Britain will no longer foot the bill for the EU’s bankrupts

George Osborne faced two major crises when he became Chancellor of the Exchequer exactly one year ago. The first of these was national. Britain was close to broke, and so he announced credible plans to tame the deficit. He deserves nothing but praise for this prompt action.

The second crisis was international, and here Osborne has been more cautious and less sure-footed. The origins of this second crisis lie in the collapse of the eurozone. A number of countries, notably Greece, Portugal and Ireland, are in effect bankrupt. Their spending commitments are far greater than their revenues, yet they are unable to raise money in the capital markets to make up the difference. As a result, their only hope of survival is the humiliation of economic bail-out.

Theoretically, none of this should matter to Britain one jot – at least not directly. Mercifully, we did not sign up to the single currency, and are therefore completely independent of the common economic government imposed upon eurozone countries by the European Central Bank from its Frankfurt HQ.

Unfortunately, in practice it matters very much indeed. This is because of the recklessly expensive error made by the outgoing chancellor Alistair Darling around this time last year. Darling’s disaster came on Monday May 10, 2010, when a meeting of European leaders took the momentous decision to launch a 750 billion euro fund, paid for by all European taxpayers, to rescue eurozone countries who met with financial difficulties.

In an action that was entirely characteristic of New Labour’s free and easy way with British taxpayers’ money when it came to the European Union, Darling committed Britain to the bail-out. It was to be his final act as Chancellor. The following day, David Cameron and Nick Clegg reached their historic agreement, and the Coalition was formed.

To be fair to Osborne, he did his best to protest by making clear his opposition to British involvement in the bail-out in a telephone call to Darling. However, critics of the Chancellor, including some in the Conservative Party, feel that he should have been tougher and made clear that when he took over at the Treasury he would have nothing to do with any deal signed by Darling.

But it is easy to understand why Osborne did not take that step. He may have felt that he did not wish to define his Chancellorship by starting off with a blazing row with Brussels. He may well have feared that taking such a drastic measure would have jeopardised the coalition deal with the notoriously europhile Liberal Democrats, then at an especially delicate stage. He may have felt powerless to act. Whatever the reason, Osborne did not attempt to overturn the Darling agreement when he became Chancellor, and we are living with the consequences today.

The first Greek bail-out had already been arranged by the time Darling wrote his blank cheque. But the consequences of his profligacy have since been felt. The Irish bail-out has so far cost Britain some £7 billion (more, in fact, as we also loaned them money on a bilateral basis) while Portugal has cost a further £4.2 billion, though the final sum has yet to be agreed. It is highly unlikely that the British taxpayer will ever again see more than a small fraction of the money we have committed to these two bankrupt countries.

To sum up, so far we have unloaded some £11 billion on the eurozone crisis. This represents a very significant percentage of the so-called cuts which Osborne imposed in last year’s Budget, and which brought hundreds of thousands of protesters on to the streets of London, some of them violent.

Indeed, it is surely surprising that more anger is not felt about the heavy cost of our eurozone commitment. One answer may lie with the BBC’s semi-monopoly of news coverage. On the one hand, its presenters have gone out of their way to emphasise the severity of the Osborne “cuts”, rarely missing an opportunity to give maximum airtime to anti-Government campaigners. On the other, the BBC has consistently minimised the extent of British exposure to the eurozone bail-outs.

But now comes a fresh crisis. It is clear that last year’s Greek bail-out has failed. As could readily have been predicted at the time, the 110 billion euros handed to Greece by the European taxpayer is now lost money. To give credit to George Papandreou, the Greek prime minister, he has struggled manfully to impose the deep cuts he promised. But state revenues have collapsed, in large part because membership of the single currency dooms poor Greece to permanent stagnation and decay. The country has gone beyond recession into depression. Gross domestic product, down 4 per cent last year, is forecast to drop a further 3 per cent in 2011. The authority of the state is in freefall, and many parts of Greece are now lawless. It would be hard to exaggerate the sheer horror of the situation, or the scale of the national suffering.

In dire circumstances such as these, the sensible decision would be to renege on its debts and set the currency free to find a level where economic activity can resume, which in the case of Greece is about one third of where it stands today. Sadly, the European Union has now acquired a demented logic of its own. It is calling for a fresh economic package to enable this unhappy, godforsaken country to remain theoretically solvent. The best estimate I have seen suggests that Greece will need a further 150 billion euros to keep it afloat over the next three or four years.

The reason why the EU is set on this frankly lunatic course is terrifying. The sad truth is that most European banks, including the ECB, are now technically bankrupt. The only way they can stay afloat is by lying about the state of their accounts. So long as Greece, Portugal and Ireland are theoretically solvent, their debt can be marked at par on the banks’ balance sheets. The moment that they acknowledge reality by rescheduling their debt (going bankrupt, in ordinary discourse), the ECB and the rest will be forced into large write‑offs and provisions.

The situation is so serious that one executive board member of the ECB, Jürgen Stark, has warned that Greek debt restructuring could cause a financial disaster that would put the devastation that followed the collapse of Lehman Brothers in 2008 “in the shade”.

This is the hideous background to the meeting of European finance ministers that takes place on Monday and Tuesday in Brussels. As with Portugal and Ireland, Britain will once again be asked to throw good money after bad in order to maintain the blatant fiction that the Greek state – and the rest of the eurozone – is financially sound.

This will give George Osborne an opportunity to remedy Alistair Darling’s mistake of 12 months ago. I understand that he will take it. The Chancellor will argue next week that Britain played no role in the first Greek bail-out, and so the rescue mechanism to which his predecessor mistakenly subscribed does not apply. This is only sensible. Osborne’s fundamental duty is not to ingratiate himself with European leaders – it is to guard the national finances. That means refusing to commit a penny more of British taxpayers’ money to the costly and doomed fight to save the euro.

Cartesio: Two Funds to Outperform Deposits

To win in today's markets as it does not take George Soros and John Paulson, norhave all the money on deposit, you can also do with a conservative strategy well designed and developed long term, as they do in Descartes.

This manager has two funds, the Cartesio X and Y. Cartesio Two products are mixed,the more conservative first and the second with more exposure to equities.

Since the release of these funds in March 2004, an investor would have earned theman APR (this measure is calculated after payment of fees) of 5.17% in the case ofDescartes X, and 6.44%, of Cartesio Y.

X Cartesio figures, which could compete more directly with the deposits for theirconservative nature, are overwhelming against the impositions bank. Earn 5.7% inthe last twelve months, almost 50% more than 4% that many institutions offering a year ago.

In fact, the current strategy of the fund going to invest part of their capital in bank deposits and other corporate bonds. Among its main stakes of the moment are themortgage.

Descartes was established in 2004 by the hand of four professionals with extensiveexperience in the sector: John A. Bertram, a former Morgan Stanley managing director, Cayetano Cornet, former chief investment officer at Invercaixa, the managerof La Caixa, and Alvaro Martinez, a former executive director at Morgan Stanley.

The financial guru (De Blonay) provides difficult months in the sector

The manager of Jupiter Financial Opportunities believes that macroeconomic instability unincremento will cause volatility in the listed banks, as they say in an interview with Citywire.

Guy de Blonay is one of the investment professionals with greater knowledge of thefinancial sector. Blonay began as an analyst in Jupiter for six years until he joined one of the star managers New Star Upon integration of this signature with Henderson, themanager returned to Jupiter in early 2010.

Given the complex picture that lies ahead, De Blonay has opted to cut their exposureto American and Chinese banks and fund managers bet, risk and insured captiallisted.

"Nobody cared about the macro environment before, now everyone does it and the market knows that we are in a rescue scenario. The quantitative measures are like apyramid scheme which will extend and keep up markets, "says manager .

For de Blonay, European banks offer great opportunities for assessment, but thesovereign debt crisis is not invited to invest in them.

Berlusconi is disappointed because of Italian elections

Italian Prime Minister Silvio Berlusconi is “surprised and sad” after his centre-right bloc lost Monday’s local elections.

According to Euronews, the most harmful was his side taking second place in his powerbase, the financial capital Milan: 48 percent for rival Giuliano Pisapia, with centre-right incumbent mayor Letizia Moratti trailing by more than six points. The run-off vote will be in two weeks.

“The second round could be a good thing for Milan,” said one Milanese. Another one said: “I can’t stand Moratti anymore, and let the Northern League drop the evil dwarf!”

Main Berlusconi ally the Northern League fared worse than expected on his own turf. The centre-left swept Turin and won a first-round victory in its stronghold Bologna, although Berlusconi’s PDL party led in Naples.

The four cities were the most important contests in the elections in 1,310 towns — like a referendum for Berlusconi, midway through his fourth prime ministerial term.

The results confirmed opinion polls showing Berlusconi’s popularity has been undermined by a sex scandal, corruption and tax fraud trials and a sputtering economy — leaving him “surprised and sad”.

Financial Times: 'DSK: a changing world'

Although the charges against Dominique Strauss-Kahn belong to the personal level,could have global economic repercussions. The arrest of the managing director of theIMF seems to be a better indicator of the relative decline in living Europe.

The IMF as an institution and had lost some of its European character.
During the financial crisis, the share of EU members in the vote fell by 2.8 percentage points. He was also planning to revise the assumption that the post of managing director Europe had to be provided, in force since 1946.
However, Dominique Strauss-Kahn did not contribute to increasing global nature of the IMF. In fact, the French led the institution to engage excessively in the rescue ofthe peripheral countries of the EU. Just resisted European strategy, according towhich defaults are controlled critical situations to be avoided at all costs.
The loss of European nature of the IMF was intended to proceed, albeit at acontrolled rate. The vote share of the EU, 29%, still above 20% which represents the EU in the global GDP, according to IMF calculations themselves. China is far behind,with 6% of the vote and a GDP of 14%.
The problems of Strauss-Kahn should accelerate changes in the institution. Unless it is free of charge in the coming days, the IMF will soon have a new leader can notignore the problems of Greece and Portugal, at least in the short term.
However, the new managing director, even Europe, will be part of a new post-crisis.That means more patience with undervalued exchange rates and capital controlsemregentes countries and less tolerance for the excessive borrowing of the richest.

Cincinnati Financial Corporation sube un 0,03% en la Bolsa

Cincinnati Financial Corporation today experienced a rise of 0.03% after its share stood at 30.92 euros at the end of the day. Throughout the day, the value of CincinnatiFinancial Corporation has come to be quoted in euros 31.08. The minimum that hasplaced the action has been on the other hand, of 30.75 euros.
During today's meeting have been negotiated a total of 294,542.00 shares ofCincinnati Financial Corporation, which represents a volume of turnover of EUR9,107,238.64.
Since the beginning of the year, lowering the value of the shares of Cincinnati FinancialCorporationha been of -2.68%. Throughout this time, the shares hit a peak of 34.25euros and 30.76 euros at least

Competition issues loom over Maple Group’s TMX bid

TMX operated as a monopoly for years, and at one time included Canada’s big banks among its owners. Over the past decade, it became a for-profit operation with a broad shareholder base and began to lose trading share as a handful of new competitors led by bank-owned Alpha entered the market.

Together, TMX Group and Alpha account for nearly 90% of trading volume in Canada.

Even those who favour the Maple deal acknowledge it raises competition issues.

Dwight Duncan, Ontario’s minister of finance who was an early and vocal critic of the initial proposal to merge the Canadian exchanges including the Toronto Stock Exchange with the London Stock Exchange group, cheered the all-Canadian Maple deal’s potential on the weekend. But he acknowledged the “twist” of a likely review by Ottawa’s Competition Bureau.

Alison Crosthwait, director of global trading research at TMX competitor Instinet LLC, said Canadian authorities are bound to focus on the diminished competition in the trading space that would result from merging Alpha and TMX.

“We’d get to have a local exchange, but it’s going to lessen competition,” she said Saturday.

Luc Bertrand, vice-chairman of National Bank of Canada, a member of the consortium, said yesterday that despite the need for a Competition Bureau review he believes there are key differences between the Maple proposal and failed Nasdaq bid for NYSE.

Among them are the different anti-trust regimes in Canada and the United States, and stiff competition from the United States for trading inter-listed Canadian stocks such as Barrick and Potash Corp., he said. In addition, he said Alpha is a “relatively limited” competitor in its current form as a trading system that does not yet compete with TMX in the company listings business.

He noted that there are also checks and balances on competitive issues, including fees, laid out by the “public interest” mandate of securities regulators.

“We don’t think NYSE and Nasdaq is a comparable transaction to our transaction,” Mr. Bertrand said.