Tag Archives: banking

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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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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A research paper supports the idea of debt forgiveness

If you’re like me, you’ve certainly wondered why economic growth has been so sluggish after the worst post-war recession — the Great Recession, or Great Financial Crisis as some have callednthe 2007-2009 crisis. Normally, the economy should have surged, after such a deep slump.

Instead, we’re proud of economic growth figures around 2% in Britain and the US and cheer when the eurozone posts a meager GDP advance of above 1% almost a decade after the crisis.

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Central bankers are trapped by their own policies

It’s unclear when it all started, but it has reached the point where it would make the biggest banker of all times, John Pierpont Morgan, turn in his grave.

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UK house prices will hurt the economy even if they keep rising

Another trick to keep UK house prices rising is taking center stage: the extra-large mortgage. It’s the mortgage lasting half a lifetime, or more, which allows you to buy a home even if, under normal circumstances, you would not afford it.

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Is housing endangering banks in the UK, Sweden and Australia?

The news that Wells Fargo, the US bank that is the world’s biggest lender by market value, targets millennials with its mortgage loans is seen as a sign that we’ve finally gotten over the crisis that nearly brought down the world economy in 2007-2009.

The Financial Times reported that the head of the bank’s home finance business said he was keen to lend more to first-time buyers, who, the paper said, have so far “put off settling down.”

But what is good for America is not necessarily good for the world. While in the US there has been some deleveraging and restructuring that allows the housing market to re-start from a cleaner basis, it is not the case in the rest of the world.

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How to win the currency war of words

By Mirela Roman

Central bankers have been striving to bring inflation down for a long time. But ironically, they took a U-turn after the financial crisis and are now trying to heal the wounds via negative or near zero lower-bound rates, “unorthodox” stimulus such as quantitative easing or various forward guidance and communication techniques.

As words almost became monetary policy tools, prices continue to stay stubbornly low or on a downward path. But there is one thing that bucks the trend, and its swings are even more sensitive to the way central banks talk than those of inflation.

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Eurozone banks are doing better, lending improves

One piece of good news about the eurozone has been overshadowed by the ongoing, Syriza-orchestrated drama on Greece: lending continues to improve, and with it, the prospects for the single currency area.

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Shorting banks is the best contrarian trade for July

If you are a contrarian, your best bet for July would be to go short banks, as a fund managers survey by Bank of America Merrill Lynch revealed there was a record long in global banks in the month.

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Italian banks’ bad loans need long-term solution: rating agency

Italian banks’ bad loans are holding back its economy, but creating a “bad bank” and dumping them there is not a good idea, because deeper reforms are needed, a European rating agency has warned.

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