Royal Bank of Scotland suffers loss of £153m in 2015 after it forks out £1.3bn in banking scandal fines
· RBS paid more than £400m to US authorities for its role in forex rigging
· But in three months to June it recorded a pre-tax profit of £293million
· Chief executive Ross McEwan cautions more pain to come
By Mark Shapland
Published: 03:50 EST, 30 July 2015 | Updated: 03:50 EST, 30 July 2015
Taxpayer-backed Royal Bank of Scotland has fallen back into the red after taking another £1.3billion hit for banking scandal fines and warned that was not the end of the payouts.
The part-nationalised group, which includes the NatWest and Ulster Bank brands, made a loss of £153million in the first six months of this year, compared to a profit of £1.4billion in 2014.
Chief executive Ross McEwan cautioned of more pain to come as the bank faces further fines for ‘conduct issues of the past’.
It paid more than £400million to US authorities for its role in the foreign exchange rigging scandal and further compensation for payment protection insurance. RBS said it put aside £459million of extra cash in the second quarter to cover past wrongdoing,
Jim Sinclair’s Commentary
What the White House will look like one year after Trump is elected President.
Jim Sinclair’s Commentary
You think we might be in bubble territory?
ETF Trading Volume Eclipses US GDP
Tyler Durden on 07/30/2015 11:35 -0400
In "signs of the coming financial apocalypse" news, ETF trading has now eclipsed US GDP.
You read that correctly. Here’s Bloomberg:
In the past 12 months investors traded $18.2 trillion worth of ETF shares, according to data from the New York Stock Exchange and Bloomberg. That’s a 17 percent increase from the 12 months prior and more than triple what it was 10 years ago. For perspective, that means the amount of dollars exchanging hands through ETFs is now more than the U.S. gross domestic product, which stands at $17.4 trillion.
To the Zero Hedge faithful, it should be immediately clear why this is so frightening, but for anyone who may be new to the "why BlackRock is a dangerous company" (to quote Carl Icahn) debate, allow us to explain, and because we’ve covered this extensively, we’ll stick to the high points.
First, the post-crisis proliferation of ETFs has funneled massive amounts of retail money into corners of the market where mom and pop previously never dared to tread. This trend has been exacerbated by ultra accommodative central bank policy, which has had the effect of herding investors into riskier assets in a desperate search for yield.
This comes as banks have pulled back from their traditional role as middlemen in the secondary market, meaning that while instruments like HY bond ETFs give the impression of daily liquidity, they cannot, by definition, be more liquid than the underlying assets they reference, and if dealers are unwilling to expand their inventories in a sell-off, fund managers facing sizeable redemptions could find that transacting in size is virtually impossible without having a significant negative impact on prices.
Fed Reporter Pedro Da Costa Is Leaving The Wall Street Journal After Asking Yellen "Uncomfortable" Questions
Submitted by Tyler Durden on 07/30/2015 10:44 -0400
It was virtually inevitable.
As we reported on June 17, Pedro Da Costa, one of the more determined and controversial Fed reporters, was shocked to learn he was no longer welcome to ask Janet Yellen uncomfortable questions, questions related to the biggest scandal currently gripping the Fed: its leaks of proprietary information to "expert network" Medley Global (recently sold by Pearson to Japan’s Nikkei) and one which has since morphed into a criminal investigation.
As a reminder, this is the Q&A that got Pedro in hot water with Janet Yellen during the March press conference:
PEDRO DA COSTA. Pedro da Costa with Dow Jones Newswires. I guess I have two follow-ups, one with regard to Craig’s question. So, before the IG’s investigation, according to Republican Congressman Hensarling’s letter to your office, he says that, “It is my understanding that although the Federal Reserve’s General Counsel was initially involved in this investigation, the inquiry was dropped at the request of several members of the FOMC.” Now, that predates the IG. I want to know if you could tell us who are these members of the FOMC who struck down this investigation? And doesn’t not revealing these facts kind of go directly against the sort of transparency and accountability that you’re trying to bring to the central bank?
CHAIR YELLEN. That is an allegation that I don’t believe has any basis in fact. I’m not going to go into the details, but I don’t know where that piece of information could possibly have come from.
PEDRO DA COSTA. If I could follow up on his question. I think when you get asked about financial crimes and the public hears you talk about compliance, you get a sense that there’s not enough enforcement involved in these actions, and that it’s merely a case of kind of trying to achieve settlements after the fact. Is there a sense in the regulatory community that financial crimes need to be punished sort of more forcefully in order for them to be—for there to be an actual deterrent against unethical behavior?
CHAIR YELLEN. So, the—you’re talking about within banking organizations? So, the focus of regulators—the banking regulators—is safety and soundness, and what we want to see is changes made as rapidly as possible that will eliminate practices that are unsafe and unsound.
Supply and Demand in the Gold and Silver Futures Markets – Paul Craig Roberts and Dave Kranzler
July 27, 2015
This article establishes that the price of gold and silver in the futures markets in which cash is the predominant means of settlement is inconsistent with the conditions of supply and demand in the actual physical or current market where physical bullion is bought and sold as opposed to transactions in uncovered paper claims to bullion in the futures markets. The supply of bullion in the futures markets is increased by printing uncovered contracts representing claims to gold. This artificial, indeed fraudulent, increase in the supply of paper bullion contracts drives down the price in the futures market despite high demand for bullion in the physical market and constrained supply. We will demonstrate with economic analysis and empirical evidence that the bear market in bullion is an artificial creation.
The law of supply and demand is the basis of economics. Yet the price of gold and silver in the Comex futures market, where paper contracts representing 100 troy ounces of gold or 5,000 ounces of silver are traded, is inconsistent with the actual supply and demand conditions in the physical market for bullion. For four years the price of bullion has been falling in the futures market despite rising demand for possession of the physical metal and supply constraints.
We begin with a review of basics. The vertical axis measures price. The horizontal axis measures quantity. Demand curves slope down to the right, the quantity demanded increasing as price falls. Supply curves slope upward to the right, the quantity supplied rising with price. The intersection of supply with demand determines price. (Graph 1)
A change in quantity demanded or in the quantity supplied refers to a movement along a given curve. A change in demand or a change in supply refers to a shift in the curves. For example, an increase in demand (a shift to the right of the demand curve) causes a movement along the supply curve (an increase in the quantity supplied).
Changes in income and changes in tastes or preferences toward an item can cause the demand curve to shift. For example, if people expect that their fiat currency is going to lose value, the demand for gold and silver would increase (a shift to the right).
Changes in technology and resources can cause the supply curve to shift. New gold discoveries and improvements in gold mining technology would cause the supply curve to shift to the right. Exhaustion of existing mines would cause a reduction in supply (a shift to the left).
70% Of Americans See Economy Worsening, Consumer Comfort Collapses By Most In 10 Month
Tyler Durden on 07/30/2015 09:58 -0400
With stocks just 1-2% from record highs, because China is fixed, oil is recovering, Europe is awesome, and gas prices are low? it appears the talking heads forgot to tell the ‘people’ how great things are. Bloomberg’s Consumer Comfort index plunged (by the most since Sept 2014) to hover at 18 month lows…
As 70% of Americans see the state of the economy as negative.
Rather amusingly an intriguing 1% of Americans see the state of the economy as ‘excellent’ – wonder which 1% that is…
Jim Sinclair’s Commentary
If you build it, they will come!
Der Spiegel: Greek Money Is Moving to Bulgaria
By Anastassios Adamopoulos –
Jul 29, 2015
Greek depositors and businesses are relocating their money and their business headquarters to Bulgaria, according to German weekly magazine Der Spiegel.
The magazine reported that 14,000 euros are leaving Greece for Bulgarian banks each week since capital controls were fist imposed in Greek banks on June 28.
On July 20, the Commerce Union had claimed that 60,000 Greek businesses had requested to relocate to Bulgaria. Der Spiegel noted that this year, 11,500 Greek businesses have already set up their headquarters in Bulgaria, as opposed to the 9,000 in 2014.
Some of the reasons the magazine identified for this business strategy are the 10% taxation on businesses and individuals, the favorable legislation for business as well as the lower wage costs.
A bank employee who spoke to Der Spiegel explained that it is very easy to open an account in a Bulgarian bank. He also noted that customers can choose whether to open their account in euros or the Bulgarian lev.
The German magazine also wrote that Krassen Stanchev from the Institute of Market Economics claimed that since the Greek crisis first began, Greeks have invested 4 to 4.5 billion euros in Bulgaria.