Category Archives: Views

Libor manipulation suit could open the floodgates

The news that the US Federal Deposit Insurance Corporation (FDIC) is suing European banks in London for manipulating Libor should worry central bankers everywhere.

It’s all hush-hush, with details coming from reports in newspapers, rather than made public officially. The Financial Times reported that the FDIC is suing Barclays, Deutsche Bank, Lloyds Banking Group, Royal Bank of Scotland, Rabobank and UBS, as well as the British Bankers’ Association, accusing them of fraudulent misrepresentation.

Lloyds said it doesn’t believe the claim has any merit, while the others did not comment, according to the report.

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UK household wealth growth about to make a U-turn

The Bank of England has reason to pat itself on the back. During the financial crisis of 2007-2009, things could have taken a very ugly turn if it hadn’t cut interest rates to record lows and hadn’t started printing money.

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As Brexit bites, there is little the Bank of England can do

The Bank of England will publish its inflation report next Thursday, and this time it will get even more attention than usual.

Brexit is being felt in prices more and more now, with the cost of grocery bills jumping and prices for essentials going up. The phenomenon of “shrinkflation” is in full swing as well; many products are mysteriously losing weight, but maintain their price.

No matter how much it would like to help (or to meet its inflation target), the Bank of England cannot do anything to prevent prices from rising. In fact, to be more accurate, it could, but it will not. The central bank could raise interest rates, stopping the pound’s depreciation — but if it does this, the housing market would crash.

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UK proposal for EU citizens post Brexit should worry everyone

The UK’s negotiations with the European Union started with a proposal regarding the status of EU citizens in Britain after the country leaves the EU. One particular point in the proposal gives a flavour of things to come. It should worry anyone, not just EU citizens.

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As home prices hit record levels, negative equity looms

A statement from Halifax shares the “good” news: home prices paid by first-time buyers are the highest ever.

In the first half of this year, first-time buyers paid on average £207,693 for a home, the highest price on record. This is 4% higher than a year ago, and 50% higher than five years ago.

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To understand (or prevent) the next crisis, read ‘The Money Formula’

Do you want to know how the next financial crisis will arrive, and how it could be prevented? In that case, read “The Money Formula“, a book by Paul Wilmott and David Orrell published earlier this year.

It shows you, with mathematical precision, what the financial world did not learn from the previous crisis. It also shows why it is so difficult for the rest of the world to catch them out.

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The first half of the year was full of humbling lessons

What a spectacular lesson the first half of the year delivered for investors. At the beginning of the year, it looked like the UK’s vote to leave the European Union was a great idea: the eurozone seemed on the brink of disintegration.

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Home price inflation keeps going, deepening inequality

The financial repression that central banks started after the global financial crisis of 2007-2009 does not seem to be close to an end. The central banks argue that inflation has not come back to their target of around 2%, but their definition of inflation is flawed.

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European stocks are everybody’s darlings

The European Central Bank (ECB) will find itself the only game in town soon. It is the only major central bank still buying bonds hand over first, and therefore it is dictating the pace for private investors.

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More Europe, or no Europe: the time to decide is now

Europe has been through a very rough patch since the financial crisis of 2007-2009, but the real danger for the European Union and the eurozone is still very present. In order to save the EU, Europeans will have to get even closer.

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