"If you're going to panic, do it fast and beat the crowd." ~ Jesse Livermore

Saturday, December 29, 2012

Euro Zone Crisis Enters Its Political Phase

Euro Zone Crisis Enters Its Political Phase - WSJ.com: "The outlook for the euro zone has improved, he said. "Why? Because we have shown we mean business when we say we are ready to do whatever is necessary to secure financial stability in the euro zone." This year has seen, he said, an announcement by the European Central Bank of a new policy to shore up government-bond markets, actions to control public finances, some ambitious economic reforms, a strengthened bailout fund, proposals to tighten economic integration and the first steps toward a single banking union in the euro zone. The crisis isn't yet over, he said, and European leaders should avoid complacency. But he isn't alone in concluding that something important happened that reduced the financial risks to the euro in 2012. One big reason for the shift in sentiment has been, as Mr. Barroso said, the ECB's announcement of government-bond purchases following the pledge in July by Mario Draghi, the ECB president, "to do whatever it takes to preserve the euro." . . . Mr. Draghi's plan remains untested, and the possibility that it won't work as hoped remains a risk for 2013. . ."

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Thursday, December 27, 2012

Top 10 things to worry about in 2013

Top 10 things to worry about in 2013 - Irwin Kellner - MarketWatch: "After growing at a 2.7% annual rate in the third quarter, the gross domestic product probably expanded only one-third as fast in the fourth. As for the first quarter of 2013, it may not grow at all. What is more, the rest of the year does not look a whole lot better. Here are the top 10 reasons why: 10. Business will be reluctant to hire. Firms are still shell-shocked by the brouhaha over the fiscal cliff, and markets are too weak to justify expanding payrolls. . . ."

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Tuesday, December 25, 2012

Doubts remain over Spanish austerity

Doubts remain over Spain's austerity miracle - Telegraph: " . . . Prof Wyplosz said the contractionary policies across the eurozone are making the task much harder. “There may be a miracle but it is more likely that Europe’s recession will continue through 2013 and 2014 and who knows how long after that,” he said. Spain’s austerity began in earnest with a 5pc cut in public sector salaries in 2010. It deepened last July with the suspension of a “14th month” bonus, equal to a further 7.1pc cut. Even King Juan Carlos took a haircut. The contrast with Italy is striking. The OECD data show that Italy’s labour costs have continued to ratchet up despite perma-slump and drastic fiscal tightening, falling even further behind Germany over the past two years. “The picture for Italy is horrible. They are going in the opposite direction from everybody else,” said Raoul Ruparel from Open Europe. “Mario Monti never really made any progress on labour reform.” Mr Monti’s technocrat government failed to tackle the issue that has bedevilled Italy for 60 years, the rigid structure that mandates equal pay for workers in the cutting-edge Lombardy with the sleepy Mezzogiorno. The reforms were watered down by the Left in parliament and ended in a compromise that gives judges the last say on who can be fired, and pleases no one. . . . "

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Saturday, December 22, 2012

Banking Group Cuts Forecast on Euro-Zone Worries

Global growth 2013?--revise your expectations--

Banking Group Cuts Forecast on Euro-Zone Worries
Wall Street Journal (blog)
The Institute of International Finance, a group that represents nearly 500 of the world's largestfinancial firms, Tuesday slashed its global growth forecast for next year, primarily on dismaleuro-zone expectations. IIF chief economist Philip Suttle ...

Euro zone crisis Tusk: decision on euro adoption coming soon
Warsaw Business Journal
EU leaders hope this will be a major step towards a “banking union” and more importantly towards solving the ongoing debt crisis in the euro zone. Importantly for Poland, the ECB will implement a process that gives non-euro zone members a path to ...

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Thursday, December 20, 2012

Banking Union to Solve Euro Zone Crisis?

Don't Rely on Banking Union to Solve Euro Zone Crisis - NYTimes.com: " . . . Conventional wisdom has it that the euro zone needs a banking union to solve its crisis. This is wrong. Not only are there alternatives to an integrated regulatory structure for the zone’s 6,000 banks, but centralization will undermine national sovereignty. The rallying cry for a banking union sounded this year when it seemed that the euro zone might break apart. Advocates of such a union said that it would break the “doom loop” connecting troubled banks and troubled governments. This week, E.U. countries will meet to discuss the terms for a single supervisor for banks, the first stage of a banking union. There are two parts to the doom loop: when banks go bust, their governments bail them out, adding to their own debts; and when governments become over-indebted, their lenders get sucked into a vortex, as their balance sheets are full of sovereign debt. In its fullest incarnation, a European banking union would break the first part of this loop. There would be a central mechanism to recapitalize troubled banks or close them down. There would also be a single deposit guarantee scheme. The cost of dealing with banking crises would, therefore, be borne by the whole euro zone rather than by national  . . . " read more here

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Tuesday, December 18, 2012

UK already jumped the fiscal cliff

'Fiscal cliff'? Britain has already jumped.
Washington Post
NEWPORT, Wales — Is this what life on the other side of the “fiscal cliff” looks like? If President Obama and congressional Republicans fail to reach a deal in the coming weeks, Americans face a fierce wave of tax hikes and spending cuts that could ...

Analysis: Boehner opens door to tax hikes, shifts fiscal cliff talks
WASHINGTON (Reuters) - U.S. House of Representatives Speaker John Boehner's offer to accept a tax rate increase for the wealthiest Americans knocks down a key Republican road block to a deal resolving the year-end "fiscal cliff." The question now boils ...

Forecast Is Sunnier, but Washington Casts a Big Shadow
New York Times
That dismal pace is driven partly by drags from Europe's recession and China's slowdown; partly by companies readjusting after potentially overstocking their back-room shelves in the third quarter; and largely by worries about the so-called fiscal ...

New York Times

ESM head Klaus Regling sees euro zone debt crisis overcome in 2-3 years
Economic Times
BERLIN: The head of the euro zone's permanent bailout fund, Klaus Regling, was quoted on Saturday as saying it will take another two to three years to overcome theeuro zone debt crisis. "We're more than half way there," the head of the European ...

Economic Times

German economy not immune to EU financial crisis: ECB
Press TV
No country is immune to the effects of the (EU) debt crisis. Not even the German economy,” said Liikanen on Saturday. “There are a number of indications that the economy is getting weaker … across the euro zone,” he added. The remarks came after ...

Press TV

Economic slowdown throughout euro zone a worry for ECB: Liikanen
On Dec 7. the central banks of Germany and Austria forecast barely any economic growth in 2013, with the Bundesbank flagging risks of a recession in the euro zone's biggest economy as the debt crisis hits the bloc's core. (Reporting By Erik Kirschbaum; ...

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Saturday, December 15, 2012

Bad News Behind the Good Jobs Numbers

The Bad News Behind the Good Jobs Numbers | TIME.com: " . . . the Labor Department claims that the jobs numbers should be analyzed without taking the storm into account at all. And by that standard, not only were the job numbers themselves fairly modest, but there are some worrying details in the report that should give one pause before celebrating these numbers too enthusiastically. Construction Employment The report showed a decrease in construction employment of 20,000 jobs. This is troubling — or at least confusing — if Sandy did in fact have a minimal effect on the report, as recent housing start data has been starkly positive . . . Revisions to Previous Months Each month, the Labor Department issues its estimate for the previous month’s job growth, but it also issues revisions for the two months prior to that as well. And this report showed a net downward revision of 49,000 jobs. So really this report gave us a net job gain of 97,000 — a much less impressive figure than the headline 146,000. Declining Participation Rate After showing a solid 0.3% gain last month, the participation rate — or the percentage of adult workers in the workforce — declined once again by 0.2%. That drop in the participation rate appears to be the primary reason the unemployment rate dropped to 7.7%, as the household survey actually showed a net decline in jobs. While some of the overall decline in the participation rate has been driven by demographic reasons — an older country is going to have fewer people able to work — that only tells part of the story. Some of the decline in participation is undoubtedly a product of a depressed economy, and a true jobs recovery would have this number moving upwards, rather than the other way around. Overall, this report is probably nothing to get excited about either way. It’s roughly in line with the steady-but-unspectacular growth the economy has been producing for the past year. But any proper reading of the report will take into account some of the figures beneath the headline, and the details of this report say that it is less of a cause for celebration than the headline numbers would suggest."  Read more: http://business.time.com/2012/12/07/the-bad-news-behind-the-good-jobs-numbers/#ixzz2EcS7J8Ng

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Thursday, December 13, 2012

The way to save Italy

Italy--there is a way out--

Mario Monti's exit is only way to save Italy - Telegraph: "The nation is richer than Germany in per capita terms, with some €9 trillion of private wealth. It has the biggest primary budget surplus in the G7 bloc. Its combined public and private debt is 265pc of GDP, lower than in France, Holland, the UK, the US or Japan. It scores top of the International Monetary Fund’s index for “long-term debt sustainability” among key industrial nations, precisely because it reformed the pension structure long ago under Silvio Berlusconi. “They have a vibrant export sector, and a primary surplus. If there is any country in EMU that would benefit from leaving the euro and restoring competitiveness, it is obviously Italy,” said Andrew Roberts from RBS. “The numbers are staring them in the face. We think the story of 2013 is not about countries being forced to leave EMU but whether they choose to leave.” A “game theory” study by Bank of America concluded that Italy would gain more than other EMU members from breaking free and restoring sovereign control over its policy levers." 

Lira anyone?

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Tuesday, December 11, 2012

Real recovery task is scaling back the state

The real work has yet to begin--in Europe, the U.S., and U.K.--

Real recovery task is to scale back the state - Telegraph: ". . . Our 41-year-old, relatively inexperienced Chancellor was batting, to say the least, on a sticky wicket. Yet while he played a reasonably good game politically, as he delivered his Commons set-piece on Wednesday, I still believe that the economics of Osborne’s statement fell woefully short of what is needed to rescue the UK from its parlous state. Osborne came into office in 2010, after years of Gordon Brown’s fiscal vandalism. As such, the current Chancellor faced the unenviable task of taking very tough and radical action to restore the UK as one of the world’s leading advanced economies. Yet while his “austerity” rhetoric has been strong, Osborne’s policy implementation has been extremely patchy. In the fiscal year 2009-10, current government spending amounted to 42.9pc of GDP. In 2012-13, for all his “tough choices” bluster, spending will be 42.3pc of national income – by no means a significant reduction. The Chancellor talks a good game on mending this country’s finances but the task has barely begun. And amid all the theatrics, and hair-shirted mood music, this Autumn Statement pointed only to lower growth, higher borrowing and crucial targets to get our deficit and debt under control being pushed ever further into the future. . . . "

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Saturday, December 8, 2012

PIMCO Investment Outlook - Strawberry Fields Forever?

PIMCO | Investment Outlook - Strawberry Fields – Forever?: "knock a few percentage points off the deficit/GDP ratio, they claim, and the private sector will miraculously reappear to fill the gap. No such luck after 2–3 years of austerity in Euroland, however. Most of those countries are mired in recession and/or depression. Political leaders there should have studied the historical evidence presented by Carmen Reinhart and Ken Rogoff in a critically important paper titled, “Growth in a Time of Debt.” They conclude that for the past 200 years, once a country exceeded a 90% debt/GDP ratio, economic growth slowed by nearly 2% for both developed and developing nations for an average duration of nearly a decade. Their work displayed below in Chart 1 shows the result in the United States from 1790–2009. The average annual U.S. GDP rate growth, while clearly influenced by the Great Depression, was -1.8% once the 90% barrier was exceeded. The U.S., by the way, is now at a 100% debt/GDP ratio on the basis of the authors’ standard measuring yardstick. (Note as well the 5½% average inflation rate during the same periods.)"

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Thursday, December 6, 2012

The Hollowing Out of America

The Hollowing Out of America | The Nation: " . . . And yet the pit exists. It goes by the name of “austerity.” However, it didn’t just appear in time for the last election season or the lame-duck session of Congress to follow. It was dug more than a generation ago, and has been getting wider and deeper ever since. Millions of people have long made it their home. “Debtpocalypse” is merely the latest installment in a tragic, forty-year story of the dispossession of American working people. Think of it as the archeology of decline, or a tale of two worlds. As a long generation of austerity politics hollowed out the heartland, the quants and traders and financial wizards of Wall Street gobbled up ever more of the nation's resources. It was another Great Migration—instead of people, though, trillions of dollars were being sucked out of industrial America and turned into “financial instruments” and new, exotic forms of wealth. If blue-collar Americans were the particular victims here, then high finance is what consumed them. Now, it promises to consume the rest of us. . . ."

Morgan Stanley’s Doom Scenario: Major Recession in 2013 - US Business News - CNBC: "Morgan Stanley isn’t alone in warning about a recession next year. Noted bear, Nouriel Roubini warned on Monday that certain key developments would exacerbate the downside risks to global growth in 2013. “Until now, the recessionary fiscal drag has been concentrated in the euro zone periphery and the U.K.. But now it is permeating the euro zone’s core,” Roubini wrote. “And in the U.S., even if President Barack Obama and the Republicans in Congress agree on a budget plan that avoids the looming “fiscal cliff,” spending cuts and tax increases will invariably lead to some drag on growth in 2013 – at least 1 percent of GDP.” (Read More: Faber Prepare for Massive Market Meltdown) Roubini said the rally in global markets that begun in July was now running out of steam as global growth slows and valuations look stretched."

Bernanke's Easy Money Death Spiral | The Economy | Minyanville's Wall Street: "Last week, I argued from a lender’s perspective that contrary to Bernanke’s assertion, QE was impeding the extension of credit by raising interest rate risk. This week, I argued from the CEO perspective that QE is impeding capital investment by raising cost of capital volatility risk. Despite compelling evidence that monetary policy is inhibiting the capital allocation process, Bernanke continues to argue as he did last week for further accommodation. The irony is that, if I am correct, the more easy money we get, and the longer it will take to build a sustainable recovery, which will forever prevent Bernanke from ever normalizing interest rates. We are just stuck in this never-ending easy money death spiral that only the market can end. And that probably doesn’t end well."

Gaming US Fiscal Reform by Mohamed A. El-Erian - Project Syndicate: "Hobbled by the self-inflicted wounds of the debt-ceiling debacle in the summer of 2011 – which undermined economic growth and job creation, and further damaged Americans’ confidence in their political system – the US Congress and President Barack Obama’s administration recognized the need for a measured and rational approach to fiscal reform. To increase the likelihood of this, they agreed on immediate spending cuts and tax increases that would automatically kick in (the “fiscal cliff”) if agreement on a comprehensive set of fiscal reforms eluded them."

Why the fiscal cliff will be averted - FT.com: " . . . A successful agreement would embody three principles; it will be large enough to stabilise the debt to gross domestic product ratio, meaning about $4.5tn in savings over 10 years; it will include a balance of spending cuts and revenue raising measures; and it will be divided into two phases because, with just four weeks left, there isn’t time to legislate the entire package. The negotiators already know the main elements of an agreement. Spending cuts should exceed the amount of new revenues. That should not be hard because $2tn of cuts are already agreed; $1.2tn in reduced discretionary spending was enacted last year and an additional $800bn will be realised by ending the Iraq and Afghanistan deployments. But it is also time to restrain entitlement spending, which has been soaring. Steps such as means testing Medicare, modernising cost of living adjustment formulas and others could save another $600bn. When the resultant interest savings are added in, total spending is reduced by $3.2tn over 10 years. . . . "

Analysis: Beige book an economic tale of 2 storms: "Federal Reserve's new beige book is to be transported into the world of Charles Dickens: The economy, it seems, is a tale of two storms. One is Superstorm Sandy. It huffed and puffed and blew the growth back downward in parts of the country during the October through mid-November period covered by the central bank's report. The other, more serious storm. is coming from Washington. And it could hit if Congress and the Obama administration fail to make a deal to spread out the tax increases and spending cuts set to take effect Jan. 1."

Which country has the best quality of life? - Telegraph: "The Economist Intelligence Unit looked at GDP, life expectancy, political freedom, job security, climate and gender equality to compile a list of 80 countries ranked by their general quality of life. It also considered economic forecasts for 2030, the year that a baby born now would reach adulthood. Switzerland, one of the world's richest countries, topped the list and was named the best place to be born. Half of the top 10 were European countries, but only one, the Netherlands, was in the eurozone. Falling at the very bottom of the list were the Ukraine, Kenya and Nigeria. The UK came in 27th place, just behind France and one place ahead of the Czech Republic and Spain in joint 28th position. The US was in joint 16th place with Germany. In compiling the list the group said it: “earnestly attempts to measure which country will provide the best opportunities for a healthy, safe and prosperous life in the years ahead.”"

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Tuesday, December 4, 2012

Avoiding a New American Recession

Avoiding a New American Recession by Martin Feldstein - Project Syndicate: "President Barack Obama’s proposed alternative to the fiscal cliff would substantially increase tax rates and limit tax deductions for the top 2% of earners, who now pay more than 45% of total federal personal-income taxes. His budget would also increase taxes on corporations, and would end the current payroll-tax “holiday,” imposing an additional 2% tax on all wage earners. Together, these changes could lower total demand by nearly 2% of GDP. And the higher marginal tax rates would reduce incentives to work and to invest, further impeding economic activity. All of that could be fateful for an economy that is still struggling to sustain a growth rate of less than 2%. The Congressional Budget Office and the Federal Reserve predict that going over the fiscal cliff would cause a recession in 2013, with Fed Chairman Ben Bernanke recently saying that the Fed would be unable to offset the adverse effect on the economy. He could have said the same thing about the fiscal drag that would be created by Obama’s budget proposal. . . . "

Euro zone debt crisis to run and run, says QNB Group
CPI Financial
Despite a recent agreement by the Euro group and the IMF on releasing further assistance for Greece under its bailout programme, the outlook for Euro zone economies remains weak and the region's sovereign debt crisis is likely to stay with us for a ...

Analysis: Greek deal puts euro zone in slow recovery room
Monday's EU-IMF agreement to keep Greece afloat inside the euro zone, by reducing its debt now and hinting at official debt relief to come later, has removed the biggest risk of a financial shock that could re-ignite market panic and send the euro back ...

ECB and BOE rate decisions to grab attention
Both Spain and Italy had announced that they completed all the funds needed for 2012, where the upcoming auctions are all for 2013 financial requirements, lowering the chance of tapping the ECBs OMT program this year. ... Moving to the U.K., the ...

Austria's Fekter sees no need to top up ESM bailout fund
Business Recorder (blog)
Moody's cut its rating for the European Stability Mechanism and sister fund EFSF following its downgrade of France in November, noting a high correlation in credit risk among the rescue funds and their largest financial backers. Fekter, one of the ...

Business Recorder (blog)

OECD cuts global economic forecasts over euro zone risks
Trade Arabia
The Organisation for Economic Cooperation and Development slashed its global growth forecasts on Tuesday, warning that the debt crisis in the recession-hit euro zone is the greatest threat to the world economy. In light of the dire economic outlook ...

Trade Arabia

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Saturday, December 1, 2012

We have already fallen off the fiscal cliff

In Washington D.C., the fiscal problem is really just simple arithmetic--

Avoiding The Fiscal Cliff By Fixing The Fiscal Hole - Forbes: " . . . the amount of revenue raised by the government as a share of Gross Domestic Product (GDP) hasn’t changed that much, an average of 17.5 percent (due to the weak economic recovery revenues were 15.5 percent of GDP in 2012, well below the long-term average). Part of our fiscal problem is simple arithmetic: the federal government has spent an average of 20.2 percent of GDP over the same time period; the reason we now have $16-trillion dollar deficit vertigo. And, the over-spending problem has worsened recently due to the government’s four year string of trillion dollar annual deficits that grew the size of the federal government to levels that have never been greater, except during World War II. The other part of the fiscal problem arises due to the composition of government spending, and how that has changed. In 1962, for instance, 70 percent of the federal budget went on public goods such as defense, agriculture, education and energy, 13 percent went on social security, 10 percent went on unemployment compensation and other income security programs, and 6 percent went on interest payments on the national debt. In 2011, . . . 33 percent went on public goods, and 6 percent went on interest payments on the debt. But social security and Medicare (which started in 1965) now accounted for 34 percent of the budget, while unemployment and other income security programs accounted for 27 percent. . . . We cannot simply tax our way out of this math. Even if the tax increases under consideration were implemented, and annually raised the $82 billion expected by the Joint Tax Committee, 94 percent of the over $1 trillion annual deficit would remain. And, due to the negative impact tax increases have on economic growth, the tax increase may raise even less revenues. This is the fundamental reality of the so-called fiscal cliff. We’ve already fallen off. Climbing out is going to be painful – and it’s going to require us to rethink what we ask of government and not just what we give."

But when it comes to politics, the simple isn't so simple!

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Thursday, November 29, 2012

None Dare Call It Default

The First World's struggle for fiscal sustainability--

Jenkins: None Dare Call It Default - WSJ.com: "Greece has defaulted once already, and it is only a matter of time until Greece defaults again. Welcome to default-o-rama, the next chapter in the First World's struggle for fiscal sustainability. Japan is piling up debt in the manner of a nation beyond hope. France, Belgium, Spain and Italy are defaults waiting to happen unless Europe can somehow generate the kind of growth that has eluded it for decades. America's fiscal cliff is an artificial crisis. We have no trouble borrowing in the short term. But at some point the market will demand evidence that long-term balance is being restored. President Obama said in his first post-election press conference that he doesn't want any proposals that "sock it to the middle class." He knows better. A long-term socking is exactly what's coming to the middle class, which must pay for the benefits it consumes."

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Wednesday, November 28, 2012

Venez à Londres, mes amis

Francois Hollande shows true colours with threat to nationalise ArcelorMittal - Telegraph: " . . . The International Monetary Fund warned earlier this month that rising taxes are undermining the country as a place “ to work and invest”, and said France risks being left behind as Italy and Spain grasp the nettle of reform. The French state’s share of GDP has risen to 56pc, creeping higher than Sweden and Denmark, without their labour flexibility. French industry has been losing 60,000 jobs a year for the past decade. The current account has swung from a surplus of 2.5pc of GDP to a deficit of 2.4pc since the launch of the euro. The country has lost 20pc labour cost competitiveness against Germany. It has a 50pc “tax wedge” – the tax share of labour costs – among the highest in the world. What France needs as unemployment rises by over 40,000 a month to modern era highs and the economy slides deeper into perma-slump is a radical assault on the state. Instead, Mr Hollande talks of nationalisation. Is London big enough to take the refugees?"

European debt crisis a bigger global threat than US fiscal cliff, says OECD
The Guardian
Europe's debt crisis remains a far bigger threat to the world's economy than the "fiscal cliff", according to the Organisation for Economic Co-operation and Development (OECD). In its latest twice ... "We don't think the euro-zone crisis is over yet ...

The Guardian

OIL FUTURES: Crude Flat as Euro-Zone Optimism Fades
Fox Business
However, the positive sentiment faded as some traders and analysts became weary of what they saw as an another temporary fix that didn't move the euro zone toward a substantial solution. Theeuro-zone debt crisis has "been so long and drawn out," said ...

OECD slashes global growth forecasts over euro zone risk
... as inappropriate. Loading... Alert icon. Sign in or sign up now! Alert icon. Loading... Published on Nov 27, 2012 by ReutersVideo. The economic organisation warns the debt crisis in the recession-hiteuro zone poses the greatest threat to the world ...

Euro zone, IMF agree on Greece debt deal
SYDNEY (MarketWatch) — Greece's institutional lenders reached a deal early Tuesday in Brussels that is expected to pave the way for the country to receive almost 44 billion euros of financial aid, while bringing its debt down to a sustainable level ...


OECD Slices World Economic Forecast
Fox Business
OECD Slices World Economic Forecast. Published November 27, 2012. Reuters. The OECD slashed its global growth forecasts on Tuesday, warning that the debt crisis in the recession-hiteuro zone is the greatest threat to the world economy. In light of the ...

Euro zone debt forgiveness lies ahead in Greek mire
Reuters India
But while a degree of can-kicking may be going on, there was a critical element in Monday night's deal that goes a lot further than any other step taken so far in the debt crisis to get Greece back on its feet. Implicit was an ... The EU official said ...

UPDATE 8-Euro zone, IMF secure deal on cutting Greek debt
Deal to include Greek debt buy-back, ECB profits returned. * Euro ... Greece, where the euro zone's debt crisis erupted in late 2009, is the currency area's most heavily indebted country, despite a big "haircut" this year on privately-held bonds. Its ...

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Tuesday, November 27, 2012

Time-bomb at the heart of Europe

France and the euro: The time-bomb at the heart of Europe | The Economist: "THE threat of the euro’s collapse has abated for the moment, but putting the single currency right will involve years of pain. The pressure for reform and budget cuts is fiercest in Greece, Portugal, Spain and Italy, which all saw mass strikes and clashes with police this week (see article). But ahead looms a bigger problem that could dwarf any of these: France. The country has always been at the heart of the euro, as of the European Union. President François Mitterrand argued for the single currency because he hoped to bolster French influence in an EU that would otherwise fall under the sway of a unified Germany. France has gained from the euro: it is borrowing at record low rates and has avoided the troubles of the Mediterranean. Yet even before May, when François Hollande became the country’s first Socialist president since Mitterrand, France had ceded leadership in the euro crisis to Germany. And now its economy looks increasingly vulnerable as well." As our special report in this issue explains, France still has many strengths, but its weaknesses have been laid bare by the euro crisis. . . "


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Monday, November 26, 2012

European Leaders Fail to Agree on Greek Aid

European Leaders Fail to Agree on Greek Aid - NYTimes.com
Euro zone finance ministers and international officials ended marathon talks on Greece's intractable debt ... afloat to contain contagion in the euro zone even as the country's debt prospects worsen. ...European Sovereign Debt Crisis (2010- ) ...

No Greek debt writedown in next rescue package: ECB's Asmussen
BERLIN (Reuters) - A write-down on Greek debt should not be part of the country's next rescue package, European Central Bank board member Joerg Asmussen told Germany's Bild newspaper ahead of Monday's euro zone group meeting. "We need a package of ...

Copper falls as euro zone growth fears return [Khaleej Times (United Arab ...
Copper fell on Tuesday after a downgrade of France's credit rating reminded investors of the festeringeuro zone debt crisis and took the steam out of a Monday rally built on optimism over positive announcements from Europe and the United States ...

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Saturday, November 24, 2012

Euro zone debt crisis: upcoming events

Factbox: Euro zone debt crisis: upcoming events
(Reuters) - Following are forthcoming events related to the debt crisis in the euro zone: GERMANY... November 23 - ECB President Mario Draghi and German Finance Minister Schaeuble speak at Banking Congress in Frankfurt on the future of the Euro Zone.

Euro zone in deep downturn as China, US tick up
PMI compiler Markit said the surveys were consistent with the euro zone economy shrinking 0.5 percent this quarter, which would be the worst reading since the first quarter of 2009, when the economy hit its lowest ebb during the financial crisis ...

Euro-Area Slump Persists as Chinese Factories Recover: Economy
San Francisco Chronicle
(See TOP CRIS for more on the sovereign-debt crisis.) Nov. 22 (Bloomberg) -- Euro-area services and manufacturing output shrank for a 10th month in November as the debt crisis hurt confidence, underscoring divergences in the global economy as China's ...

Euro zone consumer confidence falls in November
Chicago Tribune
Consumer spending accounts for more than half of euro zone economic output, but with the effects of the debt crisis cutting disposable income, households have been in no position to contribute much to economic recovery. In the wider 27-member European ...

EU Spars Over Budget as Chiefs Float Prospect of Summit Deadlock
San Francisco Chronicle
22 (Bloomberg) -- European Union leaders fought to protect national interests in setting the bloc's next seven-year budget, dogged by the debt crisis in the euro zone, tensions between rich and poor countries and Britain's insistence on keeping its ...

Poland Is 'Hostage to Europe': Finance Minister
... 6:51 AM ET. Text Size. By: Shai Ahmed CNBC Associate Editor. Despite bucking the economic gloom of the euro zone in recent years, Poland's Finance Minister warned that the region's debt crisis could derail the economic strides made by the country.


Ireland's Debt Office: Progress Made to Resecure Market Access
Wall Street Journal
DUBLIN--Ireland is making "considerable" progress to resecure full access to markets, but it still fears the wider euro-zone debt crisis could upset its plans, the head of the national debt office said Thursday. John Corrigan, chief executive of the ...

After Euro zone Q3 2012 contracts, KFH expects further decline
The latest recession will make it challenging to control financial statuses in the Euro zone, as the total GDP will shrink by 0.4% in 2012, added the report issued within a statement. However, there are medium term ... In line with our expectations ...

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Thursday, November 22, 2012

Dangerous Euro Zone-IMF Split Persists over Greek Debt

Dangerous Euro Zone-IMF Split Persists over Greek Debt
Spiegel Online
Euro-zone finance ministers meeting in Brussels this week have been unable to reach an agreement with the International Monetary Fund on how to ensure that Greece'sdebt load comes down to manageable levels. Germany and other European ... In contrast ...

Spiegel Online

Deutsche Bank expects euro zone to remain intact
Fears of a so-called peripheral euro zone state such as Greece leaving the currency union have haunted both markets and politicians as the region's debt crisis has unfolded. "Fundamentally, we believe the euro zone will remain intact," Mr ... He also ...

Premarket: Stocks steady as euro-zone fears percolate
Globe and Mail
Amid the latest efforts to pull the region out of its debt crisis, the euro is weaker against the U.S. dollar, but is well off its lows for the day, trading down 0.1 per cent at about $1.2803. Asian markets gained latitude overnight, even though the ...

Globe and Mail

Euro zone, IMF fail to strike Greek debt deal
After nearly 12 hours of talks through the night during which myriad options were discussed, euro zone finance ministers, the International Monetary Fund and the European Central Bank failed to reach a consensus, without which emergency aid cannot be ...

Debt crisis sends euro zone back into recession - Financial Mirror
World equity markets fell for a seventh day on Thursday, hit by evidence that Europe's debt crisishas stalled economic growth and by persistent concern over the ...

Euro zone aims at 120 pct/GDP Greek debt in 2020, ponders buyback
BRUSSELS Nov 20 (Reuters) - Euro zone finance ministers are aiming to bring Greek debt down to 120 percent of GDP in 2020, rowing back from an idea last week to shift the deadline to 2022, and discussing details of measures that would help achieve that ...

Euro zone meeting to focus on Greek crisis
Most Greeks want their country to stay in the euro zone but disapprove of the coalition government's handling of the debt crisis, a poll showed today. The survey, the first conducted by GPO pollsters since a June 17 election, comes ahead of a meeting ...

METALS-Copper slips as euro zone growth concerns resurface
... Thomas LONDON, Nov 20 (Reuters) - Copper dipped on Tuesday on worries over demand prospects after a downgrade of France's credit rating reminded investors of the festering euro zone debt crisis and overshadowed optimism that euro zone ministers ...

Global shares falter, oil slips on Gaza cease-fire
The Gaza conflict had supported crude oil prices over the past week and added to worries in the equity market about the U.S. "fiscal cliff" and the festering euro zone debt crisis. "Yesterday's big rally was all about fears of a wider conflict stemming ...

European shares retreat on euro zone worries
Buenos Aires Herald
European shares fell and the euro dipped today after France lost its top-notch credit rating from Moody's, reminding investors of the risks from the euro zone debt crisis. The FTSEurofirst 300 index of top European shares fell 0.2 percent to 1,089.50 ...

Poland drafting timetable for joining euro - president
Reuters UK
The comments by Komorowski were the strongest indication yet that policymakers in Poland, eastern Europe's biggest economy, were seriously considering a swift entry to the euro even though the euro zone is in the grip of a debt crisis. "(Poland) is ...

EURO GOVT-French yields edge up after downgrade
Although French bond yields have been reasonably steady and are at historically low levels, helped by safe-haven flows spurred by the euro zone debt crisis, the cost of insuring against a default reflects growing investor caution. Five-year credit ...

Tuesday, November 20, 2012

"In this global race you are either quick or you're dead"

Cameron says Britain in economic 'war' - CBI conference: debt crisis live
... crisis. Leading Democratic and Republican lawmakers voiced confidence over the weekend that a deal would be reached to avoid the so-called "fiscal cliff" ... Greece and the European Commission would sign a revised memorandum of understanding on...


Euro zone crisis firefighters begin to fight each other
Acting with the International Monetary Fund (IMF) and European Central Bank (ECB), they have bailed out Greece, Ireland and Portugal and set in place mechanisms to do the same for Spain in exchange for severe cuts to government spending and deep ...

ECB's Praet - deposit guarantee not key for bank union
Germany has resisted the idea of a Europe-wide deposit guarantee as part of a banking union, andECB President Mario Draghi said earlier this month "financial union does not have to imply the pooling of deposit guarantee schemes". After three ... The ...

TREASURIES-Prices dip on hopes budget crisis can be avoided
Lawmakers confident "fiscal cliff" will be avoided * Investors also keep an eye on Europe's debtwoes * Volumes light ahead of Thanksgiving holiday By Chris Reese NEW YORK, Nov 19 (Reuters) - U.S. bond prices fell on Monday as signs of progress in ...

Why We Don't Need QE or Euro: Czech Republic
Staff Writer, CNBC.com. As countries with much larger economies try to contest slowing growth by pumping more cheap money into their financial systems, the Czech Republic is planning to avoid similar actions – and may put off its euro joining date as ...


Euro breakup would mean short-term pain for long-term gain
Bangkok Post
The unravelling euro crisis will soon result in some countries leaving the currencyzone, but this should not unduly worry Asia, except for companies with a business presence in countries that exit the euro, according to the independent macroeconomic...

Bangkok Post

The euro zone's new migraine: Spanish politics
Globe and Mail
A serious secession attempt by the economically powerful region would trigger a political crisis that could easily scare off sovereign bond investors, raising Spain's financing costs and perhaps prompting a costly bailout of the euro area's fourth ...

Globe and Mail

fiscal cliff would give US an austerity crisis
Economic Times
Going over the fiscal cliff would give US an austerity crisis, not a debt crisis. Story; Comments ... WASHINGTON: Come January, the United States might careen off thefiscal cliff. Or start rolling ... But what is wrong with the plain old name "fiscal ...

Economic Times

SNB can keep 1.20 cap as long as needed- Danthine
The SNB set the cap of 1.20 francs to the euro in Sept. 2011 to stave off deflation and recession after investors seeking refuge from the euro zone debt crisis pushed the franc to record highs. In response to a question about how long the central bank ...

Monday, November 19, 2012

ECB's Asmussen sees Greek aid deal covering 2 years

ECB's Asmussen sees Greek aid deal covering 2 years
BERLIN (Reuters) - European Central Bank policymaker Joerg Asmussen said on Sunday the euro zone should agree next week on two years of funding for Greece and leave further help to be decided later, a view likely to irk the IMF, which wants a permanent ...

GLOBAL ECONOMY-Looking hard for reasons to give thanks
Euro zone in fresh crisis talks over Greece. * Budget wrangling ... In Europe, another week brings another meeting of finance ministers to try to 'save' Greece as well as another set of surveys likely to show the euro zone heading for another quarter ...

Italy austerity saved euro zone claims Mario Monti
Gulf Daily News
Monti, a former economics professor and high-flying European commissioner, was voted in by parliament as the head of a technocratic government on November 16 last year as Italy came under fire from the euro zone debt crisis. "This government was born ...

Gold to consolidate, rise
Hindu Business Line
The euro zone debt crisis dragged the block into its second recession since 2009 in the third quarter despite modest growth in Germany and France, data showed on Thursday. The markets are on their toes due to the looming “fiscal cliff” phenomenon, as ...

Business Insider
Little or none of these will happen as Washington will once again defer any serious deficit cutting, as it did when faced with 2011's debt ceiling crisis (which set up the current fiscal cliff crisis). The pain is deferred, but at a cost of further ...

Pick up key stocks on market weakness
The Nation
... SET Index rose on Monday after the US consumer confidence touched a five-year high, it dropped by 20.48 points from the middle to late last week (the SET Index hit a low of 1,263.05 points) on concerns over the US "fiscal cliff") and the European ...

Rajoy Still Has a Debt Mountain to Climb
Wall Street Journal
Even without requesting the euro-zone aid that would pave the way for the European Central Bank to start buying Spanish bonds, the presence of an implicit ECB backstop has led to a sharp fall in bond yields and allowed Madrid to complete its 2012 ...

Asian Stock Markets Week Ahead: Investors To Focus On US Data
International Business Times
Asian stock markets ended lower last week as concerns about the U.S. fiscal cliff andeuro zone debt crisis continued to weigh on the sentiment. Stock markets in Asia are expected to move along with the global markets in the coming week in the absence ...

International Business Times

Dollar creeps higher in cautious trade
The Nation
NEW YORK - The dollar edged higher as traders grew more cautious amid rising Middle East tensions, which added to worries about the eurozone debt crisis and the US fiscal cliff. The eurofetched $1.2741 at 2200 GMT, ... The euro managed to trim its ...

Gold falls as buck rises; Greece funding delayed
... olgax name jpmorgan large cap growth fund a realtimechannel channel quotes zigman 369776 id quote_1904397 open 2 days ago markets financials shed morning woe reits highlight us financial stocks recover earlier losses on tuesday afternoon and rise ...


Saturday, November 17, 2012

US fiscal policy and Euro debt crisis (video)

Nov. 16 (Bloomberg) -- Kyle Bass, chief managing partner and principal of Hayman Capital Management LP, talks about his firm's investment strategy, U.S. fiscal policy and Europe's debt crisis. He speaks with Stephanie Ruhle on Bloomberg (Source: Bloomberg)

How Long Would the Shock to the Economy Last? - Nov. 16 (Bloomberg) -- Cumberland Advisors' Robert Eisenbeis and David Kotok discuss President Obama's meeting with congressional leaders about the fiscal cliff. They speak on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

Debt crisis: as it happened, November 16, 2012
Have a great weekend, and don't forget to log on to our financial crisis page for more news and analysis over the weekend. Enjoy! 16.55 David .... this aim," he said. Mr Weidmann also said that comparisons between the ECB, Bank of England and Federal...


METALS-Copper falls on dollar rise, worry over US and euro zone
A pick-up in growth from China would provide welcome news in the West, where industrialised economies are struggling following the debts built up during the global financial crisis. But bulging metal inventories in China, expectations of a modest rise ...
Debt crisis sends euro zone back into recession [Financial Mirror (Cyprus)]
Some analysts said investors were wary of selling the euro heavily in case policymakers surprised markets with decisive action to tackle the euro zone debt crisis. "They don't want to sell into it too aggressively in case there's a policy response from ...
Fitch Says Weaker Euro-Zone Countries Face Challenges
Wall Street Journal
Fitch raised its outlook on Ireland to stable from negative, the first positive credit rating action on aeuro-zone sovereign from the geographic periphery since the onset of the debt crisis. The move reflected "country-specific considerations, rather ...
Gulf Daily News
EURO ZONE IN RECESSION. Posted on » Friday, November 16, 2012. BRUSSELS: The euro zone debt crisis dragged the bloc into its second recession since 2009 in the third quarter despite modest growth in Germany and France, data showed yesterday.
Moody's Says Euro Crisis May Lurch Back into Shock
The rating agency said that positive developments since summer have reassured investors that a resolution to the ongoing euro-zone crisis will be forthcoming. But Moody's said that progress on what needs to be accomplished to provide a fix--economic ...
EURO GOVT-Greek, US worries keep Bunds near highs
LONDON, Nov 16 (Reuters) - German government bonds traded close to two-month highs on Friday, with anxiety over Greece's debt sustainability and the U.S. "fiscal cliff" pushing investors towards the safety of low-risk assets. Greece has taken centre ...
Europe's Lingering Crisis Augurs Badly for Its Clout
Wall Street Journal
In the early phases of the euro-zone debt crisis, many of them dismissed its significance, arguing it was a transitory financial and economic phenomenon that would have little or no lasting geopolitical impact. Now, the crisis has dragged on for so ...
European shares slip for third session
PARIS, Nov 16 (Reuters) - European stocks slipped further on Friday as brewing worries over U.S. budget negotiations and the continuing euro zone debt crisis unsettled some investors, with banking stocks featuring among the top fallers. The euro zone ...

Euro-Zone Economy Shrinks Again
Wall Street Journal
While most economists in the November Wall Street Journal forecasting survey don't expect the U.S. to follow Europe into recession in the next 12 months, an escalation in the euro-zone crisis is the second-most-cited potential trigger for a U.S ...

Wall Street Journal

Friday, November 16, 2012

Surprise, surprise--AFTER the election, the TRUTH comes out

Surprise, surprise--AFTER the election, the TRUTH comes out--

1. Poverty is up;
2. Jobless claims are up;
3. Inflation up;
4. Eurozone already in recession--

Euro zone falls into second recession since 2009 | Reuters: (Reuters) - The euro zone debt crisis dragged the bloc into its second recession since 2009 in the third quarter despite modest growth in Germany andFrance, data showed on Thursday. The French and German economies both managed 0.2 percent growth in the July-to-September period but their resilience could not save the 17-nation bloc from contraction as the likes of The Netherlands, Spain, Italy and Austria shrank. Economic output in the euro zone fell 0.1 percent in the quarter, following a 0.2 percent drop in the second quarter. Those two quarters of contraction put the euro zone's 9.4 trillion euro ($12 trillion) economy back into recession, although Italy and Spain have been contracting for a year already and Greece is suffering an outright depression. A rebound in Europe is still far off. . . . . "

GLOBAL MARKETS-Shares sink on 'fiscal cliff,' Europe recession
NEW YORK, Nov 15 (Reuters) - Global stocks fell for a seventh day on Thursday after data showed the euro zone entered a recession in the third quarter and on fear of the U.S. "fiscal cliff," while oil prices gained on growing concerns about violence in ...

Euro Zone Q3 GDP To Contract On Worsening Debt Crisis
Action Forex
The Euro Zone falls under the spotlight as financial markets are waiting for the first Euro ZoneGDP reading for the third quarter 2012 with expectations the economy contracted amid the worsening sovereign debt crisis. The first GDP reading for the 3 ...

European shares dip as euro zone sinks into recession
LONDON, Nov 15 (Reuters) - European shares fell for the second day running on Thursday as investors fretted over waning growth due to the euro zone debt crisis and doubts about the U.S. fiscal situation. By 1112 GMT, the FTSEurofirst 300 had shed 4.86 ...

Euro zone double dips back into recession
FRANKFURT (MarketWatch) — Europe's long-running debt crisis dragged the 17-nation euro zoneback into recession in the third quarter, data showed Thursday, offering a negative counterpoint to growing optimism among U.S. and global investors over ...

UPDATE 2-Top euro policymakers at odds over Greek debt fix
ECB's Coene says writedown probable eventually. * IMF pressing for ... The euro zone's debt crisisbegan in Greece three years ago when a newly elected government disclosed that the country had knowingly understated its budget deficit. Athens managed ...

PRECIOUS-Gold slips as weak euro zone data hurts stocks
Stocks hurt by weak euro zone growth data. * World gold demand slides in Q3 - WGC. * South Africa mine strikes end, tensions remain. By David Brough. LONDON, Nov 15 (Reuters) - Gold eased on Thursday as evidence that Europe's debt crisis has hurt ...

Euro zone falls into recession
The euro zone fell into a recession in July-September, the second since the global financial crisisin 2009, as French resilience could not make up for a slump across Europe and the three-year debt crisis slowed Germany to a crawl. Economic output in ...

Fiscal Cliff Crisis; Will Lawmakers Reach Some Sort of Deal?
While the fiscal cliff issue has been at the back of investors' mind for over a year now, focus completely turned to the impending threat following the U.S. Presidential election on November 6. The fiscal cliff refers to the implementation of automatic ...

Euro zone falls into second recession since 2009 | Economy | GMA ...
The euro zone debt crisis dragged the bloc into its second recession since 2009 in the third quarter despite modest growth in Germany and France, data showed on Thursday.
GMA News Online

Euro-zone limps into recession – Debt crisis hits growth, outlook ...
By Kuwait Times
BRUSSELS: The 17-nation euro-zone was in recession for the second time in three years in the third quarter, official data showed yesterday, as the debt crisis exacts a heavy toll and the outlook darkens steadily. The euro-zone economy ... France meanwhile also managed 0.2 percent but Spain shrank 0.3 percent and Italy 0.2 percent, boding ill as the euro-zone struggles to put its financialaffairs in order through the austerity policies which are proving so unpopular. Non-euro Britain ...
Kuwait Times

Euro zone dodges disaster but doesn't rebound - Analysis & Opinion ...
By Edward Hadas
If politicians and central bankers had responded less well to the 2008 financial crisis and the on going euro crisis, the euro zone would be stuck in a vicious cycle of debt deflation and economic decline – Greece writ large. Despite foreign ...

Euro zone slips into second recession since 2009 - World - IBNLive
The euro zone fell into a recession in July-September, the second since the global financial crisis in 2009, as French resilience could not make up for a slump across Europe and the three-year debt crisis slowed Germany to a crawl.
IBN Top Headlines

Euro-Zone Woes Fuel Immigration to Germany - Spiegel Online
Experts immediately began pointing their fingers at the euro zone's reliance on austerity measures as it struggles to emerge from the ongoing debt crisis.

Europe stocks drop 1.7% on week, Greece weighs - MarketWatch
LONDON (MarketWatch)—European stocks closed the week 1.7% lower with banking shares under pressure Friday, as upbeat Chinese economic data failed to ...

CEPR: Euro-Zone Economy Suffers Recession Since 3Q 2012 - The ...
The euro-zone economy has been in recession since the third quarter of last year , following the ...Real-time updates and analysis of Europe's debt crisis ...

Euro zone falls into second recession since 2009 - Yahoo! Finance
Finance: The debt crisis dragged the euro zone into its second recession since 2009 in the third quarter despite modest growth in Germany and France, data ...

Thursday, November 15, 2012

Murmurs and Rumors

Oil ends below $86; fiscal cliff, euro zone weigh - MarketWatch: " . . . Crude-oil futures settled lower Monday, slipping back below $86 a barrel as investors watched risks to oil demand against a backdrop of concerns about the U.S. fiscal cliff and ongoing debt crisis in the euro zone. Tension in the Middle East region, however, limited oil’s losses. . . . Prices sold off Monday “due to the ongoing woes surrounding the [U.S.] fiscal cliff and the euro debt crisis,” said Matt Smith, a commodity analyst at Schneider Electric. . . . News reports say that Israel and Syria have exchanged fire, a development which is being referred to by BBC News as the most serious episode between the two countries since the Arab-Israeli war of 1973. In Nigeria, Royal Dutch Shell (US:RDS.A) has shut down a pipeline, blaming leaks caused by oil thieves. Meanwhile, worries persisted Monday over whether the United States will be able to avoid falling off the so-called fiscal cliff of tax hikes and spending cuts that will take place in January, unless politicians are able to strike a deal. “The crude complex remains at the mercy of developments and nondevelopments in two distinct ‘doozies,’ which are dictating focus at the moment: the impending ‘fiscal cliff’ and the euro debt crisis,” said Smith. “We have had murmurs and rumors of developments for both over the weekend, as Greece passes its austerity budget for next year.”. . . "

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