Posts Tagged ‘debt’

When is a bailout not a bailout?

After several weeks of speculation, the government of Spain this weekend confirmed that money would be accepted to help support the country’s banking system.

Spain’s politicians have been at pains to point out that this is not a bailout of the kind witnessed in countries such as Greece and Ireland where outside officials will effectively be making decisions about the countries’ public finances.

Spanish minsters have clearly been briefed to communicate the distinction as the following quotes from Mr de Guindos, the economy minister, in the initial Financial Times article indicate:

  • “What is being requested is financial assistance. It has nothing to do with a rescue”
  • “The conditions will be applied to the banks, not Spanish society”

I’d argue that Spanish ministers have effectively made their point but in a situation which continues to develop at pace, and where details are easily forgotten, they may well be lumped together with those who have requested funds before as the dust begins to settle on the decision. As a collegue pointed out, it could well be seen as an exercise in putting lipstick on PIGS

Friday Fiver

posted by Edward Jones

It’s been a big ol’ week in the land of FPS, what with the Autumn Statement, Public Sector strikes, another round of downgrades for Europe’s banks and the beginning of Yuletide. Here’s our take on the week that was.

The Autumn Statement

After declaring the Pre-Budget Report dead, the Government this week delivered their Pre-Budget Report Autumn Statement. It was depressing news, but we all knew it was going to be and it looks set to continue for the foreseeable future. The headlines are lower growth, increased borrowing, a squeezed public sector and more measures to help small businesses, a 0.088% increase in the bank levy and a promise to further reduce corporation tax.

Picture: Reuters UK

What really caught our eye(s) however, were the measures to help mid-size businesses; a theme championed by John Cridland at the CBI, the forgotten army of mid-size businesses have suddenly been remembered. In an attempt to create the UK equivalent of Germany’s Mittelstand, tucked away on page 64 of the Autumn Statement are a host of measures to help mid-size firms achieve their potential and export more proactively. After all, where else is growth going to come from?  

Going down, down, down…..

There’s been so much grim news on the economic front this week that it’s a little hard to pick out the ‘highlights’. To recap quickly – China’s domestic consumption appears to be slowing, as does its manufacturing production; the UK is going to grow very little in 2011, and even less in 2012; Italy continues to have to pay a fortune to borrow money; business confidence that the eurozone will survive is ebbing away; and several stars of The Only Way is Essex are about to be booted off.

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FPS’ Friday Fiver

Hello All! We’re a little late this week, though happily the ever entertaining Matt Muir provided yet another great Web Curios which has probably kept H&K blog readers’ attentions for most of the afternoon. However, we’re still committed to bringing you a round-up of this week’s news from the world of financial and professional services (and yet again it’s been a week not to miss). It’s a little shorter this week, but we hope you enjoy it as always. Thanks to Ed Jones and Jonny H as always.

WE HAVE A DEAL – JUST…..It went down to the wire, involved a very well received slap-up meal, and what most leaders likely found an annoying intervention from the British PM. However, we have a deal on the eurozone which should see it stabilise for at least a few weeks.

The medicine is nothing if not severe though – a 50% writedown on Greek debt held by private institutions (i.e. banks) and £100bn which needs to be found in order to recapitalise banks and prevent them from falling into the abyss (sound familiar from about 3 years ago?).

Will it work in the long or even short term? The jury is definitely out on that one but already things are looking a wee bit wobbly

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All that glitters

Debt, money printing, market volatility, political instability and behavioural economics – these are just a small selection of the interrelated factors currently determining the seemingly meteoric rise of the price of gold 

The extent to which current valuations are fair, sustainable or sensible is a source of some debate and I’d encourage anyone with an interest in the subject to have a listen to a short podcast just posted on The Motley Fool website.

The conversation [which can be found here] with David Kuo and the effervescent Merryn Somerset Webb is well worth a twenty minute investment of your attention.

[graph courtesy of MoneyWeek]

Man Utd’s IPO: A paradox to fans’ ambitions

posted by Edward Jones

Man Utd’s application to list on the Singapore Stock Exchange and make available 30% of the club to Asian investors is a paradox to efforts from fans and parliament alike to see local supporters have a greater say in the direction of their football club.

It is also confirmation of the global reach of those few clubs at the pinnacle of world football and serves as a reminder to the debts they’re carrying, the dizzying sums they spend and despite all this, the sheer force of their brands.

At its heart, the IPO is a symbol for the increasing monetisation of football. The beautiful game has become a beautiful business, or as is more often the case, a burden, on wealthy individuals willing to take the ultimate gamble.

The joke used to be that Man United have more fans in London than they do in Manchester, it now seems they have more fans in the Far-East than they do in the UK. The FT on Wednesday suggested of Man United’s 333m global fan base, 190m come from Asia. That an audience in the Far-East is predicted to have the potential to impose a higher valuation of a football club in Manchester is both testament to the Red Devils’ Asian appeal and the emerging power of the Asian economy, particularly in contrast to Europe.

The Culture, Media and Sport Commons Select Committee’s recent report into football governance called on the FA to look at means of giving properly constituted supporters trusts, or consortia which include supporters trusts, an opportunity to make a successful matching bid for a club that has gone into administration. Admittedly, Man United is not in this position, in spite of its mega debts, but whilst the ambitions of the Government, and I suspect most fans would be to have a greater say in the running of their club, the current crop of football owners have other ideas.

The float in Singapore seems to make business sense for the owners, which is increasingly what football decisions are coming down to. It will no doubt be accompanied by major marketing efforts to tap into United’s growing Asian fan base.

It does seem a shame however that the Red Knights and those on the terraces in the gold and green scarves will not get a more direct opportunity to buy a stake in their club and that this will serve as the model for football ownership in the immediate future.