Every week here at the Current we bring you the biggest business stories from around the world. This week: the eurozone grows, oil prices jump, real estate in Vancouver, Netflix cracks down, Canada selling off gold, and Morgan Stanley fined.
Eurozone grows by 1.5%
The eurozone (comprised of the 19 countries which use the euro) grew by 1.5% in 2015. Greece surpassed expectations but till contracted by 0.6%.The figures may encourage the ECB to further its quantitative easing (QE) policy in order to increase liquidity and boost the economy. An expanded QE program could devalue the euro, which would benefit the manufacturing and tourism sectors. (Source: http://www.bbc.com/news/business-35557883)
Oil Prices Up
Oil Prices jumped 12% on Friday following hints that OPEC may consider cutting oil production. Overproduction and falling demand have depressed oil prices since 2014 but Venezuela’s oil minister said that OPEC may be close to securing a deal to reduce production. (Source: http://www.wsj.com/articles/oil-rebounds-from-12-year-low-1455251366)
An investigation by the Globe and Mail revealed a process known as “shadow flipping” in which real estate agents in Vancouver are doubling or even tripling their commision while shortchanging the original seller. It works like this: the seller agrees to sell for $2 million to Buyer 1, Buyer 1 then sells to Buyer 2 for $2.5million who sells to Buyer 3 for $3 million all within a matter of weeks or days. The agent then walks away with huge commissions from all three sales. Although technically legal, the practice is gaining increased public scrutiny and may soon fall into the crosshairs of legislators seeking to protect sellers and buyers. (Source: http://www.theglobeandmail.com/news/investigations/the-real-estate-technique-fuelling-vancouvers-housing-market/article28634868/)
Netflix will begin to crack down on users that use VPNs to access content available only in other countries. Many Canadians use VPNs to hide or change their location in order to access American, British or other countries’ Netflix. Netflix has begun blocking service to anyone that uses a VPN, even if they use it for privacy rather than to hide or change their location. (Source: http://techcrunch.com/2016/01/22/netflix-makes-good-on-promises-to-crack-down-on-vpns-but-blocks-are-short-lived/)
Canada selling Gold Reserves
Canada has begun selling off what remains of its gold reserves which weighed in at three tonnes at the end of 2015, but now weighs in at 0.62 tonnes. The United States, by comparison, holds over 8 000 tonnes, while the UK still holds 310 tonnes. Canada’s decision continues a trend that began in the 1960’s. Canada instead holds the majority of its reserves in the form of currency and government bonds, which are far more liquid. (Sources: http://globalnews.ca/news/2508940/canada-sells-nearly-half-of-all-its-gold-reserves/)
Morgan Stanley $3.2 billion Fine
Morgan Stanley have been fined $3.2 billion for misleading investors. The bank downplayed the seriousness of risky mortgage bonds prior to the financial crisis. Bank of America paid a fine of $16.65 billion for similar violations. (Source: http://www.bbc.com/news/business-35553713)
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