Layoff List Grows: Morgan Stanley to Cut 1,600 Jobs | Fox Business

This article published by Fox Business is worrying. It’s worth a read.

via Layoff List Grows: Morgan Stanley to Cut 1,600 Jobs | Fox Business.

With the World’s economy growing and financial markets at record highs, it’s strange that the big banks are laying-off staff to cut costs. The banks are citing global uncertainty.

Certainly, as US interest rates start rising, the hot money will be swarming overseas looking for a new home. But real estate and many financial markets are overpriced, so one wonders what’s going to happen?

With Obama in the White House, political risk seems to be rising across the board. Soon perception will give way to fear start to influence investment decisions. On the back of lower oil prices, many countries are experiencing deflation, falling prices. Take the UK for example. If you look carefully at the Office of National Statistics data on inflation, you will see an alarming trend. If you strip out rising prices of services, the prices of goods in the UK has been falling steeply for some time.

In a word, the problem is extreme ‘volatility’. But if we look at the major risks in the world, a ‘volatile event’ could easily trigger a major market correction.

Let me ask an open question:

What if anything are the investment bankers hiding?

Thoughts?

 

Ken Clarke: ‘unsustainable’ debt and deficit will suck UK into low growth trap – Telegraph

I agree with former UK Chancellor, Ken Clarke, sharing his views in South America and reported in the Telegraph. What about you?

via Ken Clarke: ‘unsustainable’ debt and deficit will suck UK into low growth trap – Telegraph.

I tend to relate more easily to Ken Clarke than current Chancellor, George Osborne, whose argument is often laced more with political dogma than defensible economics.

So I favor a small state but also public investment to create jobs. Most importantly I strongly advocate an industry strategy and a skills improvement plan, along with serious measures to increase exports. There’s also a need for a much wider national risk register, with mitigating actions – it should be published quarterly as part of open government (unless there are national security issues). The number one economic risk is probably the UK banks.

Let me ask two open questions:

  1. Why do you think that the banks are the number 1 risk in the UK?
  2. How should government mitigate the risk of the UK banks?

Thoughts?

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