Wanderlust

Tag: economics

  • Turkey raises interest rates to 24% in new bid to boost lira

    Turkish lira Image copyright Getty Images

    The lira has risen against the dollar after Turkey’s central bank hiked interest rates to 24% on Thursday – the biggest increase in President Tayyip Erdogan’s 15-year rule.

    The hefty 6.25 percentage point rise is the bank’s latest attempt to stem the currency’s collapse.

    The lira is down 38% against the dollar this year despite Thursday’s slim gain.

    The move came despite Mr Erdogan repeating his opposition to high interest rates earlier in the day.

    He has repeatedly blamed the central bank for high inflation, which hit almost 18% last month, its highest level since 2003.

    Image copyright Getty Images Image caption President Erdogan has blamed Turkey’s central bank for high inflation

    Phoenix Kalen at Societe Generale said the market was both pleased and confused by the bank’s move.

    “It almost seems like it’s a game of ‘good cop, bad cop’ being played out between the Turkish authorities – with President Erdogan on the one hand still making statements regarding his dislike of interest rates and… a very sizeable reaction from the central bank in response to the recent inflationary and geopolitical developments,” she said.

    Brett Diment at Aberdeen Standard Investments said raising rates would put “Turkey on the slow road to recovering some monetary policy credibility, and that is critical”.

    Piotr Matys at Rabobank said Turkey also needed to resolve its trade dispute with the US and rebalance the economy away from big infrastructure projects and consumer spending.

    The central bank surprised investors by not raising rates when it last met in July.

    That decision sent the lira tumbling by a quarter and prompted Turkish authorities to impose a series of measures intended to support the currency.

    On Thursday Turkey banned the use of foreign currencies in the country’s property market.

  • Gordon Brown in dire warning about the next financial crisis

    Media playback is unsupported on your device

    Media captionGordon Brown says we are sleepwalking into another financial crisis

    The world is not ready to deal with another financial crisis, former Prime Minister Gordon Brown has told the BBC.

    A breakdown in international co-operation means nations would be unable to act in a concerted way to tackle future threats – which are many.

    “I feel we’re sleepwalking into the next crisis”, said Mr Brown, speaking on the 10th anniversary of the start of the previous crisis.

    He added that some of the bankers involved should have gone to jail.

    Mr Brown, speaking from his living room, said: “This is a leaderless world and I think when the next crisis comes, and there will be a future crisis, we’ll find that we neither have the fiscal or monetary room for manoeuvre or the willingness to take that action.

    “But perhaps most worrying of all, we will not have the international co-operation necessary to get us out of a worldwide crisis.”

    In the immediate aftermath of the collapse of Wall Street banking giant Lehman Brothers, the UK government was one of the first to press the case for using public money to recapitalise failing banks and did exactly that – pumping taxpayer funds into Lloyds, HBOS and RBS.

    Mr Brown, UK prime minister as the crisis unfolded, said that it was possible to counteract the evaporation of trust in the markets by co-ordinated action between governments and regulators that trusted eachother.

    “But now with the trade wars, the disagreements over climate change, the nuclear deals that have fallen apart there is no spirit of co-operation – there is division and protectionism and I fear a new crisis would see nations trying to shift the blame to each other.”

    Bob Diamond defends risk-taking banks Hammond: Financial crisis ‘shock’ continues Carney warns against complacency

    He acknowledged that the use of public money to bail out high earning bankers was a difficult pill for the public to swallow and although he insists it was necessary, he says that he is frustrated that harsher penalties weren’t dished out to some of the bankers involved.

    “I’ll be honest with you. Some of these bankers should have gone to jail and until we have proper laws that can find the guilty and show there are clear penalties, then people will think the bankers have got away with it and will go back to doing the same thing again.”

    What blame does he bear himself? Former governor of the Bank of England, Mervyn (Lord) King has been critical of the way his government designed the regulatory regime – moving bank supervision away from the central bank to the Financial Services Authority.

    Mr Brown acknowledges that it didn’t work perfectly, but argues that the system was designed to look at isolated outbreaks of bank distress – not a contagion which consumed the entire global financial system.

    No national warning system, he says, was equipped to see the full picture and no individual country could have tackled the meltdown.

    A global problem needs global co-operation. Without that – and with most of the tools available already used (rock bottom interest rates, trillions pumped into the system through quantitative easing) – Mr Brown paints a grim picture of our ability to face the next crisis.

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  • Lehman gamble paid out for brave investors

    Lehman UK staff Image copyright Reuters Image caption This Reuters picture of Lehman Brothers staff being told the bank would survive at a meeting on 11 September 2008 is one of the images that defines the financial crisis

    Investors who took a gamble on the wreck of Lehman Brothers’ UK operations after the investment bank collapsed made up to seven times their money.

    The assets of Lehman’s UK arm greatly exceeded its liabilities.

    Tony Lomas, the partner at the accountancy firm PwC who was appointed lead administrator, told the BBC there was a surplus of about £8bn.

    Lehman’s collapse into administration a decade ago marked the height of the financial crisis.

    Creditors able to wait while the administrators unwound millions of trading positions received back more than they were originally owed, said Mr Lomas, who has recently left PwC.

    Image copyright PA

    Lehman UK was far from flush when he first took over. The US parent company had grabbed all the cash available – a normal practice for large multinational companies with central treasury units – and the British operation was unable to meet its bills. “There was £3bn that had to go out on the Monday morning and it didn’t have it,” Mr Lomas said.

    As a result, Lehman UK was put into administration, and the search for assets began. “The first thing is you are looking for assets – and for liabilities – and first of all for liquid assets, things that you might be able to sell quickly,” Mr Lomas said.

    “We had a September payroll due and the quarterly rent was due. We needed about £100m quickly. We couldn’t find liquid assets quickly enough, so we had to borrow £100m from a hedge fund.”

    Lehman collapse: ‘These were very dangerous times’ How did the financial crisis affect your finances? Who’s to blame for the financial crisis?

    That search for ready funds was itself fraught. “You had to be sure you were borrowing from the right legal entity – from the right bit of Lehmans that you were sure assets would fall into,” he explained. “Most of the counterparties to Lehman trades just identified them as trades with Lehman – not the actual legal entity, so you had to be sure.”

    “We have been able to pay everybody everything they were owned – and we had £8bn left over, which was mainly the bank’s own capital.”

    Separately, the senior Bank of England official who dealt with the fallout from the Lehman collapse has revealed the Bank arranged to bring $86bn from the US to help keep London markets running in the wake of the collapse.

    Sarah Breeden, now executive director for international banks supervision at the Prudential Regulation Authority, said the Lehman administration meant London markets were running short of US dollars, leading the Bank of England to agree a “swap” deal with its US counterparts. “Eventually that totalled $86bn,” she said.

    The Bank of England lost no money from its interventions after Lehman, Ms Breeden added.

  • Workers are £800 a year poorer post-crisis

    Mr Johnson added: “Pensioners have done much better than younger people on average. In part this is because they are less reliant on earnings and so haven’t suffered from falls in earnings.”

    In addition, however, “government has chosen to protect the state pensions and other benefits received by pensioners,” Mr Johnson said.

    Even more stark is the analysis from the IFS that, if wage growth trends between 1998 and 2008 had continued, people would on average be earning £3,500 more.

    That’s 15% higher than today’s average figure.

    How did the crisis affect your finances?

    Homes: House prices in London and the south east may have risen sharply in the decade since the crisis. But in large swathes of the UK prices have still not recovered to the levels seen in 2008.

    Savings: The last decade has been a disaster for Britain’s savers, especially many elderly people who rely on their savings income. Savers who once enjoyed rates of 5%-plus now get a fraction of that.

    Borrowing: Average household debt has climbed from less than £3,000 to £4,000 in the last decade. There are lots of reasons for this, not least the easy credit available through plastic cards.

    Banking: The way we bank has completely changed. Challenger banks have emerged, and mobile technology means we increasingly sort our finances using phones. But online banking has brought branch closures – and cyber-attacks.

    Read our report on a decade of changes

    “We should never stop reminding ourselves just what an astonishing decade we have just lived through, and continue to live through,” said Mr Johnson.

    “The UK economy has broken record after record, and not generally in a good way.

    “Record low earnings growth, record low interest rates, record public borrowing followed by record cuts in public spending.

    “On the upside employment levels are remarkably high and, in spite of how it may feel, the gap between rich and poor has actually narrowed somewhat, but the gap between old and young has grown and grown.”

    Low growth

    A regional breakdown of the effect of the financial crisis on wages shows that London, the East Midlands and the south-west of England have been worst hit.

    The IFS said that the financial crisis of a decade ago sparked the deepest recession since the Second World War and had been remarkable for the “persistence of its effects”.

    Economic growth is still low by historic standards and the total debts of the government have grown by £1tn.

    The public spending cuts pushed through by the governments of 2010 and 2015 were “historically unprecedented” the IFS said.

    The government has said that there are now record levels of employment and that the introduction of the National Living Wage and tax cuts had helped support many millions of working people.

    The deficit – that is the difference between what the government spends on services and receives in tax revenues – has also been substantially reduced.

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  • Unions call for four-day working week

    Image caption Russ Todd says the arrangement offers him extra flexibility along with his time

    “My father may paintings long hours. He was once up ahead of i was up and he was once house after I went to bed,” he stated. “it’s important to be there. It issues.”

    Employee Mari Dunning has used a few of her additional time to get a suite of poetry printed, amongst extra menial tasks.

    Or for those who use the extra day to get the housework done, “you’ve got then were given your weekend huge open”, she stated.

    “i do not see why 4 days is not potential for most folks,” she introduced.

    But for most British workers the rage goes in the other route.

    ‘Better running lives’

    Some 1.4 million folks now paintings a whole seven days per week in the UNITED KINGDOM, in step with the TUC, and FIFTY ONE% of people they surveyed mentioned they feared the advantages of latest era may visit corporate managers and shareholders.

    A document this January from Centre for Towns discovered that 3.6m UNITED KINGDOM jobs might be replaced by means of machines by way of 2030.

    The TUC’s general secretary Frances O’Grady highlighted that unions had fought for 2-day weekends and bounds on lengthy hours – and that that is their subsequent challenge.

    Symbol copyright PA Image caption Frances O’Grady has led the TUC since 2013

    “We All Know that a few individuals are pessimistic about whether era will make their lives better however technology may well be a force for excellent, we will be able to also make everyone’s running lives better and richer,” she explained.

    “It does not need to be about surveillance and exploitation. This could be about creating extra enjoyable work.”

    But that may no longer be simple.

    ‘Protecting jobs’

    The Communication and Employees Union just took on that combat – to have the advantages of automation calmly shared – on the Royal Mail.

    When the postal carrier invested in new sorting machines – thus scaling down at the quantity of time employees had been had to deal with programs – it sought after the staff to work extended supply rounds instead.

    Image copyright Getty Pictures Symbol caption New tech disrupted the operating week for workers at Royal Mail

    Terry Pullinger was the lead union rep on the dispute that took years to unravel.

    “Our goal was once to paintings in opposition to a 35-hour week,” he said.

    “An Important to us was to protect as many jobs as imaginable with the generation that is coming in, that is removing so much of the paintings that our participants are doing. and fortuitously we ended up in a state of affairs the place the organization agreed with us.”

    He introduced: “persons are finding that they are being driven to work tougher, but how much can other folks take?”

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  • US tech companies ask for protection from next Trump price lists

    US-China trade war scabble game Symbol copyright Getty Pictures

    Four best US tech corporations have written to the united states Business Consultant (USTR) inquiring for coverage from the proposed third round of Trump price lists.

    Dell, Cisco, Juniper Networks and Hewlett Packard Enterprise warn the new taxes may result in US task losses.

    The corporations are concerned the price lists will increase their costs due to the fact that many of their components come from China.

    they are saying a duty of between 10-25% “could lead to vast, disproportionate economic hurt to US interests”.

    The last-ditch effort got here as US public hearings at the upcoming price lists ended.

    The hearings examining the prospective affect of the taxes wrapped up on Thursday, setting expectancies that any other round of price lists may well be imposed on $200bn (£154.7bn) of Chinese Language products as early as Friday.

    Typically, then again, the united states has carried out tariffs inside weeks, not days, of the end of public consultations.

    ‘Disproportionate hurt’

    The 4 tech corporations are involved that price lists will increase the associated fee of things corresponding to hard drives, servers and networking apparatus, which might hit income and lead to activity cuts in the u.s..

    “over the years the reduced earnings that the duties may cause may lead to hiring freezes, stagnant wages, or even job losses, to boot as hurt to traders reminiscent of reduced dividends and erosion of shareholder worth,” the firms wrote in the letter to the USTR, Robert Lighthizer.

    Bikes, cots and refrigerators: the imports hit by means of Trump’s tariffsUS-China industry row: What has came about so far?The early victims of Trump’s industry conflict

    They warned that an extra duty of as much as 25% “could cause huge, disproportionate economic harm to US interests”, including decreased spending on analysis and building and a decelerate in innovations similar to cloud computing and the rollout of 5G networks in the united states.

    The affect might be wide-ranging since the 4 companies make apparatus general via different tech firms, the federal government, and establishments similar to colleges and hospitals.

    ‘Not the best way to go’

    President Trump’s industry struggle with China moved up a equipment closing month whilst the united states introduced in a 25% tax on a 2d wave of goods price $16bn.

    Tariffs had already been imposed on $34bn of Chinese goods in July. China has retaliated on each events with tariffs on the equivalent price folks items.

    In an interview with the BBC’s Asia Industry Record programme, HPE’s leader executive Antonio Neri stated the company had “weathered the affect of the first rounds of tariffs really well because it has a flexible and big scale provide chain”.

    Whilst the company stressed it was confident it would give you the option to make changes essential to mitigate any affect of the price lists, an HPE spokesperson stated: “Changes to a tariff device that has labored well for decades is not the way in which to go for our u . s ..”

  • UK products and services sector will get wonder boost

    Waiter in outdoor restaurant Symbol copyright Getty Images

    Britain’s large services and products sector – the whole thing from eating places to banking – shocked economists through selecting up extra strongly than anticipated remaining month.

    The sector, which makes up about EIGHTY% of the economy, noticed many firms operating at capability with complete order books.

    The services index, compiled via IHS Markit/CIPS Buying Managers’ Index (PMI), grew to 54.3 in August from 53.5 in July.

    But firms stated Brexit concerns have been slowing investment for the 12 months ahead.

    The figures have been better than any of these forecast through economists in a ballot by Reuters earlier this month.

    IHS Markit’s chief trade economist, Chris Williamson, said: “Faster provider sector order e book and employment enlargement… highlights the extent to which the economy has change into more reliant on products and services to support expansion, and specifically an especially robust financial carrier sector.”

    The numbers also make up for the the slowing expansion in production which showed up in PMI figures for August launched earlier this susceptible and was as a result of a sharp downturn in exports.

    The manufacturing index was once at 52.8, the bottom reading in 25 months.

    Any reading below 50 method economic job is shrinking.

    The PMI forecast that the economy as a complete will grow at 0.4% within the third quarter of the yr, the similar as in the 2nd quarter. All Over the second quarter of the year it received a boost from the world Cup celebrations and the nice and cozy weather, in line with the Place Of Business of National Facts.

    Then Again there had been fears that the upward push in interest rates, uncertainty over Brexit and the threat of global trade wars might dampen enlargement.

    Relatively powerful

    Commenting on the products and services figures, Mr Williamson, stated: “This is a comparatively powerful and resilient rate of expansion that will for sure draw a few sighs of aid on the Bank of britain after the velocity hike earlier within the month,”

    “Given the an increasing number of unbalanced nature of enlargement and the darkening industry mood, dangers to the fast outlook appear tilted to the disadvantage.”

    The survey discovered that businesses were still taking over body of workers however that trust for the 12 months in advance slipped to its lowest considering the fact that March, with businesses saying Brexit uncertainty had made purchasers less keen to speculate, for now.

    There are signs that the lack of labour is using up a few wages. Companies within the PMI survey pronounced paying upper salaries to recruit laborious-to-find workforce and reduce employee turnover that was once proscribing their talent to finish a few projects.

    Government figures from the ONS show wages, except bonuses, grew through 2.7% in the 3 months to June, compared with a 12 months ago while the official inflation degree, as measured by the shopper Price Index, stands at 2.5%.

  • Argentina seeks IMF monetary help ‘to steer clear of crisis’

    Mauricio Macri Symbol copyright AFP Image caption Argentina’s president spoke on television in an deal with to the nation

    Argentina is to start out talks a couple of financing handle the Global Monetary Fund (IMF) on Wednesday amid reports it is looking for $30bn (£22bn).

    Finance minister Nicolas Dujovne is due to fly to the IMF’s Washington offices.

    After contemporary turmoil that saw rates of interest hit FORTY%, President Mauricio Macri said IMF aid might “strengthen enlargement” and assist keep away from crises of the past.

    The talks come 17 years after Argentina defaulted on its money owed and 12 years because it severed ties with IMF.

    Mr Macri stated in an deal with to the country on Tuesday: “Only A couple of minutes in the past I spoke with (IMF) director Christine Lagarde, and he or she showed we would start working on an settlement.”

    Through Andrew Walker, BBC economics correspondent

    Argentina has had a turbulent courting with the IMF.

    In 2013 the rustic was censured by means of the Fund over the inflation and financial expansion information revealed by the administration of President Cristina Fernandez de Kirchner. It used to be a step in a process that would ultimately have led to Argentina’s expulsion from the IMF.

    In Advance, many had blamed the IMF for contributing to a monetary and economic situation that came to a head around the end of 2001, which set again residing requirements severely.

    Family Members have advanced under the current president, Mauricio Macri, whose technique to financial policy used to be a lot more in line with that favoured on the IMF.

    the prospect of a brand new IMF loan will test that improvement. it is going to include financial coverage prerequisites, together with almost certainly spending cuts and tax rises, which can be more likely to worsen political lines in Argentina.

  • Venezuela ‘paralysed’ by way of release of sovereign bolivar forex

    Venezuelan women hold the new currency, the sovereign bolivar, after its launch Image copyright Reuters Symbol caption The New sovereign bolivar used to be offered in a bid to tackle hyperinflation

    Venezuela came to a standstill on Tuesday because the united states of america tried to care for its newly introduced foreign money.

    Thousands of businesses closed so as to adapt to the “sovereign bolivar”, and many employees stayed at home.

    President Nicolás Maduro introduced the new banknotes on Monday, revaluing and renaming the antique bolivar forex.

    the federal government say this may occasionally take on runaway inflation, but critics say it could make the predicament worse. The notes went into move on Tuesday.

    President Maduro had declared Monday to be a bank vacation.

    Symbol copyright Reuters Image caption an indication on a industry in Caracas reads “Closed for reconversion” in Spanish

    The usa’s black market in greenbacks is even frozen by the foreign money shift, as confusion reigns.

    the federal government announced several different key economic adjustments to accompany the brand new notes, together with raising the minimum wage by 34 instances its earlier level from 1 September, raising VAT and cutting beneficiant gas subsidies.

    President Maduro additionally mentioned the sovereign bolivar could be tied to the petro, a virtual currency the government says is linked to Venezuela’s oil reserves.

    But the us has banned its electorate from buying and selling in it, and one cryptocurrency website, ICOindex.com, has even labelled the petro “a rip-off”.

    “Anchoring the bolivar to the petro is anchoring it to not anything,” economist Luis Vicente León advised AFP news company.

  • Standpoint: The Nice, bad and unsightly in Trump’s first yr

    Trump in Vietnam Symbol copyright Getty Pictures

    The election of Donald Trump as the 45th president of the United States Of America has disenchanted standard knowledge concerning the attributes and behavior regarding the occupant of the Oval Administrative Center.

    Decorum has incessantly given solution to boorishness from Mr Trump in ways that mystify even his such a lot ardent supporters.

    In trying to check the president’s first year in place of business, i’m reminded of a favorite western film I watched time and once more as a boy starring Clint Eastwood referred to as “The Nice, The Unhealthy and the Unsightly.”

    on this prism, i will be able to do my very best to assess the past 365 days of the Trump presidency.

    The good

    Since Trump’s inauguration the yank economy has roared back to life.

    The bad

    Republicans in Washington DC control either end of Pennsylvania Road with the White Space on one finish and Capitol Hill on the different.

    the level of regulate is so dominant, in truth, that Republicans have not a governing majority this large on account that 1929.

    on this context, one could think the GOP desire-list of repealing Obamacare, reducing taxes and rolling again regulations could had been moderately simple. One would be unsuitable.

    President Trump’s largely fingers-off technique to the legislative process has allowed factions of GOP lawmakers to bicker and brazenly struggle with one another regarding the direction the birthday party will have to shuttle.

    Read extra on Trump’s first year

    Six portraits that tell story of Trump’s first yr What has in reality changed beneath Trump? What Trump has mentioned about your united states of america

    Trump’s energy vacuum ended in Republicans being unable to repeal President Obama’s signature well being care legislation.

    And it also intended they passed a tax lower which allows Democrats to portray the Republicans as stooges for the wealthy – many believe that had Trump asserted himself more aggressively into negotiations, a more equitable bill would have handed.

    Democrats want only 24 seats to turn control of the home of Representatives and 38 GOP lawmakers have already introduced their retirement sooner than the election this November.

    Should Republicans lose control of the home, communicate of impeachment to remove President Trump from place of business is going from far-fetched, watercooler conversation to a very actual and threatening risk.

    The unpleasant

    While President Trump likes to painting himself because the sufferer of “faux information” at the hands of a biased media, the truth is that he is ceaselessly his own worst enemy.

    His constant use of Twitter to belittle actual and perceived political fighters is beneath the honor of his place of work.

    World leaders remain at a loss for words if not angered by his behaviour and communicate of Trump’s psychological fitness is so common that it nearly feels commonplace. Which it’s not.

    President Trump has been dogged via allegations of racism and his disparaging feedback relating to Haiti and bad international locations in Africa remaining week has even the president’s closest allies shaking their heads.

    Media playback is unsupported to your device

    Media captionWhat the arena thinks of Trump

    Whether he realises it or not, having the yank press corps query whether our president is racist at an event honouring the legacy of Dr Martin Luther King is a sad, embarrassing commentary.

    Trump supporters deal with his tough communicate and social media use permit him to glue in an instant along with his supporters.

    However this premise is defective – Trump was once elected to symbolize all THREE HUNDRED+ million Americans. All folks. that includes those who are black, brown, homosexual, Muslim and transgender.

    One can not intention to please white, center-elegance men at the expense of the rest of the yankee inhabitants and successfully govern our united states of america.

    Our variety is our potential and our potential in The Us is our range. Does Mr Trump fully grasp this?

    The future

    The next 12 months are completely and exclusively in the hands of the president.

    If the yank financial system is still strong and foreign conflicts abroad stay contained, he have to be in an excellent position heading into a 2020 re-election bid.

    Will Have To the dangerous and ugly impulses stay – belittling other people at home and in another country, coupled by means of an lack of ability to paintings with lawmakers to deal with real problems dealing with the american other folks – Trump’s tenure in the White Space can be an remoted one, with contributors of his own birthday party as well because the Democrats looking to depose him in 2020.

    As an American, I Need my president to achieve success.

    Can Mr Trump – will Mr Trump – recognize the gravity and responsibility he holds? Most Effective time will inform.

    Ron Christie served as unique assistant to President George W Bush and deputy assistant to Vice-President Dick Cheney. A BBC political analyst, he’s the author of three books discussing the intersection of race and politics.

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