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Posted by: financialtrouble     

Chancellor Alistair Darling officially gave the controversial 50p broadband levy the go-ahead today in the 2010 Budget as he outlined plans roll-out an improved broadband network across the UK.   Darling confirmed details to provide the majority of UK homes (90 per cent) with access to super-fast broadband by 2017, funded by a £6 annual tax on landline phones. The tax for this Next Generation Fund (amounting to 50p per month plus VAT) will be charged on all lines available for use by an owner, regardless of whether they're making use of it or not.   The Labour government is confident provision of an improved broadband network across the country will create "hundreds of thousands" of new jobs and could lower the cost of public spending as more services go online. Speaking on the commitment the chancellor commented in his budget speech: "The UK has the potential to be a digital world leader. It needs high-speed broadband for rural areas as well as urban, it must not be limited to the well-off."   Confirmation of the 50p broadband levy has been a long time coming and in that time it's rallied up quite a lot of competition. In fact, if the Conservative party win the next election the proposals could be scrapped altogether. They've pledged to ditch the tax if they come into power, instead choosing to focus on providing a more specific 100Mb broadband for the majority by 2017. Rather than gathering funds from a broadband levy on phone lines they say they will be able to subsidise cabling in rural areas with funds from private investors, with any shortfalls being made up by the licence fee.   Earlier this week Prime Minister, Gordon Brown showed his commitment to improved high-speed web access in a pre-budget speech: "Faster broadband speeds will bring new, cheaper, more personalised and more effective public services to people," said Brown. "It will bring games and entertainment options with new levels of sophistication."   However, some industry experts, including the likes of Eclipse Internet's proposition manager, Paul Richens, believes it would be more beneficial to concentrate on providing basic broadband access for all, rather than focussing on speeding broadband for the "majority".   Chancellor Darling did not comment on when the broadband tax would come into force.

Tags: Budget, UK, 2010, Tax, Broadband
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The European Union's top regulatory official said the bloc will consider banning “purely speculative” credit-default swaps as German Chancellor Angela Merkel called for a crackdown on derivatives trading to prevent a rerun of the Greek financial crisis.   European Commission President Jose Barroso said today the 27-nation region will “examine closely the relevance of banning purely speculative naked sales on credit-default swaps.” Merkel, speaking before Greek Prime Minister George Papandreou meets President Barack Obama in Washington today, said the EU must take the lead in curbing derivatives.   “We’re of the opinion that a quick implementation of actions in the area of CDS has to happen,” Merkel told reporters in Luxembourg. Citing “ongoing speculation against euro-region countries,” she called for the “fastest possible” implementation of new rules.   European leaders are ratcheting up the pressure for global regulation of derivatives amid the Greek fiscal crisis. The commission, the EU's executive arm, will also propose creating a lender of last resort to aid cash-strapped members such as Greece, a proposal that has divided the region's leaders.   Papandreou said in a speech in Washington yesterday that “unprincipled speculators” threatened a new global financial crisis and said he’d press Obama to support EU efforts to target speculation.    ‘Enough Is Enough’    “Europe and America must say ‘enough is enough’ to those speculators who only place value on immediate returns, with utter disregard for the consequences on the larger economic system,” Papandreou said.   Germany's BaFin financial regulator said market data doesn’t back up claims that swaps were used to speculate against Greek bonds. Data provided by the U.S. Depository Trust & Clearing Corporation didn’t show that new open positions were built up and also didn’t indicate “massive speculative action,” BaFin said in a statement yesterday.   Blaming derivatives for Greece's debt crisis “confuses cause and effect,” and a ban could lead to “mispricing of financial risks,” said Tim Brunne, a credit strategist at UniCredit SpA in Munich.   The cost of swaps on Greek bonds surged to a record on concern the government will struggle to repay more than 20 billion euros ($27 billion) of debt coming due by the end of May. The risk premium investors demand to buy Greek 10-year bonds over comparable German debt has also surged, causing a jump in the country's borrowing costs. The spread is currently 305 basis points, more than twice the level at the start of November.    Lacking Transparency    “The CDS market has developed very strongly and drives prices in bond markets,” Bundesbank President Axel Weber, a European Central Bank governing-council member, told reporters today in Frankfurt. “Not everybody who buys protection has an underlying exposure. It's a very intransparent market, we need to have a much more transparency.”   Papandreou compared investors buying protection on underlying assets they don’t own -- so-called naked swaps -- to someone taking out fire insurance on a neighbor's house. They then have an incentive to burn it down to collect, he said.   U.K. Finanical Services Authority Chairman Adair Turner told a parliamentary committee last week that CDS, and naked CDS in particular, need to be examined by policy makers.   Speaking in a telephone interview before Barroso made his comments, FSA Spokesman Joseph Eyre referred to Turner's testimony last week. The FSA didn’t return a call or e-mail seeking comment on Barroso's speech.    ‘No Useful Purpose’    “Naked CDS serve no useful purpose and are dangerous,” Richard Portes, professor of economics at London Business School, said in a telephone interview today. “They do not help significantly price discovery or liquidity. They’re not analogous to short selling equities because they will affect the cost of funding.”   Barroso said that he would press leaders of the Group of 20 nations to curb swaps at a meeting in June. He also said that the creation of a European Monetary Fund to aid struggling EU members would be a long-term proposal that may require changes to EU regulations. Yesterday, Merkel indicated that a proposal to create the lender of last resort could be ready by June.   Merkel, whose finance minister Wolfgang Schaeuble champions the idea of such a fund, said it would work as “a measure of last resort” and only after “a cascade of sanctions” against governments that break euro rules. Amending European treaties would be required, she said.    ‘Other Ideas’    French Finance Minister Christine Lagarde said today an EMF may not be the best option. “Other ideas need to be studied and those that respect the Lisbon treaty are much preferable,” she said in Paris. The ECB's Weber also questioned the fund proposal, saying that there should not be “institutionalizing of emergency aid.”   Greece's ability to tame the EU's largest budget gap, at 12.7 percent of gross domestic product, prompted speculation that the country would need a bailout and could be forced to abandoned the single currency. The euro has declined 5 percent this year as Greece's financial woes undermined raised questions about the strength of monetary union.   Papandreou's government last week outlined measures to save 4.8 billion euros ($6.5 billion), including higher fuel, tobacco and sales taxes, as it seeks to lop 4 percentage points off the budget deficit. It was the third package of measures this year and the government said it would guarantee that Greece would make good on a pledge to trim the shortfall to 8.7 percent in 2010.   Greece is “on track” to achieve its deficit-cutting goals following the passage of extra austerity measures, EU Economic and Monetary Affairs Commissioner Olli Rehn said today in an interview in Strasbourg, France. The new measures put Greece “onto the path of fiscal adjustment for 2012 below 3 percent” of GDP, he said.

Tags: Greece, EU, Crisis, Merkel, European
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Posted by: financialtrouble     

 
What is the problem with Greece?

When the global financial crisis struck Greece was badly prepared after years of profligacy, hosting an expensive Olympic games in 2004, and failing to rein in its spiralling public debt. Government debt was worth more than a full year's output in 2009, and is expected to be 120% of GDP this year. Greece was picked out as vulnerable from the start of the crisis, but with the government struggling to persuade the markets to trust its plans to cut its deficits, it has been targeted by financial speculators who believe it could default on its debts. Reports suggest that traders and hedge funds have placed an $8bn (£5bn) bet that its problems will result in a fall in the value of the euro.

What is the rest of the world going to do about it?

Help appears to be on the way in the form of a eurozone bailout. This would be the first rescue of a member of the single currency, though European funds were used to support Hungary and Latvia as part of the bailouts brokered by the IMF at the height of the credit crunch. An EU summit in Brussels tomorrow will address the Greek crisis in the hope of containing the growing threat to the eurozone.

Why does it matter?

Although Greece's economy is tiny in international terms, its financial crisis has reminded investors that one legacy of the deep recession of the past two years is heavily indebted governments, which can no longer rely on cash-rich financial markets to provide cheap borrowing. And Greece's problems are especially worrying because they endanger the stability of the single currency: foreign exchange traders can't vent their worries about Athens going bust by selling off the drachma – their only option is to dump the euro, threatening a full-blown crisis for the currency.

Couldn't the rest of the eurozone just let Greece default on its debts?

No. If that were allowed to happen, or Greece were permitted to split from the 16-member single currency zone, speculators' attention would soon turn to much larger states with formidable public deficits, including Spain, Portugal and Ireland, potentially blowing the euro project apart. In other words, letting Greece sink could turn out to be the equivalent of the decision to let ­Lehman Brothers go bust, but for a whole country. That's why the French and German governments appear to be gritting their teeth and considering a bailout of their Aegean cousins.

How is it going to affect me?

The crisis could push up the cost of borrowing for other states with large deficits, including the UK, where the annual budget shortfall this year of 12% of GDP is only a shade short of Greece's 12.7%. That could mean higher interest rates for the government – and higher taxes for the rest of us.

But there is at least one positive aspect; if the euro continues falling, visits across the euro zone will get cheaper and cheaper..

Tags: Greece, Crisis, Problems, Trouble, Europe, Euro
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Greek Prime Minister George Papandreou said on Wednesday his debt-stricken country was not seeking European taxpayers' money but needed a breathing space to cut its budget deficit and borrow "on normal conditions".
 
He made the comments after European Union finance ministers told Greece it will have to take additional austerity measures to achieve steep deficit reduction targets this year.
 
"We haven't asked for money from German, French, Italian or any other taxpayers," Papandreou told a cabinet meeting. "What we want is political support to end profiteering and the defamation of our country."
 
His remarks came amid mounting opposition in Germany and other northern European countries to any bailout for Greece, which is struggling with a debt mountain set to reach 120 percent of gross domestic product this year.
 
"What we have asked for is the time we need to apply our program, which will give us credibility and allow us to borrow at normal conditions," Papandreou added.
 
German Chancellor Angela Merkel, facing strong public hostility to any financial assistance for Athens, told a political rally it would be a disgrace if banks that had brought the global financial system to the brink of collapse turned out also to have helped Greece falsify its budget figures.
 
She was referring to disclosures that U.S. investment bank Goldman Sachs arranged a derivatives deal for the Greek government in 2001 that enabled it to conceal the extent of its deficit by deferring interest payments.
 
Greek Finance Minister George Papaconstantinou told parliament in Athens that the swap deal had been entirely legal and compliant with EU rules at the time.
 
Debt markets gave stressed governments on the euro zone's southern rim a breather on Wednesday.

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Tags: Greece, Financial, Trouble, Problem, EU, Taxpayer...
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The decision by the Bank of England's Monetary Policy Committee (MPC) not to extend its policy of injecting money into the economy, known as quantitative easing (QE), come as it left interest rates at a record low of 0.5pc.
 
The Bank started QE in the depths of the recession last March in an effort to ward off the threat of deflation and prevent the economy tipping into depression. Almost a year later, the Bank's main measure of inflation rests at 2.9pc and the economy has officially exited the downturn. The MPC, led by Governor Mervyn King, will have made the decision aware of its latest forecasts for growth and inflation, which will be released next week in its Inflation Report. 
 
Financial worries soon to be over?
 
Financial markets await Bank of England minutes on shock QE expansion“Near-zero interest rates, the existing £200bn QE package and the sharp fall in Sterling are already extremely expansionary," said Ian McCafferty, CBI Chief Economic Adviser. A gradual recovery should "lead to a small rise in interest rates around the middle of this year," he said.
 
The policy of QE has seen the Bank of England buy billions and billions of pounds of UK Government debt, or gilts, from banks and financial institutions in the hope they will then use the money to buy other assets in the economy. Exiting QE, means that a huge buyer of gilts has now left the market.
 
In a statement, the MPC said that it "will continue to monitor the appropriate scale of the asset purchase programme and further purchases would be made should the outlook warrant them."
 
With the economy just crawling out of recession last quarter, the Bank's move on QE will draw criticism from business groups. David Kern, the chief economist at British Chambers of Commerce, said: "given the underlying weakness of the economy, emphasised by the recent disappointing GDP figures, it is premature to start reducing the QE stimulus. It is certainly much too early to contemplate any near-term interest rate increases." 
 
Tags: BoE, Bank, England, Printing, Money, Recession, G...
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Dubai has not pushed the world over the edge. This recognition is increasingly taking hold on the markets this morning now that the central bank of the United Arab Emirates has made it clear that it is backing the local and foreign banks of the Emirate. For this aim it has already created new financing options for the resident banks. This does not solve the possible insolvency of Dubai World, but it does make a run on Dubai's banks unlikely. The financial markets were quick to react. Following the strong rise on the Asian stock markets the effects on the FX markets are largely being reversed as well: While currencies such as AUD and NZD are back in demand, USD is coming under renewed pressure. Also the Emerging Market currencies are almost all able to appreciate. 
 
 
G10 Currencies 
 
EUR-USD: EUR-USD has almost completely reversed its losses seen on Friday and is once again trading above the 1.50 mark. It is becoming clear once again that the currency pair does not react to the relative development of the two economic areas but to the development of global risk aversion. Friday's data on the positioning of speculative investors brought little news. USD shorts remain very strong, which continues to make further rapid gains in EUR-USD difficult. There is much to suggest that the slow uptrend interrupted by repeated corrections will continue.
Against this background fundamental data is fairly insignificant. This is likely to apply for the first estimate of consumer prices in November in the Eurozone. It is generally assumed that the five month long period of negative rates of inflation has ended and that prices will have risen by 0.4% yoy. Among the US data only the Chicago-PMI is likely to have an effect on the markets today, should it provide a surprise. Consensus expects a slight fall to 53.3 points (October 54.2 points). The possibility of a positive surprise is forseen (rise to 55 points). Following the events over the past few days it seems unlikely though that this would benefit the USD. Instead it is more likely to come under pressure due to falling risk aversion. 
 
GBP: Following the significant deterioration in the pound sentiment of late, a meaningful recovery in the GBP against the USD and especially the EUR is not expected, even if global risk appetite shows further signs of recovery in coming days. In this regard, the upcoming releases today should be hardly supportive. It is thought that the BoE lending survey will point to an ongoing deleveraging by the British consumers. In addition, it is expected that the number of mortgage approvals will remain stagnant, adding to the constraints on the domestic demand. Later this week, the releases of the manufacturing PMI (Tuesday) and the services PMI (Thursday) should point to a solid rate of expansion. There is however doubt that they will trigger sustainable GBP gains against the EUR. In this regard, investors will be anxiously awaiting more details on the ECB's exit strategy during the bank's press conference on Thursday. Such plans to withdraw monetary stimulus should contrast sharply with the still ‘open mind on QE’ approach adopted by the BoE after the latest extension of its asset purchases program in early November. This should not only limit any EUR-GBP losses but it could actually propel the cross higher still. Some disappointments from the US NFP data on Friday could weigh on sentiment adding to the downside risks for the pound across the board. 
 
JPY: The announcement of one Japanese newspaper that Minister of Finance Fujii had excluded interventions on the FX markets has been corrected in the meantime. The communicative skills of the Ministry of Finance do however leave a lot to be desired for. So USD-JPY is once again under pressure this morning. It seems unlikely though that the Japanese will do nothing if the strength of the JPY continues. From a fundamental point of view the strength of the yen is inexplicable anyway. This morning the Japanese data on industrial production disappointed once again. Even though a small m-o-m plus was recorded (+0.5%) this remained well below expectations (2.5%). The potential for a reversal in JPY is considered to be very high now. Further JPY purchases therefore seem unattractive. 
 
NOK: The Norwegian just like the Swedish krona had a difficult time. The reduction of risks as a consequence of the Dubai crisis, but above all the correction of the oil price, have put considerable pressure on NOK. On Friday EUR-NOK marked highs in the area around 8.5750. Local economic data is fairly irrelevant in the current market environment. Once sentiment improves again good retail sales for October will be suited to provide additional support to NOK, but the impact should be fairly limited given the fact that global factors dominate. For EUR-NOK to ease back below the area around 8.30-8.32 market sentiment would have to turn very notably, with optimism returning and the oil price rising sharply. However, such a massive surge of risk appetite is unlikely. The lower end in EUR-NOK is therefore expected to hold for the time being. 
 
 
Emerging Market Currencies 
 
EMEA: Now that the tension created by the Dubai crisis is easing the EMEA currencies have almost all been able to recover this morning. In particular currency pairs such as EUR-ZAR and EUR-PLN have returned to levels close to previous months’ lows. 
 
PLN: In addition to the general improvement of market sentiment PLN is likely to benefit from Q3 GDP data. Following 1.1% in Q2 economic output is expected to have risen by 1.5% yoy in Q3. An increase of 1.7% is even expected. That means that the 4.10 mark in EUR-PLN might be tackled again in the coming days. Only a sustainable fall below 4.08 in EUR-PLN would however end the sideways move seen since early August. 
 
CNY: It is hardly surprising that the European negotiators were unable to convince the Chinese during their negotiations in Nanjing that an appreciation of the renminbi would be in order. Nor does it come as a surprise that the Chinese arguments are aiming in the wrong direction again. Chinese officials explained that an immediate appreciation of the renminbi would be difficult to implement as approx. 40 million Chinese live on less than one USD a day. This statement once again turns the economic reality on its head. The exact contrary is the case: An undervalued renminbi can fuel export short term. But in the long run the weak renminbi leads to a deterioration of China's terms of trade thus reducing the country's wealth. An appreciation on the other hand would mean that China would be able to buy more imports from its exports income. The strategy of boosting industrial development by means of an export boom which China has been pursuing for some years will magnify the social problems in China over the coming years. It nonetheless seems unlikely that this strategy will be renounced. Now that Juncker and Trichet have clearly failed with their mission, it remains to be seen how far the Europeans are going to increase pressure on China. Contrary to the US at least Europe does not have to worry about China dropping European government securities should the conflict over CNY exchange rates lead to any major trade conflicts. 
 
Tags: Dubai, Market, Currency, News, Information, Update
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It is difficult to solve existing financial troubles when there is no way out, so these nine suggestions should help you stay out of financial hot water. If you have a family, everyone will have to participate - no one person can do all the work alone. So make sure your spouse or partner, and the kids, understand that the family is having financial difficulties and agree together to take the steps that will lead to recovery.
 
 
1.Create a realistic budget and stick to it. This means periodically checking it and readjusting your figures and spending habits.
 
2.Don't impulse buy. When you see something you hadn't planned to buy, don't purchase it on the spot. Go home and think it over.
 
3.Avoid sales. Buying a £50 item on sale for £40 isn't a £10 saved if you didn't need the item to begin with; it constitutes as a £40 loss. Don't get sucked in by promotional advertising in this respect.
 
4. Hunt around for cheap insurance, don't just accept the renewal quote. If your problems are long term and you have private health insurance or have a private GP, consider switching over to an NHS GP .
 
5.Charge items only if you can afford to pay for them now. If you don't currently have the cash, don't charge based on future income - sometimes future income doesn't materialise in the manner you want it to.
 
6.Avoid large rent or house payments. Obligate yourself only for what you can now afford and increase your payments only as your income increases. Consider refinancing your house if your payments are unwieldy.
 
7.Avoid cosigning or guaranteeing a loan for someone. Your signature obligates you as if you were the primary borrower. You can't be sure that the other person will pay.
 
8.Avoid joint obligations with people who have questionable spending habits - even a spouse or partner. If you incur a joint debt, you're probably liable for it all if the other person defaults.
 
9.Don't make high-risk investments. Invest conservatively, opting for certificates of deposit, money market funds and premium bonds over riskier investments such as speculative real estate and junk bonds. 
 
Tags: Finance, Recession, Downturn, Personal, Family, I...
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Introduction 
 
Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due. A first time bankrupt with debts will generally receive their discharge one year after the date of the bankruptcy order (there is the possibility that in some cases the bankruptcy discharge period will be less than one year).
 
Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with individual insolvency cases.
 
Please note that if your are ever faced with the prospect of bankruptcy you should look at alternatives as soon as possible such as the
 
 
Individual Voluntary Arrangement procedure (IVA). Bankruptcy is one way of dealing with debts you cannot pay. 
 
The bankruptcy proceedings:- 
 
1. free you from overwhelming debts so you can make a fresh start, subject to some restrictions
2. make sure your assets are shared out fairly among your creditors.
 
Anyone can go bankrupt, including individual members of a partnership. There are different insolvency procedures for dealing with companies and for partnerships themselves. How are you made bankrupt?
 
An individual can be made bankrupt either in one of three ways:
 
¦ Voluntarily - By the debtor themselves.
¦ Involuntarily - By the creditor owed money (£750 Minimum).
¦ The supervisor or anyone bound by an IVA
 
A bankruptcy order can still be made even if you refuse to acknowledge the proceedings or refuse to agree to them. You should therefore co-operate fully once the bankruptcy proceedings have begun. If you dispute the creditor's claim, you should try and reach a settlement before the bankruptcy petition is due to be heard. Trying to do so after the bankruptcy order is made is both difficult and expensive. What are the implications of bankruptcy?
 
¦ You lose control of your assets.
¦ You cannot obtain credit for over £250 without the permission from the lender.
¦ You cannot act as a company director.
¦ You cannot take any part in the promotion, formation or management of a limited company (LTD) without the permission of the court.
¦ You cannot trade in any business under any other name unless you inform all persons concerned of the bankruptcy.
¦ You may not practice as a Charted Accountant / Lawyer.
¦ You may not act as a Justice of the peace (JP).
¦ You may not become an member of parliament.
¦ You may not become a member of the local authority.
¦ Your credit is affected for many years after the annulment.
¦ You may be publicly examined in court.
 
What are the advantages of bankruptcy?
 
¦ For the person involved, bankruptcy provides relative peace of mind and possible automatic discharge after one year (or less in some cases).
¦ For the creditors, bankruptcy allows a full investigation of the debtor's affairs to be carried out.
 
Tags: Bankruptcy, Personal, Insolvency, Advice, Informa...
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