Lose your collusion… Irish Banks show just how little they care.

As George Bush once said ‘Fool me once, shame on you, fool me twice…shame…well you’re not gonna fool me twice’. Banks however have done this and so much more in the last few weeks that how it’s not front page news has me flabbergasted! Are the Irish public meant to really believe the picture we are seeing unfold? Apparently so…..

Let’s look at the picture so far and put it in a time-line, then we can look at that time-line and try to discern if it was sheer co-incidence or opportunism that has lead to the moves in the market.

Tuesday 4th December: Ulsterbank cut brokers income by 50%, no explanation, and done by email. It would be laughable if it were not so serious.

Tuesday 11th December: PermanentTSB announce brokers income will be cut, to be fair they gave a lot of warning, because of the size of PTsb this action kicked off an industrial dispute, nobody cared about ulsterbank but PTsb was a market giant.

Then came the waiting game, to see what the result of the industrial …

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Islamic Finance, Ireland is turning truly cosmopolitan

Islamic finance in Ireland? What is it all about? Well before I go into it today’s post will start with condolences, you see I was meant to be at a seminar at the end of March about Islamic Finance and it had to be put off because several children parishioners of the Dublin Mosque were killed and others extremely injured in a car crash while on a field trip down to the country. My hopes and thoughts are with the children who survived and for the families surviving the ones who were lost. Due to this tragedy the seminar has been postponed but we’ll cover some of the basics of what Islamic Finance is all about and how it may change certain aspects of the Irish Market.

According to the Koran (Qur’an) there are many laws surrounding contract and general dealings. The extent of Shar’ia law is actually quite complex and in many ways you could compare it to British Common Law which was developed using the …

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Ulsterbank and First Active pinch on the back of RBOS woes.

This week Ulsterbank again made news in announcing that they were ‘leaving the broker market’ as of the end of May 2008. From the perspective of this brokerage you ‘can’t leave something you didn’t have’, Ulster had less than 5% share of the market and they never really secured a product/service offering that gave them significant inroads into the broker arena, for that reason, getting out of a channel they would never be able to operate in successfully is a wise decision.

In a statement they mentioned that they will instead focus on their existing client bank, what that means is that if you hold an Ulsterbank Account you can expect a phone call some time soon inviting you for a ‘financial review’ or something along those lines, while it is an excellent idea to review your finances always be aware that direct product producers such as Ulsterbank are not obliged to let you see what is available on the wider market, in fact, their advisors need only offer whatever limited options the bank create. Its like having a sweet-tooth …

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Will we get a rate reduction? Not if the ECB does it’s job we won’t.

I have seen articles in the news and economists from large lending institutions are saying they believe we will see two rate reductions in 2008. There are various reasons being put forward for this, and personally I would be delighted to see this happen, however, the flip-side is that if the ECB drop rates then to a degree they will just undermine their own credibility. Why? Because the ECB are not there to save the market just because there is a credit crisis, they were willing to inject liquidity in order to ensure that credit kept flowing, but in the area of Base Rates their only tenet is to control inflation at ‘near or just below 2%‘.

Rate reductions are inflationary, more money starts to move about the economy and there is an upward movement on prices, at the moment inflation is already above the stated target so cutting rates would only exacerbate that, if we get a …

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Will we get a rate reduction? Not if the ECB does it's job we won't.

I have seen articles in the news and economists from large lending institutions are saying they believe we will see two rate reductions in 2008. There are various reasons being put forward for this, and personally I would be delighted to see this happen, however, the flip-side is that if the ECB drop rates then to a degree they will just undermine their own credibility. Why? Because the ECB are not there to save the market just because there is a credit crisis, they were willing to inject liquidity in order to ensure that credit kept flowing, but in the area of Base Rates their only tenet is to control inflation at ‘near or just below 2%‘.

Rate reductions are inflationary, more money starts to move about the economy and there is an upward movement on prices, at the moment inflation is already above the stated target so cutting rates would only exacerbate that, if we get a …

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Auction Rate Bond Market feels the pinch

There has been unforseen intervention by the US Fed in the American markets, however there is still a domino effect, today we saw that there was a problem with the Auction Rate Bond Market and it has culminated in an investigation by nine state regulators.

It was said in the past that the Auction Rate market was dead after Wall Street banks ceased to purchase their own unwanted bonds, Auction Rate Securities are not liquid and this has resulted in the above case which broke in the news today. Investors were lead to believe that the bonds were a ‘cash equivalent’ however they are not, and the regulator is pushing to over rule the bonds because if money was to be seen as cash going in it has to be treated as cash on the way out (i.e.: it can’t be tied into conditions).

Auction Rate Bonds allow issuers such as Governments, Hospitals and Municipalities to issue …

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Learn a little about gardening to avoid inflation.

I know in advance I’ll draw some laughs (the ‘at’ kind, not the ‘with’ kind) due to this post but I do think it’s relevant. Today I am telling people to learn a bit about gardening, specifically, market gardening, in order to avoid getting hit by ag-flation. Agflation/Ag-flation (because it’s not an official word yet I don’t know if requires a hyphen or not) describes the current phase of world food commodity prices, the inflation is being driven on agricultural products, rice, corn, wheat, meat etc. So expect to be paying more at the till for every kind of food, in fact there have been riots in Mexico and Indonesia already because of food prices, in Haiti they stormed the presidential palace in Port au Prince and dethroned a leader.

Egypt has suspended rice exports and is trying to organise a rice for wheat swap with Syria, Ukraine is in talks with Libya, and the Philippines are in talks with Vietnam, this …

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We actually need a crash

Imagine a phoenix rising from the flames or whatever it is that helps you to rationalise the need for something getting destroyed so it can be rebuilt, in any case, for the Europe and the USA we need our governments to allow property to crash.

Inflation and deflation are not to be confused, property prices falling is not ‘deflation’. what is happening with money and credit is where you find the answer, and it lies in money being printed like there is no tomorrow. Bubbles need to be corrected, the only way to do that is to allow property prices to crash and not intervene. The way this benefits is that prices fall so far that eventually more buyers come in because its more affordable, at the moment prices coming back from levels that were unaffordable, the way to fix this is to let prices continue to fall.

No more property tax breaks, no more money for Mortgage Interest relief and certainly don’t undo stamp any further. Fortunately in Ireland despite a few minor mistakes, we have not gone the …

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Bubble Bubble, Boil and Trouble, Markets Quake and Markets Crumble

There is talk about the property bubble, and now an oil and gold bubble. Commodity prices have had a massive bull run, so will does this bull still have ground to cover? There is a real possibility the answer is yes… quite so.

Commodities have cycles like any other product, there are cycles such as ‘winter demand’ for oil, or a rise and fall as economies boom and bust, but then there are structural cycles that have to do more with supply and demand. There has been (for instance) a big upsurge in demand for oil but Opec have not increased output in order to meet the demand. The US Economy is slowing down (don’t use the R word!) and Europe is following, so if some of the major markets are starting to slow then what will that do to Oil or other commodities?

Oil prices in Euro’s prices went from €16 to €68 because the Euro got so much stronger against the Dollar, so is the solution to buy from the Iranian Oil Bourse which deals in euros? Supply …

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Stoozing? … It’s Money for nothing and the bips for free.

I kind of paraphrased a line from the Dire Straits song ‘money for nothing’ and replaced ‘chicks’ with ‘bips’. Bips are ‘Basis Points’ and it normally refers to hundredths of a percent when you are talking about rates, so 33 bips is 1/3 of 1% or 0.33. Anyways, this post is about Stoozing or getting money for nothing. Its something that has become more and more popular as of late and it’s also a loophole in the financial system that is being widely abused it even has its own website.

Stoozing is where you get a credit card on 0% and max out the money you can take on it at 0%. Normally cash withdrawals have a separate interest rate but if you know a person who owns a shop you can run it once for your total credit limit and have them give you the money (illegal – I’m just saying how it seems to work in practice). You then place this money in the highest paying deposit account …

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