Category - Economics

JPMorgan Chase & Co. To Start Charging Large Customers Deposit Fees

Reports suggest JP Morgan will initiate charges on certain deposits

Bidness, Etc., By Larry Darrell, February 24

The largest bank in the US in terms of assets, JP Morgan Chase & Co., is likely to start charging large customers on deposits and is making holding money costly for clients, reports the Wall Street Journal.

The move is an attempt to reduce the effect on deposits that are affected by billions of dollars and is said to bring the number down in 2015. It is the recent in a series of discussions by big banks to discourage certain deposits by corporate clients that are attracted by the low interest rates and new regulations.

Sources privy to the matter said that the memo in place cites new rules that will not affect retail clients. However, some financial firms and corporate clients might be charged higher fees. It is reported that JP Morgan will unveil the bank’s strategy with investors on Tuesday.

“We are adapting to a changing regulatory environment across our company,” Wall Street Journal quotes the JP Morgan memo sent on Monday.

Wall Street Journal [paywalled]: J.P. Morgan to Start Charging Big Clients Fees on Some Deposits

U.S. Oil Workers’ Union Expands Biggest Plant Strike Since 1980

Bloomberg, by Lynn Doan & Barbara Powell, February 21

The United Steelworkers, which represents 30,000 U.S. oil workers, called on four more plants to join the biggest strike since 1980 as talks dragged on with Royal Dutch Shell Plc, negotiating a labor contract for oil companies.

The USW, with members at more than 200 refineries, fuel terminals, pipelines and chemical plants across the U.S., asked workers late Friday at Motiva Enterprises LLC’s Port Arthur refinery in Texas, the nation’s largest, to join a nationwide walkout on Saturday, and issued notices for three other plants to go on strike in 24 hours.

This brings the work stoppage — which began on Feb. 1 at nine sites from California to Texas and expanded to two BP Plc refineries in the Midwest a week later — to 12 refineries and 3 other facilities. The union has rejected seven contract offers from Shell, which is representing companies including Exxon Mobil Corp. and Chevron Corp.

An agreement would end a strike at U.S. plants that account for almost 20 percent of the country’s refining capacity. It’s the first national walkout of U.S. oil workers since 1980, when a work stoppage lasted three months. The USW represents workers at plants that together account for 64 percent of U.S. fuel output.

Previously: US oil workers on largest national strike since 1980

Russia Launches Own ‘SWIFT’ Service, Links Up 91 Credit Institutions

Almost 91 of Russia’s credit institutions have been incorporated into a newly launched Russian domestic ‘SWIFT’ analogous.

Sputnik News, By Ekaterina Blinova, February 13

Almost 91 domestic credit institutions have been incorporated into the new Russian financial system, the analogous of SWIFT, an international banking network.

The new service, will allow Russian banks to communicate seamlessly through the Central Bank of Russia. It should be noted that Russia’s Central Bank initiated the development of the country’s own messaging system in response to repeated threats voiced by Moscow’s Western partners to disconnect Russia from SWIFT.

SWIFT (The Society for Worldwide Interbank Financial Telecommunication) is a Belgium-based international organization that provides services and a standardized environment for global banking communicating that allows financial institutions to send and receive messages about their transactions.

Joining the global interbank system in 1989, Russia has become one of the most active users of SWIFT globally, sending hundreds of thousands of messages per day. In general, SWIFT provides a secure communication network for more than ten thousands of financial institutions around the world, approving transactions of trillions of US dollars.

Via Ian Welsh: Russia Creates Its Own Payment System

This almost forgotten metric is suddenly driving the oil market

Bloomberg News, By Lynn Doan & Dan Murtaugh, February 18

San Francisco & Houston – It was like clockwork.

Every week since 1944, Baker Hughes Inc. would release its survey of how many rigs were out drilling for U.S. oil and gas. And every week, oil and gas traders would, for the most part, overlook it.

What a difference a slide in oil of $50 (U.S.) a barrel makes. This past Friday, traders were bent over their desks, staring at their screens, waiting for 1 p.m. ET to see whether drillers extended their biggest-ever retreat from U.S. oil fields. (They did.) Oil futures spiked within minutes of the count, closing at the highest level in four days.

“I don’t think I’ve heard ‘Baker Hughes’ more in my life than I have in the past month,” Dan Flynn, a trader at Price Futures Group in Chicago, said by phone recently. “It’s like I’m saying it in my sleep.”

The sudden interest in Houston-based Baker Hughes’s rig counts shows how desperate traders have become to find the bottom of the oil market after the biggest collapse since 2008. The company, which was Hughes Tool Co. 71 years ago when it first released the weekly count, is the third-biggest oil field service provider in the world.

Naked Capitalism: Wolf Richter: The Chilling Thing Devon Energy Just Said About the US Oil Glut

This is the brutal irony: drillers are hoping that rising production achieved with greater efficiencies allows them to meet their interest costs; but rising production pressures the price of oil to a level that may not be survivable long-term for many of them. They can lose money, burn through cash, and keep themselves above water through asset sales for only so long. And this is the terrible fracking treadmill they’ve all gotten on and now can’t get off.

Globe and Mail: CNRL’s warning to oil sands: Cut costs or face ‘death spiral’
Bloomberg: What’s behind Buffett’s exit from Big Oil

US sets deadline over financial crisis charges

FT, By Gina Chon, February 17

Washington – US prosecutors have been given a 90-day deadline to assess whether they have enough evidence to bring cases against individuals linked to the 2008 financial crisis, as attorney-general Eric Holder fine-tunes his legacy before he steps down later this year.

Mr Holder, the top law enforcement official in the US, disclosed the deadline on Tuesday and said that prosecutors had been asked to evaluate whether they can bring criminal or civil cases against individuals.

JPMorgan Chase, Bank of America, Citigroup and other companies have agreed to pay billions of dollars in fines for mis-selling mortgage securities linked to the crisis. But some lawmakers and consumer groups have criticised the Department of Justice for not holding high-level individuals accountable.

“To the extent that individuals haven’t been prosecuted, people should understand it’s not for lack of trying,” Mr Holder said on Tuesday at the National Press Club in answer to a question about the DoJ’s response to the crisis.

whooohhh, doggie…

Greek crisis talks collapse in acrimony as Syriza defies EMU

‘The only way to solve Greece is to treat us like equals; not a debt colony,’ says Greek finance minister

The Telegraph, By Ambrose Evans-Pritchard, February 16

Greece is on a collision course with the eurozone’s creditor powers after emergency talks ended in acrimony on Monday night, triggering the most serious political crisis since the launch of the euro.

The Leftist Syriza government reacted with fury to eurozone demands that it must stick to the country’s discredited austerity plan, describing the draft text as “absurd and unacceptable”.

Yanis Varoufakis, the Greek finance minister, said Eurogroup finance ministers had ignored a deal already agreed with the European Commission for a four-month delay and a “new contract for growth”, returning instead to old demands. “The only way to solve Greece is to treat us like equals; not a debt colony,” he said, predicting that EU authorities would soon have to withdraw their latest “ultimatum”.

The talks were halted after four hours of stormy exchanges, risking a traumatic showdown that could precipitate the biggest default in world history and force Greece out of the euro by the end of the month.

Sweden cuts rates below zero as global currency wars spread

Morgan Stanley warns that the world is revisiting the “ghosts of the 1930s” as one country after another tries to steal a march on others by devaluing first

The Telegraph, By Ambrose Evans-Pritchard, February 12

Sweden has cut interest rates below zero and launched quantitative easing to fight deflation, becoming the latest Scandinavian state to join Europe’s escalating currency wars.

The Riksbank caught markets by surprise, reducing the benchmark lending rate to minus 0.10pc and unveiled its first asset purchases, vowing to take further action at any time to stop the country falling into a deflationary trap. The bank presented the move as precautionary step due to rising risks of a “poorer outcome abroad” and the crisis in Greece. Janet Henry from HSBC said the measures are clearly a “beggar-thy neighbour” manoeuvre to weaken the krone, the latest such action in a global currency war that does little to tackle the deeper problem of deficient world demand.

The move comes as neighbouring Denmark takes ever more drastic steps to stop a flood of money overwhelming its exchange rate peg to the euro and tightening the deflationary noose.

A kick in the teeth from the ECB

Ekathimerini, By Mark Weisbrot, February 6

On Wednesday the European Central Bank (ECB) announced that it would no longer accept Greek government bonds and government-guaranteed debt as collateral. Although Greece would still be eligible for other, emergency lending from the Central Bank, the immediate effect of the announcement was to raise Greek borrowing costs and squeeze its banks, and to increase financial market instability within Greece.

We should be clear about what this means. The ECB’s move was completely unnecessary, and it was done some weeks before any decision had to be made. It looks very much like a deliberate attempt to undermine the new government. They are trying to force the government to abandon its promises to the Greek electorate, and to follow the IMF program that its predecessors signed on to.
Read More

Global debts rise $57tn since crash

BBC, By Robert Peston, February 4

After the explosion of borrowing in the boom years that led to the great crash and recession of 2007-08, most governments – especially those of rich developed countries – said they would embark on policies that would lead to greater saving, debt reduction and what’s known as deleveraging.

They implied they would encourage prudence, so that the sum of household, business and government debt would fall.

So what has actually happened to global debt?

According to a new study by the influential consultancy McKinsey Global Institute, global debt has grown by $57tn or 17 percentage points of GDP or worldwide income since 2007, to stand at $199tn, equivalent to 286% of GDP.

And the single biggest contributor to the rise and rise of global indebtedness is that government debts have increased by $25tn over these seven years.

US oil workers on largest national strike since 1980

US union leaders have launched a large-scale strike at nine refineries after failing to agree on a new national contract with major oil companies.

BBC, February 1

It marks the first nationwide walkout since 1980 and impacts plants that together account for more than 10% of US refining capacity.

The United Steelworkers Union (USW) began the strike on Sunday, after their current contract expired and no deal was reached despite five proposals.

The USW said it “had no choice”.

“This industry is the richest in the world and can afford to make the changes we offered in bargaining,” USW International Vice President of Administration Tom Conway said in a statement.


Reuters: Workers strike for second day at nine U.S. oil, chemical plants

China’s Louisiana Purchase: Who’s building a methanol plant on the bayou?

Al Jazeera investigates ties between Louisiana and the Chinese government in a proposed $1.85 billion methanol plant.

Al Jazeera, By Massoud Hayoun, January 26

This article is part one of a three-part series on China’s role in redeveloping southern Louisiana called China’s Louisiana Purchase.

St. James Parish, LA — A prominent Chinese tycoon and politician — whose natural gas company has a dubious environmental and labor rights record that recently started coming under fire in the Chinese press — is parking assets in a multibillion dollar methanol plant in a Louisiana town. And he appears to be doing it with help from the administration of likely GOP 2016 presidential ticket contender Louisiana Gov. Bobby Jindal.

Not many locals in a predominantly black neighborhood of St. James Parish — halfway between New Orleans and Baton Rouge — know that Wang Jinshu, the Communist Party Secretary for the northeastern Chinese village of Yuhuang and a former delegate to the National People’s Congress, is the man at the helm of a $1.85 billion methanol plant to be built in their town over the next two years with a $9.5 million incentive package from the state. The details of the project are unclear, residents say, largely because they were not told about the project until local officials, amid discussions with state officials and Chinese diplomats, decided to move forward with the project in July 2014.

“We never had a town hall meeting pretending to get our opinion prior to them doing it,” said Lawrence “Palo” Ambrose, a 74-year-old black Vietnam War veteran who works at a nearby church. “They didn’t make us part of the discussion.”

7 Keys to Understanding the Greek Elections

originally posted Jan 23

Huffington Post, By Pavlos Tsimas, January 22

On Sunday at 7:00 p.m. in Greece when the ballots are closing and the first exit polls are released in Berlin, Brussels, Madrid, London, Frankfurt and New York, all the political and financial decision-makers — and people who assist in making such decisions — will be staring at their computer screens, ready to read and interpret those numbers.

The upcoming elections in Greece are undeniably a global event, whose importance transcends Greece’s borders. The importance lies in the fact that these elections are part of a series of critical elections in Europe, from the British elections in May to Spain’s elections in November.
Read More

Amazon Prime only $72 tomorrow only, new subscribers only

OK, I wouldn’t post this, but nymole wanted anything, so here goes…
Usually Amazon Prime is $99/year, but tomorrow they are having a special sale for new members only.  If you don’t already have it, now’s the time.
Even $72 for a year sounds expensive, but it works out to $6/month, $3/mo less than Netflix.  I think it is well worth it.  Not only do you get free instant video of commercial-free movies and tv shows, just like Netflix, but you also get free 2-day shipping on any Prime items you buy from Amazon, and Amazon usually sells stuff cheaper than just about anywhere else.
When you sign up, order a Roku streaming media player in order to watch those shows (and many others).  Once you start using it, you’ll wonder if you really need to pay that big cable bill every month.

Deflation Swamps Switzerland

originally posted Jan 17

Shocking!  Unprecedented!  Unfair!  These were some of the politer adjectives used by financial experts to describe this week’s decision by the Swiss National Bank to abandon its currency peg to the euro.  As is often the case with major central bank decisions involving currencies, the public finds it very hard to understand what is happening or why it matters.  In Switzerland’s case, the situation was made even more confusing by the central bank lowering its overnight money rate to negative 0.75%.  This means you have to pay interest to the central bank for the privilege of lending them your money, an act that strikes many as contrary to the laws of nature.  Doesn’t the lender always earn interest, and the borrower always pay?  Not in the topsy-turvy world of deflation, which is the strange financial anti-matter world that Switzerland now inhabits.  The Swiss no doubt are asking themselves how they have found themselves in such a situation.  We would all do well to ask the same question, because deflation is the most important financial reality facing the world today. Read More