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• US unemployment at lowest level since February 2009• Better than expected UK services data eases fears• Summit of Greek party leaders postponed until tomorrow• Eurozone services grow again, while retail sales fell 0.4%• Today's agenda5.40pm: At the end of another busy week, it seems investors have turned the optimism switch up to 11.The catalyst for today's rally was the much better than expected US employment number, which showed 243,000 jobs created in January against predictions of a 150,000 gain. This has distracted from the continuing eurozone crisis, with the Greek talks seemingly dragging on for at least another weekend.So the FTSE 100 has finished 105 points higher at 5901.07. Some £27.2bn has been added to the value of Britain's top companies today, £43.5bn over the week (data courtesy of FTSE Group). So far this year the index has gained 334.30 points and £86.7bn. More on the UK market here.Elsewhere Germany's Dax has closed 1.67% higher while the French Cac is up 1.52%.The euro fell to $1.3094 in the wake of dollar strength after the US jobs numbers, before making a slight recovery to £1.311 at the moment.Next week sees the Bank of England's latest monetary policy committee meeting, not to mention the European Central Bank's monthly gathering. The latter could be more interesting in the light of the current crisis, especially given the continuing saga of Greece's bondholder discussions.Finally, with Portugal seen by many as next in the firing line, a report here suggests the country is sounding out advisors to look at ways of restructuring its debt, if the Greek talks succeed.So with that, it's time to shut up shop, apart from saying thanks for all the comments and have |
a good weekend. Back on Monday.4.30pm: Ahead of a meeting between Greek prime minister Lucas Papademos and leaders of the other political party officials - due to take place tomorrow - finance minister Evangelos Venizelos has been defending the proposed austerity measures. Our correspondent Helena Smith writes:Venizelos has outlined what the future would be like if Athens went the route of deciding to default on its debt and proclaim bankruptcy. Greeks may have become poorer, their standard of living may have dropped with wages and pensions poised to be axed still further, but the alternative would be by far worse, he told the Greek parliament. "The hour of truth has come," he said. "Yes, these policies are very unpleasant, but not enforcing them would be much more unpleasant. Before us lies the dramatic dilemma of having to choose between the unpleasant and even more unpleasant and we have to take very difficult decisions … but what we could live through, and are trying to avoid, is indescribable." And he also spelled out how much cash had flooded out of the country - some €65bn had been transferred abroad since the outbreak of the crisis in December 2009. Only €16bn of this was done legally, he said. Of this €16bn, at least 30% had been deposited in bank accounts in the UK.With the Greek economy in unprecedented recession, the return of the capital should be a priority, he said. "It will help business and households, real estate and the fight against unemployment."3.41pm: And here's some good news for Italian prime minister Mario Monti - Silvio Berlusconi is going to step aside from front-line politics.He also has no intention |
of running again for prime minister, he said in an interview with the Financial Times (£) published today.When he left office, there were plenty of people who wondered if the colourful Berlusconi would really step back or whether he would attempt to be an eminence grise, prior to staging a comeback. And despite playing down the latter prospect he did seem to indicate he wanted to play a role behind the scenes.And he could not resist boasting how much support he still had in the country:I still have strong popular backing, almost twice as much as my colleagues [Angela] Merkel and [Nicolas] Sarkozy. In opinion polls, I personally have 36 per cent support. If I walk out in the street I stop the traffic. I am a public danger and I cannot go out to do the shopping!3.29pm: The flow of upbeat news on the health of the US economy shows no sign of abating, says Chris Williamson, chief economist at Markit.A better than expected non-manufacturing survey from the ISM added to a buoyant sister survey of manufacturing earlier in the week. The combined message from the two surveys is that the US economy grew at the fastest rate for ten months in January. The surveys are broadly consistent with gross domestic product rising at an annualised rate of approximately 3.0% at the start of the year, setting the scene for a robust first quarter.....The data from the US need to be treated with caution, as there is some evidence that seasonal trends were disrupted so severely during the height of the financial crisis in 2008-09 that recent data may be overstating the strength of the upturn. The ISM survey has also been an im... |
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Fred Goodwin lost his knighthood but the global financial crisis was not all his fault – and the list of those who erred is longIn 2000 it was the $164bn (£103bn) AOL takeover of Time Warner in America. In 2007 it was the-then Sir Fred Goodwin's £49bn acquisition of ABN Amro that signalled that the markets had peaked and were about to crumble.Every financial crisis has its totemic moment; a decision that even at the time seems to defy logic and in retrospect is seen as an act of gross stupidity. Yet it takes more than one individual banker, no matter how powerful, to make a crisis and when the historians come to chronicle the Great Recession of 2008-09 the list of guilty men and women will include more than one former knight of the realm.Here, then, is a (far from exhaustive) list of those who might be considered most culpable – who caused, exacerbated or failed to prevent the worst downturn in the global economy since the 1930s.Alan GreenspanLaughably given an honorary knighthood in 2002 for his "contribution to global economic stability", Greenspan's responsibility for the crash cannot be underestimated.A fanatical believer in the self-righting qualities of financial markets, he was the bubble king who allowed the dotcom boom of the late 1990s to get out of hand and then, when plummeting share prices pushed the economy into recession, started the whole process off again, this time in the housing market.As chairman of the Federal Reserve, he cut interest rates and left them at rock-bottom levels for two years.Cheap borrowing costs encouraged Americans to load up on debt to buy homes, |
even when they had no savings, no income and no job prospects.These so-called sub-prime borrowers were the cannon fodder for the biggest boom-bust in US history. The housing collapse brought the global economy to its knees.Sir Mervyn KingBritain was mini-me to the US in the days of grand illusion before the crash, having its debt-fuelled party where growth was concentrated in the speculative sectors of housing and finance.King became Bank of England governor in 2003, and while he has subsequently been one of the most pro-active central bankers with a refreshingly robust approach to the banks, the case against him is that he failed to "lean against the wind" during the economic upswing, leaving interest rates too low, and then waited too long when the economy was nosediving into its most severe postwar recession before cutting bank rate.Under the government's tripartite system of regulation, the Old Lady was supposed to ensure developments in the City did not pose a systemic risk to the economy. It failed in that task.Gordon BrownWe have abolished Tory boom and bust, Brown said repeatedly in his 10 years as chancellor of the exchequer. He hadn't.His last big speech before becoming prime minister, made at the Mansion House in June 2007 just as the financial crisis was about to break, praised the bankers for their remarkable achievements and predicted "the beginning of a new golden age for the City of London". It wasn't.Brown presided over the loss of a million manufacturing jobs and an ever-widening trade deficit while cosying up to the City. He used to quip that there were two types of chancellors: those who failed |
and those who got out in time. He got that one right.Bill ClintonOne Democratic president, Franklin Roosevelt, put a cage round Wall Street after its excesses in the 20s led to the Wall Street crash and the Great Depression. Another Democrat, Bill Clinton, gave Wall Street the cage keys.After a fierce lobbying campaign, Clinton agreed to repeal the Glass-Steagall Act, which ensured a complete separation between investment and retail banks. The move heralded the coming of superbanks, huge behemoths that took in retail deposits and used them to take highly-leveraged punts in the markets.To make matters worse, Clinton beefed up Jimmy Carter's 1977 Community Reinvestment Act to force lenders to take a more relaxed approach to disadvantaged borrowers. Liberalised banks plus millions of new sub-prime customers equalled one big problem.Eugene FamaThe economics profession failed to cover itself in glory in the run-up to 2007. Not only did economists fail to spot that financial institutions were loading themselves up with vast quantities of toxic sub-prime debt, most of them thought it was theoretically impossible for a crisis to happen.In large part, responsibility for that lies with Fama, a Chicago University economics professor who in the 70s came up with the efficient markets hypothesis (EMH), which stated that financial markets price assets at their true worth based on all the publicly available information, encouraging the belief that the best thing to do was to pile in when prices were rising. Bubble-think, in other words.Ronald Reagan and Margaret ThatcherJust as many trends in modern popular music can be traced back to the Beatles, so politics was shaped by the activities of Reagan and Thatcher, the Lennon and McCar... |
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