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londonlawyer
April 30th, 2009, 10:34 AM
London’s ‘Twin Pillars of Doom’ May Spark Hedge Fund Exodus

By Tom Cahill and John Rega

April 30 (Bloomberg) -- After helping to move 23 hedge funds to Switzerland from London in the past two years, David Butler describes the flow as a “steady trickle.” Now he’s bracing for a flood.

“Call it the twin pillars of doom,” said Butler, a founding partner at hedge fund consultancy Kinetic Partners LLP in London. “Put together the U.K. tax changes and what the ogres in France and Germany have created and you will see a mass migration.”

Butler said inquiries about relocations have gone up “by a factor of 10” since Britain pledged a new 50 percent rate for top earners on April 22. Many came from fund managers already mulling a move after the U.K. tinkered with tax rules for non- domiciled workers last year. They’re calling again after the European Union, backed by France and Germany, proposed yesterday to regulate buyout firms and hedge funds managing more than 100 million euros ($134 million.)

The EU is pushing for tighter regulation with an “all encompassing” approach after markets fell in 2008. The hedge fund regulatory threshold was lowered “at the last minute” at the urging of Socialists in the European Parliament.

“The directive has been allowed to become a politically motivated attack on the U.K.’s successful investment management industry,” said Richard Perry, a partner in the financial services practice at Simmons & Simmons, a law firm in London. The measure may drive many fund management businesses outside Europe, he said. “This could inhibit the growth of London’s hedge fund industry significantly.”

Leaving London

London, home to at least 80 percent of Europe’s estimated $400 billion in hedge fund assets and about 60 percent of Europe’s private equity firms, may suffer as funds decide leaving is easier than complying with new regulations.

“There is a profound disincentive to base businesses in Britain that could as easily be run from Zurich, Dubai or for that matter New York,” Simon Walker, chief executive officer of the BVCA, the U.K. buyout industry’s lobby group, told reporters in London on April 29. “This is one of the biggest problems: it’s a disincentive to run businesses out of London.”

Geneva is the likeliest next port of call for managers who’ve had enough, said Butler. Switzerland encourages hedge fund managers to join a Swiss asset management trade group, said Joe Seet, founder of Sigma Partnership, a financial service consultancy in London and former hedge fund manager.

“It’s like joining a country club and you’ve got to follow the rules,” he said.

Tax Negotiation

Personal taxes for wealthy foreigners can frequently be negotiated with the local authorities in Switzerland, depending on the canton where the manager lives, and may be based on projected expenditures, not income, said Seet. “If you are a down-to-earth billionaire you can negotiate a rate based on what you spend,” said Seet.

Hedge fund managers in Britain are already regulated by the Financial Services Authority, which may prevent some from going because investors appreciate protection from that regime, said Antonio Borges, chairman of the Hedge Fund Standards Board, which has crafted a voluntary code of conduct for hedge fund managers.

“The U.K. regulatory system is still the best in the world and will survive despite this onslaught,” said Borges. “I suspect most hedge fund managers will stay in London because I don’t think long-term these rules will have much success. They have to be significantly modified because it creates too many issues about the industry in Europe.”

EU ‘Too Late’

Managers who meet the EU requirements, including minimum capital, would be eligible to offer their funds to professional investors anywhere in the region.

The EU’s plans “lacked ambition” and came too late, the European Parliament’s Socialist group said on its Web site. “The final proposal does not come close to meeting our expectations,” said Martin Schultz, head of the Socialists in the Parliament.

Poul Nyrup Rasmussen, a Danish Socialist in the Parliament who led the push for EU rules, has said managers threatening to leave Europe were bluffing and wouldn’t want to lose access to Europe’s nearly half a billion investors.

Seet, at Sigma, said many managers inquire about moves to Switzerland, then balk over cultural issues.

‘Bursting the Gate’

“The primary language in Geneva is French, and you really have to speak French; it’s not like the Cote D’Azur where you can get away with English,” said Seet. “Moving is not such an easy thing to do.”

Butler at Kinetics said hedge fund managers who previously balked at moving because of concerns like pulling children out of school, and moving house will look past those now.

“These two barriers change the whole ball game,” said Butler, who declined to name firms considering a move. “Now there’s nothing to stop them bursting through the gate.”

To contact the reporters on this story: Tom Cahill in London at tcahill@bloomberg.net; Edward Evans John Rega in Brussels at jrega@@bloomberg.net

Last Updated: April 30, 2009 06:01 EDT

Ninjahedge
April 30th, 2009, 10:39 AM
Maybe they should start requiring a taxation of any fund ACCESSABLE in the UK rather than just ones that are based there.

Find some way to make it so that if these guys decide to run away because they are being taxed too much, they cannot pilfer the cash flow from the country they just ran from to finance their hedge funds.

londonlawyer
May 4th, 2009, 11:15 AM
London Ponders Its Future as Financial Powerhouse
April 29, 2009, 8:05 am

Tetsuya Ishikawa reaped the fruits of London’s financial boom, structuring and selling his small share of the complex securities that fueled both his professional rise and the uninterrupted economic growth of Britain. When the boom went bust last year, he lost his job at Morgan Stanley, along with about 28,000 other Londoners working in finance.

Mr. Ishikawa, who has written a fictional memoir, has no plans to return to the City, as London’s banking district is known. But Britain’s revenue-starved Labor government will find no such escape, The New York Times’s Landon Thomas Jr. writes.

“By 2010, the U.K. will have the largest budget deficit in the developed world,” Richard Snook, a senior economist at the Center for Economic and Business Research in London, told The Times. “The problem is that the financial services industry has been a huge cash cow for the British government for the last 10 years and now it is going into reverse.”

The country’s budget deficit has soared to 12 percent of gross domestic product; its public debt burden could soon reach 80 percent of annual economic output, a figure that would leave it roughly in the same position as Greece.

But at a time when Britain more than ever needs a financial sector firing on all cylinders, its economic engine is conking out — for a number of reasons, including some that critics blame on the government.

All told, more than 70,000 jobs in finance are expected to disappear over the next two to three years, a big chunk of the total estimated job losses of about 280,000 in London.

The British government has poured hundreds of billions of pounds into preventing several of its largest banks from falling into bankruptcy as the extent of their bad bets became evident. But there is little prospect of a revival anytime soon, as the government is about to impose stiffer demands on banks to keep high capital ratios and to rely less on leverage and once-lucrative trading activities.

That, combined with a more aggressive posture by the regulatory authorities to put a check on bonuses, is likely to hasten what has already been a sharp falloff in corporate and income taxes from the City.

The economic contribution from the British financial sector, according to the Office for National Statistics, peaked at 10.8 percent of G.D.P. in 2007 — up from 5.5 percent in 1996, just before Labor took over. By comparison, the contribution from financial services in the United States to the American economy never exceeded 8 percent.

In a bid to capture more revenue, the British government has decided to raise tax rates on the affluent, many of them working in finance. But the new top income tax rate of 50 percent for those earning at least 150,000 pounds ($219,000) may only make things worse, said Mr. Snook, the economist.

“These people are highly mobile and they will leave London,” he told The Times. “The impact on public finances will be negative.”

Britain’s top tax rate will soon rank fourth behind those of Denmark, Sweden and the Netherlands — not quite the advertisement one would expect from one of the world’s leading financial centers.

In many ways, Mr. Ishikawa’s career tracked the credit explosion that has now imploded. When he began work as a lowly credit analyst in 2002, banks in London issued about 20 billion pounds in securities linked to various mortgage instruments. His career took off as that figure surged to over 180 billion pounds over the next five or six years. Mr. Ishikawa received a $3 million bonus from Morgan Stanley in 2008 as a reward for peddling assets that turned out to be toxic.

With that line of business virtually defunct, banks in the coming years must return to lower-risk and lower-return businesses like equity and bond underwriting, foreign exchange trading and traditional deal-making — businesses that may well be profitable, but can in no way make up for the loss of such a lush specialty.

The Center for Economic and Business Research estimates that corporate and income taxes from the financial industry will shrink from 12 percent of the overall tax take in 2007 to 8 percent this year and perhaps lower in the years ahead, a prospect that could force Britain to increase its already substantial borrowing requirement.

The crisis has humbled all financial centers, from Wall Street to Dubai. According to an index produced in Britain that ranks financial centers around the world, the City of London still comes out on top, closely followed by New York. The gap, though, between these two and Singapore, which is now third, is narrowing.

Lord Adair Turner, the chairman of the Financial Services Authority, agrees that London as a financial center will be in for an adjustment and says that a large portion of the banking industry’s profit contribution to the economy was “illusory.”

But even in a more restrictive environment, he points out, London’s importance as a global financial hub and the most valuable trading center in Europe will not go away.

“The City is important today for the same reason it was important in 1890,” he told The Times.

As for Mr. Ishikawa, who is 30 and grew up in Britain as the son of a successful Japanese executive, he is putting his hopes into a new career as a writer. His book, “How I Caused the Credit Crunch,” chronicles the debauched excesses of the boom — he was briefly married to a Brazilian lap dancer — by lightly fictionalizing his six-year stint in finance.

“I really don’t miss it,” he told The Times, sipping a coffee near the building where he was laid off. “There are many more kids out there more hungry than me.”

Like Faruq Rana, for example. Mr. Rana, the 26-year-old son of Bangladeshi immigrants, was born and reared in Tower Hamlets, a district abutting Canary Wharf that has Britain’s highest unemployment rate.

From his window, he can see the towers of Citigroup and Barclays reaching into the sky and his ambition to one day work as a trader in one of those buildings soars nearly as high.

“Every day when I wake up and open up my window, I can smell my job,” said Mr. Rana, who is a student in a government-financed program at Tower Hamlets College that prepares local youths for jobs in the financial industry.

Unlike Mr. Ishikawa, Mr. Rana did not go to Eton or Oxford, but he remains undeterred.

“I have the motivation and the drive,” he told The Times. “I think I can be one of them.”

MidtownGuy
May 4th, 2009, 12:30 PM
But if you look at nick-taylor's thread of London projects you would hardly think there was any economic concern at all. They're building like Ramses II over there.

londonlawyer
May 4th, 2009, 12:48 PM
Most of those projects started actual construction before the economy collaped. As in NY, they also have many sites that have been demolished and yet no work is occurring.

Many of my friends in the London markets are out of work.

They are far worse off than we are.

nick-taylor
May 5th, 2009, 09:02 AM
Most of those projects started actual construction before the economy collaped. As in NY, they also have many sites that have been demolished and yet no work is occurring.

Many of my friends in the London markets are out of work.

They are far worse off than we are.I'd be interested to see what your definition of 'worse off' is (and that is even with Boris handling the reigns).

Let's get this clear - everyone is taking hits. Everyone. When I was in Tokyo and Hong Kong earlier this year, people were feeling just as crap as their counterparts in London (and probably New York); its a global phenomena.

Instead of the concern for London, I'd actually be more worried for New York which took a massive dent in the trust department (looking at you Madoff, the failures of the NY investment scene, and its largest bank Citigroup), because without trust - people will be less inclined to give you their money.

London has its problems, but which city doesn't, lets do a rollcall?
- Dubai is falling apart
- Hong Kong is having to compete against Shanghai and the increasing stranglehold of Beijing
- Tokyo is at the centre of a long-term declining economy (demographics)
- Paris is back to kidnapping CEO's and witch hunts of anglo-saxon ideas
- and the Singapore economy is taking the largest battering going around.

Yes, I think there will be those that opt to go elsewhere, but at the moment the global hedge fund sector is in a right old mess, and has lost the allure it once had. A negligible tax rate rise means nothing to those who probably avoid paying most tax at present (they'll be more worried about the lack of bonuses), while the changes that Paris and Berlin want to enforce across Europe will end up being watered down. The end being increased domestic regulation in France and Germany that will damage the competitiveness of Paris and Frankfurt. I also envision Sarbanes-Oxley (ie level of competiveness) part II in the US.

The real issue affecting London at present however is the decline in international trade and the finance that goes alongside it. All financial centres are taking a hit from this at present, but London, Hong Kong and Singapore moreso because they are ultimately dependent upon the global scene, unlike nationally-fixated financial centres (e.g. New York, Frankfurt, Tokyo and Paris).

The bonus from this situation that London finds itself in however is that the likes of London and Singapore will bounce back sooner and stronger because of the ever-growing strength of emerging markets that haven't taken the hits that the likes of the US, UK, EU and Japan have taken in recent months.


Ultimately however, London will carry on, just as it has done for the last 2,000 years. All I know is that come 2012 London is hosting one hell of a party, will open another rail line that circles Central London, and in 2017 it will have a brand new line (Crossrail) connecting all the major CBD's, two international airports and the Olympic Park.

Of course in-between then there will be a whole host of towers including the future four tallest towers and a tranche of projects like the Tate Modern Extension, British Museum Extension and a torrent of various pedestrianisation schemes and sports stadia.

Naturally as someone who works in finance, its an edgy time, but life goes on.

ZippyTheChimp
May 5th, 2009, 12:26 PM
Ultimately however, London will carry on, just as it has done for the last 2,000 years.

"Historical results are not a guarantee of future performance. "


Now, where have I heard that before.

londonlawyer
May 5th, 2009, 01:15 PM
For most of the past 2,000 years. London was a non-entity. It, like England, started gaining prominence about 500 years ago. London bounced back many times over the past 500 years because England was one of the most powerful countries during that time. Sadly, however, England now is becoming more and more insignificant and is in a financial abyss from which it will be difficult to emerge.

More people will come to distrust London due to the casino game that was conducted in its financial markets. The derivatives that nearly broke AIG came from London. Moreover, AIM is an unregulated disaster. In fact, London's mantra of deregulation now is regarded as absurd and disastrous. With respect to Madoff, he simply was a crook, much like the Brit Nicholas Leeson and the guys in France last year. Crooks always will exist with or without regulation just as laws making murder a crime don't prevent homicides.

NY will always retain its status, in part, because the US financial market is enormous. By contrast, this crisis has heightened divisions between the UK and EU and Continental financial services likely will cluster around Paris and Frankfurt; they will not flow to London.

Moreover, other centers like Shanghai and Dubai will rise dramatically. Shanghai within 20 years will be the No. 2 financial center after NY.

nick-taylor
May 5th, 2009, 03:33 PM
For most of the past 2,000 years. London was a non-entity. It, like England, started gaining prominence about 500 years ago. London bounced back many times over the past 500 years because England was one of the most powerful countries during that time. Sadly, however, England now is becoming more and more insignificant and is in a financial abyss from which it will be difficult to emerge.

More people will come to distrust London due to the casino game that was conducted in its financial markets. The derivatives that nearly broke AIG came from London. Moreover, AIM is an unregulated disaster. In fact, London's mantra of deregulation now is regarded as absurd and disastrous. With respect to Madoff, he simply was a crook, much like the Brit Nicholas Leeson and the guys in France last year. Crooks always will exist with or without regulation just as laws making murder a crime don't prevent homicides.

NY will always retain its status, in part, because the US financial market is enormous. By contrast, this crisis has heightened divisions between the UK and EU and Continental financial services likely will cluster around Paris and Frankfurt; they will not flow to London.

Moreover, other centers like Shanghai and Dubai will rise dramatically. Shanghai within 20 years will be the No. 2 financial center after NY.I doubt either us will be proven right or wrong for a few years, but I do have a few points of contention:
- You refer to the power of the home nation as if there is a significant correlation to the size of being a financial centre, yet a paragraph later state that Dubai is going to rise dramatically.... the UAE has a population similar to that of Queens & Brooklyn or Outer London, and that isn't the fact that Dubai is pretty much bankrupt.
- We're all in the same abyss (although more correctly it is the Scottish banks: RBS and HBOS that went sour, the English banks didn't stray to far - HSBC didn't go down the route Citigroup went...), so happens also that the US is below the rest of us lot to cushion us when we hit the bottom.
- Yep, AIM is such a disaster and London so distrusted that it is being replicated across the world, next stop Tokyo AIM!
- London's regulatory stance was such a disaster that its two largest financial institutions and investment scene evaporated...

We'll re-convene in 5 years time.

RandySavage
May 5th, 2009, 07:20 PM
I'd actually be more worried for New York which took a massive dent in the trust department (looking at you Madoff, the failures of the NY investment scene, and its largest bank Citigroup), because without trust - people will be less inclined to give you their money.

How sadly ironic is it that New York ripped down the building containing this deco plaque in the lead-up to the crash of 2008:
http://farm1.static.flickr.com/65/181197461_f1501ca69c_o.jpg

londonlawyer
May 6th, 2009, 05:37 PM
I doubt either us will be proven right or wrong for a few years, but I do have a few points of contention:
- You refer to the power of the home nation as if there is a significant correlation to the size of being a financial centre, yet a paragraph later state that Dubai is going to rise dramatically.... the UAE has a population similar to that of Queens & Brooklyn or Outer London, and that isn't the fact that Dubai is pretty much bankrupt.
- We're all in the same abyss (although more correctly it is the Scottish banks: RBS and HBOS that went sour, the English banks didn't stray to far - HSBC didn't go down the route Citigroup went...), so happens also that the US is below the rest of us lot to cushion us when we hit the bottom.
- Yep, AIM is such a disaster and London so distrusted that it is being replicated across the world, next stop Tokyo AIM!
- London's regulatory stance was such a disaster that its two largest financial institutions and investment scene evaporated...

We'll re-convene in 5 years time.

Your inferences with respect to my comments regarding Dubai are misplaced. Dubai (or perhaps Qatar) likely will emerge as a Middle Eastern financial center serving the entire region -- not just its population.

On another matter, I don't think that any economist (or any sane individual for that matter) would embrace the unregulated, casino culture that pervaded London.

As a result of this crisis, London, like the UK, is broken. As I stated, NY is and always will be the capital of the world's most potent economy. As such, just from its domestic business, NY will remain the financial capital. Clearly, however, other important centers like Shanghai, Dubai, London, Frankfurt, etc. exist and will continue to emerge.

PS: Your point about HSBC not suffering to the same extent as Citi lacks insight. JP Morgan, Goldman Sachs and others didn't suffer to the same extent as did Citi either.

londonlawyer
May 6th, 2009, 06:14 PM
The Sunday TimesApril 26, 2009

We’re fleeing high-tax Britain, say City tycoons

From The Sunday TimesApril 26, 2009

We’re fleeing high-tax Britain, say City tycoonsIain Dey and Matthew Goodman
Two of Britain’s best known entrepreneurs are considering leaving Britain in protest against Alistair Darling’s new 50 per cent tax rate, as leading figures from business and the City warn of a talent exodus.

Hugh Osmond, the pubs-to-insurance entrepreneur, is thinking about a move to Switzerland. Peter Hargreaves, the £10 million-a-year co-founder of Hargreaves Lansdown, the financial adviser, is looking at the Isle of Man or Monaco. More are likely to follow.

Osmond, whose net worth is estimated at £230 million, said: “A lot of people will be off. It’s highly unlikely that I will continue to have the UK as my country of residence. It’s just as easy to work from any close location – Switzerland or wherever.”

Hargreaves, facing an extra £500,000 on his tax bill, warned: “I won’t pay, I’ll leave.”

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Robert Pfeiffer, a partner at Compass Advisers, a mergers and acquisitions firm, said that businesses such as his did not need to be based in Britain. “We all love living in London but in the end it becomes an economic decision. The clients don’t care.”

He and his partners were discussing a move to Geneva. “Do we want the hassle of moving? Probably not. But there comes a point economically when it’s hard to justify being here.”

And Philip Lambert, chief executive of Lambert Energy, said his consultancy was “seriously considering” relocating abroad, saying the state had “total hostility or apathy towards entrepreneurs”.

Dozens of Britain’s best-known business figures have condemned the new tax grab. Sir Richard Branson said it was a “block to the next wave of entrepreneurs”. Tim Waterstone, founder of the Waterstone’s bookshop chain, slammed the tax as a “disincentive to entrepreneurs”.

Stanley Fink, the former chief executive of the Man Group hedge fund, said: “Nobody believes that 50 per cent is a natural stopping point. There’s nothing to say for the richest it won’t go to 60 per cent, say for those earning over £200,000.

“There will be some successful entrepreneurs who decide to move to Switzerland or Ireland. I’m aware of one or two people who made active plans to decamp when Labour announced 45 per cent and will put those plans in motion.”

From next year anyone earning more than £150,000 a year will pay 50 per cent income tax. The move replaced the 45 per cent tax bracket threatened in the pre-Budget report last November.

The Budget revealed that the UK’s national net debt has climbed to £743.6 billion. The Treasury has said the new tax on high earners will raise about £2 billion a year to help mend the hole in the public finances.

Businessmen warned that raising taxes on the rich would do nothing to boost the Exchequer, as the wealthy can always find ways to avoid it.

Sir John Madejski, the founder of the Auto Trader publishing empire and chairman of Reading Football Club, said: “The powerhouse of this country is the entrepreneurs, the people who make money. To penalise them is silly.”

Luke Johnson, chairman of Channel 4 and founder of Risk Capital Partners, said: “It sends a terrible signal. It proves that whatever the rhetoric from Brown on the entrepreneur economy, the reality is that they don’t believe in it.”

Simon Walker, head of the British Venture Capital Association, said: “There are only six countries in the OECD with a higher tax rate than the UK – places like Denmark, Sweden and Finland. But the point about those countries is that things work there. People feel they can send their children to the local school and use the capital’s underground transport."

nick-taylor
May 7th, 2009, 10:26 AM
Your inferences with respect to my comments regarding Dubai are misplaced. Dubai (or perhaps Qatar) likely will emerge as a Middle Eastern financial center serving the entire region -- not just its population.

On another matter, I don't think that any economist (or any sane individual for that matter) would embrace the unregulated, casino culture that pervaded London.

As a result of this crisis, London, like the UK, is broken. As I stated, NY is and always will be the capital of the world's most potent economy. As such, just from its domestic business, NY will remain the financial capital. Clearly, however, other important centers like Shanghai, Dubai, London, Frankfurt, etc. exist and will continue to emerge.

PS: Your point about HSBC not suffering to the same extent as Citi lacks insight. JP Morgan, Goldman Sachs and others didn't suffer to the same extent as did Citi either.If I backtracked as fast as you did - I'd go back in time, because you pretty much stated that there was somehow a correlation to the 'home country' and the strength of financial centres which is complete rubbish in todays world where money flows across continents, overcoming political differences, nationality, and language barriers in an instant.

Yet somehow London is doomed because of the UK economy (despite everyone else facing difficult situations of their own), when it built itself servicing the global financial system...but New York is okay because it services the US financial sector which has imploded? Hell, Dubai or Qatar aren't going to radically change and represent a region that could be wiped off the map by rogue states or a handful or islamic wacko's who object to the 'ways of the west'!

The more appropriate response would be, what country isn't broken? You seem to completely forget that the US is in an even larger hole than the UK is, or that the likes of Germany and Japan have fallen off a cliff. Even China is struggling with growing unrest from not just the rural areas, but now the wealthier urban areas. May I suggest that you actually travel a bit more to get a better understanding of the world. We all share the gains from globalisation and we'll all share its pains.

The point made regarding Citigroup was that it was the largest bank in New York, but it failed. HSBC which is the largest bank in London (and the UK and world) has buffered the storm well. Granted GS has prevailled, but even they are still focused on London due to its integration into the global economy, meanwhile the largest financial institutions of New York have been gutted.

By any chance did you previously deal with CDO's? Because that might explain why you are so off the mark.....


Actually what does it matter, all I care about after the beauty of life, is Crossrail. At 119km (41.5km in new tunnels) serving 38 stations - Crossrail will open in 2017. In which time New York will have managed to (maybe) construct and open 4.3km of the Second Avenue Subway. Perhaps you ought to concern yourself with more troubling issues closer to home rather than concern yourself with affairs that you can hardly comment on.

londonlawyer
May 7th, 2009, 11:22 AM
Your urban planning degree from an English "university" does not serve you well when you attempt logic or statements regarding financial services.

nick-taylor
May 7th, 2009, 02:07 PM
Your urban planning degree from an English "university" does not serve you well when you attempt logic or statements regarding financial services.The irony, calling into question my education when those that went to Harvard/Oxbridge (aka the best of the best) are the ones that created the financial products that caused all this mess in the first place.

I presume you paid big money to go to a good university to learn about <<insert degree>> to provide insight into the markets. With this knowledge you were able to predict and warn everyone of the impending disaster to the financial markets, your clients have not had any issues, and AIG and Lehman Bros are a ok.....yeah.....

Degrees are meaningless in finance, because if you don't have common sense, concentrate too much on that bonus, or lack a grip of the situation, we end up where we are.

Still uncertain why you have an idea that I took an urban planning course, as it's incorrect and pretty much irrelevant to my present employment in finance. Christ, I pretty much run my own firm which enables me to take a months holiday every 3months around the world. You possibly might achieve that* when you retire after putting in overtime to finish the 2AS.

* depending on your savings and whether you made sound investments ;)

londonlawyer
May 7th, 2009, 02:11 PM
Winding you up is so easy. This has been going on for years much to my amusement.

Ninjahedge
May 7th, 2009, 03:39 PM
Guys?

We really do not give a crap about either of your educations.

So could you please can it and stay OT? Enough with the personal stuff. If any of us sitting here in the bleachers wanted that kind of stuff there are plenty of other sites where people tear at each other.....



Please?

londonlawyer
May 10th, 2009, 12:31 PM
The London Times
10 May 2009

Hedge fund chief Crispin Odey ready to join tax exodus

Kate Walsh
HEDGE-FUND BOSS Crispin Odey has threatened to move his firm out of Britain to avoid the 50% income-tax rate on high-earners.

He joins a growing list of Britain’s wealthy businessmen and City financiers, including Hugh Osmond and Peter Hargreaves, who have become disenchanted at the new tax rate and the European Union’s proposed changes to regulation of private equity and hedge funds.

“We are seriously considering leaving,” said Odey, who runs the £3 billion Odey Asset Management. “This government is not interested in keeping London alive as a financial centre. Hedge funds are not yet flying but they are fluttering. Everyone is thinking about leaving.”

Odey, who made a fortune from short-selling British banks last year, is one half of the “Posh and Becks” of finance. His wife Nichola Pease is chief executive of fund manager JO Hambro and as a scion of one of the founding families of Barclays – where her brother-in-law John Varley is chief executive – is a City blueblood.

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Odey feels his industry has been abandoned by the government as it focuses on winning over Labour core voters ahead of next year’s election.

“We no longer have any defence against the French and the Germans [who played a heavy hand in drafting the EU directive]. There is a great sense that the City is much less prized than it was,” he said.

He fears Geneva, Europe’s second hedge-fund hub after London, is “almost closed” as firms scramble to expand offices or secure new ones in the Swiss canton. Zurich, Monaco, Gibraltar, Hong Kong and Singapore are seen as possible destinations.

Odey, whose team of 50 operates out of a period building in Mayfair full of antiques and art, joked that as long as the rivers were stocked with salmon and the valleys with pheasants, he would move anywhere.

Charles Price, founder of the fund of hedge funds business Palmer Capital, admitted that he was also weighing up his options. “Firms have no choice but to consider moving given the lack of clarity about the regulatory environment.”

Kinetic Partners, which specialises in moving hedge funds to Switzerland, has been inundated with enquiries since the recent EU directive. Kinetic’s David Butler said he was advising 15 hedge funds that are “actively” considering leaving.

londonlawyer
May 21st, 2009, 06:58 AM
Britain's debt outlook lowered to negative
By PAN PYLAS

AP Business Writer
Posted: Thursday, May. 21, 2009

LONDON Britain faces the unsettling possibility of seeing its debt rating downgraded, after credit ratings firm Standard & Poor's said Thursday it has revised the country's outlook to negative from stable.

Though the ratings agency reaffirmed the country's actual long-term credit rating at "AAA" and its short-term rating at "A-1+," it said the outlook had deteriorated because of massive borrowing to deal with the recession and the banking crisis.

The outlook revision does not trigger a formal reevaluation of Britain's rating - unlike being put on credit watch - but does mean that policy makers have to be aware that a downgrade may happen if public finances are not put on the straight and narrow in the near future.

The pound slumped by over 2 U.S. cents to just below $1.56 after the news, while the FTSE share index fell more than 100 points, or around 2.3 percent.

This is the first time Britain has been put on the negative list since since S&P started given its view of the outlook of the country's public finances in the early 1980s.

S&P said the downward revision reflects a more cautious view of how quickly the country's finances can be repaired and that its projections incorporate new estimates of the cost of the government's bailout of the banking sector. It now esimtates that the government's net debt burden will rise to nearly 100 percent of economic output by 2013, way more than the government is currently projecting.

"These projections reflect our more cautious view of how quickly the erosion in the government's revenue base may be repaired, the extent to which the growth in government spending can be curtailed, and consequently the pace at which historically high fiscal deficits are likely to narrow," said S&P's credit analyst David Beers.

"The rating could be lowered if we conclude that, following the election, the next government's fiscal consolidation plans are unlikely to put the UK debt burden on a secure downward trajectory over the medium term," Beers said.

Prime Minister Gordon Brown is under pressure to call a general election from the Conservative Party leader David Cameron to deal with a mounting controversy over expense-account abuses in Parliament. Brown still has a year before an election must be held, but all opinion polls show that the country's swelling debt burden is one of the voters' major concerns.

Figures earlier highlighted the scale to which Britain's public finances have deteriorated.

The Office for National Statistics said public sector net borrowing - the government's preferred measure - jumped to 8.5 billion pounds in April from 1.8 billion in the same month the year before as the country pays for higher social welfare benefits and sorts out the banks.

In his budget last month, Britain's finance chief Alistair Darling predicted that the country's debt position, which aggregates borrowing through the years, is expected to rise to 59 percent of gross domestic product in 2009-10, rising to a peak of 79 percent in 2013-14. When the government came into office in 1997, it said one of its main economic policies was to keep debt around 40 percent.

The statistics office said earlier that net debt stood at 53.2 percent of GDP at the end of April.

S&P's warning comes just a day after the International Monetary Fund said the British government had to target a "more ambitious medium-term fiscal adjustment path" once the economic recovery is established.

"The focus of this adjustment profile should be to put public debt on a firmly downward path faster than envisaged in the 2009 budget," it said.

It said it could for example commit to allocating any upside surprises to growth or revenue to reduce deficits more aggressively and limit the accumulation of public debt.

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Alonzo-ny
May 21st, 2009, 07:53 AM
IMF praise for UK recession plan

By Steve Schifferes
Economics reporter, BBC News


The UK government response to the global financial crisis has been "bold and wide-ranging," the International Monetary Fund (IMF) has said.

It added that "aggressive action" by the government succeeded in containing the crisis and avoiding a breakdown.

But it warned that high levels of household and bank debt meant the pace of any recovery was still uncertain.

And it urged the government to adopt more ambitious plans to reduce the huge scale of government borrowing.

It remains to be seen whether the recent efforts to recapitalise the banks will be sufficient to sustain credit provision at a level required for a robust economic recovery


Bank predicts slow recovery

The IMF is sticking to its forecast that UK GDP will decline by 4.1% this year, compared with the chancellor's forecast of about 3.5%.

It said that the UK economy would contract at a decelerating rate in the near-term, but that the financial system was "still under stress" and that the UK economy remained "susceptible to potential shocks", with the sharp increase in public sector borrowing one of the key vulnerabilities.

"It remains to be seen whether the recent efforts to recapitalise the banks will be sufficient to sustain credit provision at a level required for a robust economic recovery," it added.

In response, the Treasury said it noted "the scale of the challenges" and accepted that "restoring the flow of credit to the economy will be crucial to building and supporting the recovery".

Vulnerable consumers

The IMF also noted that consumers were unlikely to return to their high-spending ways any time soon.

"Faced with falling house prices, significant reductions in the value of pensions and other assets, a deteriorating and uncertain employment outlook, consumers are likely to retrench spending to reduce debt and rebuild savings," it warned.

It said the speed and strength of the recovery was highly uncertain, "given the unprecedented nature of the crisis and the importance of confidence effects".

The IMF added that the depreciation of the pound could aid the recovery by shifting demand to domestically produced goods and services.

But it said that the UK had a "particular exposure" to global shocks because of its large financial sector, overheated property markets, high household indebtedness, and strong cross-border links.

And it warned that there was a need for "greater international coordination" in the event of a crisis involving a major international bank with strong cross-border links.

Andrew Smith, chief economist at KPMG, said the IMF was "right to be cautious in its outlook for the UK economy."

"Distressed consumers may prefer to save and pay down debt and businesses are in no mood or position to invest, so continued expansionary fiscal and monetary policy will be necessary to underpin demand," he added.

Public borrowing

The IMF wants the chancellor to spell out in more detail how he intends to return the public finances to a sustainable downward path.

It suggested that spending cuts were "more durable" than tax rises in reducing public borrowing over the long term, and said that a "broad public consensus" was needed on making a "sizeable fiscal adjustment".

But Robert Chote, the director of the independent Institute for Fiscal Studies, said that "experienced Whitehall hands fear it will be very difficult to achieve even the spending plans in the Budget, let alone more ambitious ones" and it will be difficult for the next government to avoid raising taxes.

The IMF also urged the Bank of England to expand its programme of credit easing by purchasing more private sector debt, as opposed to its current focus on buying up government debt.

But it warned that "at a more fundamental level, the public's confidence in the Bank of England's operational independence remains contingent on the state of the public finances."

Meanwhile Mr Darling re-affirmed his growth forecast and said in a newspaper interview that he still expected to economy to begin to recover by the end of the year.

"I am not going to change my forecast. I remain confident that the we will see a return to growth by the end of the year," he said.

lofter1
May 21st, 2009, 09:14 AM
"Hedge Funds Fleeing London" ?

Isn't that similar to saying "Con Men on the Lam" ?

What good have hedge funds done for anyone that couldn't be done in a better and more honest way?

Ninjahedge
May 21st, 2009, 11:35 AM
Maybe England, and othe nations caught by what the Hedge Funds have sewn, should not only make it difficult for them to EXIST in their countries, but also difficult to deal or trade with, or any extension thereof, FROM their country.

IOW, if XXX has share in the so-and-so Hedge fund as part of its capital vestments, that fund would not be legally traded on the London Stock Exchange.

The only thing I am worried about is that with these guys leaving, they will still be able to siphon off funds to support their trade practices from other nations less reluctant to have them as "tenants".


I hear Somalia is beautiful this time of year... :p

londonlawyer
May 22nd, 2009, 07:51 AM
Ninjahedge and Lofter raise good points.

Gregory Tenenbaum
May 22nd, 2009, 12:50 PM
Its not like they dont do anything important in society, like doctors, or nurses or postmen or bakers or cupcake makers. Is it?

Gregory Tenenbaum
May 23rd, 2009, 09:56 AM
Hedge funds arent the only ones fleeing. (http://wirednewyork.com/forum/showthread.php?p=284936#post284936)

What in Dickens is going on over there at the moment? Seriously, this is WWII the "Red Army is entering the Motherland, lets head West" scale migration.

Incredible.

Derek2k3
May 23rd, 2009, 11:24 AM
Did you just recently move to Turtle Bay?

Gregory Tenenbaum
May 23rd, 2009, 11:34 AM
It doesnt matter how many hedge funds are leaving London, what the hell are they going to do if 11 million people would like to leave?

I mean, its not 1900, they cant just pack up and go to the New World. If even half that number left, it would be amazing to see.....and the effect on the English Exchequer.

This documentary explains a lot, however. (http://wirednewyork.com/forum/showthread.php?t=21201) Perhaps some LimedNewYorkers here can tell us more.

londonlawyer
October 1st, 2009, 03:37 AM
http://www.ft.com/cms/s/0/2f6b9c88-add0-11de-87e7-00144feabdc0.html

http://www.ft.com/cms/f22a23a0-ade6-11de-87e7-00144feabdc0.EXT

londonlawyer
October 1st, 2009, 04:12 AM
London Bankers Balk at EU Regulation as Lea Invokes Secession

http://bloomberg.com/apps/news?pid=20601109&sid=aoK0x3qYrfCI

Alonzo-ny
October 1st, 2009, 04:15 AM
I think London or rather the UK and EU is doing the right thing. These companies need to be regulated and the wealthy need to be taxed more.

londonlawyer
October 1st, 2009, 05:31 AM
Regulation is happening worldwide and rightfully so. However, because casino culture was at its peak in London (e.g., the credit default swaps that nearly broke AIG emanated out of AIG financial's London office), it's ridiculous that London is afraid of being too over-regulated. Apparently, the City's traders did not learn a sufficient lesson from 2008's debacle and need the French and Germans to keep them in line.

Alonzo-ny
October 9th, 2009, 09:21 AM
UK 'becomes top financial centre'
From BBC


The UK has overtaken the United States to be ranked as the World's leading financial centre, despite doubts about its economic stability.

The rankings, compiled by the World Economic Forum (WEF), put the UK top of the list of the 55 most financially- developed countries.

The US slipped from first to third place, behind the UK and Australia.

But in stability rankings, the UK and US were 37th and 38th, below Mexico and Panama and only just above Venezuela.

Norway, Switzerland, Hong Kong and Chile led the financial stability rankings, while Argentina, Kazakhstan and Ukraine were at the foot of the table.

'Trade-off'

The ranking system takes into account 120 variables, including the size and depth of capital markets.

While developed nations still lead the overall rankings, they have performed much worse than emerging countries, according to WEF chief operating officer Kevin Steinberg.

"This year they dropped so much that they don't have a lap of advantage in relation to emerging countries anymore," he said.

Growing financial instability was the main issue for developed countries in the past year, the report said, along with a lack of access to capital markets and banking services.

"Countries with more regulation in financial systems are more stable, but access to credit is much weaker," said RGE Global Monitor's Nouriel Roubini, a co-author of the study. "There is a trade-off."

The UK overtaking the US comes amid reports that several hedge funds are moving from London to New York because of less tough regulation.

lofter1
October 9th, 2009, 10:23 AM
... several hedge funds are moving from London to New York because of less tough regulation.


Well, London ... congratulations on the arrival of fleeing hedgers.

Prepare to be ransacked.

londonlawyer
October 9th, 2009, 11:09 AM
UK 'becomes top financial centre'
From BBC


The UK has overtaken the United States to be ranked as the World's leading financial centre, despite doubts about its economic stability.....
The UK overtaking the US comes amid reports that several hedge funds are moving from London to New York because of less tough regulation.

I saw this on the Evening Standard's website, and it's absurd primarily because it's subjective. The absurdity also is corroborated by their picking Australia over the US. I guess Sydney is more important than NY.

The facts are illustrated by, among other things, the following graph from the FT. In fact, when one includes Greenwich, CT, the NY area's utter domination of the hedge fund industry is remarkable. Bear in mind, that I'm hardly a jingoist. My love of London could not be clearer.

http://www.ft.com/cms/f22a23a0-ade6-11de-87e7-00144feabdc0.EXT

Fabrizio
October 9th, 2009, 11:15 AM
The UK's news is largely the BBC which is the British Government.... or Murdoch. What do you expect them to say?

Alonzo-ny
October 9th, 2009, 11:18 AM
I don't think the study is about size or amount of transaction or companies etc. It says financially developed. That is something different. It is also the whole country, not just specific cities. I was surprised to see Australia there also but saying that I know nothing about the country. I am surprised that Switzerland is among the most stable.

As for the hedge funds leaving, it remains to be seen how many leave but it hasn't been a crisis thus far. I'd rather the UK was more regulated than being No. 1. Quality over quantity anyday.

Alonzo-ny
October 9th, 2009, 11:19 AM
The UK's news is largely the BBC which is the British Government.... or Murdoch. What do you expect them to say?

The study wasn't by the BBC. Read the article. World Economic Forum. (http://en.wikipedia.org/wiki/World_Economic_Forum)

londonlawyer
October 9th, 2009, 11:22 AM
In addition to the foregoing, the World Economic Forum's report ranks countries not cities. Nevertheless, the intellectually challenged Evening Standard somehow extrapolates this to a city v. city comparison.

http://www.weforum.org/pdf/FinancialDevelopmentReport/Report2009.pdf

Fabrizio
October 9th, 2009, 11:27 AM
Alonzo: you are right... and thank you for pointing that out.

(damned Swiss)

Alonzo-ny
October 9th, 2009, 11:28 AM
In addition to the foregoing, the World Economic Forum's report ranks countries not cities. Nevertheless, the intellectually challenged Evening Standard somehow extrapolates this to a city v. city comparison.

http://www.weforum.org/pdf/FinancialDevelopmentReport/Report2009.pdf

LL, the Evening Standard is a joke of a paper. I wouldn't even read it never mind take it seriously.

londonlawyer
October 9th, 2009, 11:31 AM
I know it is. However, it's interesting to read the thoughts of London's hoi polloi.

Ninjahedge
October 9th, 2009, 11:52 AM
I've had that before.

Very tasty.

nick-taylor
October 9th, 2009, 12:39 PM
The UK's news is largely the BBC which is the British Government.... or Murdoch. What do you expect them to say?A correction - the BBC is neither a state or privately owned or operated entity.


I think we're seeing the demise globally of the hedge fund industry. It has been portrayed far too often as a scape goat and annoyed others in the wider financial sector. If you asked people 2 years ago whether they would go into the sector, people would jump at the chance. Not now; to even be associated with a fund is akin to having leprosy. Nevermind the hurdle of enticing investors back

With that said, the % of hedge funds or some ranking by country isn't the biggest concern to New York. It's the over-reliance on the domestic market (which is shrinking in relation to the global economy) in contrast to London, the failure of it's biggest financial entities, and the world's largest investor fraud.

londonlawyer
October 9th, 2009, 12:55 PM
The US is (and will remain) for a very long time the world's largest and most significant economy. China's GDP per capita is an utter fraction of that in the US.

Moreover, NY's leading position in the world is evidenced not only by the hedge fund figures (and anyone who suggests that hedge funds are irrelevant broadcasts his lack of knowledge regarding finance), but even by the little fact that Thompson Reuters de-listed from London and listed in NY, along with moving its global HQ from London to NY.

Lastly, the suspicion of the Anglo-American financial model will accelerate the growth of European financial centers like Paris and Frankfurt. Given, for example, German mistrust of the British model, a German company seeking to raise funds will be more inclined today do so in Frankfurt -- not London.

The following article from the FT addressed Continental displeasure with the UK model and Paris' desire to rival London as the European financial center.

http://www.ft.com/cms/s/0/b278edfe-77ea-11de-9713-00144feabdc0.html?nclick_check=1

The following article from the Economist also addressed Continental's mistrust with the British financial system.

http://www.economist.com/world/europe/displaystory.cfm?story_id=14082324

nick-taylor
October 9th, 2009, 02:37 PM
The US is (and will remain) for a very long time the world's largest and most significant economy. China's GDP per capita is an utter fraction of that in the US.

Moreover, NY's leading position in the world is evidenced not only by the hedge fund figures (and anyone who suggests that hedge funds are irrelevant broadcasts his lack of knowledge regarding finance), but even by the little fact that Thompson Reuters de-listed from London and listed in NY, along with moving its global HQ from London to NY.

Lastly, the suspicion of the Anglo-American financial model will accelerate the growth of European financial centers like Paris and Frankfurt. Given, for example, German mistrust of the British model, a German company seeking to raise funds will be more inclined today do so in Frankfurt -- not London.

The following article from the FT addressed Continental displeasure with the UK model and Paris' desire to rival London as the European financial center.

http://www.ft.com/cms/s/0/b278edfe-77ea-11de-9713-00144feabdc0.html?nclick_check=1

The following article from the Economist also addressed Continental's mistrust with the British financial system.

http://www.economist.com/world/europe/displaystory.cfm?story_id=14082324I don't believe anyone was disputing the size of the US economy now or in the future. What is happening however is that its share of the global economy is shrinking as emerging markets develop, hence the rise of London is linked to the rise in emerging markets and not restricted to its domestic market. Insular or defensive thinking that ignores the opportunities of emerging markets is a core reason as to why New York has lagged behind London.

I also don't see anyone questioning hedge funds as being irrelevant, only that their outlook compared to other sectors is far less rosy and guaranteed.

Companies and sectors fluctuate. The remains of Lehman Brothers in London are now part of Nomura of Tokyo, but those in New York are part of Barclays. Examples of say Thomson Reuters 'going' to New York, or the husk of New York's Lehman Brothers being British, don't portray the greater picture that New York is failing to play at the global level.

A similar scenario was predicted when the € came about; that London would fall apart and Frankfurt would become Europe's leading financial centre. The reverse happened.

I'd expect a similar scenario to play out where domestic policy will be far more damaging to Paris and Frankfurt, and to barely register in London. In fact, London could actually consolidate its position even further. Now, I am uncertain of the exact figures, but I'd suspect that emerging market IPO's/fund raising expeditions have outstripped those from the continent which are more likely looking for 'insular' funds. Germany is an odd example, especially what with the mittelstand.

I'd also be more concerned with trust on the New York front, especially after Madoff and the decimation of the biggest financial entities in New York.

The even bigger picture is that New York is failing in quite a few areas. Be that in attracting cultural events such as the 2012 Olympics or managing transport developments. In the time it will take to open three stations on the Second Avenue Subway, the 40 station Crossrail line will be complete.

londonlawyer
October 9th, 2009, 04:04 PM
New Yorkers did not even want the Olympics. When the majority of New Yorkers opposed it, the IOC certainly wasn't going to award it to NY. Moreover, anti-Americanism was prevalent when NY bid for it and that also played a role in NY's bid.

As to the infrastructure issues you cite, you're correct. The US government lacks the funds and the will to implement mass transit improvements.

That being said, that -- in no way -- impacts NY's role as the leading financial center. No one who works in financial services (other than low-level, administrative employees) uses mass transit. Car services provide transportation.

nick-taylor
October 11th, 2009, 05:22 PM
New Yorkers did not even want the Olympics. When the majority of New Yorkers opposed it, the IOC certainly wasn't going to award it to NY. Moreover, anti-Americanism was prevalent when NY bid for it and that also played a role in NY's bid.

As to the infrastructure issues you cite, you're correct. The US government lacks the funds and the will to implement mass transit improvements.

That being said, that -- in no way -- impacts NY's role as the leading financial center. No one who works in financial services (other than low-level, administrative employees) uses mass transit. Car services provide transportation.Indeed support from the general public for a bid is one reason as to who wins the rights to host the Olympics. Yet I should point out that according to the IOC Evaluation Report IOC poll, 68% showed support for the New York bid, compared to 67% for London.

Again, anti-Americanism is probably marginal, Britain went to Iraq and Afghanistan as well.


One small problem. If the low-level people can't get to work because the infrastructure fails or is unable to cope with future demand, those high-level people (presumably these are the Harvard MBA peeps that ditched common sense for random speculation) won't be able to get their work done.

Remember, an organisation is only as strong as those at the bottom, to ignore otherwise is reckless and a path to obsoleteness.

The failure of New York to modernise and expand its infrastructure is a reflection of its complacency in a consistently evolving and moving world.

MidtownGuy
October 14th, 2009, 07:56 PM
Don't we all understand by now, from nick-taylor's London threads, that London is the best city in the universe? The transit system is forged from gold. They give out free cream puffs in the morning to every passenger and it now ranks higher than Christmas on the international popularity index.
New York is just a big suck fest... it's SO over... why doesn't it just get the hell out of London's way? I can't think of a single way that NY could possibly be better than glorious London and if you doubt it, I will dig up some kind of bar graph to prove it. London rules the world. No, the Solar System...no, wait...EVERYTHING!

londonlawyer
October 14th, 2009, 08:04 PM
...
Again, anti-Americanism is probably marginal, Britain went to Iraq and Afghanistan as well.


One small problem. If the low-level people can't get to work because the infrastructure fails or is unable to cope with future demand, those high-level people (presumably these are the Harvard MBA peeps that ditched common sense for random speculation) won't be able to get their work done.

Remember, an organisation is only as strong as those at the bottom, to ignore otherwise is reckless and a path to obsoleteness.

The failure of New York to modernise and expand its infrastructure is a reflection of its complacency in a consistently evolving and moving world.

Hardly, the Europeans always support the Brits because they want Britain to support the EU.

Your point about the hoi polloi is misplaced. Most people these days do their own typing and answer their own phones, etc.

ZippyTheChimp
October 14th, 2009, 08:26 PM
London rules the world. No, the Solar System...no, wait...EVERYTHING!Wiki doesn't agree. (http://en.wikipedia.org/w/index.php?title=Hub_of_the_Universe&redirect=no) I'm sure there's a bar graph somewhere; just don't have the time to find it. Maybe a Red Sox fan can oblige.

Derek2k3
October 14th, 2009, 08:41 PM
I don't even see why being the financial capital is even important.

Codex
October 14th, 2009, 09:13 PM
13 October 2009 - Matt Turner
Hedge funds stay loyal to London

http://www.wealth-bulletin.com/home/content/1055434785/

http://www.bloomberg.com/apps/news?pid=20601087&sid=aDxtCCTqyROc

'Wimbledon effect' counters tax and regulatory concerns

Some of the London hedge fund sector's highest profile firms have quashed talk of moving to Switzerland (http://www.wealth-bulletin.com/archive/keyword/Switzerland), with one alternatives manager asking: “What does money give you if not the freedom to decide where you spend your life?"
http://adserve.efinancialnews.com/IMPCNT/ccid=3298/SITE=WBO/AREA=WEALTH.INDEX/AAMSZ=/ZONE=3/SECTOR=/PAGEID=6093968/ACC_RANDOM=2254461/MOD2=1
Speaking at a roundtable organised by hedge fund publication Opalesque, several key figures on the London scene said that fears of funds moving to Switzerland en masse were overblown.


Oliver Dobbs (http://www.wealth-bulletin.com/archive/keyword/%22Oliver%20Dobbs%22), chief investment officer of portfolio management at CQS (http://www.wealth-bulletin.com/archive/keyword/CQS), said that while his firm had a presence in Switzerland, he did not see the firm moving to the country.

He said: "I agree that there are concerns about taxation and regulations. But something else comes into play here that I call the Wimbledon effect. London attracts the best people to one of the best tournaments. Businesses come to London because they have the best courts, the best talent, the best infrastructure, and a great championship."

This view was echoed by Lawrence Staden (http://www.wealth-bulletin.com/archive/keyword/%22Lawrence%20Staden%22), managing director of GLC (http://www.wealth-bulletin.com/archive/keyword/GLC), which manages around $1bn (€678m) in assets. He said: "You can’t in every case just effortlessly move your family to a tax haven. What does money give you if not the freedom to decide where you spend your life?"

He cited an experience 25 years ago, when he told his wife that his then employer, Bankers Trust (http://www.wealth-bulletin.com/archive/keyword/%22Bankers%20Trust%22), wanted him to move to New York. Her response was "Send me a post card". As a result, he didn't go - he explained: "These things are not that easy for some of us."

He said he did not believe that floods of funds would move for tax reasons, as the net impact of the UK's 50% tax rate was neglible. He said: "Most people’s assets under management are less than they were two years ago. That means moving to avoid 50% tax on a smaller amount, when you were not prepared to move before to avoid 40% on a larger amount."

He added: "Personally, I'd say that even if they put the [top rate of] income tax to 100%, I would still be in London. I might cycle to the office a more scenic route, however."

Anthony Ward (http://www.wealth-bulletin.com/archive/keyword/%22Anthony%20Ward%22), a co-founder of commodities hedge fund Armajaro (http://www.wealth-bulletin.com/archive/keyword/Armajaro), agreed that there was little difference between a 40% top tax rate and a 50% rate. In addition, he said he wanted to wait until the forthcoming general election, as he believed the opposition Conservative party did not want to see the hedge fund community leave the UK.

Codex
October 14th, 2009, 09:24 PM
The financial industry and hedge funds are likely to bide their time in London, particuarly with a forthcoming general election.

The current Government look like being defeated heavily in the 2010 election and the Conservatives who will replace them are likely to be far more sympathetic when it comes to negotiating better terms for hedge funds in the city. There is also the prospect of the Conservatives withdrawing from certain European legislation and replacing European legislation with British legislation. The European Human Rights is to be replaced by British legislation under a future Conservative Government, and the Conservatives are already calling for European legislation in relation to Hedge Funds be watered down substantially.

I also don't understand why Americans would somehow think that the proposed EU Legislation would be good for the US, particuarly when it forbids European Hedge Funds from investing in American Hedge Funds, and may have a detrimental impact on the global finance industry and a knock on effect in New York and across the globe.

Quote: "Andrew Baker, CEO of AIMA, said, “Funds and managers outside the EU face being locked out of the EU market with extremely worrying consequences. Global industry centres such as the United States , Canada , Switzerland , Hong Kong , Singapore , Japan , Australia and South Africa , will all be affected by this. This is not just an internal EU matter".

http://hedge-fund-news.blogspot.com/2009/07/aima-warns-of-global-impact-of-eu-hedge.html

It would be rather hasty to spend a great deal of money relocating from London when the forthcoming general election may herald yet greater change and a more favourable climate for hedge funds, and in any case moving to Switzerland may mean that Hedge Funds are blocked out of EU Markets, making any such a move possible detrimental in terms of future investment opportunities.

As for Britain's National Debt it may see cuts in areas such as Defence spending and other national programmes, however it is not an insurmountable level of debt by any means.

Finally it should be noted that Hedge Funds only account for a relatively small part of the overall UK economy, and employ 10,000 people mainly in London, generating the UK Treasury £3.5 Billion a year. It should also be noted that many hedge funds are based in plush offices in the West End of London rather than London's traditional financial areas.


http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6865289.ece



:)

Ninjahedge
October 15th, 2009, 08:58 AM
I don't even see why being the financial capital is even important.

It's where the money stays and craps on everyone until it migrates to warmer fiscal climates in the financial winter.

Ninjahedge
October 15th, 2009, 09:03 AM
He said: "I agree that there are concerns about taxation and regulations. But something else comes into play here that I call the Wimbledon effect. London attracts the best people to one of the best tournaments. Businesses come to London because they have the best courts, the best talent, the best infrastructure, and a great championship."

Holy self importance Batman! What ego blew up his rear? This is from the 21st century, right?

Back to seriousness, this sounds like pussyfooting around. His statement sounds more like a vacation brochure than a business benefit package. The only thing that would need to be looked at is how much money could be lost by the Principals and Chief Shareholders if that company was to announce a major move BEFORE they had the opportunity to divest some of their regional holdings.

The more that could be lost, the better London will be until they announce their relocation news from Switzerland.

Codex
October 15th, 2009, 10:50 AM
Holy self importance Batman! What ego blew up his rear? This is from the 21st century, right?

Back to seriousness, this sounds like pussyfooting around. His statement sounds more like a vacation brochure than a business benefit package. The only thing that would need to be looked at is how much money could be lost by the Principals and Chief Shareholders if that company was to announce a major move BEFORE they had the opportunity to divest some of their regional holdings.

The more that could be lost, the better London will be until they announce their relocation news from Switzerland.

The Wimbledon Effect - http://en.wikipedia.org/wiki/Wimbledon_Effect

The Wimbledon Effect is a chiefly British (http://wirednewyork.com/wiki/United_Kingdom) and Japanese (http://wirednewyork.com/wiki/Japan) analogy (http://wirednewyork.com/wiki/Analogy) (which possibly originated in Japan) which compares the tennis (http://wirednewyork.com/wiki/Tennis) fame of the All England Lawn Tennis and Croquet Club (http://wirednewyork.com/wiki/All_England_Lawn_Tennis_and_Croquet_Club) in Wimbledon, London (http://wirednewyork.com/wiki/Wimbledon,_London) with the economic success of the United Kingdom (http://wirednewyork.com/wiki/United_Kingdom)'s financial services (http://wirednewyork.com/wiki/Financial_services) industries — especially those clustered in the City of London (http://wirednewyork.com/wiki/City_of_London). The point of the analogy is that a national and international institution (the All England Club) can be highly successful despite the lack of strong native competition (in modern tennis Britain has produced very few Wimbledon champions).



The financial industry and hedge funds are likely to bide their time in London, particuarly with a forthcoming general election.

The current Government look like being defeated heavily in the 2010 election and the Conservatives who will replace them are likely to be far more sympathetic when it comes to negotiating better terms for hedge funds in the city. There is also the prospect of the Conservatives withdrawing from certain European legislation and replacing European legislation with British legislation. The European Human Rights is to be replaced by British legislation under a future Conservative Government, and the Conservatives are already calling for European legislation in relation to Hedge Funds be watered down substantially.

I also don't understand why Americans would somehow think that the proposed EU Legislation would be good for the US, particuarly when it forbids European Hedge Funds from investing in American Hedge Funds, and may have a detrimental impact on the global finance industry and a knock on effect in New York and across the globe.

Quote: "Andrew Baker, CEO of AIMA, said, “Funds and managers outside the EU face being locked out of the EU market with extremely worrying consequences. Global industry centres such as the United States , Canada , Switzerland , Hong Kong , Singapore , Japan , Australia and South Africa , will all be affected by this. This is not just an internal EU matter".

http://hedge-fund-news.blogspot.com/2009/07/aima-warns-of-global-impact-of-eu-hedge.html (http://hedge-fund-news.blogspot.com/2009/07/aima-warns-of-global-impact-of-eu-hedge.html)

It would be rather hasty to spend a great deal of money relocating from London when the forthcoming general election may herald yet greater change and a more favourable climate for hedge funds, and in any case moving to Switzerland may mean that Hedge Funds are locked out of EU Markets, making any such a move possible detrimental in terms of future investment opportunities.

As for Britain's National Debt it may see cuts in areas such as Defence spending and other national programmes, however it is not an insurmountable level of debt by any means.

Finally it should be noted that Hedge Funds only account for a relatively small part of the overall UK economy, and employ 10,000 people mainly in London, generating the UK Treasury £3.5 Billion a year. It should also be noted that many hedge funds are based in plush offices in the West End of London rather than London's traditional financial areas.


http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6865289.ece (http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6865289.ece)



:)

Codex
October 15th, 2009, 11:04 AM
US Treasury steps into hedge fund row with EU

The US treasury is becoming embroiled in the fierce row between hedge funds and the european union over proposed rule changes which could damage the $1.4 trillion (£849bn) sector.


by james quinn, wall street correspondent
27 jul 2009


US treasury officials are believed to be lobbying behind the scenes to alter terms of a controversial directive on the industry. The proposal, first published in april but still in draft form, would essentially allow funds managed in non-eu countries to sell funds to european investors but only if the regulation of those funds was equivalent to that seen in europe, and even then only after a three-year transition period.

As europe is the main centre for money-raising and management within the industry outside the us, the protectionist overtones in the directive have caused concern.

The quiet lobbying by the us treasury is understood to be taking place at inter-governmental levels as well as in brussels, and follows campaigning by major us hedge funds for federal intervention.


The industry's main body – the alternative investment management association (aima) – yesterday warned of the problems the proposed legislation could create. It said the directive could cause "potentially major difficulties", see investor choice limited and reduce competitiveness.

"funds and managers outside the eu face being locked out of the eu market with extremely worrying consequences," said andrew baker, aima's chief executive.

"global industry centres such as the us, canada, switzerland, hong kong, singapore, japan, australia and south africa will all be affected by this. This is not just an internal eu matter."

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5919898/US-Treasury-steps-into-hedge-fund-row-with-EU.html (http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5919898/US-Treasury-steps-into-hedge-fund-row-with-EU.html)

:)

Hedge Funds outside the EU face being locked out under the new legislation, including the Swiss. Furthermore the Swiss have a further problem as Swiss investment funds are facing protectionism and according to a new draft European Union law, Swiss alternative investment managers will not be eligible until 2014 for a new ‘passport’ to market services within the European Union.

Furthermore even if the Swiss funds can gain access to EU markets, new regulations will create costly compliance difficulties. In the current text, the EU Directive will require Swiss fund managers to obey new EU rules on capital requirements and leveraging and to disclose more information to regulators.

Switzerland will have to reciprocate market access, should its fund managers sell services to the EU market. And the government will have to provide regulatory and tax equivalence and sign a cooperation agreement with member states hosting a Swiss fund manager.

http://www.swisster.ch/en/news/business/swiss-funds-to-fight-eu-protectionism_116-2187443

The proposed New EU Hedge Fund Regulations are seen as protectionist by many and will lead to job losses in major financial centres such as New York, as they will now have limited access to EU Hedge Fund Markets.

AIMA suggests that the directive makes it so difficult and costly for non-EU funds and managers to access the EU market that it is clearly protectionist in effect, if not in intent. This will have major consequences for non-EU funds and managers (particularly in North America and Asia-Pacific) who will face a major loss of business in the EU.

Andrew Baker, CEO of AIMA, said, “Funds and managers outside the EU face being locked out of the EU market with extremely worrying consequences. Global industry centres such as the United States, Canada, Switzerland, Hong Kong, Singapore, Japan, Australia and South Africa, will all be affected by this. This is not just an internal EU matter.

This will also have a very significant impact on investors. EU investors, in particular, face a situation where they can use only EU asset managers of EU domiciled funds investing assets under an EU custodian. And international investors with EU funds or managers will find that their costs will go up and their returns will go down because of the restrictions and compliance costs the directive imposes.

http://www.dofonline.co.uk/governance/new-hedge-fund-rules-protectionist-070929.html


:)

The draft EU Directive, announced in April, allows managers in non-EU countries to sell their funds to European investors, but only if regulation and supervision is equivalent to that in Europe, and only after a three-year transition period.

http://abcnews.go.com/Business/wireStory?id=8181256

:)

Ninjahedge
October 15th, 2009, 01:55 PM
Are you trying to bombard Codex?

BTW, I had a feeling for what he meant by the Wimbeldon effect, no need for a Wiki..... ;)

Codex
October 15th, 2009, 02:04 PM
Are you trying to bombard Codex?

BTW, I had a feeling for what he meant by the Wimbeldon effect, no need for a Wiki..... ;)

I am merely poiniting out that the EU Directive in it's present form will not be good for hedge funds globally including the Swiss and indeed NYC.

Furthermore there are increasing calls for this protectionist legislation to be watered down, something the British Conservative Party would seek to do should they win the forthcoming election. The American Government are also unhappy with the proposed legislation, and the Swiss themselves are far from happy at the prospect of being excluded from parts of the EU Financial Markets and in having to kowtow to EU Financial Regulations. At the same time the Swiss Banking Sector is still reeling from the end of it's traditional secrecy, and this has had the result of levelling the playing field in terms of banking options. With the US and EU working together in order to make life very difficult for tax havens, coupled with the recent credit crunch, everything is far from rosy in Switzerland.

Finally I would point out that some financiers were predicting the end of the pound, this time last year, now it is the turn of the dollar, whose demise is being hailed throughout the financial press, along with economic horror stories regarding California or stories predicting the demise of financial markets or the moving of trading to new locations. Personally I think it is best to take such stories at best with a pinch of salt, and to wait to see what happens in the fullness of time.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6211858/HSBC-bids-farewell-to-dollar-supremacy.html




:)

londonlawyer
October 29th, 2009, 08:02 PM
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEC0OYmvvcZM

New York Eclipses London as Financial Center in Bloomberg Poll Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Alison Fitzgerald

Oct. 30 (Bloomberg) -- New York has withstood the worst economic crisis in seven decades and remains the leading global financial center, followed by Singapore, which topped London as investors’ preferred place for doing business, according to Bloomberg Global Poll.

Twenty-nine percent of respondents in the quarterly poll of investors, traders and analysts who subscribe to the Bloomberg terminal say New York will be the best place for financial services two years from now. Singapore is chosen by 17 percent of respondents and London is the pick of 16 percent. Shanghai has 11 percent, while Tokyo, once considered a global hub, gets the nod from only 1 percent.

“Despite the carnage of 2008, I still expect the ‘new new’ thing in financial services to be developed and nurtured here, and ultimately exported to the world,” says poll respondent Peter Rup, who manages more than $300 million at Artemis Wealth Advisors LLC and Orion Capital Management LLC in New York.

On a separate question, China, Brazil and India offer investors the best opportunities for making money, those surveyed say. The U.S., Europe and Japan are seen to have less potential.

The results about the best financial-services environment contrast with the anxiety just three years ago that New York was losing its competitive edge over London as a global financial capital. U.S. Treasury Secretary Henry Paulson and New York Mayor Michael Bloomberg warned at the time that excessive U.S. regulation was driving investment firms to the U.K.

U.S. Regulation

Both U.S. and U.K. lawmakers are working to rebuild a web of financial regulations and raise taxes after a credit crisis and recession destroyed trillions of dollars in household wealth and more than 10 million jobs. Investors say they expect the U.S. administration under President Barack Obama to be more restrained in reining in risk-taking than that of U.K. Prime Minister Gordon Brown.

“Americans will fight harder against politicians than those in Europe and stand a better chance of a compromise on regulation, taxes and populism,” says poll respondent Richard Nolan, a strategist at the London brokerage firm Newedge Group. “So New York and London will suffer but I believe that London will suffer more.”

Poll respondent Bennett Gross, managing director of wealth management at Pacific Income Advisors Inc. in Santa Monica, California, says the regulatory crackdown may even be a plus. Investors, he says, may be willing to accept more constraints in exchange for stability and liquidity, particularly in the aftermath of the financial crisis.

‘Disastrous Downside’

“Most wealthy clients would accept higher regulation because it means the peaks and valleys will be a little less severe,” Gross says. “I doubt I have a single client who would not give up some of the upside to have less of the disastrous downside of 2008.”

The quarterly Bloomberg Global Poll of investors and analysts in six continents was conducted Oct. 23-27. It is based on interviews with a random sample of 1,452 Bloomberg subscribers, representing decision makers in markets, finance and economics. The poll has a margin of error of plus or minus 2.6 percentage points.

The Bloomberg Global Poll is conducted by Selzer & Co., a Des Moines, Iowa-based public-opinion research company.

The ascent of Singapore and the decline of London reflect the rise of specialized financial centers that cater to specific segments of the industry.

Hedge Funds

Many hedge funds have left the British capital because of a new top income-tax rate of 50 percent for higher earnings and regulations planned by the European Union that restrict the amount they can borrow.

One fund, Amplitude Capital LLP, recently moved its head office from London to Switzerland. Another, Brevan Howard Asset Management LLP, recently said its offshore unit was considering opening an office in Geneva.

Consulting firm Kinetic Partners LLP says it had helped 23 hedge-fund firms move to Switzerland from London in the past 18 months and is looking to relocate another 15 since the U.K. announced a higher tax rate in April.

“About 20 percent of the hedge-fund community could leave the U.K. in the next two or three years,” says London-based David Butler, a founder of Kinetic. “The feeling among the hedge-fund community is there is a better place to be.”

Singapore, Shanghai

Singapore and Shanghai are growing in popularity as firms look for ways to tap the wealth that has accumulated in China and the rest of Asia. Private wealth management in particular is growing in Singapore, which has no capital-gains tax.

“Everything in Singapore is so well organized. Everything is so efficient. Everything works,” says Gary Addison, a partner at the private-equity firm Actis Capital LLP, which has $2.9 billion under management. Addison worked in London then Tokyo before moving to Singapore two years ago.

The investment climate attracts firms seeking high returns. “I perceive Singapore to be a little more of the tawdry wild west, or I guess tawdry wild ‘east,’” says Gross, of Pacific Income.

Shanghai isn’t as well established as Singapore; 11 percent of those polled by Bloomberg see the city as the top financial center because of the huge growth potential in China. As credit remains tight in the U.S., China will try to unleash the excess savings of its citizens, says poll respondent Anthony Comorat, wealth-management director at Lydian Trust Co. in Palm Beach, Florida.

‘Optimal Environment’

China is “a country with no financial crisis and a budget surplus in a position to acquire and operate global businesses on an unprecedented scale,” Comorat says. “This creates an optimal environment for financial services that will not exist in the West in two years.”

Dubai, like China and Singapore, remains a popular regional financial center for investors who want to take advantage of the oil wealth in the Middle East. The sheikdom is the preferred locale of 5 percent of those polled.

“No one can compete with Dubai in terms of a place to live and work,” says Paul Reynolds, managing director and head of debt and equity advisory for the Middle East at NM Rothschild & Sons Ltd., in Dubai. “The Gulf generally is well-positioned in terms of its geography and liquidity, in terms of the provision of the services for business to flourish.”

The survey shows investors want to work in cities with established financial-services infrastructure, such as New York, Singapore and London. However, they see the best prospects for their investments in emerging markets such as China, India and Brazil.

Brazil, India

Sixty-eight percent of those surveyed say they are optimistic about the investment climate in Brazil; 67 percent say the same about India and 66 percent of China. The latter presents the best opportunities for investors over the next two years, according to 44 percent of those polled.

Only 41 percent are positive about the investment climate in the U.S. and 36 percent say the same about the European Union.

Investors are downbeat about Japan, with only 25 percent saying they are optimistic about its investment climate and 5 percent saying it offers the best opportunities.

“Tokyo’s tighter regulation in terms of financial rules and regulations are not providing as much flexibility as in Singapore or Shanghai,” said poll respondent Leonardy Maleke, market risk manager at PT Rabobank International in Jakarta.

“The aging population there, the large debt relative to economic output, a stock market that peaked in 1989, and stubborn bouts of deflation make it hard to characterize Tokyo as a better place for financial services,” Comorat says.

Click here for additional information on methodology and a full list of survey questions.

To contact the reporters on this story: Alison Fitzgerald in Washington afitzgerald2@bloomberg.net and

Last Updated: October 29, 2009 18:00 EDT

londonlawyer
November 8th, 2009, 09:49 AM
http://www.ft.com/cms/s/0/be761538-cb04-11de-97e0-00144feabdc0.html

londonlawyer
November 12th, 2009, 08:46 AM
http://www.thisislondon.co.uk/standard-business/article-23768345-bluecrests-millionaires-are-set-to-flee-50-percent-tax-rate.do

BlueCrest’s millionaires are set to flee 50% tax rate
Robert Lea
12.11.09

Dozens of millionaire traders at one of London's most powerful hedge funds are to quit London for Switzerland ahead of the Labour government's 50% top tax rate hitting from next April.

Belgravia-based BlueCrest Capital Management, reckoned to be among the top five hedge fund management firms in Europe, is looking at opening an office in Geneva.

When it does, and the firm is expected to make the decision soon, at least 50 of BlueCrest's high-earners will relocate there.

The decision is the most high-profile tax avoidance relocation by a London-based hedge fund since the Chancellor revealed plans for a 50% tax rate for those paid more than £150,000 a year. Accountants and lawyers have been predicting an exodus to Switzerland but only a few firms have made the move.

BlueCrest is the first of London's big five hedge fund managers to announce such plans. The other fund managers are Man Group, which owns 25% of BlueCrest, GLG Partners, Lansdowne Partners and Brevan Howard, who together account for about 40% of money invested in London hedge funds.

BlueCrest, which has £7 billion under management, is run and 75% owned by Mike Platt, 41, and William Reeves, 45, former star JPMorgan traders who set it up nearly a decade ago and are said to be worth £250 million apiece.

Their star traders include Leda Braga, reckoned to be London's most successful female hedge fund manager, who runs BlueCrest's award-winning money-minting investment strategy BlueTrend. A spokesman confirmed: “BlueCrest is considering opening an additional office in Geneva.”

The spokesman denied the move was “an exodus”, saying opening an office in a major financial centre like Geneva was a sound business decision.

It is understood BlueCrest will keep its headquarters at its offices on Grosvenor Place, overlooking Buckingham Palace, from where the majority of its 350 staffers will continue. The spokesman refused to comment on whether Platt, Reeves or Braga, who all keep homes in London, will be taking advantage of the Swiss tax regime.

Switzerland is a popular choice for so-called “tax tourism” as wealthy individuals can effectively negotiate their own tax rates. Swiss tax rates are generally around 25% though there have been reports of UK-based executives getting offers of rates of around 10%. There are also low tax rates on dividend income. Platt is one of the London hedge fund industry's more colourful characters, recently bagging a yellow Fiat decorated by the artist Damien Hirst at the annual over-the-top Ark industry dinner and auction.

He also has a reputation as a fearsome trader, who invests his own money in his firm's strategies. At a recent analysts' conference call in which he predicted a “bloodbath in gilts” because of the inflation that will follow the Bank of England's money-printing quantitative easing programme, Platt said: “We're not making long-term investments or analysing companies or determining what we think is value.

“We're very much more oriented towards trading opportunities in the markets. From a macro perspective and certainly in the last 19 years that I've been trading, I've never seen an environment as good as this for trading strategies.”

Codex
November 19th, 2009, 05:41 PM
I think they might wait until the election in May or June 2010 before making up their minds.

Furthermore London has seen high levels of foreign investment recently.

http://www.ukinvest.gov.uk/OurWorld/4051640/en-GB.html

Codex
November 19th, 2009, 05:47 PM
Cushman & Wakefield - http://www.cushwake.com/cwglobal/jsp/newsDetail.jsp?Language=EN&repId=c28000002p&Country=GLOBAL

Wall Street Journal - http://online.wsj.com/article/BT-CO-20091118-705319.html

Financial News: London Leads The Way For House-Hunting Banks

More banks took up residence in London than any other European city over the past six months, as they moved to take advantage of the bottoming out of office rents in the U.K. capital.

London accounted for 36%, or 819,198 square foot, of all new property deals involving banks during the six months to Sept. 30, according to a report by property firm Cushman & Wakefield.

Guy Douetil, head of Cushman & Wakefield's EMEA banking group, said: "Banks are now beginning to make major decisions where significant opportunities exist to consolidate, or save money, in their HQ locations. London has been the first to benefit and we expect other western European capitals to follow in 2010."

London has been boosted by property deals including Japanese bank Nomura opting to relocate its former Lehman staff to the 527,431 square foot Watermark Place scheme, in the City of London.

Also, Australian bank Macquarie agreed to take a 210,000 square foot letting in Drapers Gardens, from the Canary Wharf Group and Exemplar Properties.

Web site: www.efinancialnews.com (http://www.efinancialnews.com)



:)

Codex
November 19th, 2009, 06:06 PM
And according to Reuters Blue Crest is thinking about opening an offce in Switzerland, however it's not closing it's London operation.

http://www.reuters.com/article/hedgeFundsNews/idUSLNE5AC01420091113

Most hedge funds are not going to do anything rash until after the forthcoming general election.

londonlawyer
November 29th, 2009, 09:46 AM
http://www.ft.com/cms/s/0/c3fd0260-db48-11de-9023-00144feabdc0.html?nclick_check=1

Boost for France in banks shake-up
By Joshua Chaffin and Nikki Tait in Brussels and Alex Barker in London

Published: November 27 2009 11:35 | Last updated: November 27 2009 21:02

Michel Barnier will take over a job that encompasses a broad swathe of policy, from financial services oversight to accountancy matters, liberalisation of postal services and facilitating cross-border services

France will have a stronger hand in recasting Europe’s post-crisis banking and financial services sector over the next five years after its nominee for the European Commission, Michel Barnier, snagged the internal market portfolio.

The French victory came after months of intense lobbying over top Commission jobs that culminated on Friday in an announcement of new portfolios by José Manuel Barroso, the European Commission president.

Alarmed about Mr Barnier’s possible influence over the City of London, the UK had pressed for Mr Barroso to separate financial regulation from the internal market portfolio. Mr Barroso resisted a last-minute phone call from Gordon Brown, saying on Friday that it had never been his intention to split the job. Instead, he revealed a desire to move financial services into the economic and monetary affairs portfolio, but only once cross-border co-ordination of policies had been improved.

“That comes only when we have a real internal market for financial services,” he said.

The City of London received some reassurance in the form of Jonathan Faull, the British bureaucrat currently heading the justice, freedom and security department, who is to become the top civil servant in the internal market department.

British diplomats also said that they expected to have strong positions in Mr Barnier’s cabinet – the team of people who support the commissioner.

“Even if Nicolas Sarkozy gets on the phone and tells [Mr] Barnier to close down the City of London, it’s not possible for one commissioner to do that,” said one British official.


As new laws are drawn up, there are sharply differing views between European powers, such as France and Italy, which want a more centralised system, and others such as Britain, which want to retain domestic control.

There were fewer surprises for the rest of the top economic posts, whose nominees will still face a confirmation hearing in January before the European Parliament. The competition commissioner’s job went to Joaquín Almunia, the Spanish nominee and holder of the economic and monetary affairs job in the current Commission. His predecessor, the tough-minded Neelie Kroes, will take over the telecommunications portfolio.

Copyright The Financial Times Limited 2009. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web

Codex
November 29th, 2009, 01:35 PM
The EU President is going to have little power never mind the finance minister. The French also have to tread carefully as the EU is already unpopular in the UK and any pressure on Britain and other countries may result on pressure to further reform the Common Agricultural Policy, which the French have traditionally been reluctant to fully reform.

The Conservatives have already stated that if they win the next election they will replace the European Human Rights Laws and European Court of Human Rights with British Laws, and there may be a similar call in relation to financial laws.

http://news.scotsman.com/scottishconservativeparty/European-human-rights-laws-may.5273671.jp

http://www.bloomberg.com/apps/news?pid=20601102&sid=aRMak2zZSXao

http://euobserver.com/883/28216

http://en.wikipedia.org/wiki/Common_Agricultural_Policy

http://news.bbc.co.uk/1/hi/8363297.stm





:)

londonlawyer
November 29th, 2009, 02:10 PM
The Conservatives are full of it. When Brown is out and Cameron is in, there is no way that the UK will pull out of fundamental EU systems. It would create enormous controversey.

Codex
November 29th, 2009, 02:45 PM
The Conservatives are full of it. When Brown is out and Cameron is in, there is no way that the UK will pull out of fundamental EU systems. It would create enormous controversey.

It's official Conservative policy to withdraw from the EU Human Rights Laws and to claw back powers from the EU.

Controversial or not, it is popular with a large percentage of the British electorate, although the Conservatives are less radical than parties such as UKIP who would withdraw from Europe altogether.

UKIP was once derided as a political non-entity, however in the 2009 European Elections, UKIP came second in the UK, beating the governing Labour Party.

Which is precisely why the European Union have to tread carefully, if they are not to see the demise of the EU itself. Furthermore any jobs lost in the British Economy or financial sector due to EU interference would merely compound the situation.

It also should be noted that other EU Countries such as Denmark are equally sceptical of growing EU powers.







.......

zupermaus
November 30th, 2009, 04:51 AM
Its the Asian cities we should be worrying about:

http://news.bbc.co.uk/1/hi/business/8268856.stm


http://i447.photobucket.com/albums/qq195/Giedrius_LT/GFCIstats.jpg

Alonzo-ny
November 30th, 2009, 05:20 AM
I wish that list would leave out the tax haven/ money laundering islands.

londonlawyer
November 30th, 2009, 06:42 AM
In 30 years, Shanghai could very well be the financial capital of the world.

Codex
November 30th, 2009, 07:31 AM
In 30 years, Shanghai could very well be the financial capital of the world.

One of the advantages London has is that it operates in a time zone that straddles both New York and Tokyo. Furthermore Hong Kong, Singapore, Tokyo etc have more to fear from a rise in the financial industry in Shanghai than London. Europe is still going to have a financial industry regardless of the Far East.

The same argument was made in respect of Tokyo when the Japanese economy was emerging, but what happened was that Japanese Banks and Companies opened large offices in London, and the Japanese invested heavily in London and indeed Britain.





:)

Alonzo-ny
November 30th, 2009, 07:38 AM
I doubt there will ever be one financial capital. There will always be several dominant cities. Shanghai may very well become number 1 but it doesn't mean the other cities will fade away.

nick-taylor
November 30th, 2009, 08:25 AM
In 30 years, Shanghai could very well be the financial capital of the world.It could be, but my bet is on Hong Kong and Singapore becoming more entrenched and increasing their lead over Shanghai with London, Hong Kong and New York at the top. The reason is simple; Shanghai (much like New York) is predominatly a domestic-focused financial centre, and while China's economy continues to boom, the wider global economy is opening up even more diverse opportunities.

Hence internationally orientated financial centres such as Hong Kong, London and Singapore think (literally) outside the borders, are more flexible, offer far more possibilities, greater returns, and are more in-touch with the pulse of the global economy. There is no equivalent of say Standard Charted in New York.

Of course there is also the slightly minor issue that Shanghai isn't an attractive place. It has a bulging new metro and lots of shiny towers but Hong Kong demolishes it for lifestyle and excitement. If a financial centre like Shanghai can't retain domestic talent, good luck trying to source the best international talent.

dtolman
November 30th, 2009, 10:04 AM
A lot of the modern Chinese economy is a speculative bubble - one that continues as the rest of the world is in recession. We'll see how these east-asian cities do when the China bubble pops.

If China can survive its first real recession, I'll start believing. Until then...

londonlawyer
December 2nd, 2009, 12:36 PM
http://www.bloomberg.com/apps/news?p...2VFpBGpY&pos=2

EU Finance Chiefs Overcome U.K.-France Bank Clash (Update1)
Share Business ExchangeTwitterFacebook| Email | Print | A A A By Mark Deen and Emma Ross-Thomas

Dec. 2 (Bloomberg) -- European Union finance ministers overcame a clash between the U.K. and France to reach an agreement on overhauling financial supervision for the bloc.

“We’ve found a compromise. We’re in the process of creating a real European authority,” French Finance Minister Christine Lagarde told reporters in Brussels today. “It was a laborious process; not everyone was on same wavelength.”

The EU is aiming to revamp banking supervision a year after the bankruptcy of Lehman Brothers Holdings Inc. exacerbated a financial crisis that forced European governments to spend, lend or guarantee more than $5 trillion to support banks. An economic-risk watchdog led by central bankers, as well as new EU agencies to oversee banks, insurers and investment firms are intended to prevent a repeat of the worst global crisis since the Great Depression.

Finance ministers had sparred over how much power the European supervisors should wield over national authorities. The clash in Brussels came amid U.K. concern that the appointment last week of Michel Barnier, an ally of French President Nicolas Sarkozy, as EU commissioner for internal markets will see London face a tougher regulatory environment during his five-year term.
Big Losers

“It’s the first time in 50 years that France has had this role,” Sarkozy said in an interview with Le Monde published on Nov. 28. “The English are the big losers in this business.” Ahead of the meeting today, U.K. Chancellor Alistair Darling wrote in the London-based Times calling for less power for the Europe-wide watchdogs and said that success of businesses in London was in the interests of Europe.

“London, whether others like it or not, is New York’s only rival as a truly global financial center,” Darling wrote. “No other center in Europe offers the same range of services. It is in all of Europe’s interests that they prosper alongside their close European partners.” London has already been eclipsed by New York and Singapore as a global financial center, according to a Bloomberg Global Poll in October. Deal
Under the deal, countries can overturn European supervisors’ decisions by garnering a simple majority among the 27 EU members, Lagarde said.

France had wanted members to need a qualified majority to overturn a decision, while the U.K. tried to restrict the supervisors’ control, calling for the burden to be on them to seek a majority before forcing a country to use public funds for a bail out.

In non-emergency situations, voting will be based on members present rather than all member states.

“It seems like a loss for the U.K. but there’s still a big debate to be had about the consequences of calling an emergency,” Simon Gleeson, financial regulatory specialist at Clifford Chance LLP in London, said in a telephone interview today. “To the extent this means something, I think it is a loss for the U.K.” The new regulatory system, including a European Systemic Risk Board of central bankers and national regulators, would ensure EU market laws are implemented the same in every country and strengthen supervision across the 27-nation bloc.

The board is designed to issue warnings and recommendations, flagging problems such as the build-up of investments in U.S. subprime mortgages. Three new European Supervisory Authorities would oversee banking, securities and insurance and pensions, according to the commission’s proposal.

“It wasn’t easy merging the goals of an effective European supervision structure, keeping national authorities capable, better managing cross-border conflicts where they exist and respecting the rights of national parliaments,” German Finance Minister Wolfgang Schaeuble said.

To contact the reporters on this story: Emma Ross-Thomas in Brussels at erossthomas@bloomberg.net; Mark Deen in Brussels at mdeen@bloomberg.net.

Last Updated: December 2, 2009 10:44 EST

londonlawyer
December 2nd, 2009, 12:50 PM
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6940999.ece

londonlawyer
December 2nd, 2009, 06:13 PM
--------------------------------------------------------------------------------

http://www.timesonline.co.uk/tol/new...cle6939895.ece

December 2, 2009

We are in charge now, Sarkozy tells the City


Alistair Darling has delivered a blunt warning to the EU’s new French finance chief against meddling with the City of London.

As Nicolas Sarkozy gloated over impending curbs on the City, the Chancellor said that such moves would drive financial services out of Europe.

The French President’s glee at the appointment of Michel Barnier as Commissioner for the Single Market took on an edge of menace yesterday when he said that unfettered City practices must end.

“Do you know what it means for me to see for the first time in 50 years a French European commissioner in charge of the internal market, including financial services, including the City [of London]?" he said yesterday. "I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism," he said. His implicit threat was just what Downing Street had feared when Mr Barnier, formerly an agriculture minister, was given the portfolio last week.

Mr Darling, writing in The Times today, says that it would be a “recipe for confusion” if firms were supervised by the EU as well as national watchdogs and that Britain would not accept new laws that could lead to taxpayers picking up the bill for bailouts ordered by Brussels.

He rejects claims that the economic crisis was the fault of the “Anglo-Saxon” model, pointing out that French and German banks were among the biggest creditors of the failed US insurance giant AIG.

Terry Smith, a prominent banker, said that the threat of increased regulation was already threatening the City’s future.

“I’ve never seen so much work going on by companies, individuals and teams of people to evaluate relocation out of the UK,” he said.

londonlawyer
December 2nd, 2009, 06:42 PM
--------------------------------------------------------------------------------

http://business.timesonline.co.uk/to...cle6939892.ece

From The Times December 2, 2009

It’s déjà vu all over again as Sarkozy takes aim at City of London

By Suzy Jagger, Martin Waller and Francis Elliott

Napoleon Bonaparte scorned England as “a nation of shopkeepers”, but he knew it was the vitality of the City of London that made Britain such a threat to his imperial ambitions.

The feeling was mutual. The City, fearful of a European ruler who would cut off their trade, readily funded the war effort that culminated in Napoleon’s downfall. Last night the City was again going on the offensive as one of its most successful bankers predicted that the French President’s criticism of Britain’s financial sector would encourage firms to quit Britain for markets more supportive of business.

Terry Smith, chief executive of the bonds broker Tullett Prebon, told The Times: “I’ve never seen so much work going on by companies, individuals and teams of people to evaluate relocation out of the UK. Switzerland isn’t in the EU, but there are other destinations being considered as well.”
President Sarkozy expressed glee yesterday at the appointment of Michel Barnier as finance chief in Brussels. Last month the Frenchman was appointed European Commissioner for the internal market and financial services. Mr Barnier now has influence over the reform of hedge fund, banking, insurance and banking regulation.

At a meeting of European finance ministers in Brussels today, the powers of three new EU-wide economic watchdogs are to be agreed. The French are leading a drive for the bodies to be given power directly to interfere in the workings of individual companies, a move resisted by Britain.

A proposed EU directive covering the workings of Britain’s private equity industry is also entering a key phase in negotiations.

Yesterday Mr Sarkozy said that the nomination of a French commissioner in charge of EU markets would help continental economic ideals to prevail over the discredited Anglo-Saxon model. In a speech in France the President blamed the reputedly free-wheeling Anglo-Saxon model for the global economic downturn. The Group of 20 rich and emerging nations had made remarkable strides during the crisis to regulate bonuses and eliminate tax havens, but the battle was not over, Mr Sarkozy said.

“Do you know what it means for me to see for the first time in 50 years a French European Commissioner in charge of the internal market, including financial services, including the City [of London]?” he said of Mr Barnier’s nomination. “I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism.”

His comments met with alarm and dismay in the City. One senior banker said: “Surrendering control of the City of London to the French in return for some nonentity getting a non-job [Baroness Ashton of Upholland’s appointment as EU foreign affairs chief] is one of the biggest fiascos of British diplomacy since Suez. The fact that Sarkozy is now being gleeful makes it worse. The Prime Minister must explain how he will protect the City from EU meddling or lose what remaining credibility he has in the City.”

Sir Victor Blank, the banker and company chairman whose work forms the basis of Britain’s takeover code, told The Times that the “inherent strength” of Europe meant that any changes to financial regulation would take years to implement and that such measures would need the approval of 27 member nations of the EU.

“This is not something that will shift and change overnight. It will be subject to debate. The City of London has an innate strength. People want to be here.”

Richard Lambert, Director-General of the CBI, said: “Mr Sarkozy needs to be very careful with his rhetoric because he is making the job of Mr Barnier much more difficult. Mr Barnier has made clear — very sensibly — that he sees the City of London as one of Europe’s most valued assets.”

Lord Levene of Portsoken, the head of the Lloyd’s insurance market, the biggest in the world, said of Mr Sarkozy’s words: “That’s today’s quotation. There will be another one tomorrow. I can’t get too excited about it. I think what we should do is to get our highest representative to intervene on our behalf. You know what politicians are like — good for a quote.”

Simon Walker, head of the British Venture Capital Association, whose members are facing onerous proposed regulations from Brussels, said: “This is not a war against capitalism. But there is a need for a much greater degree of subsidiarity which respects the models of different countries.”

He added: “President Sarkozy’s rhetoric is over the top and he is clearly playing to his domestic audience. The free market is deeply entrenched in the British psyche.”

Another senior City source, who declined to be named, said: “Sarkozy’s language is very alarming. If it is a true reflection of Barnier’s approach, that is very bad news for London indeed. Besides, Sarkozy’s analysis is completely wrong. European companies also imploded during the crisis. There is very little evidence that excessive bonuses, however distasteful, caused the crisis themselves.”

Last century, another Frenchman, Charles de Gaulle, had a similar antipathy for the Square Mile, which he made clear in the 1960s when he withdrew his country from the Gold Pool, the London-based reserve designed to stabilise currencies by tying them to the value of gold.

--------------------------------------------------------------------------------

Codex
December 3rd, 2009, 06:16 AM
City Shouldn't Rise to Sarkozy Rhetoric

DECEMBER 2, 2009

Wall Street Journal

http://online.wsj.com/article/SB10001424052748704107104574571933458067204.html?m od=googlenews_wsj (http://online.wsj.com/article/SB10001424052748704107104574571933458067204.html?m od=googlenews_wsj)

Nicholas Sarkozy must have been chortling to himself yesterday as he watched the City of London put on an Oscar-worthy display of righteous indignation. The French president had chosen to herald the appointment of his countryman, Michel Barnier, as the new European commissioner in charge of financial services with language which could only have been designed to cause maximum fury and a degree of fear on the other side of the Channel.

Blaming the "free-wheeling Anglo-Saxon" model of financial markets for the world's economic crisis, Mr. Sarkozy said: "I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism."

The message couldn't have been clearer if he had said: "Watch out London, my man is in charge now, and he is going to clamp down on the activities of the City of London."

London responded accordingly, with its bankers and politicians grabbing the microphones to warn against the dire consequences of any such attack. Chancellor of the Exchequer Alistair Darling leapt into print to argue that "London is New York's only rival as a truly global financial center," and thus it is in Europe's interests that it be strengthened, not weakened.

Mr. Sarkozy obviously doesn't share that view. His preference would be for La Defense, that Parisian predecessor of Canary Wharf, to become the financial powerhouse of Europe. The fact that his son was unsuccessful in his efforts to win the top position there hasn't dimmed the presidential vision.

But while the City of London was spluttering its outrage over the mission that Mr. Sarkozy appeared to have been setting for Mr. Barnier, an altogether more sensible mood was prevailing.
At the gathering of European finance ministers, what would appear to be a relatively sensible framework for the supervision of the financial markets of the 27 member states was hammered out. It shies away from handing the new EU authorities the sort of powers Mr. Sarkozy might like to see in favor. The European Systemic Risk Board, which, if it lives up to its name, should be able to spot the next subprime or CDS squared danger, won't be empowered to leap upon the perpetrators and stop their questionable practices. Instead, it will only be able to issue warnings and recommendations.

According to Jaquin Almunia, the EU's new commissioner for economic affairs, it will rely on "moral suasion and peer pressure" to ensure those warnings are heeded and recommendations followed.

Mr. Almunia may be a little optimistic here. The "freewheeling Anglo-Saxons" proved remarkably impervious to warnings of dire consequences if they persisted in their reckless activities, preferring, in the immortal words of former Citigroup CEO Chuck Prince, to continue dancing while the music kept playing.

But while the bankers may be immune to the pressures from this new European body, they won't be immune to the tighter regulation toward which member countries are moving as they slam shut the stable doors after so many billion of dollars have bolted.

There should be no need of an extra regulatory layer atop the national structures, and the finance ministers seem to have opted for a sensible compromise course. Yet it is too soon to be entirely sanguine over the matter for the European Parliament may take a different view.

Even if sense prevails over the financial-supervisory framework, Mr. Sarkozy has other weapons with which to attack the City of London. It isn't merely paranoids in the Square Mile who see the Alternative Investment Directive as an attempt to shackle one sector of the "freewheeling Anglo-Saxon financial markets."

This piece of legislation has trodden a long and painful route through the dual-track process that eventually makes European law. Students of its history are in little doubt that it has been propelled on its journey by an alliance of France and Germany intent on scaling back London's role as a center of the hedge-fund industry.

This may have been because of genuine fears for the safety of investors in these funds, or because of fears for the risks that they pose to financial stability, in which case the arguments have still to be convincingly made. Or it may have been because of a wish to deal a blow to London and, perhaps, shed a little benefit on Paris and Frankfurt. If that were the aim, however, only the first part would be achieved since hedge funds taking a pre-emptive decision to leave London have been heading straight to Switzerland.

Whatever the motives behind the legislation, however, what is indisputable is that what is being proposed is badly cobbled together and ill thought through. For instance, the plans to restrict remuneration, in ways similar to those proposed by the G20 for bankers aren't easily applied to partnerships, the chosen structure for many hedge funds.

Careful lobbying has calmed some of the worst elements in the package, although it is almost certainly the case that a visit to Brussels by London's mayor, Boris Johnson, did nothing to enamor the European politicians to his cause. For the tousle-haired mayor to arrive with his entourage and a battalion of cameras and newsmen in order to lecture the European Parliament about the importance of the City of London was never going to be well received.

A calmer approach is what is required. The City would be wise to ignore Mr. Sarkozy's comments and hope Commissioner Barnier does the same. Although he has in the past been a close ally of the president, Mr. Barnier, known as the Silver Fox, may want to be his own boss in his new role. And before leaping up and down in defence of the "freewheeling Anglo-Saxon" model, the City and its denizens might reflect that it has proved far from perfect.

Codex
December 3rd, 2009, 06:17 AM
Sarkozy acts to calm London fears

By George Parker and Brooke Masters in London and Ben Hall in Paris

Financial Times

December 2 2009

http://www.ft.com/cms/s/0/631f76a2-df81-11de-98ca-00144feab49a.html?nclick_check=1 (http://www.ft.com/cms/s/0/631f76a2-df81-11de-98ca-00144feab49a.html?nclick_check=1)


Nicolas Sarkozy will use a planned visit to London on Friday to try to calm fears in the City that he is putting in place a plan to impose French-style regulation on the British financial sector.

The French president caused anguish in the City and Westminster last weekend with his triumphant comments following the appointment of Michel Barnier, the former French foreign minister (http://www.ft.com/cms/s/0/c33a30dc-ddfa-11de-b8e2-00144feabdc0.html), as the European Union’s internal market commissioner.

It has emerged that Mr Sarkozy, having made his pitch to a domestic audience, now wants to quell the furore he started when he makes his visit to London.

Downing Street and the Elysée Palace said no final arrangements had been made for the visit, but financial regulation is expected to feature high in talks with Gordon Brown, Britain’s prime minister, along with Afghanistan.
The leaders are expected to proclaim the deal made on Wednesday in Brussels on a framework for EU financial supervision as an example of Franco-British co-operation.

But Mr Sarkozy’s claim that Mr Barnier’s appointment reflected a victory for the French approach to regulation continues to reverberate around the City to Mr Brown’s discomfort.

The prime minister was goaded in the House of Commons on Wednesday by Greg Barker, an opposition Conservative MP, who said Mr Brown should have tried to put a Briton in the internal market post. “Why did the prime minister fail for Britain?” he asked.

Mr Brown defended his decision to instead push for a Briton to take the post of EU foreign policy chief, a job that eventually went to Lady Ashton.
Tim Linacre, chief executive of Panmure Gordon, the City stockbroker, said it would be “very disappointing” if Mr Brown had deliberately sought to put a Briton in the EU foreign policy job rather than the finance chief, saying that a tougher regulatory regime would hit Paris as well as London and that the winners would be Geneva, New York and Asia.

Angela Knight, chief executive of the British Bankers’ Association, said Mr Sarkozy’s comments had “put a question mark over his nominated commissioner that will not be easily dispelled”.

“If anyone in the European project thinks for a minute they are capable of subverting the years of effort it took to make the UK the world’s financial centre, they are sadly mistaken.

But Stuart Fraser, policy chairman of the City of London, said fears over Mr Barnier were overstated but that it was important he was not seen to be pushing French interests.

Most City professionals and bankers say tax rules will have a much bigger effect on their decision to stay in London than financial regulations , though a proposed EU directive on alternative investments (http://www.ft.com/cms/s/0/296daa22-65ac-11de-8e34-00144feabdc0.html) has prompted some hedge fund managers to talk of moving out of the British capital.

Codex
December 3rd, 2009, 06:18 AM
Mr Sarkozy caused outrage in the City and in Westminster on Tuesday when he said that a European banking model had "nothing to do with the excesses of financial capitalism". Mr Barnier later tried to defuse the row in an interview with French radio: "I know the importance of the City. I know the importance of this major financial centre for growth in Britain and for all of Europe's economy," he said. "I have to work in Europe's interest to draw lessons from the crisis, including in the City's (London) interest to support this financial centre, as well as others including Frankfurt and Paris."

http://www.independent.co.uk/news/business/news/stop-meddling-with-london-bankers-leader-tells-sarkozy-1833097.html (http://www.independent.co.uk/news/business/news/stop-meddling-with-london-bankers-leader-tells-sarkozy-1833097.html)

Codex
December 3rd, 2009, 06:21 AM
Sarkozy is unpopular in France never mind Britain, and it's unlikely that Sarkozy will win a further term in office.

http://www.reuters.com/article/worldNews/idUSTRE5AR17L20091128 (http://www.reuters.com/article/worldNews/idUSTRE5AR17L20091128)

Furthermore a future Conservative Government following next years general election looks increasingly likely and may signal a clawing back of power from the European Union through British legislation such as the proposed 'Referendum Lock' which would mean that a British national referendum would have to be held before any further increase in Brussels power over that of London could take place. It should be noted that it would be most unlikely that the average Briton would openly support the transfer of any powers from London to Brussels.

There are also other proposals being considered by the Conservatives to limit EU Power.

http://www.telegraph.co.uk/news/worldnews/europe/eu/6521619/David-Camerons-plan-to-save-Britain-from-the-EUs-clutches-will-it-work.html (http://www.telegraph.co.uk/news/worldnews/europe/eu/6521619/David-Camerons-plan-to-save-Britain-from-the-EUs-clutches-will-it-work.html)

The truth is any legislation passed by Barnier and the EU Parliament will apply throughout the EU and not just in the UK, so there would be no advantage in banks or hedge funds moving from London to Paris or anywhere else within the EU. There is also the possibility of a Government review of the UK role within the EU and EU powers in relation to the UK. Whilst political parties who wish to withdraw the UK completely from the EU such as UKIP must be delighted that Sarkozy has played right in to their hands. It should be noted that UKIP beat Labour into third place in this year's European elections, a major embarrasement for Gordon Brown and his Government and a clear message to the European Union from the people of Britain.

As for the French, if they really want to attract business to Paris then I suggest they start by reforming their over complicated tax system and then move on to their high rates of taxation.

As for London, I am very upbeat about it's future, and indeed that of other UK Cities such as Manchester, Liverpool, Newcastle, Leeds, Edinburgh, Glasgow etc etc

London has a very bright future in my opinion -

http://www.thinklondon.com/business_facts/ (http://www.thinklondon.com/business_facts/)

http://www.thinklondon.com/business_facts/sector_facts/sales_marketing.html (http://www.thinklondon.com/business_facts/sector_facts/sales_marketing.html)

http://www.cyrilleonard.de/news/detail/221.html (http://www.cyrilleonard.de/news/detail/221.html)




:)

Codex
December 3rd, 2009, 10:42 AM
As for Sarkozy, all hell has now broken out, and his trip to London tomorrow has been cancelled.

http://news.sky.com/skynews/Home/Politics/Gordon-Brown-Has-Snubbed-An-Offer-From-Nicolas-Sarkozy-To-Discuss-Financial-Issues/Article/200912115488424

The French are now desperately trying to backtrack.

http://www.nytimes.com/reuters/2009/12/03/business/business-uk-france-britain-barnier.html?_r=1






:D

londonlawyer
December 3rd, 2009, 11:05 AM
The French and the rest of Europe are not trying to backtrack on their policies. The Continent has a very different philosophy to finance than the US and UK have. They're backtracking solely on Sarkozy's bombastic statements which were not good for public relations.

Codex
December 3rd, 2009, 11:17 AM
They're backtracking solely on Sarkozy's bombastic statements which were not good for public relations.

Which is precisely what I said. :rolleyes: :rolleyes: :rolleyes:

As for Mr Barnier he is now trying to reassure Britain that France's push for tougher financial regulation in the European Union will not undermine the City of London.

"There is no reason for this controversy as the rules of the game are clear," he said.

"I plan to work with everybody. I'm not an ideologist. I'm very practical. Everybody needs to calm down."


All very amusing, and I am sure UKIP and the right in Britain who oppose the EU are toasting Sarkozy for giving them some much needed ammunition for the forthcoming British General Election.

http://www.express.co.uk/posts/view/140885/Exclusive-86-say-Britain-must-quit-the-EU-now

http://news.bbc.co.uk/1/hi/programmes/analysis/8362532.stm

Indeed there are those who would like to see Britain take a role in Europe similar to that of Switzerland.

http://www.telegraph.co.uk/comment/3643414/Let-the-UK-take-a-Swiss-role-in-the-EU.html




:)

Alonzo-ny
December 3rd, 2009, 11:33 AM
Sarkozy is a very inept polititian if he did not expect this kind of reaction.

Codex
December 3rd, 2009, 12:01 PM
Sarkozy is a very inept polititian if he did not expect this kind of reaction.

Totally Agree.

Although I think his comments were meant for a home grown audience and that he didn't expect them to end up on the front pages of British Newpapers.

Still we have now tumbled your little game Sarkozy and will now fight you on the landing grounds, in the hills and on the streets and and we shall never surrender. :D

londonlawyer
December 3rd, 2009, 01:00 PM
As I've said for quite some time, Continental mistrust of the US-UK approach derails London's role as THE financial center of Europe. Continentals will procure services from their own financial capitals, Paris, Frankfurt, Milan.

http://www.timesonline.co.uk/tol/news/politics/article6942504.ece

From Times Online December 3, 2009

Nicolas Sarkozy pulls out of Gordon Brown meeting after EU 'victory' boast
(Jean-Paul Pelissier/Reuters)


It was reported this morning that Mr Sarkozy was to make a short visit to Number 10 to smooth relations in the wake of his gloating about the appointment of former French minister Michel Barnier to the EU’s internal market portfolio.

But a spokesman for the French president said: “Nicolas Sarkozy will not go to London tomorrow.

“There will be a meeting between Brown and Sarkozy on the sidelines of the European Council meeting in Brussels.”


Downing Street today acknowledged that there had been "general discussions" about a meeting between the French president and Gordon Brown. The Prime Minister’s official spokesman, however, insisted that there had been no firm plans for a visit.

A senior Government figure told The Times that the decision to cancel the trip to London had been taken both Number 10 and the Elysee. “I think the view was taken that flying him over to London might look a bit over the top.”

Mr Sarkozy is said to share Mr Brown’s determination to close down the controversy caused by Mr Barnier’s appointment and its description by the French president as a “victory”.

“The British are the big losers in this,” Mr Sarkozy said in an interview with Le Monde, referring to negotiations in which the French backed Lady Ashton as the EU’s High Representative in return for Mr Barnier getting the job which will oversee new financial regulatory reforms.

The new commissioner for the single market himself tried to calm the row. “There is no reason for this controversy as the rules of the game are clear,” Mr Barnier said today. He said that he planned to meet Alistair Darling in London before Christmas.

Mr Darling’s push to limit the powers of new European financial supervisors was rebuffed by the region’s finance ministers at a meeting in Brussels yesterday.

Under the terms of an agreement, a government can only oppose an order from regulators if it gathers a blocking majority among the 27 European Union states.

Mr Darling had arrived in Brussels last night saying the burden should be on the regulators to seek a supporting majority from EU members before making an order.

“The UK had some major difficulties in accepting that the new European bodies would be able to take decisions” that would affect its companies, Luxembourg Finance Minister Luc Frieden told reporters in Brussels. “It was more of an issue between the UK and certain other EU countries.”

The Elysee palace confirmed that Mr Sarkozy would meet Mr Brown for private talks in Brussels at the summit on December 10 and 11, but the presidential spokesman would not say whether a trip for this week had been planned.

Privately, officials said that Paris believes that the dust should settle in London from this week's spat before Mr Sarkozy tackles the matter of financial regulation and France's role in the EU Commission. The French media have depicted high emotion in London over Mr Sarkozy's remarks, which gained hardly a mention at home.

Last Saturday, Mr Sarkozy told leaders of his Union of a Popular Movement: "With everything that has happened with the financial crisis, it's very reassuring that French ideas on regulations are triumphing in Europe."
He said then that he would visit London soon to explain France's ideas. Mr Sarkozy plans to continue to stress France's relative economic success over "the Anglo-Saxons" in coming speeches. The President knows that the issue is a winner as he campaigners for his party ahead of important national regional government elections in the New Year.

Alonzo-ny
December 3rd, 2009, 01:07 PM
London isn't going to fall apart and collapse if it isn't the number 1 financial capital of the world. Frankfurt and Paris don't suffer as do many other cities.

londonlawyer
December 3rd, 2009, 01:14 PM
I agree.

londonlawyer
December 3rd, 2009, 01:15 PM
Sarkozy is a very inept polititian if he did not expect this kind of reaction.

He is the second craziest politician of a first-world nation (after Berlusconi, of course).

Fabrizio
December 3rd, 2009, 01:17 PM
^ would you care to elaborate?

Alonzo-ny
December 3rd, 2009, 02:01 PM
He is the second craziest politician of a first-world nation (after Berlusconi, of course).

I didn't really have an opinion on him until his government failed to invite the Queen to a ceremony for WW2. He went on to say it was a Franco-American event. This is a disgusting way to treat a country that helped liberate France at the cost of many British lives.

londonlawyer
December 3rd, 2009, 02:04 PM
I agree with you.

I wish Royal had won. She is hot, and it's funny how she likes to bash the US.

Alonzo-ny
December 3rd, 2009, 02:11 PM
She is attractive. I'd much rather be watching her on the news instead of a guy with a Napoleon complex.

londonlawyer
December 3rd, 2009, 02:16 PM
That famous bikini shot of her was enough to garner my support!

londonlawyer
December 7th, 2009, 11:35 AM
http://www.thisislondon.co.uk/standard-business/article-23780531-uk-to-drop-out-of-top-10-economies-2015.do

UK ‘to drop out of top 10 economies’ by 2015
Hugo Duncan
07.12.09

A leading City think tank today predicted that the UK will drop out of the world's top 10 economies by 2015.

The Centre for Economics and Business Research said Britain (CEBR), currently the seventh-largest economy in the world, will be overtaken by Brazil, Russia, India and Canada by the middle of the next decade. It said even Australia could pass Britain by 2020.

The grim warning came as Chancellor Alistair Darling put the finishing touches to the Pre-Budget Report (PBR) to be published on Wednesday.

Business leaders and economists urged the Chancellor not to raise taxes and cut spending too soon for fear of snuffing out the recovery and driving the UK back into recession.

The UK was the world's fourth-largest economy in 2005 but was overtaken by China in 2006, France in 2008 and Italy this year.

Douglas McWilliams, chief executive of the CEBR, said: “In a decade, the UK could have dropped from being number four in the world to being outside the top 10.”

The forecast will not make pleasant reading for the Chancellor ahead of the PBR. Darling will admit that borrowing this year will hit a record £180 billion, or more than 12% of gross domestic product, as tax receipts evaporate and spending soars.

He will also repeat Labour's pledge to halve the deficit between 2010-11 and 2013-14 through higher taxes and spending cuts. Among the tax increases being considered are a supertax on bankers' bonuses and a 60% to 70% rate of income tax on those earning over £500,000.

Darling will also outline some spending cuts, although he will resist publishing the full details until after the general election.

Richard Lambert, director general of the CBI, said the biggest concern of all was when the squeeze should get underway.

He said: “Start too soon and there would be a risk of snuffing out a still-fragile economic recovery. Leave it too late and the UK's borrowing costs would start to escalate, building even bigger trouble for the future.”

Writing in The Times, Lambert said tightening should start in 2011-12 and aim to get the budget back in balance by 2015-16.

“History shows that a fiscal correction geared to spending cuts rather than to tax increases is more likely to deliver debt reduction and support growth,” he said.

Professor David Blanchflower, a former member of the monetary policy committee at the Bank of England, also urged the Chancellor “to resist any temptation to start cutting public spending in 2010-11”.

In a letter to the Financial Times, Blanchflower and 11 other professors wrote: “Taking risks at this point while recovery is delicate would risk a return to recession.

“What progress has been made towards recovery in the UK and abroad has been, in some considerable part, due to decisions by governments to increase spending as a stimulus, to actively support employment and to accept higher deficits as an inevitable outcome of these measures.

“To reverse this policy just when it is having an effect would be mistaken.

“Reducing the deficit now through spending cuts would undermine the recovery and ultimately damage the public finances further.”

Alonzo-ny
December 9th, 2009, 05:32 AM
Please post all articles and discussion regarding the UK economy here.

londonlawyer
December 9th, 2009, 05:45 AM
There was more bad news about the the UK's economy and more stress on the City today. However, let's not focus on it and hope that Cameron can turn things around.

http://www.hsu.edu/uploadedImages/carters/English%20flag.gif

Alonzo-ny
December 9th, 2009, 06:53 AM
Pre-budget report today. Hopefully Darling will reassure markets as to how he will cut the budget deficit.

If Cameron wins the election the UK is almost guaranteed a W shaped recession.

Codex
December 9th, 2009, 06:56 AM
Good Luck to the UK Economy and the Irish, and not just England

http://athena.libraries.claremont.edu/~blog/blog/images/unionjack.gif

http://www.mod.uk/NR/rdonlyres/92AEF50F-B188-4982-93F1-ECC6BE338E7A/0/UnionJack.bmp

http://www.thenetflow.com/wp-content/uploads/2009/07/Irish-Flag.jpg

Codex
December 9th, 2009, 07:03 AM
As for the UK economy, consumer confidence is up, house prices are up again for the 5 month running and business confidence is upbeat with many businesses stating that they will be hiring again come the New Year. Whilst Unemployment in the UK stands at 7.8% which is lower than many of it's European Neighbours and lower than the US rate where it stands at around 10.2%.

The UK Economy has weathered far worse storms, and there is much to be optimistic about.

http://www.propertywire.com/news/europe/halifax-price-index-up-200912093742.html

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=d4d3a1ba-cfe9-42bc-8c67-03ad2770a5f2

http://www.mad.co.uk/Main/News/Articlex/46ba026adb924ec59b1b46160a04a88b/Consumer-confidence-on-the-up.html

Britain has a history of specialist expertise in areas such as Finance, Business Services, Bio-Techs, Entertainment, Education, Construction, Electronics, Communications, Aviation and many other Hi-Tech Sectors, which is something we can draw upon in order to build a more specialised knowledge based economy. Rolls Royce Engines are used to power many of the worlds aircraft, whilst Tesco is set to become the second largest retailer in the world after Walmart, Vodafone is one of the largest communications companies in the world (owning a large percentage of Verizon), whilst BP and Shell are two of the largest oil companies on the planet, British Airways and Virgin are two of the best known airlines in the world, whilst GlaxoSmithKline (GSK) and AstraZenaca are major pharma companies whilst companies such as Lloyds of London, HSBC, Standard Charter are insurance and finance giants and BAe is one of the largest companies in the global defence industry. These are just a few British companies.

In terms of the future, Britain has the potential to concentrate ever more on it's knowledge base, inventiveness and skills in a whole host of areas, and it should be noted that a large percetage of global inventions were courtesy of the UK and that we continue to be a very creative nation.

The future of the knowledge economy is discussed in this recent article. :)

http://www.egovmonitor.com/node/27160/print








:)

Alonzo-ny
December 9th, 2009, 08:18 AM
Luckily Ireland is not within the UK. If you want to see a wealthy country become a disaster then look no further. I always distrusted the Irish economy along with that of Dubai.

Codex
December 9th, 2009, 08:21 AM
Luckily Ireland is not within the UK. If you want to see a wealthy country become a disaster then look no further. I always distrusted the Irish economy along with that of Dubai.

The Irish Economy certainly has gone belly up.

londonlawyer
December 9th, 2009, 09:54 AM
Good Luck to the UK Economy and the Irish, and not just England


I posted just the George's cross and not the Union Jack because I love England.

Codex
December 9th, 2009, 09:59 AM
I posted just the George's cross and not the Union Jack because I love England.

I love all the member states of the United Kingdom, and the Union Flag.

ZippyTheChimp
December 9th, 2009, 10:03 AM
^
Codex, check the PM I sent you yesterday.

Codex
December 9th, 2009, 10:05 AM
^
Codex, check the PM I sent you yesterday.

I have seen it, and I haven't posted any further quotes with whole articles in them. The only quotes that I make are in respect of that which I am replying too. As is the case above, and they are usually very short quotes as is the case above.

ZippyTheChimp
December 9th, 2009, 10:16 AM
^
That was only one part of the PM.

There's no reason to quote a preceding post at all, unless it is long and you're addressing only a specific point.

LL made a post, and you responded. Just like my post and your response. It's simple.

Codex
December 9th, 2009, 10:19 AM
The above people such as LL often quote my post, so perhaps you should PM them, if it is just the preceding post then point taken, however this really is a very trivial matter.

I will no longer quote immediately preceding posts if that makes you happy, although what difference this makes in relation to short posts is any ones guess.

ZippyTheChimp
December 9th, 2009, 10:51 AM
You're right, it's a trivial matter, and we usually ignore it, unless it is done repeatedly, and we have to address it.

In that case, the rule becomes simple, and the moderators don't have to decide exactly what defines a "short post." You also quoted my post (http://www.wirednewyork.com/forum/showpost.php?p=308392&postcount=20) some time after I sent you the PM. It's sort of a short post.

Whether you comply or not doesn't "make me happy," but what makes me unhappy is that I've had to waste time in this side discussion and others are going to have browse through it, when the PM I sent you was sufficient.

Just drop it and move on.

Fabrizio
December 9th, 2009, 05:05 PM
The Irish Economy certainly has gone belly up.

A story in today's NYTimes about Ireland's economy:

Ireland’s Budget Just Adds to the Gloom

http://www.nytimes.com/2009/12/10/world/europe/10ireland.html?ref=global-home

--

londonlawyer
December 14th, 2009, 08:06 PM
http://www.ft.com/cms/s/0/f9feca5e-e8e2-11de-a756-00144feab49a.html

nick-taylor
December 15th, 2009, 04:47 AM
http://www.ft.com/cms/s/0/f9feca5e-e8e2-11de-a756-00144feab49a.htmlNo suprise really, international IPO's have fallen off the cliff (the area London was strongest in) and won't pick up till the later half of 2010. The deterioration of the US economy however has meant Hong Kong overtook the US.

US unemployment is now 2.2% ahead of the UK, and 0.2% ahead of the €-area. The IEA has also put 2020 as the year of peak oil (unless no major viable discoveries are made), so crazy years to come!

Also is it true that some subway lines in NYC may be mothballed?

londonlawyer
December 15th, 2009, 05:15 AM
In fact, the only year, prior to this, that NY was not the IPO leader was 2006 when London was. That one year (which followed enormous anti-US sentiment around the world) was London's only time in the top spot (yet, it comically led Londonders to start claiming the title of world's financial capital). Now, London even isn't among the top ten in the world for IPOs. Moreover, not only is HK's lead over NY small, but it's the financial capital of a booming, emerging economy. Thus, it is expected to be in the lead. This story, however, simply portends London's dramatic decline as a financial center.

Codex
December 15th, 2009, 06:35 AM
Any shift in global power is going to hurt America more than any other nations. As other nations challege American global economic dominance and industrial might. Indeed many international observers have predicted the decline of the relative strength in global terms of the US when compared to the emerging East, and there is a raft of books and articles predicting the decline of the so called American Empire.

As already stated London has expertiese in many areas and has close links with the Far East, indeed London was once the mother city of many of these emerging economies. London will remain an international financial hub, as well as being the centre of an emerging knowledge economy based on London's expertise within an array of specialist areas.

londonlawyer
December 15th, 2009, 06:38 AM
The US economy is (and will be for a very long time) the world's strongest. GDP per capita dwarfs China. In fact, China, despite having a population of about 1b more than the US, will not overtake the US as the largest economy until 2050. Even at that time, China's advantage will be small.

Codex
December 15th, 2009, 06:56 AM
http://upload.wikimedia.org/wikipedia/commons/thumb/5/5e/The_Guardian.png/800px-The_Guardian.png

The great shift in global power just hit high gear, sparked by a financial crash

As an emboldened China sees, the American dollar is gravely wounded. And the days of US political supremacy are numbered.

20th April 2009

http://www.guardian.co.uk/commentisfree/2009/apr/20/global-power-shift-china

We have entered one of those rare historical periods that is characterised by a shift in global hegemony from one great power to another. The last such was between 1931 and 1945, and marked the end of Britain's financial ascendancy and its replacement by that of the United States. It might be argued that the cold war represented a similar period, but that is a fallacy: the cold war was an ideological struggle between two powers that were always hopelessly ill-matched. This new period is marked by the rise of China and the decline of the US. Arguably the process started around a decade ago, but at that stage it was barely noticed, such was the west's preoccupation with 9/11 and its after-effects. Indeed, the Bush administration was thinking in exactly the opposite terms: that the world was entering a golden age of American global power.

It is more appropriate, however, to date the beginning of the new era from 2008. First, the election of Barack Obama signalled a recognition by the US of the limitations of its own power and the need for it to co-operate with other nations. Second, China has reached a point where it is now clearly prepared, on the basis of the advances of the last three decades, to assume a more active global role. And third, the onset of the global financial crisis provides the context for the decline of American economic power and illustrates the extent to which it has become dependent on China for the continuation of its global financial hegemony.

Such periods of transition are profoundly unstable, deeply uncertain and fraught with danger. The world is fortunate - for the time being, at least - that it has an American president in Obama who is prepared to take a conciliatory and concessive attitude towards America's decline and that it has a Chinese leadership which has been extremely cautious about expressing an opinion, let alone flexing its muscles.

The picture, however, is changing rapidly; indeed, this year has already witnessed a marked change in Chinese attitudes. Ever since Deng Xiaoping, the Chinese approach has been based on taoguang yanghui - hide one's capabilities and bide one's time. But a succession of statements and initiatives suggest that Chinese policy has now entered a new phase. Premier Wen Jiabo expressed a strong confidence at the Boao Forum in Hainan on Saturday that China was successfully weathering the effects of the global economic crisis. During his visit to Europe for the Davos meeting, he made clear that reckless western economic policy, especially by the US, was responsible for the crisis. He also declared that China would not give funds to the IMF unless the latter was subject to major reform.

Later he expressed strong concern about US financial policy and its impact on the dollar, seeking reassurance that the value of China's US treasury bonds would not be prejudiced. In a carefully staged run-up to the G20 summit, Vice-premier Wang Qishan set out a vision of a new monetary order while, most dramatically of all, the central bank governor, Zhou Xiaochuan, called for a new global currency based on using the IMF's special drawing rights, an idea immediately rejected by the US. Meanwhile, a meeting of the finance ministers and central bank chiefs from China, India, Russia and Brazil that preceded the G20 summit called for greater voting rights for developing countries in international financial organisations.

This new assertiveness is finding other forms of expression in Chinese society. A new book by five nationalistic authors, Unhappy China, argues that China has no choice but to become a superpower: published in March, it immediately shot to the top of the bestsellers list. There has also been an intense public debate about whether the country should continue purchasing US treasury bonds, especially given their extremely low interest rate.

It is now abundantly clear that China is prepared to take an active and interventionist role in international financial affairs. Given that the global financial crisis is at the top of every agenda and that reform of the existing global financial order is now irresistible, this has far-reaching implications: China will be a central player in whatever new architecture emerges from the present crisis. This represents an extraordinary change even compared with two years ago, let alone five years ago, when China was not even included in discussions on such matters. But it also has a much wider significance.

The rise of China and the decline of the US will, at least during this period, be enacted overwhelmingly on the financial and economic stage. And China has now demonstrated that it intends to be a full-hearted participant in this process. It is not difficult to predict some of the likely consequences: the G20 will in effect replace the G8 and the IMF and the World Bank will be subject to reform, with the developing countries acquiring a greater say.

The most audacious proposal that has so far emanated from Beijing, almost completely unforeseen, is the suggestion for a new global currency which might, in time, replace the role of the dollar as the world's reserve currency. Whether or not such a proposal would ever see the light of day, or indeed work, given that reserve currencies have always depended on a powerful sovereign state, it nonetheless provides us with an insight into the strategic financial thinking that now informs the Chinese government's approach. Clearly they recognise that the days of the dollar as the dominant global currency are numbered. This would also, incidentally, signal the end of New York as the global financial centre.

But this is only one side of the picture. On the other side is the growing role of China's currency, the yuan, which has so far attracted little attention. Although the yuan remains non-convertible, it is evident that the Chinese are seeking to progressively internationalise its role. The Chinese government recently concluded a number of currency swaps with major trading partners, including South Korea, Argentina and Indonesia, thereby widening the use of the renminbi outside its own borders. It is also in the process of taking steps to increase the yuan's role in Hong Kong. This is significant because of the latter's international position. In addition, the government has announced its intention of making Shanghai a global financial centre by 2020.

The likely longer-run trends, then, are perhaps not so difficult to decipher; the short term, however, in the context of a highly volatile financial climate, certainly is. The dollar's strength over the past couple of years remains something of an anomaly, given the catastrophic state of the US financial system. It would be a brave person who bet on the dollar's strength continuing; it is much more likely, in fact, that at some point its value will plummet. Should that happen, then the dollar's global position could rapidly be undermined and the need for more fundamental global financial reforms made more urgent. All of this would only serve to accelerate the decline of the US and the rise of China.

Codex
December 15th, 2009, 07:17 AM
US Economic Power and Global Economic Leadership would also be thrown in to question, if the Dollar is replaced as the World Reserve Currency by a new Global Currency. Something the IMF, UN and indeed China are keen to push ahead with.

UN wants new global currency to replace dollar

The dollar should be replaced with a global currency, the United Nations has said, proposing the biggest overhaul of the world's monetary system since the Second World War.

By Edmund Conway, Economics Editor
07 Sep 2009

http://www.telegraph.co.uk/finance/currency/6152204/UN-wants-new-global-currency-to-replace-dollar.html

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUYeJEwZaQrw

http://www.thedailystar.net/newDesign/news-details.php?nid=117334


http://i.telegraph.co.uk/telegraph/multimedia/archive/01403/dollar2_1403594c.jpg

A number of countries, including China and Russia, have suggested replacing the dollar as the world's reserve currency


In a radical report, the UN Conference on Trade and Development (UNCTAD) has said the system of currencies and capital rules which binds the world economy is not working properly, and was largely responsible for the financial and economic crises.

It added that the present system, under which the dollar acts as the world's reserve currency, should be subject to a wholesale reconsideration.

Although a number of countries, including Chinaand Russia, have suggested replacing the dollar as the world's reserve currency, the UNCTAD report is the first time a major multinational institution has posited such a suggestion.

In essence, the report calls for a new Bretton Woods-style system of managed international exchange rates, meaning central banks would be forced to intervene and either support or push down their currencies depending on how the rest of the world economy is behaving.

The proposals would also imply that surplus nations such as China and Germany should stimulate their economies further in order to cut their own imbalances, rather than, as in the present system, deficit nations such as the UK and US having to take the main burden of readjustment.

"Replacing the dollar with an artificial currency would solve some of the problems related to the potential of countries running large deficits and would help stability," said Detlef Kotte, one of the report's authors. "But you will also need a system of managed exchange rates. Countries should keep real exchange rates [adjusted for inflation] stable. Central banks would have to intervene and if not they would have to be told to do so by a multilateral institution such as the International Monetary Fund."

The proposals, included in UNCTAD's annual Trade and Development Report, amount to the most radical suggestions for redesigning the global monetary system.

Codex
December 15th, 2009, 07:46 AM
The replacement of the Dollar by a new Global Currency would throw in to doubt New York's position in the global financial pecking order, and would also have a significant impact in terms of the current US Domination of Global Economic Policy. Whilst the dollar may not be replaced with immediate effect, the growing influence of the East may well dictate future global economic policy including the world reserve currency.

http://www.usatoday.com/money/economy/2009-10-22-dollar-weakens-against-euro_N.htm (http://www.usatoday.com/money/economy/2009-10-22-dollar-weakens-against-euro_N.htm)

NYC has just as much to worry about as other western financial centres, if not more, as it is currently the dominant global economic centre, with the dominant currency in a country which has for much of the last century called the shots.

However as Bob Dylan once sang 'The times they are a-changin'.

Fabrizio
December 15th, 2009, 08:27 AM
I'm not doubting these findings, but let's remember: The UN has been complaining about the dollar since forever. They were complaining when it was "too strong" ... are complaining now when it's weak.

These articles and this earth-shattering report are from September... any updates since then?

Alonzo-ny
December 15th, 2009, 08:30 AM
I think China's position is much more significant. However it will take decades to eventually happen. It is definitely a move that makes sense. Has OPEC given up on the idea of pricing oil in Euros?

Codex
December 15th, 2009, 08:46 AM
I'm not doubting these findings, but let's remember: The UN has been complaining about the dollar since forever. They were complaining when it was "too strong" ... are complaining now when it's weak.

These articles and this earth-shattering report are from September... any updates since then?

The IMF also wants to replace the Dollar as the world currency, with the Chinese and Russians lending their support.

The Dollar may survive a few years yet but in the longer term there may well be increasing pressure to replace it as the world reserve currency, especially as other nations take a far greater role in the Global Economy and Global Economic Policy. Indeed the Yuan itself could replace the Dollar as the World Reserve Currency of the future. The current situation is on-going however any further weakening of the dollar could signal it's death knell as the global reserve currency.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5325805/Chinas-yuan-set-to-usurp-US-dollar-as-worlds-reserve-currency.html

http://www.bloomberg.com/apps/news?pid=20601109&sid=aRMZbES7DNFc

http://www.usatoday.com/money/economy/2009-10-22-dollar-weakens-against-euro_N.htm

Things are changing fast, indeed it has just been reported that the US Car Market has falen to number 2 in the world for the first time having been overtaken by the Chinese.

http://www.nzherald.co.nz/motoring/news/article.cfm?c_id=9&objectid=10615290

Whilst China is now the worlds largest exporter, as US industry and manufacturing is overtaken by that of China and the Far East.

http://news.xinhuanet.com/english/2009-08/26/content_11947382.htm




:)

Codex
December 15th, 2009, 08:52 AM
:)



http://upload.wikimedia.org/wikipedia/commons/thumb/5/5e/The_Guardian.png/800px-The_Guardian.png

The great shift in global power just hit high gear, sparked by a financial crash

As an emboldened China sees, the American dollar is gravely wounded. And the days of US political supremacy are numbered.

20th April 2009

http://www.guardian.co.uk/commentisfree/2009/apr/20/global-power-shift-china

We have entered one of those rare historical periods that is characterised by a shift in global hegemony from one great power to another. The last such was between 1931 and 1945, and marked the end of Britain's financial ascendancy and its replacement by that of the United States. It might be argued that the cold war represented a similar period, but that is a fallacy: the cold war was an ideological struggle between two powers that were always hopelessly ill-matched. This new period is marked by the rise of China and the decline of the US. Arguably the process started around a decade ago, but at that stage it was barely noticed, such was the west's preoccupation with 9/11 and its after-effects. Indeed, the Bush administration was thinking in exactly the opposite terms: that the world was entering a golden age of American global power.

It is more appropriate, however, to date the beginning of the new era from 2008. First, the election of Barack Obama signalled a recognition by the US of the limitations of its own power and the need for it to co-operate with other nations. Second, China has reached a point where it is now clearly prepared, on the basis of the advances of the last three decades, to assume a more active global role. And third, the onset of the global financial crisis provides the context for the decline of American economic power and illustrates the extent to which it has become dependent on China for the continuation of its global financial hegemony.

Such periods of transition are profoundly unstable, deeply uncertain and fraught with danger. The world is fortunate - for the time being, at least - that it has an American president in Obama who is prepared to take a conciliatory and concessive attitude towards America's decline and that it has a Chinese leadership which has been extremely cautious about expressing an opinion, let alone flexing its muscles.

The picture, however, is changing rapidly; indeed, this year has already witnessed a marked change in Chinese attitudes. Ever since Deng Xiaoping, the Chinese approach has been based on taoguang yanghui - hide one's capabilities and bide one's time. But a succession of statements and initiatives suggest that Chinese policy has now entered a new phase. Premier Wen Jiabo expressed a strong confidence at the Boao Forum in Hainan on Saturday that China was successfully weathering the effects of the global economic crisis. During his visit to Europe for the Davos meeting, he made clear that reckless western economic policy, especially by the US, was responsible for the crisis. He also declared that China would not give funds to the IMF unless the latter was subject to major reform.

Later he expressed strong concern about US financial policy and its impact on the dollar, seeking reassurance that the value of China's US treasury bonds would not be prejudiced. In a carefully staged run-up to the G20 summit, Vice-premier Wang Qishan set out a vision of a new monetary order while, most dramatically of all, the central bank governor, Zhou Xiaochuan, called for a new global currency based on using the IMF's special drawing rights, an idea immediately rejected by the US. Meanwhile, a meeting of the finance ministers and central bank chiefs from China, India, Russia and Brazil that preceded the G20 summit called for greater voting rights for developing countries in international financial organisations.

This new assertiveness is finding other forms of expression in Chinese society. A new book by five nationalistic authors, Unhappy China, argues that China has no choice but to become a superpower: published in March, it immediately shot to the top of the bestsellers list. There has also been an intense public debate about whether the country should continue purchasing US treasury bonds, especially given their extremely low interest rate.

It is now abundantly clear that China is prepared to take an active and interventionist role in international financial affairs. Given that the global financial crisis is at the top of every agenda and that reform of the existing global financial order is now irresistible, this has far-reaching implications: China will be a central player in whatever new architecture emerges from the present crisis. This represents an extraordinary change even compared with two years ago, let alone five years ago, when China was not even included in discussions on such matters. But it also has a much wider significance.

The rise of China and the decline of the US will, at least during this period, be enacted overwhelmingly on the financial and economic stage. And China has now demonstrated that it intends to be a full-hearted participant in this process. It is not difficult to predict some of the likely consequences: the G20 will in effect replace the G8 and the IMF and the World Bank will be subject to reform, with the developing countries acquiring a greater say.

The most audacious proposal that has so far emanated from Beijing, almost completely unforeseen, is the suggestion for a new global currency which might, in time, replace the role of the dollar as the world's reserve currency. Whether or not such a proposal would ever see the light of day, or indeed work, given that reserve currencies have always depended on a powerful sovereign state, it nonetheless provides us with an insight into the strategic financial thinking that now informs the Chinese government's approach. Clearly they recognise that the days of the dollar as the dominant global currency are numbered. This would also, incidentally, signal the end of New York as the global financial centre.

But this is only one side of the picture. On the other side is the growing role of China's currency, the yuan, which has so far attracted little attention. Although the yuan remains non-convertible, it is evident that the Chinese are seeking to progressively internationalise its role. The Chinese government recently concluded a number of currency swaps with major trading partners, including South Korea, Argentina and Indonesia, thereby widening the use of the renminbi outside its own borders. It is also in the process of taking steps to increase the yuan's role in Hong Kong. This is significant because of the latter's international position. In addition, the government has announced its intention of making Shanghai a global financial centre by 2020.

The likely longer-run trends, then, are perhaps not so difficult to decipher; the short term, however, in the context of a highly volatile financial climate, certainly is. The dollar's strength over the past couple of years remains something of an anomaly, given the catastrophic state of the US financial system. It would be a brave person who bet on the dollar's strength continuing; it is much more likely, in fact, that at some point its value will plummet. Should that happen, then the dollar's global position could rapidly be undermined and the need for more fundamental global financial reforms made more urgent. All of this would only serve to accelerate the decline of the US and the rise of China.

Fabrizio
December 15th, 2009, 08:57 AM
"The IMF also wants to replace the Dollar as the world currency, with the Chinese and Russians lending their support."

Meanwhile:

Dollar Not Going Anywhere: IMF

"Bowing to political pressure, and reality, the head of the International Monetary Fund said Friday that the U.S. dollar's role as the world's reserve currency will persist."

"Speaking ahead of the April 2 meeting of the Group of 20 large industrialized and developing countries in London, where world currencies will be atop of the agenda, Managing Director Dominique Strauss-Kahn of the IMF said the dollar is not under threat, but that he also understood China's position as questioning the future of the American currency."

http://www.forbes.com/2009/03/27/imf-dollar-china-markets-economy-dollar.html

----

Codex: could you make that Guardian logo just a little bit bigger. Hard to see.

Oh, and the crumpled-up dollar is charming too.

I have a clip-art of some British Pounds going down the toilet... will post it soon.


--

Codex
December 15th, 2009, 09:05 AM
^^

Yes but for how long, and it should be noted that countries such as China are becomng ever more powerful within the IMF, and that the US is increasingly no longer calling the shots in relation to Global Economic Policy.

I agree with Marin Jacqu's (London School of Economics) Analysis in The Guardian (Above)

Furthermore even with out a new Global Currency the Yuan itself may very quickly eclipse the dollar as the Reserve Currency of Choice.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5325805/Chinas-yuan-set-to-usurp-US-dollar-as-worlds-reserve-currency.html

China's yuan 'set to usurp US dollar' as world's reserve currency

The Chinese yuan is preparing to overtake the US dollar as the world's reserve currency, economist Nouriel Roubini has warned.


By James Quinn, Wall Street Correspondent


http://i.telegraph.co.uk/telegraph/multimedia/archive/01403/dollar2_1403594f.jpg


Professor Roubini, of New York University's Stern business school, believes that while such a major change is some way off, the Chinese government is laying the ground for the yuan's ascendance.



:)

Fabrizio
December 15th, 2009, 09:10 AM
Codex: the point is you are posting agenda driven BS.

You tell us with supreme confidence: "The IMF also wants to replace the Dollar as the world currency, with the Chinese and Russians lending their support."

The International Monetary Fund wants to replace the dollar? You heard it here first folks.

Just because you say something does not make it true.



----

And above you tell us, "Furthermore even with out a new Global Currency the Yuan itself may very quickly eclipse the dollar as the Reserve Currency of Choice."

But then post:

"Professor Roubini, of New York University's Stern business school, believes that while such a major change is some way off, the Chinese government is laying the ground for the yuan's ascendance."


It's as if you are having your own little back and forth.

--

Codex
December 15th, 2009, 09:29 AM
^^^

It depends how you define some way off, the predicted growth of Shanghai as the number one financial centre may be some way off, with the Chinese aiming to make Shanghai the number one financial centre by 2020. I would call the replacement of the dollar within this period a very quick eclipse of a global currency that dominated the 20th century, however others may see this as someway off.

However what is patently clear is that the dollar is becoming an increasingly weak global currency, with much of Americas vast debt now financed by Beijing and the Chinese.

Two very real possibilities are the total replacement of the dollar by a new international currency or the dollars eventual demise in favour of the Yuan itself.

As for the Chinese their rates of growth are astounding and with over 1.35 billion people and a economy which is increasingly reflecting the countries size, the Americans are no longer going to call all the shots when it comes to global economic policies.

Codex
December 15th, 2009, 09:38 AM
Good old Mr Sarkozy has also now stepped in to the breach, and is trying to stir things up in relation to the dollar as the dominant world currency.

http://www.nytimes.com/2009/12/15/world/europe/15iht-politicus.html

Whilst the Chicago Tribune reported only last week that:

With Dollar Down and Out, New IMF Reserve Currency May Be Answer

http://www.chicagotribune.com/news/politics/sns-200912101700tmswpfafftr--v-a20091210dec10,0,4114675.story

londonlawyer
December 15th, 2009, 09:44 AM
This is ridiculous. I'm hardly a patriot, but anyone who suggests that the US is not the economic superpower does not know what he's talking about. It's funny too that an English paper would speak about the alleged end of NY's role as the leading financial center when only a year ago they'd be asserting, quite ridiculously, that London occupied that role.

Indeed, I predict that Frankfurt will emerge as the European financial center followed by Paris and London.

With respect to your points re: the dollar's decline as the world's reserve currency, such suggestions are utterly unfounded. There's a great article in Foreign Affairs by the noted economist Barry Eichengreen (I presume that you know him) which addresses this issue. Not long after Bretton Woods, nationalist proclivities about the dollar's role in world affairs prompted prior, unsuccessful attempts to dethrone it as the reserve currency . Sixty years thereafter, however, the greenback reigns supreme.

PPS: The Chinese do not even suggest that the Yuan, whose value they artificially maintain, should be the reserve currency. They suggest that SDRs should.

Codex
December 15th, 2009, 09:48 AM
^^^

Nobody said the US wasn't an economic superpower, what is being stated is that other nations such as China are now taking up the mantle. Indeed all through this thread you have predicted the rise of Shanghai and the East, well I have news for you any such rise will effect America, currently the dominant global player more than it will any other nation.

nick-taylor
December 15th, 2009, 11:56 AM
In fact, the only year, prior to this, that NY was not the IPO leader was 2006 when London was. That one year (which followed enormous anti-US sentiment around the world) was London's only time in the top spot (yet, it comically led Londonders to start claiming the title of world's financial capital). Now, London even isn't among the top ten in the world for IPOs. Moreover, not only is HK's lead over NY small, but it's the financial capital of a booming, emerging economy. Thus, it is expected to be in the lead. This story, however, simply portends London's dramatic decline as a financial center.You can fixate on particular aspects, but the financial services sector is a very broad marketplace encompassing a wide array of services and products that you are apparently unaware of.

The fortunate result is that while London might not perform well in one area at a certain moment, it excels at anothers. OTC derivatives, bonds, futures, metals & energy markets, legal services, maritime services, insurance, bullion, international banking & cross-border banking, foreign exchange, management of overseas clients' non-dom portfolios, etc...

Of course you'd have to be a fool to believe that London (or pretty much any financial centre) isn't experiencing a bumpy ride (markets, investors, banks, government legislation, regulatory parameters, etc...), but in the long run there are two key focuses that will see London through: connections and understanding.

Connections to the outside world; and specifically to countries that are experiencing astronomical growth and demand for international financial services is critical to how London rivalled (and surpassed) New York. New York of course rides the ebb of the US economy, hence to command a comparable base, London had to adapt to fit the global marketplace.

It is a pretty much stonewall guarantee that the biggest driver in growth this year and for the rest of this century will not come from Japan, the US or Europe, but emerging market giants in Asia, South America and the Middle East. Institutions such as BoA, and Citi are ill-placed to harness this growth, but Asia-powerhouses such as HSBC and Standard Chartered are.

There is also a lack of understanding in the US (ignorance or racism) of up and coming alternatives to the bog-standard instruments of the 20th century. Sharia compliant finance is one such sector that is expected to have very positive growth and it so happens that London is the leading Western Sharia-compliant financial centre, while the UK is home to over a quarter of the world's institutions providing Islamic financial education (the US: 4%).

London like the giant beast it is will like its wounds, but ultimately carry on as it further integrates itself with the likes of Shanghai, Delhi and Hong Kong. In the long term (post 2020) I suspect London will have more in common financially with Hong Kong than New York.


There is more likelihood that Chicago will overtake New York in finance than Frankfurt or Paris emeging above London! For a start neither Paris or Frankfurt are the leading financial centre for Europe (for instance more €'s are traded in London than the rest of Europe combined), and they are less willing to look at alternative markets; sharia-finance is a brilliant example where despite Britain having a smaller muslim population it has embraced sharia-financial products.

Then you have the problem that they have a major problem retaining domestic talent, let alone gaining international talent; the best French minds in finance that aren't part of the 'old boys network' are in London or New York. Sarkozy even sought for them (and their votes) to return and help Paris.

The easiest way for the likes of Frankfrut overtaking London is if the British government were to regulate the sector to death; there just isn't the realistic political will in either France or Germany to actually step up a level.

Codex
December 15th, 2009, 02:56 PM
With respect to your points re: the dollar's decline as the world's reserve currency, such suggestions are utterly unfounded. There's a great article in Foreign Affairs by the noted economist Barry Eichengreen (I presume that you know him) which addresses this issue. Not long after Bretton Woods, nationalist proclivities about the dollar's role in world affairs prompted prior, unsuccessful attempts to dethrone it as the reserve currency . Sixty years thereafter, however, the greenback reigns supreme.

PPS: The Chinese do not even suggest that the Yuan, whose value they artificially maintain, should be the reserve currency. They suggest that SDRs should.

Dollar poses dilemma for Bric countries

By Katie Hunt
Business reporter, BBC News

http://news.bbc.co.uk/1/hi/business/8101154.stm
http://newsimg.bbc.co.uk/shared/img/999999.gif

http://newsimg.bbc.co.uk/media/images/45927000/jpg/_45927692_006152037-1.jpg
China and Russia fear the value of their dollar holdings may fall

China, Russia and, to a lesser extent, Brazil have expressed a desire to see the dollar one day replaced as the world's main trading currency.

And fears that these big holders of dollar assets may be looking to switch from the US currency have unsettled financial markets and US politicians.

"Although China's call for a new reserve currency is premature, it is legitimate," says Shujie Yao, a professor of economics at the School of Contemporary Chinese Studies at the University of Nottingham.


--------------------------------------------------------------------------------------------------------------------------------------------------------------

China's yuan 'set to usurp US dollar' as world's reserve currency

The Chinese yuan is preparing to overtake the US dollar as the world's reserve currency, economist Nouriel Roubini has warned.


By James Quinn, Wall Street Correspondent

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5325805/Chinas-yuan-set-to-usurp-US-dollar-as-worlds-reserve-currency.html (http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5325805/Chinas-yuan-set-to-usurp-US-dollar-as-worlds-reserve-currency.html)


http://i.telegraph.co.uk/telegraph/multimedia/archive/01403/dollar2_1403594f.jpg


Professor Roubini, of New York University's Stern business school, believes that while such a major change is some way off, the Chinese government is laying the ground for the yuan's ascendance.

Known as "Dr Doom" for his negative stance, Prof Roubini argues that China is better placed than the US to provide a reserve currency for the 21st century because it has a large current account surplus, focused government and few of the economic worries the US faces.

IN a column in the New York Times, Prof Roubini warns that with the proposal for a new international reserve currency via the International Monetary Fund, Beijing has already begun to take steps to usurp the greenback.


China will soon want to see the yuan included in the International Monetary Fund's special drawing rights "basket", he warns, as well as seeing it "used as a means of payment in bilateral trade."

Prof Roubini's warning followed the US government's latest economic data that showed producer prices in April experienced their biggest year-on-year drop since 1950, falling 3.7pc.

-------------------------------------------------------------------------------------------------------------------------------------------------------

Codex
December 15th, 2009, 03:26 PM
Indeed, I predict that Frankfurt will emerge as the European financial center followed by Paris and London.

I predict that the US will decline in power this century, giving up it's role as dictator of global economic policy. The BRIC Nations and economic and political pacts such as the EU will have a far greater role in all areas of international economic policy, whilst the US Economic supremacy will be further eroded by the loss of the dollar as the worlds main currency and world currency reserve. This economic decline will also be reflected in a decline in America's standing in the world as the current dominant economic and military power. The loss of the dollar as the worlds reserve currency will also have a devastating effect on NYC's financial sector, which will lead to New York no longer being among the major global financial hubs.

We can ALL make predictions.

Fabrizio
December 15th, 2009, 03:48 PM
^ Yes, but why is it you don't seem very credible?

The exact same links posted multiple times. The same dumb photo of a crumpled dollar posted 3 times.

For what purpose? Is the board being spammed?

(Moderators?)

Alonzo-ny
December 15th, 2009, 04:03 PM
The bored is not being spammed. Just because you don't agree with his opinion doesn't mean it is unacceptable. Codex isn't the only one around here whose posting style has been questioned. There is a thread if you want to discuss that.

Fabrizio
December 15th, 2009, 04:13 PM
I don't not agree with the position ...but is posting the same link over again (on the same page no less) and quoting it twice or posting the same illustration (not an info photo) 3 times (on the same page no less)... ok? Are we that dumb that we can't get the point?

That's all I want to know.

You tell me.

londonlawyer
December 15th, 2009, 06:21 PM
I predict that the US will decline in power this century, giving up it's role as dictator of global economic policy. The BRIC Nations and economic and political pacts such as the EU will have a far greater role in all areas of international economic policy, whilst the US Economic supremacy will be further eroded by the loss of the dollar as the worlds main currency and world currency reserve. This economic decline will also be reflected in a decline in America's standing in the world as the current dominant economic and military power. The loss of the dollar as the worlds reserve currency will also have a devastating effect on NYC's financial sector, which will lead to New York no longer being among the major global financial hubs.

We can ALL make predictions.

What currency do you foresee emerging as the reserve currency and when do you foresee this emergence?

londonlawyer
December 15th, 2009, 07:41 PM
Let's hope for the best.

http://psp.theurp.co.uk/wallpapers/StGeorgesCross.jpg

Codex
December 16th, 2009, 06:38 AM
^ Yes, but why is it you don't seem very credible?

The exact same links posted multiple times. The same dumb photo of a crumpled dollar posted 3 times.

For what purpose? Is the board being spammed?

(Moderators?)

It is credible according to many of experts such as Martin Jacques of the London School of Economics and Professor Roubini of New York University's Stern business school.

The photo is from the 'Daily Telegraph' Articles I posted, look at the links.

http://www.telegraph.co.uk/finance/currency/6152204/UN-wants-new-global-currency-to-replace-dollar.html

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5325805/Chinas-yuan-set-to-usurp-US-dollar-as-worlds-reserve-currency.html



A few other recent articles in relation to the dollar -


http://www.independent.co.uk/multimedia/archive/00248/torn-dollar_248041t.jpg

http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html

http://www.independent.co.uk/opinion/leading-articles/leading-article-the-end-of-the-dollar-spells-the-rise-of-a-new-order-1798200.html (http://www.independent.co.uk/opinion/leading-articles/leading-article-the-end-of-the-dollar-spells-the-rise-of-a-new-order-1798200.html)

http://www.telegraph.co.uk/finance/china-business/6266790/China-calls-time-on-dollar-hegemony.html




:)

Codex
December 16th, 2009, 07:02 AM
Oh and as for Frankfurt it's a city of 600,000, and rather like saying Boston will take all of New York Cities financial jobs. Although Frankfurt doesn't have the major international educational establishments that Boston has, nor the same size metro area.

Ninjahedge
December 17th, 2009, 10:53 AM
Codex, I do not mind your style either, but re-posting the same graphics does lend an aire of Spam to your posts... ;)


As for world currency, that is difficult, but I hope something is set up before China ursurps it by sheer participation.

China does not strike me as a country any more stable than the rest of us. It has only been around for, what (forgive my history or lack thereof), 70 years or so. A militarily enforced "communist" dictatorship does not bode well for longevity.

We need to find a way to make a currency that does not depend on one countries wellbeing to determin its worth.

londonlawyer
December 17th, 2009, 11:32 AM
Oh and as for Frankfurt it's a city of 600,000, and rather like saying Boston will take all of New York Cities financial jobs. Although Frankfurt doesn't have the major international educational establishments that Boston has, nor the same size metro area.

It's also the financial capital of the richest and most powerful country in Europe.

londonlawyer
December 17th, 2009, 11:37 AM
Anyone who suggests that the Yuan will become the world's reserve currency might as well wear a sign stating: "I KNOW NOTHING ABOUT FINANCE AND ECONOMICS."

The Yuan is an artificially manipulated currency, the value of which is determined by the Chinese government -- not the markets.

Lastly, the devalued dollar is in the United States' interest at the moment -- much to the dismay of the EU and Japan. The government could prop up the dollar should it wish to and investors would follow, but why would the government make its exports more expensive during a recovery?

At any rate, the dollar's central role to world markets is evidenced by the fact that the US Treasury sells long-term bonds at diminimus rates.

Indeed, Barry Eichengreen's analysis clearly demonstrates why the dollar will remain the reserve currency for quite some time.

Codex
December 17th, 2009, 12:07 PM
It's also the financial capital of the richest and most powerful country in Europe.

Germany has a strong manufaturing base, but is not even in the same league as London when it comes to financial expertise.

Codex
December 17th, 2009, 12:09 PM
Anyone who suggests that the Yuan will become the world's reserve currency might as well wear a sign stating: "I KNOW NOTHING ABOUT FINANCE AND ECONOMICS."

The Yuan is an artificially manipulated currency, the value of which is determined by the Chinese government -- not the markets.


The point the economists and journalists make in the articles I have posted is that the Chinese are currently hoping to internationaise the Yuan and hope to trade it on international markets, indeed Business Week even predict the Yen to be the third most powerful currency by 2012. As for the dollar it is already being sidelined when it comes to middle eastern and far eastern trading, a move instigated by the Chinese, who find the dollar weak and unstable.

http://articles.latimes.com/2009/apr/03/business/fi-yuan3

http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=252615

http://www.businessweek.com/globalbiz/blog/eyeonasia/archives/2009/07/_according_to_h.html

http://www.whatsonxiamen.com/news4443.html

http://www.moneycontrol.com/news/economy/raghu-rajan-sees-rupee-yuan-as-international-currency-soon_409781.html

Obviously these publications and economists don't share your viewpoint, perhaps you should contact them and inform them, and perhaps send them one of your signs. Sadly we are not all blessed with your intellectual prowess and ability to make predictions.

A new global currency should replace the US dollar as the international reserve currency, as the long-term deterioration of America’s economy and the greenback is fueling a “currency-regime crisis”, says Martin Wolf, associate editor and chief economics commentator of the Financial Times (London).

Wolf, who has honorary doctorates from three universities, bases his argument in part on the Triffin dilemma, an economic paradox named after economist Robert Triffin. The paradox shows that the US dollar’s role as a global reserve currency leads to a conflict between US national monetary policy and global monetary policy. It also points to fundamental imbalances in the balance of payments, particularly in the US current account.

Contd........

http://knowledge.insead.edu/economy-currency-martin-wolf-091217.cfm?vid=361





:)

londonlawyer
December 17th, 2009, 02:49 PM
The UK's decline UK is like watching a loved one die. We're standing with you, friends. Indeed, "we're all Brits now."


http://business.timesonline.co.uk/tol/business/economics/article6960255.ece


December 17, 2009

Ireland overtakes UK to emerge from recession

Grainne Gilmore

Gordon Brown faced further embarrassment today over Britain’s recovery after it emerged that Ireland's beleaguered economy has emerged from recession.

Irish economic output rose by 0.3 per cent between July and September compared to the second quarter, official figures showed today, leaving the UK as one of the few Western economies still mired in an economic downturn.
The technical definition of a recession is two or more consecutive quarters of falling gross domestic product — a key measure of economic strength. A number of countries emerged from recession in the third quarter, including America, Japan, China, Germany and France.

However, Britain’s economy continued to shrink, falling by 0.3 per cent in the third quarter according to the most recent estimates from the Office for National Statistics (ONS).

Although new estimates out next week are expected to show a more modest contraction in the third quarter, analysts are not forecasting that the UK has exited recession.

Last week, Alistair Darling outlined measures to return Britain to health and cut its £178 billion deficit in the Pre-Budget Report ahead of a general election next year.

Despite Ireland’s upbeat data, analysts were cautious about the outlook.

Eoin Fahy, chief economist at KBC Asset Management said: “The process is still very volatile. Clearly, we shouldn’t overstate. It is good news that GDP is growing rather than falling but we still have to remain cautious because of the volatility."

The toll taken on the Irish economy by the financial crisis and the recession was laid bare in today's figures, which showed that GDP fell by 7.4 per cent in the three months to September compared with the same period one year earlier.

The UK economy contracted by 5.1 per cent over the same period

londonlawyer
December 17th, 2009, 02:51 PM
Sadly, the bad news keeps piling up for our friends across the pond. First, London's star falls rapidly from the sky with respect to IPOs, hedge funds, private equity and venture capital, and now the whole country is falling. This is quite lugubrious.

http://business.timesonline.co.uk/tol/business/economics/pbr/article6951118.ece

December 10, 2009

Debt leaves Brown lacking in European credibility

Bronwen Maddox

When Gordon Brown walks into the European Union Council of Ministers meeting in Brussels today, his familiar lectures and gibes on the principles of economic management will have little credibility with the 26 other national leaders. Even if they do not say so to his face — and several may — they will have in the front of their minds that Britain now has the weakest government finances of any of the Top 20 industrial countries.

That not only, in banal terms, constrains what Britain can spend, it also undermines one plank of British policy in Europe: pushing for enlargement, taking in poorer eastern and southern countries. It severely shakes another, to which the Prime Minister has attached his own reputation: the advocacy of “British-style” liberal financial regulation and an aggressive competition policy.

The failure of yesterday’s Pre-Budget Report to make much impact on the annual deficit in the budget, or to explain how the Government intends to reduce debt, does nothing to address the scepticism of other governments.

Yesterday’s account from Alistair Darling barely touches the fiscal deficit — the difference between income and spending — at £180 billion or about 13 per cent of GDP. That is the worst ratio, by some way, among the top industrial economies of the G20 group, and the worst level for Britain since the Second World War.

It is worse even than that of Japan or the US. In both those countries, political debate is now dominated by the deficit. In the US, the national debt — the total of all the debt the Government owes — hit $12 trillion last month. The figure has taken on a resonance in national life that (so far) it lacks in Britain, as politicians and lobby groups compete to advertise their alarm with “national debt clocks”.

Among his European colleagues, Brown could seek out the Greeks for company. The Greek fiscal deficit matches that of Britain. But that is uncomfortable company. On Tuesday Fitch, the credit rating agency, downgraded Greece’s sovereign and bank debt, and questions about whether Greece will default preoccupy the markets.

Brown has blamed the global crisis for Britain’s plight, but that does not explain why the deficit has gaped so wide while others have merely stretched. The an- swer is that Britain entered the recession in a worse position. Years of doggedly optimistic forecasts of growth and tax revenues were deployed to support the Government’s distaste for curbing spending.

Yesterday’s report, while indulging again in implausible projections of growth, ducked the question of how Britain should now extract its public finances from an unsustainable position.

Codex
December 17th, 2009, 03:11 PM
Harvard’s Feldstein Says U.S. Economy Still Mired in Recession

By Vincent Del Giudice and Thomas R. Keene

Dec. 17 (Bloomberg)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aoBDcTKNS.oo&pos=6


http://www.bloomberg.com/apps/data?pid=avimage&iid=inD0TvjLnobI

The U.S. economy remains mired in a recession, prospects for next year are weak and home prices may resume declines, Harvard University economics professor Martin Feldstein (http://search.bloomberg.com/search?q=Martin+Feldstein&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) said.

“The recession isn’t over,” Feldstein said today in an interview on Bloomberg Radio in New York. “It will be a while before we have enough information to know if the recession ended.”

Feldstein is a former president of the National Bureau of Economic Research (http://www.nber.org/) and remains a member of the group’s Business Cycle Dating Committee, the panel charged with determining when recessions begin and end.

His comments are at odds with those of the panel’s chairman, Robert Hall (http://search.bloomberg.com/search?q=Robert+Hall&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), who said early this month that the recession may have ended.

Employers in the U.S. cut 11,000 jobs in November, the fewest in 23 months, and the unemployment rate unexpectedly fell to 10 percent from 10.2 percent, a government report showed on Dec. 4.

The report “makes it seem that the trough in employment will be around this month,” Hall said in an interview on the day the figures were released. “The trough in output was probably some time in the summer.

The committee will need to balance the midyear date for output against the end-of-year date for employment.”

The economy has lost more than 7.2 million jobs since the recession began in December 2007. The total number of workers collecting unemployment (http://www.bloomberg.com/apps/quote?ticker=INJCJC%3AIND) checks as well as those taking extended government benefits totals about 10 million, according to Labor Department statistics released today.

‘Extended Period’

The Federal Reserve yesterday repeated its pledge to keep interest rates “exceptionally low” for “an extended period” and said the “deterioration in the labor market is abating.”

Ben S. Bernanke (http://search.bloomberg.com/search?q=Ben+S.+Bernanke&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) won backing for a second term as Fed chairman today in a 16-to-7 vote by the Senate Banking Committee. The nomination next goes to a vote of the full Senate.

Gross domestic product expanded at a 2.8 percent annual pace in the third quarter after shrinking for each of the previous four quarters. Growth will average 2.6 percent next year, according to the median forecast in a Bloomberg News survey of economists early this month.

Restrained consumer spending suggests “2010 is going to be a very weak year,” said Feldstein, 70, who was chairman of the White House Council of Economic Advisers (http://www.whitehouse.gov/administration/eop/cea/) during the Reagan administration.

“Thrift in the long run is a very good thing, but increasing thrift as you come out of a recession is going to be a drag,” he said.

Housing Market

Regarding the residential property market, where the recession initially emerged, Feldstein said the Obama administration’s effort to revive the housing market is a failure and home prices will continue to decline.
“It was just not well enough designed,” Feldstein said. “They ended up failing.” That suggests the housing slump will “continue to push down house prices,” he said.

“We saw a little pause in home-price declines in the summer but I think that was because of the first-time home buyers program,” Feldstein said. “We’re not going to get that boost.”

The U.S. House (http://www.house.gov/) voted Dec. 11 to tighten rules for derivatives and create powers to break apart healthy financial firms that pose a risk to the economy. The House rejected a “cram-down” amendment that would have given federal judges the power to lengthen mortgage terms, cut interest rates and reduce loan balances for homeowners in bankruptcy court.

Mortgages Modified

Lenders permanently modified 31,382 of the 4 million mortgages targeted for loan relief under the Obama administration’s main foreclosure prevention plan through last month, the Treasury Department announced on Dec. 10.

Economic reports today suggested the government’s efforts to revive growth with fiscal stimulus may be working for now, Feldstein said in a separate interview on Bloomberg Television. “The danger is we will run out of steam,” he said.

Codex
December 17th, 2009, 03:16 PM
Former Fed boss Alan Greenspan warns that record U.S. debt will cause more woe

By Mail Foreign Service (http://www.dailymail.co.uk/home/search.html?s=y&authornamef=Mail+Foreign+Service)

17th December 2009



http://i.dailymail.co.uk/i/pix/2009/12/17/article-0-07A3AB68000005DC-879_233x283.jpg

Foretelling: Alan Greenspan testifies before a Senate committee today

The former U.S. Federal Reserve Chairman Alan Greenspan has warned of further economic woes because of the mountain of American debt.

The economic guru warned that the country faced an unprecedented ‘fiscal crisis’ because of record red ink, which currently stands at $12 trillion.

In testimony prepared for delivery before the Senate Homeland Security Committee, Greenspan backed calls for politicians to put party differences aside because and formulate a joint plan to tackle the debt.

Greenspan called a proposal by Democratic Senator Kent Conrad and Republican Senator Judd Gregg for a bipartisan task force on deficit reduction ‘an excellent idea.’


Read more: http://www.dailymail.co.uk/news/worldnews/article-1236730/Former-Fed-boss-Alan-Greenspan-warns-record-U-S-debt-cause-woe.html#ixzz0ZylJqvKQ (http://www.dailymail.co.uk/news/worldnews/article-1236730/Former-Fed-boss-Alan-Greenspan-warns-record-U-S-debt-cause-woe.html#ixzz0ZylJqvKQ)

Codex
December 17th, 2009, 03:20 PM
You are so right, things are positevely rosy in the US, and if we try really hard we too can have 10% unemployment rather than our current 7.8%.

As for debt, the term people in glass houses speings to mind, and it should be noted that America has substantial debt.

I think you will find that we can all post woeful articles with regard to economies worldwide.

londonlawyer
December 17th, 2009, 03:28 PM
Codex, you're hilarious!

Codex
December 17th, 2009, 03:37 PM
^^^

It's spontaneous and it's called 'wit'.

londonlawyer
December 17th, 2009, 03:41 PM
You should adopt this avatar.

http://www.bbcprograms.com/pbs/catalog/blackadder/images/0201_Blackadder.jpg

Codex
December 17th, 2009, 04:31 PM
^^^

No dirsepect to Lord Blackadder or indeed Rowan Atkinson, but he wasn't blessed with good looks, so no I won't be using his picture as an avatar. The thought of Rowan Atkinson gurning at me every time I make a post is far from appealing.

londonlawyer
December 20th, 2009, 07:24 AM
http://www.thisislondon.co.uk/standard-business/article-23785699-bank-of-england-exodus-from-the-city-is-price-worth-paying.do

Bank of England: exodus from the City 'is price worth paying'
Jim Armitage
18.12.09

The Bank of England today added fuel to the raging row over City bonuses as one of its senior officials decreed that an exodus of bankers to Geneva and other low-tax countries could be “a price worth paying”.

Andy Haldane, the central bank's head of financial stability, said the crisis wrought on Britain's economy by the banks showed such a flight could actually help the country.

“Some of the downside of carrying around a big financial system is now evident to all. If some of that were to migrate overseas that would be unfortunate, but given the costs of carrying that financial system around, it may be a price worth paying,” he said.

Bankers, who have become accustomed to attacks from vote-hunting politicians, today were appalled at the words from a supposedly independent central banker.

One senior official at a leading Canary Wharf investment bank said: “This is very, very dangerous talk. For God's sake, this is the Bank of England speaking.

“They have to be very, very careful. Banks in the City, and their staff, provide massive tax revenues for the country. The Bank should be talking about the need to rebalance the economy by boosting manufacturing and other areas, rather than trying to kill off banking.”

He added: “In this past week, we've been suffering from a flood of calls to our staff from headhunters in the US trying to lure them away from the British political climate to American banks. It's extremely worrying and the government, central bankers and regulators should be cautious in what they say.”

Another investment bank chief said: “I know there's a lot of cynicism when people start bandying words like “exodus” around.

Realistically, there won't be a huge flood of people leaving the country instantly. But it will happen slowly, silently. People will slip away.”

Haldane's words came amid growing anger over the government's 50% tax on banks' bonus pools. Only yesterday it emerged Standard Chartered, HSBC and Barclays were believed to have rejected the government's calls for help raising private cash for its fund to invest in small businesses.

Sources at the firms cited the negative stance from Gordon Brown towards banks as being a key reason for their refusal to help out. David Buik, markets commentator at BGC Partners, said: “I profoundly disagree with Andy Haldane's comments. We need to protect the greatest jewel in the UK's crown, the City of London and its employees. Unfortunately I think the die is already cast. The surrender of regulation to Europe is the most profound thing to happen in the City for 25 years. That plus the constant, spiteful attacks on all the good parts of the City of London will lead to an inevitable erosion of our position as the leading financial centre of the world.”

Haldane was speaking to the BBC World Service as the Bank's twice-yearly Financial Stability Report made it clear the recent stabilisation of the banking system owed little to the skill of bankers but was all to do with the reduction in competition.

Codex
December 20th, 2009, 07:43 AM
Don't get too carried away, there is a general election shortly, and the latest polls show a commanding lead for the Conservatives. The Conservatives are generally far more sympathetic to the demands of the city and have already stated that they cherish the city. A short term one year tax on bankers bonuses is not going to destroy London, neither will Sarkozy's huffing and puffing, and as for the rise of the East and China that is something all financial centres will have to deal with, not just London. As Chinese economic power rises it is fairly clear that American economic supremacy is going to decline, and that this will be reflected in New York's role as a financial centre and indeed the US Dollar's role, as it is reduced in status and replaced as the worlds reserve currency. These are changing times, but London is a city which has met with change for a thousand years and which will continue to meet change.

http://www.dailymail.co.uk/debate/article-1237209/DAVID-CAMERON-Yes--really-reasons-cheerful.html

http://www.thisislondon.co.uk/standard-business/article-23783300-bankers-simply-must-accept-a-lean-year.do

Furthermore where are the wealthy Chinese heading and the Chinese bankers, none other than London, which over the centuries as always be a magnet for the wealthy and those who wish to trade.

http://www.forbes.com/feeds/reuters/2009/12/08/2009-12-08T095245Z_01_GEE5B2284_RTRIDST_0_WEALTH-LONDON-ANALYSIS.html?feed=rss_europe

http://www.theglobeandmail.com/report-on-business/influx-of-rich-chinese-solace-for-londons-wealth-banks/article1392629/

http://www.ukinvest.gov.uk/OurWorld/4045740/en-GB.html

http://news.xinhuanet.com/english/2007-11/21/content_7122455.htm


Finally lets not forget the restrictions (including pay and bonus restrictions) on Banks under the Obama Administrations Troubled Asset Relief Program (TARP), and there are other restrictions planned for the US Financial Sector on top of the new oversight bodies announced and other regulations. It should also not be forgotten that the US already has severe regulations relating to financial regulations, which were brought in to being after 9/11 by the Bush Administration.







:)

Codex
December 20th, 2009, 08:34 AM
Thursday, December 10, 2009


Wall Street Brain Drain Is Tough to Quantify


By Dunstan Prial (feedback@foxbusiness.com)

FOXBusiness

http://www.foxbusiness.com/story/wall-street-brain-drain-tough-quantify/


.ybuzz { MARGIN-TOP: -4px; FLOAT: right; MARGIN-LEFT: -2px}
http://www.foxbusiness.com/images/story/Bailed-Out-Banks-276.jpg



Wall Street's "brain drain (http://www.foxbusiness.com/topics/brain-drain.htm)" is one of those phenomenon that’s just hard to quantify.

No one denies that it’s happening; just about every big bank that received a government bailout during the darkest days of the financial crisis has complained that the threat of curbs on executive compensation (http://www.foxbusiness.com/topics/business/executive-compensation.htm) is either contributing to departures by key executives or preventing them from hiring talented people.

Considering all the evidence, the proposed pay restrictions are sending shock waves across Wall Street.

Five American International Group (http://www.foxbusiness.com/topics/business/companies/american-international-group.htm) (AIG (http://quote.foxbusiness.com/symbol/AIG/snapshot)) executives caused a stir earlier this week by threatening to resign unless the government raised their pay packages above a $500,000 cap imposed by the Obama administration’s pay czar.

Bank of America (http://www.foxbusiness.com/topics/business/finance/banks/bank-of-america.htm) (BAC (http://quote.foxbusiness.com/symbol/BAC/snapshot)) said last month it was having trouble finding a successor to outgoing chief executive Kenneth Lewis because potential hires were unwilling to accept a reduced salary.

Citigroup (http://www.foxbusiness.com/topics/business/companies/citigroup-inc.htm) (C (http://quote.foxbusiness.com/symbol/C/snapshot)) lost a rising star last summer when Ajay Banga, head of the bank’s Asia Pacific operations, left to accept the job of chief operating officer at credit card processor (http://www.foxbusiness.com/story/wall-street-brain-drain-tough-quantify/#) MasterCard (MA (http://quote.foxbusiness.com/symbol/MA/snapshot)).

Meanwhile, other venerable banks such as Goldman Sachs (GS (http://quote.foxbusiness.com/symbol/GS/snapshot)), JPMorgan Chase (JPM (http://quote.foxbusiness.com/symbol/JPM/snapshot)) and Europe’s Royal Bank of Scotland have all reported the loss of top executives and traders to smaller entities such as private equity firms and hedge funds that aren’t facing the same scrutiny from the government and the public.

What’s more difficult to determine is whether all of this movement is a bad thing, and what the long-term impact might be, if any.

The populist argument is that these executives took home many millions of dollars each year for devising and executing obtuse and highly risky investment schemes that eventually blew up in their faces and nearly dragged down the world’s financial system.

Adherents of that position feel little sympathy for the bankers and believe some pay restrictions are appropriate as a way of quelling future risky behaviors.

An alternative argument holds that these banks, especially the ones that are still wobbly, need their best and brightest employees to help them get stabilized. And besides, all Wall Street bankers shouldn’t be held accountable for the sins of a few. For some, it’s not an either or proposition.

Timothy J. Bartl, senior vice president and general counsel for the Center on Executive Compensation, a Washington-based advocacy group, said the government has every right to place pay restrictions on executives at banks that received government bailouts, but not at banks that never took government money or have already paid it back.

“Where the government has provided extraordinary assistance to a company it has the right to impose restrictions such as pay restrictions,” said Bartl. “But in doing so both the government and the company subject to those restrictions face a balancing act.”

Bartl explained that the government, naturally, wants to ensure that executive pay at bailed-out banks is not excessive and that pay packages are structured such that they reward actual performance.

“But it needs to be high enough or sufficient enough to retain or acquire the talent necessary to execute the (bank’s) turnaround and repay the taxpayers,” he said. “It’s not just a matter of popular perception of fairness. It’s a combination of what’s fair and what’s realistic given the necessity of keeping these banks in business (http://www.foxbusiness.com/story/wall-street-brain-drain-tough-quantify/#) and strengthening them, and eventually repaying the government. That’s where it becomes a balancing act.”

The Obama Administration’s pay czar, Kenneth Feinberg, who is charged with setting compensation levels at a handful of large bailed-out banks, showed an inclination toward flexibility earlier this week when he allowed exceptions for several AIG executives to the $500,000 cap he imposed at the struggling insurance giant.

Banks such as Goldman Sachs and JPMorgan have avoided scrutiny from Feinberg by paying back their bailouts, and Bank of America followed suit on Wednesday. Citigroup is also reportedly preparing to repay the government (http://emac.blogs.foxbusiness.com/2009/12/10/citigroup-and-treasurys-sticking-points/).

But there are some who believe the issue of excessive pay won’t go away when these big companies pay back the Treasury Department.
Government reform is needed, they believe, if the problem doesn’t take care of itself organically.

Gerald Epstein, an economics professor at the University Massachusetts at Amherst, said the banking sector grew too big during the past two decades and the recent financial meltdown is helping to scale it down to its proper size in relation to the overall economy.

According to Epstein, as the size of the sector shrinks there will be fewer jobs available and more competition among bankers for those positions. Consequently, the compensation packages for those jobs will shrink.
But there’s a larger point raised by the near-collapse of the U.S. financial system, according to Epstein, a co-organizer of SAFER, a group of economists proposing stricter financial regulations.

Many of the jobs for which bankers were paid millions of dollars in salaries and bonuses “weren’t very productive,” either for the broader economy or for the shareholders of the companies that employed these bankers, Epstein said.

“If some of these bankers left it wouldn’t be a net loss for the economy as a whole or the shareholders of these companies because the activities they engaged in caused tremendous losses both to the shareholders and, obviously, the economy as a whole,” he said.

What’s needed is a new crop of “plain vanilla” bankers, he said. In other words, bankers whose job is to loan money to people who need it and who have the means to pay it back.

If there are bankers who once made $20 million a year who want to leave the U.S. for Europe or Hong Kong because they can no longer make that kind of money here, Epstein has a message for them. “Good riddance,” he said.

Codex
December 20th, 2009, 08:38 AM
Monday, November 02, 2009

Brain Drain: Not Just for Executives Anymore


By Darryl R. Isherwood (feedback@foxbusiness.com)

FOXBusiness

http://www.foxbusiness.com/story/wall-street-brain-drain-tough-quantify/


As the Obama Administration attempts to rein in Wall Street pay, it’s no secret the restrictions imposed by “pay czar” Kenneth Feinberg have sent some executives scurrying for greener pastures, or at least to pastures where the administration hasn’t yet set limits on the amount of “green” available.

The "brain drain," as it is known, has hit all of the seven largest bailout recipients that fall under Feinberg’s jurisdiction, with more than 40 executives at those firms jumping ship.

But the drain hasn’t been limited to just executives. In the past year, dozens, if not hundreds, of lower level employees have walked away from those same companies, many of them blaming what they say is the “mob mentality” of lawmakers seeking to hold someone accountable for Wall Street’s near demise.

At Bank of America Merrill Lynch (BAC (http://quote.foxbusiness.com/symbol/BAC/snapshot)), which accepted some $45 billion in bailout funds and has yet to repay the money, several high profile stock analysts have left the firm in the past six months. Aamong them were most of the company’s energy (http://www.foxbusiness.com/story/markets/industries/finance/brain-drain-just-executives-anymore/#) analysts, its economic guru and several regulars on the Institutional Investor All-America list, which ranks the best analysts in the business.

In interviews, some cited the risk of compensation cuts as their reason for leaving. Others cited employee morale, damaged daily by continuing attacks from all levels of government and by the defection of high ranking employees. But whatever the reason, they said the decision to seek employment outside the glare of the government spotlight was not a hard one.

“It’s no coincidence that so many of us decided to leave at the same time,” said one stock analyst, a fixture on the various “best of” lists who left Bank of America this summer for a smaller Wall Street player. The analyst asked not to be identified, citing media policy at his new firm.

“If you go back to late last year and early this year, they were talking about claw backs of bonuses and maximum pay levels at all of these companies. That’s a tough atmosphere (http://www.foxbusiness.com/story/markets/industries/finance/brain-drain-just-executives-anymore/#) to work in, especially when there are opportunities out there at firms that didn’t take any TARP money.”

“Basically my bonus is my salary and I have to work a whole year to collect it,” said another who also asked not to be identified. “To face the potential bullet (of bonus restrictions or claw backs) at the end of the year isn’t worth it.”

And while the average taxpayer may feel little sympathy for high salaried Wall Streeters, they should, says one former Bank of America employee.
“The taxpayers are the major investors in these companies now by virtue of the bailout,” the analyst said. “If I’m an investor the last thing I want to do is undercut the top talent at my company.”

The brain drain also hasn’t been lost on some lawmakers who say the government’s compensation restrictions are counterproductive to its efforts at recouping taxpayers’ multi-billion investment in the foundering companies.

“If they jump ship and you don’t have top talent running these companies, the American taxpayer, who is the majority stockholder, has inferior people running the company. Doesn’t that concern you?” U.S. Rep. Dan Burton (R-Ind) asked Feinberg during a hearing last week.

Feinberg responded that his restrictions had walked a fine line between employee morale and reining in pay. Asked to comment on the defection of important employees, a Treasury spokeswoman echoed Feinberg’s response.

“As his rulings show, Mr. Feinberg has struck a careful balance between the need to retain talent so that taxpayers can recoup their investment and the need to structure compensation in a manner aligned with long-term value creation and financial stability,” said spokeswoman Meg Reilly. “In several cases, Mr. Feinberg has expressly identified employees critical to the future of the enterprise, and has taken those considerations into account when structuring the employees' compensation.”

And just how much effect the loss of any employee has on a company’s ability to perform is debatable, says one analyst who follows the banks closely.

“People in my business tend to be ego-maniacs,” said Dick Bove of Rochdale Securities. "They think that they are indispensable and that if a firm loses their services the firm is harmed. But if you are dealing with a company that has a trillion in assets it’s pretty hard to make that case.”

Bank of America also recognizes the loss, but says top-tier talent will always gravitate toward the biggest names in the business.

"If you're looking for a global career in financial services, there are very few (companies) that can offer the opportunity that we can," said Bank of America spokesman Jerry Dubrowski.

Feinberg has begun work on 2010 compensation for the major TARP recipients, vowing to continue to structure pay that puts long term growth ahead of short term gains.

londonlawyer
December 20th, 2009, 09:27 AM
Codex,

I think that you have a serious case of Napoleon complex vis-a-vis the US. Do you seriously think that the UK even remotely rivals the unparalleled economic supremacy of the US?

Codex
December 20th, 2009, 10:32 AM
^^^

I never said that the UK rivals the unparalleled economic supremacy of the US, I said China will, and that like the UK the US will have to readjust. Indeed it is the US which faces the loss of it's unrivaled economic supremacy not the UK, which has not enjoyed any global economic supremacy post Empire and post WW2.

China with it's economy growing rapidly and population of over 1.325 billion, over a billion more than the US or indeed more than four times that of the US, is going to become the major global economic power in my view, not the UK, although the EU also projects a lot of economic power, being a market of over 500 million with the prospect of further expansion. India may also emerge as a global economic power, although much later in the century than China, whilst Russia has vast resources and Brazil is rapidly emerging as a major economic force.

http://www.google.com/publicdata?ds=wb-wdi&met=sp_pop_totl&idim=country:CHN&q=china+population (http://www.google.com/publicdata?ds=wb-wdi&met=sp_pop_totl&idim=country:CHN&q=china+population)

londonlawyer
December 22nd, 2009, 11:34 PM
http://www.guardian.co.uk/business/2009/dec/22/britain-still-in-recession

UK recession longest and deepest since war, says ONS• Terry Smith warns of sterling crisis and interest rate rise
• Uplift in construction not enough to halt GDP drop
Comments (346)
Buzz up!
Digg it
Larry Elliott, economics editor guardian.co.uk, Tuesday 22 December 2009 20.01 GMT Article history
A dole queue in Brixton in 1981. Fresh estimates show the current recession deeper than that in the early 1980s, with output down 6.03%. Photograph: Neil Libbert

One of the City's leading financiers last night predicted a looming collapse of financial confidence in Britain as Gordon Brown received the twin blow of a fresh warning from a ratings agency over the budget deficit and figures revealing that the slump of the past 18 months is now officially the deepest since the second world war.

Terry Smith, chief executive of money brokers Tullett Prebon, said: "We will have a crisis of confidence in the credit worth of the UK. People won't be willing to buy gilts at anything like the current interest rate, or even possibly in this currency and we'll have an interest rate hike and/or a good, old-fashioned sterling crisis. Possibly both."

Smith's comments on Sky News came just hours after ratings agency Fitch said that the UK – along with France and Spain – needed to "articulate more credible and stronger fiscal consolidation during the course of 2010 to underpin confidence in the sustainability of public finances".

Failure to do so, the ratings agency added, would greatly increase the chances of a debt downgrade, which would increase the cost of servicing the national debt.

Earlier, the Office for National Statistics released data showing that Labour's attempts to boost growth had taken the edge off the recession in the third quarter but were not enough to prevent the slump extending into a record-breaking sixth quarter.

Confirmation that the UK is the only G20 nation still in recession sent the pound tumbling to a two-month low against the dollar, with sterling dipping below the $1.60 level after the ONS announcement.

Ministers will now have to wait until the next set of growth figures are published in late January before receiving evidence that their attempts to boost activity have worked. Public investment in buildings helped provide the biggest boost to construction output for more than six years, while the "cash for clunkers" scheme led to a pick-up in demand for cars.

Downing Street was last night taking comfort from evidence that the recession during 2009 has not been as deep as was feared at the turn of the year. One source said cuts in borrowing costs and active use of tax and spending policies had helped underpin the economy. When accompanied by individual measures such as an expansion to the programme to find work for the unemployed, tax credits to top up incomes where people needed to reduce hours, limit the scale of repossessions. He said: "Labour and housing markets behaved much better than expected, and significantly better than in the 1980s and 1990s recessions, and confidence has not hit the lows one might have feared."

The City had been hopeful that encouraging news from the construction sector and for investment would result in the ONS revising away its estimate of a 0.3% drop in gross domestic product in the three months to September, but gloomier news from manufacturing and services resulted in only a limited reassessment.

Officials said they now estimated that the economy contracted by 0.2% in the third quarter after a drop of 0.7% in the three months to June. The ONS said that new data showed that the UK had performed worse than originally believed, leaving the economy 5.1% smaller at the end of the third quarter of 2009 than it had been a year earlier. Since the start of the downturn in early 2008, GDP has dropped by 6.03%, marginally worse than the 6% fall during the manufacturing slump of 1979-81.

Shadow chief secretary to the Treasury, Philip Hammond, said: "Gordon Brown's claim to be leading the world out of recession rings hollow as the evidence mounts that his policies have failed. We need a change of direction to deal with mounting debts, and provide the confidence that the British economy is lacking."

Jonathan Loynes, chief European economist at Capital Economics, said: today's GDP figures were "a touch disappointing" in the light of figures last week showing a sharp upward adjustment to investment in the third quarter prompted by a 10% jump in government capital expenditure.

"The figure has gone up from an original estimate of a -0.4% drop, and may yet go up further in future releases. But this will make little difference and will leave the UK still looking weak compared to its major competitors."

Figures for American GDP were revised down for a second time today. Originally, Washington said the world's biggest economy grew at an annual rate of 3.5% in the third quarter but last month cut the estimate to 2.8%. Today, officials announced that the economy grew at an annual rate of 2.2%.

nick-taylor
December 23rd, 2009, 06:26 AM
While the initial drop was painful, the upward revisions illustrate that we are most likely already out of recession. The downward revisions for the US on the otherhand could indicate that the US will enter a double-dip partly due to the large number of people out of employment which is higher than the € area and 2.1% higher than the UK.

londonlawyer
December 23rd, 2009, 06:33 AM
That news was from yesterday, and therefore, the UK is still in recession. Moreover, the overwhelming concensus is that the US will not face a double-dip. In addition, those who speculated about a W-shaped recovery suggested that it would cover the US, EU, etc.

The US has, by far, the biggest and the most potent economy of any country in the world. All pale by comparison.

Nonetheless, I hope that the UK's recession ends soon. Its sad to see the demise of this once great nation.

Fabrizio
December 23rd, 2009, 06:41 AM
If you follow the OECD they are as dependable as you can get... so take a look at their findings too:

(PDF alert)

http://www.oecd.org/dataoecd/56/49/44246955.pdf

Scroll down to figures on 3rd page. UK in expansion... US in recovery. Actually the whole Euro area is doing better than the US.... and that's where comparisions should be made.

Comparing the UK alone to the US as far as economic might goes is pretty nuts.

Codex
December 23rd, 2009, 08:21 AM
The latest CBI figures show Britain has now emerged from recession with some slow growth.

http://news.xinhuanet.com/english/2009-12/22/content_12684405.htm

http://www.guardian.co.uk/business/2009/dec/21/cbi-economic-growth-recession

Britain had a less severe drop in economic performamce compared to countries such as Japan and even Germany, however our recession lasted slightly longer, however we are now seeing some growth and are emerging from recession according to the CBI and other bodies.

Codex
December 23rd, 2009, 08:27 AM
That news was from yesterday, and therefore, the UK is still in recession. Moreover, the overwhelming concensus is that the US will not face a double-dip. In addition, those who speculated about a W-shaped recovery suggested that it would cover the US, EU, etc.

The US has, by far, the biggest and the most potent economy of any country in the world. All pale by comparison.

Nonetheless, I hope that the UK's recession ends soon. Its sad to see the demise of this once great nation.

As I have already mentioned, you had better get used to not being the worlds dominant economy as other contenders and particuarly China are lining up to take the US Crown.

The Chinese are going to overtake America you just have to look at the sheer size of the country and it's levels of economic growth. China has a population of over 1.325 billion, more than a billion more than the US and more than for times the population of the US and twice the population of the UK combined. I will however be sad to see the demise of the US as the worlds great economic power.

The UK is also not in demise, it has gone through far worse periods, such as the end of WW2 when Britain was bankrupted by it's war effort and the 1970's when we were considered the sick man of Europe.

Furthermore the UK Economy is now firmly embedded within the EU, the largest market in the world, with a GDP higher than the US.

londonlawyer
December 23rd, 2009, 12:09 PM
The EU is not a country, Codex. It's precisely as the name states (i.e., a union). Moreover, it's a socially and economically disjointed union with great competition and self-interest among its members, as the latest debacle between the UK and France over Barnier demonstrates.

With respect to China, as I have stated, its GDP per capita is a fraction of the US', and its total economy will not surpass the US' until 2050. In that 40 year period, it will surpass the US by a very modest amount, and its GDP per capita will still be far smaller than the US'.

nick-taylor
December 23rd, 2009, 02:14 PM
That news was from yesterday, and therefore, the UK is still in recession. Moreover, the overwhelming concensus is that the US will not face a double-dip. In addition, those who speculated about a W-shaped recovery suggested that it would cover the US, EU, etc.

The US has, by far, the biggest and the most potent economy of any country in the world. All pale by comparison.

Nonetheless, I hope that the UK's recession ends soon. Its sad to see the demise of this once great nation.Economic figures are never set in sand - they continue to be revised as more accurate figures come to light over the course of later quarters.

Back when the third quarter figures were released in late October, analysts at the likes of Goldman Sachs laughed at the figures as "baloney" and that they would be ultimately revised to show an eventual positive position similar to the original BoE forecast for growth in the third quarter.

Suprise, suprise the figures have been revised upwards for the UK.

The US on the otherhand has seen a deterioration, as subsequent revisions have seen more accurate figures reflect a less confident position. Of course future revisions could go back up, but the high unemployment rate is going to start making its presence known.


The size of an economy doesn't dictate how well it performs as you only have to look at the vast inequalities within the US and the (higher than Europe) unemployment rate.

You should be more concerned with figures such as 23% of all US properties are now in negative equity (or 'underwater'), compared to 10% in the UK. We can talk about quarterly economic reviews all day, but figures like the above are what will define how an economy progresses through the next decade. Remember short-term thinking is what led to this mess.

China's economy will probably overtake that of the US within the next 20 years barring a catastrophe or the world runs out of resources. Expect India to follow suit 10 years after that.

Codex
December 23rd, 2009, 05:51 PM
The EU is not a country, Codex. It's precisely as the name states (i.e., a union). Moreover, it's a socially and economically disjointed union with great competition and self-interest among its members, as the latest debacle between the UK and France over Barnier demonstrates.

With respect to China, as I have stated, its GDP per capita is a fraction of the US', and its total economy will not surpass the US' until 2050. In that 40 year period, it will surpass the US by a very modest amount, and its GDP per capita will still be far smaller than the US'.

According to analysts and economists at Deutsche Bank, the Chinese economy will have overtaken the US Economy within a decade or by 2020.

http://www.marketwatch.com/story/chinas-gdp-overtake-us-early?dist=msr_1 (http://www.marketwatch.com/story/chinas-gdp-overtake-us-early?dist=msr_1)

As for the EU it is a very cohesive union in relation to economic policy, which is one of the reasons American hormone ridden beef is banned throughout the EU, whilst within the Eurozone one currency prevails and European Economic policy and laws are increasingly centralised.

As for the term 'Union', it wasn't long ago that the US was engaging in a cold war with the The 'Union' of Soviet Socialist Republics, and the term Union can be applied to many different forms of nation state, indeed isn't the US itself a country forged by the union of a number of states, each of which have their own laws and customs, indeed many like Texas even consider themselves very different to other Americans. Furthermore if you visited every American state, wouldn't you have visited every state in the 'Union'.

'Union' - Definition - http://www.google.co.uk/search?hl=en&safe=off&defl=en&q=define:union&ei=Ep8yS5CzNOLOjAfx2ZnSAg&sa=X&oi=glossary_definition&ct=title&ved=0CAgQkAE

nick-taylor
January 21st, 2010, 05:48 AM
londonlawyer shall be relieved to know that growth prospects for the UK have turned significantly upwards. Goldman Sachs has predicted the UK economy to expand by 3.4% in 2010, compared to 2.4% in the US and 1.9% in the €-zone. China's economy continues to power ahead and could overtake the US even sooner than originally predicted, especially what with a quarter of all US homes in negative equity.

In addition it is anticipated that growth in the BRIC economies will lead to 100,000-180,000 new financial jobs being created in London over the coming decade due it's position as the international crossroads of finance. If you're up to the cut LL - you might need to relocate!

ablarc
January 26th, 2010, 09:01 AM
A tiresome thread.

Alonzo-ny
March 29th, 2010, 03:43 PM
The British economy
The pain to come
A terrible recession will be followed by a lacklustre recovery, but Britain is no basket-case

http://media.economist.com/images/images-magazine/2010/13/fb/201013fbd001.jpg

Mar 25th 2010 | From The Economist print edition

FROM the chancellor’s brandishing of the red Gladstone box to his speech in the House of Commons, British budgets are events in their own right. But as the drama of the day fades, some turn out to be less about the public finances and more about politics. Alistair Darling’s budget on March 24th was first and last a launching-pad for Labour in the general election expected on May 6th.

As Britain prepares to go to the polls, its sick economy is uppermost in voters’ minds. With good reason. There are fundamental doubts that it can ever recover fully from a banking crisis and recession that laid Britain lower than many other rich countries. In the short term, the worry is whether a feeble recovery reliant on fiscal and monetary life-support can develop its own driving force. Looking ahead, there are fears that the strong, steady growth rate in the 15 years before the financial crisis is no longer Britain’s default mode. And casting a dark shadow over the next parliament are public finances that have veered wildly into deficit and will need to be hauled back harshly from the brink.

Mr Darling sought to soothe. A recovery was under way, but its fragility called for careful nursing, which ruled out an early attack on the deficit this year. To reassure financial markets jittering over the prodigious size of government borrowing, the chancellor showed restraint. He did not dispense altogether with traditional pre-election sweeteners. Mr Darling announced some temporary help for most first-time homebuyers, which will relieve them of stamp duty, a property-purchase tax, and extended some extra payments to pensioners. He also said he would phase in slowly a planned increase in fuel duty. But the overall giveaway will cost a modest £1.4 billion ($2.1 billion) in 2010-11.
From boom to bust to blight

Mr Darling aimed above all to draw a dividing line between experienced Labour and the neophyte Tories over the central issue of this election: who can be trusted most to steer the economy and restore sound public finances. But Labour’s credibility is not what it was. In the past two elections Gordon Brown could and did crow about how well the economy was doing in both historical and international terms. As chancellor he claimed not only to have done away with “boom and bust”, but also to have presided over the longest period of sustained growth since 1701. But as prime minister he has broken all the wrong records.

The economy shrank by 5% last year, the biggest fall since the Great Depression. The contraction over the six quarters of the recession was 6.2%. That peak-to-trough decline was less severe than in Japan, Germany and Italy, but the recession lasted longer than in any other G7 economy.

The public finances look even worse. Not only is the budget deficit the highest, as a proportion of GDP, since the second world war, but this year’s will be the biggest of any G7 (and even G20) economy, according to the IMF. The build-up in government debt between 2007 and 2014 will be second only to Japan’s (see chart 1).

http://media.economist.com/images/images-magazine/2010/13/fb/201013fbc177.gif

A recovery of sorts began in the fourth quarter of 2009, when GDP grew by 0.3% from its trough in the previous three months. But even this flicker of life may prove to have been snuffed out in the first quarter of this year. Consumers may well have been discouraged when the main rate of VAT, a consumption tax, was restored to 17.5% at the start of 2010 after 13 months at 15% to counter the downturn. Recent disappointing export performance has dimmed hopes that Britain can trade its way out of the quagmire.

As one reverse has followed another, Britain’s economic reputation has nosedived. So has sterling. Its trade-weighted value has fallen by around a quarter since mid-2007, a bigger decline even than after the pound was turfed out of the European exchange-rate mechanism in 1992. For some, Britain now vies with the distressed likes of Greece and Spain for the title of sick man of Europe. Others see disquieting parallels with the 1970s, when Britain’s economy certainly deserved that tag. As then, the pound is wobbly, strikes are breaking out again, the public finances are shot to pieces and the election may result in a hung parliament. This has happened only once since the second world war, in February 1974.

There is also more than a passing resemblance to Japan, which never regained its economic stride after its banking crisis of the 1990s. Could Britain now follow suit, given that its financial system came so close to collapse in October 2008? Those inclined to think so find worrying confirmation in a report by McKinsey, a management consultancy, which shows that total indebtedness in the British economy was the highest as a share of GDP among ten advanced countries in 2008, narrowly beating Japan’s.

The central charge is that the bloom of economic health in the period of non-stop growth after the recession of the early 1990s turned into the flush of debt intoxication. As the expansion went on, it came to rely too much on consumer and public spending. Current-account deficits were persistent. Now Britain must pay for its sins through a long period in rehab that will make any recovery a pale simulacrum of the real thing.
History unrepeated

There is something in this, but less than the fretters claim. The economy may have been lopsided before the recession, but on nothing like the scale of southern Europe. In 2007 Spain’s current-account deficit ran at 10% of GDP; Greece ran one of 14.4%. By comparison, Britain’s 2.7% was a mere bagatelle. The fall in the pound has allowed the economy to regain competitiveness in a way not open to the weaker members of the euro area.

As for the resemblances with the 1970s, history is not repeating itself. Inflation has recently flared up, but at 3% in February it is tame; the post-war high, reached in 1975, was 27%. And despite the current industrial unrest, the private-sector unions are no longer the behemoths that Margaret Thatcher squashed in the 1980s.

Of all the unflattering comparisons, the one with Japan is the most salient. There are indeed reasons to expect a financial crisis to scar growth. But Britain is not as deep a debtor as that headline figure from McKinsey suggests. That number is inflated by London’s role as a global financial hub where foreign banks cluster to do international business. Adjusting for this, McKinsey reckoned that debt amounted to 380% of GDP in 2008. Although this was the second-highest after Japan (459%), four other countries—Spain, South Korea, Switzerland and France—had debt above 300%. In any case, the consultancy cautioned that total debt was a “crude metric”, insufficient to gauge where the real trouble spots are, which in Britain are in borrowing incurred by households and in commercial property.

Even if lamentations about the British economy are overdone, there is no miraculous way out of the mess. The Treasury’s projection of 1.25% growth this year seems reasonable. But its prediction that this hesitant trot will break into a gallop of 3.25% in 2011 looks over-optimistic. True, the IMF is forecasting 2.7% (see chart 2). But the latest survey of independent forecasts assembled by the Treasury found that they were expecting, on average, growth of 2% next year.

http://media.economist.com/images/images-magazine/2010/13/fb/201013fbc176.gif

The recovery is being helped by extraordinarily loose monetary settings. The Bank of England has held the base rate at 0.5% since March 2009 and has injected £200 billion into the economy by purchasing assets with central-bank money. A temporary boost will come as companies stop the fierce destocking that exacerbated the recession. But if the recovery is to take root, it must be able to cope with a gradual withdrawal of emergency monetary support and develop a more sustained impetus from the private sector than a turnaround in the inventory cycle.

That will require new sources of demand. The long expansion was sustained by buoyant private consumption and public spending. Although the pace of consumer spending slackened in the middle of the 2000s, that was against a background of remarkably low real income growth, which meant that consumers had to resort to extra borrowing. As a result the household saving ratio slid from 9.6% of disposable income in 1997 to a 50-year low of 1.5% in 2008. Meanwhile, net trade—exports less imports—kept on detracting from GDP growth.
Trade to the fore

Now the economy must be driven by net trade, with private investment pitching in as well. In principle, the fall in the pound has set the stage for this. However, dire figures for exports in January (a fall of 4.4% compared with December) aroused fears that the hoped-for boom in exports will be stillborn. Sceptics say that exporters have not capitalised on the falling pound by cutting their foreign prices.

But exports have at least climbed off their lows of last spring, and adjustment to currency moves takes time. For example, it was not until 1994 that export growth really started to boost the economy after the post-ERM devaluation. The coldest winter in 30 years may have affected January’s trade numbers; business surveys are now reporting a big upturn in export orders. That would make sense, since exports are now much more profitable, which should encourage firms to expand overseas.

An associated worry is that Britain has become too reliant on finance. Perhaps manufacturing, which still accounts for around half of all exports, has shrunk to the point where it cannot take advantage of a cheaper pound. But this exaggerates the significance of the financial sector, which even at its peak made up only around 8% of the economy compared with manufacturing’s 12%. Britain remains the sixth-biggest manufacturer in the world. And, after a decade of grappling with a high exchange rate (before sterling started to tumble in 2007), industrial firms have become leaner and fitter.

A recovery in private capital spending should also get under way, not least after the extraordinarily sharp falls that occurred during the recession, with business investment contracting by 19% last year and housing investment shrinking at around the same rate. There is an urgent need to re-equip the country with new plant, especially to generate power.

But even if the recovery does become entrenched, it is likely to be lacklustre both this year and next. Britain’s banks are still trying to mend their battered balance-sheets, which will constrain the supply of credit. This is more of a problem for smaller firms than big companies, which have access to bond and equity markets, but it will act as a brake.
From fool’s gold to austerity

The recovery will also be cheerless. The recession, oddly enough, has felt less painful than the steep falls in GDP might have suggested: partly because unemployment has not risen as much as feared, and partly because many households have been shielded by lower interest rates on their borrowing costs. But now the payback comes. Whatever the extent of the country’s total debt, British households are certainly the most indebted (relative to disposable income) in the G7. That alone will hamper their ability to spend freely in the years ahead, as the base rate moves up from its current emergency setting of 0.5% and mortgages become more expensive.

As Andrew Haldane, executive director of financial stability at the Bank of England, has pointed out, debt operates like a tax, with higher servicing charges on it reducing disposable income. Making matters worse, an actual tax squeeze is on its way. Labour is planning to raise national-insurance contributions by a percentage point from next year, but that will not be enough. More tax increases will probably be needed.

A feel-bad recovery is better than none at all. But just how fast can the economy expand after the traumas of the past three years?

At the trough of the recession, in the third quarter of 2009, GDP was more than 6% lower than in the first quarter of 2008. If the underlying growth rate of productive capacity had remained the same, this would imply that the economy was operating around 10% below its potential output. With so many spare resources available, the recovery could sprint ahead for several years without inflation taking off.

But financial crises damage the capacity of an economy and can also affect its subsequent growth rate. In a study based on crises in the past 40 years, mainly in emerging economies, Michael Dicks, an economist at Barclays Wealth, has estimated that as much as 7.5% of Britain’s potential output has been lost. And he thinks that the sustainable growth rate has fallen to 1.75% a year.

The Treasury thinks Britain will get off more lightly. It has lopped 5% off potential output, but has not changed its view that subsequent trend growth will remain at 2.75%. That is probably too optimistic. The National Institute of Economic and Social Research, a think-tank, reckons that the trend rate is now 2.4%. Bart van Ark, an economist at the Conference Board in America, thinks it could be as low as 2%.

One reason to think that the damage to the economy has been contained is that the labour market has soured less than feared. The fall in output during the downturn has been much worse than in the early 1990s, when GDP sank by 2.5%, but the increase in the jobless rate since early 2008, from 5.2% to 7.8%, has been similar to the rise over the equivalent period in the previous recession. Although unemployment will probably rise further, there should be fewer people shunted out of the labour market who find it hard to get back.

On the other hand, future GDP growth is likely to be slower because there will be less net inward migration. With jobs scarcer and the pound weak, Britain is a less attractive destination and some migrants are returning home. Moreover, both Labour and the Conservatives are committed to curbing future immigration.

The British economy is not alone in expecting a duller future. The euro area looks set for an even weaker recovery, on IMF forecasts at the start of this year. And the IMF envisages Britain outgrowing America next year. The economy has longstanding weaknesses, such as poor skills and a congested transport system. But it retains important strengths, such as its openness to trade and capital, its lead in business services, a strong scientific base and world-leading universities. Michael Porter, a professor at Harvard Business School who has made a career out of studying competitiveness, believes that Britain still remains a “very attractive value proposition”.

Britain’s political economy is on trial as much as its economy. The government is currently spending four pounds for every three it receives in revenues. This reflects not just the severity of the recession but misjudgments during the good years. It was a mistake to be borrowing at all, let alone over 2% of GDP, in 2006 and 2007 when the economy was strong. Moreover, that deficit would have been even higher but for inflated receipts from ebullient property markets and financial firms.

http://media.economist.com/images/images-magazine/2010/13/fb/201013fbc214.gif

Mr Darling was able to announce a somewhat improved forecast for this year’s borrowing—but only to the extent that terrible is better than horrendous. He is now expecting a deficit of £167 billion in 2009-10, rather than his earlier estimate of £178 billion. But that still leaves it extraordinarily high, at 11.8% of GDP; and it will fall only to 11.1% in 2010-11. That chancellor is expecting the gap to narrow, but by 2014-15, there will still be a shortfall, of 4% (see chart 3). Before borrowing blew out so spectacularly, that would have seemed far too much.

Some of the reduction will happen automatically as the economy recovers. However, a stringent programme of fiscal retrenchment will also be necessary. Mr Darling stuck to his guns about deferring the start of this to 2011, on the grounds that the economy is still too weak to start the heavy lifting this year. But the main weakness in the chancellor’s plans is that he remains coy about where the spending cuts will be made. Furthermore, his planned tax rises on high earners may well yield less revenue than he hopes. And his predictions for the public finances are acutely vulnerable to setbacks in his forecasts for strong GDP growth from 2011 until 2014.

For the moment, investors and credit-rating agencies are giving Britain the benefit of the doubt. But that will not last beyond the election. Mr Darling’s budget is the last breath of a dying government. What will really count is the first one of the next parliament. That budget will have to do what the chancellor failed to do: set out a credible plan for reducing the deficit, grounded in sober rather than wishful forecasts for growth, decide where spending cuts will actually be made, and also—in all probability—announce additional tax increases.

Britain’s economy was overhyped before the recession, but the gloom has been overdone since the great fall. If a new government can show that it will get a grip on the public finances, this would help bolster confidence. The country’s economic future may be less dazzling than before but that glitter turned out to be fool’s gold. After those excesses, a period of private sobriety and public austerity may prove to be no bad thing.

Gregory Tenenbaum
April 12th, 2010, 06:27 PM
Tell me something gentlemen.

Just how in the world are they going to organize security for the main event in 2012, when they can't even seem to manage a rummage sale (http://sleepny.lefora.com/2010/04/04/how-to-shop-in-london/) without it devolving into a mini riot?

Have you ever seen anything remotely like that before? Even at A&F on 5th?

So how are they going to manage?

lofter1
April 12th, 2010, 06:46 PM
Not to worry, frenzied teen fashionistas are far more troublesome than the nastiest sports hooligans.

Alonzo-ny
April 13th, 2010, 10:57 AM
What does it have to do with the UK economy is a more pertinent question.

Gregory Tenenbaum
April 13th, 2010, 11:09 AM
"GT,

You obviously didn't pay attention when we were talking at sleepny. Posts like this (http://wirednewyork.com/forum/showthread.php?t=20930&p=322794&viewfull=1#post322794) are exactly what I warned against. I mean what does this store sale have to do with the economy? You are just continuing in your old pattern. Another post like that and you will be banned again. I warned you not to make off topic posts and not to make posts irrelevant to the thread. It is exactly the reason for your previous banning(s).

Alonzo"

Alonzo

I did pay attention. You obviously jump to conclusions. That's not the mind of a genius. Try to look at the different ideas separately - they aren't hard to understand.

I searched for a thread regarding the Olympics and could only find architecture threads, however, this thread did come up as there are posts within it relating to the impact of the Olympics on London's/the UK economy. No doubt it will have a huge impact both before and after the Olympics as well as being a great source of pride and morale for the peoples of the great Kingdom, including your good self.

The question I posed is really two fold:

First, how will security be handled in the face of this kind of incident involving some boxes of discounted lycra and which resulted in a mini riot (how many police did they need to stop shoppers from rioting? Looking at the video it seemed a lot to me - but maybe that's just me)

Second what does this kind of mania say about the retail economy in the UK which makes up about 70% of the economy if I am not mistaken.

About the Polish plane crash, well, there's a lot about that being said (http://n3.nabble.com/FRACKIN-IDIOT-POLES-tp711443p711443.html), but here that's another post, and if you care to read the post carefully (http://wirednewyork.com/forum/showthread.php?t=9059&p=322807&viewfull=1#post322807), it's more than balanced, it is most regrettably (and tragically for the people on that plane) the awful truth.

Alonzo-ny
April 13th, 2010, 11:13 AM
Nonsense, GT. If you want to make the moderation public that is fine. You are continuing your old pattern. It is a shame that Ed and others actually put faith in you and lobbied for your return. You are just throwing it back in their face.

There is an Olympics 2012 thread. If you had to make the post then that would have been the appropriate place. However, it is plain to see you are continuing the old routine of making posts simply to inflame and to get your dig into the UK. Another one gets you banned again.

Gregory Tenenbaum
April 13th, 2010, 11:20 AM
I had thought that the thread you are talking about related only to architecture, and if it does not, could you move the posts I made?

Would that not be the practical thing to do?

Otherwise, I see that LL and NT have made posts in this thread about the Olympics. And so shall I.

What percentage of the UK economy is retail? 70%? 80%? Any idea on the figure?

Alonzo-ny
April 13th, 2010, 11:23 AM
No I will not move it. I would have deleted it if you did not make the moderation public. You are on thin ice already. We all know your history and the standard routine.

Post something tenuously linked to the topic, or not at all. Link to a negative article, video, etc about the UK that is entirely unrelated. Comparison to NY optional.

You can post rationalise your post all you want but we all know that these posts are loaded with your strange hate of the UK. Another one and you are banned. Be on topic and discuss things like a good boy, just like everyone else manages to do around here.

Gregory Tenenbaum
April 13th, 2010, 11:32 AM
Right, I see.

So no bad stories about the real world in the UK. Only the sugar coated, plum fairy, Sir Galahad ones, am I right?

Tell me something, how is the ground level retail economy as demonstrated by this riot in an effort to save a few pounds unrelated to the UK economy when it's 70% of the UK economy?

Alonzo-ny
April 13th, 2010, 11:40 AM
Questions like the last line of your post are completely on topic and appropriate. If you made posts like that then discussion can be generated. What I won't accept is links to things that are extremely tenuously linked to the topic and are overtly attempts by you to inflame a reaction or to simply insult. I am not censoring negativity. I am keeping discussion civil and on topic.

As for your question I can't really answer in any detail or certainty. Retail is not even close to 70% of our economy, I don't know where you are getting that figure from. Retail was hit quite badly in the recession with a few well known stores being hit hard or going out of business. As for this particular riot I am not convinced that it is an attempt for people to simply save money. There are many extremely cheap places to buy clothes so I suspect it was more a sales fever that seems to happen wherever there is a sale.

Your question is not unrelated to the economy at all, but that question isn't the one which you asked before or in the manner you asked it now, was it? Was it so hard to articulate in in the way you just have?

Ninjahedge
April 14th, 2010, 08:15 AM
Question, if that is somehow related to the UK Economy, what would explain the riot at the WalMart in 2008?

http://www.dailymail.co.uk/news/worldnews/article-1091274/Wal-Mart-security-man-trampled-death-U-S-Christmas-sales-frenzy-6ft-6in-20-stone-man-mountain.html

(Pardon the cheese on that, first relevent Google tag...)

Do you think those people shopping there were stock holders and brokers literally killing to get the latest deals on Toilet Paper Storage Spindles and Slap-Chops?

Gregory Tenenbaum
April 14th, 2010, 04:49 PM
The UK economy is an interesting topic.

http://maxkeiser.com/2010/04/14/london-property-money-laundering-operation/

NH - that incident was shocking.

Still, how are they going to organize the big event in '12 when a rummage sale causes these kinds of problems?

Alonzo-ny
April 14th, 2010, 04:57 PM
Isn't it logical that the organisers of a sale would not be adequately prepared to handle a riot? We handled the G20 protests pretty well. Some good old British policing, just how it should be done.

Anyway, the sale riot hasn't affect the economy in any form. Let's get on topic, shall we?

Ninjahedge
April 15th, 2010, 07:57 AM
GT, they could always follow the lead that the US set with the Republican National Convention [/shudder]

Gregory Tenenbaum
April 16th, 2010, 04:34 AM
The G20 was not well handled, if you have read anything about Tomlinson being killed on his way home from his newsstand.

But that aside, the rummage riot footage was fascinating to watch. How desperate can the retail environment be when people are literally rioting to save a couple of dollars. Getting a several hundred dollar discount on a large electrical item - I can understand that. But some cheap lycra? Gimme a break.

I'll let this gentleman (http://www.youtube.com/watch?v=34mHZgP9vkc&feature=popular) have the last word about the banking crisis and the Iceland loans.

Alonzo-ny
April 16th, 2010, 04:56 AM
I have never heard of anyone named Tomlinson being killed. I have however heard of a man named Tomlinson who was pushed over and then happened to die later on.

Well, first of all they weren't saving a single dollar because we use Pounds Sterling over here. Get that right at least. Like it has already been noted these riots have happened in other countries and at a time not in recession. Luckily, no-one was trampled to death in this most recent riot.

Well that gentleman (drunken lout) is not referring to the banking crisis or Iceland loans, he is referring to the volcanic eruption that is grounding flights in the UK and in Europe.

All in all your post was a big swing and a miss. Nothing particularly accurate or on topic. Better luck next time.

Gregory Tenenbaum
April 16th, 2010, 06:02 AM
The AA riot was a symptom of people wanting to save a few dollars. (http://news.bbc.co.uk/2/hi/uk_news/8601361.stm)


Alex Dowle, 18, was among those in the crowd. He told the BBC News website that he had heard about the event online and decided to visit with some friends.
He said lines had already built up by the time he got there at about 1045 BST.
He said: "I walked there from Liverpool Street station and it looked like everyone was on a pilgrimage to the site.


In other news, it looks like Napoleon was right.

http://www.retail-week.chttp://wirednewyork.com/forum/showthread.php?p=289298om/election/gordon-brown-retailers-will-thrive-under-labour/5012162.article

(BTW Tomlinson was killed as a result of police action, so I'm not sure what you are talking about.

Thread here http://wirednewyork.com/forum/showthread.php?p=289298

The question is this, if it were your father or uncle, would you be so willing to defend the action of your "finest"? Alonzo, will you stop at nothing to defend your country in the eyes of this forum? Seriously dude, we know the truth already. And we know that your entertainment channels cannot be trusted to broadcast the truth. (http://biased-bbc.blogspot.com/)

Watch this video to see what actually happened (http://www.youtube.com/watch?v=g4OfBcg9xy0&feature=PlayList&p=A33A57BC8DFADFF8&playnext_from=PL&playnext=1&index=32))

Alonzo-ny
April 16th, 2010, 08:08 AM
Lol. You are surprisingly susceptible to your own techniques. I was taking the piss. I have no idea what really happened with Tomlinson. I saw the video and that is about it. I have no opinion on it. I was mocking your extremely one sided view with the opposite view.

Anyway. This is enough. Tomlinson, the AA riot and whatever was at your broken Napoleon link have nothing to do with the British economy. Like I have always said, you are welcome to criticise the UK but do it in the appropriate thread. If one does not exist, start one. Anymore off topic posts will result in a one week ban.

Gregory Tenenbaum
April 16th, 2010, 10:32 AM
A nation of shopkeepers (http://www.retail-week.com/election/gordon-brown-retailers-will-thrive-under-labour/5012162.article), and yes, you may not realize it but retail is a big part of the economy.

It's just that it makes the economy non productive.

The obsession with retail in the UK is exactly on point with respect to the topic, and was evidenced when 10 officers had to handle shopping at one store! That's insane! The fact is that it is an almost totally non productive part of the economy except in the design stage, most of the manufacturing is off shore - even Burberry is made elsewhere.

BTW, "taking the piss" out of Tomlinson's death is pretty low dude. He was a newsstand guy trying to get home for goodness sake.

Alonzo-ny
April 16th, 2010, 10:40 AM
Retail is relevant. So stop focussing on the riot and talk about retail and the economy specifically. You have drained what little relevance was in the riot story already so move on and talk about the retail economy.

I was taking the piss out of you.

Ninjahedge
April 16th, 2010, 11:21 AM
Pardon the dissection Alonzo, but here goes.

GT, how many times has this happened?
How much did it cost to protect/control?
What was the overall additional cost compared to net tax revenue of the UK economy?

This event is one of those 0.1% stories that gets all the attension off the real matters and focuses people no things where they, as demonstrated here, argue incessantly about something that does not, when viewed against the full model, effect the situation at all. It is something the US government has PERFECTED in its politics, but not gotten quite as up front and proud of it as other ancient civilizations (*cough*Italy*cough* ;)).

You have made your point, beating babies and killing kittens is bad. Now lets get back onto something that actually has a sizable effect on something other than Tabloid sales in the UK.

ablarc
April 16th, 2010, 03:23 PM
(BTW Tomlinson was killed as a result of police action, so I'm not sure what you are talking about.

Thread here http://wirednewyork.com/forum/showthread.php?p=289298
This indeed looks pretty bad. London police seem more and more like arrogant, murderous pigs.

Gregory Tenenbaum
April 16th, 2010, 03:42 PM
Pardon the dissection Alonzo, but here goes.

GT, how many times has this happened?
How much did it cost to protect/control?
What was the overall additional cost compared to net tax revenue of the UK economy?

I do not know but I do know

1. In the UK shopping is a religion
2. Nothing remotely like this has ever happened say, at Abercrombie and Fitch, which also suffers from mad retail fervor (http://sleepny.lefora.com/2009/08/19/abercrombie-and-fitch-5th-avenue/)
3. The footage is remarkable, and to read that !10 officers! had to assist with one shop is probably a first anywhere in the world
4. What makes it remarkable is that it was over a few pieces of polycotton or lycra
5. Who knows what the real conditions on the ground over there are, ie with respect to the economy and consumer behavior - but the MSM won't tell you - this kind of anecdote speaks volumes and if someone had told you - you wouldn't believe them. It's like something from the Onion.

Alonzo-ny
April 16th, 2010, 06:11 PM
This indeed looks pretty bad. London police seem more and more like arrogant, murderous pigs.

There is a link to the thread yet you still post your reply here, where it is off topic? I have no problem with people making statements like this, whether I agree with them or not, but do it in the correct thread.

It seems people have a problem following instructions. I will give everyone the same warning that I directed at GT before. The next off topic post gets one week off. I have had enough off topic nonsense.

ablarc
April 16th, 2010, 06:49 PM
Sorry, alonzo, the link was in this thread; do we all have to become editors?

Alonzo-ny
April 16th, 2010, 07:03 PM
What are you editing? You must have read the requests to get this thread on topic before you reached the post with the link. If you have an issue with my instructions PM me.

Ninjahedge
April 17th, 2010, 10:02 AM
I do not know but I do know....

You see, there's the catch GT.

I was not interested in the other "information" you posted. What I was looking for was real-world context, not more editorial sweetening.

Your following statements were all conjecture "probably a first", "remarkable" and other descriptors do not point to the facts I requested.

One person murdering 50 does not make an entire country a madhouse, and neither does one incident at a retail store.

Alonzo-ny
April 17th, 2010, 10:53 AM
Our dear friend has departed. Normal, sane, service can now resume.

Binky Bainbridge
April 20th, 2010, 01:47 PM
Goldman Sachs and others didn't suffer to the same extent as did Citi either.
....and the reasons why are now becoming apparent .... not much different in style & operation to a Mafia boiler-house scam!

mr messer
July 22nd, 2010, 03:39 PM
This indeed looks pretty bad. London police seem more and more like arrogant, murderous pigs.

Wow. I just read about this.

Not murderous pigs. Murderous pigs who get away with it because they wait until time runs out.

Independent (http://www.independent.co.uk/news/uk/crime/riot-officer-faces-no-charge-over-g20-death-2032427.html)

A police riot squad officer was told today he will not be prosecuted over the death of Ian Tomlinson during G20 protests.
Director of Public Prosecutions Keir Starmer said there is "no realistic prospect" of a conviction after a 15-month inquiry.
But he said a manslaughter charge could not be brought because of "irreconcilable" differences between doctors over what caused his death. And alternative charges of assault or misconduct could not be brought because of the evidence, legal time limits and case law.
Mr Starmer said the evidence of Dr Freddy Patel, who found Mr Tomlinson died of natural causes, could undermine any prosecution.
Dr Patel could be struck off within months as the General Medical Council examines claims that he bungled four other autopsies.
Mr Starmer said the doctor's findings also ruled out one kind of assault charge because it could not now be proven that the strike or push harmed Mr Tomlinson.
He added that the officer could not be charged with common assault, which does not require proof of injury, because there is a six-month time limit.

Also from Independent (http://www.independent.co.uk/news/uk/crime/fury-over-police-culture-of-impunity-2032911.html)

Fury over police 'culture of impunity'

Campaigners said vital evidence was lost because the IPCC did not launch a full independent inquiry until a week after Mr Tomlinson's death, after the video of the assault emerged.

Compare with Pogan (http://www.nydailynews.com/topics/Patrick+Pogan), who faced discipline and a trial.

There are cultural differences, most certainly.

Alonzo-ny
July 22nd, 2010, 06:35 PM
I am sure the economy will tank because of this.

mr messer
July 23rd, 2010, 09:19 AM
The UK economy will tank because of BP, no?

Or because of the social/unemployment crisis?
(http://www.independent.co.uk/news/business/news/economy-set-for-triple-whammy-admits-bank-chief-2032213.html)

http://www.youtube.com/watch?v=vnKR9uZUA1k

Alonzo-ny
July 24th, 2010, 11:07 AM
What ever you say. I see Gregory is enlisting a troll army over at sleepny.