European Stocks Plunge Most In Six Months

Europe's 'Dow', the EuroStoxx 50, has suffered the biggest 4-day rout in 10 months as the broad Bloomberg 500 index plunged by the most in five months today amid terrible consumer, car registration, and economic collapse on the continent. DAX is at 4-month slows. Despite the bloodbath in European stocks, the ever-efficient European bond market (free to trade and totally un-manipulated) is now around unchanged on the week (while stocks are down 3-4%). European financials are leading the drop but it is broad-based. EURUSD also rolled back over nearing its biggest drop in 9 months. Swiss 2Y at 3 month lows. Bunds bid. European VIX surged to 5 week highs over 23%.

Worst 4-day run in 10 months in stocks...




but Sovereigns don't care

Some Victims Of Shady Foreclosure Practices Report Trouble Cashing Settlement Checks

(afagen)

As if going through the nightmare of foreclosure proceedings wasn’t bad enough, some of the victims who have been compensated as a result of a settlement between big banks and U.S. regulators can’t even get their darn checks to cash. Most of those borrowers only received between $300 and $500, and have been told their checks were rejected when trying to get their money.
The Federal Reserve reported the snafu hitting some recipients of the payments, saying in a statement that ”early problems with some checks have been corrected,”  the Fed said in a statement today. All funds are now available, the Fed added, which made us think it maybe just forgot to transfer money from its savings to its checking account or something.
Instead, the Fed says there was an issue with the paying agent and the paying bank, but all problems have been corrected as of now.
The settlement checks were sent out after an independent review of banks’ shady foreclosure tactics ended with the government laying out a confusing and somewhat arbitrary settlement plan, because it was just too difficult to figure out what each victim should get from the banks.
More than 50,000 people have had success cashing or depositing their settlement checks, notes the Fed, out of the 4.2 million eligible borrowers out there who could receive payments.
“The Board will continue to monitor the payments closely and encourages borrowers who have concerns or experience difficulties cashing their checks to call Rust at 1-888-952-9105,” the Fed added.

Schiff v. Kudlow: What Gold’s Drop Signals for America’s Future

How the Chinese currency is replacing the U.S. Dollar in global oil markets

History is being written in the East. As the U.S. stays distracted with stone age warriors in Central Asia and the Middle East, the last platform of the American economic foundation, the U.S. Dollar's currency reserve status, is being underminded by their trade partners in Asia. Both Australia and Japan are set to start direct-trading in Chinese currency and they are not the only ones. There are almost 20 countries whom have currency swaps in place with China all in order to side-step the U.S. Dollar in global trade. At the China Money Report, we have written extensively on the "Rise of the Renminbi". What is new and largely unreported and what we will cover in this article is the "Rise of the Petroyuan," as China is now converting its oil imports into Chinese Yuan as opposed to U.S. Dollars. This will be a new challenge and possibly the fatal blow to the U.S. Dollar as the dominant global reserve currency.
With their industrial base all but gone, the housing market bubble popped, and the Federal Resereve funding the majority of the government debt with printed currency, the American economy can ill-afford a new challenge to its currency's reserve status. It is this very reserve status which has led to America being able to consume more than it produces for decades upon decades as foriegn countries were willing to trade consumer products for paper IOU's. The Dollar's reserve status came about naturally after WW2 as the U.S. was the world's larget trading nation, exporter, and creditor. Today, China occuppies all of these slots.
China will soon occupy a new slot: That of the world's largest oil importer. OPEC has confirmed on April 4th of this year that they expect China to surpass the United States as the world's largest oil importer in 2014. This shift in global oil flows is being driven by the twin pillars of a booming Chinese economy and America’s newfound booming domestic oil and gas supply. This shift in the oil trade carries with it massive geopolitical implications that will reshape the world as we know it.

China’s Increasing Oil Imports

The demand side of oil from China has already reshaped geopolitics and global supply chains. Between 2002 and 2010, China's annual imports of crude increased from 70m tonnes to more than 270 million tonnes. Saudi Arabia’s largest customer for oil is no longer the U.S. but the Peoples Republic of China. In the year 2012, China’s net oil imports were still 1 million barrels per day lower than in the United States, but in some months, China was very close and even surpassed the U.S. in net oil imports. In December 2012 for instance, China imported 6 million barrels a day compared to only 5.98 million barrels in the U.S. From 2010-2015 alone, oil imports in China are expected to grow over 40%. China's oil demand growth is expected to represent 64% of all new demand for oil in 2012-2013.
The upside potential of oil imports into China are still not understood by most analysts and the potential on how large they could become is incredible. Car sales in China are already almost twice the levels in the U.S. and sales are up 20% for the first two months of 2013. Keep in mind that 90% of car sales are paid cash-up-front and most large cities have prohibitive taxes and quotas against new car sales. Despite these regulations, sales are still up 20% so far in 2013. All of these new cars and trucks will of course require more oil that China will need to import. General Motors already sells more vehicles in China than they do the United States and their sales are growing double-digits.
China's increasing dependence on imported oil has threatened the country's energy security and it is of major concern to the government. China’s oil dependence is expected to reach 59.4 percent in 2013. Be assured, China is building a blue-water navy and developing the global relationships, which will be required to protect this supply of crude they require today and the ever increasing amount they will need in the future. Indeed, the country of China may be forced into becoming the reluctant miltary superpower to guarantee that they have access to global oil markets.

Americans Turning Off Oil Imports

In comparison to China, the US reliance on foreign energy imports has declined considerably, and many are predicting that the US could be energy self-sufficient by 2030 thanks to its surging domestic production of shale gas and oil. The US is now expected to be a gas exporter by 2020 instead of the previously projected 2022. Domestic oil supplies as well as Canadian supplies will make North America energy independent. This is good news for the U.S. and this new found wealth could be used for a new platform for a revitalized American economy if they can substianlly restructure the tax and legal system which has driven production out of the country.

Trading Oil for Yuan

Recent reports from Reuters, have confirmed that China is now trading their own domestic currency, the Yuan, for oil. Both Russia, and Iran are now using Yuan for oil sales to China. Venezuela is sure to follow. With Russia and Iran accepting Yuan for oil that means there are now almost 1 million barrels per day being exchanged for Yuan instead of USD. Angola can be expected to move oil sales into Chinese Yuan if they haven't already. Over half of their oil sales are now to China. For Venezuela, the political relationship with the U.S. is well known as fear of the U.S. military might be the only thing stopping them from shifting oil sales into Yuan now. Sudan is another country, highly dependent on China politically and will most likely convert their oil sales into Chinese Yuan.
If Russia, Iran, Angola, Sudan, and Venezuela all convert just their oil sales to China into the Chinese Yuan the world will see over 5 million barrels per day traded not in U.S. dollars but in Chinese Yuan. Good night Petro Dollar...Hello Petro Yuan.

Geopolitical Shift and Rise of the Petro Yuan

Does China, as the world’s largest importer of oil then take charge of global sea lanes to ensure the trade in oil? This has been a priority of the U.S. military for the last 50 years. The Pentagon is spending $1.58 trillion annually on hardware for trucks, planes, ships, and guns. In 2013, their cost increase alone was $74 billion. The cost increases this year alone, of $74 billion, is more than Russia’s entire military budget. Can America justify a defense budget of this size to protect sea lines for Saudi crude going to China?
What about the so called “King Dollar”? For decades you could trade oil for dollars. This relationship has gone a long way towards making the U.S. dollar the world’s reserve currency. What happens when the U.S. no longer needs to buy imported oil. As time goes on, the oils futures markets will no doubt shift more to Dubai and Dalian, than West Texas and Brent Crude. In decades past, America's thirst for energy imports resulted in all oil contracts being denominated in U.S. Dollars, the so-called Petro Dollar. The Petro Dollar is now headed for extinction to make way for the Petro Yuan.
We are all witnessing the birth pangs of a new global reserve currency and the "Rise of the Petro Yuan".

Unemployment jumps to 7.9% as rise in the number of young people out of work takes figure 'dangerously close' to a million

Data from the ONS reveals UK has jobless rate of 7.9 per cent

900,000 people have been out of work for more than a year

Experts warn figures show recovery is slower than expected

Think-tank says: 'The light at the end of the tunnel remains rather dim'

Unemployment has increased by 70,000 to 2.56million, with another rise in the number of young people out of work taking the figure 'dangerously close' to one million.
The total is the worst since last summer, giving the UK a jobless rate of 7.9 per cent, with 979,000 16 to 25-year-olds seeking work.
Martina Milburn, chief executive of The Prince's Trust, said: 'Youth unemployment is still dangerously close to a million.
'Thousands of these young people are long-term unemployed, often facing further challenges such as poverty and homelessness. We must act now to support these young people into work and give them the chance of a better future.'

Figures from the Office for National Statistics show unemployment has increased by 70,000 to 2.56 million

The number of people in work fell by 2,000 in the latest quarter to February, to just under 30million - the first time the figure has dipped since autumn 2011.
Today's data from the Office for National Statistics revealed that 900,000 people have been out of work for more than a year, an 8,000 increase on the three months to November, while the number of unemployed 16 to 24-year-olds rose by 20,000.
There was a 7,000 fall in Jobseeker's Allowance claimants last month, to 1.53 million.

 

Meanwhile, the rise in average earnings continued to lag behind inflation, with total pay increasing by just 0.8 per cent in the year to February, down by 0.4 per cent on the previous month.
Statisticians said it was the lowest growth rate since the end of 2009, while the 1 per cent rise in regular pay, which excludes bonuses, was the lowest since records began in 2001.
The number of people classed as economically inactive, including students, people on long-term sick leave or those who have given up looking for work, fell by 57,000 to 8.95 million.

Latest unemployment figures from the ONS show 7.9 per cent of the adult labour force cannot find a job

Despite today's increase in unemployment, the total is 71,000 lower than a year ago.
There has been a 62,000 fall in the number of people in part-time jobs, to just over eight million, with a 60,000 increase in full-time employment, to 21.6 million.
Shadow Work and Pensions Secretary Liam Byrne said: 'Three years on it's now clear the Government's plan is failing, and failing badly. Not only are more people unemployed than at the election, it's soaring up.
'Yet to add insult to injury this Government is slashing tax credits and child benefit but giving millionaires a tax cut. Families are £891 worse off because of tax and benefit changes and pay packets are now a whopping £1,700 smaller than at the last election. People have to work almost an extra month and a half to make what they did in 2010. Working people are going backwards.
'With the IMF warning George Osborne to change course and unemployment getting worse, it's clear the time has come for a fresh approach.'

Figures show a rise of unemployment among young people and those out of work for more than a year

David Kern, chief economist at the British Chambers of Commerce, said: 'The labour market figures are disappointing, but unsurprising.
'Despite the fairly large rise in unemployment, the number of those in jobs has remained almost unchanged.
'The level of inactivity fell by 57,000 in the three months to February as more people returned to the workforce, and this contributed to the increase in unemployment. Although the UK labour market remains surprisingly robust, overall the outlook is uncertain.
'It is realistic to expect further increases in the jobless total if the private sector is able to only absorb some of the expected reductions in public sector employment. In our recent forecast, we predicted that unemployment would increase to 2.6 million in 2014.'
Nigel Meager, director of the Institute for Employment Studies, said: 'Today’s data from the Office of National Statistics show that the long-awaited recovery in the UK labour market may still be some way off.
'Nearly all the headline indicators recorded little change; the recent employment growth seems to have fizzled out, and there is virtually no change in total hours worked in the economy, or in new vacancies recorded by employers.
'Much recent commentary has focused on the apparent resilience of the UK labour market, and the strong performance in total employment.
'It’s worth stressing though that the employment rate at 71 per cent is still below its pre-recession level, and the recent jobs growth has been at the expense of a poor productivity performance, which may harm the UK’s longer-term growth prospects.
'Recent employment growth has relied heavily on under-employed part-timers, and precarious self-employment.
'Looking beyond these small month-to-month movements in the official statistics, the overall picture remains one of stagnation.
'Unemployment has been stuck at around 2.5 million for nearly four years, a million higher than pre-recession levels, and the employment rate has been stuck in the 70-71 per cent range for a similar period.
'The stark fact is that although the labour market wasn’t hit as badly this time round as in previous recessions, it has taken much longer to recover, and the light at the end of the tunnel remains rather dim.'

Millions of customers held to a £72 ransom by NatWest simply for going more than £10 into arranged overdraft

Millions of current account customers with NatWest and RBS face new charges of £72 a year plus interest simply for dipping more than £10 into their arranged overdrafts.
From July, the state-backed bank will force its current account customers to pay the extra charges on top of the interest of 19.89 per cent.
In a further blow, interest will kick in after you go more than £10 into the red instead of the current £100.

Extra charges: RBS and NatWest assert that their overdrafts are still competitive compared with other banks

The only way of avoiding these charges is to pay up to £24 a month for a packaged account with the bank. Student and graduate accounts will also be exempt from these charges.
Campaign group Which? says that if you dip into an authorised overdraft of £250 for two weeks a month, you would see costs rise from £21.60 a year to £93.60.
A spokesman says: ‘These new charges are a significant increase for those who dip into their authorised overdraft and will make it harder for people to compare the cost of running their account with other banks.

 

‘To help consumers, switching banks  must be made much easier. The regulator must also clamp down on complicated and excessive bank charges.’
RBS and NatWest will also start to hit people who have just left university with its graduate account: there is a £6-a-time fee if they dip more than £6 into unauthorised overdrafts, up to a maximum £90 a month.
However, it is also cutting back on the number of unarranged overdraft fees it will charge each month — down from £186 to £90.
RBS and NatWest argue that even with the extra charges, their overdrafts are still competitive compared with other banks,
‘A new fee has been introduced. However, others have been removed or capped across our range of current accounts,’ says a spokesman.

THREE OF THE BEST CURRENT ACCOUNTS FOR OVERDRAFTS

If you find yourself teetering between black and red at the end every month – and get slapped with hefty overdraft fees – it may be worth looking around for an account with a better deal.

These are three of the best options currently available:

• First Direct’s First Account offers £250 fee-free. After that, unarranged overdrafts are charged at 15.9 per cent up to the £500 overdraft maximum.
  

However, you must pay in at least £1,000 per month to be eligible for this account. First Direct also has no branches, so if you prefer face-to-face banking it is probably not for you – although the bank's customer satisfaction reports are excellent.

As a bonus, you get £125 cashback when you switch. If you wish to switch to another bank within 12 months, it will give you an additional £100 to move.         

• If you need temporary relief from overdraft fees, Santander Everyday Current Account is offering a 0 per cent charge for the first four months.
  

After that, agreed overdrafts cost £1 a day, capped at £20 a month. Unarranged fees are charged daily at £5 – capped at 20 occasions per month and potentially racking up to £100. The overall overdraft fee cap is a monthly £150.

There is no minimum account balance and Santander offers a free switching service.
Watch out - Santander has received a lot of bad press for its poor customer services standards, although there seems to have been improvements in recent months.

• Although interest on The Co-operative Bank Current Account Plus overdraft is charged at a whopping 18.9 per cent,  there is a £200 fee-free buffer, just in case you find yourself slipping into the red.

Informal overdrafts incur a monthly £20 charge – as well as a daily £20 service charge. However, there is a quarterly cap of £150. In addition there is formal overdraft service of £20 a year.

You must pay in a minimum of £800 per month to the account.

The other option is to avoid overdraft charges altogether.

If you are running up hundreds of pounds in overdraft fees every month, the best option may be to go cold turkey and sign up to a bank account that simply does not allow you to get overdrawn in the first place.

Barclays Cash Card Account is a basic account that offers free, no-frills banking.
You can make payments by direct debit or standing order and can withdraw up to £300 a day. However, there is no overdraft facility and no cheque book.
Another low-cost, no fuss option is Co-operative Bank’s Cashminder Account.
Once again there is no overdraft or cheque book, but it does come with a debit card and standing order and direct debit facilities. The minimum balance required is £1.
By Amy Andrew

IMF urges more action from Bank of England on flailing economy as new governor prepares for tenure

Senior change: Canadian Mark Carney succeeds Sir Mervyn King as governor of the Bank of England this July

The Bank of England was yesterday urged to do more to bolster the economic recovery just months before the arrival of new governor Mark Carney.
The International Monetary Fund said cutting interest rates to 0.5 per cent and pumping £375billion into the economy through quantitative easing was not enough – even with inflation stubbornly above target. It said the Bank should offer guidance over how long rates will stay at rock bottom levels and use money created through QE to buy private sector assets as well as government debt to stimulate demand.
The recommendation came as the IMF slashed its UK growth forecasts for this year and next by 0.3 percentage points to 0.7 per cent and 1.5 per cent.

It marked the biggest downgrade to any major economy over two years although Britain will still grow faster than Germany, France, Italy and Spain.
The Washington-based Fund urged the Bank and the Treasury to act – warning that George Osborne was ‘playing with fire’ by pressing ahead with his austerity plans.
‘In the United Kingdom, other forms of monetary easing should be considered, including the purchase of private sector assets and greater transparency on the likely future monetary stance,’ it said in its latest World Economic Outlook.
‘Greater near-term flexibility in the path of fiscal adjustment should be considered in the light of lacklustre private demand.’
The Treasury refused to change course on its tax and spending plans and said ‘we are slowly but surely fixing this country’s economic problems’.
But it is thought the Bank may take more aggressive action to kick start the recovery – particularly after Carney succeeds Sir Mervyn King as governor in July.
In the Budget last month, the Chancellor said the Bank should focus on boosting growth and jobs and not just targeting inflation in a sweeping overhaul of its powers.

 

But it is feared that even with a more flexible remit, high inflation will limit what Carney can do. Figures from the Office for National Statistics yesterday showed inflation remained stuck at 2.8 per cent in March – higher than any other major European country. Inflation has been above the 2 per cent target for more than three years and looks set to top 3 per cent this summer.