatic decline in the gold price has been driven by high-volume and high-intensity selling. A number of traders have hit stop-loss levels, which exacerbated the decline. Industry reports suggest that two waves of selling in Commodities Exchange (Comex) June futures amounted to a contract value of $20 billion (£13 billion) and were key factors triggering gold's collapse.
Short positions in both metals and steel/metal equities are at record highs. According to some sources, London Metal Exchange short positions in copper and aluminium are equally large.
We believe the sell-off is exaggerated. Sales of gold exchange traded funds (ETFs) have unwound almost all of the eurozone crisis buying seen in 2012. At these prices, gold is a good buying opportunity. We also believe some central banks in emerging markets may be minded to buy at these levels.
Our technical analysts believe the gold price will consolidate before declining to the next medium-term support level of $1,250. This would represent an attractive entry point.
Koen Straetmans, commodities strategist, ING Investment Management
Worryingly it appears that not only the gold speculators but traditional buy-and-hold investors have thrown in the towel. More than 200 tonnes have been sold by gold ETF investors in a sharp reversal of a multi-year trend of ever-rising tonnage held by ETFs. The latter peaked at over 2,600 tonnes at the end of last year and currently hovers under 2,400 tonnes.
The sheer size of these holdings (around 80% of mine production) highlights the risk to the gold price should these investors further reduce positions, in particular as some are still in-the-money. Similarly, silver exchange traded product (ETP) holdings represent 50% of annual mine production.
There are some compensating forces. There has been renewed physical gold buying in India and China after recent price falls. Central banks are unlikely to become gold sellers - Cyprus only holds 13.9 tonnes, other central banks actually bought some 534 tonnes last year. Eurozone central banks, plus Sweden and Switzerland, are bound by a combined 400-tonne maximum selling agreement annually until September 2014.
We hold the view that we will witness a consolidation phase of global economic growth. On signs of further economic recovery it is therefore likely that equally beaten-up cyclical segments within commodities may do better initially.
Given the high level of uncertainty over the final dominance of forces we currently have a neutral position to precious metals.
For industrial metals, the latest Chinese gross domestic product (GDP) figures, plus industrial production and fixed asset investments (including real estate development) have been disappointing. Within the sector we prefer aluminium over copper as the former trades within the cost curve and the latter above. Aluminium is also expected to be the metal that could benefit the most from a shift to a Chinese consumer-led economy because of its uses in packaging and transportation.
Ashley King, head of treasury, Arbuthnot Latham
Ultimately, any price support for gold depends on whether central banks will continue with their quantitative easing policy. Recent poor economic data from China, Europe and the US shows that global economic recovery is far from certain. Commodity prices have also fallen sharply in recent weeks and possibly have further to fall.
The lower price of gold has resulted in an increase of physical purchases of bars and coins, although this has been outweighed by investors liquidating other variants of gold exposure such as ETFs and moving into asset classes such as equities.
Technically the break below $1,550 may open a move lower towards medium-term support at the $1,265 level. This level may represent a good buying opportunity for the longer-term investor.
Bart Van Craeynest, chief economist, Petercam
The theories (of why the gold price has dropped so spectacularly) include: possible gold sales by eurozone central banks; reduced inflation fears because of a hesitant global recovery; signs that the US Federal Reserve is looking to end QE3; the fact that the Cyprus issue did not affect the entire eurozone as much as could be expected; and improving confidence in the global recovery.
It is impossible to assess which is the correct one. In itself, gold does not generate any income or represent any economic activity, and as such, it is impossible to put a fair value on it.
However, gold has a strategic place in our portfolios. We do not hold it because it is a risk-free, stable asset: it is not. Nor because we expect inflation to become a major issue in the near term. Money printing holds inflation risks, but only if that money is actually used and if the economy is running close to potential. Neither condition is fulfilled in developed markets today. And we do not hold gold because we fear that the world is slipping into a doom scenario: on the contrary we expect the global recovery to continue.
We hold positions in gold for two specific risk scenarios: sustained and extremely loose monetary policy with massive liquidity injections has never been tried on today's scale. Textbook economics suggest that at some point this will lead to higher inflation and bubble formation.
Our long-term view is that the euro is gradually unravelling, and that eventually several countries will leave the euro, with significant implications for confidence in paper money.
These risks have not disappeared. If anything with Japan joining the global printing party and Cyprus getting closer to euro exit, these risks have become more prominent.
Paul O'Connor, director of multi asset, Henderson Global Investors
The most obvious trigger is the revelation that the government of Cyprus floated the idea of selling the central bank's gold holdings during recent bail-out discussions. Commentators have been quick to extend this theme to other eurozone countries, providing alarming estimates of potential gold sales.
It's worth noting that the central bank of Cyprus has shown no intent to sell gold; press comments suggest it would be opposed to the idea. If the Cypriot central bank sold its gold reserves it would only raise about 2% of the bail-out and would also deplete its foreign exchange reserves. It is questionable whether other eurozone central banks would pursue such a path, given the impact on the gold price and the stability of financial markets.
It's quite possible that the move was amplified by a few big trades from major funds, liquidating long positions or initiating shorts. The latest data from the Commodity Futures Trading Commission (CFTC) shows a surge in speculative short interest in gold in recent weeks, to its highest level since 1999. Options prices also show a surge in demand for downside protection in gold.
I would also highlight the futures market. Gold futures require only a 5% margin, which enables investors to place significant directional trades for a small amount of upfront capital. When the price moves sharply, stops get hit, triggering a "domino effect" in the price of gold.
Other sources confirm widespread capitulation in commodities. The April Merrill Lynch Global Fund Manager Survey showed that the number of funds reporting an overweight exposure to commodities is at its lowest since 2009. CFTC data suggest that speculative positioning in copper is at its lowest level for a decade.
There is a risk that a move of this size will trigger selling in related commodities and even in other assets as investors raise funds to meet margin calls.
Richard Davis, managing director and portfolio manager, BlackRock's Natural Resources team
Some holders of gold bullion are probably fatigued after seeing the strong performance of other assets such as equities. They may also be questioning the merits of holding gold as an insurance policy as the global economy is showing signs of a recovery, so gold was already poised for selling.
We don't see this sell-off as the beginning of a bear market for the metal. Longer term, the factors that have driven the bull market in gold have not gone away. We are yet to see the ramifications of quantitative easing, in terms of inflation. At the same time, we expect jewellery demand to pick up at these lower prices, especially in China, and some Indian jewellers are already returning to the market.
In the gold equity market, the recent sell-off has been largely indiscriminate, which has presented some excellent buying opportunities.
Wolfgang Pflüger, senior analyst, Berenberg Bank
The "Great Gold Crash" of late has not been a singular event. To put it into perspective, as at 25 April gold has lost some 9% since the start of the year. That compares to copper (-11%) or lead (-13%). Silver has been hit harder with -28%.
All these metals have broken out of their long-term upward trends. Technically speaking, they are now in a cyclical bear market. That may last a little bit longer for those whose fundamentals have changed, as it has for industrial metals: weaker demand figures combined with higher mining supply coming on stream spells output surplus, and downward pressure on prices for months to come.
The fundamentals for gold haven't changed at all. We still live in a world of governments caught in a debt trap, trying to reflate out of it with the help of unsound monetary policy, swamping the world with liquidity. We still have negative real yields on government paper and we have weak currencies (look at the yen).
So gold and to a lesser degree silver keeps its value (at least as an insurance you pay for the stability of your portfolio). But when almost 40% of the demand for precious metals now comes from financial investors not buying the physical metal but paper stuff like ETFs or future contracts and those investors switch their holdings with a short-term view, then from time to time prices can crash.
That has been a typical sell-off. Markets should be clean now. And after a period of bottom building which could last from a couple of weeks to a couple of months, precious metals should resume their upward trend. In other words, I'm much more confident for price gains in the precious metal sector than for industrials. At year end we expect gold to be around $1,600 an ounce and silver should reach $26,50.
John McManus, portfolio manager, Union Investment, Frankfurt
We see four main reasons for the gold price drop. First, nervousness that the Fed might end QE3 at the beginning of the fourth quarter. Secondly, the discussions about a potential gold sale of the central bank of Cyprus, possibly followed by similar activities in Italy, Spain or Portugal. Thirdly, a downgrade of the gold price by several investment banks, and fourthly sales of ETFs and futures.
We expect a gold price level of about $1,550 on a 12-month basis, as the supporting frame is still intact, with low real yields, lose monetary policy and competition in the field of devaluation.
In the context of the gold-price drop, other precious metals have also been affected, such as platinum and palladium. But palladium is attractive on a 12-month basis due to rising demand for catalyst production, as car sales are increasing in the US and China. For platinum, we also expect growing market demand.
This article was written for our sister website Interactive Investor
Money- The Global Financial Crisis - Central Banks are still stuck on Life Support Systems
Updated: 30 Apr 2013
Still stuck on central-bank life support
By Alan Wheatley, Global Economics Correspondent | Reuters – Sun, Apr 28, 2013 20:18 BST
LONDON (Reuters) - Five years after the onset of the global financial crisis, the world economy is in such a
chronic condition that the European Central Bank might cut interest rates this week and the Federal Reserve is
likely to indicate no let-up in the stimulus it is providing the U.S. economy.
With the euro zone economy in recession, momentum is building for the ECB to lower interest rates for the first
time since July 2012, according to senior sources involved in the deliberations.
If the bank does not act on Thursday, a quarter-point cut in June is considered a racing certainty.
The ECB is the most conservative of the world's main central banks. Its main short-term rate, now at 0.75 percent,
is higher than the equivalent rate of the Fed, the Bank of England and the Bank of Japan.
And unlike its peers the ECB has not engaged in quantitative easing - printing new money to buy bonds.
But the ECB seems to be softening. "I would argue that the ECB should be thinking of easing policy; whether
they are currently is more debatable," said Stephen King, global chief economist for HSBC in London.
Only a small majority of 76 economists polled by Reuters expected a cut as early as this week.
The swing factor for King is what is happening to Germany, the euro zone's largest economy. Until recently,
Germany had been showing resilience thanks to its export sector.
But April's survey of purchasing managers and the Munich IFO institute's monthly poll were distinctly soft.
"Germany is becoming more like everybody else. It is being dragged down, whether it likes it or not, through
weakness in southern Europe, slowing growth in China and the depreciation of the Japanese yen," he said.
"None of these things are good for Germany. So the weaker Germany becomes, the easier it is to agree on a
common monetary policy," he added.
China's official purchasing managers' survey for April, to be released on Wednesday, is likely to provide more
evidence that the world's second-largest economy is shifting down to a lower trend rate of growth after three
decades of averaging around 10 percent a year.
Economists polled by Reuters expect the index derived from the survey to have edged up to 51.0 from 50.9 in
March, holding above the threshold of 50 that demarcates month-on-month expansion from contraction.
Jian Chang, who tracks the Chinese economy for Barclays in Hong Kong, prefers to describe the economy as
being in a stabilisation rather than a recovery phase.
"As long as the PMI comes in above 50 it will show that modest, slow growth is continuing," she said.
Global markets have become addicted to the drug of super-fast Chinese growth and tend to react badly to signs
of softness. But Chang said the authorities in Beijing, intent on guiding the economy to a more sustainable
growth rate, are not panicking.
There has been no big investment package, for example, to support the government's urbanisation drive.
Policymakers will be comfortable as long as growth for the year as a whole comes in above their target of 7.5
percent, she said. Barclays is forecasting an outcome of 7.9 percent.
Whether that target is met will depend in part on an improvement in exports to the European Union and to the
United States, which on Friday reported a disappointingly soft first-quarter gross domestic product growth rate of
The pace of expansion has averaged just 1.4 percent over the last two quarters and 1.8 percent over the past
year, noted Jay Feldman, director of U.S. economic research at Credit Suisse in New York.
"All in all, growth is persistent, but decidedly underwhelming. At this trajectory, achieving a labour market
recovery beyond the fits-and-starts progress of the last few years will be a challenge," he told clients.
Figures this week are likely to fit into the same pattern.
The Institute of Supply Management's April manufacturing survey is forecast to dip to 51.0 from 51.3 in March,
while the economy is likely to have generated 150,000 jobs in April, up from just 88,000 in March but not enough to
reduce the jobless rate from 7.6 percent.
Because the Fed has pledged to stick to its super-loose policy until unemployment falls to 6.5 percent, the central
bank is expected to confirm at this week's policy meeting that it will keep buying $85 billion (54.8 billion pounds)
in bonds every month to keep bond yields low and encourage investment.
Talk had started to grow that the Fed might start to wind down, or taper its quantitative easing programme. But
after the latest economic data, the central bank's tone is likely to change, according to Steve Ricchiuto, chief U.S.
economist for Mizuho Securities in New York.
"They're going to come out of this meeting with a more balanced view on tapering and say, ‘we could increase or
we could taper'," he said.
Indeed, price pressures are so muted because of slack in the economy that some Fed policymakers have raised
the prospect of injecting even more stimulus.
The core personal consumption expenditure deflator, the Fed's favourite inflation gauge, rose just 1.3 percent in
the year to March, Friday's GDP report showed.
"Low inflation leaves that much more leeway for the Fed to focus on growth and jobs. If the core PCE index falls
much farther, look for ‘inflation being too low' to show up in more Fed communications," Feldman said.
(Editing by Greg Mahlich)
Money- Cost of Living Crisis- Incomes worst in Wales
Updated: 26 Apr 2013
Welsh receive lowest levels of disposable income
Thu Apr 25, 2013 9:54AM GMT
Welsh people are suffering the lowest levels of disposable income in the UK with new figures showing a higher than
£1,000 gap, local media reported.
Fresh statistics released by the Office for National Statistics (ONS) found individuals in Wales were left with £14,129
after tax and benefits were taken into account, British media reported.
That’s below the levels for England and Scotland, where individuals have, on average, a significantly higher level of
affluence - at £16,251 and £15,654 respectively.
Meanwhile, many families in Wales are heavily reliant on benefits to fund their cost of living.
“In both 1997 and 2011 [Wales] received the largest share of social benefits and social contributions as a proportion
of total incomings, at 22.4% and 25.8% respectively. London received the smallest proportion in these years”,
according to the ONS.
In both years Wales also had the lowest level of income earned through “productive activity” such as pay and
proceeds from property, falling from 72.1% in 1997 to 67.8% in 2011.
Labour claimed people in Wales were facing a “cost of living crisis” while Plaid Cymru called on the UK government
to pass a new law that would commit it to levelling out the British economy
Money - How the Pound has been devalued since 1983
Updated: 19 Apr 2013
What a pound coin bought 30 years ago... And what it gets today
The pound coin was introduced 30 years ago this week on April 21st 1983.
lovemoney.com – Tue, Apr 16, 2013 15:23 BST
Yahoo! Finance UK -
These days, there are more than 1.5 billion coins in circulation and it’s estimated that around 2.9% are forgeries!
But what could you have bought with a brand new pound coin in 1983?
Here are a few examples:
- Two pints of London Pride beer - 20 cigarettes - 6lbs of frozen chicken
- 3 loaves of sliced white bread - 2.77 litres of petrol Fotolia
A packet of 20 cigarettes for a pound back in ’83?
These days, the price is more like £8.
Let’s look at what you can get for a pound these days:
- 1 hour in a car park Fotolia
- 1 bottle of water from a vending machine
- 5 trips to a public toilet in London -
3 cans of diet Coke from Poundland -
0.72 litres of petrol
Clearly we’ve had to endure a lot of inflation over the last 30 years, and you can’t buy much for a pound in 2013,
unless you visit your local pound shop anyway!
That said, when you visit a pound shop, don’t assume that everything is a bargain.
For example, a pack of chewing gum can be quite expensive at £1, so you may be better off buying your gum at
a supermarket or even at a local corner shop.
You may also find that some products are in smaller sizes than you’d normally find in shops.
Money- No Austerity for the Rich. They have never had it so good
Updated: 25 Apr 2013
Bosses cash in on crisis
The 50 richest people in the world are worth £1.046 trillion, up by 23 percent on last year.
The figure was revealed in the Sunday Times Rich List last week.
Millions of ordinary people in Britain face brutal attacks from the Tories in the name of austerity.
But the richest have never had it so good.
There are now 88 billionaires in Britain—more than ever before.
The top 1,000 richest people in Britain have a record collective wealth of £450 billion.
This is up by £35 billion on last year.
That rise alone is enough to build 80 new hospitals.
The bankers in the city of London are raking in billions at the expense of the poorest.
Alan Howard is the richest hedge fund manager.
He made his cash from the misery of others when he bet on the collapse of the Greek economy.
All around the world it’s the same. And the rich know who their friends are.
Some 43 of Britain’s 50 biggest donors to political parties bankrolled the Tories
Money- Hiding the Filthy Lucre
Updated: 18 Apr 2013
Written by Philip Bowring
Tuesday, 16 April 2013
Caymans: Great place to go visit your money
The thieves get the blame but as usual the bankers
are home and dry
The lines between fraud, tax evasion and avoidance,
theft of documents, duty to report crimes, etc. grow ever murkier, as evidenced by the
widespread publicity given to the International Committee of Investigative Journalists, which in
the past two weeks has made public a long and embarrassing list of politicians, hedge fund
managers, government officials and major and minor satraps who have stuffed multiples of
billions of dollars into tax havens across the world.
But the organizations at the murkiest heart of the situation are not Mexican drug cartels nor
They are some of the world's best-known financial institutions and some of its largest
Almost every day brings news of some new case of misdeeds being exposed, whistleblowers
and scapegoats alike prosecuted and politicians embarrassed. Governments make pious noises
about cracking down on tax havens but in reality they can do little.
They can sit on this or that little island – goodbye Cyprus as a safe place for money – but money
This is a world with few really effective foreign exchange controls to discourage the wily and
any number of places willing to hide it.
That includes the likes of Singapore as well as more obviously dodgy avoidance centers like the
Cayman Islands, all too keen to pick up any business driven from elsewhere (including
Switzerland now that the Germans have been getting tough).
The chances of achieving much are dim. Or dim unless governments of major countries are
actually prepared to take on their own big banks and the likes of major internet soft and
hardware companies that use essentially dishonest transfer pricing tricks and complex devices
to pay minimum taxes and keep billions of cash offshore.
The hypocrisy at the heart of the system is well illustrated by Hong Kong and its leading, though
London-headquartered bank, HSBC.
As Asia Sentinel readers will be aware, Hong Kong courts have taken to giving 10-year and
longer jail sentences to tiny cogs in the so-called money laundering schemes – in these cases
depositing funds which were alleged, without any supporting evidence, to be the profits of
crimes on the mainland.
Every week Hong Kong banks knowingly launder billions of dollars of mainland money which may
be the profits of crimes but more likely is the product of another crime - under - or over invoicing
of trade transactions to avoid both tax and foreign exchange regulations.
But the government lawyers and tame judges are either too dumb or compromised to accept
that reality so give outrageous sentences to minor players and let the banks go free.
Meanwhile across the world, in Spain in this case, the Swiss government is, with the connivance
of HSBC, trying to extradite a former employee of HSBC in France who provided the authorities
with a list of foreign account holders with HSBC in Switzerland.
Then French Finance Minister and now IMF head Christine Lagarde passed the list on to US and
some European governments.
The whistleblower faces prosecution on grounds of theft of information.
Yet reporting knowledge of or reasonable suspicion of crimes is supposed to be a duty.
In Hong Kong you can get 10 years jail for not recognizing that fact.
It may be a crime in Switzerland to reveal bank account information, but it is a national duty for
a French citizen to reveal criminal activity by one of its citizens.
If you want to be an international banker, you have to follow foreigners' rules or stick to
guarding the hoards of African dictators and assorted war criminals.
An even bigger storm has broken out over the release by the International Committee of
Investigative Journalists of the thousands of documents about offshore accounts held in such
notorious jurisdictions as the Caymans and British Virgin Islands (BVI).
Cries of theft have gone up and appeals made to the right to privacy.
But transparency is also a right and obligation in most well-run countries.
What gives a citizen of, say, the US or France the right to hide tax and money affairs in
informational black holes such as the Caymans?
For sure there are legitimate reasons for operating through, for example, BVI holding
Many of the companies listed in Hong Kong do so for a variety of reasons which have more to do
with procedural and regulatory issues rather than tax or other money ones.
Nonetheless, every nation has a right to expect its citizens to obey its laws and hence there is
also an obligation to report criminal breaches of those laws.
Hong Kong has the whole situation upside down, prosecuting locally for supposed crimes
committed elsewhere, while its top bank in effect is defending its role in shielding illegal activity
by citizens of the US and some European countries.
However it is hardly surprising that wealthy individuals such as the French budget minister,
recently exposed as having a secret offshore account, engage in such practices given the lax
attitudes of governments to tax schemes employed by corporate giants and which fail to
prosecute individual bankers for their roles in the outright dishonesties which contributed to the
global financial crisis.
These are usually described as "tax avoidance" and hence legal but examined closely they
almost invariably involve dishonest reporting of values and of where the transactions actually
took place, so that profits are retained in some offshore zero or low-tax location.
The little cartel of major international auditors who also act as tax consultants are key to
creating these fictions.
They often have all too close links to government revenue departments which are responsible
for cracking down on such manipulations.
Meanwhile governments more broadly are constantly threatened by companies that threaten to
move their headquarters to Ireland or Singapore or Hong Kong if the local authorities take tax
gathering too seriously.
Meanwhile the City of London feeds off the many tax havens which rely on British laws and
protection, and Germany is lenient towards bank secrecy in Austria and the whole EU ignored
Cyprus abuses before the recent crisis.
There is a real danger that abuses by big corporate as well as banks are turning middle classes
in many countries against the idea of free markets.
They are having to pay more taxes while the richest get richer.
Yet as any student of Adam Smith can tell you, these are not free markets but ones manipulated
by insiders against the interests of all other producers and consumers.
Some authorities have made a fetish of cracking down on money laundering in the name of
fighting El Qaeda or drug cartels.
This is nonsense.
El Qaeda was never in the big money league and the drug cartels have networks of legitimate
business through which to move money around.
Open trade and open movement of money are inseparable.
But the same does not apply to tax liabilities and the reasonable requirement that citizens pay
taxes as required by their national laws, and that multinational corporations pay tax where they
actually make money – which you can be sure is not some Cayman or Cook Islands post-box, or
cloud in the Google sky
Money- Heavy Metal ! - And the Wheels come off the Gravy Train for Gold
Updated: 18 Apr 2013
|Falling Commodity Prices Spell Trouble
|Written by Philip Bowring
|Wednesday, 17 April 2013
Gold bug scurries for cover
Indonesia, Malaysia, Australia on the firing line
The wheels are finally coming off the decade-long
Watch out, Australia in particular.
But beware Indonesia and to a lesser degree
The price decline has probably only just begun.
Take gold, often seen as a harbinger of commodity
price trends generally.
Those who think it is cheap after a 20 percent fall
from its high should remember that it is still four
times its price just 10 years ago.
Iron ore is still five times and thermal coal three times 2003 levels.
Of course valuing a commodity mainly seen as a store of value rather than a useful metal is
But there are some guidelines worth keeping an eye on in assessing gold's average price over
One is the cost of production.
This matters less for gold than other metals simply because annual output of around 90 million
ounces is still small - about 1.5 percent -- relative to the total existing supply.
But much of that supply is locked up in central bank vaults so at the margin changes in demand
and supply can be very significant.
That is where supply issues enter.
It is currently estimated that the all-in cost of new mines is around US$1,300 an ounce.
So new companies are not going to open new mines unless they believe the price is going to be
sustained above that level.
But many projects are already well under way on the assumption that it will.
Added in is the impact of new copper mines producing gold as a by-product.
A more important number too than all-in cost is the marginal cost of production for existing
That is now estimated to be around US$800 an ounce so the price still has a long way to fall
before these find additional production uneconomic.
By chance, perhaps, this price roughly coincides with another so-called "fair price" calculation -
the ratio of the gold price to the US consumer price index.
Gold like other minerals has seen advances in mining and processing techniques which have
enabled production to double in the past 30 years without the discovery of huge new deposits
such as those which once existed in South Africa.
Clearly gold was driven to nearly US$2,000 not by either the cost of production or as a multiple
of the US CPI but by "safe haven" concepts associated both with the global financial crisis and
more recently by fears of inflation caused by central bank quantitative easing, sometimes
dubbed "money printing."
In real terms gold almost regained the US$800 peak seen in 1980 when global inflation was
rampant in the wake of massive oil price increases.
But once perceptions change the impact on prices can be sudden. Now the evidence that
inflation is about to surge is hard to find.
Despite QE, advanced economies are growing very slowly, if at all, China and India and most of
the developing world have also slowed.
Yet fears of global crisis have also receded.
Gold was always a momentum play and one encouraged by the emergence of gold Exchange
Traded Funds which have been in existence for less than a decade but which were heavily
promoted and even now, after significant withdrawals in recent months, hold some 80 million
ounces or nearly a year's mine output.
Some gold funds are also leveraged.
Add in the possibility that some central banks may sell gold rather than buy it and the short term
demand/supply situation looks as weak as the longer term marginal cost one.
Quantitative easing may be creating some asset bubbles but definitely not in gold or other
commodities. Indeed the broader fall in commodity prices caused both by underlying
demand/supply issues as well as sentiment and ETFs may well ensure that inflation remains low
despite QE in the US, Europe and Japan and by official stimulation efforts in China.
Already there is evidence that the fall in energy prices in the US caused by the shale gas boom is
providing more stimulus to the rest of the economy than QE is.
The fall in the price of thermal coal could well do the same for China.
And it is only a matter of time before a combination of new gas and oil production elsewhere,
plus shale gas development in other countries, ensures that energy prices are likely to be a
global stimulus, not a drag - except of course for countries such as Australia, Indonesia and
In Australia mining and gas producers are seeing the writing on the wall and putting major
projects on hold.
But meanwhile others are too advanced to stop now and will go into production, having
incurred costs far above original estimates thanks to the strength of the Australian dollar and
the outlandish costs of labor in the remote regions of the country where the mines are located.
The much advertised and criticized Chinese mining investment binge in Africa, South America
and parts of Asia is also beginning to have an impact on supply - much to the future discomfort
of many Chinese companies but to the broader advantage of China which will see lower import
Just as miners big and small failed to see the boom in Chinese demand and thus profited from
shortages and high prices, so now the opposite is occurring.
Chinese (and other developing country) demand is not increasing as fast as assumed.
China's overall growth rate was unsustainable if only because of demographics.
But more importantly, the miners forgot that as China grew richer demand increases would
shift from commodity-hungry housing and infrastructure to services, household appliances etc.
China would well continue to grow by 6-7 percent a year while barely increasing commodity
The scope for increasing energy efficiency also remains huge.
ETFs and momentum plays have had a role in prices of other commodities than gold - though to
a much lesser extent.
Speculative buying by Chinese companies has also played a role though it is hard to see
whether unwinding is needed.
Not every commodity has suffered to the extent of gold or even oil.
But the iron ore price looks more propped up by the collapse - for political reasons - of Indian
Agricultural ones may in the medium term be less impacted if only because of scares about the
impact of climate change on production.
However, there is scant evidence that overall supply is falling behind demand, and China's need
for imports may be plateauing given the huge increases already seen in protein and fat intakes
in local diets.
Prices will likely continue to be driven by shorter term shifts in supply but those of tree crops
have long cycles so with an oil price spike or a big setback to soybean production rubber and
palm oil look more likely to go down than up.
So all this sounds like bad news. But it is actually good news for the majority of the world's
population who are consumers, not commodity producers and will be a spur to growth in every
country which is a net importer of them.
Meanwhile new commodity exporters will make life harder for the traditional ones like Australia.
Money- Karl Marx called Bankers "Usurers, Parasites and Bandits"
Updated: 05 Apr 2013
Marx: Bankers are parasites and bandits
Thursday 04 April 2013
(Usurer -A person who lends money at unreasonably high rates of interest)
It is correct to think that Marx did not refer to bankers are robbers (M Star March 27). However he did refer to
them as usurers, parasites and bandits.
He uses all three in a paragraph in Capital Volume Three (Chapter XXXIII): "The credit system, which has as
its focus in the so-called national banks and the big money-lenders and usurers surrounding them,
constitutes enormous centralisation, and gives to this class of parasites the fabulous power, not only to
periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous
"The Acts of 1844 and 1845 are proof of the growing power of these bandits."
Trust Marx to put his finger on it.
Money- What if a fully regulated bank went bust ?
Updated: 29 Mar 2013
1. Is your money guaranteed by the UK government?
The most important thing to understand is if you save with Santander in the UK, it is for all intents and purposes
a UK bank, fully regulated by the FSA and protected by the Financial Service Compensation Scheme (FSCS). In
technical terms, if you have savings with Cahoot and Abbey they’re just sub-brands of Santander UK, so all
three share one lot of protection.
So let’s examine what would happen in the unlikely event of a fully UK regulated bank going bust…
The UK government (via the FSCS) would be in charge of sorting it out – all money saved in fully UK regulated
bank accounts is protected up to £85,000 per person, per institution.
This, it is now said, would be paid out within 7 days for most cases, 20 days if it’s complex.
This new shorter time period has never been tested, but the last time the FSCS needed to pay out it was
For those with money in ISAs or current accounts, that’s all part of the same thing (ie, you’re protected up to
£85,000 in total for all three), and if a bank were to go bust and you had an ISA with them, the way it has worked
before is you get a certificate saying it’s ISA cash, so you can use the certificate to put your money into another
ISA (ie, it wouldn’t count as using this year’s allowance, it’d count as a transfer of a past allowance).
So in practical terms, if you’ve less than £85,000 then your money is protected so there is no problem. If you’ve
more, then as I always suggest for all banks, it’s worth spreading the cash in different institutions in £85,000
lumps to keep it safe
See the Safe Savings guide for full help on this – and answers about what to do if you’ve saving and debts in one bank etc.
It’s arguable too that if you think you’d ever need access to cash at speed, ie, within the 7 day FSCS period, then
splitting amounts below £85,000 is a safe precaution to mitigate the risk of all your money being locked-up at
Now, do note I described Santander as a “fully UK regulated bank”, but don’t think that means all bank accounts
in the UK have the same level of protection as it.
Unlike Santander, some European banks, including ING Direct, opt for the passport exemption of the FSCS
regulations – which in effect means in the event one of those went bust, you’d be reliant on the Dutch, not the
UK government to pay out your compensation.
2. How safe is money in Santander UK?
We’re being told by Santander that its UK bank is ring-fenced from its Spanish parent.
In other words, the Spanish bank owns shares in the UK bank, but its cash and operations are ring fenced.
Now I have no way of knowing this, and haven’t checked it out as it’s not my bag, but assuming it’s true (and we
must assume it is, as if it wasn’t the Financial Services Authority (FSA) would be coming down on it like a tonne
of bricks for saying so) then problems at the Spanish bank shouldn’t impact its UK arm.
As for how stable the UK bank is, well most commentators seem pretty strong on it, though again that’s not our
forte so please read articles from This Is Money or the BBC for more info.
3. Why are a few councils withdrawing cash?
The most important thing to understand is that while money saved by consumers is protected, money invested
by councils and large businesses isn’t, so in the unlikely event even a fully UK regulated bank went bust, they
wouldn’t get their cash back.
So during the Icelandic bank collapse, while no UK savers lost money as it was protected and paid out by the
government, many councils and institutions use more complex ways of savings (ie, we’re not talking just cash in
accounts here) and were exposed.
This has made some adopt an ultra-cautious stance and they are relying on credit ratings to help set their
policies. I suspect there are some tick-box exercises going on here (ie, they need to keep cash within banks with
certain credit rating settings).
4. What happens if a bank were to collapse?
Now while I don’t want to scaremonger, and think this is an unlikely outcome.
Let’s just explore what’d happen in that eventuality, as it may help put some minds at rest.
The only precedent we have here is what happened in 2007-8 when we saw a spate of banks in trouble. The
outcome for banks in the UK depended very much on whether they were fully UK regulated (as Santander UK
is), not whether they were UK owned.
Money- How Safe is my Bank Account ?
Updated: 29 Mar 2013
Finding the right bank account
How safe is my bank account?
You need to be sure that your money will be safe if your bank goes bust
As the world of finance is still going through a turbulent time, you might be worried about whether the money in
your bank account is safe.
The collapse of Northern Rock, Bradford & Bingley, and Icelandic banks are still fresh in peoples' minds and
with the Euro crisis is ongoing, it is important to know your money will be safe should the worst happen.
How to check your bank account is safe
If you’re worried about the safety of your bank and the money you have in it, the first thing to do is to check
whether the bank is regulated by the Financial Services Authority (FSA) by using the regulator's online register.
If the provider is authorised, then you will be covered under the Financial Services Compensation Scheme
(FSCS) up to £85,000.
It's important to remember that this £85,000 coverage is per person, not per account.
So if you have more than this amount you might want to consider spreading it around several financial institutions.
However, you can be penalised if you withdraw money early from certain bank accounts, such as notice and
fixed-term accounts, so check with your bank first.
Action point: Read our step-by-step guide to finding the best bank account or, if you’re looking to make a bit
more from your money, take a look at our round-up of best rate savings accounts and best rate cash Isas.
Who owns your bank account?
In recent years some banks and building societies have merged with their larger competitors which might affect
the FSCS coverage their customers would get in the event of a crisis.
Some banks, such as Lloyds and HBOS, have retained their own banking licences post-merge, so you have
compensation coverage from both banks (i.e. up to £170,000).
However, others have given up their separate banking licences, meaning that you may now only have one 'dose'
So if you have multiple deposit accounts with one bank or building society – or several accounts with different
brands that come under the same authorisation – you will only be protected under the FSCS up to a total of
To find out how your money is spread across different financial institutions, read our guide to who owns who in
the banking industry.
Action point: If you want to move your money, our guide and tips to switching bank accounts will help.
Joint bank accounts
If you and your partner have saved a significant amount of money and you don’t like the idea of spreading it
around multiple banks, consider opening up a joint savings account.
The FSCS covers £85,000 of savings per individual, per financial institution – so by placing your savings in a
joint savings account along with your partner, you're effectively doubling your coverage to £170,000 in total.
Foreign bank accounts
Many foreign-owned banks that operate in the UK have to be authorised by the FSA so money deposited with
them will be covered by the FSCS.
However, a bank based in the European Economic Area (EEA) can offer certain products or services in the UK
while still being authorised in their home country.
So if you deposit money with an EEA bank it will be covered by the compensation scheme of the bank’s home
country, rather than the FSCS, up to a limit of €100,000 (about £85,000).
Compensation rules vary depending on the country the bank is authorised in so if you are not sure how your
money is protected you should check with your bank.
Money -Euro Crisis - Are your UK Savings safe ?
Updated: 29 Mar 2013
Euro crisis: what it means for UK consumers Savings not covered by the FSCS
If your savings account isn't covered by the FSCS, you might want to switch accounts to keep your money safe
Banks not covered by the UK compensation scheme
The only major savings institutions operating onshore in the UK which are not covered by the FSCS are Anglo-
Irish Bank and Triodos Bank. Anglo-Irish is now closed to new business.
Triodos is a Dutch bank and in the event that it was to become insolvent, savers' money would be protected up
to €100,000 (£86,000) by the Dutch depositors' protection scheme.
All depositor protection schemes are only as strong as the nation state that sits behind them.
The Netherlands has a AAA credit rating, which is the best rating available.
Which? does not believe that savers should have to make an assessment of a country's financial strength when
deciding where to deposit their money.
As such, our best rate savings tables do not include banks which are not fully protected by the UK FSCS.
Anglo-Irish Bank has now been nationalised by the Irish government, and deposits would only be at risk if the
Irish government were to become insolvent. Ireland has a much weaker credit rating than the UK, and the
likelihood of it defaulting on its financial commitments is significantly higher than most European countries.
Therefore, if you still have savings deposited with this institution, we would advise that you move them to a bank
that offers full UK FSCS protection.
Are my savings safe in an offshore bank account?
All offshore bank accounts are protected by the depositor protection scheme of the territory where the offshore
bank is based. For example, Nationwide's offshore banking arm is based in the Isle of Man.
Therefore, if Nationwide were to become insolvent, depositors with Nationwide International would need to rely
on the Isle of Man depositors' protection scheme to recoup their money. It is unlikely that the depositor
protection schemes of small offshore territories would be able to meet the obligations caused by a major
insolvency, so depositors would be likely to lose money.
In the 2008 banking crisis, some depositors who had money in the offshore arms of the insolvent Icelandic
banks lost their money.
If you need to have money in an offshore bank or savings account, the risk of problems is likely to be lower if
you opt for a bigger brand with a more stable financial footing.
Are my savings safe if my account was opened in another European country?
If you travel regularly or own property abroad, you may have a bank account or savings account opened within
an EU country other than the UK.
Money in these accounts is likely to be protected by the depositor protection scheme of the country where your
bank is based. If the government of the country where your bank is based were to default on its debts, and was
unable to prop up its depositor protection scheme, you could lose some of your money.
If possible, you may want to consider moving some or all of your money to an account protected by the FSCS.
Money- Cyprus - and the Eurozone debt problem
Updated: 22 Mar 2013
Cyprus leaders seek emergency deal to avoid financial meltdown
Cypriots protest against the EU bailout deal outside the parliament in Nicosia in March 2013.
Thu Mar 21, 2013 10:50AM GMT
Political leaders in Cyprus have held emergency talks to come up with a another Plan B in an effort to prevent
financial collapse after parliament rejected the terms of a European Union bailout.
Cypriot President Nicos Anastasiades met with political parties on Thursday to secure their aid for a revised plan
to raise USD 7.5 billion (5.8 billion euros) that international lenders have demanded in return for a larger rescue
According to officials, the new plan includes a smaller deposit grab to ease the pain on small savers, reforming
the country's crisis-hit banks and raising money from domestic sources including pension funds and
subsidiaries of foreign banks in Cyprus.
Meanwhile, Cypriot Finance Minister Michalis Sarris is also set to resume talks in Russia later in the day to secure
Moscow’s support after his Wednesday meeting with his Russian counterpart Anton Siluanov failed to produce
On Wednesday, Cypriot lawmakers overwhelmingly voted against a controversial levy on bank deposits,
proposed as a condition for a 10-billion-euro ($13 billion) loan by the European Union and the International
The vote threw the country’s economy into chaos as fears increased that the banking system could face a
Banks across Cyprus remained closed to avoid a bank run.
Electronic transfers also continued to be blocked.
“Business has already been down due to the recession - now with the banks closed this is just making
the situation worse as many suppliers are refusing to deliver products to retailers.
Credit is not being accepted and cash is in short supply,” said Marios Tsiakkis, the general secretary of
the Cyprus Chamber of Commerce and Industry.
The long-drawn-out eurozone debt crisis is viewed as a threat not only to Europe, but also many other developed
economies in the world
Money- The Pound in your pocket is worth 25% less than in 2007
Updated: 19 Mar 2013
Sterling hits 28-YEAR LOW against Aussie dollar
despite Sir Mervyn's pep talk that prompted
comeback against euro and dollar
By This Is Money Reporter
PUBLISHED: 10:10, 15 March 2013 | UPDATED: 17:11, 15 March 2013
Sterling staged a comeback against the euro and the dollar today as investors piled in to back up the currency
after Sir Mervyn King called time on the sell-off that has seen the pound fall 6 per cent against both reserve
currencies since the year began.
But in a strange twist the pound found itself under attack from down under as the Australian dollar reached a 28-
year high trading at AUS$1.454 - with foreign exchange traders suggesting the pound could fall as low as
AUS$1.43 next week.
Charles Murray, senior broker at currency broker FC Exchange said although sterling had risen following Sir
Mervyn's comments the UK economy still faced the prospect of a triple dip recession and was still reeling from
the loss of its AAA rating last month.
Fair value: Sir Mervyn King said yesterday that recent heavy falls in the value of sterling against other currencies
like the euro and dollar had gone far enough.
'Sterling is getting sold off quite a lot because of issues such as the loss of the AAA rating and the possibility that
the UK could be falling into a third recession in four years,' he said.
'The Qatari’s have said they are going to pump a few billion into the economy but that’s the only good news on
Murray explained the strength of the 'Aussie' came from the fact it was commodity linked. With commodity prices
reaching record highs in recent years, both the Australian economy, which is a large exporter of gold and other
metals, and its currency had seen strong growth. #
In contrast the UK economy had flat-lined and the Bank of England had been forced to pump money into the
economy in order to get British banks to lend to small businesses and homeowners and boost exports.
He added the Aussie had been gaining on the pound for around six to eight months with sterling being valued at
AUS$1.55 last summer.
'It's a matter of confidence,' Murray added. 'There is lots in Australia and none in the UK.'
Bouncing back: sterling has regained ground against the dollar having fallen to 33-month lows earlier this week.
Earlier today sterling rose a cent against the dollar, or 0.5 per cent, to $1.5167 continuing a three day rally in
which it has so far risen 1.2 per cent, after hitting 33-month lows on Tuesday. Against the euro the pound was
trading almost half a cent, or 0.06 per cent, higher at €1.1603.
The rise in the pound came after the Bank of England governor warned the recent sharp fall in sterling’s value
against the dollar and the euro had gone far enough, adding the pound was now ‘properly valued’ and that the
economic recovery 'was in sight'.
Sir Mervyn's intervention reflected fears the recent slump in the value of the pound would raise inflation and
squeeze household budgets further.
Until yesterday he had repeatedly talked down sterling since the Autumn. In November, he said sterling’s rise in
2012 ‘was not a welcome development’. And January he said the 25 per cent fall in the value of the pound since
2007 ‘was certainly necessary for a full rebalancing of our economy .
But last night he suggested things had gone far enough.
‘We are moving to a properly valued exchange rate. I think we’re probably there,’ he said. ‘Basically we’re at the
same level [of sterling] we were after the impact of the financial crisis,' he told ITV News.
He also refuted any notion that the Bank had taken action to devalue the pound.
‘We’re certainly not looking to push sterling down. We’re looking to ensure recovery in the UK economy and
gradually bring inflation back to our 2 per cent target,’ he said.And analysts warned sterling could still struggle to
make further headway given persistent concerns about the British economy and expectations the Bank may
have to resort to more asset purchases to support the economy.
The pound bought nearly $1.63 in December: it was worth less than $1.50 on Tuesday.
In contrast, the U.S. economy is showing signs of a sustained recovery, adding to speculation that the Federal
Reserve may halt its quantitative easing programme sooner than many expect.
Peter Kinsella, currency strategist at Commerzbank: ‘further weakness [in the pound] will only generate more
(imported) inflation. What King is trying to do is stem more sterling weakness. But sterling/dollar remains a sell on
rallies given the different growth outlooks between the U.S. and the UK.’
Earlier this week, weak manufacturing output figures added to a string of sluggish data that has raised concerns
the British economy could be heading for a third recession in four years.
Against that backdrop, the Bank might opt for more monetary easing to stimulate growth via its programme of
asset purchases, which is generally negative for the currency as it involves the central bank flooding the market with sterling.
Analysts said investors would also be wary before Chancellor George Osborne presents his budget next week.
Speculation is mounting that Osborne will announce a review of the BoE's remit and give it more leeway on
inflation targeting, allowing scope for a further easing of monetary policy.
Andy Scott, premier account manager at foreign currency exchange brokers HiFX said: 'Markets tend to listen to
central bankers but talk is cheap and memories short. The figures on the economy are what matter and they don’t
look great with there still being a risk of a third technical recession in the last four years if we see contraction in
the current quarter.
'There’s also the possibility that the Bank of England will do more quantitative easing which will keep investors
wary due to such measures usually having a negative impact on a currency’s value. Next week’s releases on
inflation, the bank’s minutes and the budget will make for interesting viewing.'
Money -MP's Concerned - Spit Roasted Pigs and headless Chickens to be taxed ?
Updated: 15 Mar 2013
Morrison backs fight against 'chicken tax'
14 March 2013 | By Alistair Driver
MORRISONS has lined up with the British Poultry Council (BPC) and a cross party group of MPs to campaign
against a tax on rotisserie chicken.
The unlikely coalition delivered a petition of over 50,000 signatures to the Treasury on Wednesday.
In last year’s Budget, the Chancellor announced that VAT would be introduced on rotisserie chicken, which is
cooked by roasting on a rotating spit, from October 1 2012.
In September, Morrisons and the British Poultry Council together launched the ‘Don’t Tax Our Roast’ campaign
in protest of the tax, which was delivered this week ahead of next week’s Budget.
The poultry industry claims the price increase has resulted in an 18 per cent drop in sales, with the Treasury
pocketing approximately £13.35 million in VAT since the tax was introduced. The BPC and Morrisons say this
benefit to the Treasury has been delivered ‘at the expense of hard-pressed consumers and poultry producers
across the UK’.
Guy Mason, head of corporate affairs at Morrisons said: “The fact that over 50,000 people felt compelled to sign
our petition shows the strength of feeling among our customers about this unfair tax on a staple British meal.
We are urging the Government to take notice of the British public’s opposition to this move.”
Caroline Leroux, head of external relations at the BPC said: “The poultry industry has felt the acute effects of
the tax, although it is consumers who are really feeling the pinch in difficult economic times.”
MPs from the main parties have backed the campaign. Nic Dakin, Labour MP for Scunthorpe said: “It is a great
shame that the Chancellor decided to penalise the industry by introducing a tax on a healthy staple food that
forms an essential part of the British diet.”
Roger Williams, farmer and Liberal Democrat MP for Brecon and Radnorshire, said: “Delivering this petition
sends a clear message to the Chancellor that consumers are backing British producers and want to see him do the same.”
Neil Parish, Conservative MP for Tiverton and Honiton and Chair of the All-Party Parliamentary Group for Pigs
& Poultry, said: “The British poultry industry is doing great work across the country and it is critical that the
Government supports British farmers, producers and customers.”
Money -Can I claim back Tax for giving to Charity
Updated: 14 Mar 2013
Tax efficient giving to charity: the basics
Confusion - I rang HMRC who told me I couldn't claim tax relief on Gift Aid charities.
If you know more- do "Get in Touch"- Radical
If you want to donate to a charity or Community Amateur Sports Club (CASC) and you're a UK taxpayer, there
are a range of tax incentives and schemes available to help you get the most from your donation.
How you can give in a tax efficient way
There are a number of tax efficient ways to give to charity as an individual.
You might be able to claim some tax back using these methods.
In order to claim these, the organisation you give to must be recognised as a charity for tax purposes by HM
Revenue and Customs.
You can check this by asking the charity to confirm that it has an HMRC charity reference number.
If your donations are under the Gift Aid scheme, your chosen charity can also claim tax back (known as tax
relief) from the government.
Depending on the type of gift you make, you may have to make a claim to receive the tax relief (either on your
Self Assessment tax return or by contacting your own Tax Office).
Find your tax office
The different ways you can give in a tax efficient way are summarised below.
Money -UK- Inflation only at 2.7 % ? Not according to my shopping bills
Updated: 14 Mar 2013
UK bills soar four times faster than pay
Wed Mar 13, 2013 3:16PM GMT
Britain’s household bills have risen four times faster than average earnings in the past five years.
According to figures from the Office for National Statistics (ONS), the country’s household bills have risen by an
average of 25 percent over the last five years, while average earnings increased by only 6 percent .
Moreover, the comparison website uSwitch.com found that Briton’s average pay increased from £24,900 a year
to £26,500 since 2008, while the cost of living increased more than four times faster during the same period of time.
It also said more than half of their respondents were worried about rising living costs and that they feel poorer
since the coalition government has came to power.
“Consumers are anticipating next week’s Budget with a mix of dread and despair,” said Michael Ossei, a
personal finance expert at uSwitch.
“Spiraling living costs are stretching household budgets to their absolute limit and people are running out of
ways to fund their ever-increasing bills.”
Earlier in February, the British pound plunged to a two-year low against dollar to $1.5073, after credit ratings
agency Moody’s downgraded the British government’s bond rating from the top AAA to AA1 due to the country’s
rising debt and slowing growth.
The currency slid once again against dollar this week, leaving the country teetering on the brink of a third
recession since the 2008 financial crisis
Money- Lloyds Bank knew my father but not me as they cut 8550 jobs
Updated: 14 Mar 2013
British bank Lloyds job toll tops 8,550
Wed Mar 13, 2013 6:12PM GMT
Job toll in the British Banking Group, Lloyds, has reached 8,550 with 550 more cuts announced, as a part of an
ongoing program of staff reductions launched in 2010.
Lloyds, which is 41 percent owned by the British taxpayer, announced on Wednesday that it is to axe another
550 jobs, taking the estimated total of redundancies to 8,550.
The cuts will take place across different departments, including risk, insurance, commercial banking, retail and
wealth, asset finance and international divisions.
Britain’s leading trade union Unite, however, criticized the banking group over the job cuts and said the bank’s
staff reductions while it is still taking on more agency workers is “madness”.
"Lloyds cannot continue to cut now then ask questions later. It's madness that the bank has so many agency workers when it's cutting so many permanent jobs,” said Unite national officer Dominic Hook.
He also said stability and growth, which are the bank’s most prominent goals, would not be achieved by “continuous and damaging job cuts”.
Politics UK- Pounds to Pulp ? - Better to Barter ?
Updated: 12 Mar 2013
Pound continues to fall against dollar
British pound continues to fall against the dollar.
Mon Mar 11, 2013 10:51PM GMT
British pound has continued to fall against the dollar, raising fears that the country could slide into a triple-dip recession.
Sterling once again slid against dollar to $1.4868 on Monday, its lowest level since the early days of the coalition
in 2010, and during the 2008-2009 recession.
Earlier in February, the currency plunged to a two-year low against dollar to $1.5073, after credit ratings agency
Moody’s downgraded the British government’s bond rating from the top AAA to AA1 due to the country’s rising
debt and slowing growth.
"The overriding concern is that the government is giving little indication that it will take its foot off austerity
which is hurting economic growth," said Market analyst Nawaz Ali from Western Union.
Earlier last week, British Business Secretary Vince Cable urged Chancellor George Osborne to change his
economic course by borrowing more in order to stimulate growth in the economy.
Cable also announced that the Chancellor’s deep cuts to capital spending have had adverse “economic
Osborne and British Prime Minister David Cameron, however, have so far rejected calls for a change in fiscal
policy, saying that increasing government expenditure or cutting taxes would not help Britain’s struggling
Money- The Fat Cats of Europe
Updated: 12 Mar 2013
Who's the fattest cat of all?
Monday 11 March 2013
by Tom Gill
The 1 per cent are getting richer, the rest of us are getting poorer.
This is a familiar story in a world where greed and extreme wealth are central to the dominant capitalist system.
It's a trend that is central to capitalism's periodic crises - the most recent of which we remain engulfed by.
The annual Forbes billionaires list is an opportunity to test politicians' promises that we really are "all in it
together" and their claims that the heavy doses of austerity medicine are being spread fairly.
What the list tells us - with a record number of billionaires, worth a record fortune - is that that's a big fat lie.
The latest Forbes ranking, totalling a record 1,426 super-rich (120 more than last year), globally represents a
fortune of $5.4 trillion.
That's up from the $4.6trn a year earlier. As you might expect, the United States continues to dominate the list,
with 442 super-rich, followed by the Asia Pacific region, with 386, the rest of the Americas producing 129 and the
Middle East and Africa 103.
Although now the epicentre of austerity, EU countries contribute heavily to the US business magazine's hall of shame.
And many of the richest among them have become even more filthy rich - this at a time when most people on the
continent have been getting poorer, by 14 per cent, to be exact, or one trillion dollars, according to a recent
Credit Suisse study of household wealth.
Here are the highlights from Europe's bust "periphery," currently the focus of some of the most brutal austerity
for all but a tiny super-elite.
In Portugal, with wages falling in real terms for three straight years, poverty is spreading among the middle class
and an actual rate of unemployment that is by some estimates at around 23 per cent, the 99 per cent really are
getting screwed by the "troika" and its punishing bailout plan.
But life for that tiny elite of super-wealthy Portuguese couldn't be better.
Food distribution boss Alexandre Soares dos Santos and his family saw their fortune grow $300 million. With an
estimated fortune of $3 billion in 2012, the No 2 in the Portuguese ranking Soares dos Santos is doing
handsomely as owner of Jeronimo Martins, which has more than 2,500 stores in Portugal and Poland.
Then there's Belmiro de Azevedo, the third-richest Portuguese, who got richer by $500m.
He's now worth $1.45bn.
The source of his vast wealth is Sonae, which owns the Modelo Continente supermarkets, shopping centres
and fixed and mobile communications services, with operations and investments in 65 countries, including
Saudi Arabia, Turkey and Kazakhstan.
Sonae's share price rose more than 50 per cent, says Forbes.
Seventy-eight-year-old Americo Amorim, the global king of cork, actually saw a fall of $300m in his assets due to
the drop in the price of his oil and gas holding company Galp Energia.
But he remains Portugal's top fat cat, with a fortune estimated at $4.1bn - 600,000 times the country's annual
minimum wage upon which around a third of Portuguese rely for their livelihood.
In Ireland a phenomenal show of generosity to the failing private banking system has left the ordinary citizens in
a state of "debt bondage," as the Wall Street Journal puts it.
Still, the luck of the Irish has stuck to some, with the country providing five billionaires to the Forbes list.
Pallonji Mistry, owner of the Tata steel empire, became $700m wealthier over the past year, boosting his net
wealth to $10.5bn, according to Forbes.
Son Shapoor, a horse racing enthusiast, was apparently given a stud farm as a birthday gift a few years ago.
What will daddy give him with his billionaire bonus this year?
Mobile phone tycoon Denis O'Brien is profiting handsomely from Digicel, his phone network provider, which
operates in central America, the Caribbean and the Pacific Islands.
Thanks in part to huge borrowings of the like that only the disgustingly rich can possibly secure, his company
managed to expand sales and profits.
And now O'Brien is looking to profit from the Myanma, who have been impoverished by years of misrule by a
military dictatorship coupled by international sanctions.
He's become $200m richer over the past year, presiding over a fortune of $5.2bn.
Campbell's soup heir John Dorrance III renounced his US citizenship and moved to Ireland in 1994,
"presumably to avoid paying capital gains taxes, prior to selling his 10.5 per cent stake in the company in 1995-
1996," says Forbes.
He's currently living a "quiet" life in south Dublin, when, that is, he's not sunning himself on his yacht in the
Bahamas with his Finnish wife. He's maintained his $2.4bn fortune.
Italy's millions are struggling with soaring unemployment, collapsing public services and plummeting living
standards, thanks budget cuts and counter-reforms of Bilderburg Club member Mario Monti and his
predecessor, the media magnate Silvio Berlusconi.
But the ones with billions, like Silvio - who has become $100m richer - are having a right old dolce vita.
Twenty-three Italians are worth nine digits or more, with nine more dollar billionaires now part of the exclusive club.
The country's richest is Michele Ferrero, the patriarch of Italian chocolate dynasty Ferrero Group.
No, it's not miserable Italians trying to cheer themselves up with a tasty treat, but sales in Russia, the US and
Brazil that pushed up the value of the group - and Ferrero's net worth - by $1.4bn to $20.4bn since last year.
Coming in at number two is Leonardo Del Vecchio, the king of eyeglasses, who founded and chairs Luxottica,
the world's largest producer and retailer of sunglasses and prescription glasses, including famed brands like Ray-Ban.
Del Vecchio's net worth is nearly $4bn higher, at $15.3bn, than in March 2012.
Third place goes to Prada's Miuccia Prada whose riches almost doubled from $6.8bn to $12.4bn thanks to a
giant leap in the luxury goods and clothing company's share price. Hubbie Patrizio Bertelli, also in the Prada
business and a major shareholder, saw his net worth balloon from $3.7bn to $6.7bn.
The global boom in luxury goods purchases by the unashamedly prosperous also saw Giorgio Armani - number
four in Italy - get richer, from $7.2bn to $8.5bn.
Given the size, wealth and economic woes of the nation, Spain has a disproportionate quality and quantity of billionaires.
It has 20 in the global super-rich club, a further four added over the past year.
This is all the more grotesque if you consider that over this period household wealth dropped by some 18 per
cent, through a combination of record unemployment, collapsing wages and house prices, plus losses suffered
by hundreds of thousands of small shareholders as banks have gone bust.
Still leading the Spanish superricos on the Forbes list is Amancio Ortega, who is also now number three fat cat in the world.
The net worth of the former chairman, but still 60 per cent owner, of Inditex, best known for its Zara brand, sky-
rocketed over the past year by $19.5bn to $57bn thanks to Inditex's huge leap in profits.
Ortega also has $4bn worth of property, much of it acquired at bargain prices during the financial downturn that
led hundreds of thousands of Spanish to be evicted from their homes.
Ortega's ex-wife half takes the number two spot for Spain. Rosalia Mera holds a 5.1 per cent stake in the $18.1bn
(2011 sales) Inditex. With $6.1bn, she's $1.6bn richer.
Spain's number three fat cat Juan Roig has a 55 per cent stake in the 1,356-store Mercadona grocery chain, the largest in Spain.
Thanks to deep price cuts, presumably designed to allow the increasingly destitute Spanish people to feed
themselves, Mercadona captured a 22 per cent market share, the largest of any grocer.
While this discounting may have smashed any number of smaller grocers unable to compete, bankrupting the
owners and sending their employees to the dole office, it did increase Roig's fortune by $800m to $5.5bn.
Life is a grotesque tragedy for most Greeks, now into their seventh year of recession, with a million out of work
and a third living in poverty.
But for the country's latter-day Crassuses, there's no touching their epic fortunes.
Indeed, two out of the three Greeks on the Forbes list have seen their fortunes grow.
Banker and shipping boss Spiros Latsis, age 66, and his family rose in the ranking as a result of his assets
swelling from $2.6bn to $3.3bn.
The second-wealthiest Greek on the list is British-born Aristotelis Mistakidis of mining giant Glencore
International with a fortune of $2.7bn, a fall of approximately $100m from 2011.
The assets of art collector Philippos Niarchos increased by around $100m to $2.6bn.
Britain has 35 dollar billionaires. And befitting a nation that still clings to the monarchy, a member of the nobility,
Gerald Cavendish Grosvenor, tops the list with $11.4bn.
The sixth Duke of Westminster's fortune rose by $400m over the past year thanks to the booming "prime"
property market, which has been inflated by the billions from wealthy Greeks, Spaniards and Portuguese,
among others, who are fleeing the eurozone meltdown, abandoning their citizens to an ever more miserable fate.
The Britain's wealthiest landowner is sitting pretty amid the rising value of real estate in Belgravia, London's
most expensive neighbourhood, where his family trust owns 190 acres - and where homes can sell for $150
His Grosvenor Group separately owns real estate on five continents. His family also has 96,000 acres in
Scotland, 32,000 acres in Spain and thousands of acres elsewhere in England.
Like the duke, Britain's number two in the rich list are also minting it with the British property market, a safe
haven for those members of the global elite who are joining in an investment strike against jobs and the real
economy and instead prefer to use their zillions to speculate in golden bricks and mortar.
Once metal traders, doing deals with Russian oligarchs who got disgustingly wealthy by robbing their own
people blind, David and Simon Reuben reinvented themselves as British property magnates.
The Reuben brothers also now control 48 per cent of all horseracing in the UK. They got $1.5bn richer last year
and are now worth $10.5bn.
Another property dealing "noble," Charles Cadogan - number four in the list - Top Shop's Philip and Christina
Green (number five), Virgin's Richard Branson (number six), jeweller Laurence Graffare (number eight) and
JCB's Sir Anthony Bamford are also rather more wealthy ($900m, $800m, $400m, $1.7bn, $2bn respectively) than
a year ago.
The majority of the other British members of the dollar billionaires' club maintained their wealth over the past
Which in a country where your average worker has seen their pay packet shrink more sharply than almost
anywhere else in the region is a scandal.
But that's the nature of unfettered capitalism.
It's time to challenge it.
- You can read more details on Europe's filthy rich tat www.revolting-europe.com
Money- Barclays Obscene Pay differentials demonstrate the gap between haves and have nots
Updated: 09 Mar 2013
Barclays bonanza for 428 millionaires
Friday 08 March 2013
Banking giant Barclays revealed today that 428 of its employees took home a whopping £1 million or more last
year, including five who got more than £5m, despite a year of scandal and falling profits.
The group's annual report also showed that chief executive Antony Jenkins was awarded a total pay package
worth £2.6m in 2012, including a £1.5m long-term incentive bonus which will pay out in future years if he meets
Unions slammed Barclays over the yawning pay gulf between its coddled City-slickers and struggling shop-floor staff.
Unite national officer Dominic Hook said: "The rampant inequality in the pay between the top Barclays executives
and those on the front line who deal directly with customers is shocking - and needs to be addressed by chief
executive Antony Jenkins as a matter of urgency."
TUC general secretary Frances O'Grady added: "The EU is absolutely right to push ahead with its bonus cap.
"George Osborne should start siding with the interests of the electorate and the wider economy, rather than with
the rich and powerful elite in the City."
Money- Be Wary of Credit Ratings Agencies
Updated: 07 Mar 2013
Downgrade your expectations:
Prem SikkaEvaluating the creditworthiness of countries is far from an exact science,
yet the influence of credit ratings agencies is extraordinary.Recently, the UK government’s debt rating has been downgraded by credit rating agency Moody’s from AAA to
Aa1. It joins France, whose credit rating was downgraded to Aa1 in November 2012. In August 2011, Standard &
Poor’s (S&P) had downgraded the US from AAA to AA+.
Credit ratings enable investors and markets to assess the risks of government securities.
In the case of the UK, a downgrade could increase the government’s borrowing costs.
It would also further reduce the value of the pound sterling and thus stoke inflationary pressures by increasing
the cost of imports, though the weak pound may help British exporters.
But the notions of social stability, justice, and fairness are beyond the remit of credit ratings agencies.
The general message from the Moody’s downgrade is that the UK government must deepen its austerity program
and attack hard-won social rights on education, pensions, healthcare and unemployment.
Credit ratings can have serious impact on national and household accounts, but are also a major money-spinner.
In 2012, Moody’s reported profits of $1,077 million and 2012 is expected to produce record profits as investors
seek shelter from growing financial uncertainty.
However, the models used by credit rating agencies continue to produce odd results, and there is an urgent
need to check the economic, social and political power exercised by the rating agencies.
The UK government has provided around a trillion pounds in loan and guarantees to ailing banks.
For many years, the UK-based banks engaged in organised tax avoidance, money laundering, interest rate
manipulations, mis-selling of pensions, endowment mortgages, payment protection insurance and many other
These scams did not persuade credit rating agencies to reduce the UK’s credit rating.
Perhaps they approved of hot money rushing to London to take advantage of scams.
Just as the regulators began to show signs of getting off their bended knees to giant corporations, Moody’s has
downgraded the credit rating.
The very concept of risk assessment requires some openness and a relatively free flow of information, but credit
rating agencies continue to give higher ratings to opaque jurisdictions.
Bermuda, whose opaque structures often enable corporations and wealthy elites to avoid taxes elsewhere, is
rated Aa2, while the economic powerhouse China is rated Aa3. Oil-rich Saudi Arabia is rated Aa3, the same as the
Cayman Islands which is well-known for its secrecy, opaque structures and fiddle factories that facilitate tax
avoidance. Iceland, bailed out by the European Union and the International Monetary Fund enjoys a credit rating of Baa3.
It shares the same rating as India, which has foreign currency reserves of around $300 billion.
In December 2009, Moody’s boldly stated that “investors' fears that the Greek government may be exposed to a
liquidity crisis in the short term are misplaced”, but barely four months later, the Greek government was
negotiating bailout deals.
Credit rating agencies have a history of poor performance.
Enron, the fraud-ridden US energy giant, collapsed in December 2001.
Right until its demise, it continued to attract favourable credit ratings.
These enabled the company to overstate its profits and assets and understate its liabilities.
Credit rating agencies said that lessons will be learnt, but the banking crash once again has shown that the
emperor had no clothes.
Moody’s, Standard & Poor’s, and Fitch, the world’s biggest credit rating agencies, maintained A-ratings for
Lehman Brothers and US insurance giant AIG until early September 2009, just days before their collapse and bailouts.
In 2008, just prior to the banking crash, there were about twelve AAA-rated companies and about the same
number of AAA-rated countries, but around 64,000 complex financial instruments received the AAA-rating.
Banks sliced, diced and repackaged subprime mortgages, collateralised debt obligations and structured finance
deals into what they described as “safe investments”.
This illusion was supported by the AAA-ratings given by rating agencies, which subsequently turned out to be junk.
The regulators were content to let the banks hold less capital for AAA securities and, as a result, banks did not
have the buffer to deal with toxic debts. Investors, governments, taxpayers and markets were duped, and the
whole financial system came tumbling down.
Credit rating agencies wield enormous economic, social and political power, but do not owe a “duty of care” to
the stakeholders affected by their opinions.
These issues have now become the subject of legal disputes.
In February 2013, The US Department of Justice sued Standard and Poor’s (S&P) for issuing “inflated ratings that
FCA 1200 held that credit ratings agency S&P was liable for the “misleading and deceptive” ratings issued by it
because it made unfounded and irrationally optimistic assumptions in its analysis.
Protracted litigation will follow as credit rating agencies try to wriggle out of any social obligations.
These issues are important because credit ratings form the basis of economic experiments that can result in
austerity drives, unemployment, loss of social welfare, and ruined lives.This article first appeared at The Conversation
Money- 25% of UK's Top Companies Pay No Tax- What else did you expect from the Nasties ?
Updated: 04 Mar 2013
25% of UK’s top companies pay zero tax
Sun Mar 3, 2013 7:48AM GMT
Almost 25 percent of Britain’s biggest listed companies have paid no corporation tax last year, a new research reveals.
The Mail’s analysis of the latest annual reports and accounts of the FTSE 100 companies, which represent about
81 percent of the entire market capitalization of the London Stock Exchange, revealed that 47 companies has
given no exact figures for tax they pay in the country.
Moreover, of the 53 who disclosed their tax payments, 12 showed they paid no tax at all despite half of them
receiving a tax credit.
G4S, Vodafone, British American Tobacco, and Rolls-Royce, were among the companies which paid no tax in the
country last year. The 12, however, paid £5.6?billion in corporation taxes in other countries.
Member of European Parliament for south east England Sharon Bowles, who is pushing for tax disclosure, said:
“In an age of austerity, when the ordinary man in the street has to pay all his tax, we should be making sure
corporates pay their fair whack and in the right place.”
Recession-hit Britain is losing at least 5 billion pounds each year due to tax avoidance schemes by wealthy
individuals and companies
Money- Lax on Tax- Its always Christmas for the Super Rich
Updated: 28 Feb 2013
“We don’t pay taxes. Only little people pay taxes.” Leona Helmsley,
wealthy widow of a New York property tycoon *
SchNEWS reckons it’s time to point out the bleedin’ obvious – it’s always Christmas time for the super- rich
and the multinational corpora- tions. Under Neo Labour those with the most cash have doubled their money.
A report on inequality from the Office for National Statistics shows that the top 1% increased their share of
national wealth from 20% to 23% in the first six years of the Labour government. The top ten per cent of
Britain now owns an incredible 54% of the wealth.
Meanwhile Chief Executive (CEO) pay is out of control. In the UK it rose 25 per cent a year from 1983 to 2002 –
no matter how a company was performing. If a CEO remained in post for seven years, he (and it is always a
he) could expect to see his salary double – twice. CEOs now pocket around 50 times as much as ordinary
employees. In fact, a new paper from business school academics reckon that “corporate managers are
somewhat like landed aristocracy in the 19th century, or political elites of the Third World” with their pay far
outstripping their contribution to the company or the country.
Office cleaner Abdul Durrant stood up at HSBC annual general meeting in June and asked if cleaners at the
bank’s Canary Wharf headquarters could be paid more than £5 an hour. It was not, he said, enough to live on.
HSBC Bank chief executive William Aldinger didn’t answer – and why should he care. He has a £37 million
three-year package to live on, as well as free dental and medical treatment for life.
Not that you’ll read about this in the corporate media where it’s divide and rule. You skint? Then blame those
poorer than you. So The Sun runs another ‘Shop a Skiver’ campaign but forgets to nominate its owner
Rupert Murdoch. In 1999 The Economist reported that Murdoch had made £1.4 billion in profits over the
previous 11 years but had paid no corporation tax. After an examination of what was available of the
accounts, it reckoned Murdoch would normally have expected to pay enough tax to “build seven new
hospitals, 50 secondary schools or 300 primary schools”.
Or what about Richard Desmond, owner of Express Newspapers, who paid himself £46.2m last year. Yet his
papers run a relentless campaign against asylum seekers and how they are bleeding the country dry.
Richard Branson’s Virgin Group is based in the Caribbean – yet since privatisation, Virgin Trains have
received £1.57 billion in public subsidies. That’s taxpayers’ money, for someone who pays hardly any tax, for
a service that is crap
Money- US Credit Rating Agencies -Pontificate for Political Profit as well as for Economic gain
Updated: 28 Feb 2013
Moody's, S&P and other credit rating agencies deserve a failing grade
The traditional credit rating business is broken.
Perhaps there is a way to use open source models to fix it
Moody's believes the UK's recovery is unlikely to gain traction until at least 2015.
Photograph: Brendan Mcdermid/Reuters
Five years after the financial crisis, European and US regulators have yet to solve the problem of biased credit
rating opinions. Moody's downgrade of the UK's credit rating and the recent US lawsuit against S&P remind us
that credit ratings remain both consequential and controversial.
More importantly, they are a byproduct of a broken industry hamstrung by obsolete regulation.
Rating agency regulation needs to evolve in order to encourage rather than stifle innovation. Just as
TripAdvisor has disrupted the status quo for travel reviews, 21st century technologies can revolutionize the
way that fixed income investors glean wisdom about bonds.
Rating agencies first found their way into US federal rulemaking in the wake of the Depression. Regulators
decided that expert third-party evaluations were needed to ensure that banks were investing depositor funds
wisely, especially since taxpayers started guaranteeing deposits under the auspices of the FDIC.
In the 1970s, after rating agencies adopted the issuer pays model, the federal government implemented
NRSRO (Nationally Recognized Statistical Rating Organization) registration – albeit without oversight. Finally,
the 2006 Credit Rating Agency Reform Act – passed in reaction to the controversy over Enron's and
WorldCom's ratings – stiffened regulation of NRSROs.
To become a new NRSRO, a firm must submit 10 letters from Qualified Institutional Buyers stating that they
have happily used the firm's ratings for at least three years. This requirement is somewhat circular, because it
is hard for a new rater to gain attention from institutional buyers without being an NRSRO.
Once a rating agency joins the NRSRO club it faces enormous compliance costs in terms of both employee
training and reporting. Upstart Egan Jones recently found that the penalties for making errors on mandatory
Securities and Exchange Commission (SEC) filings can be quite severe. The compliance burden actually
favors the big three because they generate enough revenue to fully staff compliance units. New entrants often
lack this luxury.
Further, Egan Jones and S&P share two characteristics that should raise an eyebrow: both downgraded the
US and subsequently faced disciplinary action from the US government. Perhaps this helps explain why
Moody's chose to downgrade the UK while leaving the US at Aaa. The two countries have virtually identical
central government net debt-to-GDP ratios, while the UK has significantly smaller central government deficits
and is less subject to interest rate spikes due to the longer average maturity of its bond issues.
Expert opinions about bond risk can play an important social role. Since most people lack the time and
expertise to thoroughly evaluate these instruments, delegating this task makes sense. Further, correct and
credible expert opinions about fixed income securities promote a proper alignment of interest rates to risk,
ensuring that our society's scarce capital is effectively deployed. So rather than simply dismiss the ratings
business, we should be trying to fix it.
What could a 21st Century rating industry look like? Today, computer models are available to rate all major
classes of fixed income securities. In some cases, rating agencies use such models, but the workings of these
models and the data entered into them are not fully disclosed. This creates opportunities to massage inputs
and outputs, or to ignore potential improvements that produce commercially inconvenient results – as alleged
in the Department of Justice's complaint against S&P. Further, model results can be overridden by a rating
committee, whose proceedings are kept secret.
A more modern alternative would leverage open source models with fully transparent inputs and outputs. As
with Linux and Wikipedia, the software and data would be open to a worldwide peer review process, which
could facilitate their rapid improvement. A number of examples for this radically open approach to credit
modeling now exist including the National University of Singapore Risk Management Institute's Credit Risk
Initiative for corporate bonds and this author's open source public sector credit framework for government bonds.
Regulators can accelerate the innovation process by empowering one or more certification boards to review
and approve open source credit models. This way, rigorous modeling efforts can be differentiated from the
dross that often plagues open source communities. A rough template for such a certification body is the World
Wide Web Consortium that sets standards for HTML, XML and other internet technologies.
Well-meaning government regulations often have the negative unintended consequence of locking in
outmoded ways of conducting business. A modern regulatory regime would empower mass collaboration
technologies to improve credit rating performance.
Money - The Pound going down on Osborne's patch
Updated: 26 Feb 2013
Pound hits two-year low after credit rating downgrade
Mon Feb 25, 2013 10:26PM GMT
British pound has fallen to a two-year low as currency markets lose their confidence in the country’s
downgraded economy, raising fears of a longer than expected period of low growth.
Sterling slid against dollar to $1.5073, its lowest level since summer 2010, after Credit ratings agency Moody’s
downgraded the British government’s bond rating from the top AAA to AA1 last week due to the country’s
rising debt and slowing growth.
The pound also plunged to a 16-month low against the euro at 0.8745 at one point, despite government efforts
to play down the significance of the country losing its triple A credit rating.
"While the downgrade may add to market nervousness about the UK's fiscal position, the key effect is simply
to reemphasize the weakness of the economic outlook,” said Jonathan Loynes, chief European economist at
Earlier last week, the surprise decision by three members of the Bank of England (BoE), including its governor
Sir Mervyn King, to pump an extra £25 billion into the UK’s struggling recovery sent pound to a 15 month-low
against the euro and a cent to an eight-month low against the dollar
Money- Is Balls the next best thing to a Parliamentary Piss Up ? We need Radical Change !
Updated: 25 Feb 2013
Britain’s ratings downgrade described as ‘a humiliating blow’
Ed Balls, Britain's Shadow Chancellor
Sat Feb 23, 2013 9:7PM GMT
Shadow chancellor Ed Balls attacked the Conservative-led coalition government’s economic policy and its
devastating austerity measures, urging the Chancellor George Osborne to "kick-start our flat-lining economy".
According to Moody’s, which has for the first time since 1978 downgraded the country’s rating, growth would
"remain sluggish over the next few years". The ratings agency said the coalition’s debt reduction programme
faced significant "challenges".
"This credit rating downgrade is a humiliating blow to a prime minister and chancellor who said keeping our
AAA rating was the test of their economic and political credibility”, said Balls, speaking on BBC Radio 4's
"I have always said... that you should not set your policy by the credit ratings agencies.
They have got things wrong in the past.
"But what matters is the underlying economic reality.
There has been no growth now for two years, our deficit is getting bigger... the plan has not worked."
"In the budget, the government must urgently take action to kick-start our flat-lining economy and realise that
we need growth to get the deficit down", added the shadow chancellor.
However, the Chancellor Osborne warned that Britain's situation would get much worse if the government
abandoned its "commitment to deal with that debt problem".
"What is the message from the ratings agency? Britain's got a debt problem. I agree with that. I've been telling
the country for years that we've got a debt problem, we've got to deal with it”, he said.
"We've got to take tough measures to do that and I think people understand that."
Osborne claimed that the UK was still able to borrow money "very cheaply with very low interest rates" from
investors all around the world.
Earlier, Liberal Democrat’s chief secretary to the Treasury, Danny Alexander, told BBC News that losing the
AAA rating was not a devastating blow.
Alexander insisted the government was trying to "deal with huge financial problems we inherited from Ed Balls
and his colleagues and get the country back on track".
Meanwhile, Scottish finance secretary John Swinney said the cut proved the UK's "vigorous austerity
programme" was not working and confirmed "the utter failure of the UK government's economic strategy".
The UK's net sovereign debt was the equivalent of 68 percent of the country's annual economic output, or
GDP, at the end of 2012.
The country has experienced a double-dip recession since 2008. It grew in the third quarter of last year,
boosted by the impact of the Olympics, but shrunk again by 0.3 percent in the last three months of 2012.
All three major credit agencies last year put the UK on "negative outlook", meaning they could downgrade its
rating if performance deteriorates.
“What the credit rating agencies are doing though is reflecting the reality and the reality is an economy which
is not growing, a deficit which is getting bigger, families in real stress and a government which is ploughing on
regardless with a plan which is not working -- saying 'the medicine is not working, let's increase the dose of the
medicine' that is completely crazy economics”, Ed Balls added.
The downgrade may fuel unease amongst members of the ruling Conservative Party and his Liberal Democrat
coalition partners that Osborne's gamble that he could slash the deficit and ensure a return to growth by the
May 2015 election is failing to pay off.
Sterling fell by almost a cent to around $1.5160 after the downgrade, just off Thursday's fresh 2-1/2-year low,
and analysts expected it to weaken further on Monday, even if many had seen a downgrade coming sooner or later.
Britain joins the United States and France in having lost its triple-A rating from at least one major agency, after
holding a top-notch rating from Moody's and Standard & Poor's since 1978, and from Fitch Ratings since 1994
Money-Supermarkets take 58% of spend but cooperatives & better local markets can change that !
Updated: 21 Feb 2013
Supermarkets 'Now Take 58% Of Retail Spend'
Consumer spending trends show supermarkets are the big winner,
amid a forecast of plastic's demise as a retail payment method.
1:31pm UK, Tuesday 19 February 2013
Video: Retail Spend: Supermarkets Take 58%
Graph: Trolley Wars: UK Supermarket Share
Nearly 60% of all retail spending is now made in supermarkets, according to a new report.
The Payments Council study found that 58p in every retail pound is handed to them, up from 46p a decade ago.
The changing trend shows that in the last 10 years supermarkets have taken an extra 26% of retail sector spending.
The Payments Council said the latest data also showed that the UK spent £58bn on entertainment last year, 60%
more than in 2001 and outstripping growth in consumer spending by over a quarter.
However, the wide-ranging survey was carried out before the discovery of horsemeat in a number of processed
meat products across several supermarkets which is believed to have hit sales.
It came as spending in restaurants and cafes was revealed to have almost doubled in the same period.
According to the report, The Way We Pay, a number of consumer trends have been combined for the first time.
It said cash purchases continue to migrate to debit card payments but it warns that plastic spending may become
The study said that mobile phones, led by the smartphone revolution, look increasingly likely to become the
primary payment vehicle.
Smartphones are expected to become an important payment vehicle
The Payment Council also said cheque usage halves every five years.
In 2003, 43% of our retail spending by value was with cash, but now it is just 30% - with the majority being for payments under £5.
Chief executive Adrian Kamellard said: "We scarcely notice the steady changes in the way we pay, yet someone
in their thirties today will see more change in their lifetime than in the entire history of money.
"Even recent innovations such as payment via a mobile phone, which ten years ago some felt to be science
fiction, will soon be commonplace. The 2000s were the decade of the debit card.
"The 2010s are likely to be the decade of the mobile phone. Just as we can't imagine how we ever did without the
internet, many people will soon wonder how we used to be so dependent on cash and cheque - 20 years from
now even cards may seem archaic."
The report also looked at how leisure pursuits continue to shift for many people.
Spending in furniture and homeware shops is down by nearly half during the last decade, as is spending in DIY stores.
Meanwhile, the digital revolution of the media has now hit the delivery of publishing - newsagents have lost nearly
20% of their trade in the past 10 years.
Money-Pound Plunges as BOE boss wanted to print more cash.
Updated: 21 Feb 2013
Pound plunges as King loses QE vote
By (c) Sky News 2013 | Sky News – 7 hours ago
Fri, Feb 15, 2013 19:21 GMT
The pound has plunged against key economies after it was revealed that the Bank of England boss lost a vote for
an increase in monetary stimulus.
Sterling fell to fresh multi-month lows against the euro and the dollar after minutes from the BoE showed governor
Sir Mervyn King wanted an increase of quantitative easing (QE) to £400bn.
The notes showed that unexpectedly three out of the nine BoE policymakers voted for an increase in asset
purchases under the bank's QE programme, which currently sits at £375bn.
However, they were outvoted by the six others who preferred to keep policy unchanged.
The minutes also show that the Monetary Policy Committee (MPC (KOSDAQ: 050540.KQ - news) ) considered
cutting interest rates below the current historic low of 0.5%.
The pound slid to at least an 8-1/2-month low against the dollar, dropping 1.1 cents in a day and reaching $1.549.
Meanwhile the slide with the euro continued, with the pound dropping to 1.145 euros, down 1.15 cents in the day.
The FTSE 100 index peaked above 6409 after news of the MPC minutes was released and finished at 6395 - a five-
year closing high as investors anticipated benefits from extra QE stimulus.
James Knightley, economist at ING bank, said it was "significant" that Sir Mervyn voted for more QE.
"Clearly, if the data disappoints, more QE will be on its way," Mr Knightley said.
The MPC meeting was held on February 6 and 7, with the governor being supported by BoE economist Paul
Fisher and Professor David Miles.
The British economy has been stagnant for the past two years, and the central bank only sees sluggish future growth.
But concerns about inflation and how effective more buying of bonds or other assets would be have stayed the bank's hand.
However, the swing in the governor's views provided the sharpest divergence in views since June last year, when
a split vote was followed the next month by a majority in favour of an extra £50bn of purchases.
"A case could ... be made for undertaking additional asset purchases at this meeting," the minutes said.
"The degree of slack in the economy, and the likely positive response of supply capacity to increased demand,
meant that higher output growth would not necessarily lead to any material additional inflationary pressure."
More broadly, the MPC said it was willing to allow longer for inflation to fall to its target, and to consider measures
to boost lending from sources other than banks.
Most economists have seen it as unlikely that the BoE would opt to try and pump yet more cash into the economy,
due to persistently high inflation and doubts from King among others about further asset purchases.
The meeting was only the fourth time that the governor has been outvoted since he took office in 2003.
Money- Barclays and the Sack Race
Updated: 19 Feb 2013
Yesterday, Barclays announced it had made profits of £246 million in 2012, or just over £700,000 per day (or £8.14
every second of every hour of every day of every week of the year).
This was however down on 2011's looting when the bank made profits of £5.9 billion.However, when adjusted to
remove fines over Libor rigging, PPI mis-selling and other scandals that have ravaged the bank, then its 2012
profits (on an adjusted basis) were £7.05 billion (or £224 per second).The bank also announced a bonus pool of £1.85 billion (down 11%
from 2011). The fall in profits and in bonuses though still large, excessive and exploitative are not enough.
So despite announcing these untold riches to be shared between shareholders and directors and other high
fliers, the bank also announced that 3,700 staff will be made redundant - split roughly evenly between the retail
business and the investment bank.When I met with Jean-Luc Melenchon, the French Left Party leader, at the end of last year, he told me that one of
his one his policy proposals was that no company should be able to make redundancies as long as it was
profitable. After all, why should a company making profits be allowed to sack the workforce that produced those
profits - simply to try to make higher profits for shareholders?
In the case of Barclays, their 2012 bonus pool of £1.85bn would be enough to give each sacked worker £500,000 -
more than enough to cover their wages. Barclays unadjusted profit of £246m would pay for 3,700 staff on average
salaries of £66,000.
Now you might argue that such rules would be inflexible, especially in the case of a company that is trying to
restructure - in the case of Barclays to restructure away from investment banking, and closing its tax avoidance
unit, under considerable public scrutiny.
However, while voluntary redundancies could still be requested, what Melenchon's proposals would mean is that
even when restructuring a company should offer alternative posts with re-training if necessary.
In fact Melenchon's proposals could be part of a modern full employment strategy, and would be a good way of
preventing rising unemployment - something the OBR predicts we will see this year.
Money- World Currency Wars of 2013
Updated: 17 Feb 2013
The great currency war of 2013 explained
Japan, Europe, the US and Britain are at war.
But what is a currency war and who’s winning?
By Kathleen Brooks, Director of Research UK | Forex.com – Fri, Feb 15, 2013 19:21 GMT
Combat has been joined, with the world’s economic superpowers locking horns on the international markets.
But what exactly is a currency war?
Could one wrong move by the Japanese say, or the Europeans, cause the US or Brazil to mobilise their armies?
Maybe not, but a currency war does have lasting repercussions for the losers and rich spoils for the winner –
and the latest G20 meeting in Moscow did nothing to reduce hostilities meaning it’s likely to continue for the
This is why.
As governments and central banks change policies, traders jump to sell or buy their currencies.
That could mean the pound soars against the dollar or crashes against the euro.
And this matters.
A strong pound means less inflation in Britain as foreign goods become cheaper, but hurts exports and jobs as
British-made goods cost more overseas and it’s expensive for international companies to operate in the UK.
On the other hand, a plunging pound might push up the price of petrol and food, but it means it’s cheap for other
countries to open plants in Britain and helps boost any British company trading abroad.
Right now – with growth almost non-existent in the developed world – the objective seems to be to drop your
country’s currency to the lowest level you can and so “win” business from abroad and return to growth, inflation
being seen as collateral damage.
Who started it?
The “cause” of the current war has been the recent drop in currencies like the yen, leading to corresponding
increases in currencies like the euro.
To currency traders the “currency war” has another name - trending markets – and is to be encouraged.
If you had jumped on the long USDJPY trade in November you would have locked in nearly 20% profit, if you
had jumped on EURJPY back in July when European Central Bank (ECB) chief Mario Draghi said the ECB would
do “whatever it takes” to save the euro, you would have made 35% - some nice juicy profits.
Put simply, that means in a little over three months it’s become 20% cheaper to do business in Japan than the
US and in half a year working in Europe has become a third more expensive than in Japan.
And the ECB doesn’t like it.
Its central bankers have one of the hardest jobs in central banking:
They need to decide on policy that works for 17 individual nations at the same time.
Due to this, currency market volatility makes their job harder, they would much rather that markets were not
trending and instead moved slowly and steadily – otherwise known as range trading, often the scourge of the
So maybe the real war is actually between the market and the central banks?
After all, the market is the one actually selling the yen and making it drop.
Japan might be pursuing an ultra-loose monetary policy, however, its economy is extremely weak, at the end of
2012 it registered its third consecutive quarter of negative growth, and it is mired in deflation.
So keeping rates at zero and pumping money into the economy through quantitative easing seems a perfectly
logical policy decision, even if it does weaken the yen.
But that doesn’t mean it’s not a headache for everyone else.
The massive fall in the value of the yen means you could argue that Japan is the clear winner in this war.
However, it’s worth keeping in mind little old Blighty.
The pound is the second worst performer in the G10 so far this year, yet the UK has not been mentioned at all in
relation to currency manipulation even though the Bank of England actually owns more of its government debt
as a percentage of GDP than the Bank of Japan does.
So maybe the UK is the real winner of this war, as it hasn’t even had to deal with the diplomatic consequences of
having a weak currency.
And the losers
Unless there is a serious shift in market sentiment, fast-growing and transitioning emerging market currencies
with a strong export or commodities bases are likely to be the losers in the currency war.
That would mean the developing economies that have been seen as so cheap to operate in for so long are
rapidly becoming more expensive as their currencies soar as ours plummet.
The Brazilian real and the South Korean won are most at risk, in our view.
At least for now.
Because the currency war is alive and well and expect the losers to launch a counter-attack at any stage.
Money -Trade in the Eurozone - Oh Shit George- Deficit Britain hits rock bottom
Updated: 16 Feb 2013
Eurozone registers 81.8b euro trade surplus in 2012
Updated: 2013-02-16 03:40
BRUSSELS - The eurozone's trade in goods recorded a surplus of 81.8 billion euro (109.2 billion US dollars) in
2012, compared with a deficit of 15.7 billion euro in 2011, Eurostat said Friday.
The Eurostat data also showed that the 27-nation European Union (EU) recorded a deficit of 104.6 billion euro in
2012, which was an improvement on the previous year's deficit of 162.7 billion euro.
In December 2012, euro area's trade in goods balance with the rest of the world delivered a 11.7 billion euro
surplus, compared with a surplus of eight billion in the same period of 2011.
For the EU, the figure was 700 million euro deficit in the last month of 2012, compared with 200 million in
Eurostat also published trade figures for each member state over the first 11 month of 2012.
The data showed that the largest surplus was observed in Germany at 174.6 billon euro followed by the
Netherlands, Ireland and the Czech Republic, while Britain registered the largest deficit at 152.9 billion euro,
followed by France, Spain and Greece.
Money- QC Pershad's own Tax Law
Updated: 13 Feb 2013
'British barrister dodges £620,000 tax'
Tue Feb 12, 2013 10:35AM GMT
A senior British barrister specializing in fraud cases has dodged more than £620,000 in VAT payments that
should have been paid in tax, media reports said.
The barrister, Rohan Pershad QC, from Hammersmith in west London, vanished off the Inland Revenue's
radar in 1999, when he stopped paying tax even though he carried on charging his clients for VAT, British media reported.
Pershad QC is said to have accumulated illicit profits, by which he bought properties in Surrey and Somerset
that cost more than £1.5m, according to reports.
Blackfriars crown court, in London, unanimously convicted the barrister of cheating the public revenue after
more than nine hours of deliberations.
He was released on bail until sentencing on 26 February.
During the nine-day trial, jurors heard that most barristers are self-employed and are legally required to pay
their own VAT.
Pershad, however, stopped doing so shortly before he moved to Thirty Nine Essex Street chambers.
"Through all of that time, he was collecting the VAT. It's just that for that period of 12 years, whilst it was being
collected in, it wasn't being accounted for or handed over as VAT”, said Andrew Marshall prosecuting.
"It provided him, if you think about it, with a private, tax-free income because VAT was not being paid.
This money, it stayed with Mr Pershad", Marshall said.
His online CV depicted a lawyer with a "particular expertise in fraud cases", Marshall added. "This is a man
that is used to looking at other people's business and dissecting it and finding fault in it," he told jurors.
Pershad, who was called to the bar in 1991 and was made QC in 2011, specialized in financial disputes,
professional negligence and insurance cases.
Last month, the Director of Public Prosecutions, Kier Starmer, QC, warned that prosecuting tax evasion
should be a priority since it is not a victimless crime. It is estimated to cost the British economy £14billion a
year in lost revenue
Money- Tax Cheats and their Dodgers Revealed by a Tory Boy
Updated: 12 Feb 2013
The tax gap is a problem for the whole country
Monday 11 February 2013
by Stephen McPartland
"Many of the challenges facing the world today transcend politics and encouraging companies to pay their fair
share of tax has united people across the political spectrum.
So much so that I believe I am the first Conservative member of Parliament in history to write for the Morning Star."
The surprise my sentence to the house may have generated in loyal readers of this paper may be equalled by
the shock felt in the boardrooms of Britain's 100 largest companies when I launched my FTSE 100 tax
The time has come for companies to accept that their customers, employees, and even shareholders believe
that paying a fair share of tax is an important measure of corporate social responsibility.
Fancy corporate lawyers can eloquently describe the differences between tax avoidance and tax evasion, with
the lines between them becoming increasingly blurred.
Tax evasion is clearly wrong, illegal and unfair to the rest of society, as everyone else has to pay more in taxes
to make up for those who do not pay their fair share.
Just before Christmas, there was an explosion of public interest after the public accounts committee named
and shamed some well-known companies that used transfer pricing to offset their tax liability here in Britain,
basically to avoid paying tax.
I am aware there is a strong argument that the tax authorities in this country could do more to enforce tax payments.
The government has done work on tackling tax avoidance - but I fear the general anti-avoidance rule that will be
introduced might end up penalising the sole trader and small and medium-sized enterprises instead of tackling
the missing billions in tax from the larger corporates.
My campaign for tackling tax avoidance stems from a meeting I had with Christian Aid supporters in my
constituency last September when the tax justice bus tour visited Stevenage.
The tax justice campaigners believe that tax-dodging by international companies costs Britain around £35
billion and developing countries an estimated £100bn a year.
Just imagine the dramatic difference such a huge sum of money would make if it were available to invest in public services.
There is growing anger at the fact that some large companies are hiding behind complex accounting rules that
may be strictly legal but are considered to be unethical by the public.
The problem of the missing billions in tax is not just a problem in Britain.
It is worldwide and it does the greatest damage to poor and developing countries that cannot stand up to
The report into the behaviour of Associated British Foods in Zambia that Action Aid released over the weekend
brings the power of large corporations and that of developing countries into stark contrast.
Action Aid commissioned some very interesting research into the use of tax havens by FTSE 100 companies in
October 2011 and found that at that time:
•The 100 companies had 34,216 subsidiary companies, joint ventures and associates
•38 per cent of their overseas companies located in tax havens
•98 of them declared tax haven companies.
Only two groups, Fresnillo and Hargreaves Lansdown, did not
•There were 623 companies registered in Jersey - compared to just 551 registered in China, despite tens of
billions in transnational trade with that country.
I know that governments from all around the world will agree with the sentiment of greater tax transparency, but
they will struggle to introduce it as every nation competes in the global race.
I welcome the Prime Minister's initiative to make tackling tax avoidance a priority as Britain takes over the
presidency of the G8.
The PM himself made strong references about a particular company needing to wake up and smell the coffee.
However, I believe that it will be up to the companies themselves to lead the way and they will only do that if
their customers - the British public - drag them kicking and screaming towards tax transparency and a fairer tax system for us all.
Last November I wrote to the chief executives of all the FTSE 100 companies asking them whether they were
willing to pledge their support for corporate tax transparency and whether they would support a new
international accounting standard for country-by-country reporting.
The current international accounting standards only require multinational companies to report accounts on a
global consolidated basis, which makes it incredibly difficult to know where taxable economic activities are
occurring and where profits are declared.
Companies move billions between jurisdictions in order to reduce their tax bills, and large companies are
allegedly manipulating their centres of interest through the use of holding companies, offshore accounts and
intellectual property rights.
Whether this is tax avoidance or tax evasion, it is certainly immoral and the only way of resolving the issue is to
introduce greater transparency.
In the interests of transparency I'm publishing all the responses that I have received from the FTSE 100 at
Every one of us can then decide individually whether the biggest companies in Britain really do care about the poorest in our society.
The responses from the FTSE 100 companies have been wide-ranging but generally disappointing.
HSBC has offered to help design a tax transparency standard, BT and others have welcomed the transparency
initiative - although not the new accounting standard - and Hargreaves Lansdown has questioned the value
that it receives for the taxes that it pays.
On a more positive note the chief executive of Sainsbury's agreed that consumers are best placed to
encourage companies to pay the tax they are supposed to, as they can vote with their wallets.
Capita stated it was both interested in and supportive of establishing a new international accounting standard.
Morrisons suggested that the government should force all companies to disclose their corporation tax payments in this country.
But the refreshingly honest response from Aggreko summed up what many other companies felt - that they
were paying lots of tax and probably more than they needed to, but greater tax transparency was a "lousy idea."
I could go on, but the general thrust is pretty simple - the biggest companies in Britain believe they all honestly
pay their taxes and make a huge contribution to the economy by employing people who have to pay taxes.
The majority of responses so far clearly show that they are not prepared to be proactive and will only comply
with the laws as they stand.
Unfortunately lawyers can blur the lines between tax avoidance and tax evasion, but this is clearly wrong,
illegal and unfair to the rest of society.
Over the weekend we heard the news that Barclays is closing down its tax advisory (avoidance) service in
Britain, so we are making a difference.
Add your voice to the campaign and sign the petition calling for greater tax transparency today at www.taxchallenge.co.uk.
•Stephen McPartland is Conservative MP for Stevenage
Money - Tax Rates and allowances for 2013-14
Updated: 30 Jan 2013
Key tax rates/reliefs for 2013
Last updated: Dec 21st, 2012
Feature by Sam Barrett
Unsure on your income tax rates or your pension contributions relief?
Any idea how much inheritance tax or National Insurance you pay?
Moneywise is on hand with all the rates and reliefs for 2013.
Basic rate (20%): On first £34,370 after allowances
Higher rate (40%): On income over £34,371
Additional rate (50%): On income over £150,000
Basic rate 10%. Higher rate 32.5%. Additional rate 42.5%.
Savings tax: Starts at 10% for those whose total income is less than £2,710 over their personal allowance.
PENSION CONTRIBUTIONS RELIEF
20% at basic rate; 40% at higher rate; 50% at top rate (subject to restrictions).
Maximum annual contribution: £50,000. Lifetime: £1.5 million.
INDIVIDUAL SAVINGS ACCOUNTS
Maximum annual contribution: £11,280 in this tax year
Maximum cash ISA: £5,640
Maximum stocks and shares ISA: £11,280
Junior ISA: £3,600
CAPITAL GAINS TAX
Basic-rate taxpayers: 18%
Higher-rate taxpayers: 28%
Trusts and estates: 28%
Individual annual exemption: £10,600
Entrepreneurs’ relief up to £10 million - gain taxed at 10%
Payable by purchasers of property as a percentage of price paid.
Up to £125,000: nil
£125,000 - £250,000: 1%
£250,001 - £500,000: 3%
£500,001 - £1 million: 4%
Over £1 million: 5%
Over £2 million: 7%
NATIONAL INSURANCE CONTRIBUTIONS
Class 1 employees: Nil on first £146 of weekly earnings. 12% on £146 - £817.
Extra 2% on weekly earnings over £817. Lower rates payable if contracted out of state second pension.
Class 2 self-employed: Flat rate of £2.65 a week where earnings exceed
£5,595 a year.
Class 3 voluntary: Flat rate of £13.25 per week
Class 4 self-employed: 9% on profits between £7,605 and £42,475 a year, and 2% on earnings over £42,475.
Nil on first £325,000. 40% tax on excess of estates over £325,000.
Unused nil-rate band allowance can be transferred on person's death to the estate of surviving spouse or civil partner.
A lower rate of 36% applies where 10% or more of the deceased person's net estate is left to charity.
If they fall outside the nil-rate band, gifts made within seven years of death will be chargeable at a percentage of the full IHT rate as follows:
0-3 years: 100%
3-4 years: 80%
4-5 years: 60%
5-6 years: 40%
6-7 years: 20%
Over 7 years: nil
Annual gift exemption:
You can give away gifts worth up to £3,000 in each tax year.
You can carry forward any unused part of the £3,000 to the following year, but if you don’t use it that year the
carried-over exemption expires.
Gifts between husbands and wives and to charities are exempt, as are marriage gifts within certain limits.
Charities claim rate on donations at 20%. Higher-rate taxpayers receive higher-rate relief.
Money- Nothing beats a "fair" State Pension but ....here are 10 credits
Updated: 15 Jan 2013
10 reasons it's good to be a pensioner
To break up some of the doom and gloom that accompany stories of the plight of pensioners, we've put together a list of the perks of being retired.
It's safe to say it isn't a golden age for pensioners.
Falling stockmarkets, pathetic annuity rates, miserly returns
on savings and a Chancellor of the Exchequer who appears to be out to get you can make you wonder why you put in all those years of hard work.
But it's not all bad news. There are still some benefits to being over 60 and here are our top 10.
1. FREE BUS PASS
If you are old enough to claim your state pension and live in England you are also able to claim an older
person's bus pass.
This entitles you to free bus travel at off-peak times - that's between 9:30am and 11pm Monday to Friday and all
day at weekends and on public holidays.
Free bus passes are also available in Wales, Scotland and Northern Ireland, but unfortunately you can't use
passes to travel between the nations.
Still, given the soaring price of petrol, free bus travel isn't to be sniffed at. Contact your local council to find out
how to apply for one.
2. DISCOUNTED RAIL FARES
Once you turn 60 you are eligible for a Senior Railcard. It will cost you £28 a year but given that the card gives
you a third off all UK rail tickets you'll quickly make your money back. You can apply at railcard.co.uk or at your local train station.
3. WINTER FUEL PAYMENT
If you were born before 5 July 1951 you are entitled to a tax-free lump sum to help you with your fuel bills during
winter. How much you'll get depends on your living arrangements.
Generally, if you are the only person in your household who qualifies but are under 80 you'll get £200 (£300 if
you're over 80); if you live with someone else who qualifies you'll get £100 (£200 if you're over 80 or £150 if the
other person is over 80 too). You don't need to act, the money will be automatically paid to you.
4. COLD WEATHER PAYMENT
On top of the winter fuel payment, pensioners who get Pension Credit usually qualify for a Cold Weather
Payment if the temperature drops particularly low during the winter.
A network of weather stations monitor local temperatures between 1 November and 31 March every year. If there
is a seven-day period where either the average temperature drops below 0ºC for seven days or more, or it is
forecast to be on average 0ºC or lower in your postcode you will automatically be credited with £25 per week.
5. FREE TV LICENCE
If you are 75 or over then you're entitled to a free TV licence, saving you £145.50 a year. So you can watch all the
telly you want safe in the knowledge you're not paying Jeremy Clarkson's wages anymore.
If you have a TV licence you will automatically receive a refund for any payments made after your 75th birthday
and yours will be converted into an Over 75 Licence.
6. CHRISTMAS BONUS
In 1972, then prime minister Ted Heath introduced a £10 Christmas bonus for pensioners. It was worth £98 in
today's money and was considerably more than the £6.75 a week basic state pension that pensioners of the time received.
Bizarrely, given the government's austerity drive this bonus still exists, and there are no plans to get rid of this
Christmas present from the Treasury. But the money is still just £10, so it's nowhere near as generous as it was in Heath's day.
You don't need to do anything to claim this benefit; it should be paid to you automatically in the same way as
you receive your winter fuel payment. If you think you're entitled to the money and haven't received it you
should speak to The Pension Service on 0800 731 7898.
7. HOUSING HELP
If you are on a low income and claiming Pension Credit you are also entitled to help with your housing costs.
If you rent your home you can claim housing benefit to help with your payments. And homeowners can claim
Support for Mortgage Interest. The amount paid is a standard rate of interest (so it might not match the rate of
interest you pay on your mortgage) and it is paid directly to the lender.
"The rules about how much help you can get are complicated," says Paul Crayston, spokesperson for the
Money Advice Trust. But there is help out there, so speak to your local Citizens Advice Bureau or call the
National Debtline on 0808 808 4000.
8. REWARDS FOR BEING A SILVER HELLRAISER
Once you've retired it's time to start playing up every bad habit you have. This is because when you retire you
convert your pension savings into an annuity that pays you an income for life.
Obviously, the annuity company doesn't want to pay you more in income than you give it in pension savings, so
the longer it thinks you'll live the less income you will receive. So what you have to do is try to get an enhanced annuity.
These annuities pay out a higher level of income as they are intended for people with health problems that mean
they may not live as long as a strapping, healthy 65-year-old.
"Even people who consider themselves to be healthy may be eligible for an enhanced annuity if they are a
smoker or drink significant amounts of alcohol," says Jim Boyd, spokesperson for annuity specialists Partnership.
"People who are eligible for an enhancement can receive extra income in retirement of up to 40% or more." So
for once in your life it can pay to admit to that extra glass of wine or crafty cigarette.
9. FREE PRESCRIPTIONS
While the rest of us grumble about paying £7.30 for prescriptions, those of you who are over 60 (or living in
Wales, Scotland or Northern Ireland) can waltz in and out of the pharmacy as often as you like for free
prescriptions. That's going to add up to some pretty big savings as the years go by.
If you embrace your age and shout about it when you enter a museum, art gallery or theme park, you'll probably
find yourself in line for a discount on the admission price. For example, annual membership to English Heritage
properties for the over-60s is £12 cheaper than for younger adults.
If you are visiting somewhere and you aren't sure whether it offers a senior citizen discount make sure to ask.
Money- Only a UK Nationalised Bank would reveal, and act on, an Economic threat ahead of time
Money- At any Rate - Scotland want a Public Bank - England needs one too !
Updated: 04 Jan 2013
Ensuring Scottish sovereignty
Sat 22nd Dec 2012
The Royal Bank of Scotland (RBS) and the Bank of Scotland were pillars of Scotland's economy and culture for over three centuries.
So when the RBS was nationalised by the London-based UK government following the 2008 banking crisis and
the Bank of Scotland was acquired by the London-based Lloyds Bank it came as a shock to the Scots.
They no longer owned their oldest and most venerable banks.
Another surprise turn of events was the triumph of the Scottish National Party (SNP) in the 2011 Scottish parliamentary election.
Scotland is still part of the United Kingdom, but it has had its own parliament since 1999, similar to US states.
The SNP has rallied around the call for independence from the UK since its founding in 1934, but it was a minority
party until the 2011 victory, which gave it an overall majority in the Scottish Parliament.
Scottish independence is now on the table.
A bill has been introduced to the Scottish Parliament with the intention of holding a referendum on the issue in 2014.
Arguments in favor of independence include that it will allow the Scottish people to make decisions for Scotland
themselves, on such contentious issues as having nuclear weapons in their seas (and submarine ports) and
being part of the North Atlantic Treaty Organization.
They can also directly access the profits from the North Sea oil off Scotland's coast.
Arguments against independence include that Scotland's levels of public spending (which are higher than in the
rest of the UK) would be difficult to sustain without raising taxes.  North Sea oil revenues will eventually decline.
One way budgetary problems might be relieved would be for Scotland to have its own publicly owned bank, one
that served the interests of the Scottish people.
True economic sovereignty means having control over the national currency, credit and debt. The public bank option
It was in that context that I was asked to give a presentation on public banking at RSA Scotland (the Royal
Society of Arts) in Edinburgh on November 22. Among other attendees were a special adviser and a civil servant
from the Scottish government.
The presentation was followed by one by public sector consultant Ralph Leishman, Director 4-consulting, who
made the public bank option concrete with specific proposals fitting the Scottish context.
He suggested that the Scottish Investment Bank (SIB) be licensed as a depository bank, on the model of the state-owned Bank of North Dakota.
Lively debate followed.
The SIB is a division of Scottish Enterprise (SE), a government economic development body.
SE encourages economic development, enterprise, innovation and investment in business, which is achieved by
the SIB through the Scottish Loan Fund. As noted in a September 2011 government report titled "Government Economic Strategy":
[S]ecuring affordable finance remains a considerable challenge...
Evidence shows that while many large companies have significant cash holdings or can access capital markets
directly, for most small and medium-sized companies bank lending remains the key source of finance.
Unblocking this is key to helping the recovery gain traction.
The limitation of a public loan fund is that the money can be lent only to one borrower at a time. Invested as
capital in a bank, on the other hand, public funds can be leveraged into nearly 10 times that sum in loans.
Liquidity to cover the loans is provided by deposits, which remain in the bank available to the depositors.
Any shortage in liquidity can be covered by borrowing at low interest from other banks or the money market.
As observed by Kurt Von Mettenheim, et al, in a 2008 report titled "Government Banking: New Perspectives on
Sustainable Development and Social Inclusion from Europe and South America" (at page 196):
[I]n terms of public policy, government banks can do more for less:
Almost ten times more if one compares cash used as capital reserves by banks to other policies that require budgetary outflows. 
Leishman stated that the SIB now has investment funds of 23.2 million pounds sterling (US$37 million) from the
Scottish government. Rounding this to 25 million pounds, a public depository bank could have sufficient capital
to back 250 million pounds in loans. For deposits to cover the loans, the Scottish government has 125 million
pounds on deposit with private banks, currently earning little or no interest. Adding just 14% of the General Fund
cash and cash equivalent reserves held by Scotland's local governments would provide another 125 million
pounds, reaching the needed 250 million pounds with six times that sum in local government revenues to spare.
The model of the Bank of North Dakota
My assignment was to show what the government could do with its own bank, following the model of the Bank of
North Dakota (BND). On the Saturday following the RSA event, the Scotsman published an article by Alf Young
that summarized the issues and possibilities so well that I'm taking the liberty of abstracting from it here. 
North Dakota is currently the only US state to own its own depository bank.
The BND was founded in 1919 by Norwegian and other immigrants, determined, through their Non-Partisan
League, to stop rapacious Wall Street money men foreclosing on their farms.
All state revenues must be deposited with the BND by law.
The bank pays no bonuses, fees or commissions; does no advertising; and maintains no branches beyond the main office in Bismarck.
The bank offers cheap credit lines to state and local government agencies.
There are low-interest loans for designated project finance.
The BND underwrites municipal bonds, funds disaster relief and supports student loans.
It partners with local commercial banks to increase lending across the state and pays competitive interest rates on state deposits.
For the past ten years, it has been paying a dividend to the state, with a quite small population of about 680,000,
of some $30 million (18.7 million founds) a year. Young writes:
Intriguingly, North Dakota has not suffered the way much of the rest of the US - indeed much of the western
industrialised world - has, from the banking crash and credit crunch of 2008; the subsequent economic slump;
and the sovereign debt crisis that has afflicted so many.
With an economy based on farming and oil, it has one of the lowest unemployment rates in the US, a rising
population and a state budget surplus that is expected to hit $1.6bn by next July.
By then North Dakota's legacy fund is forecast to have swollen to around $1.2bn.
With that kind of resilience, it's little wonder that twenty American states, some of them close to bankruptcy, are at
various stages of legislating to form their own state-owned banks on the North Dakota model.
There's a long-standing tradition of such institutions elsewhere too.
Australia had a publicly-owned bank offering credit for infrastructure as early as 1912.
New Zealand had one operating in the housing field in the 1930s.
Up until 1974, the federal government in Canada borrowed from the Bank of Canada, effectively interest-free.
... From our western perspective, we tend to forget that, globally, around 40 per cent of banks are already publicly
owned, many of them concentrated in the BRIC economies, Brazil, Russia, India and China.
Banking is not just a market good or service. It is a vital part of societal infrastructure, which properly belongs in the public sector.
By taking banking back, local governments could regain control of that very large slice (up to 40%) of every
public budget that currently goes to interest charged to finance investment programs through the private sector.
Recent academic studies by von Mettenheim et al and Andrianova et al  show that countries with high degrees
of government ownership of banking have grown much faster in the last decade than countries where banking is
historically concentrated in the private sector.
Government banks are also LESS corrupt and, surprisingly, have been MORE profitable in recent years than private banks.
Given the massive price we have all paid for our debt-fuelled crash, surely there is scope for a more fundamental
re-think about what we really want from our banks and what structures of ownership are best suited to deliver on those aspirations?...
As we left Thursday's seminar, I asked another member of the audience, someone with more than thirty years'
experience as a corporate financier, whether the concept of a publicly-owned bank has any chance of getting off the ground here.
"I've no doubt it will happen," came the surprise response.
"When I look at the way our collective addiction to debt has ballooned in my lifetime, I'd even say it's inevitable".
The Scots are full of surprises, and independence is in their blood.
Recall the heroic battles of William Wallace and Robert the Bruce memorialized by Hollywood in the Academy
Award winning movie Braveheart. Perhaps the Scots will blaze a trail for economic sovereignty in the European
Union, just as North Dakotans did in the US.
A publicly owned bank could help Scotland take control of its own economic destiny, by avoiding unnecessary
debt to a private banking system that has become a burden to the economy rather than a pillar in its support.
Her websites are WebofDebt.com and EllenBrown.com . (Copyright 2012 Ellen Brown)
1. See here .
2. Government Banking: New Perspectives on Sustainable Development and Social Inclusion from Europe and South America , Kurt von Mettenheim, Academia.edu.
3. Alf Young: Cashing in on state-owned banking , Scotsman, November 24, 2012.
4. There should be no rush to privatise government owned banks , Panicos Demetriades, Svetlana Andrianova, Anja Shortland, Vox, January 20, 2012.
Ellen Brown is an attorney and president of the Public Banking Institute, PublicBankingInstitute.org . In Web of Debt, her latest of 11 books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back.
Money- Interest Rates and Retail Price Index (RPI) unchanged
Updated: 11 Jan 2013
Pensioners' relief as RPI fiddle ruled out
Thursday 10 January 2013
Pensioners breathed a sigh of relief today after the nation's leading statistician warned against tampering with a benchmark inflation measurement.
National statistician Jil Matheson said there should instead be a new measure brought in to stand along with the two which are already used to work out how fast prices change.
Pensioners expressed concerns following proposals to make big changes in the calculation of the Retail Prices Index - the measure of inflation linked to retirement income and a series of other investments and services.
Ms Matheson called for a new index to be created from March - RPIJ - which involves some calculation changes but would be closer aligned to the other inflation benchmark, the Consumer Prices Index.
She said that while RPI calculation, which unlike CPI includes mortgage costs, didn't meet international standards it should be maintained due to its "significant value" to index-linked bond markets.
The index is linked to a wide variety of services and investments, from water bills and rail fares to pensions and even national debt.
For pensioners many annuities are linked to RPI and even a small percentage change could knock thousands of pounds off a typical 20-year retirement income.
Many private pensioners also have their annual increases linked to RPI, while returns for investors with index-linked bonds and savings certificates are likewise based on the index.
The change may be deemed necessary as any change prompting a fall in RPI would save the Treasury billions of pounds a year in interest on government bonds.
Saga director-general and pensions expert Ros Altmann said the decision not to alter RPI was "excellent news."
She added: "To have radically changed the traditional inflation measure could have jeopardised the inflation protection inherent in many people's income arrangements."
Meanwhile, the Bank of England has decided to keep its key base rate at its record low of 0.5 per cent for the 46th month running and it will not be printing any more money to pump into the economy - so-called quantitative easing.
Money-Fact- Osborne Policies are not Working- "When will they ever learn" ?
Updated: 04 Jan 2013
UK 'to lose top credit rating' as Treasury warns on national debt struggle
By Hugo Duncan
PUBLISHED: 01:18, 2 January 2013 | UPDATED: 09:27, 2 January 2013
..Britain will be stripped of its gold-plated credit rating this year in a major embarrassment to George Osborne, a
string of leading economists warned last night.
The coveted AAA score is widely seen to be under threat after the Treasury admitted that it is taking longer than
expected to get the ballooning national debt under control.
A downgrade would be a crushing humiliation for the Chancellor who has staked his reputation on cleaning up
the mess left by Labour and safeguarding the country’s top-notch rating.
Credit crunch: A downgrade would be a crushing humiliation for the Chancellor who has staked his reputation
on safeguarding the country¿s top-notch rating.
Standard & Poor’s, Moody’s and Fitch – the world’s three biggest agencies – have all put the AAA rating on
‘negative outlook’ with a downgrade expected in the New Year.
Ross Walker, an economist at Royal Bank of Scotland, said:
‘I would be surprised if all three of the main ratings agencies had the UK as AAA by this time next year.’
It is feared that the loss of the top rating could drive up borrowing costs for the government, businesses and
households – further denting hopes of a recovery.
But the fallout could be more political than economic, given the muted response on the financial markets to
recent downgrades in the United States and France.
Vicky Redwood, senior UK economist at Capital Economics, said: ‘It’s looking likely that the UK will lose its AAA rating next year.
‘However, this is largely just rating agencies telling us what we already know, so we doubt that financial markets will move much in response.
For now, the UK’s relative safe-haven status still looks secure.’
In the Autumn Statement in early December, the Office for Budget Responsibility sharply downgraded its
forecasts for economic growth in Britain for the next five years.
It also said that Osborne will miss a crucial target to cut the national debt as a proportion of national income by
2015-16, putting the rating at risk.
But Robert Chote, chairman of the OBR, said the loss of the AAA rating will not have a ‘noticeable impact’ on the economy.
‘It’s not entirely clear that this would be providing any new information to the markets they hadn’t already been able to deduce,’ he said.
Philip Shaw, economist at Investec, said: ‘If the current weak run of numbers persists, a triple dip recession could
be on the cards, in which case the risk that Britain loses its top notch rating would be odds on.’
Read more: http://www.thisismoney.co.uk/money/news/article-2255720/UK-lose-credit-rating-Treasury-warns-national-debt.html#ixzz2GyF2Ivcv
Money- 2013 - The Year Osborne hits you in the Pocket
Updated: 03 Jan 2013
2013 The year taxpayers and pensioners win and those on benefits lose
Universal credit, child benefit, a cap on state support… The entire population – from newborns to their great-
grandparents – will be affected by tax and benefit changes next year, but will you win or lose?
Felicity Hannah – Mon, Dec 17, 2012 11:55 GMT
Yahoo! Finance UK - 2013 will mean big changes for your finances.
It’s going to be a pretty big year for personal finances. As the Government continues its attempts to cut the deficit
and encourage growth, this inevitably involves cutting the amount of money many Brits have in their pocket.
But there’s good news as well as bad coming in 2013 – with some changes saving Brits hundreds of pounds.
And it doesn’t matter how old or young you are, how rich or how poor, everyone will be affected.
So here’s what’s happening and what it will cost or save you.
2013 is the year the Government begins the rollout of its new benefits scheme, the Universal Credit.
Following a trial in the north-west in April, this will be launched nationally for all new claimants in October.
After that, existing claimants will be gradually moved onto the system between 2013 and 2017.
This payment is designed to simplify the complex benefits system and make sure that work always pays.
Unlike some benefits that are cut the moment you’re in work, Universal Credit tapers off as you earn more – for every £1 you make, you lose 60p of the benefit.
It replaces Income-based Jobseeker’s Allowance, Employment and Support Allowance, Income Support, Child
Tax Credits, Working Tax Credits and Housing Benefit.
That means it will be received by both working and non-working households.
However, there are some concerns.
An impact report from the Department for Work and Pensions suggests that 2.8 million households will receive less money as a result.
There are also fears that vulnerable people will struggle to manage a monthly rather than weekly payment,
especially as they need to pay their own rent – landlords will no longer be paid directly by the state.
Until 2013, all parents and guardians of children receive a regular payment of £20.30 a week for the first child and
£13.40 a week for any other youngsters.
Due to a three-year freeze, that amount will not rise next year, regardless of how high inflation is.
However, some families are about to lose a lot more.
On January 7 2013, high earners will lose some or all of their Child Benefit.
It goes from being a universal benefit, to one that is sharply cut in homes where an adult earns more than £50,000 a year.
It’s being cut on a sliding scale; for every £100 you earn above the £50,000 mark, you lose 1% of the payment.
That means that if an adult in the household earns in excess of £60,000, that family will lose all their Child Benefit.
Yes, that does mean that a family with two parents earning £49,000 each will still receive it, whereas a family with
one stay-at-home parent and one parent earning £60,000 will lose it.
If you’re affected, the taxman will have written to you, inviting you to either stop receiving the payment, or receive
it but declare it in your tax return so that the money can be clawed back.
There’s more information available on the HMRC website.
For some households, this could be one of the toughest changes in 2013.
From the 15 April, there will be a limit to the amount that working-age people can receive in state help, no matter how many children they have.
This cap is set at £350 a week for a single adult with no children and £500 a week for a couple or single parent.
It’s being rolled out across households that receive Housing Benefit first.
If you don’t receive Housing Benefit but
will be affected by the cap, it will be applied when you’re moved onto Universal Credit.
If you’re entitled to Working Tax Credit or you’re receiving Disability Living Allowance (or the new Personal
Independence Payment), then you’re not affected by this cap.
The Government has launched a benefit cap calculator to help people work out if they’re affected.
Personal tax allowance
Good news! Many workers will find they pay less income tax, as the personal allowance rises to £9,440 in April.
That’s actually £235 more than the Government originally announced, close to double the amount when they
came to power, and means that the amount people can earn before they pay tax will have risen by £1,135
compared to April 2012.
So everyone earning more than that will see themselves £227 better off a year – or £18.92 a month – as a result.
However, there was a freeze point at which workers start paying 40% tax has been kept at £41,450 – rather than
rising with earnings or inflation.
Another bit of good news! Despite the Government spending cuts, George Osborne has agreed to increase the
ISA allowance for the 2013-14 tax year.
It’s going up to £11,520, of which up to half can be saved as cash.
From April, the state pension will rise to £110.15 a week, which is a hike of 2.5%.
That’s an extra £2.70 a week, and a bigger rise than average earnings or anyone on benefits will see, but there’s
real concern it’s still not enough.
The Office for National Statistics has announced that the Consumer Prices Index measure of inflation rose to
2.7% in October.
But that rise hasn’t yet factored in the recent hikes in energy bills, which are a huge cost for many pensioners.
In fact, there’s some suggestion that inflation is likely to reach 3% in the next few months, leaving pensioners
facing a cut in their real income.
Even if you’re not affected by the benefits cap, there’s another squeeze ahead for Housing Benefit.
From April next year, social tenants will see their housing benefit cut if they’re occupying a home that’s larger
than they need.
It’s been dubbed the “bedroom tax” because it’s a reduction in the amount you can claim based on any
If you have one spare bedroom, you’ll be docked 14% of your benefit, and two or more means you’ll lose 25% of your benefit.
Bear in mind that you’re not entitled to one bedroom per person – it’s one for each adult couple or person over 16.
Two children of the same sex aged under 16 are expected to share a room, and two children under 10 are
considered able to share a room regardless of their gender.
Disability Living Allowance
It’s all change in 2013 for anyone of working age who’s receiving DLA.
The benefit is being scrapped in favour of a new system of Personal Independence Payment (PIP), which is
based on an assessment of individual need.
From April 2013, new claims made in the north-west and north-east of the country will automatically be assessed
for PIP instead of DLA and that will be rolled out to new claimants in the rest of the country from June.
Then, between October 2013 and March 2016, people receiving DLA will be asked to make a claim for PIP instead,
and will be freshly assessed against the new entitlement criteria.
Some people have accused the Government of using this as an excuse to make savage cuts to the benefits of
society’s most vulnerable, especially as the contract for assessing claimants has been awarded to ATOS.
There’s an ePetition to sign if you’re opposed to the change.
What do you think?
Will these changes benefit society or are some groups being unfairly targeted?
Share your thoughts in the comments below.
Money- Recycling ? Does your Council have local banks ?
Updated: 02 Jan 2013
Recycling facts and figures
UK households produced 30.5 million tonnes of waste in 2003/04, of which 17% was collected for recycling (source: defra.gov.uk).
This figure is still quite low compared to some of our neighbouring EU countries, some recycling over 50% of their waste.
There is still a great deal of waste which could be recycled that ends up in landfill sites which is harmful to the environment.
Recycling is an excellent way of saving energy and conserving the environment.
Did you know that:
- 1 recycled tin can would save enough energy to power a television for 3 hours.
- 1 recycled glass bottle would save enough energy to power a computer for 25 minutes.
- 1 recycled plastic bottle would save enough energy to power a 60-watt light bulb for 3 hours.
- 70% less energy is required to recycle paper compared with making it from raw materials.
Some Interesting Facts
- Up to 60% of the rubbish that ends up in the dustbin could be recycled.
- The unreleased energy contained in the average dustbin each year could power a television for 5,000 hours.
- The largest lake in the Britaincould be filled with rubbish from the UK in 8 months.
- On average, 16% of the money you spend on a product pays for the packaging, which ultimately ends up as rubbish.
- As much as 50% of waste in the average dustbin could be composted.
- Up to 80% of a vehicle can be recycled.
- 9 out of 10 people would recycle more if it were made easier.
- 24 million tonnes of aluminium is produced annually, 51,000 tonnes of which ends up as packaging in the UK.
- If all cans in the UK were recycled, we would need 14 million fewer dustbins.
- £36,000,000 worth of aluminium is thrown away each year.
- Aluminium cans can be recycled and ready to use in just 6 weeks.
- Each UK family uses an average of 500 glass bottles and jars annually.
- The largest glass furnace produces over 1 million glass bottles and jars per day.
- Glass is 100% recyclable and can be used again and again.
- Glass that is thrown away and ends up in landfills will never decompose.
- Recycled paper produces 73% less air pollution than if it was made from raw materials.
- 12.5 million tonnes of paper and cardboard are used annually in the UK.
- The average person in the UK gets through 38kg of newspapers per year.
- It takes 24 trees to make 1 ton of newspaper.
- 275,000 tonnes of plastic are used each year in the UK, that’s about 15 million bottles per day.
- Most families throw away about 40kg of plastic per year, which could otherwise be recycled.
- The use of plastic in Western Europe is growing about 4% each year.
- Plastic can take up to 500 years to decompose.
Money-Tax Scandal - UK Firms are paying less than 12 years ago
Updated: 29 Dec 2012
UK firms pay less tax than 12 years ago, data shows
Big firms in Britain pay less tax than they did 12 years ago.
Thu Dec 27, 2012 5:45PM GMT
Big firms in Britain pay less tax at the current time of austerity than they did 12 years ago despite a big boost in profitability, a Reuters analysis of official data reveals.
According to the data by the HM Revenue and Costumes (HMRC), the companies’ payments of corporation tax totaled £21 billion in 2011-12, down £5 billion or 21 percent since 2000-01. However, the gross operating surplus for all UK companies has increased by 65 percent to £329 billion during the same time. Tax campaigners believe that the trend shows tax avoidance has been expanding under a more business-friendly strategy at the UK’s HMRC. Tax avoidance refers to legal exploitation of the tax regime to one's own advantage, to attempt to reduce the amount of tax that is payable by means that are within the law. Earlier in December, Business giants Starbucks, Google and Amazon were found guilty of dodging millions of pounds in tax in Britain. Tax avoidance is practically undoing all austerity measures as well as widening the gap between the rich and the poor in the British society.
Money- Refunds on those Unwanted purchases
Updated: 28 Dec 2012
How to get a refund on your unwanted Christmas gifts
We’ve all been there, whether it’s finding your aunt has given you a thermal vest for Christmas, or that a parcel
contains dodgy perfume you’d never wear.
If you wake up on Boxing Day with a stack of unwanted presents, you can do something about it.
Proof of purchase
Always make sure you hold on to your receipt, or ask the person who gave it to you for a gift receipt.
Without any proof of purchase you'll only be offered an exchange, or at best a gift voucher.
Remember, if the present was bought using a card, the money can only be refunded to the cardholder.
Although retailers aren't legally obliged to refund you on purchases, most do so as a gesture of goodwill.
Many shops are more lenient after Christmas and will give you your money back even if the item was bought in the sales.
Some even extend their returns period, so check the terms and conditions on the back of the receipt or ask in-store for more details.
Check for damage
Make sure to check if the gift is damaged or faulty - the retailer is obliged to give you your money back if you can
prove there's a manufacturing fault.
Don't leave it too late
While most shops will refund you out of goodwill, don't leave it any longer than two weeks before you return the
item, and certainly don't wait any longer than the end of January.
It's worthwhile checking with the individual store, as some retailers will not process refunds or exchanges in the
busy sale period between Christmas and New Year.
Read the small print
If your gift was bought online, check with the retailer what its refund policy is.
Many online retailers will offer you something in return, but will typically expect you to pay for the return postage
when you send the item back.
Money-The Osborne's-Tax Avoidance-or Seven years of Bad Luck or Bad Management or all three ?
Updated: 24 Dec 2012
George Osborne's family firm in fourth annual loss
The Chancellor's family-owned interior design business,
Osborne & Little, failed to contribute to the Exchequer last year as it recorded its fourth straight year of losses.
Osborne & Little sells high quality fabrics and wallpaper in the UK and abroad.
It was established by the
Chancellor's father, Sir Peter Osborne, more than 40 years ago.
9:55PM GMT 23 Dec 2012
The upmarket fabric and wallpaper group, in which George Osborne has a multi-million pound interest, recorded
a loss of £301,000 for the year to March 2012, and paid no corporation tax.
The loss came on turnover of £23m, a slight increase on the previous year. In results published over the
weekend, the company said it was "pleased that turnover has remained consistent in a very challenging environment".
Despite the poor performance, the company was able to donate £4,000 to the Conservative Party.
It also gave £8,000 to charity.
The loss came despite Osborne & Little increasing its gross operating margin, a measure of profitability before
expenses, from 42pc to 45pc.
Osborne & Little sells high quality fabrics and wallpaper in the UK and abroad. It was established by the
Chancellor's father, Sir Peter Osborne, more than 40 years ago.
As well as distributing its products through stores such as John Lewis, the company has a wholly owned US
subsidiary. George Osborne's mother, Lady Felicity Osborne, is a director of the company, alongside Sir Peter.
In its latest accounts, the company revealed the highest paid director received £628,000, down from £736,000 the
previous year. In total, directors' pay, including benefits and pensions, increased from £1.1m to £1.3m.
The result for 2012 compares to losses of £739,000 in 2011, £150,000 the previous year and £7.5m in 2009. Prior
to this, the company made a profit.
In the accounts, the directors said they were seeing little sign of an upturn in the global economy.
"Looking ahead for the current year, market conditions continue to be challenging in the current economic
climate and there is little sign of this changing in the near future," they said.
Neither George Osborne nor the company responded to calls seeking comments.
Money- Mortgage rates down,Savings Accounts disappear as Banks cream off the top
Updated: 21 Dec 2012
350 top savings accounts disappear over 2012
More than 350 savings accounts have disappeared over the course of 2012, leaving slim pickings for savvy savers.
350 top savings accounts disappear over 2012
A recent government scheme aimed at supporting the housing market by lowering mortgage rates is having a devastating impact on Britain's savers.
To help banks to lend more at lower rates, the Bank of England and HM Treasury launched the Funding for
Lending scheme (FLS).
This allows banks to borrow at rates as low as 0.25% for the 18 months until 31st January 2014.
Predictably, this flood of cheap money has had the desired effect, as mortgage rates have indeed dropped in the past four months.
Alas, by making banks less reliant on customer deposits, the FLS has also caused chaos in the savings sector.
351 saving accounts vanish
Moneyfacts has revealed some shocking savings news: since the start of this year, no fewer than 351 savings
accounts have vanished.
What's more, over half of these disappeared accounts -- 191 in total -- were withdrawn between November and
December, as the FLS gathered pace.
Here's how the market for savings accounts has shrunk during 2012:
Total no. of accounts
All savings accounts (including cash ISAs)
Source: Moneyfacts, 12/12/12
As you can see, savers could choose between 2,389 different savings accounts at the start of this year.
By November, this total had slipped by 160 to 2,229, and then plunged to 2,038 after 191 accounts were withdrawn in a single month.
In other words, more than one in seven savings accounts (15%) has vanished this year.
For cash ISAs, the market fell from 372 accounts in January to 316 recently, also a fall of 15%.
The great rate rip-off
In addition, Moneyfacts identified a massive surge in the number of accounts paying rates below the Bank of
England's base rate (which has been stuck at 0.5% a year since March 2009). Check out this table:
Total no. of accounts
Accounts paying above base rate
Accounts paying below base rate
Source: Moneyfacts, 12/12/12
At the start of 2012, a mere 170 accounts offered interest rates below 0.5% a year.
By November, this batch of awful accounts had soared to 812, an increase of 642.
Since then, this total has fallen back to 783, but this group of inferior accounts has still more than quadrupled in number in 2012.
Likewise, the number of accounts paying rates above base rate has declined, with the number falling from 1,559 in
January to 1,417 in November to 1,255 in December. In effect, almost one in five top-paying savings accounts
(19.5%) has vanished in 2012 -- and the year isn't over yet.
Beat the savings meltdown
Of course, faced with the wholesale withdrawal of savings accounts, British savers need to fight back by getting smart and doing their homework.
To help you to find superior savings accounts, I've trawled the market for some eye-catching accounts in several different categories.
Here's my latest list of ideal homes for your spare cash:
1. Cash ISA (fixed rate)
Savers willing to tie up their money for long periods gain access to some of the highest interest rates.
For example, SAGA pays a tax-free fixed rate of 2.75% a year for three years on the full cash ISA deposit (£5,640 for this tax year).
If 36 months is too long, then the best two-year fixed rate is 2.62% a year from Britannia.
Over 12 months, the highest fixed rate is 2.69% from National Counties BS on £1,000+.
2. Cash ISA (variable rate)
For savers requiring instant access to their ISA cash, the top rate is paid by the M&S Bank Advantage Cash ISA, which offers 2.75% a year on deposit of £100+.
There are no withdrawal penalties, but this rate reduces to 2.25% on 6th March 2013.
[SPOTLIGHT]If you can wait two months to dip into your ISA, then the best rate comes from the Coventry BS 60 Day Notice ISA.
This pays a market-beating rate of 3.1% a year on £1+, including a bonus of 0.6% for the first 12 months.
Also, this account guarantees that the rate payable will be at least 3.1% until 29th November 2013.
3. Emergency fund (instant access)
For your emergency fund, rainy-day money or similar nest egg, you need an account that offers instant or easy access with no withdrawal penalties.
Sadly, few accounts in this category pay rates in excess of 2% a year.
However, the Post Office Online Saver Issue 8 beats the rest by paying 2.35% a year, including a 0.7% bonus for 12 months.
Even better, this ramped-up rate is available on deposits of just £1 and above.
Another winner in this group is the M&S Bank Everyday Savings account, which also pays 2.35% a year (including a first-year bonus of 1%) on balances above £1.
For accounts without introductory bonuses, the table-topper is the West Brom BS WeBSave Plus 3 account.
This pays 2.3% a year on £1,000+, but can be operated only via the internet.
4. Regular saver (fixed rate)
Finally, the very best rates are reserved for super savers who are willing and able to set aside spare cash each and every month.
If you can set aside between £100 and £500 a month for the next 12 months, then the Cheshire BS Platinum Monthly Saver Issue 6 will pay you a ridiculous yearly rate of 5% on these savings, fixed until 31st January 2014.
However, make more than one withdrawal, or miss more than one deposit, and this rate plunges to a mere 1% a year. Unfortunately, this account can only be opened and operated via a Cheshire BS branch.
If you don't have a Cheshire BS branch in your area, then try the West Brom BS Fixed Rate Regular Saver (Adult) account. This pays 4.1% a year on monthly deposits of £10 to £250, but the rate reduces to 0.5% if you miss a payment.
Money - Save it ?- Leave your wallet at home !
Updated: 18 Dec 2012
10 ways to spend less
Dec 17th, 2012
1. A typical credit card has an annual interest rate of around 16.9%. If you owe £1000 on your card for the course of a year you will end up paying £169 more than you need to.
One way of spending less is clearing your credit card and the easiest way of doing so is to transfer your balance to a balance free transfer card.
Compare Credit Cards: Compare all the credit cards in the market - filter, sort and find the best card for your situation
2. Review your mobile
Gone are the days when mobile phones were reserved for city boys and rich kids.
Nowadays everyone has a mobile, from 13-year old kids obsessed with texting to old age pensioners who use their phones for emergencies only.
But many of us are on the wrong tariff. Indeed, some people may actually be better off on a pay-as-you-go tariff.
If you pay £30 a month for your phone but only make a couple of calls you could be better off topping up £10 on a PAYG tariff and saving yourself £240 a year.
Make some extra cash for yourself by selling your old mobile
3. Buy own brand goods
Spending less on your supermarket bill is easier than you think.
How budget supermarkets have saved me money
It may be second nature to you to buy brand name products but have you ever looked into how much you could save by buying own-brand products?
Take a look at some basics – a loaf of Warburton's Danish bread is 75p but a loaf of Asda's own Danish bread is just 53p.
And at Tesco, a bottle of Fairy Clean and Care washing-up liquid will set you back £1.50 for 433ml.
But a 500ml bottle of Asda's own Daisy washing up liquid costs just 60p.
4. Cancel television packages
Sky TV is a luxury and in good times why shouldn't you treat yourselves to your favourite sports, movie and music channels?
But in this SOBER age your TV package should be one of the first things to go when you want to spend less money.
A basic Sky TV package costs £20 a month but buy a Freeview box for £20 instead and you get additional channels on top of the terrestrial offerings with no monthly fee.
Which media provider offers the best deal?
5. Bring a packed lunch to work
It sounds obvious but bringing a lunch to work is one of the simplest ways of saving money yet one of the most neglected. Many of us spend around £4 or £5 a day on lunch.
Make sandwiches to bring to the office or make a little extra dinner each night and pack it in Tupperware and you could save yourself around £20 a week.
20 steps to a frugal lifestyle
6. Book travel early
Anyone who travels by train regularly will know how pricey it can be. But if you plan ahead and book in advance you could save a small fortune.
But remember that a lot of these tickets only go on sale 12 weeks before travel. Book a journey before then and you'll pay more.
7. Make the most of offers
There are plenty of offers available for everything from eating out to theatre tickets.
Check out websites like Vouchercodes.co.uk and Myvoucherscodes.co.uk regularly to see the latest offers.
8. Cancel your gym membership
Okay, so the idea was to lose weight, tone up and get a body like an aerobics instructor by the end of 2012 - and how many times did you actually go the gym?
Tallying up the amount of workouts you had may make you question your willpower but it should also make you question your spending.
To run are not to run: are gym memberships worth the hassle?
The average gym membership is around £40 and in London you can pay up to £100 a month. If you know you barely go then this is one expense you can certainly do without.
If you do want to keep visiting the gym why not use your local authority gym which can cost around £15-£20 a month but many also off a pay-as-you-use service.
9. Pack up smoking
You may plan each year to give up the smoking habit but if protecting your health doesn't give you enough ammunition then perhaps protecting your bank balance will.
If you smoke 20 cigarettes a day you could spend over £2000 a year! If going cold turkey isn't feasible at least make an effort to cut down.
10. Learn to budget
The final tip is the most simple but also the most effective.
If you spend more than you earn you're going to get in trouble. Learn to keep track of everything you're spending
to make sure you know where your money is going and avoid being left struggling at the end of the month.
Money- Predictions for Interest Rates in 2013
Updated: 18 Dec 2012
What will happen to interest rates?
Interest rates have now been at 0.5% for nearly four years.
Will this change in 2013?
"We are some way offseeing the Bank of England base rate rise, although if the recent 1% GDP growth is mirrored
in the next couple of quarters there will be some pressure to begin the process," says Andrew Montlake, director of mortgage broker Coreco.
"I think we'll still have a base rate of 0.5 to 0.75% by the end of the year."
Barry Naisbitt, chief economist at Santander UK, agrees:
"With overall economic activity still below the level before recession hit, and the consensus view that the economy
is likely to grow relatively weakly next year, rates seem likely to be on hold for a good while longer."
Money- Taxing the Poor to Give to the Rich -Supported by Cabinet Millionaires
Updated: 14 Dec 2012
Taxing the poor to give to the rich
Wednesday 12 December 2012
The need for big companies and wealthy individuals to pay more tax has gathered force over recent months.
The latest public finance figures tell a story of two countries, where the public paid more and the corporations paid less.
The corporation tax take was down 10 per cent for the year to October, while tax and VAT receipts were up 6.4 per cent.
Her Majesty's Revenue and Customs (HMRC) believe that the tax gap - the amount that corporations ought to
be paying compared to what they are - is £4.1 billion.
This amount would build 300 new schools, provide 430,000 nursery places or 153,000 nurses.
Overall, HMRC estimates that in 2010/11 it was deprived of £9.6bn in VAT - with £3.3bn in excise duties - and
£14.4bn in income tax revenues, national insurance contributions and capital gains tax. HMRC says that the tax
gap for the whole economy amounted to £32bn in 2010-11 or a third of the deficit of £120bn for 2012-13.
The extent of the tax avoidance became clear at the hearings of the public accounts committee, where the MPs'
view was that it may be legal to avoid paying tax but it was not moral.
It was revealed Starbucks paid £8.6m in corporation tax over 14 years of trading in Britain - none for the past three years - despite sales of £1.2bn.
Amazon reported turnover of £207m in 2011, for its British operation, on which it paid tax of £1.8m.
However, £3.35bn of its sales were from Britain - 25 per cent of all sales outside the US. Its profits are booked in
Luxembourg, where the tax is paid.
Google recorded revenues of £396m in 2011 in Britain and paid corporation tax of only £6m.
However, it is estimated that Google's revenue from its operations here actually was £2.75bn with an estimated pre-tax profit of £836m.
Google's profits are registered in Ireland.
Not to be forgotten, Vodafone's earnings in Britain - up to March 2011 - before tax increased from £1.2bn to
£1.3bn, yet it paid no corporation tax.
Interestingly, earlier in the year, Vodafone chief executive Vittorio Colao declared that one of the ways in which
the company felt it contributed to the common good was by paying tax ... though clearly not in Britain.
There have also been the cases of celebrities like comedian Jimmy Carr (below) using schemes designed to avoid tax.
Carr though has since stopped using the much-publicised offshore scheme.
Central to the debate is a moral question about avoiding tax.
Although it is legal to avoid paying taxes but to do so is also immoral as it amounts to stealing from the rest of us.
Failure to pay tax means that there is less money for the NHS, education and welfare.
The practice of only paying tax in the lowest charging country in which companies operate is mirrored in other
aspects of their operations - such as labour rights and environmental law where they will move around to
operate in the least regulated domain in order to maximise profits.
International regulation needs to be urgently put in place to stop multinationals from moving their operations
from country to country to maximise profit.
There are though encouraging signs of progress in this area.
The bad publicity that Starbucks received following the PAC inquiry has led to negotations starting between the
company and the British government as to how it can pay more tax.
Consumer power can lead to a boycott of the products of companies like Starbucks, Vodafone and Amazon and has clearly affected their thinking.
What such companies dread in the age of social media is having their brand damaged.
The same is true of celebrities like Jimmy Carr quickly moving to ditch tax avoidance methods once the public disaproval war aired.
Even the British government appears to be moving on the issue with Chancellor George Osborne providing
another £150m to HMRC to tackle tax avoidance and looking to change the laws to stop multinationals avoiding tax.
Who knows how much of the missing taxes can be recuperated if any - the coalition government may have to go looking for another excuse to demolish public services.
Money-Everyone loves to Hate a Thief -Tax Theft is endemic all over the World - Its Encouraged !
Updated: 13 Dec 2012
Dont forget the organ grinders behind these monkeys
04 December 2012
Guest post by Martin Kirk of /The Rules*
Everyone loves to hate a thief.
And quite right, too. Google, Amazon and Starbucks – and many more like them – are certainly stealing from the
UK and other countries by playing tax systems so aggressively.
But there’s a more important story here that the British MPs and world media are largely missing.
In fact, the only ones who haven’t missed it are Google themselves.
Matt Brittin, Google’s UK Chief, hit a very important nail on the head when he said, to Channel 4 News this week,
“ [Google] plays by the rules set by politicians.”
Leaving aside his motivation to shift the blame, the man is not wrong.
The rules of the international tax system do not just let this happen, they actively encourage it.
Tax theft is endemic all over the world.
It is organised through an intricate system of tax havens; the PR around it is astonishingly good, as evidenced
by the fact that most people have no idea of its scale and can get distracted by the misdeeds of a few bad apples
rather than seeing the barrel they came in; and one of the most vibrant and important hubs – the City of London - is sitting right under the noses of the British politicians who are today decrying the corporations who use it.
Tax havens exist solely to help the rich avoid national taxes.
They give them a way to opt out of the social contract.
Multinationals happily extract profits from countries and then team up with tax havens to avoid paying their
share of taxes that make the countries profitable for them in the first place.
Without things like the rule of law, and economic and political stability, the market for most products would flounder.
All these things cost, and when people steal taxes they are essentially saying, everyone but us should pay.
The scale of the theft is staggering. Somewhere between $21 and $32 trillion is hidden behind the vast walls of tax haven secrecy.
That’s the equivalent of one third of all global annual income.
Somewhere between 60 and 70% of all international trade flows through them so that profits can be siphoned off untaxed.
The scale alone means tax havens have a material impact on levels of global inequality and poverty.
But more insidious is what they actively facilitate.
Tax havens are in the background of practically every instance of large-scale corruption and economic crime of the last thirty years.
Every corrupt leader, every major arms dealer and drug cartel, as well as most multinational corporations rely on their ‘discretion’ to do business.
It’s a morality-blind service industry for the ultra-rich.
Forget the 1% - this industry exists largely for the pleasure and benefit of the 0.02%; the 10 million people who ‘own’ the bulk of the $21trillion hidden.
This theft cuts deepest in the poorest countries in the world, that struggle to pay for basic services like
education, healthcare, strong justice systems - all the things that make societies more equal and fair.
So as we revel in the shaming of a few bad guys, we should remember that this episode has done nothing more than highlight the symptoms of an endemic global disease.
We should be very suspicious of the British Finance Minister, George Osbourne’s seemingly helpful decision to
put £150m into the British tax collection authority to help catch corporate theft of this kind.
This is the man who, just this year, actively undercut EU efforts to tackle tax havens by signing a bilateral deal
with Switzerland that protects the secrecy of tax thieves for a one-off cost of the payment of some back taxes. So before we congratulate him for adding a few sticking plasters with one hand, we should demand answers to why he’s feeding the disease with the other.
If decision makers are serious about tax havens, they should look to the system behind the headlines.
For British MPs, that means looking down the road at the City of London and asking questions like, why does
the City of London have special exemptions from the Freedom of Information Act?
For others, especially the leaders of poorer countries, that means standing together and demanding change at the international level.
Perhaps most importantly, people can start demanding change themselves.
Can we really rely on business leaders and politicians to bite the hand that so often feeds them?
And as long as one tax haven exists, there will be a place for the corrupt and the greedy to hide the money they
steal, so picking them off one by one is never going to work.
The only thing to do is change the rules that let all of them exist.
The first step is to see the bigger picture.
This post is also appearing on Common Dreams today.
*Martin Kirk is Global Campaigns director of /The Rules a new social movement against inequality and poverty,
and is campaigning against tax havens around the world.
To take part, go to the website. Follow: @therules.org
Money- Eon increase dual Energy bills by 8.7%
Updated: 12 Dec 2012
Eon announce price increase
Last updated: Dec 11th, 2012News by Emma Gunn
E.on has announced prices for dual energy customers will rise by 8.7% from 18 January 2013.
Customers on the electricity-only tariff will experience a 7.7% rise on average, while the average gas-only price
will increase by 9.4%.
With price increases now announced by all of the UK's six major suppliers this winter, the average household
will be left paying around £100 more for their energy this year.
This will bring the average annual bill to a record high of £1,400, according to energy comparison site
Compare Energy – switch and save £100s
See what you can save:
"This set of industry-wide price rises could not have come at a worse time, with the UK economy still faltering
and a very cold winter forecast," says Mark Todd, director of energyhelpline.com
Customers affected will be sent letters from E.on detailing the changes over the next few days
Money- Strauss- Kahn paid up for "moral failing"
Updated: 11 Dec 2012
Strauss-Kahn reaches legal settlement with hotel maid
Nafissatou Diallo appeared outside court with her lawyer after the hearing
Details of the 63-year-old's agreement with Nafissatou Diallo will remain confidential, the judge added.
Mr Strauss-Kahn was held in New York in May 2011 after Ms Diallo, 33, said he assaulted her in his hotel suite.
Prosecutors later dropped charges amid concerns about her credibility.
The incident was widely seen as having ruined Mr Strauss-Kahn's chance of becoming the Socialist presidential candidate in his native France.
New York State Supreme Court Justice Douglas McKeon announced on Monday that after lengthy negotiations, the parties "came together and put terms of a settlement on the record".
At the scene
Now that there has been a settlement, we will probably never know exactly what transpired between the head of the IMF and the immigrant hotel maid from Guinea at the hotel Sofitel in Manhattan.
There was forensic evidence of a sexual encounter of some kind.
Mr Strauss-Kahn insisted it was consensual, Ms Diallo said he attempted to rape her.
The criminal case collapsed after the prosecution said Ms Diallo had credibility issues. Now her attempt to bring a civil case has been settled for an undisclosed amount.
Two very different lives have been turned upside down by the encounter, and Mr Strauss-Kahn's ambitions to be president of France lie in ruins.
The amount of the settlement was kept confidential.
Mr Strauss-Khan did not attend the hearing, but Ms Diallo was in court.
After the settlement, the judge thanked all parties and said it was a "privilege to work with all of you".
Outside the courtroom, Ms Diallo made a short statement: "I thank everybody all over the world and everybody at the court, and God bless you all."
Her lawyer, Kenneth Thompson, said afterwards that she was "ready to move on".
In May 2011, Ms Diallo, a Guinean immigrant with a teenage daughter, said Mr Strauss-Kahn had forced her to perform oral sex when she went to clean his hotel room.
He was arrested, charged with attempted rape and forced to resign from his post at the International Monetary Fund.
Mr Strauss-Kahn had previously admitted to a "moral failing", but insisted their sexual encounter was consensual.
In the wake of Ms Diallo's accusations, other women came forward with sexual assault allegations against him
Money- Laundering -HSBC- The unacceptable face of Banking - One very good reason to Nationalise them
Updated: 11 Dec 2012
HSBC to pay £1.2bn over Mexico scandal
News of bank's agreement comes hours after Standard Chartered admitted settlement with US regulator over Iran
HSBC expected to admit it has settled allegations of running money for Mexican drug barons. Photograph: Andrew Burton/Getty Images
HSBC is expected to admit on Tuesday it has settled allegations of running money for Mexican drug barons for a larger than expected $1.9bn (£1.2bn), barely 24 hours after close rival Standard Chartered admitted paying $670m (£415m) in penalties to US regulators to settle allegations it broke sanctions on Iran.
The $1.9bn that HSBC will pay to the US authorities exceeds the $1.5bn it had warned it could cost to settle the allegations raised in a damning US Senate report in the summer which came amid a wave of scandals to hit the banking sector.
HSBC is expected to confirm it has struck the agreement which has already led to the departure of compliance head David Bagley and put pressure on former chairman Lord Green, now a trade minister.
The bank is expected to admit violating US laws meant to prohibit money laundering including the Bank Secrecy Act and the Trading with the Enemy Act.
The deal is expected to include a settlement with the powerful Manhattan district attorney's office and a deferred prosecution agreement with both the Justice department and Treasury department.
Ahead of the settlement, HSBC on Monday named a former US official as head of group financial crime compliance, a newly created role, as the bank prepared for the fine related to drug allegations.
Bob Werner, who used to work for the US treasury, will create a global financial intelligence unit to conduct internal investigations at HSBC.
Peter Henning, a professor of law at Wayne State University, said: "If the numbers are right, this is going to get everybody's attention.
The worst situation would be if the charges were for money laundering but it looks like this is a deferred prosecution relating to books and record controls, that gives the bank some wiggle room in terms of its explanations.
But the size of the fine means the bottom line is this is very significant."
Henning said the fine would have a significant "reputational impact" and HSBC would have to be very careful in future.
"You get one black mark.
If something like this comes up again in the US, the authorities are not going to be very forgiving."
European banks seemed to have under estimated the prosecutorial zeal of the US authorities, he said.
"We have had Standard Chartered and now this and we still have more Libor cases to come."
US authorities are investigating banks involved in the alleged manipulation of London's Libor, the key measure for setting loan rates around the world.
Britain's banks are braced for fines following the £290m penalty slapped on Barclays – now vastly exceeded by the amounts levied by US regulators for breaching sanctions and laundering money.
The fines on Standard Chartered follow accusations that lax systems left the US financial system vulnerable to "drug kingpins" and terrorists.
Standard Chartered is paying $327m to the US Federal Reserve, the US justice department and the New York district attorney, it was announced yesterday, following a settlement of $340m in August with the New York department of financial services.
The bruising episode for Standard Chartered, which until the summer was regarded to have preserved its reputation through the banking crisis, also includes the bank being forced set up "acceptable" compliance programmes.
Cyrus Vance, the Manhattan district attorney, said: "Banks occupy positions of trust. It is a bedrock principle that they must deal honestly with their regulators.
My office will accept nothing less – too much is at stake for the people of this country."
The Fed, which is receiving $100m of the Standard Chartered fines, said it was imposing "one of the largest penalties" it had ever announced for "alleged unsafe and unsound practices" adopted by the bank.
"Under the cease and desist order Standard Chartered must improve its programme for compliance with US economic sanctions, the Bank Secrecy Act and anti-money-laundering requirements," the Fed said.
The Financial Services Authority, the UK watchdog, has agreed to assist in the supervision of the order.
The department of justice and the district attorney for New York County have entered into "deferred prosecution agreements" for which the bank which will pay $227m.
The bank has also settled with the Office of Foreign Assets Control (Ofac) but the settlement of $132m is offset against other penalties.
Standard Chartered said that Ofac had concluded the "vast majority" of transactions were not in violation of sanctions.
The bank said that $24m of transactions for Iranian counterparties and $109m from other countries facing sanctions – such as Burma, Sudan and Libya – had breached sanctions.
Money- Wooden Spoon winners for last year
Updated: 06 Dec 2012
How has last year’s winner fared?
This is Money
It’s not been a good year for 2011’s wooden spoon winner TalkTalk (company CEO Dido Harding is pictured above holding the award) — in fact, it’s been atrocious.
After scooping the award for rotten customer service in January — grabbing more than a quarter of all votes — the phone and internet giant said it would mend its ways.
It promised more resources for customer service and said it would fix more faults at the first attempt. However, the past 11 months suggest there is much work left to do.
We received hundreds of letters, calls and emails from angry readers, many of whom have been livid at the way they were treated.
If it wins for a third time in a row, tradition might suggest it can keep the wooden spoon trophy for good.
The Wooden Spoon challengers
Over the year, we’ve kept a watching brief on your complaints and drawn up a shortlist of eight of the worst offenders.
Here are our eight biggest service flops listed alphabetically.
Insurers are supposed to give policyholders’ peace of mind — but Direct Line has too often added to their stress levels at a difficult time.
You wrote to us with details of how it frequently delayed payouts; entered into disputes over no claims discounts; and repeatedly failed to return calls when you needed help.
In one case, it even ignored a police report to avoid paying up on a collision claim.
It’s left us wondering whether the insurer has been too focused on its stockmarket flotation, and not enough on doing the right thing by its customers.
This firm may be the country’s biggest electricity supplier, but the sheer sloppiness of its service is breathtaking.
Its failures include wrong meter readings taken by staff; contested direct debits; missing bills which trigger huge payment demands; long waits of up to an hour to telephone its call centre; and staff giving out duff information about the cheapest tariffs for older households.
To compound matters, an even bigger part of the problem, you say, is the effort needed to resolve these complaints.
The bank, part of state-backed Lloyds Banking Group, has repeatedly floored readers with its sheer inability to properly handle simple requests. It has failed to switch home loans on time and lost details of insurance claims, as well as mislaying savings during cash Isa transfers and treating shabbily relatives who are trying to sort out power of attorney for a loved one.
HM REVENUE & CUSTOMS
We have been flooded with your letters of complaint about shock tax demands for hundreds — and often thousands — of pounds.
But the bills are just the start of the problem, because so many of you have said you feel that the way tax staff treat your legitimate queries is insulting and aggressive.
Pensioners, who are embarrassed about owing money to the State, claim they are regularly made to feel like criminals.
And even when you try to correct the Revenue’s mistakes you end up being baffled by tax codes which are sent over and over again.
Two years after promising to get it right, HMRC’s customer service is still horribly lacking.
The biggest charge readers have levelled at the Spanish-owned bank is that of ‘incompetence’.
Its alleged failures include having poorly-trained and rude staff; mislaying money during account transfers; losing customer account details; problems with the store cards it runs; promises to call back which are repeatedly broken; and an inability to carry out even the most simple customer requests.
Our recent exposure of £300,000 lost in old passbook accounts was finally revealed as being a problem with the way staff handled queries.
This is the fifth year running Santander has been on our wooden spoon shortlist — and its excuses are starting to become very tiring.
The wooden spoon winner from 2011 and 2010 is still slipping up badly.
Angry customers of the phone and broadband provider have sent a deluge of complaints about disputes over final bills after they have switched to rivals.
The company still seems so focused on getting new customers it can’t concentrate on looking after the ones it has got already.
Others have told of broadband speeds which are way below what was promised, failures sorting out technical issues and of debt- collectors who are sent in to chase phantom bills.
Many of you have told us how you need another holiday after a break away booked with travel operator Thomson.
Trips have been ruined by hotels which look lovely in glossy pictures but turn out to be shabby wrecks.
You’ve had once-in-a-lifetime cruises wrecked by last-minute changes to the ship and destinations — often leaving travellers footing extra costs.
Its refusal to refund flights when it has changed departure times, and a failure by reps to help sort problems on the ground, have also been repeated gripes.
Your mobile phone billing nightmares with Vodafone have been seemingly never-ending.
Your biggest complaint has been disputed payments — usually run up because of confusing tariffs or roaming charges overseas. Some have also been hit with demands long after a contract has expired.
We have reported how it refused to pay out £1,707 to a man mugged in broad daylight because he failed to report his phone stolen in time, a customer mis-sold spare Sim cards who was denied a refund, and another who wasn’t given help when he asked for assistance reading online bills.
Money - Who drives you mad, baby
Updated: 06 Dec 2012
Which company drove you crazy in 2012?
By James Coney
UPDATED: 10:10, 28 November 2012
This is Money
The Radical had problems with:-
Switched bank accounts from Cahoot to Coop both created problems so changed back again.
BT Broadband - Bloody Terrible - Never again - He finally got rid and moved to Tesco - so far so good.
Scottish Power - One minute in debt and the next well in credit, so they sid they would reduce the monthly debit and didn't and said they would refund the credit and didn't - well not for 3 weeks.
Expedia kept changing the flight details and then reverted to the original one change. They will never know the damage this caused.
Lincoln Hospital - ULHT - Accepted for and then Refused Surgery within 3 months. Complained. Took over one year to get a final response so I could send it to the PHSO -Parliamentary Health Service Ombudsman
Have you been left enraged by an energy firm?
Maybe you’ve had to battle with a bungling bank?
Or perhaps you are incensed by an incompetent insurer?
Now is your chance to hit back and shame the company that’s given you the WORST customer service this year.
Today we launch the fifth annual Money Mail Wooden Spoon Awards.
We want you to cast your vote for the organisation you think dishes up Britain’s shoddiest service.
Each week we’re deluged with hundreds of letters, emails and phone calls about appalling behaviour from companies and institutions that have driven you to despair — and left you out of pocket to boot.
You have told us of your frustration at dealing with badly-trained staff, botched bills and unreliable computer systems.
Worse, your loyal custom over many years has been treated as worthless, even though you’ve often spent thousands of pounds on a company’s products.
On top of this many of you voice anger, not just at pathetic service, but at the way your complaint was handled.
You’ve endured bungling staff who promise to return phone calls but never do; your letters frequently go unacknowledged; and you’ve wasted hours on the telephone trying to get put through to the right department.
In many cases, you’ve ended up arguing with staff in overseas call centres where it’s impossible for you to understand what you’re being told.
Repeat offenders: the people who drove you mad in 2012
Here are the most common complaints to fill our mailbag in 2012.
• ENERGY SUPPLIERS which bodge meter readings, send payment demands bearing no relation to actual gas or electricity used and bamboozle customers with complex tariffs and pricing.
• TAX OFFICIALS who cause massive confusion and stress by sending huge shock bills with little explanation and then kick out complaints without properly investigating.
• MOBILE PHONE GIANTS who refuse to pay out for phone calls made by fraudsters, trap customers in complex contract deals and are too quick to send in debt collectors for missed payments.
• BANKS and BUILDING SOCIETIES which routinely fail to perform even the most basic of tasks such s cash Isa transfers, lose customer details during current account switches and continue to stall over payouts for payment protection insurance.
• INSURERS who will go to any length to avoid stumping up for legitimate claims.
• BROADBAND AND HOME PHONE PROVIDERS who don’t fix technical faults but expect customers to keep on paying out.
• TRAVEL FIRMS whose lamentable service wrecks your holiday and even when they do apologise send you a discount voucher — towards another trip with them.
Every company makes mistakes — but it’s how they put things right that matters.
There are many whose customer service works well, and they pop up only sporadically in our mailbag.
But for those who appear like clockwork, correcting the simplest problem or carrying out the most basic instructions seems impossible.
This is simply unacceptable for long- suffering customers.
Money- The Radical's 10 ways to cut your Christmas food bill
Updated: 04 Dec 2012
Money – The Radical’s 10 ways to cut your Christmas food bill
- Only celebrate New Year instead
- Create less waste for the birds
- Visit the supermarket only once before Christmas
- Make that visit one hour before closing on Christmas Eve
- Don’t buy fresh vegetables at a supermarket, use the local town market
- Pack any children you have off to their grandparents
- Buy own brand products – often they are the same as in the fancy packets
- Grow your own
- Buy in bulk – One Lamb Half a pig and a Hindquarter of Beef
- No 9 cuts next Christmas bill too
Money- One Person's 10 ways to cut your Christmas food bill
Updated: 04 Dec 2012
10 ways to cut your Christmas food bill
Of all the financial outlay that comes with Christmas time, the food bill is often the biggest. So follow our 10 top tips to get a great Christmas feed for less.
That last big food shop before Christmas will undoubtedly be the biggest of the year as you strive to ensure that you've got enough to feed the hoards over the festive period.
This year the chances are you'll be watching what you spend, but the good news is that if you follow Moneywise's tips, saving cash doesn't have to mean cutting back.
1. The easiest way to save at the supermarket is good old fashioned menu planning. Dig out your diary and wherever possible plan out what you'll be eating and how many you'll have to feed over the Christmas period.
Rather than filling your trolley with piles of veg and random cuts of meat only buy the ingredients for the meals you'll be cooking.
2. Next, write a list. It sounds obvious but far too many of us fail to do it. Make sure you have all the food you'll need for your menu plan plus any extras for quick breakfasts and easy lunches. With a list your not only less likely to forget things, but perhaps most importantly, you won't splash out on food you won't need.
3. Shopping online makes it easier to stick to your list but unfortunately all the prime delivery slots for the days before Christmas were booked weeks ago.
However you can still go online to compare prices and find the cheapest supermarket for your particular trolley at mysupermarket.co.uk.
4. If you always eat organic meat you won't want to downgrade to a frozen battery bird, however you can cut the cost - and the waste - of your Christmas dinner by buying the right size turkey. A large 5kg turkey will serve 8-11, a medium 3.5kg bird will serve 4-7 while a more modest 1.5kg turkey crown will be perfect smaller parties of up to four people.
5. Unexpected guests provide the perfect excuse to overload your fridge and freezer but don't use it as an excuse to spend more. Keep a couple of standyby meals in the freezer for emergencies but nothing more. After all, the shops will only shut for two days.
6. Be realistic. Do you really need to buy numerous tins of Roses or Quality Street, case loads of chocolate biscuits and vats of fruit and nuts? There will invariably be plenty of sweet treats under the tree and you'll come to resent the overload when they're still hanging around well into the new year.
7. Beware the supermarket tricks. By all means snap up a half-price bottle of champagne but remember these loss-leaders are priced that way to get you through the door. Get what you came for then head for the door before you're tempted to buy more things you don't need.
8. Shop alone - bring kids or hungry partners with you at your peril. They'll be filling the trolley while you're not looking and at Christmas, the pester power will be even harder to resist.
9. If you're playing host to the masses this year don't feel embarrassed about asking people to contribute food and drink. Most people will be more than happy to stump up a Christmas pud, cheese board, or bottle of red in return for their lunch.
10. Supermarkets cash in on our need for convenience so don't plump for pricey ready prepared vegetables: there will always be at least one volunteer to peel the spuds and carrots. It also takes no time to make your own pigs in blankets and mince pies.
Money - Many Familes are living on borrowed cash
Updated: 29 Nov 2012
Britons facing growing debt crisis: survey
Wed Nov 28, 2012 7:20PM GMT
A new research has revealed a growing debt crisis in Britain, where male workers borrow £381 on average every month just to make ends meet, local media reported.
The research carried out by Unite the Union found that male workers are borrowing £100 more than women every month to provide for their daily requirements, British media reported. The survey of over 2,000 adults revealed the extent of the growing debt crisis, which is more rampant among men, according to Unite. The union said that younger men in their 20s were more likely to borrow and their average borrowing topped almost £400 a month. "Falling living standards and government austerity [measures] are forcing ordinary working people into the clutches of these legal loan sharks.
Their eye-watering interest rates, up to 4,000 percent a year, are trapping people in a spiral of debt”, said Unite general secretary Len McCluskey.
“Men are at the sharp end of this debt crisis as they turn to payday vultures to pay the bills, put food on the table and make ends meet”, he said.
"We need a cap to halt the vicious cycle of payday loan misery and stop a generation of young men and women falling into a lifetime of high interest debt", the Unite general secretary added.
Money- Which Supermarket Deals ? - Bargain or Rubbish
Updated: 26 Nov 2012
Which supermarket deals can you trust (and which are rubbish)?
Can you spot a decent deal or recognise a rip-off?
We’ve been investigating…
Felicity Hannah – Fri, Nov 23, 2012 17:55 GMT
Yahoo! Finance UK
We’re all on the lookout for a bargain at the supermarket.
When money is tight, it’s important to save where you can.
Even when money isn’t an issue, it always feels good to grab a bargain.
But are you always getting one?
Research by Which? has shown that shoppers are routinely being ripped off by so-called discounts and offers.
So how do you know what’s a decent deal?
And what should you steer well clear of?
Multi-buy money deals – be suspiciousThe Which? research showed that one in 10 products in a multi-buy deal, such as a buy-one-get-one-free offer, have their prices raised just before the promotion.
For example, one supermarket sold a pizza for £1 but then increased the price to £2.50 before selling two for £4.50.
Unless you have a photographic memory, it’s impossible to remember all the prices so you won’t necessarily notice.
The good news is that you don’t have to.
The online tool mysupermarket.com shows you a graph of each product’s price over the last year.
That means you can see if a price has been artificially hiked to make the offer look better.
Not everyone wants to do their shopping online, but you could always use the tool to see how much your shop will cost before you go.
Product discounts – be suspicious
The same goes for straightforward discounts.
I almost never buy a full-price bottle of wine and wonder if anyone really spends £9.99 on a bottle worth a fiver.
Just as with multi-buy deals, there have been accusations of supermarkets inflating the price in order to factor in a discount later.
According to Which?, one supermarket raised the cost of blueberries from £1.80 to £3.99 for two weeks, before putting them on ‘offer’ at £1.99.
Not only that but retailers have been spotted leaving products on offer for longer than they were being sold at a higher price.
For example, one supermarket sold Becks beer for 70 days at a higher price before discounting it for 190 days.It’s hard not to feel misled.
Again, checking the prices independently through a tool like mysupermarket.com or by keeping previous receipts can help you spot this.
Bigger bag, better value – be suspiciousIt’s easy to assume that the larger quantity we buy of a product, the better the discount.
Most of us would expect that a packet of 250 teabags would be cheaper per bag than a smaller packet of 80. And quite often, that is the case.
But reasonably frequently, it’s not.
For example, one supermarket sells four cans of Heinz beans for £2, making the unit cost 50p.
But it sells a packet containing six cans for £3.19, which is 53p each.
Many of us sleepwalk into paying more by assuming a bigger pack means better value.
Sadly, many supermarkets make it hard for customers to spot these phoney bargains.
Few people will know if they are better off buying a packet of three onions for 94p or a handful of loose onions at 87p per kilogram, particularly when they are shopping in a hurry.
Which? has been campaigning for clearer pricing per unit so that customers can make an informed choice. Visit their website to sign the petition.
Fight the overspend temptationSupermarkets are on a mission to get us through their doors and, once we’re in, get us to spend as much as possible.
And they’re clearly succeeding.
We do buy unplanned items when they’re on a two-for-one offer, or sitting in reduced-priced bins at the end of aisles, that’s exactly why supermarkets put them there.
In fact, new research from HelloFresh, a recipe and ingredient delivery service, found that the average Brit overspends by £27.42 every time they visit the supermarket.
On a weekly shop, that’s more than £1,400 a year!
But you can fight back.
Write a shopping list, based on a meal plan, and then stick to it.
Set yourself a strict budget for each shop.
Only visit the aisles you need, to avoid aimlessly browsing the shelves.
Most of all, be aware of the temptation to overspend so that you’re only tempted by genuinely good deals.
Which deals are worth it?Of course, many multi-buys, larger packs and other offers do give shoppers great value.
But knowing what to look for can help you find the genuine deals rather than supporting supermarket’s wily marketing.There are also discounts and offers that you should always take advantage of.
If a non-perishable item that you buy regularly is on a particularly good deal then stock up.If you’re given a discount voucher to spend on your next shop, keep it handy.
I have started pinning mine to my bag for life, so I remember to use them next time.
This might sound extreme, but it only take a couple of seconds and helps me save pounds off my shopping.
Finally, if you regularly shop at a specific supermarket then make sure you’re making the most of any loyalty scheme it offers.
At Tesco, for example, you can earn one point for every £1 you spend and 100 points is worth £1.
So, for every £100 you spend, you earn £1 in vouchers.
However, if you spend your vouchers on the right rewards instead of groceries, they can be worth up to four-times as much.
So, for every £100 you spend in store, you can earn £4 in vouchers if you spend them on magazine subscriptions, meals out or other treats through Tesco’s website.Sainsbury’s customers can make use of the Nectar card reward scheme.
If your regular supermarket offers a reward scheme then it’s well worth signing up – you’re subsiding it either way!
Money- Public pay more in tax - Corporations pay less -So what says Jack and Ostriches ?
Updated: 23 Nov 2012
Britain's missing billions:
counting the true cost of corporate tax avoidance
There's a painful subtext to yesterday's public finance figures.
While most of us are paying more tax, many big companies are paying less
Ben Chu Thursday 22 November 2012
Yesterday's public finance figures were a tale of two countries: the public paid more and corporations paid less.
Last month Treasury receipts from VAT and income tax – which we all pay – rose by 6.4 per cent relative to October 2011.
But corporation tax receipts – levied on the profits of the largest firms in the land – fell by 10 per cent on the same month a year earlier.
In October companies poured £7.8bn into the state's coffers, down from the £8.7bn they handed over last year.
And this shortfall was not just a monthly aberration.
Since George Osborne delivered his Budget in March companies have paid £24.9bn in corporation tax, 9.8 per cent less than the £27.6bn they handed over in the same period of last year.
The trend is an ominous one for the Chancellor. In March HMRC
Mr Osborne's official fiscal forecaster, the Office for Budget Responsibility, predicted that corporation tax receipts would grow by four per cent this financial year.
But they are presently running about 10 per cent lower.
The shortfall in tax revenues is one reason why many analysts expect that the Chancellor will be compelled to announce further spending cuts and tax rises in his autumn statement on 5 December to meet his "fiscal mandate".
This requires Mr Osborne to put plans in place to eradicate the structural deficit within five years.
The Treasury suggested yesterday that weak corporation tax receipts over the past seven months are largely due to a collapse in North Sea output this year after a gas leak, which means that large energy firms have been paying less tax. There is some truth in this.
Output has been disrupted by problems on the Elgin Platform and maintenance work elsewhere.
Yet the Government's own figures also suggest that corporations are evading and avoiding many billions of pounds of corporation tax.
Her Majesty's Revenue and Customs performs a regular estimate of the "tax gap", which is the difference between what it believes companies ought to be paying in corporation tax and what the state is actually receiving. In its latest estimate for 2010-11, HMRC put that figure at £4.1bn.
Some campaigners, such as Richard Murphy of Tax Research UK, think that the real figure could be £12bn or more.
To put that in context, even the HMRC figure represents a sum that could finance the construction of 300 new schools.
It could be used to build 25 new hospitals. £4.1bn would pay the annual salaries of around 153,000 nurses, or 164,000 police officers. It would pay for 430,000 nursery places a year.
The money could be used to fund a penny cut from the basic rate of income tax.
According to HMRC large businesses accounted for £1.4bn of this unpaid tax.
Multinationals such as Amazon, Google and Starbucks, which have attracted criticism for the low amount of corporation tax they have been paying in Britain, apparently legally, would be included in this category.
Tax avoidance by companies is not the only reason the Treasury's coffers are emptier than they should be. HMRC estimates that in 2010-11 it was deprived of £9.6bn in VAT, £3.3bn in excise duties, and £14.4bn in income tax revenues, national insurance contributions and capital gains tax.
The National Audit Office said yesterday that aggressive tax avoidance schemes by individuals and small companies are costing the public purse billions of pounds.
According to HMRC the tax gap for the entire economy amounted to £32bn in 2010-11.
If the Treasury closed this tax gap it would cover almost a third of the £120bn deficit projected for 2012-13 and consequently reduce the need for further spending cuts and tax rises.
Earlier this month Mr Osborne and his German counterpart, Wolfgang Schauble, called for an international crackdown on tax avoidance by large multinational companies.
Yet the Chancellor has also tried to encourage multinational companies to move their headquarters to the UK by cutting corporation tax rates. In his March Budget Mr Osborne announced that the rate companies will pay on profits will fall to 22 per cent by 2014.
The Government has also been accused of cutting staffing levels at HMRC by 10,000 as part of its austerity drive, thereby reducing the ability of officers to extract more tax from companies and others unwilling to pay their fair and legal contribution to the public purse.
Mind the £4.1bn tax gap...
A number of famous multinationals have come under the spotlight over corporation tax.
Starbucks has reported taxable profits in the UK only once in the past 15 years. Google reported revenues in Britain of £395m in 2011, but paid just £6m in corporation tax.
Amazon booked £3.3bn in UK sales in 2011 but paid no corporation tax at all. Senior executives from all three companies appeared before the Commons Public Accounts Committee this month.
Starbucks told MPs it paid a royalty to its parent company in the Netherlands, which offset profits made here.
Amazon said its profits are all booked in Luxembourg, and Google's profits are registered in Ireland.
Money- Britain is still economically depressed- printing money and no hope of growth
Updated: 23 Nov 2012
Interest rate cut below 0.5% all but ruled out by Bank of England
By Adrian Lowery
UPDATED: 11:30, 21 November 2012
..Interest rates will not be cut below their historic low of 0.5 per cent - that was the message sent out by Bank of England policymakers today.
Minutes of the last monetary policy committee meeting showed the Bank effectively ruled out a cut to the bank rate, saying it was 'unlikely to wish to reduce Bank rate in the foreseeable future'.
Alan Clarke at ScotiaBank said it was 'Pretty crystal clear that the Bank of England is not going to cut bank rate, which is something that we've always believed.'
Interest rates: The Bank of England effectively ruled out a cut to the bank rate
However, the policymakers hinted they could well pump more cash into the flagging UK economy, with the MPC slit on extending the quantitative easing programme.
One member, David Miles, voted to increase QE by £25billion to £400billion, arguing that the case for more QE was 'strong'.
More...Bank of England slammed for 'stifling' free thinking and 'centralised' regime under King
Borrowing rise squeezes Osborne deficit plan and ups pressure to raise cash in mini-Budget next month
While Mr Miles was outvoted by eight to one to keep the economy-boosting programme on hold at £375billion, the MPC said 'a case could be made for a further easing in monetary conditions' as it warned the UK economy could shrink again in the fourth quarter.
Further easing: David Miles was the only MPC member to vote to increase QE by £25billion to £400billion
Economists said the minutes signalled the Bank was keeping its options open.
Vicky Redwood at Capital Economics said 'like the Inflation Report, the minutes leave the door open for more QE': 'We still expect more QE in February.'
Other analysts think the MPC will sit on its hands. Mr Clarke said, 'They are keeping their options open for other things but for me, they are going to be aggressively on hold for the next three to six months.'
Details of the meeting come after the Bank slashed its growth forecast last week for next year to around 1 per cent and said gross domestic product could decline in the final three months of this year after a return to growth in the third quarter gave an 'overly optimistic impression'.
It also revised its inflation forecast and said the rate was not expected to fall towards the 2 per cent target until the second half of next year.
Today's minutes showed the MPC believed there were 'substantial risks' that inflation might not fall back to target as commodity prices remained volatile.
Read more: http://www.thisismoney.co.uk/money/news/article-2236271/Interest-rate-cut-0-5-ruled-Bank-England.html#ixzz2D0rIvVLA
Money- I Will or I Wont - Either way you pay- Solicitor or Osborne !
Updated: 21 Nov 2012
How do I go about writing my will?
Last updated: Apr 17th, 2012
Ask The Experts with Francis Klonowski
This article was written in response to a reader’s question.
If you have a financial question that has left you scratching your head ask our panel of experts who will aim to shine some light on the matter.
“I need to write a will but I do not know how to start the process.
What rules do I need to be aware of and how do I go about writing one?
”You might also like:
•Why should I bother making a will?
•What happens if I die without a will?
•How do I contest a will?
•Will writing scams to avoid
“Writing an accurate and legally sound will is very important as it means you can determine what happens to your money and possessions after your death.
It can also make it easier for those who have to deal with your affairs – your executors – as they are guided by your written wishes.
There may also be legal and tax implications that have to be addressed. In particular, depending on the size of your estate, a properly written will can help to reduce inheritance tax.
You could draw up the will yourself, using forms available from good stationers, or you could consult one of the many will-writing companies, preferably one that is a member of the Institute of Professional Willwriters (ipw.org.uk).
But given the importance of this document, I still think it is best to consult a solicitor.
It may cost a little more, but at least you can discuss your requirements face to face.
If you don't know any in the area, try asking a local funeral director for a recommendation as it should know which firms are efficient at processing wills after a death.
The requirements of writing a valid will:
•It must be in writing
•It must be signed and witnessed by two individuals aged over 18, who do not stand to gain from the will
•You must be over 18 when writing it
•You must have the mental capacity to make the will and understand its implications
•You must not have made it as a result of pressure from someone else
•It must start by stating that 'this will revokes all others'.
” Francis Klonowski
Money- France's credit rating lowered again
Updated: 21 Nov 2012
Moodys lowers France's credit rating
Updated: 2012-11-20 09:29
NEW YORK -- Moody's Investors Service on Monday downgraded France, stripping it of its prized AAA credit rating due to concerns over its prospects for economic growth and its exposure to Europe's financial crisis.
Moody's lowered France's rating one notch to Aa1.
It kept the rating's outlook at negative, meaning it could face future downgrades.
The ratings agency said that it is becoming increasingly difficult to predict how resilient France will be to future euro-area shocks.
But the agency noted that the country's rating remains high compared with many other European countries.
It cited for this France's diversified economy and "a strong commitment to structural reforms and fiscal consolidation."
The downgrade will heighten fears that Europe's debt crisis is spreading from the so-called peripheral nations like Greece, Portugal and Ireland to the core of the euro region.
Standard & Poor's, a rival rating agency, lowered its rating on France's debt one notch from AAA to AA+ in January, citing the deepening political, financial and monetary problems within the eurozone.
Pierre Moscovici, the French finance minister, blamed the downgrade on the policies of previous governments that had failed to restore the competitiveness of the nation's economy.
"French debt still remains among the most liquid and safest of the eurozone," said Moscovici, a member of the ruling Socialist government.
"The French economy is large and diversified and the government has shown proof of its serious plan to implement structural reforms and restore public finances."
The yield on the French 10-year government bond fell 1 basis point, or 0.01 percentage point, to 1.96 percent on Monday.
That's 60 basis points more than equivalent German government bonds, suggesting that investors see them as riskier.
Money- Who is responsible for UK Economy sinking into Triple Recession ?
Updated: 15 Nov 2012
UK risks triple-dip recession, Mervyn King warns
Persistently low growth will last until the next election,
Bank of England governor warns as he cuts 2013 growth forecast to 1%
• Josephine Moulds
• guardian.co.uk, Wednesday 14 November 2012 13.46 GMT
Sir Mervyn King, the governor of the Bank of England, says the UK economy could shrink in the final quarter of 2012
The UK economy risks suffering from a triple-dip recession amid a period of persistently low growth that will last until the next election, the governor of the Bank of England has warned.
Sir Mervyn King cut Britain's growth forecast to 1% next year and warned that output was more likely than not to remain below pre-crisis levels over the next three years.
"There seems a greater risk that the UK economy may be in a period of persistent low growth," he said on Wednesday.
The UK economy emerged from a double-dip recession in the third quarter of this year, when the economy grew by 1%, but King warned that this was driven by one-off factors.
"Continuing the recent zig-zag pattern, output growth is likely to fall back sharply in the fourth quarter as the boost from the Olympics in the summer is reversed – indeed output may shrink a little this quarter," he said.
If that period of contraction continues into 2013, the UK could drop into a triple-dip recession.
At the same time, the Bank significantly raised its inflation forecasts. Inflation is now is expected to reach around 3% in the near-term and not fall back significantly until the second half of 2013, later than previously thought.
UK inflation jumped to a surprise five-month high of 2.7% last month, driven by rises in tuition fees and dearer food bills.
Energy price rises over the next few months are likely to drive it even higher.
King said the outlook for inflation was the main reason why the monetary policy committee decided not to expand the quantitative easing (QE) programme in November.
He said there were limits to what monetary policy could do to boost an economy undergoing far-reaching adjustments in the wake of the financial crisis and amid severe headwinds from the eurozone debt crisis.
But economists said the bank may still engage in more QE in the future.
Howard Archer of IHS Global Insight said: "With economic recovery currently looking feeble, fragile and far from guaranteed, we believe that the Bank of England will ultimately decide to give the economy a further helping hand with a final £50bn of QE.
This seems most likely to occur in the first quarter of 2013."
Labour said this gloomy outlook proved the coalition government's economic plans were not working.
The shadow chancellor, Ed Balls, said: "This sobering report shows why David Cameron and George Osborne's deeply complacent approach to the economy is so misplaced.
Their failing policies have seen two years of almost no growth and the Bank of England is now forecasting lower growth and higher inflation than just a few months ago."
Money- Pensioners Personal Allowance "cut" will hit 4.41million
Updated: 14 Nov 2012
21 March 2012
Budget 2012: Over-65s' tax-free income freeze
George Osborne: "No pensioner will lose in cash terms"
From April 2013, those hitting 65 will no longer receive a larger personal allowance than people of working age.
This will save the government £1bn by 2015, Budget documents have revealed.
The government said it wanted to "simplify" the tax system and spread tax relief across everyone, regardless of age.
But the National Association of Pension Funds said: "Over the course of this Parliament, pensioners stand to lose over £2bn in age-related tax allowance.
"This will come as a blow to millions of pensioners who have paid in to the tax system throughout their working lives.
Pensioners with modest amounts of pension saving stand to be the biggest losers."
The amount of income that is tax-free - the personal allowance - is greater at present for most people aged over 65
The system will be changed so eventually, everyone will have the same personal allowance
Some 4.41 million people will be worse off in real terms in 2013-14, losing £83 on average
Within that, 360,000 people aged 65 lose an average of £285
An accountant has warned that the change could cause difficulties for the UK tax authority's computer system and leave some people paying the wrong amount of tax.
"It is going to impact those least able to detect whether they are paying the wrong amount of tax," said Chas Roy-Chowdhury, of the ACCA tax body.
For those aged between 65 and 74, the personal allowance, the amount of income that is tax-free, has been set at £10,500 from April.
For those aged 75 and over, the allowance will be £10,660.
This extra allowance gradually reduces for pensioners, whose taxable income is between £24,000 and about £29,000.
It disappears for any pensioner earning more than £29,000.
There is also a gradual withdrawal of the basic personal allowance for everyone with income above £100,000, regardless of age.
In a major shift in the way tax is calculated, already dubbed a "grannytax" on Twitter, Chancellor George Osborne has said that income tax personal allowances will change in the following way:
The under 65s' personal allowance will increase to £9,205 in April 2013 - that relates to people born after 5 April 1948
A personal allowance of £10,500 will be restricted to most people born after 5 April 1938, but before 6 April 1948
The personal allowance of most people born before 6 April 1938 will be £10,660
The change means that as people turn 65, they will not be entitled to the higher personal allowance set aside for most pensioners.
Instead, they will receive the same as everyone else.
As time goes on, more and more people will fall into this group.
As a result, in 2013-14, some 4.41 million people will be worse off in real terms with an average loss of £83, HMRC said.
Dot Gibson, National Pensioners Convention: "Pensioners are very, very worried"
Within the total, 360,000 individuals aged 65 lose an average £285.
Some 230,000 people will be brought into income tax.
So this will save the government £360m in the year it is introduced, rising to £1.25bn a year by 2016-17.
"This measure will support the goal of a single personal allowance for all taxpayers regardless of age, and spread tax relief fairly across working-age people and pensioners," said HM Revenue and Customs (HMRC).
Although the tax-free income allowance is rising for the under-65s, HMRC has confirmed that 300,000 will be drawn into higher rate tax from 2013/14.
The change comes as a result of the higher rate threshold being reduced from £42,475 to £41,450 - the point at which people start paying 40% tax on their income.
Meanwhile, the chancellor confirmed that he would set up an "automatic review" of the state pension age to make sure it keeps on rising if people keep on living even longer, which means to 68 and beyond.
The state pension age is already scheduled to rise to 67, for both men and women, by 2026.
Money- Osborne's Economic Policy has failed Britain
Updated: 14 Nov 2012
British economy needs at least £48bn to survive
Tue Nov 13, 2012 4:2PM GMT
British Chancellor George Osborne will need to raise taxes or cut government expenditure by £48 billion in the next treasury spending round if he wants to get the reduction deficit plans back on track, media reports said.
Separate studies by the Social Market Foundation (SMF) and the Royal Society of Arts (RSA) found that the country’s poor economic conditions had left the Chancellor with a larger fiscal gap than previously thought, British media reported. According to the reports, the British economy’s weaknesses will leave Osborne with no other choice but to cut spending or raise taxes by £22 billion more than what was proposed in 2010. SMF's director Ian Mulheirn said: “the Chancellor will have to lay out some eye-watering cuts at the next spending review and will have to prolong austerity policy deep into the next parliament.” Mulheirn added that a further £22 billion, about 23 percent, of cuts would now be required to make ends meet. The predicted additional cuts could spark concerns of a triple-dip recession among Britons whom have not yet been healed from the devastating consequences of the country’s bad economic conditions.
Money-UK Tax Abuse- Parliament's Public Accounts Committee-Fit for purpose?-MP's cosy company deals
Updated: 13 Nov 2012
20 August 2012
.HMRC hails three tax avoidance victories
HMRC is keen to scare people away from complex and apparently legal tax avoidance schemes Continue reading the main story
Tax and InheritanceTemps hit by 'abusive tax avoidance'
How French wealth tax affects UK citizens
How 'morally wrong' is cash-in-hand?
When is tax dodging illegal?
HM Revenue and Customs (HMRC) has trumpeted three victories in the courts last month against complex tax avoidance schemes.
The Revenue said the decisions had potentially stopped as much as £200m being lost.
Its director general of business tax, Jim Harra, said: "HMRC will challenge tax avoidance relentlessly."
However, Mike Warburton of accountants Grant Thornton said HMRC was not winning every case that came to court.
"It may be that they are winning at the moment, but that is not always the case and three does not make a trend," he said.
"Having said that, it is undoubtedly the case that the courts have been finding against complex tax avoidance schemes.
"But in these three cases the Revenue has won for quite different reasons," he added.
'Firing a broadside'
One of the three cases was heard in the Court of Appeal and involved an artificial scheme, back in 2003-04, to avoid capital gains tax on the £10m profit from the sale of a business.
"You win some, you lose some”
Chartered Institute of Taxation
The two other cases were dealt with by tax tribunals, part of the judicial tribunal system, that deal with tax law cases.
Mr Harra said: "We have now had three major court successes in avoidance cases in the last month alone and I hope this sends a very clear message:
These schemes don't come cheap, you carry a serious risk that you'll end up paying the tax and interest on top of a set-up charge which can run into the hundreds of thousands of pounds."
John Whiting, of the Chartered Institute of Taxation (CIOT), said: "There is a message here to taxpayers that HMRC has not gone soft, but these cases are part of the normal ebb and flow - you win some, you lose some."
But Ronnie Ludwig, at accountants Saffery Champness, said HMRC was firing a broadside at all such schemes.
"This shows they are determined to take a stand against complex tax avoidance schemes," he said.
HMRC has been engaged in a renewed drive to recover unpaid tax since 2005, when it first won the power to flush out untaxed income hidden in offshore bank accounts.
More recently it has published photographs of the top-20 most wanted criminals who have dodged tax, typically by VAT frauds or smuggling cigarettes.
Earlier this month it sent penalty notices to about 500,000 people, demanding they pay up at least £1,200 each for failing to submit their self-assessment tax returns.
But it was also criticised last year by MPs on the public accounts committee for supposedly cutting "cosy" deals to settle the complicated tax affairs of big companies such as Vodafone and Goldman Sachs.
More recently though, the National Audit Office found that five of those big settlements had been reasonable.
Money-UK Tax Dodgers Exposed- But is this MP's calling the kettle black ?
Updated: 13 Nov 2012
UK Uncut plans day of action against Starbucks
UK Uncut is planning a day of action against Starbucks,
including turning cafes into womens' refuges, creches and homeless shelters,
in protest at Government spending cuts
that it argues may not be necessary if the company paid more tax.
UK Uncut claims that Starbucks avoids paying taxes that could fund the public services being cut by Government
By Matthew Sparkes
10:44AM GMT 12 Nov 2012
Last month it emerged that Starbucks had paid nothing in UK corporation tax over the previous year, despite making sales worth £398m.
The news sparked public anger and today the company, along with Amazon and Google, who have also faced scrutiny over their tax bills, will give evidence to the Public Accounts Committee on their payments.
UK Uncut claims that Starbucks avoids paying taxes which could be used fund the public services being cut by Government that will have a disproportionate impact on women.
The action will take place on Saturday December 8, three days after Chancellor George Osborne’s autumn statement, when further spending cuts are expected.
The group claims that women will bear the brunt of cuts to public sector jobs, wages, housing benefit, childcare, and pensions, and also suffer from the Government's decision to cut £5.6m from violence against women services.
Every day 230 women are turned away from refuges as a result of the Government’s cuts to women’s services, it says.
UK Uncut activist Sarah Greene said: “It is an outrage that the Government continues to let multinationals like Starbucks dodge millions in tax while vital services like refuges and rape crisis centres face the axe. It does not have to be this way.
"The Government could easily bring in billions that could fund vital services by clamping down on tax dodging, but are instead making cuts that are forcing women to choose between motherhood and work, and trapping them in abusive relationships.”
Lord Myners, the former City minister, this morning accused multinational companies such as Starbucks of leeching tax revenue from Britain and attacked accountants for allowing it to happen.
He said companies such as Starbucks made millions in revenue in Britain but "ensured they made no profits" through large royalty and other payments to offshore companies. Corporation tax is only paid on profits.
Lord Myners told BBC Radio 4's Today programme it was creating unfair competition for British rivals such as Costa Coffee and Cafe Nero which paid corporation tax and said "accountants have conspired to allow that to happen".
Money- On Pay Women lose out
Updated: 07 Nov 2012
Pay Gap In Reverse As Women Work 'For Free'
The gender pay gap is so large that women will effectively work the rest of the year for free, it is claimed.
A study by the campaign group Fawcett Society suggests that, rather than improving, the pay and jobs prospects of women are going into reverse amid the Government's austerity measures.
Chief executive Ceri Goddard said: "At the same time, women's unemployment stands at a 24-year high and growing numbers of women have been forced into low paid, part-time and insecure employment - underemployment.
"Far from slowly moving forward, we now face going into reverse. If Government wants to avoid an unprecedented backwards step on its watch, they must take more action."
The conclusions were released as separate research for the Chartered Management Institute (CMI (BSE: CMI.BO - news) ) found that the average female company executive earns more than £400,000 less than a male counterpart over her career.
According to the Institute, the average gender pay gap for UK executives is more than £10,000 annually.
It also claimed that women receive less than half the bonus payments given to men and 4.3% of female executives were made redundant in the past year, 1.1 percentage points more than male bosses.
It found that while women now make up 57% of company executives only 40% are departmental heads and fewer than one in four are chief executives.
The survey of more than 38,000 executives revealed a "substantial" gender pay gap at the higher end of the executive career ladder, the Institute said.
"A lot of businesses have been focused on getting more women on boards but we've still got a lot to do on equal pay and equal representation in top executive roles," said CMI chief executive Ann Francke.
"Women make up almost three out of four at the bottom of the ladder but only one out of four at the top."
Money- US Debt - Its big and its spread worldwide but China holds the biggest share
Updated: 07 Nov 2012
US debt: how big is it and who owns it?
• Who owns US debt around the world - and how big is it?
Find out how China got to own over $1.4 trillion - and see how it's changed in Obama's first term
US debt: who owns it and how big is it?
US federal debt is still a record high.
This week it passed a milestone: the fourth straight year the deficit has passed the $1tn mark.
As of today, the national debt stands at $16,066,241,407,385.80 (just over $16 trillion).
It's an issue that's sure to come up in the first presidential debate this Wednesday.
So, how does the US borrow money?
Treasury bonds are how the US - and all governments for that matter - borrow hard cash: they issue government securities, which other countries and institutions buy.
So, the US national debt is owned mostly in the US - but the $5.4tn foreign-owned debt is owned predominantly by Asian economies.
Under President Obama's first term, that figure has gone up from $3tn, a rise of 74.1%.
Under George W Bush, it went up too - by 85% over the whole two terms - and 64% in his second term alone.
Holders of US Treasury bonds, $bn
The US Treasury releases the figures on this every quarter - we have made them more useable.
So, who has the most?
The key findings are:
• As of July this year, US Treasury bonds owned overseas accounted for $5.4tn of the national debt - up 14.6% on last year.
That's not everything - the US now owes over $16tn.
• China is the biggest owner of US Treasury bonds - over $1.14tn.
But it's down 12.6% on last year, backing up reports that China is selling off its US treasury bonds
• Bonds bought in the UK (mainly private investors and pension funds) make it the eighth country on the list at $140.9bn - up 13.5% on January 2009 when Obama took over
It reflects a US national debt which has grown starkly, from $7.8tn in 2005 to busting through the US debt ceiling of $14.294tn last year - according to these day by day figures.
Bad as that number is, using the bald total figure is not as representative as using a measure which compares the debt to the size of the economy.
That is, debt as a percentage of gross domestic product - GDP.
And, looking at that figure up to the end of 2010 (using OECD data), Britain is actually worse off than the US.
Roll over the line to get numbers
The full data is below.
What can you do with it?
MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES (in billions of dollars), HOLDINGS AT END OF PERIOD
Country July 2012. July 2011. Jan 2009. % change, Jan 2009 to July 2012 % change Jul 2011 to Jul 2012
SOURCE: US TREASURY
1) Estimated foreign holdings of U.S. Treasury marketable and non-marketable bills, bonds, and notes reported under the Treasury International Capital (TIC) reporting system are based on annual Surveys of Foreign Holdings of U.S. Securities and on monthly data.
2) United Kingdom includes Channel Islands and Isle of Man.
3) Oil exporters include Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.
4) Caribbean Banking Centers include Bahamas, Bermuda, Cayman Islands, Netherlands Antilles and Panama.
Beginning with new series for June 2006, also includes British Virgin Islands.
July 12- July 11- July 09 - %changeJuly09-12- %changeJuly 11-12
Totals in $billions
Grand Total 5348.5 4668.3 3071.7 74.1 14.57
China, Mainland 1149.6 1314.9 739.6 55.4 -12.57
Japan 1117.1 885.2 634.8 76.0 26.2
Oil Exporters 262.3 244 186.6 40.6 7.5
Brazil 253 219.1 133.5 89.5 15.47
Carib Bnkng Ctrs 246.2 177.9 177.1 39.0 38.39
All Other 224.1 193.9 147 52.4 15.58
Taiwan 196.1 147.6 73.3 167.5 32.86
Switzerland 190.1 118.5 62.1 206.1 60.42
Russia 154.3 141.7 119.6 29.0 8.89
Belgium 144.2 86.6 15.6 824.4 66.51
United Kingdom 140.9 141 124.1 13.5 -0.07
Hong Kong 136.7 105.9 71.7 90.7 29.08
Luxembourg 128.3 114.1 87 47.5 12.45
Singapore 92.7 65.7 38.5 140.8 41.1
Ireland 88.2 52.2 50 76.4 68.97
Norway 69.9 23.7 21.9 219.2 194.94
France 64.8 45.6 17.9 262.0 42.11
Germany 62.8 63 56.2 11.7 -0.32
Canada 55.6 46.8 8.4 561.9 18.8
India 53.9 40.3 32.5 65.8 33.75
Mexico 53.5 31.1 34.8 53.7 72.03
Thailand 53 58.4 37.2 42.5 -9.25
Korea, South 44.3 33.4 31.3 41.5 32.63
Philippines 36.7 30 11.6 216.4 22.33
Turkey 30 42.8 30.8 -2.6 -29.91
Chile 29.7 19.6 15.2 95.4 51.53
Poland 29.4 31.9 3.3 790.9 -7.84
Sweden 28.2 28.4 12.4 127.4 -0.7
Colombia 28 18.8 11.5 143.5 48.94
Italy 27.8 21.3 15.6 78.2 30.52
Israel 25.5 20.9 16.9 50.9 22.01
Australia 25 20.4 7.8 220.5 22.55
Netherlands 24.6 23.6 16.8 46.4 4.24
Spain 24 14.4 4.2 471.4 66.67
Malaysia 20 15.3 8 150.0 30.72
Denmark 14.6 10.8 35.19
Peru 11.8 9.6 22.92
South Africa 11.5 10.1 13.86
Money - £11bn tax owed=A start on UK Jobs and Economic Growth-£50bn tax owed = Economic Salvation
Updated: 03 Nov 2012
Foreign firms could owe UK £11bn in unpaid taxes
Foreign companies, including Starbucks and Google, could be responsible for as much as £11bn in unpaid British taxes, it has been disclosed.
David Cameron has said HMRC should 'look carefully' at cases where international corporations have legally been able to pay no corporation tax
8:34PM GMT 02 Nov 2012
HM Revenue & Customs has identified £25bn of unpaid taxes that may have been wrongly withheld by corporations, of which almost 44pc are overseas companies, according to Pinsent Masons, the tax specialists.
The research comes ahead of an appearance next week by Lin Homer, the HMRC chief executive, in front of MPs over how effective the taxman has been in collecting money from large foreign corporations.
International companies such as Google, Facebook, Amazon and Starbucks have sparked controversy after it emerged that they all pay minimal tax on large UK revenues.
Although these firms follow UK law, there are concerns that such giant corporations are using accounting strategies to divert profits earned in Britain to their parent companies or to lower tax jurisdictions, via royalty and service payments, or by so-called transfer pricing.
Starbucks has paid no corporation tax in Britain for the past three years, while Amazon, Facebook and Google have together paid less than £30m of tax despite sales of £3.1bn over the past four years.
Starbucks' Europe arm paid just $1.2m in taxes
02 Nov 2012
New FSA rules to wipe thousands of pounds off people's pensions
01 Nov 2012
Hard-to-tax companies should make other contributions to society
24 Oct 2012
Foreign firms face UK and EU tax crackdown
24 Oct 2012
Taxman jails arms smuggler over China deal
26 Oct 2012
Our tax system is a chain around the economy’s ankles
30 Oct 2012
Margaret Hodge, chairman of the Public Affairs Committee, which will quiz Ms Homer on Monday, told The Daily Telegraph that the behaviour of some companies was “immoral” and that it wasn’t clear if HMRC was doing enough to make sure companies didn’t get away with it. The PAC has demanded that Google, Amazon and Starbucks attend a separate hearing the following week to defend their records.
“There is a growing anger among ordinary people who pay their taxes that the system is not fair,” said Ms Hodge. “It may be legal but it is not moral.”
Charlie Elphicke, a Conservative MP and former tax lawyer, has called for a radical change in corporate behaviour and an end to company bosses “playing the system”.
According to Mr Elphicke, 19 US-owned multinationals are paying an effective tax rate of 3pc on British profits, instead of the standard rate of 26pc. The key to this is called transfer pricing. This can involve a parent company charging its regional divisions a royalty fee for its brand name and corporate marketing benefits, with the payments being transferred directly to the head office.
In other firms, the brand name, trademarks or research and development services are registered not in the UK, but in another country with lower tax rates such Luxembourg or Ireland. This has the effect of magnifying profits in the lower tax jurisdiction and minimising them in the UK.
“We want to try and find out whether people are being treated equally and fairly under the law,” said Ms Hodge. “I’m not sure HMRC is doing all it can to make sure every penny due comes in.”
David Cameron has said HMRC should “look carefully” at cases where international corporations have legally been able to pay no corporation tax – or very small amounts – on billions of pounds of UK revenue
Money- Barclays face heavy fine for manipulating markets
Updated: 03 Nov 2012
Barclays faces fine for manipulating markets
US regulators gave bank 30 days to show why it should not be penalised for manipulating physical electricity prices.
Last Modified: 01 Nov 2012 11:59
The British bank said it would fight the charges, likely setting up a landmark legal battle [EPA]
US regulators have threatened to fine Barclays bank roughly $470 million to settle allegations that the bank and four traders manipulated California electricity markets, reviving the spectre of a sector-wide crackdown on energy trading.
The Federal Energy Regulatory Commission (FERC) proposed fine, which was announced on Wednesday, would be the largest penalty ever levied by the commission and potentially exceeds the fine Barclays paid over the Libor bid-rigging scandal that cost Chief Executive Robert Diamond his job.
The bank has 30 days to show why it should not be penalised for an alleged scheme of manipulating physical electricity prices at a loss in order to make profits in related positions in the swaps market, a strategy known as a "loss-leader".
British bank Barclays said it would fight the agency, likely setting up a landmark legal battle that could set a precedent over whether the once-common trading ploy in commodity markets is illegal or simply ill-advised.
It will have huge implications across the market, as the FERC - which won expanded powers to tackle manipulation in 2005 after the California power trading scandal and related Enron meltdown - pursues similar investigations against companies including BP and Deutsche Bank.
The FERC also said four of the company's power traders -- Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith -- have 30 days to show why they should not be assessed a total of $18 million in civil penalties.
It said their activity accounted for nearly a quarter of all trading in the next-day power market during the period, accruing gains of an estimated $34.9 million.
Bank documents showed how the traders bragged about how they would "crap on" certain markets to profit in other ones, the order shows.
Barclays "strongly disagreed" with the order, which it said was "by nature a one-sided document, and does not reflect a balanced and full description of the facts."
"We believe that our trading was legitimate and in compliance with applicable law," Barclays spokesman Mark Lane said in an email.
"We have cooperated fully with the FERC investigation, which relates to trading activity that occurred several years ago.
We intend to vigorously defend this matter."
The four traders left Barclays over the past five years for reasons unrelated to the investigation, according to a source familiar with the matter.
The bank closed its Portland office in 2011 and effectively quit the Western power market this year.
It is the latest blow for Barclays, which has fired staff, clawed back pay and taken other disciplinary action after being fined $450 million by US and British regulators over Libor.
New CEO Antony Jenkins, who took over at the end of July, is in the middle of a review to change the bank's culture and lift profitability. The changes are due to be unveiled in February.
Earlier on Wednesday, Barclays announced that the US Department of Justice and the Securities and Exchange Commission were investigating whether it was complying with US laws in its ties with third parties who help it win or retain business.
The FERC order is tantamount to an indictment, suggesting the issue may go to court after settlement talks were unsuccessful, said Craig Pirrong, a University of Houston professor and expert in energy trade regulation
Money- Sign the Pensioners Petition - On Tory Freeze on Tax Allowances in April 2013
Updated: 02 Nov 2012
Sign Arthur’s Petition
The NPC is urging its supporters to sign an online petition aimed at reversing the Chancellor’s decision to freeze the age related tax allowances from April 2013.
If we secure over 100,000 signatures we can organise a debate in Parliament and a lobby of MPs on the same day.
You can sign the petition at http://epetitions.direct.gov.uk/petitions/31778.
Money - Loan Shark looks for repectability from a Tory Minister is a joke ?-
Updated: 02 Nov 2012
Wonga hires No.10 insider to lobby
against payday curbs
as critics slam lender's 'cosy' relations with ministers
By Ed Monk
PUBLISHED: 14:00, 30 October 2012 | UPDATED: 15:56, 30 October 2012
..Wonga has hired one of the Prime Minister's senior advisers to lobby on its behalf in a move critics said signaled its desire to fend off changes that would give borrowers greater protection.
Wonga is to make Jonathan Luff its global head of public affairs, the first time the payday lender has employed anyone in such a capacity.
Mr Luff is an insider at No.10, having performed the role of David Cameron's adviser on digital strategy. He has been on secondment from the Foreign Office.
The Thick of It: Wonga has appointed a former Downing Street adviser to fight its cause.
The eye-catching hire was taken as a sign that Wonga will lobby the very top of government to prevent curbs on its lending.
In a statement Wonga said: 'Jonathan has prior diplomatic Service experience and wide-ranging international contacts, and he is therefore well placed to support the company’s international growth.
Wonga is delighted with the appointment.'
As a so-called 'payday' lender, Wonga charges sky-high rates of interest - its typical APR is 4214 per cent - for short-term loans.
The loans are controversial and lenders have been dubbed 'legal loan sharks' by their critics.
More...'Wonga is targeting our bankruptcy capital': Blistering attack on payday lender's Newcastle Utd sponsorship
How to get out of debt
LEE BOYCE: Letting Wonga sponsor ITV's Red or Black? gambling-themed show leaves a bitter taste in my mouth
Wonga has flourished in the financial crisis and in September revealed its turnover had soared 225 per cent on the year before. It approved 2.5million loans in 2011 - up 296 per cent on the previous year.
It has been trying to raise its profile through ad campaigns that have included ITV's Saturday night show Red or Black?, hosted by Ant and Dec, and the shirts of Newcastle United, which is in an area with the highest personal bankruptcy rates in the whole country.
Tough questions: MP Stella Creasy said the Government needed to show it was on the side of vulnerable borrowers.
Stella Creasy, Labour MP for Walthamstow, has led campaigns in parliament for further restrictions on payday lending.
She said: 'Like many other legal loan sharks, Wonga is making massive profits from preying on consumers in Britain’s poorly regulated consumer credit market. They have used these profits to target our football clubs and Saturday night TV, and now they are targeting the highest echelons of Government.
'Those Britons struggling with debts caused by payday lending and wondering why the Government is doing nothing to help them will want answers.
'Along with Wonga paying for cosy chats at Conservative conference with Ministers and the lack of regulation to tackle the problems these companies are causing British consumers, this appointment only further raises concerns about how seriously this government takes personal debt.'
Ms Creasy said Mr Luff's appointment needed to comply with government rules on civil servants taking jobs in the private sector.
The business appointment rules for civil servants are designed to stop companies hiring public servants in order to exploit their knowledge of, and contacts within, government.
In their key principles, the rules say that for a period of two years after they leave public service, a civil servant 'must not misuse your official position, for example by using information acquired in the course of your official duties, to further your private interests or those of others'.
The rules also make clear that firms should not gain an advantage by hiring someone who, in the course of their official duties, had 'access to information relating to unannounced or proposed developments in Government policy, knowledge of which may affect the prospective employer or any competitors'.
Ms Creasy said Mr Luff's appointment may need the approval of the Advisory Committee on Business Appointments. She called for the Government to publish the advice given to the committee on the appointment by the Cabinet Office Permanent Secretary.
Ant & Dec faced criticism after Wonga secured a deal to sponsor their Saturday night ITV show Red or Black?
Wonga said that Mr Luff's appointment was fully compliant with the Advisory Committee.
However, a spokesman for the Committee said that it was not required to sign off Mr Luff's appointment because it only considered cases of individuals of director level or above, which Mr Luff was below. Any potential breaches of the rules would have to be considered by the individual's department, the spokesman said.
The Office of Fair Trading launched a review of paypay loans in February and will publish its recommendations by the end of this year. It is understood that Mr Luff will have 'restrictions' on contact with the government departments where he worked until the OFT review has finished. In particular it is thought he may not access No.10 or the cabinet office for three months.
Research from Which? in May found that one in five pay-day borrowers had not been able to pay back their loan on time - while a third of people said they had experienced greater financial problems as a result of taking out a payday loan.
In May the OFT publicly rebuked Wonga for wrongly accusing customers of fraud in debt collection letters. Wonga staff told some customers who worked in the public or financial sectors that they had to pay, or else would break terms in the contract of employment which specify they should not be in debt.
This is Money has taken up the cases of readers who have had their bank accounts emptied after Wonga allowed accounts to be fraudulently set up in their name
Read more: http://www.thisismoney.co.uk/money/cardsloans/article-2225261/Wonga-hires-No-10-insider-lobby-payday-curbs-Creasy-slams-cosy-relations-ministers.html#ixzz2B1VDTVDN
Money- Children a Countries future ? - Not to the Nasty Party- Child Benefit cuts hit all groups
Updated: 02 Nov 2012
Cuts to child benefit will see one million families
pay 52% tax with some losing more than 70p in every pound
Families with large numbers of children will be hardest hit
A family with three children will lose £2,449 a year and 66.5p in every pound earned over £50,000
By Tim Shipman
UPDATED: 07:42, 31 October 2012
..More than a million families will lose over 50p in every extra pound they earn under plans to cut child benefit for the better off.
Figures show those with at least one earner on more than £50,000 a year will be hit by crippling marginal tax rates the Government has vowed to abolish.
In some cases families with large numbers of children will see more than 70p removed for every extra pound they earn.
Cut: George Osborne is planning to cut the benefit if one or both parents is earning more than £50,000, and stop it altogether when one earner receives £60,000
At present, all parents with young children are given the benefit, which is worth £20.30 a week for the first child and £13.40 for each subsequent youngster.
For a couple with two children, it is worth £1,752 a year.
Now George Osborne is planning to cut the benefit if one or both parents is earning more than £50,000, and stop it altogether when one earner receives £60,000.
But the 1.2million families this week receiving letters telling them they will lose out in January may be unaware of how hard they will be hit.
The Chancellor has set up a ‘tax taper’, which will see families lose 1 per cent of the benefit for every £100 earned over £50,000.
Calculations: Mike Warburton, a director of accountancy giant Grant Thornton
According to figures drawn up by Mike Warburton, a director of accountancy giant Grant Thornton, those with one child who are already paying 40 per cent income tax and another 2 per cent in National Insurance will lose £1,056 a year.
That will add 10 per cent to their marginal tax rate, meaning they will lose more than 52p in every pound they earn between £50,000 and £60,000.
However, someone with two children will surrender £1,752 a year and be hit with a marginal tax rate of 59.5 per cent.
A family with three children will lose £2,449 a year and 66.5p in every pound earned over £50,000.
Mr Osborne has set up an Office of Tax Simplification to make things easier and encourage people to go out to work.
But Mr Warburton pointed out: ‘There is a payoff between fairness and simplicity, and the taper has created an anomaly which makes it unattractive to work harder.
‘If you’re daft enough to have eight children you would face a marginal rate of over 100 per cent.’
The Treasury insisted that only 3 per cent – around 36,000 families – will pay marginal tax rates of more than 60 per cent.
But they acknowledged that all 1.2 million families will face rates of more than 50 per cent.
Tory MP Mark Reckless, who has branded the reforms a ‘serious political problem’, said the Government should seek to spare those hit by the changes by cutting the amount of money Britain gives to the EU.
‘Accountants are rightly drawing attention to the difficulties with these proposals.
One way we could get the money we need to avoid these type of cuts would be to take it from the EU budget.
‘The extra cash that Brussels is demanding would pay for child benefit several times over.’
A Treasury spokesman said: ‘For higher-rate taxpayers, the lowest marginal tax rate is 42 per cent.
‘Those receiving child benefit and earning between £50,000 and £60,000 will now face a higher marginal rate, but for the vast majority of them, around 97 per cent, the marginal tax rate will still be below 60 per cent.
‘Only a small proportion of those in the taper – the other 3 per cent – would face higher marginal rates and this will apply to large families.’
Read more: http://www.thisismoney.co.uk/news/article-2225528/Cuts-child-benefit-million-families-pay-52-tax-losing-70p-pound.html#ixzz2B1T4nBXk
Money- Homeownership -A Tory Flagship but Poverty has reached Homeowners
Updated: 02 Nov 2012
Nearly a fifth of homeowners
who bought their property in the last five years
are in negative equity
By Lee Boyce
UPDATED: 15:55, 29 October 2012
Nearly a fifth of homeowners who bought their property in the last five years are now saddled by negative equity, a study has revealed.
Property website Rightmove found that 17 per cent of people who have purchased a home since 2007 have a mortgage balance bigger than the value of their home.
Additionally, the study found that a fifth of homeowners believe their house is worth less now than when they paid for it.
Property shock: A fifth of people believe their property is now worth less than they paid for it
Rightmove said it will take more than a modest market recovery to help many people trapped in negative equity move house.
Four out of 10 people surveyed believe prices will remain around the same in a year's time and around a quarter expect prices to edge downwards.
Meanwhile, the number of agreed house sales jumped by 9.2 per cent in October.
This was largely down to sellers dropping their prices to shift homes that have been left lingering on the market, separate data from property analyst Hometrack has shown.
House prices drifted lower again in October with a 0.1 per cent fall for the third month in a row, despite a slight increase in the number of new buyers registering with estate agents.
Despite the small falls, Hometrack says that year-on-year, house prices registered the lowest level of price falls for two years, with a 0.4 per cent drop.
This was down to a strong spring market, when the ending of a stamp duty concession for first-time buyers prompted a rush of sales, as well as prices starting to firm up in the northern regions.
Hometrack said it expects estate agents to continue pushing through as many sales as possible towards the end of the year as demand from buyers’ tails off.
Prices were flat in London and fell across the rest of England and Wales.
The West Midlands saw the biggest price fall with a 0.5 per cent drop, but it also recorded the second biggest increase in sales.
The number of agreed sales rose by 9.2 per cent across the country in the strongest uplift seen since the spring, with Wales and West Midlands seeing strong sales increases of 18 per cent and 17.6 per cent respectively.
The data showed small falls in property prices in October, but an increase in new property and sales
Richard Donnell, director of research at Hometrack, said the big jumps in sales were mainly down to sellers re-pricing homes that have been on the market for a while to a level where sales can take place, rather than a significant increase in demand from buyers.
Mr Donnell said that stamp duty rates are acting as a barrier to 'much-needed' sales and any recovery in the housing market will hinge on how well household incomes recover.
He said: 'The foundation of any national and sustainable recovery in the housing market rests on growth in the wider economy and household incomes.
'Any recovery will most likely start to be seen in transaction volumes rather than prices.'
House sales have been lower in recent months than they were a year ago, with just over 52,300 sales a month on average between April and July this year, compared with almost 55,000 sales a month during the same period in 2011, according to Land Registry figures released last week,
Back in July, Grenville Turner, chief executive of Britain’s largest property services group, Countrywide, urged the Government to ‘review the outdated thresholds’ in order to stimulate house sales.
Red viewing: Prices are falling in a large percentage of areas compared to increasing
Signs of an improving mortgage market boosted home movers' confidence that house prices will increase in the next year, the Rightmove study found.
The number of people that think that prices will go up in the coming months increased to 29 per cent, showing a seven percentage point increase on the share of people who were optimistic about increases a year ago.
Faith in the improving mortgage market is cited as the main reason, with 32 per cent of people stating this as the reason for their positivity.
Rightmove said that a return of house price confidence and better access to mortgage funding are ‘crucial’ ingredients to getting the market moving again.
However, of those who think prices will go up, most predict the increase will be relatively small.
The Government launched an £80billion scheme to kickstart lending in August, which has already helped to increase mortgage availability, although much of the competition among lenders so far has been aimed at people with bigger deposits to put down.
For example, Tesco Bank launched a 1.99 per cent two-year fixed mortgage ten days ago – a record low rate. However, it is only available to those with a 40 per cent deposit.
The gap between asking and achieved prices over time shows that northern regions are starting to fare better
THOSE LOOKING TO TAKE SECOND STEP ON PROPERTY LADDER ARE 'STUCK'
Two-thirds of towns have seen a year-on-year drop in sales of homes typically bought by people taking their second step on the property ladder, a study found today.
Some 374 out of 577 areas surveyed across England and Wales saw an annual fall in sales of 'second stepper' homes in the first seven months of 2012, representing the biggest number of cities and towns to see a drop in three years, Lloyds TSB said.
Nine of the 10 areas recording the biggest falls in 2012 are in southern England, with Torpoint in Cornwall recording the biggest drop at 52 per cent.
Meanwhile, Ashington in Northumberland recorded the biggest rise in typical second stepper home sales, with an 86 per cent uplift.
People living in the areas which have seen the biggest drops in second stepper home sales could be facing a bigger struggle to move out of their first home.
The study found that the price of a typical first-time buyer home has fallen by 16 per cent, or more than £33,200, on average over the last four years in the 10 towns and cities that experienced the largest falls in second stepper home sales.
This is double the eight per cent fall in the 10 areas with the highest growth in second stepper sales this year, where the decline in first-time buyer home values has averaged just over £7,300.
People buying their first home tend to stay there for around four years, the Lloyds TSB findings revealed, meaning many people who are now trying to take their second step on the property ladder will have bought at the top of the market and be stuck in negative equity
Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-2224687/Nearly-fifth-homeowners-bought-property-years-negative-equity.html#ixzz2B1P7U17q
Money-Sheer Decadence-Boss Hester laughing all the way to "OUR" RBS Bank & with Nasty Party Blessing
Updated: 31 Oct 2012
RBS boss Stephen Hester is spending £260,000 a year
on RENTING a third home (lucky he's on a £1.2million salary then)
• He has has begun renting the five-bedroom townhouse to live with new bride new bride Suzy Neubert, 47
• He handed £8.6million marital home in West London to ex wife in 2010
• But he still has vast country pile in Oxfordshire, a 350-acre estate complete with eight gardeners, and a ski chalet in Verbier
By Matt Blake
| UPDATED: 10:55, 30 October 2012
Lavish tastes: Despite turning down a £963,000 bonus following an outcry, Stephen Hester's extravagant lifestyle has come under fire
RBS boss Stephen Hester is renting a £260,000-a-year Victorian mansion - on top of the two multimillion-pound properties he already owns.
Hester, who has run the taxpayer-backed bank since 2008, has begun renting the five-bedroom townhouse to live with new bride new bride Suzy Neubert, 47, according to reports.
The £1.2million-a-year Royal Bank of Scotland boss separated from his Canadian-born wife Barbara in 2010.
Mr Hester has also relinquished ownership of their magnificent £8.6million marital home in London's salubrious Kensington to her.
The couple, married almost 20 years with two children, purchased the five-bedroom, four-bathroom mansion in one of the capital’s most exclusive areas in 1995 for £1.78million.
But while Mr Hester may have 'lost' the London home, he can fall back on his vast country pile in Oxfordshire, a 350-acre estate complete with eight gardeners.
It boasts a turreted tree house, tennis court, swimming pool and open-air jacuzzi.
The grounds include extensive landscaped gardens, featuring rare trees from around the globe
And there is always the ski chalet in exclusive resort Verbier with mountain views, a large central fireplace, wine cellar and sauna.
Mother-of-two Miss Neubert works in the City, as head of sales and marketing for private bank J O Hambro, which handles the funds of hugely wealthy individuals.
She was married to Jolyon Neubert, the barrister son of Tory MP Sir Michael Neubert, with whom she had two daughters.
Yorkshireman Mr Hester has had a glittering, and financially rewarding, career, starting at Credit Suisse, then Abbey National and property company British Land before taking over RBS from the disastrous leadership of Fred 'The Shred' Goodwin four years ago.
The women: Stephen Hester separated from his Canadian-born wife Barbara (left) in 2010.
His name has now disappeared from Land Registry documents listing ownership of their £8.6m home.
He is now married to fellow banker Suzy Neubert,
RBS had to be bailed out by the taxpayer when it emerged it had made losses of £24billion, the biggest loss in banking history.
As a result it is still 82-per-cent owned by the taxpayer.
But despite turning down a £963,000 bonus following a vast public outcry, his extravagant lifestyle - and £1.2million salary - has come under fire
The country pile: A 350-acre countryside estate, it boasts a turreted tree house, tennis court, swimming pool and open-air jacuzzi.
The grounds include extensive landscaped gardens, featuring rare trees from around the globe
Homes: While he relinquished the £8.6million marital home in London's salubrious Kensington, right, to his ex wife, Mr Hester still has the chalet in Verbier,
Weeks after he took over at RBS, recruited to end the culture of excess, details emerged of his magnificent country estate, which has one of the most spectacular gardens in Britain.
The gardeners are paid salaries of up to £20,000 to tend it throughout the year.
Part of it was designed and created by celebrity landscape architect Tom Stuart-Smith, who has worked for Karl Lagerfeld and billionaire philanthropist John Paul Getty.
The grounds include an 80-acre arboretum, parterre, sunken garden and water meadow.
RBS sources said the bank was not contributing to the rent of the new townhouse, which would cost around £8million to buy.
A spokesman told The Sun: 'We never comment about the private living arrangements of staff.'
Read more: http://www.dailymail.co.uk/news/article-2225178/RBS-boss-Stephen-Hester-spending-260-000-year-RENTING-home-lucky-hes-1-2million-year-then.html#ixzz2ApFuVKLL
Money - False Economy -Why the Cuts are Wrong - The Alternatives
Updated: 30 Oct 2012
Why Cuts are the Wrong Cure
Discover the alternatives
The government is wrong when it says that there is no alternative.
There are many alternative approaches that do not involve deep, rapid and unfair cuts in spending.
We do not set out a detailed policy mix, we simply want people to realise that there are alternatives so that they can work together to get the government to change its policies.
But the alternatives do have some things in common.
They start by saying that we should not try to get rid of the whole deficit in four years.
A longer timetable allows economic growth to do more of the work of deficit reduction.
This is because growth will reduce the amount the government needs to spend on unemployment and increase the amount it gets from tax (even without changing tax rates).
If growth does more of the work, then we need to raise much less from cuts or tax increases.
However we cannot pretend that the recession never happened.
The banking crash showed that some of what was thought to be real economic growth was an illusion.
As we have explained, part of the deficit is structural and won't disappear even when the economy is growing strongly again.
And at any time there are genuine debates to be had about how we should spend and what on; and how much we should tax and who should pay it.
But there is nothing that says the split between cuts and tax has to be £4 of cuts for every £1 of tax rate increases.
This choice means that deficit reduction is hitting the poor and those on middle incomes rather than those who can easily afford it..
A sensible timescale, policies for growth and fair tax
So alternative, fairer approaches will start with a timescale and policies that give growth the major role in cutting the deficit.
They continue with policies that put much more emphasis on raising money from a fair, progressive tax system.
There are many different policies that can stimulate growth and create jobs.
It even makes sense to borrow more in the short-term if that encourages enough economic growth in the longer-term to make that worthwhile.
Policies that stimulate growth include:
•A new green investment bank that can help move the economy away from over-reliance on finance to generating growth and jobs in a low-carbon economy.
•Direct policies to create jobs, such as the Future Jobs Fund – which was one of the first things this government cut.
•Policies that get banks lending again to small and medium-sized businesses.
•A state investment bank based on the nationalised RBS and Lloyds banks.
A fairer tax system would include:
•Closing the £40 billion UK annual tax gap – this is the amount of tax that could be raised by more efficient enforcement and by closing loopholes.
•A Robin Hood tax on financial transactions that could raise £20 billion a year.
Money-10.8% Price Increase for Gas and Electricity
Updated: 29 Oct 2012
UK energy giant announces price rise
Sun Oct 28, 2012 3:30PM GMT
UK energy supplier EDF Energy has announced plans to increase prices for gas and electricity by 10.8 percent, causing many British households to face a double-digit increase.
EDF has become the latest energy supplier to announce an increase in energy pricess as dual fuel customers, who pay their annual expenses through a monthly direct debit, will see an increase of £123 totaling around £1,252, from December 7, the British media reported.
The energy companies in Britain have blamed the government’s policies for the rise in fuel bills.
At the moment, 75 percent of households are on their supplier’s most expensive scheme, with 60 percent admitting to never switching firms in the last 15 years.
Gary Hornby, an energy analyst, said the current price rises were just the beginning, as there will be further increases next year.
Hornby said, “These rises come at a time when household budgets are already stretched and, despite the positive GDP figures released yesterday, the UK economy continues to struggle.”
Fuel Poverty Action’s James Angel also warned that the rises come as the Tories prepare to axe a government scheme to offer subsidies to some of the hardest affected.
Around 4.75 million households in Britain currently suffer from fuel poverty.
Money -UK Tax Dodgers, Why Starbucks and friends paid no Corporate Tax
Updated: 22 Oct 2012
‘UK govt complicit with tax-dodgers’
Sun Oct 21, 2012 10:49AM GMT
One has to presume that this is all done on the basis of a tacit understanding between HMRC (HM Revenue and Customs) and the corporations, an unsaid deal between Queen and company."
British anti-capitalist campaigners say the revelations that the British branch of the world’s largest coffeehouse company has been paying no corporate tax over the past three years is only possible through an “understanding” with the government.
Occupy London Stock Exchange activists said reports of American coffee giant Starbucks having generated £398 million in sales in Britain while legally paying no corporate tax are outrageous.
Occupy LSX suggested in an article on its website that Starbucks should have secret give-and-take with the taxing system to be able to report losses for the past three years that allows it to legally avoid corporate tax.
The Starbucks case is especially problematic as the company has reported similar sales to its British competitor Costa Coffee -- £398 million and £377 million respectively - but has reported £319 in costs of achieving those sales that is three times as big as Costa Coffee.
In effect, Starbucks has paid no corporate tax due to loss-making in three years while paying £8.3 million in tax for sales of £3 billion since 1998 when it started work in Britain.
The campaigners said that the list of tax avoidance in Britain also includes several other well-known companies including Barclays multinational banking, Facebook social networking website and Amazon electronic commerce company.
“Barclays for example paid 1% tax most recently which saved them £3.14bn … Facebook paid £240,000 in tax off £175m in revenue. Amazon pays approximately 1% tax in the UK by putting their UK sales through Luxembourg,” the article said.
“One has to presume that this is all done on the basis of a tacit understanding between HMRC (HM Revenue and Customs) and the corporations, an unsaid deal between Queen and company,” it added.
The Starbucks taxing controversy has even raised concerns of British MPs.
Margaret Hodge, Chairman of the Commons Public Accounts Committee, which is responsible for scrutinizing stewardship of public funds including tax collection, has called on HMRC to look at the company’s tax affairs.
“HMRC must take a serious look into these allegations against Starbucks," Hodge said.
British anti-tax avoidance campaign group UK Uncut, which is known for protests in the form of sit-ins, has also announced it will target Starbucks chain stores across Britain.
Money - £11.5 bn wiped off Retirement Funds
Updated: 14 Oct 2012
Retirees set to lose billions
By Harriet Meyer |
Fri, Oct 12, 2012 18:01 BST
Millions of Britons due to retire over the next few years face a 'double whammy' that risks seeing £11.5 billion wiped off their retirement funds, according to a new report by the Saga Foundation.
This figure takes in the impact on pensioners of tax and benefit changes, including the freezing of age-related allowances from April 2013 and the reduction in winter fuel payments, alongside rock bottom interest rates and three rounds of quantitative easing.
Compiled for Saga by experts from the Centre for Economics and Business Research, the report concludes that the changes will cost pensioners an average of £1,318 each by 5 April 2014.
Dr Ros Altmann, director general of Saga, says: "Pensioners are being hammered.
They didn't cause our economic meltdown yet they have been paying a heavy price as we try to fix it and they face an even tighter financial squeeze in future.
"Those retiring now are the biggest losers in life's pension lottery as tax and benefit changes will compound the misery wreaked by paltry savings rates and overshooting inflation."
The report shows that the 40% of single pensioners who sit in the lowest income bracket are forced to get by on just £8,034 a year with couples living on just £13,883.
The average income of the next 40% of pensioners is £13,104 for single households and £23,998 for couples, while even the wealthiest 20% typically only receive £20,332, well below the average national income.
Altmann adds: "Instead of pumping hundreds of billions of pounds into financial markets and bank balance sheets it would have been much better sending cheques to everyone to encourage them to spend.
"If older generations felt confident again, they would splash out and boost economic growth. If we keep hammering them, these grey pounds will be wasted."
Alliance Trust Research Centre's study of inflation rates affecting different age groups shows that over the past two years, pensioners have suffered a higher rate of inflation.
Over the past two years, those aged 65-74 and those households aged 75 and over have faced an inflation rate averaging 4.4%, higher than the official Consumer Prices Index average of 3.8%.
A spokesperson for Alliance Trust says: "This is simply because these households allocate a larger proportion of their budgets to utilities and food, areas that have seen elevated levels of inflation in recent years.
The over 75-year-old households, for example, allocate almost 17% of their budgets to food, higher than any other age group."
With little prospect of rates on savings accounts rising coupled with the gloomy economic outlook, pensioners are particularly vulnerable in the current climate.
Michelle Mitchell, Age UK's charity director general, says: "Many of those on a low income who had managed to build up a small retirement pot are facing a significant loss in savings due to historically low interest rates."
However, she adds that conditions could improve, saying: "Future pensioners should benefit from the government's plans to bring in a flat-rate state pension that aims to make the system more straightforward and easier to navigate.
"But the needs of the 1.7 million pensioners currently living in poverty must not be overlooked by the reforms and the government should be working harder to find ways to ease their hardship.
Too many older people are put off by the process of claiming benefits or are simply unaware that they are entitled to extra help, which could have a huge impact on their finances and quality of life."
This article was written for our sister magazine Money Observer
Money- Under Capitalism common sense flies out of the window
Updated: 11 Oct 2012
It's capitalism, stupid
Wednesday 10 October 2012
If anyone is in debt, they need to be helped to climb out of it.
And the best way of doing this is to provide them with the means of earning sufficient income and ensuring repayment stages are realistic and feasible.
Seems like common sense, but the IMF and the European Bank are doing exactly the opposite in their treatment of the chief debtor nations of the eurozone. This can only make a bad situation worse.
The main reason these countries are in big economic trouble and why most of the developing countries are too is the result of lax banking regulation.
Priority number one should be for governments worldwide to impose proper regulation on banks' lending and investment policies.
Once that has been done, you'd think the next priority would be to redirect investment to public infrastructure projects. This would create employment, increase tax revenues and be a second step on the road to paying off the enormous debts. It would also ensure social cohesion.
These are the sort of policies Franklin Roosevelt pursued in the 1930s and what the Labour government did after the end of the second world war. These aren't socialist solutions, they're a means - if there are any left - of saving capitalism.
But the dogma of neoliberalism has penetrated so deeply into government psyches and economic thinking that such suggestions are viewed as the worst form of apostasy.
From a capitalist viewpoint that would be tantamount to admitting that "free market capitalism" has not worked.
It is one of the central contradictions of capitalism that profits are most easily increased by reducing wage bills and cutting jobs through "efficiency" savings but the corollary of this is that workers have less income to spend, or little at all if they are unemployed.
Thus there is less money in circulation to buy manufactured goods, so company profits are reduced yet further and the vicious circle continues.
This is exactly what is happening in Europe and in the wider world now.
In Spain, Greece and Portugal the austerity measures demanded by the bankers have meant drastic wage reductions, rises in unemployment to unheard of levels, while at the same time cutbacks in public spending are imposed.
Young people are queuing up to leave these countries simply to find work.
There is social breakdown, mass poverty and anger.
There is no chance in hell of these countries being able to emerge out of the present mess through such policies.
Where can the impetus come from?
Who will invest in such unstable and volatile countries? Why can't even the wise capitalists see this?
The main reason is that the ruling elites are locked into a neoliberal way of thinking and also because, despite the chaos brought about by the financial institutions and the flak they have taken for this, they are still calling the shots.
The global financiers can only see pound, euro and dollar signs in front of their eyes and can't relate to real production, manufacturing and society.
They want to squeeze interest out of the indebted countries come what may.
The increased financialisation of the whole capitalist system over recent decades has also meant that investors have sought more rapid returns on their money and bigger and bigger profits than can easily be obtained by investing in manufacturing or sustainable agriculture.
This has accelerated the takeover frenzy, asset-stripping and closures. It is short-termism gone insane.
It has meant companies are no longer able to undertake long-term planning as investments are now made on the basis of short-term profitability potentials.
The insatiable greed of the big banking institutions means that they are demanding big returns now, and don't care what happens a few years down the line.
This attitude has been behind hedge fund casino economics, the derivatives market and speculation in raw materials, shoddy building projects and internet bubbles.
These are the central contradictions and unless the Labour Party leadership is prepared to address them, no amount of tinkering at the edges - as Ed Balls appears to be suggesting - will help.
Money - The QE-Quantative Easing or Prininting Money Policy has failed the people
Updated: 08 Oct 2012
QE experiment has backfired, consultancy says
The Bank of England's attempt to support the economy with massive injections of newly created money has failed to achieve its main objectives, CEBR claims
Phillip Inman, economics correspoondent
Thursday 6 September 2012
Radical - The Unions and the Left have been calling for "Jobs Growth and Culture" for over a year now. The Coalition policies are simply wrong and taking Britain further into a recession.
The Bank of England's attempt to support the economy with massive injections of newly created money has failed to achieve its main objectives, according to an independent assessment of the Bank's policy of quantitative easing (QE).
A report by the economic consultancy, CEBR, found that all households have lost out with pensioners the worst affected following Threadneedle Street's decision to pump funds into the City in an effort to support bank lending and persuade consumers to buy more goods.
The Bank has used £325bn of funds since 2008 to buy UK government bonds, mainly from banks, and is part way through spending another £50bn.
Several economists have predicted QE could reach £500bn by the end of next year to boost the recovery.
But with Britain back in recession and bank lending and consumer spending down over recent months, there should be a reassessment of QE's impact before more money is spent, said Saga, the over-50s campaigning group that commissioned the report.
Ros Altmann, a pensions expert and the director general of Saga, said the Bank's policy had several unintended consequences that were undermining the recovery.
MPs on the Treasury select committee questioned how much QE is supporting economic growth and demanded the bank conducted an internal review.
The review, published last month, argued that most people were better off after a boost to stock market and property values that could be directly attributed to QE.
It said preventing a steep fall in asset prices had increased the value of households' financial wealth, although it admitted that holdings were heavily skewed, with the top 5% of households holding 40% of these assets.
Altmann said a breakdown by age group showed that in the first years after the credit crunch younger families with mortgages and other debts benefited from lower interest rates at the expense of older people who rely on savings income.
But recently, banks have increased the cost of mortgage loans while inflation has eaten away at the living standards of all age groups.
She said: "CEBR estimates that real incomes for the over-50s would have been 1.5% higher without QE.
This group comprises 21 million people and represents more than half of UK households and nearly half of total domestic consumption."
Around 1.2 million people will be reaching state retirement age over the next two years and many will be forced to buy a private income using their pension retirement pot.
Retirement incomes, known as annuities, have fallen sharply since 2008 when QE was introduced.
Douglas McWilliams, chief executive of CEBR, said: "Those pensioners hit hardest are those who have had to take out an annuity in the past four years, who will be retiring on much lower incomes than they might have expected, after working hard to pay for their retirement.
Also pensioners who rely on interest income will have had their income reduced in the same way.
"The effects of these factors are not confined to those pensioners directly affected because the impact of their spending spreads out through the economy through those who supply them with goods and services."
Altmann said Saga was calling for an alternative policy, not an end to monetary policy.
She said the billions of pounds created by the Bank would be better spent on temporary tax breaks for capital spending to encourage house building.
She said desirable new homes for older people would encourage them to move and free up family homes for younger people.
Plans to switch pension fund cash into funding vital infrastructure projects should also be encouraged to increase investment and jobs.
The Bank, which now owns around one third of the government's traded debt, could embark on another round of QE in November.
The nine-strong monetary policy committee has discussed purchasing a broader range of assets, including mortgage loans, after similar moves by the Federal Reserve, but has so far limited its purchases to government bonds.
Money- The Capitalist Bankers
Updated: 29 Sep 2012
When the boss is always right
Written by Vanson Soo
Monday, 16 July 2012
Diamond says he didn't know a thing
No fingerprints in rigging the Libor rate?
Let me start with a familiar scene.
Suppose the boss says “I don't like his face.”
His sidekicks exchange quick looks and leave the room without a word.
They clearly understand what their boss means and promptly kill the guy in cool mafia fashion.
You probably relate this scene to classic Hollywood mafia movies, in which the sidekicks usually flee the scene right after the murder.
When the police show up to find whodunit, nobody including the boss remembers what happened.
Unconventional corporate governance combined with plausible deniability.
That is exactly what seems to have happened at the British banking giant Barclays, starring its recently-departed chief executive Robert E. Diamond, Jr. and several former deputies whose casting roles and special appearances have yet to be confirmed.
Just like the mafia boss and his cinematic sidekicks who know exactly what happened but display confused innocence, Diamond has insisted he had no clue that his deputies took him so seriously and acted on his cue, implicitly putting the blame on them.
And more remarkably, Diamond had no knowledge of the consequences of what he said to his sidekicks. Or at least that was what he claimed.
It all started in the autumn of 2008 just around the time Wall Street icon Lehman Brothers collapsed in the midst of the financial crisis.
At that time, the Bank of England's executive director of markets, Paul Tucker, told Diamond he had received calls from several senior figures from Whitehall who were questioning why Barclays was consistently quoting the London interbank offer rate - Libor - at the top end of the daily scale, according to documents released by the bank.
Tucker is now a deputy governor of BOE.
Libor is the benchmark used between banks to set interest rates, or costs, of hundreds of trillions dollars worth of financial products.
The high quotes suggested the high cost of Barclays’own funding and therefore indicated the poor health of the bank, since interest rate spreads are an indication of risk.
The exchange with Tucker reportedly prompted Diamond to relay to his deputies the concerns of the central bank: that the bank had been submitting high Libor rates.
According to various media reports, Diamond's top deputies took the cue and told their employees to report artificially low interest rates in line with those of its rivals.
This eventually forced Barclays to agree to a US$450 million settlement earlier this month in response to US and UK probes and accusations that the bank had tried to manipulate key interest rates for its own benefit and to mask its true financial standing.
Local and municipal governments and private borrowers today all over the planet are lining up to sue major Wall Street and London banks over allegations that the manipulated interbank rate had cost them billions in additional interest rate costs.
That is because the local governments often bought derivatives called interest-rate swaps to protect themselves.
The swaps, which they bought from the same banks they are now suing, protected them when Libor rose, but cost them when the interbank rate fell.
Already a flock of cities, states and municipalities in the United States have filed suits in the Manhattan Federal Court against the banks that set Libor.
Diamond, who stepped down early this month, never specifically instructed anyone to manipulate the Libor, according to the regulatory records released.
And he was “disappointed and angry” that his deputies took his comments as a cue to rig the Libor.
When Diamond gave evidence earlier this month to the UK Parliament's Treasury Select Committee in London, he blamed a group of 14 traders for the rate rigging.
He said he was not aware of their activities till a week before regulators published their findings, including the email exchanges between Barclays traders which made him “physically ill” after reading them.
The Barclays scandal prompted British Prime Minister David Cameron to tell lawmakers it would be completely wrong if people leaving under these circumstances were given some vast payoff, referring to the severance package Diamond may receive.
Perhaps Cameron should actually thank Diamond as this scandal and the resulting public outrage offer a golden opportunity to rein in the much needed and overdue reforms of the banking system.
What happened at Barclays was essentially a major failure in a very important aspect of corporate governance: the disclosure of any material events, which in this case is even more spectacular.
“Either you were grossly negligent, grossly incompetent, or you did not know what was going on,” said Labor MP John Mann in one of the grilling sessions Diamond faced earlier this month.
Sound familiar? Think of media tycoon Rupert Murdoch, yet another recent case of top level C-suite executives seemingly seeking to get around and away by claiming to have not a single clue of what happened under their watch, including material events in their core business.
These problems are obviously not just confined to the UK but have seemingly plagued many developed economies and global financial centers.
Corporate governance is here to stay but it regularly hits the headlines for the wrong reasons.
As Professor Wayne Yu, who specializes in corporate governance issues at the Graduate School of Business at the Hong Kong Polytechnic University, explains, trust is the very corner stone of a financial market.
The company's top executives have significant discretion on how to use the money provided by the capitalists, being the debt holders and shareholders of the company.
These capitalists are ultimately and always at the mercy of the executives on the fate of their investments so they would understandably prefer to put their money where their investments are better protected.
In this sense, competition among different financial markets boils down to competition on corporate governance, which includes not only legal protection of private properties but also internal mechanisms such as a competent board of directors, independent auditors and effective internal control systems, he said.
Who knows, with some serious major reforms and beefing up on good corporate governance practices, bosses may suddenly realize their memories came back much more easily.
(Vanson Soo runs an independent business intelligence practice specialized in the Greater China region.
Money- FSA becomes FCA ?
Updated: 28 Sep 2012
Good riddance to a worthless old watchdog
By Jeff Prestridge
UPDATED: 22:37, 8 September 2012
..The demise of the ineffective, expensive and bureaucratic Financial Services Authority cannot come soon enough.
It has been a spectacular failure over the years, allowing the big banks to get away with persistent mis-selling while providing little protection for consumers and driving hundreds of good independent financial advisers out of business.
Last week, Martin Wheatley, managing director of the regulator and chief executive designate of its successor, the Financial Conduct Authority, admitted as much when he said he wanted the banks to end incentive schemes that encourage branch staff to sell useless, inappropriate and often expensive financial products in the pursuit of extra earnings.
Welcome though Martin Wheatley's words are, they are unfortunately about 20 years too late, says Jeff Prestridge
‘We, as the regulator, intend to change this culture of viewing consumers simply as sales targets’, he said in announcing the crackdown.
‘This bonus-based approach has played a key role in many scandals we have seen over the years. Incentive schemes on payment protection insurance were rotten to the core and made a bad problem worse.’
Without wishing to blow our trumpet too loudly, Financial Mail has repeatedly uncovered evidence over the years of mis-selling by the banks, only for the unwieldy regulator to then take an eternity to do anything about it.
To illustrate this point, it was Financial Mail that ten years ago began to unearth evidence that Lloyds Banking Group (Lloyds TSB as was) had been giving staff incentives to sell high-risk investment plans (remember those awful precipice bonds?) to bemused customers who actually did not want to risk any of their hard-earned savings.
We reported on a ‘selling frenzy’ within the bank as league tables were drawn up of who was selling the most plans, with the aim of shaming those staff who were not hard-selling enough.
Non-performing staff saw their base salaries fall. It was not until the end of 2003 that the regulator finally acted and slapped a £1.9million fine on the bank for mis-selling.
Incredibly, the ‘selling frenzy’ at Lloyds continued. Indeed, last week it was confirmed that the bank was being investigated by the regulator over its staff incentive scheme.
Another fine is in the offing. Hopefully, by the time the Financial Conduct Authority replaces the ineffective FSA next year, anti-consumer incentive schemes dreamt up by profit-obsessed bankers will, like the FSA, be history. The financial world will be a far better place for such a double demise.
Another scandal that soured the reputation of the regulator – and for that matter Government – is that of Equitable Life, the mutual insurer that nearly went to the wall in 2000, leaving customers seriously short-changed.
Last week, Richard Roberts, professor of contemporary history at King’s College London, published a report into the lessons that can be learnt from the debacle.
Professor Roberts says non-executive directors of financial services firms should be better equipped to challenge management through the acquisition of greater technical knowledge and being required to spend more time carrying out their duties.
Financial products, he says, should also be made simpler. Martin Wheatley would be well advised to get hold of a copy (it’s at equitable.co.uk) because the report’s recommendations should be absorbed into the Financial Conduct Authority’s DNA.
Indeed, every employee of the FCA should be required to read it as should every new financial services non-executive director as part of their vetting by the FCA.
Most Equitable Life policyholders and many victims of the Arch Cru investment funds scandal (consumers and financial advisers) will shed few tears at the removal of Mark Hoban as Financial Secretary to the Treasury.
He has obstinately refused respective requests for a more efficient compensation scheme and just financial redress.
Let’s hope that in the interests of fairness, Greg Clark, his replacement, is more accommodating
Read more: http://www.thisismoney.co.uk/money/saving/article-2200237/JEFF-PRESTRIDGE-Good-riddance-worthless-old-watchdog.html#ixzz27j6Dop8k
Money- Mortgaged to death
Updated: 28 Sep 2012
'We'll have a mortgage until we die':
1.3m interest-only borrowers risking retirement dreamBy Richard Dyson
UPDATED: 11:28, 24 September 2012
..Hundreds of thousands of homeowners will face a triple-whammy in coming years: they will retire, their mortgages will become due for repayment and they will not have the available capital to clear the debt.
This will leave them in breach of their mortgages and technically at risk of repossession.
These are the conclusions of a number of recent reports into what is being dubbed the ‘next great banking scandal’: the phenomenon of interest-only mortgages – where borrowers have no means to repay the capital.
Last week, Xit2, which analyses mortgage risk for banks, published research suggesting that one million interest-only mortgages where the borrower has no repayment plan in place, will have matured by 2020.
We’ll have a mortgage until we die
Alan and Peggy Stevens took out their first mortgage in 1960 when they were in their early 20s and newly married.
He was a sub-postmaster – the youngest in London at the time – but he and Peggy, both now 72, have since had varied careers and lived in several homes.
They raised three children, all now married.
One constant in their life together has been a mortgage.
‘For one brief period in 1980 between house moves we had no mortgage, but otherwise we always have,’ says Alan.
When they neared 70, the couple took stock.
They still had an interest-only £65,000 mortgage on their home near Leighton Buzzard, Bedfordshire, but no ready means to repay it.
Happily, their property, worth about £500,000, gave them plenty of equity.
Alan says: ‘We looked at all the options and sought a great deal of advice before going for equity release [or lifetime mortgage].
My son is a financial adviser and he said, “Do it.”
All our children agreed.’
The deal, with Just Retirement, let Alan and Peggy withdraw up to £185,000 equity at 6.65 per cent.
They took £125,000, using part of it to clear the existing mortgage.
Alan says: ‘Peggy was doubtful, worrying about the rate at which mortgage interest would clock up.
But we went through every scenario.
I don’t think there can be any nasty surprises ahead.
It is strange to think that, yes, we will have been mortgaged for almost all our lives, but I don’t regret the decision.’
The new City regulator, the Financial Conduct Authority, is said to be on ‘red alert’ over the issue and has undertaken substantial research into the area.
A few lenders, at least, are sensing a crisis ahead, including Barclays’ new chief executive Antony Jenkins, who spoke about the issue to Financial Mail earlier this month.
With interest-only mortgages, the borrower pays just the interest due each month but puts nothing towards reducing the outstanding capital, so the size of the loan never shrinks.
The big enticement for borrowers is that monthly repayments can be up to 40 per cent lower than with capital repayment.
In the Eighties and Nineties, such mortgages were sold in conjunction with endowment policies or other stock market investments.
These were supposed to clear the debt at the end of the term.
Some of the borrowers caught up in today’s interest-only crisis are those whose endowments have under-performed or who have let them lapse.
However, at least in those cases borrowers had some sort of savings to repay part of their loan.
Since 2002 an estimated 1.3 million borrowers have taken on interest-only mortgages without having any repayment plan in place, says Xit2.
The banks relaxed their lending criteria between the start of this century and the beginning of the financial crisis in 2007-08, meaning that few asked how homeowners intended to repay their debt when the mortgage matured. Some went further.
They lent more to people borrowing on an interest-only basis, arguing that the lower monthly payments meant they could afford bigger loans.
Steve Lowe of Just Retirement is an expert in the field and his company is one of the biggest providers of lifetime loans for older homeowners. About 20 per cent of Just Retirement’s borrowers are taking lifetime loans to repay existing mortgages.
He says: ‘If borrowers were asked to explain how they would eventually repay, many said they would use the growth in the property’s value.
This was acceptable to most banks.’
The FCA’s research shows that where there is no linked investment such as an endowment, 28 per cent of interest-only borrowers say they will sell their property to clear their mortgage at the end of the term.
This raises the question of where they would then live.
Because many interest-only borrowers extended their mortgages at the height of the housing boom many could not afford to downsize, as they will not have enough equity.
The FCA says: ‘We estimate only 19 per cent of interest-only borrowers who took out loans from 2005 to 2010 with no known repayment strategy will have sufficient equity to downsize.’
The numbers are big. This year about 80,000 interest-only home loans reach maturity and are due to be repaid, rising to 170,000 a year by 2020.
While today’s outstanding debt averages £60,000, in 2020 it will average £110,000.
It is expected that every year in the next decade 60,000 borrowers will reach the end of their mortgage and – with no means of repaying – will have to extend their mortgage.
This will either be through a formal arrangement with the lender or, more likely, a default situation in which they simply fail to repay.
Of the borrowers in this situation, more than half will be 60 or older.
Mark Blackwell, managing director at Xit2 in West Malling, Kent, says: ‘Banks do not have a good handle on the scale of this issue because most do not have information on how their borrowers intend to pay.
‘A lot of data has not been collected and in many cases lenders have merged. It is clearly an area of consumer concern.’
What to do if capital hasn’t been repaid by end of the mortgage
1 DOWNSIZE: An interest-only borrower with a shortfall can sell the home, clear the loan and buy a cheaper property.
But research by the Equity Release Council suggests this will be hard for many.
Recent house price falls mean that many homeowners have less equity than before, which in any case is eroded by the costs of selling and buying.
This route will be best for those with small mortgages relative to their property’s value.
2 ARRANGE A FURTHER MORTGAGE WITH YOUR EXISTING LENDER: For most, this will be the best solution. But borrowers must be able to afford monthly payments into retirement.
Lenders may insist the new mortgage is arranged on a repayment basis, pushing up the cost, and they are only likely to offer a deal if there is substantial equity.
3 REPAY THE MORTGAGE WITH A NEW LOAN FROM AN EQUITY RELEASE SPECIALIST: Equity release loans let older borrowers live in their homes until they die or go into care.
In the meantime homeowners pay nothing, but interest on their loan rolls up until the property is sold – possibly after their death.
These deals, also known as lifetime mortgages or reverse mortgages, can be costly.
Typical rates are between six and seven per cent – far higher than on standard mortgages, where the borrower already has equity in the property.
As the sum you can borrow depends on your age as well as your home’s value, this route will best suit older borrowers with some equity.
Advice must be sought.
Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-2207093/Well-mortgage-die-1-3m-borrowers-risking-retirement-dream.html#ixzz27j1bw1ki
Money-Backing the Nasty Party=Greater Inequality, Lower Living Standards & Increased Taxes
Updated: 23 Sep 2012
Britons’ living standards set to deteriorate in future
Sun Sep 23, 2012 2:38AM GMT
A new analysis of deepening income inequality in Britain has found that rich will become richer and the poor become poorer amid plans to enforce £10 billion welfare cuts.
The study, commissioned by the Institute for Fiscal Studies (IFS) and the Institute for Employment Research, for the Resolution Foundation found that low- and middle-income families will have their living standards slashed until 2020, even if the country faces a constant economic growth.
According to the findings, even a boom in future of the UK’s economy will not be able to cover the widening gap in the British society although the government is urged to drop its austerity policy.
Meanwhile, a plan by the chancellor, George Osborne, to slash a further £10 billion from the welfare budget by 2016 is being viewed as a declaration of war against the poor.
The results show net income of low-income households will fall by 15 percent by 2020, which is down from £10,600 (at 2009 prices) to just £9,000 at the end of the decade (again at 2009 prices).
This is while middle income families will also have their income slashed by three percent from £22,900 in 2009 to £22,100 in 2020.
On the contrary, rich and affluent families will have their living standards of living grow by 0.2 percent a year to 2020.
This growth would be faster for the most affluent.
Professor Mike Brewer, research fellow at the IFS, said all the signs were that with current government policies the trend would be strongly against income growth for the bottom half of households.
"This analysis confirms the strong currents that will be pushing against income growth in the next 10 years, even once a recovery in GDP takes hold," he said.
"Britain looks likely to see continuing polarisation in our labour market as more high-and low-paid jobs are created, skewing the distribution of income growth towards higher income households,” he said.
"Meanwhile, support through the tax and benefit system is set to fall over the long-term, meaning that lower income households will tend to fall behind,” Professor Brewer added
Money - Supermarkets tricks
Updated: 22 Sep 2012
How to beat the latest supermarket tricks
Radical says - 1.Always take a pre prepared shopping list, stick to it and always read the product label
Supermarkets use every trick in the book to part you from your hard-earned cash.
But you don’t have to passively submit and now there's a new way to fight back.
By Felicity Hannah
Sometimes, it can seem like supermarkets are the enemy.
Despite their occasional bargains and loyalty schemes, they want every penny of yours they can get.
It’s understandable that they need to make a profit, but when they appear to be wilfully misleading shoppers it’s harder to forgive.
So I was disappointed to read a new report from Which? that showed almost three-quarters of Brits feel that supermarkets are trying to mislead them by using confusing pricing practices.
Because, we’ve all seen it done, in every supermarket.
The law requires that retailers provide both a selling price and a unit price, to help customers compare the true cost of a product.
So, if you’re trying to work out whether the bigger packet is better value for money, there should be an easily comparable unit price on the shelf.
But all too often these comparisons are misleading or difficult to work out, often when the larger packet isn’t better value.
One is priced per tin, the other per 100g, for example.
Which? has been encouraging people to tweet photos of misleading labels –
MP Thomas Brake found beer advertised at £1.26 a metre.
Another irate customer found tins priced at £1.03, or four for £1. What a great bargain!
There are more examples of confusing ‘deals’ here.
One of the most frustrating tricks is when a supermarket advertises a price as though it’s a bargain when actually it’s the same cost as elsewhere or even a price hike.
But there’s a great new way to keep on top of such supermarket swindles.
The website mysupermarket.com is a good way to compare your basket of shopping in different supermarkets to find the cheapest deal.
In fact, it claims that customers save an average of £17 every single time they use the site to compare shopping.
And it just got even more useful.
Thanks to the website’s newest tool, customers can see the price of an item over the previous year.
If you look at the graph in the bottom right of the screen, it shows that these beans are a genuinely good deal from this supermarket, the price has actually fallen.
You can also compare the prices to other shops, to see if the product is cheaper elsewhere.
This allows customers to see the real value of an offer, and avoid getting ripped off.
Mysupermarket.com has also launched a ‘Savvy Buys’ section of the website, which highlights products that are at least 30% lower than average.
Getting wise to the tricks
Sadly, supermarkets will continue to encourage extra spending in their stores, using tricks as varied as enticing smells to special offers that see you buying more than you need.
You can read about some of the biggest scams out there in our article ‘The seven biggest supermarket scams’.
But there are ways to overcome these money-making methods, such as buying your fruit, veg and meat at your local market and only visiting the aisles you need.
You can read more about ways to beat their manipulating tricks in our article ‘A fanatic’s guide to supermarket savings’.
Planning healthy meals cheaply
One of the reasons it’s so hard to keep the cost of food down is that most people want to feed their families the best they can afford.
But by cooking from ingredients rather than buying ready-made items, it’s possible to keep the food bill down without sacrificing quality.
My favourite tool for this is the NHS’ Change 4 Life meal planner.
If you need some inspiration for cheap, tasty recipes, this is incredibly useful.
It’s full of recipes that cost around £5 to make but feed four adults, and you can plan a week’s worth of meals in one go.
Once you’ve chosen your meals for the week, it will even email you a shopping list, so you don’t buy more than you need.
Do you think supermarkets repay customer loyalty or are they exploiting broke Brits?
How do you keep the cost of your shopping down?
Share your thoughts and experiences – Get in Touch !
Money-World Monetarists and "QE Infinity" have failed the Capitalist System
Updated: 21 Sep 2012
Printing more money to save a failed system
Publication Date : 21-09-2012
Monetarists - not kings or queens, or presidents or prime ministers - rule the world,
for the worse rather than for the better.
It is not known who has given Mario Draghi, the president of the European Central Bank, a license to undertake "outright monetary transactions", the European version of perpetual money printing.
Draghi will be committed to an "unlimited" bond buying programme to save the euro and prop up the sovereign debts.
This unlimited bond buying programme will be accompanied by clear steps to create the "Federation of Nation States", or the "United States of Europe".
Draghi is a pure monetarist, one who believes that money printing can save a drowning economy.
Across the Atlantic, the US Federal Reserve has also announced a third round of money printing, known officially as quantitative easing (QE3).
Ben Bernanke, the Fed chairman, says the Fed will be targeting the weak labour market by purchasing mortgage-backed securities to the tune of US$40 billion a month to stimulate the economy.
Another $45 billion will be spent per month to purchase long-term US Treasuries, to hold down the long-term interest rates, which are already at an abnormally low level.
The US Fed has a strange dual mandate - managing price stability and ensuring full employment.
It is a bizarre theory to hold that monetary policy, or money printing in plain terms, can bring about full employment.
However, the Fed is now ignoring price stability, in spite of rising food and fuel prices, and is focusing on adding fresh liquidity and holding the rates down further to stimulate the labour market.
Bernanke also belongs to the monetarist camp, which equates money printing with economic growth and employment.
Most people now call QE3 "QE infinity", since the Fed plans to intervene in the financial system indefinitely until the labour market improves.
Since the previous two rounds of QE, which can only buy time, have failed to improve economic conditions, how can QE infinity turn the economy around?
Dr Paul Krugman, a Nobel prize winner in economics, has infamously called for massive stimulus - both fiscal and monetary - to reflate the Western economies, even though they are saddled with a mountain of debt that will never be paid off.
In Asia, the Bank of Japan has long been manufacturing money out of thin air. It has just announced an eighth round of money printing to prop up the ailing Japanese economy.
The Bank of Japan is to purchase 10 trillion yen of bonds to add further liquidity into the financial system.
Now it has 80 trillion yen of bonds in its portfolio, equivalent to 20 per cent of Japan's gross domestic product.
Bank of Japan Governor Masaaki Shirakawa said on Wednesday - against this wish - that Japan is now maintaining the easiest monetary conditions in the developed world.
"I do not think that you could argue that the Bank of Japan is less bold than the Fed," he said.
The Japanese economic bubble went bust in 1990 and the economy has not recovered since, in spite of heavy-handed government intervention through both fiscal and monetary means.
Fiscal intervention, including the cost of maintaining the country's welfare system, now brings the Japanese debt up to $14 trillion or 230 per cent of GDP.
Aggressive bond buying by the Bank of Japan has driven interest rates down to the 0 per cent mark - the first central bank in the rich world to do so.
The monetarists also rule over Japan.
The problem with the Keynesians and monetarists is that they don't allow the economy to go through the normal, albeit painful, process of restructuring and debt reduction.
The bubbles built up before the busts in Japan, Europe and the United States. Instead of undertaking a restructuring, the US Fed, the European Central Bank and the Bank of Japan have chosen a convenient path of money printing.
We all know that money printing sows the seeds of hyperinflation. It will destroy the global economy.
It seems that since the European Union, the US and Japan have all gone bankrupt, they want the rest of us to go down the drain with them.
It is time for a new regional financial architecture to be created, to move away from the global dominance of the Fed, the ECB and the Bank of Japan, which exist to prop up the banks' balance sheets rather than helping the real economy to recover.
US$1 = 78.2 yen
Money- US Owes China $1149.6billion
Updated: 21 Sep 2012
China increases holding of US debt in July
Updated: 2012-09-19 11:26
By Zheng Yangpeng (chinadaily.com.cn)
China in July increased its holding of US Treasury securities by $2.6 billion to $1149.6 billion, ranking it first among all countries and regions, according to latest data from US Treasury Department.
China's holding in July was still lower than the $1166.2 holding of Jan, the highest point this year.
Other major US Treasury securities holders, including Japan, Brazil and the Caribbean Banking Centers also increased their holding in July
Money- Wait a Mo ! -Olympic Games just preferred to shopping online
Updated: 20 Sep 2012
Drop In Retail Sales Despite Olympic Games
Online sales put in their worst monthly performance in nearly five years in August as people chose to watch the Olympics on television rather than shop on the internet.
Non-store retailing sales volumes, which also includes mail order, fell by 6.7% between July and August, the biggest drop since December 2007, according to the Office for National Statistics (ONS).
The London 2012 Games had a negligible overall effect, as UK retail sales excluding fuel fell 0.3% month-on-month in August.
Samuel Tombs, UK economist at Capital Economics, said the figures "add to the evidence that the Olympics did not provide the hoped-for boost to spending on the high street".
He also said: "With consumer confidence still very weak and inflation set to outpace earnings growth for another six months or so, we would not be surprised to see further falls in retail sales in the coming months."
There was some positive impact from the London 2012 Games at sporting goods stores, which helped sales volumes in the "other stores" category jump 1.5% month on month.
But this was offset by a 0.7% fall in department stores and a 2.7% fell in household goods stores between July and August.
Food stores saw a slight 0.2% rise in sales volumes in the period, which some retailers put down to improved weather and the Olympics.
Suit specialist Moss Bros is among retailers that have blamed Britain's summer of major events for slow business.
The retailer said it had missed out on nearly £2m of hire business due to events such as the Queen's diamond jubilee and the Olympic Games as more weddings were deferred.
Hopes that the squeeze on consumer spending will ease have faded as economists warn that inflation will fall more slowly than previously expected.
The rate of inflation edged down to 2.5% in August from 2.6% in July, while average earnings rose 1.4% in the year to July.
Rising petrol prices, utility bill hikes and higher tuition fees will pile pressure on the cost of living in the months ahead.
"B" is for UK Banks - says Moody's
Updated: 12 Sep 2012
Moody’s warns UK banks of ‘downgrade’
Tue Sep 11, 2012 2:22PM GMT
Moody’s rating agency has predicted a negative outlook for the UK banking system amid uncertain domestic economy, local media reported.
In its annual report on the UK banking industry, Moody’s Investor Services put UK banks on notice Tuesday for a possible downgrade in their credit ratings.
This comes as British lenders are grappling with uncertain economic growth, higher regulatory costs and exposure to financially-near-bankrupt euro-zone states.
“Profitability at large banks like Royal Bank of Scotland Group PLC, Lloyds Banking Group PLC and Barclays PLC could be hit by factors including higher compliance costs and write-downs on their exposure to foreign real estate”, Moody's said.
"The continued negative outlook for the UK banking sector is driven by the UK's uncertain economic prospects, pressure on profitability and downside risks for asset quality," said Elisabeth Rudman at Moody's.
“The key drivers of the negative outlook are :-
(1) the UK’s uncertain economic prospects;
(2) downside risks for asset-quality; and
(3) pressure on profitability due to net interest margin pressure, weak credit growth, and higher regulatory and compliance costs”, said Moody’s in its annual report.
The banks’ operating environment will remain uncertain over the next 12-18 months due to weak economic growth prospects, with economic growth expected to be "marginally positive", Moody's said.
“Despite efforts to reduce exposures, some banks still have significant concentrations in commercial real estate and in Moody’s view, there is a risk of further defaults and higher provisions in this sector”, added the report
Money- While the "parasites" -the Banks, speculate on food, millions starve- and we give to charity
Updated: 03 Sep 2012
Barclays makes £500m betting on food crisis
Outrage as bank revealed to be major speculator while millions face starvation
Tom Bawden Saturday 01 September 2012
Barclays has made as much as half a billion pounds in two years from speculating on food staples such as wheat and soya, prompting allegations that banks are profiting handsomely from the global food crisis.
Barclays is the UK bank with the greatest involvement in food commodity trading and is one of the three biggest global players, along with the US banking giants Goldman Sachs and Morgan Stanley, research from the World Development Movement points out.
Last week the trading giant Glencore was attacked for describing the global food crisis and price rises as a "good" business opportunity.
The extent of Barclays' involvement in food speculation comes to light as new figures from the World Bank show that global food prices hit an all-time high in July, with poor harvests in the US and Russia pushing up the average worldwide cost of staples by an unprecedented 10 per cent in a month.
The extent of just one bank's involvement in agricultural markets will add to concerns that food speculation could help push basic prices so high that they trigger a wave of riots in the world's poorest countries, as staples drift out of their populations' reach.
Nor has the UK escaped rising food costs. Shop food prices have risen, on average, by 37.9 per cent in the past seven years, according to the Office for National Statistics, as the demands of an increasingly affluent and growing world population strain supply. Oils and fats have soared by 63 per cent in the UK during that period, fish prices by 50.9 per cent, bread and cereals by 36.7 per cent, meat 34.5 per cent and vegetables 41.3 per cent. In April, average UK food prices were 4.2 per cent higher than a year earlier.
Oxfam's private sector adviser, Rob Nash, said: "The food market is becoming a playground for investors rather than a market place for farmers. The trend of big investors betting on food prices is transforming food into a financial asset while exacerbating the risk of price spikes that hit the poor hardest."
The World Development Movement report estimates that Barclays made as much as £529m from its "food speculative activities" in 2010 and 2011. Barclays made up to £340m from food speculation in 2010, as the prices of agricultural commodities such as corn, wheat and soya were rising. The following year, the bank made a smaller sum – of up to £189m – as prices fell, WDM said.
The revenues that Barclays and other banks make from trading in everything from wheat and corn to coffee and cocoa, are expected to increase this year, with prices once again on the rise. Corn prices have risen by 45 per cent since the start of June, with wheat jumping by 30 per cent.
Barclays makes most of its "food-speculation" revenues by setting up and managing commodity funds that invest money from pension funds, insurance companies and wealthy individuals in a variety of agricultural products in return for fees and commissions. The bank claims not to invest its own money in such commodities.
Since deregulation allowed the creation of such funds in 2000, institutions such as Barclays have collectively channelled an astonishing $200bn (£126bn) of investment cash into agricultural commodities, according to the US Commodity Futures Trading Commission.
Barclays' dominance in commodities trading is thanks to its former chief executive Bob Diamond, who was Britain's best-paid banking boss until he was forced to resign last month following a £290m fine for attempting to manipulate the Liborinterest rate. As boss of Barclays Capital he boosted trading in agricultural products.
Dealing with the reputational headache associated with high levels of food speculation will be yet another item in the already-bulging in-tray of Antony Jenkins, who was promoted to become Mr Diamond's replacement on Thursday.
Christine Haigh, policy and campaigns officer at the World Development Movement and one of the analysts behind the research, said: "No doubt the UK's biggest player in the commodities markets is hoping it will do better this year by cashing in on rising food prices. "Its behaviour risks fuelling a speculative bubble and contributing to hunger and poverty for millions of the world's poorest people."
Banks and hedge funds typically argue that speculation makes little or no difference to food prices and volatility and argue, correctly, that no definitive link has been proved. Barclays declined to comment on the amount of money it makes from trading in agricultural commodities yesterday.
The bank defended its actions, pointing out that trading in so-called futures contracts – an agreement to buy or sell a certain quantity of a product, at a given price on an agreed date – helped parties such as farmers and bakers to hedge against the risk of rising or falling prices. "Our clients include investment companies, food producers and consumers who, among other things, seek our help to manage risks."
Barclays also declined to comment on whether it thought large amounts of speculation pushed up prices and volatility. A spokesman said: "We recognise there is a perception held by some stakeholders that participation in agricultural futures markets by some participants can unduly influence the prices of commodities. As a result, we continue to carefully monitor market trends and any research produced on this subject," a spokesman said."
Barclays Capital analysts admitted in a note to clients in February that speculation did push up prices. Barclays said: "The second key driver is that commodity investors have begun allocating to commodities again after beginning 2012 heavily underexposed to the sector." The other drivers were the "health of the global economy" and "weather and geopolitics".
Money- 10 Consumer weapons-the rights and wrongs
Updated: 29 Aug 2012
Martin Lewis' 10 consumer weapons
By Martin Lewis | Telegraph –
Top tips on consumer rights you should arm yourself with before shopping.
1 Spend over £100 and credit cards are safer
The ''Section 75’’ laws mean that if you buy something costing over £100 on a credit card (anywhere in the world), the card company is jointly liable with the retailer.
Many think this is just a refund for non-delivery if the company goes bust, but it’s far more powerful.
You’ve got identical rights with the card company as with the retailer (although in practice, approaching retailers is normally easier), even if you only put a deposit on the card.
So if goods fulfil the ''faulty’’ rules (see left), you could go straight to the card company.
If using this valuable protection, do repay the card in full each month to avoid interest, though.
2 Know your rights and quote the rules
Chances of till victories are boosted if you’re polite, assertive and, most importantly, know your rights.
Stating “under the Sales of Goods Act 1979” and quoting the rules makes a powerful point.
3 You have a “no-fault” right of return online
There’s far more protection buying online, via post or phone.
The Distance Selling Regulations mean you can return goods bought anywhere in the EU within a week, even if not faulty, and expect a full refund.
For big purchases, it’s worth becoming a ''Robo’’-shopper: research offline, buy online. Mrs MSE often does this checking out what she wants in-store, then ordering it online so she has more rights.
4 Ask for the delivery charge back if returning online goods
Under the Distance Selling Regulations, you can also reclaim the delivery charges you paid when ordering.
Most companies don’t offer this unless you ask, so ask. However, while it varies due to contracts, most sellers are allowed to ask you to pay the cost of you sending it back to them.
5 Buying for a friend? Note it down
Technically, only the person who bought the goods has statutory rights, so if you give a present, use a gift receipt, or note down that it’s a gift (preferably on the slip that the retailer keeps), to transfer the rights.
6 Second-hand doesn’t mean second-rate
You have exactly the same ''faulty’’ rights for second-hand goods, but what counts as ''satisfactory’’ is reduced, because by definition the quality threshold is reduced with second-hand goods.
Even so, buy a toaster and it should make toast!
7 On eBay it’s all about who you buy from
Buying from a professional eBay trader (someone who makes a living from it) means you’ve got full ''faulty’’ rights.
Buy from a private seller who occasionally flogs a couple of their old cast-offs, and your only protection is that it’s ''as described’’ and the owner is legally allowed to sell it.
8 For a full refund, return at speed
To be legally entitled to a full refund you must be deemed to have “not accepted the goods”.
As a rule of thumb, a maximum of a month is usually safe. If not, expect a choice of repair, replacement or a partial refund.
9 After six months you need to prove fault
Up to then, in court the store would need to prove goods weren’t faulty when you bought them.
This gets complicated as ''faulty’’ can include ''not lasting a reasonable length of time’’, that is, if there was something innate within the product when bought that meant it wouldn’t last as long as it should.
10 Ultimately, court is the judge
If goods are faulty but the shop says no, the only way to force them to behave is in court.
Unless it’s a big purchase, it’s often not worth it. So try to escalate it within the store.
Politely ask for a manager, and if that fails, play the “formal letter to head office”’ game, explaining your disappointment and that you’re willing to go to court if needed.
Often the hassle factor helps your cause.
Martin Lewis is a broadcaster and creator of MoneySavingExpert.com
To join the six million who are emailed his weekly tips, visit moneysavingexpert.com/tips
Money - The Wealthy Thieving Bastards exposed QE-D
Updated: 29 Aug 2012
Bank's stimulus plan 'has lined pockets of the rich'
Report shows wealthy do 240 times better out of QE than the poor
Friday 24 August 2012
The Bank of England's money-printing programme, intended to revive economic growth, has delivered a massive boost to the wealth of the most prosperous 10 per cent of households in Britain while delivering relatively scant returns for the poorest, a new analysis from the Bank indicated yesterday.
In its report on the effectiveness of its controversial quantitative easing (QE) programme, the Bank said it successfully pushed up share prices and other asset values, delivering an overall boost to the net financial worth of UK households of around £600bn.
The Bank said this worked out at an average benefit of around £10,000 per person.
However, financial assets are unevenly distributed around the population, meaning that the benefit was highly unequal.
And an analysis by The Independent reveals that the wealthiest 10 per cent of households would have benefited from QE more than 240 times as much as the poorest 10 per cent.
The Bank's researchers suggested that the £325bn of sovereign-bond purchases enacted by the Monetary Policy Committee since March 2009 boosted asset prices across the economy by around 28 per cent.
The most recent research on levels of wealth by the Office for National Statistics (ONS) in July showed that the wealthiest 10 per cent of British households held £2.5 trillion in pension wealth at the end of 2010, while the poorest 10 per cent held just £2bn.
The ONS also estimated that the richest 10 per cent of households held £569bn in financial assets at that time, as against the poorest 10 per cent, who, in contrast, owed around £9bn.
When The Independent applied the Bank's estimate that the monetary stimulus programme successfully boosted asset values by 28 per cent over the last two years to the ONS data, it showed that quantitative easing delivered a benefit to the wealthiest households of £870bn, while the poorest households benefited by just £3.5bn.
With 2.5 million households in the poorest 10 per cent and the same number in the wealthiest 10 per cent, that means the richest households gained by an average of £350,000 each from quantitative easing, while the poorest benefited by an average of £1,400 – more than 240 times less.
However, the Bank's analysis also said that the money-printing programme boosted the size of the economy by between 1.5 and 2 per cent, which, it claimed, had effectively boosted the income of everyone in the country by between £500 and £800 on average.
It also pointed out that many individuals benefited from the monetary stimulus programme because the economy did not shrink as much as it otherwise might have done, meaning that they did not lose their jobs.
The analysis further suggested that concerns quantitative easing had undermined the value of pension funds and hit retirees were misplaced.
Campaign groups have complained that the asset-purchase programme has driven down sovereign-bond yields and, in turn, reduced annuity rates.
An annuity is the income stream that people receive when they cash in their pension pot on retirement.
But the Bank pointed out that the programme had also boosted the value of the assets of pension funds (which invest mostly in shares and bonds) cancelling out the real impact of lower annuities on pensioners' incomes.
"For typical fully-funded pension schemes, asset purchases are likely to have had a broadly neutral impact," the Bank concluded.
However this was disputed by the pressure group Saga. Its director general, Ros Altmann, said: "It is asserted, but not proven, that pension savers are no worse off due to QE gilt-buying.
This assertion is simply not correct and the reality is very different for those recently or soon-to-be-retired."
Ms Altmann said the Bank's assessment had not taken into consideration higher inflation, which has eaten into living standards in recent years.
The Bank's analysis showed that the first round of QE had raised the Consumer Prices Index by between 0.75 and 1.5 per cent.
The Bank also examined the impact of its decision to slash interest rates to historic lows of 0.5 per cent in 2009 when the economy was deep in recession.
It found this had cost savers around £70bn in interest that they would have collected if rates had been kept unchanged from their levels before the financial crisis.
It also found that borrowers had benefited by around £100bn from lower rates.
Money-State Pensions-New "Fair & Simple" Flat Rate Pension is coming-decided by "your" Nasty Party ?
Updated: 24 Aug 2012
The £10,000 a year variation in state pensions,
as 130,000 get just £7 a week, while others get £230
By Joanna Robinson
UPDATED: 10:09, 22 August 2012
..New figures from the Department for Work & Pensions have shown a startling difference in state pension incomes, with some receiving as little as £7 a week, while others get £230 a week.
While 130,000 people receive £7 a week or less, roughly the same number receives over £200 a week more. This difference equates to £10,000 a year.
The Government has revealed the figures as it confirms plans for a flat-rate universal state pension which will be set out in detail later this year.
Game of chance?
The disparity between state pension incomes means some are £10,000 a year better of than others
Part of the reason for the disparity in pension payments is the wide variation of basic and additional state pension top-ups in existence in the current system.
These variations will cease to exist when the new flat rate is introduced, although the Government has promised that entitlements to top-up pensions already earned - like contributing to or receiving credits for the additional state pension - will be protected.
Smaller state pensions are the result of people having an incomplete record of National Insurance (NI) contributions – for example women who have taken time out from work to raise their children and not recorded enough years of contributions.
While the new flat-rate is designed to be universal, those with an incomplete NI record after it is introduced will only get a proportion of the flat rate related to the amount of contributions they made.
The DWP said that because state pension regulations have multiplied so much over recent decades and made the system so complex, people have no way of working out what they will get a week, and can’t budget properly for their needs.
The pensions minister Steve Webb described the range of payouts as ‘simply staggering’ and said: ‘The current system is so complex and would baffle even Einstein.’
‘We can’t go on playing roulette with pensions.
A flat-rate single-tier state pension will restore simplicity and give people certainty instead of chance.
And it will provide a sure foundation for further saving.’
The DWP has confirmed that the current state pension will be replaced with a simple flat-rate state pension for new retirees, further details of which will be set out in a White Paper due to be published later this year.
What you can expect from the White Paper It will propose that anyone with a full 30 year National Insurance record will be entitled to the full, flat-rate state pension which will work out at around £160 a week by the time the new scheme starts in 2016.
This will only apply to men born after April 1951 and women born after April 1953, and will exclude existing pensioners.
Women, the self-employed and pensioners with modest incomes and private savings will be winners. 60 per cent of women would be entitled to less than the £140 a week so these women will all get higher state pensions under the new system.
The new system will reduce - but not eliminate - pensioner means-testing.
Future pensioners who do not have a full 30 year NI record or those who may get Housing Benefit or Council Tax Benefit may still be means-tested.
.The department said that the new flat-rate pension will be set above the level of the current means test, currently estimated at around £140 a week.
Commenting on the figures, Dr Ros Altmann, director-general of Saga, said: ‘The UK state pension system is the by far the most complex in the world.
Almost no one understands it and it is not fit for purpose.
It fails to provide an adequate pension income for millions of Britain's pensioners, in particular women and low earners.
‘Radical reform is long overdue - at the moment the UK State pension system relies far too much on mass means-testing which particularly penalises those who have tried to save for their retirement.
As we are about to automatically enrol all workers into a private pension scheme, it is vital that the state pension system makes it safe to save.
She said that the DWP figures ‘highlight the dramatic difference’ between what pensioners can receive but do not highlight the reality ‘that it is predominantly men that get the highest amounts and women the lowest.’
‘The new pension system should be fairer and simpler and no longer treat women as second class citizens but we still need to see the details of the new framework and how the Government plans to implement it in order to ensure fairness.’
Are people really living on £7 a week?
Despite many only receiving a weekly basic state pension of £7, this can be topped up with benefits depending on their financial circumstances, such as housing benefit or council tax benefit.
The very poorest will also be eligible for pension credit to boost their income.
This is a means-tested benefit made up of two different parts – the so-called guarantee credit and savings credit.
If a pensioner living on their own has an income of less than £7,420 a year, they should be able to qualify.
The main part, guarantee credit, tops up your weekly income to the guaranteed minimum level set by the Government – £142.70 a week if single, £217.90 if with a partner.
The second part can add up to £18.54 a week for those living alone, £23.73 if part of a couple.
The state pension figures include the basic state pension and additional state pensions but do not include pension credit.
Read more: http://www.thisismoney.co.uk/money/pensions/article-2191543/State-pension-disparity-sees-130-000-just-7-week-230.html#ixzz24QMBLxiC
Money - Should you bank with a criminal ?
Updated: 16 Aug 2012
UK banks are complicit in criminal acts
Scandals emerging from within the UK banks
show how deeply involved they are in criminal activities.
Wed Aug 15, 2012 1:58PM GMT
British banks are involved in widespread criminal activities as evidenced by scandals emerging from the financial services industry on an almost daily basis.
The scandals reveal the complicity of the regulators including the Financial Services Authority (FSA) and the Bank of England (BoE), and successive governments which act as the protectors of those financial gangsters.
For example, the Royal Bank of Scotland (RBS) whose half-year losses topped £1.5 billion, and other high street banks mis-sold expensive and useless payment protection insurance to more than 3 million people who did not need it.
This was part of a scandal that exposed the RBS’s role in rigging the interbank lending rate, Libor.
RBS is one of 18 giant banks at the heart of the rigging of the Libor rate, the interbank lending rate linked to $800 trillion in financial transactions.
Documents that have been released implicate the Bank of England and show that neither the bank nor the government did anything to stop it.
Furthermore, there has been no proper examination of the bank’s activities in Britain.
Last month, HSBC, the world’s second largest banking group, was found by a senior US Senate Committee to have laundered billions of dollars in Mexican drug cartel money.
HSBC was not alone.
Six years ago, Barclays Private Bank, a subsidiary of Barclays, laundered drug money from Colombia through five accounts linked to the infamous Medellin cartel.
Despite this record of illegality, recklessness and mismanagement, not a single top executive of a major UK bank has been charged with criminal wrongdoing.
Neither has there been any substantive change in the regulation of the banking and financial services sector.
Successive governments are linked by countless connections to the financial elite, from whom they recruit their advisors, regulators and even ministers.
Their record confirms that they are merely the puppets of criminals in London’s Square Mile
Money- Inbound Tourism suffered during the Olympics
Updated: 13 Aug 2012
UK economy not benefiting from Olympics
Britain’s weak economy
is unlikely to have been given a hopeful boost from hosting the Games.
Sun Aug 12, 2012 6:24PM GMT
After 17 days of hosting the London Olympic Games, Britain’s recession-hit economy seems unlikely to enjoy a hopeful boost from the world event, analysts warn.
Britain’s construction sector appeared to have benefited before the Olympics, but experts are now saying that the Summer Games spectacle did not deliver any special financial reward and was not expected to in the future.
Mary Rance, chief executive of tourism body UKinbound, said the Olympics event, which has cost £9.3bn at the expense of British taxpayers, has failed to lift the financial sector.
Rance also stressed that the Olympics failed to deliver additional visitors to London and other parts of the UK.
During the first few days of the Games, reports revealed that London had turned into a somewhat "ghost town" due to the lack of visitors in the capital.
The British Prime Minister David Cameron showed his fears of the atmosphere as he urged people to “come back into the capital”.
The reason why London was deserted was because of the run-up to the Olympics when commuters and tourists were warned to stay away from the capital.
This was due to fears that London’s transport system could not cope with millions of extra visitors
Money- Top Saving Rates Plunge
Updated: 10 Aug 2012
Top savings rates plunge as the Government’s
£80bn scheme to kick-start bank lending hits savers
By Dan Hyde
| UPDATED: 10:11, 8 August 2012
Santander binned its best buy 3.3 per cent Direct Isa 9 account last Thursday and replaced it with a three per cent offer.
And ING this week cut its top-paying easy access rate to 2.44 per cent (3.05 per cent) from 2.55 per cent (3.19 per cent).
It followed Coventry Building Society chopping its Telephone Saver rate — a best buy — from 2.6 per cent (3.25 per cent) to 2.24 per cent (2.8 per cent).
Last week the Government gave banks access to billions of pounds to lend to homeowners and small businesses as part of its Funding for Lending scheme.
The idea is to help stimulate Britain’s sluggish economy by making it easier to borrow and spend.
More...Best savings rates: Cash Isas, fixed rate Isas, regular savings Isas
Will the Bank of England's cheap loans plan send savings rates tumbling?
But savers are losing out as banks flock to take advantage of cheap money.
There is now less need for a bank to pay savers more than 3 per cent — equivalent to six times the Bank of England’s 0.5 per cent base rate — to boost its coffers.
Basic and higher - rate tax payers should look to Isas for the best returns. You can put away up to £5,640 and earn interest tax-free.
West Brom Building Society this week launched a 3.16 per cent Websave Isa 6 account. You must give 60 days’ notice to withdraw cash.
ING Direct offers 3.2 per cent, but will not allow you to transfer in previous years’ Isa savings.
Read more: http://www.thisismoney.co.uk/money/saving/article-2185312/Top-savings-rates-plunge-Government-s-80bn-scheme.html#ixzz236Afxxjz
Money- Olympic "Gold" medal - What's it worth ? Call Trading Standards !-
Updated: 05 Aug 2012
How much Gold is there in a Gold Medal
The gold medal is actually pure silver with about 6 grams of gold plating.
Actually, according to statistics, an Olympic "Gold Medal" is actually 90% silver...
How much gold is in a gold medal?
The Olympic gold medal has long been the goal of many athletes.
Dating back to ancient Greece, the Olympics have been a test of the strength and endurance of the top athletes of the world.
What many people do not realise is the fact that coveted gold medal is more symbolic than valuable.
Since its inception as part of the Olympics in 1896, the Olympic gold medal has actually been comprised of more silver than gold.
With only a 6 gram plating of gold over the sterling silver base, the gold medal's actual value is roughly £145 (GBP), a far cry less than what it's value would be based on the assumption of pure gold.
This remains the case for a few reasons.
One reason the Olympic Committee has never seen fit to change the composition of the gold medal is to ward off souvenir hunters and those who would cheapen the experience of the Olympics by selling the medals.
The second reason is perhaps stated best by the creed that every Olympic participant joins in reciting.
"The most important thing in the Olympic Games is not to win but to take part.
Just as the most important thing in life is not the triumph but the struggle.
The essential thing is not to have conquered but to have fought well."
When Pierre de Coubertin, one of the authors of the original Olympic Charter, penned those words, he was making a clear statement that the value of the medal lies in the experience that an Olympic champion will remember for a lifetime and not the monetary value of the metal it contains.
Money - Super Rich- Tax Loopholes and Avoidance Schemes
Updated: 25 Jul 2012
Monday 23 July 2012 by Spacey
Super rich elite already looking for loopholes
to help avoid being exposed for using loopholes
After the government promised to name and shame wealthy people who use ‘aggressive’ tax avoidance schemes, users of ‘aggressive’ tax avoidance schemes have already begun looking for ‘aggressive’ exposure avoidance schemes.
Popular tax avoidance schemes, such as donating money to the Conservative Party so that loopholes remain open, are estimated to cost the economy billions.
The super rich have expressed their annoyance at the inconvenience of finding ways of avoiding being exposed for avoiding paying tax
“If the tax laws become too restrictive then I’ll have to take my enormous wealth elsewhere,” threatened one multi-millionaire.
“Technically I’ve already got my vast wealth elsewhere, but that’s not the point.”
“What’s important is making people think that they’d be worse off if I moved overseas.”
Accusations that the government’s plans are nothing but populist rhetoric designed to avoid actually closing tax loopholes exploited by some Tory donors have been dismissed by Downing Street.
“Suggestions that we’re trying to create the illusion of doing something while actually doing nothing are unfair,” insisted David Gauke, the minister with responsibility for tax matters.
“These schemes take money away from public services that help people who are the most in need.”
“While we appreciate the super rich trying to help, we’re perfectly capable of doing that all by ourselves.”
Read more: http://newsthump.com/2012/07/23/super-rich-elite-already-looking-for-loopholes-to-help-avoid-being-exposed-for-using-loopholes/#ixzz21cSN3CLE
Money- Senior Political figures admit paying, or should that include taking, cash in hand ?
Updated: 25 Jul 2012
Cameron, Clegg and Johnson all admit paying tradesmen cash in hand
Senior political figures fall foul of Treasury minister David Gauke's view
that it is 'morally wrong' to pay tradesman cash
Nicholas Watt, chief political correspondent
The Guardian, Wednesday 25 July 2012
Cash in hand payments 'morally wrong': many of Treasury minister David Gauke’s colleagues don't think so.
David Cameron, Boris Johnson and Nick Clegg all admitted that they have made cash-in-hand payments to tradesmen as Downing Street struggled to control a debate on the morality of tax.
The government's most senior members – plus the London mayor – all acknowledged that they may have fallen foul of a Treasury minister who said it was "morally wrong" to pay plumbers in cash.
But other ministers took a different view. Eric Pickles, the communities secretary, denied that he ever made a payment in cash. Asked whether he had ever done so, Pickles told the BBC: "Certainly not."
Westminster descended into virtual parody of the television satire The Thick of It after the Treasury minister David Gauke said on Monday it was "morally wrong" to pay plumbers cash in hand because it denied the revenue vital funds. Ministers issued different responses, indicating a lack of central co-ordination.
A No 10 source said that Cameron is likely to have made payments in cash but he had never done so to secure a discount. The source said: "The prime minister has never paid anyone in cash to get a discount. He may have paid cash but he has never done this to help anyone evade their share of tax."
Johnson said: "I've certainly paid a lot of cash in hand," he said.
Clegg told Channel 4 News: "I can't remember off the top of my head. I am sure I have paid someone cash, but I certainly have never paid anyone cash in hand knowing that is done in order to avoid tax. That would be entirely wrong."
Vince Cable, the business secretary, said "of course" he had made payments in cash. Asked by ITV News whether he had ever paid anyone cash in hand, Cable said: "Of course, it's perfectly legal and perfectly moral, providing you're not doing it with the objective of avoiding tax and I certainly wouldn't do that.
"There's nothing wrong with paying people cash. Absolutely nothing wrong at all. What is wrong is if people do it knowing that this is a way to avoid tax and where there is an understanding that somehow the differences will be split. That is wrong. Everyone should be honest and everyone should be ensuring that tax is properly paid."
Cable used the debate to highlight the government's campaign to crack down on millionaire tax avoiders. "The real abuse takes place in the multi-million, multi-billion tax dodges and that is where the government is now starting to crack down hard, identifying individuals in big tax avoidance scheme, introducing a general anti-avoidance rule that will stop a lot of these schemes getting through in the first place."
Jeremy Hunt, the Olympics minister, was asked at a London 2012 security briefing whether he could say "hand on heart" that he had never made any cash in hand payments. Hunt said that he had never dodged tax as he dodged the question.
"Let me start by saying David Gauke was saying that tax dodging is wrong and I personally haven't dodged tax. But I am here to talk about the Olympics so I think it is very important that we focus on that topic, if I may."
James Brokenshire, the home office security minister who was sitting next to Hunt at the briefing, was more forthcoming. "Would I have made cash payments to avoid VAT? No, I certainly would not."
Treasury sources moved to play down the significance of Gauke's remarks. They said that he had only described cash-in-hand payments as morally wrong if they were designed to secure a discount from a tradesman avoiding tax.
In his remarks on Monday Gauke said the revenue was losing £5bn a year in tax avoidance. HMRC has raised more than £500m in the past year after launching campaigns focusing on particular areas such as plumbers and electricians.
Tariq Dag Khan, of the tradesman website Rated People, said: "David Gauke's comments that it is morally wrong to pay tradesmen in cash do little to help tradesmen who are struggling in a difficult economic climate. For the reality is that there is little or no alternative to cash payments for many tradesmen, and criticising the whole industry belies a misunderstanding of the situation many customers and tradesmen are in.
"There is a great deal of trust involved when hiring a tradesman for both the tradesman and the customer and therefore cheque payments do not provide a viable alternative especially when, if the cheque bounces, the tradesmen could be dangerously out of pocket and in some circumstances forced out of business as a result."
Money -US/China-US must save more,-China spend more
Updated: 25 Jul 2012
Money- US/China- US must save more,- China spend more
Wednesday, 25 July 2012 07:38
Global Rebalancing: Now or Never
Written by Stephen S. Roach, YaleGlobal
Tuesday, 24 July 2012
Head to head
For sustainability's sake, the US must save more, China must spend more
Time and again, the lessons of a troubled world economy are the same:
An unbalanced world is an unsustainable world.
A decade ago, the world had just come through three difficult events in the span of three years – the Asian financial crisis, the Y2K scare, the bursting of the US equity bubble.
The unbalanced world was ill equipped to deal with the asymmetrical shocks bound to follow.
Steeped in denial, an unstable global economy continued its race to the edge.
The price for denial was steep.
The world peered into the abyss in late 2008, experiencing the greatest financial disaster since the Great Depression of the 1930s.
Sadly, this was just the latest in a steady string of crises over the past 30 years, including the 1980s Latin American debt crisis, the subprime crisis and the European sovereign debt crisis raging today.
Behind most of these crises is a major macro imbalance, which could have been avoided with pro-active, disciplined and responsible policies.
But the temptations of false prosperity proved far too alluring.
It’s essential to understand the forces at work on both sides of the unbalanced global macro equation.
The demand side is dominated by the American consumer.
With about 4 percent of the world’s population, US consumers spend about $10.7 trillion annually.
By contrast, China and India, collectively comprising nearly 40 percent of the world’s population, have combined consumption of about $2.5 trillion.
Based on this unbalanced mix of global demand, the outlook for global consumption is likely to be weak.
The main source of this weakness can be traced to the United States.
Reflecting bursting of US property and credit bubbles, the American consumer has pulled back as never before.
Anemic consumption growth is also likely to persist in crisis-torn Europe and in Japan.
China and India, with solid prospects for consumer demand, lack the scale to offset the US-led shortfall of consumer demand in the developed world.
The supply side is dominated by the Asian producer.
But the fastest growing economic region in the world has severe imbalances of its own.
Specifically, the private consumption share of developing Asia’s pan-regional GDP has never been lower, its export share never higher, after recovering from the crisis-induced plunge of 2008-09.
With anemic consumption growth likely to persist in the advanced economies, persistent imbalances on the Asian-led supply side of the global growth equation remain a worrisome feature of the post-crisis climate.
Nowhere is that more evident than in China.
In 2007, Premier Wen Jiabao spoke of the great paradox of the Chinese economy:
The economy looked strong on the surface, but was characterized by a model that he depicted as increasingly “unstable, unbalanced, uncoordinated, and ultimately unsustainable.”
The 2008-09 crisis and collapse in world trade hit China’s most dynamic source of economic growth – exports – with an unprecedented shock.
Lacking support from external demand and the backstop of internal private consumption, China relied on an aggressive stimulus of fixed investment.
China did what it needed to do to sustain economic growth and maintain social stability in the midst of wrenching crisis.
Still, renewed weakness on the demand side of the global equation has pushed its GDP growth back down to 7.6 percent in mid-2012 – holding to a soft-landing trajectory, but yet another important reminder that China must change its growth model to derive greater support from internal demand, especially private consumption.
China has made the transition to a pro-consumption growth strategy the centerpiece of its newly enacted five-year plan. It features three building blocks:
•China has the smallest services sector of any major economy in the world, yet services in China generate about 35 percent more jobs per unit of GDP than do manufacturing and construction.
By shifting from capital-intensive manufacturing to labor-intensive services, China could grow more slowly and still hit labor absorption targets.
•Per capita income of urban workers in China now runs about three times that of their counterparts in the countryside.
With China’s urban population exceeding its rural population for the first time in history, ongoing rapid urbanization, coupled with services-led employment opportunities, is a plus for boosting aggregate wage incomes.
•China must build a social safety net. Lacking financial security, workers will continue fear-driven precautionary saving, an impediment to a flourishing Chinese consumer culture.
Fortunately, China is in good shape, with plenty of ammunition to deploy countercyclical stimulus in order to avoid the dreaded hard landing and get on with structural rebalancing.
Short-term policy benchmark lending rates of 6.0 percent are well above CPI inflation of 2.2 percent and a fiscal deficit of less than 2 percent of GDP is one of the lowest in the world.
Predicting sources and timing of the proverbial next crisis are near impossible, but there are two destabilizing scenarios to ponder:
First, the full risks of a sovereign debt overhang haven’t played out yet.
With long–term government interest rates remaining low, there’s a false sense of complacency.
In 2011, debt exceeded 100 percent of GDP for the broad collection of so-called advanced economies for the first time since the end of World War II.
The overly-indebted can finesse this problem for the time being, but probably not much longer.
Second, the world’s most important economic relationship between the United States and China could fall victim to its own set of imbalances.
Particularly troublesome is Washington’s bipartisan penchant for China bashing, with demands that China be forced to raise the value of the renminbi or face trade sanctions.
This is the wrong response.
The US suffers from a multilateral trade deficit – characterized by imbalances with 88 countries in 2010.
It’s impossible to fix a multilateral imbalance by putting pressure on a bilateral currency.
Instead, Washington must come to grips with its own unprecedented shortfall in national saving.
Lacking saving and still wanting to grow, the US must import surplus saving from abroad – running massive current account and multilateral trade deficits to attract the foreign capital.
Unfortunately, the currency issue and the false hopes it spawns in resolving tough problems bearing down on US workers have hijacked the US-China trade agenda.
The renminbi has risen 31.4 percent against the dollar since mid-2005 – well in excess of the 27.5 percent increase long demanded by Washington politicians.
Of the two current account imbalances, the US deficit remains a far more destabilizing force.
According to dollar-based International Monetary Fund estimates, the US deficit is likely to be 2.8 times the magnitude of the Chinese surplus in 2012.
The global rebalancing agenda would be better served if the US-China trade relationship were recast as an opportunity.
For a growth-starved US economy hobbled by sluggish consumer demand, exports could become an important source of growth.
China is America’s third largest and most rapidly growing export market.
The US focus needs to shift toward market access – ensuring that its companies have a fair shot at Chinese markets as that nation ushers in what could be the greatest consumption story of the modern era.
In short, the outlook for sustainable world growth depends critically on how the United States and China address rebalancing imperatives.
Advanced economies, especially the United States, must consume less and save more.
The developing world, especially China, has no choice other than to draw down its excess saving and consume more.
The sooner the world faces up to these urgent rebalancing imperatives, the better.
(Stephen S. Roach, a member of the faculty at Yale University, was formerly chairman of Morgan Stanley Asia, and is the author of “The Next Asia. This is reprinted with permission from the Yale Center for the Study of Globalization)
Money - Where has all the G4S money gone ?
Updated: 25 Jul 2012
Where has all the G4S money gone?
Tuesday 24 July 2012
Websites were advertising G4S Olympic security guard jobs at £6.15 an hour - just seven pence above the minimum wage.
Some applicants were offered much higher hourly rates at interview only to have them drastically reduced when the official G4S contract arrived. No wonder they didn't bother to turn up.
Yet the company's bill for supplying 10,000 guards to the government was £284 million.
That's £28,400 per employee and well over two years at the hourly rate advertised.
Yet the Olympic contracts were only for a few weeks - a month or two at the most.
Could it be that some of that money wasn't actually intended for the workers but going to the directors, shareholders and towards an Olympic-size bonus for head of G4S Nick Buckles to add to his £830,000 annual salary?
Money-A Nasty Party MP calling the kettle Black Market-Its Capitalism-A Something for Nothing System
Updated: 24 Jul 2012
War waged on Europe's €2trn black economy
Tax cheats 'cost Exchequer more than £1,000 for every man, woman and child in Britain'
Jonathan Owen Sunday 15 July 2012
The Black Market
Tax dodgers are costing Britain £64bn a year and the black economy is so large it could pay off the national debt, according to a new study.
The amount the Exchequer loses to tax cheats is equivalent to more than £1,000 for every man, woman and child in the country.
These figures are estimates based on a European Commission study highlighting the size of the shadow economy across Europe.
In Britain, efforts to escape tax – whether by those not declaring income, or businesses exploiting tax loopholes – are contributing to a black economy that estimated to be worth £160bn a year.
At 10.5 per cent of Britain's GDP in 2011, this is bigger than the deficit, which stood last year at 8.3 per cent of GDP.
The shadow economy – people working or trading "off the books" – results in tax lost to the Exchequer of up to £64bn, according to British tax experts.
This number assumes the proportion of tax as being 40 per cent. It is 16 times the £4bn tax loss the Government estimates from the hidden economy.
"Near enough £1 in every £8 in the British economy is in the shadow economy – the cash-in-hand, illicit, undeclared part of the economy that exists almost entirely to make sure tax is not paid," said Richard Murphy, director of Tax Research UK.
"That costs us approaching £70bn a year in lost tax revenue – enough to pay for the defence and law and order budgets in their entirety, or to close more than half the annual current deficit."
Revenue & Customs has slashed its staff from 100,000 to about 65,000 in the past seven years, and the department plans to cut numbers to just over 50,000 by 2015.
"When a government demands its tax authority halve in size, the result is an inevitable breakdown in tax law and order, and that's exactly what we are suffering," he added.
In Britain and other countries there is a need to address the "pay as little as you can" attitude of some companies, said Algirdas Šemeta, the European Commissioner responsible for taxation.
"Why should teachers, nurses and shopkeepers carry a heavier tax burden just because large companies can employ clever tax planners to avoid paying their share?" he said.
"The UK is certainly not the worst pupil in the class in the EU. Nonetheless, we're still talking about billions of pounds falling through the net, at the expense of the honest taxpayer."
Britain is part of a European shadow economy worth ¤2trn (£1.6 trn). Tens of billions of euros remain hidden in offshore accounts, "often unreported and untaxed". The Cayman Islands, a British overseas territory, is one of the fastest growing tax havens, according to the EC report.
The scale of the problem has prompted the EC to act on what it describes as "not only an issue of revenue, but also of fairness".
"Honest taxpayers should not suffer additional tax increases to make up for revenue losses incurred due to tax fraudsters and evaders," it says in the report.
Tough new measures are being drawn up in what amounts to a war on tax dodgers. Action plans to crack down on tax havens and companies involved in "aggressive" tax planning will be produced by the end of the year.
Calling for concrete action from member states, the report's recommendations include: the introduction of auditor teams to investigate cross-border tax fraud; a European tax number to prevent people exploiting different tax systems; minimum criminal penalties for tax cheats; and a "quick-reaction mechanism" on VAT fraud.
A Treasury spokesman said: "The UK Government is fully committed to tackling tax fraud and evasion and has invested over £900m in a Revenue & Customs crackdown on these.
This is an interesting report and we strongly support some of the suggestions made. However, we would want to be sure that any action within the EU did not impinge on member states' ability to run their own tax systems."
Money- The Olympic Big Top - A Spin or two and the Money goes round
Updated: 24 Jul 2012
Olympics Bill Tops £12bn
6:00pm UK, Thursday 26 January 2012
: Sky Investigation: Spiralling Cost Of Olympics
By Lia Hervey and Orla Chennaoui, Sky Olympics Team
The true cost of staging the 2012 Olympics is five times the figure given when London won the bid in 2005.
A Sky investigation has revealed the final cost for the Games will be more than £12bn.
However, associated costs could make the bill as high as £24bn - a staggering 10 times the original estimate.
When London bid for the Games seven years ago the predicted cost of staging the Olympics and Paralympics was put at £2.37bn.
The original public sector funding package, which is primarily cash to build the venues and provide security and policing, was increased in 2007 to about £9.3bn following a review.
However Sky has counted an extra £2.4bn on top of the current £9.3bn public sector funding package for the Games.
The additional cash includes spends on more anti-doping control officers, money for local councils for their Olympic torch relay programmes, cash spent on legacy schemes, paying tube workers not to strike, governmental operational costs, the cost of the Olympic Park Legacy Company, legal bills over the stadium tenancy decision and extra pounds to UK Sport.
The figures also take into account the cost of buying the land for the venues at £766m.
Negotiations are still ongoing about the debt this has left and who will pay for this after the land value becomes considerably lower because of the recession.
The £12bn cost of the Olympics, calculated by Sky, does not include extra counter-terrorism funding of £1.131bn being allocated to the police despite a ministerial statement saying "much of this capacity will be devoted to the Olympics in 2012".
Nor does it include the £4.4bn budgets of the security and intelligence services.
It also does not take into account the opportunity cost of having the majority of the UK police force working on the Games instead of fighting crime elsewhere.
On peak days 12,000 officers will be policing the Games.
In addition, Sky's overall total misses out the £6.5bn spent on transport upgrades which have been brought forward due to the Olympics and could have been cancelled as part of Government spending cuts were it not for the event.
If these figures had been counted, the Olympic spend would have totalled well over £24bn - more than double the current budget and 10 times the original calculation.
The figures also do not consider the cost of actually staging the Games.
This is paid for by the London Organising Committee (Locog), a private company which raises revenues primarily through sponsorship, merchandising and ticket sales.
Locog's budget for the Olympics is £2.1bn.
Sky's Olympic team has counted as many extra Olympic spends as possible across public bodies but there is certainly more spending that has not been accounted for.
Many public bodies have repeatedly ignored Sky's requests for information.
Newham Council, the local authority staging the majority of the Games, provided some figures but requests for further details have been ignored despite contacting them six times.
A number of Freedom of Information requests to the council by members of the public have also failed to get the figures.
But Sky can reveal that they are providing £40m of public money towards the Olympic Stadium conversion and have also spent £700,000 on Olympic projects.
The council spent nearly £1m on their legal costs over the West Ham and Spurs FC row over the stadium and have spent £29,400 on tickets.
As with previous Games, nobody has ever been able to accurately predict the final cost and it will not be until 2013 when we can say whether any increased tourism, economic benefits and the returns from the tenancy or sale of the Olympic venues and village made them a worthwhile investment.
Emma Boon, campaign director for the Taxpayers' Alliance, said: "In some cases it is very difficult to pick apart Olympic spending and separate it out.
"For example, if you look at things like police budgets particularly, it's very difficult to say (whether) those officers would have been on duty that day anyway and whether they are specifically doing Olympic duties or not... To a degree we will never know.
"But I think as far as possible the accounts relating to the Olympics have got to be open, they have got to be honest - publish them on the internet, let taxpayers go and have a look at where their money has gone."
However, Olympics minister Hugh Robertson told Sky News the public spending package is "absolutely" still £9.3bn.
"That in itself is a difficult figure as there is lottery money in that, and there will be money that is repaid when thigns like the broadcast media centre are sold," he said.
Mr Robertson added: "That £9.3bn figure is not a true figure of the cost to the taxpayer."
London Mayor Boris Johnson told Sky News he agreed it was important to assess value for money but insisted the projects would deliver 40,000 jobs, valuable skills and economic growth.
Regarding the decreasing value of some of the land, he said money would return to the public purse when it is built on, he said.
"You can classify a lot of different budget lines and expenditure in the last five, six years and going forward into the future as Olympic-related where they might be delivering regeneration in London, driving economic growth," he said from Davos.
"The transport spend, the land-purchase spend, these are things I think economists might classify it in a different way."
However a Department for Culture, Media and Sport spokesman said: "The Public Sector Funding Package for the Games is £9.3bn and includes all additional security, defence and public transport provision for the Games.
"It is simply not right to start adding on top of that budgets that would have been in existence regardless of 2012 and claim that as being an Olympic cost.
"We have always been transparent about the cost of the Games and have rigorously managed the budget to ensure the programme remains within the £9.3bn.
"London 2012 is an investment in our country that is already bringing in economic benefits that would otherwise not have been possible.
"It is an incredible opportunity for the United Kingdom - not a burden."
Money- Super rich hold $32trillion in offshore havens
Updated: 24 Jul 2012
Super rich hold $32 trillion in offshore havens
LONDON (Reuters) - Rich individuals and their families have as much as $32 trillion of hidden financial assets in offshore tax havens, representing up to $280 billion in lost income tax revenues, according to research published on Sunday.
The study estimating the extent of global private financial wealth held in offshore accounts - excluding non-financial assets such as real estate, gold, yachts and racehorses - puts the sum at between $21 and $32 trillion.
The research was carried out for pressure group Tax Justice Network, which campaigns against tax havens, by James Henry, former chief economist at consultants McKinsey & Co.
He used data from the World Bank, International Monetary Fund, United Nations and central banks.
The report also highlights the impact on the balance sheets of 139 developing countries of money held in tax havens by private elites, putting wealth beyond the reach of local tax authorities.
The research estimates that since the 1970s, the richest citizens of these 139 countries had amassed $7.3 to $9.3 trillion of "unrecorded offshore wealth" by 2010.
Private wealth held offshore represents "a huge black hole in the world economy," Henry said in a statement.
(Reporting by Chris Vellacott)
Money- First went Barclays Diamond -Now HSBC Chief Bagley resigns over dirty money scandal
Updated: 19 Jul 2012
HSBC chief Bagley resigns over dirty money scandal
Wednesday 18 July 2012
The head of compliance at HSBC bank David Bagley has resigned after a US Senate investigation found that HSBC had allowed Mexican drug cartels to launder billions of dollars through its US division.
Mr Bagley told a Senate investigations panel yesterday that he will remain at the London-based bank in a new role.
Mr Bagley has been the head of compliance at the bank since 2002.
Other HSBC executives also apologised at the hearing, but all claimed that they weren’t fully aware of illicit transactions flowing through the bank.
The executives said the bank has made deep changes to its policies and corporate culture to prevent further exposure to illegal transactions.
But senators expressed scepticism, noting that the problems had persisted for seven years.
The Senate permanent subcommittee on investigations also found that HSBC bank affiliates had skirted US government bans against transactions with Iran and other countries.
And HSBC US division provided money and banking services to banks in Saudi Arabia and Bangladesh believed to have helped fund al-Qaida.
The report also blamed US regulators, saying that they knew the bank had a poor system to detect problems but had failed to take action.
Thomas Curry, the head of the US Office of the Comptroller of the Currency that oversees HSBC US operations, also apologised at the hearing.
“HSBC has fallen short of our own expectations and the expectations of our regulators,” Mr Bagley testified.
The executive who headed the HSBC Mexican affiliate in 2007 and 2008 Paul Thurston claimed that he had tried to clean up deficiencies he found in the operation.
Mr Thurston said the Mexican bank had been a “fast-growth” bank that lacked controls against money laundering.
The CEO of the US division of HSBC also apologised for weak oversight.
“We’re burning the bridges to make sure no-one can get back to the way it was before,” said Irene Dorner, president and CEO of HSBC Bank USA, which has assets of roughly $210 billion (£134bn).
The US Justice Department said it is conducting a criminal investigation into HSBC operations.
Money-Funny money is the best Osborne can do?-BOE may reduce interest rates to stimulate the economy
Updated: 19 Jul 2012
Bank of England signals rate cut possibility
Wednesday 18 July 2012
Cutting interest rates beyond the record low of 0.5% remains a weapon to combat the weakening economy, the Bank of England indicated today.
Members of the Monetary Policy Committee (MPC) opted to pump more emergency cash into the economy earlier this month, but not before discussing in more detail the possibility of a first cut in rates since March 2009.
Minutes of the July meeting revealed the notion that a new £80 billion "funding for lending" scheme aimed at kick-starting bank lending could lessen fears about the impact of a rate cut on the margins of lenders.
In the end, members of the nine-strong committee voted overwhelmingly to keep rates on hold but admitted on the subject of interest rates that they will "review this option again".
They voted seven-to-two in favour of increasing quantitative easing by £50 billion to £375 billion.
Vicky Redwood, chief UK economist at Capital Economics, said: "Members signalled that a rate cut was still possible further ahead, although only after the effects of the funding for lending scheme become apparent."
A reduced rate would be the lowest in the Bank's 318-year history, with a cut to 0.25% saving a borrower with an average lifetime tracker rate on a £200,000 mortgage £328.56 a year, according to comparison site Moneyfacts.
But lower borrowing costs would deliver yet another blow to Britain's savers, who have lost out since rates hit their current historic low in March 2009.
The Bank's main concern over a rate cut beyond 0.5% is the impact it could have on some banks' and building societies' ability to lend.
Lenders have assets, mainly mortgages, with interest payments contractually linked to the Bank's rate and a reduction below 0.5% might squeeze some lenders' interest margins to the point at which they become less able to offer new loans to customers.
The funding for lending scheme, launched last Friday by the Bank and the Treasury, is designed to unclog the flow of credit by offering banks cheap finance and cushion the impact of a rate cut on banks' margins.
Malcolm Barr, head of UK economic research at JP Morgan, said: "If take-up of the funding for lending scheme is high, particularly among the building societies, and the MPC begins to express a few doubts about the effectiveness of QE, then a cut in Bank rate would start to look more likely if more stimulus is still needed."
The minutes said the impact of the funding for lending scheme could "alter" its assessment of a rate cut, although this was unlikely to be for several months.
Under the scheme, British banks are being offered funding at low interest rates over a four-year period - but it will be directly linked to bank lending performance to encourage lenders to increase loan availability and reduce rates.
However, other analysts remained sceptical. Howard Archer, chief UK and European economist at IHS Global Insight, said: "The MPC is prepared to re-visit the case for lower interest rates, although the indications are that this will not happen any time soon and we remain doubtful that interest rates will go below 0.5%."
The economy is in a double-dip recession after contracting by 0.3% in the first quarter of 2012 and declining 0.4% in the final three months of last year.
Meanwhile, inflation has pulled back from 5.2% last September as the impact of the VAT hike fades and energy and commodity prices fall.
The near-term picture for growth is "somewhat weaker" than the Bank's assessment last May, the Bank's minutes added, and the UK is now potentially facing a period of two years where there has been "little or no economic growth".
Survey data continued to weaken in the month before the meeting, the MPC said, while there were increasing signs that the eurozone crisis was hitting UK growth.
The minutes added: "Information during the month suggested export prospects had weakened, which would further impede the UK economy's rebalancing away from domestic demand towards net exports."
Money- Job vacancy at the Palace - Royal pay just £14000 a year-says it all about the Monarchy
Updated: 18 Jul 2012
Royal job pays just £14,000
Monday 16 July 2012
The Queen is seeking a housekeeping assistant at her stately Windsor Castle to take care of guests' jewellery, run their baths and assist with dressing - all for a measly £14,000 a year.
Guests to the royal household may also need help in packing and unpacking, pressing and preparing clothes and arranging dry cleaning, which are all requirements outlined in the job description advertised on the monarchy's website.
The permanent position at the Berkshire castle also provides the option for the successful applicant to live in accommodation on site. But adds that this would come with "a salary adjustment."
The successful applicant will also be expected to carry out gruelling tasks such as cleaning staircases and corridors, setting up rooms for special events and taking care of furnishings and ornaments from carpets and antiques to pieces of art and silver and brass items.
Money - Energy bills to rise for network upgrades
Updated: 17 Jul 2012
Energy Bills To Rise As Network Upgrades Loom
By (c) Sky News 2012 | Sky News – 28 minutes ago
The energy regulator is proposing that household bills rise by up to £15 annually over the next eight years to pay for investment in gas and electricity infrastructure.
The move is subject to consultation but Ofgem argued it would help ensure the power network remains among the most reliable in the world.
National Grid (LSE: NG.L - news) has been told it can provisionally spend £17bn to connect new power plants across England and Wales and install gas pipelines.
The regulator said another £5bn would be acceptable if the company needed it.
It is understood National Grid wanted a greater sum but Ofgem was anxious not to impose too high a burden on consumers.
The work, which includes laying undersea cables and maintaining gas mains, will result in average household bills rising by £7 next year and by up to £15 by 2021 under Ofgem's plans - but National Grid said they fell short of what was needed.
A spokesman said: "While the information currently available is limited, we believe that these initial proposals will not appropriately incentivise the essential investments necessary to provide safe, reliable networks for the UK consumer and avoid delays to the achievement of the UK's environmental targets."
It added that the packages proposed do not adequately reflect the increased scale of investment and implicit risk associated with such major investments.
Ofgem chairman Lord Mogg said: "Britain faces an unprecedented need to invest to replace ageing infrastructure, meet environmental targets and deliver secure supplies.
"This needs to be carried out at a time of global financial uncertainty, which makes attracting investment difficult but possible."
Money- Giving it away - Philanthropists
Updated: 14 Jul 2012
What compels people to give their money away?
10 July 2012 by Michael Bond
Meet Pamala Wiepking, who studies what makes philanthropists tick, and tells us why women, the elderly and the poor are more generous
What makes us give money to charity?
Most giving is done through some sort of social interaction.
Eighty-five per cent of donations are made in response to a direct request - through a friend, on the doorstep, through a media appeal.
People feel obligated because of their reputations - they want to establish them or don't want to damage them. In general the people who are most generous are the ones who are asked to give most often.
Who gives the most?
Religious people tend to be the most giving across the board.
There is a lot of research on that, and it applies across cultures.
This is partly because of the values they have grown up with, but also their religious attendance.
If you're getting together with other people who are giving, who can see whether or not you are giving, then to some extent you have to live up to those expectations if you want to be involved in this social group.
You have investigated whether we get more miserly as we grow old.
What did you find?
The older you get, the more likely you are to give more, but this evens out and eventually declines in people over 75. The economist Russell James and I did a study to find out why this is.
We thought it might be related to a decline in cognitive ability, but we didn't find that.
Instead we found that older people stop giving because they are less often in situations where they encounter requests for donations.
They are physically less capable of going to services or gatherings.
Does gender make a difference?
Women tend to be more generous.
That is partly because they are more empathic, care more about others and about inequality.
Men donate more to political parties, and they are more likely to be generous if they are well educated and well off.
But rich people aren't always the most philanthropically minded...
Poorer people give away a higher proportion of their income than richer people. I think there is a logical explanation for this.
Most people give similar amounts in similar situations.
If you're asked in a door-to-door collection you might give €2, if you're asked by direct mail perhaps €10, and that is equal across all incomes.
It is not because rich people are inherently less generous.
You've also looked at whether we lie about how much we donate.
What did you find?
We compared donations as reported in a survey with donations as recorded in a charity's database. Interestingly, we found that most people do not lie about their giving.
However, some people underestimate their donations, for example those with a Protestant religious affiliation (they do not want to make public that they gave; it is between them and God) and respondents in higher income households, who might have forgotten the relatively small donation.
How can people be persuaded to give more?
We need role models.
In the Netherlands, philanthropists are not publicly applauded. In the US, anyone who gives even a little is celebrated.
Pamala Wiepking researches the sociology, psychology and economics of philanthropy at Erasmus University, Rotterdam, the Netherlands
Money- JP Morgan loses $5.8 Billion
Updated: 14 Jul 2012
JPMorgan traders may have hidden derivatives losses
By David Henry and Jed Horowitz
REUTERS - JPMorgan Chase & Co (NYS:JPM - News) said its traders may have deliberately hidden losses that have since climbed to $5.8 billion for the year, in a development that may result in criminal charges against traders at the bank.
The bank's Chief Investment Office made big bets now known as "the London Whale trades" on corporate debt using derivatives.
JPMorgan said in the worst-case scenario those trades will lose another $1.7 billion, and it has fixed the problems in the CIO's office.
Even with the bank's trading losses, it earned nearly $5 billion overall in the second quarter, thanks to strong performance in areas like mortgage lending.
But JPMorgan's disclosure that CIO traders may have lied about their positions could bring even more intense regulatory scrutiny to the bank, analysts said. It is already under investigation by agencies ranging from the FBI to the UK's Financial Services Authority.
An internal review found that some of the CIO traders appear to have deliberately ignored the massive size of their trades -- and the difficulty in liquidating them -- when valuing their positions.
The result was not reporting the full declines in the value of positions.
A person familiar with the matter said a criminal investigation into people at JPMorgan is focusing on employees based in London.
"I see little doubt that someone is going to get charged with fraud," said Bill Singer, a lawyer at Herskovits in New York who provides legal counsel to securities industries firms, and publishes the BrokerandBroker website. Criminal charges are possible, he added.
The trading losses and possible deception from traders are a black eye for JPMorgan Chief Executive Officer Jamie Dimon, who was respected for keeping his bank consistently profitable during the financial crisis.
"(Dimon) has a lot of explaining to do about how this could happen," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
The Chief Investment Office became infamous in May when JPMorgan said bad derivatives bets had triggered about $2 billion of paper losses, a figure that turned into $4.4 billion of actual losses in the second quarter.
One trader in the CIO, Bruno Iksil, took big enough positions in the credit derivatives markets to earn the nickname "The London Whale."
He executed at least some of the big bets that caused trouble for the bank, and has since left JPMorgan, a source said on Friday.
Ina Drew, who headed the CIO, has also left, and offered to give back as much as the bank could claw back, said Dimon, whose pay could be taken back as well.
A spokesman for the bank said JPMorgan had accepted Drew's offer.
The bank said it had moved the bad trades from the CIO, which invests some of the company's excess funds, to its investment bank. JPMorgan was one of the inventors of credit derivatives, and its investment bank is one of the biggest traders of the product on Wall Street.
The CIO will now focus on conservative investments, JPMorgan said.
"We have put most of this problem behind us and we can now focus our full energy on what we do best," Dimon said in a statement.
JPMorgan said later on Friday that its former CIO risk officer, Irvin Goldman, had resigned. Goldman "behaved with integrity and we wish him well," JPMorgan said.
Many investors and analysts believe the company has done a good job of working through this difficulty, at least from a business standpoint. The bank said it hopes to resume buying back shares in the fourth quarter.
"People feel good that the loss is largely contained at this point," said Nancy Bush, a banking analyst at independent research firm NAB Research.
JPMorgan's shares rose 5.8 percent to $35.99 in afternoon trading.
But from a legal and regulatory standpoint, the difficulty with the CIO's office may only just be beginning. Lawyers said the bank's finding will likely add fuel to the multiple probes the company is facing now.
THE TEMPEST LEAVES THE TEAPOT
The bank posted second-quarter net income of $4.96 billion, or $1.21 a share, compared with $5.43 billion, or $1.27 a share, a year earlier.
The derivative loss after taxes reduced earnings per share by 69 cents, the company said.
JPMorgan said it expected to file new, restated first-quarter results in the coming weeks, reflecting a $459 million reduction of income because of bad valuations on some of its trading positions.
The bank found material problems with its financial controls during the period.
Friday's financial report came three months to the day after Dimon, 56, told stock analysts that news reports about Iksil and looming losses in London were a "tempest in a teapot."
That remark, which Dimon told Congress last month was "dead wrong," added to the damage the loss has done to his reputation and his argument that his bank is not too big to be managed safely.
A host of international regulators and agencies are probing the trading mishap.
Besides the FBI and FSA, they include the U.S. Securities and Exchange Commission, the Federal Deposit Insurance Corp, the U.S. Commodity Futures Trading Commission, the U.S. Treasury's Office for the Comptroller of the Currency, and the Federal Reserve Bank of New York.
(Reporting by David Henry and Jed Horowitz in New York, additional reporting by Chuck Mikolajczak; Editing by Lisa Von Ahn and Phil Berlowitz)
Money- Current Tory policies will result in poverty for decades as cost of ageing population rises
Updated: 13 Jul 2012
UK austerity set to last decades as cost of ageing population rises
Tax increases or more spending cuts will be needed to reduce national debt in long term,
says Office of Budget Responsibility
• Josephine Moulds
• guardian.co.uk, Thursday 12 July 2012 15.02 BST
Austerity measures will have to continue to find the extra £80bn needed by 2061 to pay for a rise in over-65s to 26% of the population, the OBR predicts.
The age of austerity will be longer that first thought if the UK is to keep up with the escalating costs of an ageing population, the government's independent economic forecaster has said.
The Office for Budget Responsibility said the UK's public finances were "clearly unsustainable" over the next 50 years, despite Chancellor George Osborne's punishing round of spending cuts.
Even if the government succeeds in saving £123bn over the next seven years, the OBR said it would need to permanently increase taxes or cut spending by 1.1% of GDP – around £17bn in today's terms – to get the national debt back to pre-crisis levels.
If the government continues with current policies, and if those policies succeed, the OBR said public finances would improve until the mid 2020s.
But there would still be a long-term deterioration in the decades that follow.
Net public sector debt is forecast to fall from 74% of GDP in 2016-17 to a low of 57% in the mid-2020s, before rising increasingly fast to reach 89% of GDP in 2061-62.
That is an improvement on last year's forecast that debt would reach 107% of GDP by 2061, but the OBR said more still needed to be done.
"On current policy we would expect the budget deficit to widen sufficiently over the long term to put public sector net debt on a continuously rising trajectory as a share of national income," it said.
"This is clearly unsustainable."
People over 65 are expected to make up around 26% of the UK's population by 2061, compared with 17% this year.
That will cost an additional £80bn in today's money to pay for health, pensions and long-term care, the OBR said.
Recent reforms to public sector pensions have cut costs by £175bn, it added.
The bulk of those savings, around £126bn, came from the 2010 decision to make pensions rise in line with the consumer prices index, rather than the retail prices index.
As well as the growing burden of paying for the elderly, the OBR noted that declining North Sea oil production is likely to put pressure on revenues over the next 50 years.
"This suggests governments are likely to need to find replacement streams of revenue just to hold the tax burden constant, let alone to meet the upward pressures on spending," it said.
Money-Interest rates predictions-A cut in 2013 before a rise in 2017-& a General Election in 2015
Updated: 12 Jul 2012
Interest rates predictions:
Markets predict a cut to 0.25% -
and a wait until 'March 2017' for a 0.75% base rate
By Andrew OxladeT:@andrew_oxlade
UPDATED: 12:46, 10 July 2012
We wish we could give an exact forecast on the future of the UK base rate, but we can't.
We CAN, however, arm you with the right information and views from those in the know so you can make your own call (this round-up is updated every few days).
No green shoots:
The gloomy outlook for the economy could see the Bank of England keep rates on hold for the long haul
When will the MPC make the first move?
Interest rate futures on money markets give an indication of shifting sentiment.
They moved dramatically in 2011.
At the extremes, they pointed to an immediate rise in spring, but by the end of the year indicated 2015 for the first increase.
In the first half of 2012, forecasts modulated between a mid-2014 and late-2015 prediction.
But the fresh turmoil in the eurozone has now pushed the 'first rise' prediction even further into the future.
It is also due to the Bank of England's new lending plans for banks [more is explained here]
Money markets today (10 July) imply rates will be cut from 0.50% to 0.25% in March 2013 and then rise back to 0.50% in January 2015.
A rise to 0.75% is not forecast until March 2017.
It's a significant shift from three months ago when the predictions for a rise to 0.75% was 'mid-2014' .
The market has only recently priced in that rates would fall before rising.
The June minutes from the Bank of England monetary policy committee (20 June) showed a reduction was discussed [read the full minutes].
The ramifications of the new dangerous phase in the euro crisis - the woes of Spain - appear to hit home in May, leaving us with the market's new ultra-dovish view on rates.
The International Monetary Fund wants (22 May) to see a cut to 0 per cent.
BDO's inflation index reflects expectations of price pressure within British industry and business
It was a very different story in April when inflation fears were sharply on the rise (see the chart right): it emerged that Adam Posen, the MPC's biggest fan of low rates, had finally changed his mind on QE (18 April).
Official figures (17 April) showed the consumer price index, which had been falling, rose from 3.4% to 3.5%.
But rate rise fears ebbed as dramatic events unfolded in Greece and Spain.
And then CPI showed a surprise fall to 3% in April, and it fell further, to 2.8%, in May.
Why 'swap rate' money markets matter to savers and borrowers
When markets move a decent amount - and the move holds - it can affect the pricing of some mortgages and savings accounts.
When swaps price a rate rise to come sooner, fixed rate savings bonds tend to marginally improve in the weeks that follow. But it also puts pressure on lenders to withdraw the best fixed mortgages.
As for using swaps as a forecast, we've consistently warned on this round-up that they are extremely volatile and should be treated with caution - they are a more a guide of swinging sentiment rather than an actual prediction.
This market forecast is watched closely by the Bank of England which references it in its quarterly inflation report. The latest forecast chart, published on February 15, is below. It also shows how expectations of a rise had moved further out.
Important note: Markets, economists and other experts haven't had a great record of making the right calls in recent years: 2010 predictions 2008 predictions.
This is Money has always advocated caution with any sort of prediction (including our own!).
There's no guarantee that those who have made correct calls in the past will make them in the future.
[More: Whether to trust predictions].
We'd also urge consumers not to gamble with their personal finances when it comes to predicting swings.
Recent history of rates and predictions
The MPC voted to 'hold' again in May, with the bank rate remaining at 0.5% well into a fourth year.
A rise still looks a long way off, with the mainstream predictions for the first increase ranging from 2013 to 2016.
The Ernst & Young ITEM Club, a group of economists, remains far more hawkish than the consensus.
It expects rates to start rising in a year if 'global input cost inflation increases again and the domestic economy begins to recover in the manner in which we anticipate', with a return to the 'normal' 4 per cent or 5 per cent by 2015.
The Ernst & Young ITEM Club's predictions for mortgage rates and the base rate is far more hawkish than the money market prediction
At the other extreme, the Centre for Economic & Business Research, which has previously been marginally ahead of the curve in understanding low rates were with us for the long-term, has been forecasting a far longer wait for a rate rise.
On 16 January, it said interest rates would remain on hold until 2016.
Capital Economics (9 March), another one of the more useful forecasters, said the base rate would not move until 2015.
So why such a long delay?
Economic prospects have steadily worsened in the past year - and a weak economy makes an increase in borrowing costs an unlikely option.
The prospect of low rates for years exists despite inflation remaining painfully high - it hit a peak of 5.2% (11 October) but is slowly easing lower (bar the odd blip), down to 2.8% in the latest figures, for May.
Policymakers are adamant CPI will fall back further this year, and fall under the 2% target by 2013.
In fact, it is now deflation that is emerging as a threat (4 July).
In early 2011 markets suggested a rate rise was imminent.
But predictions for the first rise have since taken huge strides into the future:
- In March 2011, a rise was seen as imminent;
- In June 2011, markets pointed to the first rise in summer 2012;
- By early August, it was early 2013;
- October - early 2014;
- November - early 2015;
- Mid-December - late 2015;
- Mid-January - early 2016;
- Early February - late 2014;
- Mid-March - early 2014;
- Mid-April - early 2015;
- Mid-May - early 2015;
- Mid-June - early 2017;
- Mid-July - early 2017.
Our tweeting on rates: @andrew_oxlade | @predict_rates
Read more: http://www.thisismoney.co.uk/money/news/article-1607881/Interest-rates-News-predictions.html#ixzz20NfsebIr
Money- HSBC fined $1billion for money laundering offences
Updated: 12 Jul 2012
HSBC joins hall of shame
after revealing it is to be fined $1bn
for money laundering offences
By Ben Griffiths
PUBLISHED: 22:06, 11 July 2012 | UPDATED: 22:12, 11 July 2012
..Britain’s biggest and most profitable bank last night joined the hall of shame when it was revealed it is to be fined $1bn (£600m) for money laundering offences.
The disclosure comes hard on the heels of the Libor-fixing scandal which has claimed the scalp of Barclays boss Bob Diamond.
The HSBC offences related to transactions that took place between 2004 and 2010.
Sorry: HSBC chief Stuart Gulliver admitted the bank had failed to deal with unacceptable behaviour
The bank will ‘acknowledge and apologise’ for its actions.
The disclosure came in a leaked internal memo from the bank’s chief executive Stuart Gulliver and emerged in Hong Kong, the centre of its Asian operations.
Gulliver said: ‘Between 2004 and 2010, our anti-money laundering controls should have been stronger and more effective, and we failed to spot and deal with unacceptable behaviour.’
He said it was ‘right that we be held accountable and that we take responsibility for fixing what went wrong’.
HSBC could be fined around $1bn (£600m) after a Senate probe which has lasted months as part of an effort to shine a light onto shadowy money flows.
The bank plans to ‘fully cooperate’ with any investigations.
The appearance by Europe’s biggest bank at the committee hearing next Tuesday comes just days after former Barclays chief executive Diamond was quizzed by MPs about the bank’s role in fixing the Libor-rate.
Gulliver admitted this was just the start and there could be further enforcement action from authorities in the US during the coming months.
HSBC is also under investigation by Wall Street watchdog the US Securities and Exchange Commission and the US Department of Justice. Those probes also are examining whether HSBC was vulnerable to illicit funds moving through the bank.
Another probe by the US Federal Reserve and Office of the Comptroller of the Currency found there was ‘significant potential for unreported money laundering or terrorist financing’.
HSBC’s expansion in the United States has proved damaging both to its balance sheet and its reputation. Its 2003 purchase of sub-prime lender Household Finance landed it with billions of dollars of write-offs. And its decision to buy two private banks owned by the Safra family has caused it problems over both money laundering and tax avoidance.
HSBC said: ‘As disclosed in regulatory filings, HSBC has been fully cooperating with the Senate Permanent Subcommittee on Investigations and regulatory authorities in the United States in relation to these issues.
Read more: http://www.thisismoney.co.uk/money/markets/article-2172187/HSBC-braced-faces-1bn-US-penalty-money-laundering-offences.html#ixzz20NeJv772
Money - Barclays tip of Banking and City Corruption Scandal-Nationalise the "Cesspit" Banks
Updated: 11 Jul 2012
Barclays scandal, tip of iceberg’
Tue Jul 10, 2012 9:15PM GMT
A senior Bank of England official has said that the Barclays Bank interest rate rigging scandal is just the tip of the iceberg for City corruption.
Speaking at the House of Commons Treasury Committee, the Bank of England’s deputy governor, Paul Tucker told British MPs that greedy bankers may have been rigging the figures across dozens of other markets as well as the “cesspit” of the London Interbank Offered Rate (Libor), reported The Sun.
The manipulation of Libor, a measure of how much banks charge each other for loans, cost Barclays record fines of £290 million. This was followed by the resignation of three top executives, Marcus Agius, the chairman of Barclays, Robert Diamond, Barclays Chief Executive Officer, and Jerry del Missier, Chief Operating Officer and a top deputy to Diamond.
Speaking to a British parliamentary committee on Wednesday 4 July, Diamond said Barclays had raised concerns on several occasions with American and British authorities about discrepancies over how Libor was set. However, the lender was not told to stop the practice.
On Thursday 5 July, British Chancellor George Osborne accused his shadow counterpart Ed Balls of involvement in the scandal suggesting that he had known about Barclays’ manipulation of Libor.
However, Tucker gave Labour a significant boost after he told British lawmakers that there was “absolutely not” any pressure from ex-ministers or mandarins on him to persuade banks to fix their Libor lending rates.
Warning against corruption within Britain’s financial system, Tucker also called on the British government to widen a Financial Services Authority investigation to look into all other unregulated deals.
Money-UK "Children in Poverty-Families standards of living falls"
Updated: 11 Jul 2012
Family of four need £36k for decent standard of living'
Joseph Rowntree Foundation report finds a couple with two children need £36,800 -
a third more than before the recession
• Randeep Ramesh, social affairs editor
• guardian.co.uk, Monday 9 July 2012 23.26 BST
The study found that childcare was now a family’s biggest weekly outgoing.
A couple with two children needs to earn £36,800 to have an acceptable standard of living, a third more than before the recession, according to a report published by the Joseph Rowntree Foundation.
In a review of minimum income standards, the foundation said soaring childcare and transport costs have combined with cuts to tax credits to hit families hardest.
It estimates that households need to spend £455 a week on essentials – a third higher than in 2008, and twice the rate of inflation.
One in four families in the UK now lack a decent standard of living, the report adds.
The foundation said its research was the first detailed assessment of the baseline level of living standards since the economic slump that began in 2008.
It found childcare was now a family's biggest weekly outgoing. In 2008, childminders outside London charged £2.70 an hour on average; now they charge £3.50.
With the cost of bus travel doubling compared with the cost of owning and running a car, families said that having a car was now essential in urban areas outside London.
These rising costs come as government cuts deeply into the subsidies paid to modern middle-class Britain. While the coalition has sought to soften cuts in tax credits with higher personal allowances, the effect is to take £1,000 out of families' pockets.
Julia Unwin, the foundation's chief executive, said: "Families have a monumental task trying to earn enough to get by.
Parents facing low wages and pressure on their working time have little prospect of finding the extra money they need to meet growing household expenses."
The foundation calculates that a single working age person needs £16,400 a year – equating to an hourly pay of £8.38 – to be able to participate in society.
A jobless person would be short by £108 every week of this "minimum".
"This year's research shows that a dangerous cocktail of service cuts and stagnating incomes are being keenly felt by parents. Many working people face the risk of sliding into poverty. It illustrates how anti-poverty measures are needed to address not just people's incomes but also the costs that they face."
For the poorest in society, the news is particularly bad.
The gap between the national minimum wage and the salary needed to reach the minimum standards has widened dramatically for families with children in the past two years.
Parents needed to earn an hourly rate 30% higher than the minimum wage in 2010.
This year the gap is 55%.
As incomes fall but expectations do not, the report reveals a picture of "austerity Britain" where increasing numbers are being left behind.
The research has found that a quarter of the UK's population live below the minimum income standard – 3 million more than in 2008.
People are reacting to harder times by spending less on presents at Christmas and birthdays and "buying expensive items such as bikes and games consoles second-hand".
The JRF found that size matters. For households with three or more children, a tumble dryer was now considered a "need to have" rather than a "nice to have".
Since 2010 the JRF study has found all working-age households needed to be able to have a computer in the home and connect to the internet. But today the researchers found if there were two school-age children in the home, then a family would need two computers.
Oxfam's director of UK poverty, Chris Johnes, said: "We could see a generation of families that have to go without essentials.
The government need to take action to protect the poorest families by reversing cuts to working tax credits and increasing the minimum wage.
Work should always pay enough for families to be able afford to have a decent quality of life."
A government spokesperson said: "We have had to make tough choices to repair the country's finances and return the economy to growth, but this government is committed to helping the most vulnerable in society.
By next year, we will have taken 2 million of the lowest earners out of paying tax altogether by increasing the personal tax threshold.
We are also introducing universal credit from 2013, which will simplify the system and ensure that work pays.
"It's vital that we give young children the best start in life, and that is why we are rolling out free early education, backed by more than £1bn, to help children and their parents.
We recognise that childcare costs are an issue and that is why the prime minister launched a commission into this matter which will report back in the autumn."
• For a full breakdown of spending, from after-school clubs to housing costs, click here
Money- China and EU lower interest rates-reflects economic growth slow down in both areas
Updated: 10 Jul 2012
Why did China and Europe cut interest rates simultaneously?
(People's Daily Online)
17:05, July 09, 2012
The People's Bank of China announced on the night of July 5 that the benchmark yuan deposit and loan interest rate will be cut since July 6, 2012.
Almost at the same time, the European Central Bank also announced the reduction of interest rate.
Reduction of interest rates in succession will have a superimposed effect
On June 8, 2012, the People's Bank of China cut the interests rate for the first time since three and a half years and it again announced to reduce it on July 5, which is the first time for Chinese central bank to carry out an asymmetric reduction of interest rates.
Remarkably, the European Central Bank also announced to cut interest rate of 25 basis points to 0.75 percent in less than an hour after the Chinese central bank announced the news.
It was the third reduction of interest rates since Mario Draghi was elected the president of European Central Bank and it also is the lowest benchmark interest rate in the history of the European Central Bank.
Why the two central banks simultaneously announced the reduction of the interest rates?
Sun Lijian, vice president of the School of Economics under the Fudan University, said that this is a coordinated reduction between Chinese central bank and its European counterpart.
It is obvious that a superimposed effect caused by simultaneous reduction will have a positive impact on the world and plays a great role in stimulating the international market.
However, in the opinion of Xie Taifeng, dean of the School of Finance under the Capital University of Economics and Business, China's reduction of interest rate is based on both China's economic growth situation and the external economic environment and is a comprehensive consideration.
Ba Shusong, deputy director of the Financial Research Institute under the Development Research Center of the State Council, said that recently the major economic entities, whether they are the developed economic entities or the developing economic entities, have an economic growth weaker than expected.
The synchronous weakening made these central banks return to the slack policy.
It can be said that China's central bank's reduction of interest rate was launched in the global backdrop
Money- Ch.4 Dispatches investigates HMRC Directors tax dodging
Updated: 10 Jul 2012
TV investigation uncovers possible tax avoidance
links to revenue directors
9 July 2012
An undercover investigation to be aired on Channel 4 this evening will cast new doubts over the commitment at the top of HM Revenue and Customs to tackling tax avoidance.
The Dispatches investigation exposes apparent conflicts of interest between members of HMRC's board of directors and companies involved in the sort of schemes that deprive our public finances of tens of billions of pounds every year.
The press release for the programme, Secrets of the Taxman, outlines the company connections of two of HMRC's non-executive directors Phil Hodkinson and John Spence.
Channel 4 says Mr Hodkinson, a director who chairs HMRC's ethics committee, earns more than £125,000 a year from Resolution Ltd, which is incorporated in the tax haven of Guernsey where it does not pay income or corporation taxes.
Mr Spence, who was a board member until 30 June and chaired the department's audit committee, is also the chairman of a major estate agent and financial services group, one of whose senior employees was secretly filmed offering to reduce stamp duty on the sale of multi-million pound properties.
Margaret Hodge MP, chair of the Commons public accounts committee told Dispatches that no non-executive director on any government body should be associated with tax avoidance schemes, and promised to challenge HMRC on the findings.
The programme also discovered that Apex Credit Management Ltd, one of the 11 private debt collecting agencies contracted by HMRC, is controlled through a complex web of companies by a firm based in Guernsey.
On Apex, Richard Murphy, who continues to work with PCS on our tax justice campaign, said: "The very existence of a Guernsey holding company, Luxembourg intermediate company, UK trading company structure would cause me concern.
What it smacks of is tax planning."
The individuals featured, their companies and HMRC all denied there was any conflict of interests.
The programme is due to be broadcast on Channel 4 at 8pm this evening.
Find out more about our tax justice campaign
Tens of thousands of revenue staff strike against damaging cuts
Money - In the Grip of the Fat Cat Bankers- The truth about traders,tantrums and toxic deals
Updated: 09 Jul 2012
Whistleblower The culture ultimately comes from the top'
As the scandal over Barclays bank grows,
one whistleblower reveals the truth about the shocking world of traders,
tantrums and toxic deals
Saturday 07 July 2012
I worked at Barclays for a long time – years – and to begin with it was run by people who cared about individuals.
There is no evidence of that in Barclays as it is now, none whatsoever.
All those people care about is making more money.
A lot of the old Barclays people, they have been managed out of the business.
It really started to change in the middle of the last decade.
They hired a lot of managers from places like Citigroup and JP Morgan.
They changed it.
There was a culture of fear and all these people who had been there for years were managed out.
Bob Diamond was the CEO and his policies come down through the executive committee, and then MDs and directors push that down through the firm.
All of this stuff ultimately comes from the top.
The MPs will never force him to give the full picture about the way Barclays was run and the way it still is, through a culture of fear. You fear for your job and you fear for your bonus.
Diamond said he found out what his traders were up to only two weeks ago, when the fines dropped into his inbox.
What I don't understand is why the MPs didn't make more of that.
If that is the case, and yet they've paid £300m in fines, in my view it is impossible that he wouldn't have known.
Barclays operates a policy of escalation.
That is endemic. It is almost entombed in the culture of the bank.
The purpose of that is that if something goes wrong it gets escalated up the line.
I don't know how or why Diamond wasn't questioned more on that point.
Libor fixing was escalated by several people up to their directors, they would then have escalated it up to the line because, at Barclays, if you don't escalate and it is found that out you haven't, it is grounds for disciplinary action.
You will be dismissed.
You are taught that, and you have to do regular in-house FSA courses.
You have to sign off every year. If a member of a team saw something and didn't escalate they would be fired.
That company moves billions around on a day-to-day basis.
Sometimes money gets paid to the wrong place because, you know, everyone is human.
Not every system is foolproof. When that happens, you escalate it up to your senior who has more knowledge.
The error gets looked at and the systems are checked and the training is checked so that it can't happen again. Mistakes would never be tolerated for long.
Barclays is a very well-run bank. I seriously couldn't fault the way it is run.
All the fees are collected on time, all the cash is collected and paid out.
And the reason for that is if you didn't do your job you were fired.
Back in 2008, we noticed what was going on with Libor.
We were informed on a weekly basis of the rates we were having to charge to clients and the rates at which Barclays was borrowing.
The dealers in our Treasury area, they would send a monthly update of the difference between the Libor interest rate they were quoting and the Libor they were getting.
They were advising us of the difference of what was being published and their actual cost of funds.
This was escalated up.
There was a culture of fear.
Basically you were always frightened of losing your job.
They'd shout at you.
I know of incidents where they'd smash the desk with their fists, and I personally have felt physically threatened.
But there is no point in pursuing it. You'd get nowhere.
Anyone could have made a complaint.
It would have been investigated because they have to.
But you know that that person being complained about has been brought in to get people to do more.
So you wouldn't win.
The culture would be encouraged by senior people.
And if you want to get paid you have to put up with it. If you complain about it, they are very clever.
They won't fire you instantly, they will demoralise you.
They will move you on to a job you don't want to do.
In the end, they will manage you out on the basis you have lost interest.
There are people that work there, that do a really good job, go beyond what they are supposed to do but don't want to do anything else than their current job.
I had analysts, executives, that were good but didn't want to do anything else.
The problem for them is, every year you would have to force-rank all the people in your team.
Even if someone performed extremely well, but just wanted to stay in the same job, they would lose out on their A grade to newer or more keen people coming along on, the basis that other people were prepared to do more, do more difficult roles, do longer hours.
You're always scared of the end-of-year grade.
There were very difficult conversations I had to have with people who had done well. It was always do more, work weekends.
Did people crack? Some did. People work fro m 7am to 6pm.
But some work from 7am to 10pm. If you have family, you only see them at weekends.
But some people work weekends too.
You have a BlackBerry and when you come home you will still get lots of emails.
You are constantly on call.
It is a big fight.
You have to grow some skin, grow some balls.
Most sit there in silence and go out and cry afterwards, particularly the girls.
You do exactly what they want.
If you want their money, you have to work their rules.
If you don't, you'll slip down and be gone.
But anyone below director is not getting great money.
What annoys me is the press talks about fat-cat bankers. It isn't the case.
It's only the people at the top that get the real money.
But if you say you work for Barclays Capital, they think you're a robbing bastard or extremely wealthy.
The money is good, though. I earned more than a doctor, say.
And why did I do it?
The money. Providing you do exactly what they want.
Even after it all, I loved Barclays, despite the very hard work.
I still do, and I'd do it again in an instant.
It's a pride thing. It's all I've done.
Bob Diamond told us he loved Barclays: Well, his staff hated it...
Diamond (to select committee this week)
I love Barclays. I love Barclays because of the people.
"Barclays used to be run by people who cared about individuals but there is no evidence of that in Barclays Capital as it is now, none whatsoever.
All these people care about is making more money."
It was wrong.
It was not reported up.
It should have been reported to compliance and to their supervisors.
If something goes wrong it gets escalated up the line.
Libor fixing was escalated by several people up to their directors, they would then have escalated it up the line because at Barclays if you don't escalate...
You will be dismissed.
In terms of honesty, integrity and plain dealing, that is how I have behaved in my entire career in the business.
MPs will never force Bob Diamond to tell the whole picture about the way Barclays was run and the way it still is, through a culture of fear.
Bad bosses: Corporate scandals
Following its collapse in 2001, the company's name became a byword for corporate corruption.
Fraudulent accounting at the Houston-based commodities conglomerate allowed executives to hide billions of dollars in debt from failed deals and projects.
The company's collapse resulted in the cutting of 20,000 jobs and an $11bn (£7bn) loss for shareholders.
Greg Smith, a senior US Goldman Sachs executive, used the pages of The New York Times to deliver his resignation letter.
His verdict of the corporate culture within the investment bank was devastating: "I can honestly say the environment now is as toxic and destructive as I have ever seen it."
He claimed Goldmans was obsessed with the bottom line at the expense of its clients.
The bank denied his claims.
Rupert Murdoch's media empire is struggling with accusations that its corporate culture was saturated with either wilful ignorance or a willingness to look the other way as employees at a number of its titles indulged in illegal practices.
Its detractors insist senior executives knew much more about the phone-hacking scandal than was originally admitted to, though this is strongly denied.
The new police investigation into the allegations resulted in many arrests
Money- End the Independence of the Bank of England but don't nationalise all finance institutions
Updated: 07 Jul 2012
Nationalising all the banks not a good idea
Friday 06 July 2012
If he means state ownership for every insurance company, credit union, friendly society and building society as well as the big banks, as a co-operator I do not think that would be a good idea.
That does not mean however there are not some key things we need to do.
First, we must end the so-called "independence" of the Bank of England.
This was always like putting a fox in the hen house.
One of the proudest achievements of the post-war Labour government was the nationalisation of the Bank of England.
In its current form it is clearly suffering from regulatory capture and must be brought under the control of the government with its objectives realigned to the nation's rather than the bankers' interests.
Second, we must completely separate retail from investment or casino banking and remove the public safety net from this kind of speculative activity.
The taxpayer should not be forced to bail out or effectively subsidise speculation which is neither economically efficient nor beneficial to the wider public interest.
Then the process of mutualisation of the remaining retail banks could take place, beginning with the ones the government already owns.
There would also be space in this system for a national investment bank to invest on a regional basis in key infrastructure and industries taking a long-term view in the national interest.
Finally, a retooled Financial Services Authority needs to be given the teeth to look after the interests of consumers in this new system.
This process would, I believe, take away the perverse incentives that currently exist in our banking system that no amount of regulatory tinkering can remedy.
Money- Coutts, the Queens banker makes a final withdrawal
Updated: 07 Jul 2012
Coutts charges £600 a year for current account
(but not it's favourite customer... the Queen)
• By Becky Barrow
Her Majesty will still be able to bank for free but thousands of other customers won't be so fortunate.
Coutts, the Queen's bankers, has 'outraged' many by forcing them to pay £600 a year for a basic current account.
The banking giant which is majority-owned by the State, has written to its customers this week warning of its new charging structure, which was yesterday branded 'unfair.'
Unpopular move: The new charging scheme at Coutts could cost customers tens of thousands of pounds over the years
At present, the bank forces everybody to have at least £10,000 in their current account to avoid the £150 quarterly charge.
But the letter warns its customers that this rule is being scrapped.
Under the new rules, you will be charged £150 every quarter - even if you have the minimum balance in your account.
The bank blames the huge fee hike on 'the cost of providing a full private banking service', and claims that it has 'continued to increase.'
Exempt: The Queen, Coutts most famous customer, will not have to pay the new bank charges
There is now only one way to bank for 'free' with Coutts - you have to have £250,000 of savings, investments, a mortgage, or a combination of two or three of them, with the bank.
The new system, which comes into effect from 1 September, is a terrible shock for customers, many of whom are elderly and have banked with Coutts since childhood.
Today one disgruntled customer, who has been with the bank for 25 years, said she is 'outraged' by the new charges.
The fees of £600 a year are the equivalent of £1,000 for a higher rate taxpayer because they must be paid out of post-tax income.
She said: 'If I live for another 20 years, they are going to charge me £20,000 - and what am I actually getting for my money?
'I have been with Coutts for a quarter of a century, but I shall be moving.'
Eddy Weatherill, from the Independent Banking Advisory Service, accused the bank of 'squeezing its customers between a rock and a hard place.'
He said: 'As taxpayers, they are paying for the bank and they are paying for it as current account customers too.'
Coutts is owned by Royal Bank of Scotland, which is 84 per cent owned by the taxpayer who have pumped £45billion into the disgraced banking giant.
Coutts was set up in 1692 - two years before the Bank of England - and has an exclusive client list from the Queen to Premier League footballers, but also many customers who are far less wealthy.
Many are already struggling to keep up with the £10,000 minimum balance, a rule which was introduced in 2008 when it was doubled from £5,000.
Andrew Hagger, from the financial information firm Moneynet, said: 'It is just so very one-sided and unfair.
'The scales are tipped in the favour of the big banks, rather than its customers who has been with them for years.'
Experts said banks, such as Coutts, hike their fees, but hope that its 72,000 customers will be too lazy to do anything about it.
Kevin Mountford, head of banking at the comparison website Moneysupermarket.com, said: 'People really need to think whether or not they are getting value for money with their bank.
'Most of the banks rely on consumer apathy that people will not ever bother to leave.'
Sir David Money-Coutts, who has died aged 80, was the seventh-generation chairman of
Coutts & Co, the London bank which traditionally provided accounts — and overdrafts — for
members of the Royal family.
5:48PM BST 02 Jul 2012
Founded in 1692 by a Scottish goldsmith, John Campbell, under the sign of the Three Crowns in the Strand, the bank took the name Coutts from two brothers, Thomas and James, who joined the partnership in the mid-18th century — James having married Campbell’s granddaughter. It was Thomas who established the firm’s reputation as private bankers to the aristocracy, and secured its royal connection.
Though it became a subsidiary of the National Provincial Bank (later part of NatWest) in 1920, Coutts maintained the style and management practices of a 19th-century partnership into the era of computerisation and increasing competition that began in the 1960s. David Money-Coutts, who became a managing director in 1970 and succeeded Sir Seymour Egerton as chairman in 1976, faced the challenge of steering a course between tradition and modernity.
Ably assisted by his cousin and deputy chairman Lord Harrowby, Money-Coutts oversaw a transition of the business into one which kept a sharper watch on cost, profitability and internal efficiency — but also sought to maintain, through personal accessibility and attention to individual customers’ circumstances, the “soul” which one of them, the writer Osbert Sitwell, had praised in earlier times.
Tall and angular, Money-Coutts bore a distinct resemblance to his ancestor Thomas, whose statue dominated the foyer of the bank’s Strand headquarters. He also shared the characteristic of “exactness” for which Thomas was famed.
David Money-Coutts had a reserved manner and was a stickler for exactness: he described himself as “fairly pernickety ... people say I ought to have been a schoolmaster”. But brusqueness disguised a genuine kindness and concern towards both customers and staff. He was a perfectionist with a practical eye: on his daily round of the bank’s departments, he would sometimes pause to repair an out-of-action item of office machinery. He was also notably unstuffy. “We are not snobs,” he once observed, “though some of our customers are.”
Symbolic of Coutts’ willingness to embrace the future during his tenure was the refurbishment of the Strand building. After a long planning battle, the final design by Sir Frederick Gibberd incorporated the first glazed atrium and internal garden in a London office complex within John Nash’s triangular scheme from 1831, famous for its “pepper pot” corners. When the Queen came to perform the official opening in 1978, Money-Coutts reminded her that his great-great-great-great-grandfather Thomas had been a Gentleman of the Privy Chamber to hers, George III.
“With all those greats on both sides,” Her Majesty replied, “I do indeed agree that this is very much a family occasion.” She went on to acknowledge the wisdom of Coutts’ financial advice to royal customers over the generations, “even if they have not always been grateful for it”.
The boom years of the 1980s brought new pressures, both in risk control and in profit performance. Having previously allowed Coutts directors a high degree of autonomy, NatWest began to demand much more from them, and in 1990 a strategy was conceived in which “Coutts & Co” would become the global brand for the group’s services for high-net-worth customers.
Money-Coutts declared that this could be achieved “whilst retaining the character of a much smaller private bank”. But in the view of many observers, his retirement from the chair in 1993 marked the end of the era of benign and cautious but forward-looking dynastic management which had served Coutts and its customers so well.
David Burdett Money-Coutts was born on July 19 1931 . He spent his childhood in Ayrshire and was educated at Eton. After National Service with the 1st Royal Dragoons in Germany and Egypt (where he contracted polio, but made a full recovery), he read PPE at New College, Oxford. His paternal ancestor, the Rev James Money, had married Clara Burdett, a granddaughter of Thomas Coutts. The surname Money-Coutts was adopted by James and Clara’s descendants, and in 1912 the ancient barony of Latymer was revived in favour of David’s great-grandfather, Francis Money-Coutts.
David’s grandfather and uncle, respectively the 6th and 7th Lords Latymer, were directors of Coutts, but his father Alexander made a career in the Imperial Tobacco Company. David thought of following him until he was invited to join the bank after graduation in 1954. After four years’ probation, including a secondment to a City stockbrokers, he became a junior director.
Sharing an open office with his colleagues, he participated in a unchanging daily routine of collective decision-making: administration matters at 10am, loans at 11.30, trustee business at noon, onwards to lunch and letters to be signed thereafter. All male staff, including directors, wore frock-coats — which Money-Coutts regarded as “good for morale, because everyone looks smart”.
Recognising his personal role as banker to the Royal family, he was appointed KCVO in 1971. Well-respected throughout the financial establishment, he was also chairman of the investment group M&G, deputy chairman of the discount house Gerrard & National and of Phoenix Assurance, and a director of Dun & Bradstreet, the credit reference agency. At NatWest he was a director from 1976 to 1990, and chairman of the bank’s southern regional advisory board.
Beyond the City he was much involved in the field of health care as a governor of Middlesex Hospital, a member of the Kensington, Chelsea and Westminster Area Health Authority, chairman of the Medical Schools Council and a trustee of the Multiple Sclerosis Society. He was chairman of the Scout Foundation and the Old Etonian Trust .
He married, in 1958, Penelope Todd, who in an unguarded interview at the time of his knighthood revealed that he could cook, iron and sew — indeed, do anything domestic “except give birth” — and that although he was the “kindest, nicest man”, he had once tipped a bowl of bread and butter pudding over her head in anger. She survives him with their son and two daughters.
Sir David Money-Coutts, born July 19 1931, died June 25 2012
Money- Europe slashes its interest rate to stimulate its sagging economy
Updated: 06 Jul 2012
European Central Bank slashes interest rates
Widely expected quarter-percentage point cut
intends to make both businesses and
consumers borrow and spend more money.
Last Modified: 05 Jul 2012 20:22
President of the European Central Bank, Mario Draghi, speaks at an ECB press conference in Frankfurt [EPA]
The European Central Bank has cut its key interest rate by a quarter percentage point to a record low 0.75 per cent to try to help ease Europe's financial crisis and boost its sagging economy.
The action, which was widely expected, is meant to make it cheaper for businesses and consumers to borrow and spend money.
But experts said that fear over the economy was so high in Europe that the cut might only have limited effect.
In a more surprising move, the ECB cut the interest rate it pays banks on overnight deposits by a quarter percentage point - to zero.
This pushes banks to lend the money, rather than sock it away with the ECB.
ECB President Mario Draghi said the eurozone economy would recover only gradually. Some of the risks foreseen from the debt crisis had already materialised, pushing the bank to act, he said.
Analysts warned the rate cut might do little to jolt the eurozone economy back to life, however.
Borrowing rates are already low, but businesses and households are not spending money because they are afraid of the economic outlook.
Follow our comprehensive Euro Crisis spotlight coverage
Draghi said there is more the ECB could do to stimulate growth. "we still have all our artillery ready," he said, adding that low inflation gives the bank more wiggle room. But he suggested no further actions were imminent.
Stock markets initially rose after the news, but the gains faded as investors worried about a slowdown in the global economy.
Germany's DAX stock index fell 0.5 per cent and the Dow 0.2 per cent. The euro was down 1.1 per cent to $1.2380.
"Today's ECB interest rate cut does little to alter the bleak economic outlook," said Jennifer McKeown, analyst at Capital Economics.
She said the ECB is likely to now wait and see how the financial markets and the economy react to the rate cut and to the new emergency measures announced by European leaders last week.
The leaders agreed to make it easier for troubled countries and banks to receive rescue loans from Europe's bailout fund and also signaled greater willingness to use emergency funds to purchase government bonds.
The goal would be to drive down troubled countries' borrowing costs. They also agreed to create a single Europe-wide banking regulator to prevent bank bailouts from wrecking individual countries' government finances.
Collectively, the moves sent a message to financial markets that leaders from the 17 countries that use the euro could work together to fix their problems.
They also helped lower the high borrowing costs for financially stressed countries such as Italy and Spain, the euro region's third- and fourth-largest economies.
Lending activity in the eurozone has remained weak because businesses are not asking for credit because of the slow economy and out of fear that the eurozone may suffer a further financial calamity.
Concerns remain that bankrupt Greece could eventually leave the euro, causing more turmoil, or that Spain and Italy could need bailouts that would strain the resources of donor countries.
Money- A Flawed Diamond but Banks are made of Marble and their vaults stuffed with our Silver
Updated: 06 Jul 2012
UK MPs question former Barclays executive
Ex-CEO Bob Diamond admits "reprehensible behaviour" at bank over interest-rate rigging during testimony to parliament.
Last Modified: 05 Jul 2012 04:25
Bob Diamond, the former Barclays chief executive, has acknowledged that there were "mistakes" and "reprehensible" behaviour at the bank, in testimony before British politicians about the rigging of key London interest rates.
"Clearly there were mistakes, clearly there was behaviour that was reprehensible," Diamond said on Wednesday, while insisting that Barclays had acted quickly to tackle problems as soon as the rate-fixing scandal came to light.
"The attitude of Barclays three years ago when this was recognised was, let's get to the bottom of it," he said.
Diamond quit as chief executive of the British bank on Tuesday, the same day as the firm's chief operating officer Jerry del Missier.
They stepped down after chairman Marcus Agius had resigned on Monday.
Libor and Euribor
Last week, the bank was fined $455m by British and US regulators for attempted rigging of the Libor and Euribor interest rates.
Libor is a flagship London instrument used throughout the world, while Euribor is the eurozone equivalent.
The rates play a key role in global markets, affecting what banks, businesses and individuals pay to borrow money.
Manipulating the rate could have given the impression that the bank was in a stronger position financially than it actually was.
Diamond also said he was concerned that British officials could have misunderstood what he said was a situation of adequate funding for Barclays in 2008, at the height of the financial crisis, which is at the centre of the allegations.
He said this could potentially have led to the nationalisation of Barclays, as happened to other UK banks like Royal Bank of Scotland.
"If Whitehall then was told Barclays was at the highest of Libor", officials might have told themselves, "''My goodness they can't fund, we need to nationalise them' as they had nationalised other British banks", Diamond said.
Money- The Banks are serially corrupt but do politicans come up smelling of roses ?
Updated: 06 Jul 2012
Monday, 2 July 2012
Banks are serially corrupt.
But Vince Cable's shareholder plan won't work
Banks are serial offenders and can't be controlled by shareholders.
Vince Cable, the business secretary, has correctly identified the problem of corruption at banks, but his policy prescription of asking shareholders to invigilate abusive organisations and executives has not worked and will not work.
Contrary to Cable's claims, shareholders are traders and speculators rather than owners.
They barely hold shares for more than three months and do not have a long-term interest in the business.
They have been utterly ineffective at curbing corrupt practices at banks, as evidenced by the tide of scandals.
Banks are under the spotlight for the Libor scandal and mis-selling of loans to small businesses, but they are serial offenders.
The mid-1970s secondary banking crash highlighted fraudulent practices, which also engulfed the property and the insurance sectors.
The government bailed out the banks and in turn had to resort to loans from the International Monetary Fund.
In the 1980s the financial industry sold around 8.5m endowment policies for repaying mortgage loans.
These were not suitable for all borrowers.
Banking staff received commission for selling the policies.
The risks were often not explained to the borrowers.