OBAMA ANNOUNCES AGGRESSIVE MOVE ON BANKS - US President Barrack Obama has announced wide-ranging proposals that would radically change the face of American - and possibly - world banking. He is calling for banks to abandon their hedge funds and private equity operations and he is also planning to impose limits on the size of banks.
Kevin McConnell, of Bloxham Stockbrokers, says that the proposals are quite radical and will come as a complete shock to many investors on Wall Street. He says investors were not expecting Obama to wade in so aggressively having said a number of weeks ago that he wanted to claw back the $90 billion of funding that the US administration had given to the financial sector last year.
Mr McConnell says he thinks the likes of Goldman Sachs will move away from commercial banking activity and he predicts that we will see the break-up of banks over the next couple of years if the viability for their business models are regulated out of existence.
He says there is also the distinct possibility that similar moves will be introduced in Europe and the UK over the next number of years. He says that Obama's proposals will be politically popular with voters, who are seeing big bonuses paid out in Wall Street at a time when the economy is still only in very early stages of recovery from a very near disaster.
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MORNING BRIEFS - Global online payment company PayPal will add 100 staff to its Irish workforce at Blanchardstown in Dublin. The company already employs over 1,100 people in Ireland, after it opened its European Centre with 25 staff in 2003. The Dublin centre manages all direct customer contact for PayPal's businesses across Europe.
*** Markets went into a tailspin yesterday evening after the US President Barrack Obama called for those massive changes to the way America's main banks do their business. The reaction to Mr Obama's comments was swift, with the Dow Jones closing the day 2% lower - its worst performance since October. Asian markets followed suit with the Nikkei in Tokyo closing at a three week low. Here at home, the ISEQ closed the day 1.4% lower, with the banks taking a battering.
*** Google has posted a five-fold increase in quarterly net profit to $1.97 billion. Google said fourth-quarter revenue climbed 17% to $6.67 billion and that it finished 2009 with profits up 54% to $6.5 billion.
*** The Irish Auctioneers and Valuers will be gathering for their annual conference later today after another apocalyptic year in the property market. Among those who will be addressing members will be Alan Ahearne - advisor to the Minister for Finance and UCD economist Colm McCarthy. The IAVI is expected to call for increased transparency in the property market and for house prices to be made public.
*** Oil prices continue to slide this morning with a barrel dipping below $76. The fall is being attributed to weaker demand in the US and fears that the Chinese are preparing to increase interest rates. The US Department of Energy said yesterday that petrol reserves increased by a stronger than expected 3.9 million barrels - striking a two-year high.
*** On the currency markets, the euro is currently trading at $1.4130 and 87.1 pence sterling.
