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The Crisis in Catalonia & What I Saw in Our Neighborhood in Barcelona

The Crisis in Catalonia & What I Saw in Our Neighborhood in Barcelona

As separatist region is rocked by violence, businesses sound alarm.

Two of Catalonia’s biggest business associations, Foment de Treball and Pimec, have called for calm and dialogue after ten days of non-stop political and civil unrest in the separatist region of Spain. At a gathering of almost 450 Catalan business people and executives on Wednesday, the two associations called for a political solution to what they described as “the grave conflict we are living through in Catalonia,” a region that is riven down the middle by the question of independence.

A key passage in the event’s joint manifesto hinted at why the crisis shows no sign of abating: “It is the responsibility of politicians, and not the justice system,” to find an “effective and decisive” solution to this conflict. Unfortunately, political dialogue and negotiation have been sorely lacking in relations between Barcelona and Madrid for a number of years. And there’s little sign of that changing. 

As general elections approach, Spain’s main political parties, with the notable exception of the left-wing Podemos, are hardening their stance toward the Catalan separatists. For its part, the separatist government in Barcelona is doubling down on its calls for independence. If the elections on November 10 deliver enough votes for the triumvirate of Spain’s right-wing parties (the People’s Party, Cuidadanos and the far-right Vox, whose support appears to be growing) to form a coalition, they will crack down even harder on Catalan nationalism, which is likely to fuel even stronger pro-independence sentiment in the region.

A little more than two years have passed since more than two million people in Catalonia voted in a banned referendum to leave Spain. On that day, the separatists were given a harsh lesson in the raw power of state violence.

 …click on the above link to read the rest of the article…

Metro Bank Teeters after Bond Sale Fails. Shares Collapsed 95%

Metro Bank Teeters after Bond Sale Fails. Shares Collapsed 95%

Hedge-fund manager Steven Cohen and Michael Bloomberg are among those ruing the day they bought the crushed shares of the UK bank touted as a “bargain.”

Even by its own recent standards, Metro Bank has had a torrid week. On Monday, shares of the British retail bank tumbled 5%, on Tuesday, 25%, on Wednesday, 5%, and on Thursday, 4.5%, before staging a brief comeback in the final hours of trading on Friday, to end the week 35% lower. By Friday morning, it was the second most-shorted stock on the FTSE all shares index, behind the collapsed travel & vacation-giant Thomas Cook.

The main trigger for this week’s rout was the bank’s failure on Monday to raise a much-needed £250 million by issuing non-preferred bonds that deeply skeptical investors spurned. Despite trying to lure buyers with an interest rate of 7.5%, double the rate of similar offerings, Metro only attracted £175 million worth of orders, prompting the embattled lender to pull the plug on the bond sale.

“Failure to get enough support for a product that is yielding 7.5% is quite remarkable when you consider how investors are struggling to find generous levels of income in the current market,” said Russ Mould, the investment director of AJ Bell. “It suggests that investors don’t trust the bank or they believe the 7.5% yield is simply not high enough to compensate for the risks of owning such a product.”

Metro Bank opened for business in 2010, becoming Britain’s first new high street bank in over 100 years. One of a handful of so-called “Challenger Banks” — new retail lenders created after the crisis to provide a little more banking competition in a country where the five biggest banks control a staggering 85% of the market — Metro Bank proved particularly adept at luring disillusioned clients from the big banks.

 …click on the above link to read the rest of the article…

Use of “Hidden Debt Loophole” Spreads Among Australian Corporations

Use of “Hidden Debt Loophole” Spreads Among Australian Corporations

Situation already so bad that hiding debt becomes a priority?

Australian engineering group UGL, which is working on large infrastructure projects such as Brisbane’s Cross River Rail and Melbourne’s Metro Trains, recently sent a letter to suppliers and sub-contractors informing them that as of October 15, they will be paid 65 days after the end of the month in which their invoices are issued. The company’s policy had been, until then, to settle invoices within 30 days.

The letter then mentioned that if the suppliers want to get paid sooner than the new 65-day period, they can get their money from UGL’s new finance partner, Greensill Capital, one of the biggest players in the fast growing supply chain financing industry, in an arrangement known as “reverse factoring”. But it will cost them.

Reverse factoring is a controversial financing technique that played a major role in the collapse of UK construction giant Carillion, enabling it to conceal from investors, auditors and regulators the true magnitude of its debt.

Here’s how it works: a company hires a financial intermediary, such as a bank or a specialist firm such as Greensill, to pay a supplier promptly (e.g. 15 days after invoicing), in return for a discount on their invoices. The company repays the intermediary at a later date. This effectively turns the company’s accounts payable into debt that is owned a financial institution. But this debt is not disclosed as debt and remains hidden.

In its letter to suppliers, UGL trumpeted that the payment changes would “benefit both our businesses,” though many suppliers struggled to see how. One subcontractor interviewed byThe Australian Financial Reviewcomplained that the changes were “outrageous” and put small suppliers at a huge disadvantage since they did not have the power to challenge UGL. Some subcontractors contacted by AFR refused to be quoted out of fear of reprisal from UGL.

 …click on the above link to read the rest of the article…

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