Thursday, November 5, 2009

Bank of Ireland reports huge loss

Bank of Ireland has announced losses of almost 1bn euros (£895m) for the six months to the end of September.

The bank has said that the total value of loans that it thinks might not be repaid will be 6.9bn euros (£6.1bn) for the period to April 2011.

It has warned the Irish government that it may require another infusion of taxpayers' capital.

The bank has 44 branches in Northern Ireland and runs a financial services joint venture with the UK Post Office.

It said the past six months had been "difficult" and gave a very cautious appraisal of future economic prospects, saying there were "some indications of a slow-down in the pace of economic decline in the UK and to some extent in Ireland."

The bank's UK division posted a operating profit of £163m but that became a £203m loss when impaired loan charges were taken into account.

The bank said it remained committed to the UK market and will continue its partnership with the Post Office.


In September, Ireland's Minister for Finance Brian Lenihan said around 16bn euros worth of Bank of Ireland loans would be transferred into Nama, the country's "bad bank" which is intended to remove toxic property loans from lenders' balance sheets.

However the bank said on Wednesday that significant uncertainties exist surrounding the specific amount of loans being transferred, when they will be transferred and the price that will be paid for those loans.

In a rescue plan for its economy, the Irish government has already pumped seven billion euros into its top two lenders, with Allied Irish Bank and Bank of Ireland each getting 3.5bn euros in state cash.

Ireland's banking sector has been badly hit by the international financial turmoil, the collapse of a domestic property bubble and a deep recession in the former "Celtic Tiger" economy.

Peter Schiff On CNBC Fast Money 11-3-09 "Indian Investing in IMF Gold"

Click this link ........

The New “S&L” Crisis: Bailouts for States Likely

In this video Diane Garnick an investment strategist at Invesco discusses the looming bailout for state and local governments. Nearly every state and local government has seen a dramatic drop in their revenue. Unlike the federal government state and local governments aren’t able to print money to pay their debts.

The state that’s being hardest hit by the revenue crisis is California which receives nearly 75% of its revenue from corporate income tax, personal income tax and sales tax. These three revenue streams are adversely affected by an economic downturn.

Click here for original article

ADP says U.S. companies cut estimated 203,000 jobs

Companies in the United States cut an estimated 203,000 jobs in October, according to a private report based on payroll data.

The drop compares with a revised 227,000 decline the prior month, data from ADP Employer Services showed on Wednesday. The figures were forecast to show a decline of 198,000 jobs, according to the median estimate of 34 economists in a Bloomberg survey.

The report signals unemployment will keep climbing even after the economy begins to expand, one reason why Federal Reserve policy makers may pledge to keep interest rates low for a long time after their meeting today. ADP has overstated the Labor Department's initial estimate of payroll losses by 103,000 per month on average in the five months to September.

"While the economy has resumed growing, the labor market is in rough shape," Joseph Brusuelas, a director at Moody's in West Chester, Pennsylvania, said before the report. "Businesses appear hesitant to boost staff until the recovery matures."

Stock-index futures held earlier gains following the report. The contract on the Standard & Poor's 500 Index was up 0.7% to 1,049 at 8:32 a.m. in New York. Treasury securities fell, pushing the yield on the 10-year note up to 3.51% from 3.47% late Tuesday.

ADP includes only private employment and doesn't take into account hiring by government agencies. Macroeconomic Advisers LLC in St. Louis produces the report jointly with ADP.

The report comes two days before a Labor Department release that is forecast to show the unemployment rate rose to 9.9% in October, the highest since 1983, while employers cut 175,000 jobs.

Another report today showed employers announced the fewest job cuts in 17 months in October. Planned firings fell 51% last month to 55,679 from 112,884 in October 2008, a fifth consecutive year-on-year decline and the largest since July 2006, Chicago-based placement firm Challenger, Gray & Christmas Inc. said. Announcements were down 16% from the prior month.

The economy already has lost 7.2 million jobs since the recession began in December 2007, the most of any economic slump since the Great Depression.

Today's ADP report showed a decrease of 117,000 workers in goods-producing industries including manufacturers and construction companies. Service providers cut 86,000 workers.

Employment in construction fell by 51,000, the 33rd straight monthly drop, while manufacturers cut 65,000 workers.

Companies employing more than 499 workers shrank their workforce by 53,000 jobs. Medium-sized businesses, with 50 to 499 employees, eliminated 75,000 jobs and small companies also decreased payrolls by 75,000, ADP said.

US Airways Group Inc., the smallest full-fare U.S. airline, was among companies cutting staff last month. The Tempe, Arizona-based carrier, said it will cut 1,000 jobs, or about 3% of the workforce, and drop some flight routes.

Some companies are adding to their payrolls. Deere & Co., the world's largest maker of agricultural equipment, said last week it's recalling 452 workers, the majority of manufacturing employees laid off earlier this year at a company factory in Iowa.

The ADP report is based on data from about 400,000 businesses with 23 million workers on payrolls. ADP began keeping records in January 2001 and started publishing its numbers in 2006.

Gold Spells Trouble for Greenback: Charts

The value of gold and silver are on the rise, but this spells trouble for the declining dollar index which could push as low as 66 points, according to Chris Zwermann, strategist from Zwermann Financial.

Gold made new highs Wednesday and “looks like it’s going further up,” he told CNBC.

“The question is what really does gold tell us,” he said, adding that gold’s strength is “a sign that the dollar is going to weaken earlier or later in the next few days already, and the stock markets turn around again.”

The dollar is on a downward trend, currently resting at about 76 points, but “the dollar so far didn’t manage to come out of this downtrend,” Zwermann said, adding that the dollar doesn’t have the strength to turn around at the moment, pushing the index target as low as 66 points.

While gold strength spells trouble for the US dollar, the silver market is likely to rise with gold pushing the spot silver value to more than $20 per ounce, he said.

- To watch the full interview, see video above

IBM Internal Document Outlines Knowledge of Planned Pandemic With 100% Certainty

"Services & Global Procurement pan IOT Europe, Pandemic Plan Overview,"an official inter-departmental document was distributed to upper-level management of IBM, France in 2006. Disclosed in this secret document was the prediction of a "planned" pandemic described as having a "100% chance of occurring within the next 5 years."

The document also describes "quarantines"and operational procedures to be taken upon the official announcements of the "pandemic"by the World Health Organization. The foreknowledge of such an event could not exist, unless the pandemic was a planned event.

Certainly, this document is the “smoking gun" which demonstrates the current bird/swine flu "pandemic"is an orchestrated event leading to mass vaccinations sponsored by the WHO and UN.

This single document definitively proves there is international, corporate collusion behind the "bird/swine flu pandemic"and the intentional plan to create disease on a worldwide scale.

As evidenced by this document (see below), IBM's primary concerns are focused on maintaining their workforce, even under an official quarantine, and the continuation of sales and services to their clients.

IBM is considered to be one of the most powerful corporations in the world. They and their subsidiaries helped create enabling technologies, step-by-step, from the identification and cataloging programs of the 1930s to the selections of the 1940s which designed complex solutions for Adolf Hitler during this period.

You can apply a simple search at for additional documents. Query [pandemic 2006] or [pandemic 2005] for dozens of relevant results on pandemic preparedness and planning.


SECRET plans to seize more than £4billion a year from Britain and make its citizens pay taxes direct to Europe emerged last night.

The leaked proposals, seen by the Daily Express, state that Britain should lose the billions of pounds in rebate that was agreed by Margaret Thatcher 25 years ago.

The plans – with a foreword by European Union Commissioner Jose Manuel Barroso – would cost every British family at least £155 a year.

They would also mean Brussels being given the power to dip straight into taxpayers’ pockets.

The proposals prompted fury last night.

Shadow Europe Minister Mark Francois vowed they would be resisted by a Tory government.

He said: “The idea of an EU tax is a non-starter.

“Britain is a major net contributor to the EU and it is important that we do not pay more than our share.

“A Conservative Government would defend that position robustly.”

Possible taxes suggested in the report – which could be discussed as soon as the start of the European summit in Brussels tomorrow – include levies on phone calls, flights, financial transactions or carbon emissions.

They would have to raise about £6.4billion a year – the net cost of belonging to the EU and equivalent to about £260 for every household in the UK. Mats Persson, of think-tank Open Europe, warned the plans would “rightly cause concern among British taxpayers”.

Jim McConalogue of the European Foundation, which wants to renegotiate European treaties, said: “It is clear from its so-called ‘reform’ agenda that Brussels is committed to the daylight ­robbery of the British taxpayer.”

Matthew Elliott, chief executive of the TaxPayers’ Alliance, branded the idea of direct taxation from Brussels an “outrage”.

He added: “Control of taxation must rest solely in the hands of democratically elected politicians who answer to British taxpayers.

“The EU has shown time and time again it is greedy for power. This is another sign they will never stop trying to grab it.”

Ruth Lea of Eurosceptic think-tank Global Vision said: “People need to wake up to the fact we are now in a superstate.

“Year by year we are living in an integrated United States of Europe and this is just part of it.” The plan, dated October 6, would see huge reforms of the EU’s £110billion-a-year budget.

In his preface, Mr Barroso writes that the report “presents the Commission’s vision for the EU budget reform” that “should form the basis for further debate with the European Parliament and the Council”. The current budget deal runs until 2013.

The proposals would see big cuts to programmes like the Common Agricultural Policy which sees tens of billions of pounds paid to small farmers in countries like France.

But in return Britain would be expected to give up its £4.1billion a year rebate, first agreed by Mrs Thatcher in 1984. Other options being considered include taxes on communications and banks and a carbon tax which would push up the cost of fuel, flights and heating.

A spokeswoman for the European Commission said that the draft report seen by the Daily Express was a “work in progress” that will be presented by the end of the year.”

A huge majority of readers backs Britain leaving the EU, the Daily Express phone poll revealed last night. Asked whether the UK should get out, an astonishing 99 per cent said yes.

Of the thousands who voted, just a few readers said the UK ought to stay in.

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Economic Crisis Hits States and Municipalities

Crises expose the system's irrationalities and wasteful resource allocations. For example, Madoff and his many, smaller imitators reveal the tips of corruption icebergs. More important, the crisis-induced fiscal emergencies looming in most of the 50 states demonstrate several absurdities in our economic system.

The Center on Budget and Policy Priorities (CBPP) in Washington, DC monitors and calculates the gap between the fifty states' tax revenues and expenditures. The following recent CBPP chart compares the total state budget shortfalls in both the last recession and the current one. Today's record shortfalls measure how many billions states will need to raise in additional taxes or cut their expenditures (or combinations of both) in this and coming years.

At a time of crisis, while the federal government injects unprecedented stimulus (tax cuts and expenditure increases) into the U.S. economy, the fifty states are doing the opposite. State tax hikes and expenditure reductions will continue to undermine or slow any recovery. Moreover, the American Recovery and Reinvestment Act (Obama's stimulus program) has offset only modest portions of the states' fiscal budget shortfalls for 2009 and 2010. The CBPP estimates that the worst of the budget crisis will hit states in 2011 and 2012. The carnage will total a huge net $260-billion even after allowing for the federal stimulus funds still available then to flow to states. Another way of putting this is to note that the just released third quarter (Q3) of 2009 Gross Domestic Product (GDP) number was lower than it would have been without the depressing effect of the fifty states' tax hikes and expenditure cuts. We saw states and municipalities spend 1.1% less in Q3 than they had in Q2, despite rising need.

State taxes are generally more regressive than the federal income tax and so fall relatively harder on middle and lower income groups. Likewise, state expenditures tend more immediately to impact those same groups since they include major supports for public education and myriad social programs. The negative economic effect of the states' fiscal crises will heavily impact the mass of U.S. citizens already angered by high unemployment and foreclosure rates as they observe trillions of bailout dollars flowing to banks and corporations ‘too big to fail.’

The CBPP also studied what kinds of budget decisions the states have already made because of the crisis. Key findings include the following:

27 states have reduced health benefits for low-income children and families;
25 states are cutting aid to K-12 schools and other educational programs;
34 states have cut assistance to state colleges and universities;
26 states have instituted hiring freezes;
13 states have announced layoffs; and
22 states have reduced state workers' wages.
Since the worst of the states' budget shortfalls lies ahead, we can expect all of these numbers to deteriorate further.

These state actions not only undercut the federal government's short-term stimulus goals; they also impose long-term costs on the economy in the diminished health and education of the U.S. workforce. Just when the mass of Americans need more help and support from their state governments, our economic system provides them with less. This raises the human and fiscal costs of the crisis.

If the states represent a fiscal train wreck, then the nation's cities and towns represent another train not far behind and hurtling toward the wreck. The basic revenue for U.S. cities and towns comes from property taxes on land, homes, stores, factories, offices, and automobiles. As the prices of most of those properties fall, eventually the local property tax revenues from them also fall. Reassessing those property values usually takes a few years. Thus, the likely drop in tax revenues for cities and towns will only hit over the next few years. Their fiscal distress will then pressure them to raise tax rates, cut expenditures, or both. Doing so will counteract what the federal government is trying to do for the economy thereby worsening what the states are already doing.

The depth and duration of this crisis has thus only begun to bite deeply into the economy. Its negative social consequences, in the short and long runs, are rising fast. Recent GDP numbers point to the ability of torrents of deficit spending (and a fall in the U.S. dollar's exchange rate with other major currencies) temporarily to lift the total volume of sales. However, the much touted GDP numbers for the second half of 2009 do not represent beneficial economic change for the mass of citizens.

For those who are willing to look beyond the usual economic blinders, here's an old suggestion that only seems new because of the effective ban put on public discussion for so long. At the present time, the vast majority of U.S. states and municipalities exempt intangible property from property taxes. That is, stocks and bonds are kinds of property not subject to the taxes on other kinds of property (land, houses, etc.). If we imposed a very low rate of property tax on intangible property, it would cover the present and anticipated fiscal shortfalls of U.S. cities, towns, and states. Moreover, an intangible property tax would fall on those most able to pay, those who fared best since the 1970s as the gap between rich and poor widened sharply. If coordinated across all states and cities (perhaps levied and collected by Washington and then returned to states and municipalities), intangible property owners would have no incentive to move it from one place to another.

In short, an intangible property tax is a logical as well as long-overdue reduction in the unfairness of a property tax system that exempts just that kind of property – stocks and bonds – mostly held by the richest citizens. Indeed, an intangible property tax could exempt, say, the first $150,000 of intangible property per person to avoid hurting small owners and compensate by a progressive intangible property tax schedule for all the larger owners. By falling most on the wealthiest among us, it would have a significantly less negative impact on total spending than broad-based state and local tax increases or public expenditure cuts. An intangible property tax thus represents the best state and local response to the current crisis, minimizing its long-term costs and bringing some justice to the tax system. •

Rick Wolff is a Professor Emeritus at the University of Massachusetts in Amherst and also a Visiting Professor at the Graduate Program in International Affairs of the New School University in New York. Check out Rick Wolff’s documentary film on the current economic crisis, Capitalism Hits the Fan, and his website at This article first appeared on the MRZine website.

by Rick Wolff

CMBS Delinquencies Swell to 5.5% in October, says BarCap

Delinquencies in commercial mortgage-backed securities (CMBS) accelerated in October, according to a report from Barclays Capital (BarCap).

The 30-plus day delinquency rate jumped 41bps to 5.5% in October as current loans deteriorated and transferred to special servicers. For the past three months, delinquencies have grown an average of 34bps, and BarCap analysts expect the pace to increase through 2009 and into 2010.

Younger vintages are falling into delinquency at a more severe rate than older ones, analysts noted. The 30-plus day delinquency rate on post-2005 vintages jumped 47bps to 5.63% in October, while pre-2005 vintages increased 27bps to 5.17%.

The delinquency rate for post-2007 vintages leaped 69bps in October to 5.32%, according to the report.

Hotels continued to lead the delinquent march. A total of $974m in loans backed by hotels fell delinquent in October, and the hotel delinquency rate grew 152bps to 7.81%. The 2007 vintage registered a 10.71% 30-plus day delinquency rate, the largest being the $150m Hyatt Regency – Jacksonville loan.

BarCap analysts pointed to a lack of demand and a failure to sustain a boost at summer’s end driving the delinquencies.

“Without the ‘protection’ of built-in leases, this points to more delinquencies in future months,” according to the report.

UK is 'skint’ says Marks & Spencer’s Sir Stuart Rose

The UK is “skint” and the next Government could be forced to raise VAT beyond 17.5pc as it sets about “refilling the coffers”, Sir Stuart Rose, the executive chairman of Marks & Spencer, has warned.

He said that VAT – which is set to rise from 15pc to 17.5pc on January 1 – could be increased again next year as whichever party wins the general election looks to balance the national accounts.

“We are skint as a country and the Treasury needs revenue so I would not rule it out,” he said. Sir Stuart added: “this Government and the future Government have got to make some hard decisions about refilling the coffers”.

His comments on possible tax increases were echoed by Simon Wolfson, the chief executive of Next, the clothing chain.

Mr Wolfson said: “If you look at the UK’s structural deficit, which is £80bn , then you have got to conclude that all taxes will have to go up. The only real cure is time.”

Both M&S and Next released sales figures on Wednesday.

M&S reported better-than-expected interim results. Pretax profit increased slightly from £297.8m to £298.3m, however the figure was 4pc higher than analysts were expecting. Like-for-like sales at the chain fell by 0.9pc and total sales rose by 2.8pc to £4.3bn.

Despite the better-than-expected performance, Sir Stuart warned that the UK’s crawl out of recession would take some time.

He said that although consumer confidence had returned in recent months, it was only back to January 2008 levels. He added that a lot of “bad news” was set to hit the consumer economy in the coming months, such as the end of stamp duty relief on December 31, tax increases, the January 1 VAT rise and political uncertainty in the run-up to the election.

He said that the recovery will be “long and steady” and warned that it could be at least 12 months before the consumer economy started growing again.

“It might be 2011 before we start seeing some growth,” said Sir Stuart, before adding that a so-called 'double-dip’ recovery – a slight recovery followed by another downturn – could be “very demoralising”.

M&S said that like-for-like clothing sales fell by 1.4pc over the half, while food sales fell by 0.3pc. The retailer also reported that it had cut food prices heavily over the half.

Sales from its website grew by 29pc over the half. However M&S has attracted controversy for including sales made over the internet in its 'like-for-like’ figure, which is generally a measure of sales from physical shops. Yesterday Next pointed out that using this same metric, its 'like-for-like’ sales would be higher than they appear.

M&S will launch its new Christmas TV ad campaign next Wednesday. The £10m campaign will consist of nine different ads, which will star celebrities including Stephen Fry, John Sergeant, Life on Mars actor Philip Glenister as well as Wallace and Gromit, the Plasticine characters.

M&S cut its interim dividend from 8.3p to 5.5p. Shares in the retailer rose 20.5 to 361.5p. M&S’s pension liability increased by £1bn but this was offset by a £700m increase in the market value of certain assets.

By James Hall, Retail Editor