Archive for November 2010

Euro steadies as Ireland bail out agreement is finalised.

November 29, 2010


The euro steadied against the dollar as currency markets opened today after it was confirmed that the Ireland’s EU bail out had been finalised.

Having earlier fallen to its lowest level since 21 September at $1.3181, the euro rebounded to $1.3200 and steadied out over the course of the morning.

Ministers finally closed the 85 billion euro bail-out agreement in Brussels yesterday, easing concerns of total economic crisis in the Irish Republic.

Irish Prime Minister Brian Cowen said that the bail-out was the “best available deal for Ireland” providing “vital time and space to successfully and conclusively address the problems we’ve been dealing with since the financial crisis began”.

He said that 10b euros would immediately be injected into the capital reserves of its banks.

European policy makers had also convened to discuss growing concerns over Spain and Portugal who are thought to be next in line for EU assistance.

Last week saw Portugal announce its deepest spending cuts in more than three decades in an attempt to reduce its debt to EU limits by 2012 and Spain too has taken precautionary measures to limit the threat of foreign investment withdrawal.

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Taseko Mines Ltd Investigation Continues

November 26, 2010

There are mounting concerns over Canadian B.C.’s Taseko Mines Ltd and its recent stock-plummet, with many asking probing questions as to just how stocks in the company fell so quickly.

The general sentiment is that the sell-off was the direct result of a leak from within the government prompting Liberal MP Mark Holland (public safety critic) to request an official investigation into the 40 per cent stock decline.

Shares in Taseko Mines Ltd fell by 40 per cent on the Toronto Stock Exchange. The suspicion comes from the timing, which was exactly two weeks before Ottawa announced it was blocking the firm’s planned development of a controversial B.C mine.

Holland wrote to the RCMP stating, “As the integrity of the federal government and cabinet is a matter of serious public concern, it is in the interest of all Canadians that this matter be resolved. I therefore request that you look into this case and determine whether or not there are grounds to launch a formal investigation.”

Holland is of the mindset that a member of the Tory government was responsible for divulging the information which prompted that mass shares-sale. Confirming this belief he commented, “Someone, somewhere in the Conservative government leaked.”

The investigation emphasised a huge amount of curiosity and finger pointing from Holland’s camp. His second question read:

“One day out of nowhere, the stock dropped 40 per cent. That’s no accident. This was a decision of the Conservative government, of its cabinet, and when did the share prices plunge? Around the same time the minister secretly met in cabinet to block the mine. Normal investors got wiped out, insiders leaked the information and made millions.”

The pinnacle question was fired when Holland asked, “What assurances do we have the Conservative insiders didn’t make out like bandits…?”

As the investigation continues, details will more than likely become suitably clearer.

Ireland announces austerity plan amid continuing EU debt concerns

November 25, 2010

The Irish government announced its austerity plan today which aims to save the country 15b euros over the next four years.

In addition to spending cuts, the minimum wage in Ireland will be reduced by 1 euro, to 7.65 euros an hour.  Over 24,000 public sector jobs will be cut and a new property tax will be introduced which will cost most homeowners up to 200 euros by 2014.

Ireland’s VAT is also set to rise from 21% to 22% in 2013, with additional increase to 24% in 2014.

It is hoped that the news plans will save the state the 15b euros (£13bn).  This will be in addition to the estimated 85bn euros secured through the EU’s bail out package.

The announcement came just several hours after Ireland’s credit rating was downgraded two notches by Standard & Poor in a reflection of the country’s debt-laden economy.  It was warned that further downgrades might also be possible.

The eurozone crisis has continued to affect markets with the FTSE-100 performing erratically in reflection of falling share prices.

The euro has also been volatile, falling 1.9%lower than the US dollar.

Germany’s Chancellor Angela Merkel commented on Tuesday that the euro was in an “exceptionally serious situation” due to the EU’s economic crisis.

Fears that the EU bail out will not be enough to settle the European economy have been compounded by falling markets and the withdrawal of investments.

Is Your Home Insured?

November 24, 2010

Is Your Home Insured?

Have you got adequate home insurance for your property? Does your home insurance cover you in the event of a fire or theft?

Making sure you have the right coverage is absolutely essential because let’s face it, a home is the thing that we are most reliant upon and that we come back to everyday. If something goes wrong and we are not covered, it can be financially devastating.

Insuring your home is much simpler than it used to be. These days you do not even have to venture outside your home to purchase home insurance. Everything can be done online.

Long gone are the days that you would have to declare the value of your property and contents,that appraisals would have been conducted and estimates created.

These days, most companies use a digitized calculator to determine the proper rebuild cost of your home for you. They then typically provide you with what’s called “guaranteed replacement cost” insurance, explains Doug Poole, an independent broker with Hugh Wood Canada. “This means if the calculator is wrong and it costs more to rebuild your house, the insurance company will pay the extra cost.”

Insurance typically comes in three levels of coverage which divide themselves into basic, standard and comprehensive with each one mirroring a counterpart price. It is up to you which kind of cover you want and how much you are willing to pay.

Ireland’s Debt Floods The Global Economy

November 23, 2010

Economies around the world suffered losses to shares as a direct result of the Irish Republic’s debt crisis.

The weekend saw the troubled economy ask for a European Union-led bail-out after many months of refusal and apparent self-help methods. The amount required to lift such an ill economy out of complete financial crisis could total $122 billion (or 90 billion Euros) bringing its total deficit to a target of just 3%.

Banks in Ireland struggled with shares in Bank of Ireland slumping 24% while those in Allied Irish Bank fell by 16%.

Looking to share status’s around the world, the losses are evident. The UK’s FTSE 100 index was down 0.4%, while France’s Cac had lost 0.5%. Asian shares had earlier ended sharply lower, with Chinese stocks losing 2.4%.

In what is now seen as a likely event, the European Union is now bracing itself for an influx of other bail-out requests from a handful of troubled countries such as Spain and Portugal.

Vincent Chaigneau at Societe Generale comments,

“The market reaction to the rescue package was fairly positive, but the mood did not last.” He added, “Overall, the reaction to the rescue package was not quite what policy makers had hoped for. The rescue is seen as a salve but does little to fix the structural problems.”

Australian dollar on the rise as EU debt concerns decrease

November 16, 2010

Speculation that Ireland may well be seeking financial support from the European Union has eased market cautiousness and allowed the Australian dollar to rise to a high of 99.20 US cents on Tuesday.

Reports of the extent of Ireland’s debt over the weekend and the country’s refusal to accept an EU ‘bail out’ had a knock on effect on the currency market causing the Australian dollar to close flat at the end of Monday’s trading.

However, reassurances from the Irish government that it is fully funded until well into next year and ‘in discussions’ with the EU seem to have appeased concerns. HiFX senior trader Stuart Ive acknowledged the easing of Ireland’s debt worries on Tuesday claiming that ‘it did help establish more risk being placed in the market.’

‘The main reason for the bounce overnight is there has been a little bit of a calming in the markets in terms of the whole situation with Ireland and Europe,’ Mr Ive said.

He predicted that the Australian dollar would continue to hold its position between 98.00 and 99.0 cents.

In shares, the Australian market also closed relatively higher on Tuesday with a strong performance from the finance sector. At 1615 AEDT, the SP/ASX200 index was up 0.26 percent and the broader All Ordinaries index had risen 0.2 per cent.

The materials sector however continued to under perform closing at a loss of 0.09 per cent, according to the SP/ASX200 materials index.

Dollar Loses a US Cent

November 12, 2010

Amidst speculation over the consequences of increased interest rates in China, the Australian dollar ended the week losing over one US cent and falling in Asian trade.

The announcement on Thursday, which reported the fastest increasing inflation rate in China since 2008, had an extensive knock-on effect on stock markets world wide. The inflation rate rose from 3.6% in September to 4.4%, far exceeding the predictions of Chinese analysts.

Combined with talks of currency wars and tension over European debt at the G20 summit in Seoul this week, the drop in China markets left Australian investors quick to retreat from commodities and risk, sparking broad-based losses.

Stock markets in the US, EU, Hong Kong and Japan also sank following the announcement by China’s Central Bank, further damaging global market confidence.

Following Thursday’s close of 100.44 cents, the Australian dollar was trading at mere 99.11 US cents by 1700 on Friday. Analysts are expecting to see yet a further possible drop to below 99 US cents over night and a possible fluctuation between 98.00 and 101.50 US cents over the coming weeks.

There were also fears that with China being the nation’s largest trading partner, Australia may also be forced to make similar future interest rate hikes to stabilise the economy.