European banks

Chest pains

Europe’s sovereign-debt crisis is constricting the flow of money to its banks

“I’VE never seen risk aversion this intense,” says the chief executive of a large European bank. “It is unsustainable.” His anxiety is understandable given the wild gyrations that rocked bond and commodity markets in early August and continued through the slow trading days of mid-August, when gold hit new highs and the yields on government bonds touched new lows in Britain and America. Steep falls in stock prices this month have erased all the gains made over the past year.

Gold falls again after jump in dealing costs

25 August 2011 Last updated at 11:15 GMT

BBC

The price of gold has fallen again after the cost of dealing in the metal jumped sharply on two key exchanges.

Hopes the global economy will stabilise also prompted sales.

Fears about European and US debt and growth prospects had led investors to buy gold - which is seen as a safer investment - in recent months.

Climate science (II)

Clouds in a jar

A new experiment with old apparatus reveals a flaw in models of the climate

The Economist

CLOUD chambers have an honoured place in the history of physics. These devices, which generate vapour trails that mark the passage of high-energy subatomic particles, were the first apparatus that allowed such passage to be tracked. That was in the 1920s and led, among other things, to the discovery of cosmic rays. Science has moved on since then, of course, and cloud chambers are now largely museum pieces. But the world’s leading high-energy physics laboratory, CERN, outside Geneva, is dusting the idea off and putting it into reverse. Instead of using clouds to study cosmic rays, it is using cosmic rays to study clouds. In doing so, it may have thrown a spanner into the works of the world’s computer models of the climate.

Euro-Zone Data Show Rough Path Lies Ahead

The Wall Journal

By ALEX BRITTAIN And TOM FAIRLESS

LONDON—A slump in German business confidence and an unexpected fall in euro-zone factory orders marked the latest in a string of forward-looking data to suggest the currency bloc's economy is losing momentum.

One giant step to EU fiscal union

BBC

Watching the French president and the German chancellor in Paris yesterday I tried to imagine myself a Dutch or Italian voter.

Here, in the middle of August, the two leaders of the eurozone's most powerful countries had interrupted their August to announce that, in future, there would be a eurozone government with an elected president.

Delivering a Franco-German Bouquet of Irony

The Wall Street Journal

By ALEN MATTICH

This week's Franco-German deal to save the euro is a collection of ironies, not least that it's likely to precipitate an early withdrawal from the single currency by some of its beleaguered member states.

French President Nicolas Sarkozy and German Chancellor Angela Merkel drew up a plan to fix the euro zone's problems by making sure member countries stick to sound fiscal policies. And by sound they mean budget deficits of no more than 3% of gross domestic product, with the aim they balance their budgets over the economic cycle, and gross-debt-to-GDP ratios of below 60%.

Euro Zone Weighs New Plan on Greek Bailout Collateral

The Wall Street Journal

By MATTHEW DALTON, RIVA FROYMOVICH and BERND RADOWITZ

BRUSSELS—Euro-zone governments are discussing a plan to have noncash Greek government assets, including real estate, offered as collateral for a new round of rescue lending to Greece, backing away from a bilateral agreement reached last week between Greece and Finland, officials said Tuesday.

Greek Cuts Erode Livelihoods

The Wall Street Journal

Households, Small Businesses Wilt Under Strain of Austerity Measures; Holiday Bonuses for Pensioners Are Cut

By COSTAS PARIS And ALKMAN GRANITSAS

ATHENS—Greek households and small businesses show growing signs of strain as knock-on effects of government cutbacks ripple through the country's fragile economy.

Analysis: Stocks' volatility keeps forecasters busy

(Reuters) - Nobel Laureate Paul Samuelson is famous for saying the stock market predicted nine of the last five recessions.

This joke by the first American to win the Nobel Memorial Prize in Economic Sciences is not lost on economists as they repeatedly downgrade U.S. growth forecasts in response to the exceptional turmoil in financial markets.

Global Markets Move, but Merkel Won't

The Wall Street Journal

Never say that euro-zone countries can't agree on anything. A consensus is rapidly forming: Germany should transfer to its euroland partners more of its hard-earned money, either by lending its impeccable credit to an issue of euro bonds, or contributing more to a much-enlarged European Financial Stability Facility.

U.S. investigating S&P over mortgages: report

(Reuters) - The U.S. Justice Department is investigating whether Standard & Poor's improperly rated dozens of mortgage securities in the years before the financial crisis, The New York Times reported on Thursday, citing sources familiar with the matter.

Growth worries hobble stocks, Swiss franc slips

(Reuters) - European equities followed Asian stockslower on Thursday as investors fretting about the global growth outlook cut exposure to riskier assets, while the Swiss franc fell on talk the central bank was intervening in the forwards market.

Franc Gains as Switzerland Stops Short of Peg

Bloomberg

The Swiss franc strengthened after the country’s central bank announced additional liquidity measures while refraining from announcing tougher moves such as adopting a currency target or a temporary peg.

Franco-German Proposal Disappoints

Sarkozy and Merkel Propose Euro-Zone Council for Better Governance

By NATHALIE BOSCHAT, BERND RADOWITZ and GABRIELE PARUSSINI

PARIS—The plan by France and Germany to create a head of the euro zone to shore up economic governance of the monetary union stopped short of more fundamental steps toward refashioning the area into a federal entity that would issue its own debt, disappointing investors hungry for a more radical solution to the euro-zone crisis

Poor German data hits stocks and euro

(Reuters) - Stagnant growth in Europe's powerhouseGermany knocked stocks lower on Tuesday and hit the euro, adding to investor fears that the world economy is slowing more than expected.

Focus was also on a meeting in Paris between French President Nicolas Sarkozy and German Chancellor Angela Merkel, with investors looking for any signs of new measures to contain the spreading euro zone debt crisis.

U.K. Leader Blames Riots on 'Moral Collapse'

U.K. Prime Minister's Promise to Use Policy to Remedy Social Ills Comes Amid Debate Over His Cuts to Police

The Wall Street Journal

By ALISTAIR MACDONALD

LONDON—Prime Minister David Cameron sought to bolster his law-and-order credentials Monday with a speech promising a root and branch review of all government policy to tackle the "slow-motion moral collapse" he believes led to the U.K.'s worst rioting in decades.

Mr. Cameron faces many obstacles in turning round what he described as "broken Britain"—including his government's cuts to police forces, and divisions between the police and government that have erupted since the unrest.

Selloff raises stakes in Sarkozy-Merkel talks

(Reuters) - The leaders of France and Germany face a stark choice in talks on Tuesday over whether to begin steering the embattled euro zone toward closer fiscal union or risk watching the bloc unravel.

French President Nicolas Sarkozy and German Chancellor Angela Merkel meet in Paris to discuss what further measures they can take to contain Europe's debt crisis, which is now spreading to the continent's core.

Italy has been forced to ramp up its austerity measures and financial market jitters hit France last week with French banks' shares subject to panic selling following rumors that the country could be next to lose its prized AAA debt rating.

Markets heading to new danger zone: Zoellick

(Reuters) - The loss of market confidence in economic leadership in key countries like the United States and Europe coupled with a fragile economic recovery have pushed markets into a new danger zone, something that policymakers have to take seriously, the head of the World Bank said on Sunday.

U.S. Shows off Carrier Amid Tensions

The Wall Street Journal

ABOARD THE USS GEORGE WASHINGTON—Less than a week after China launched its first aircraft carrier, the U.S. showed off its own big-boy supercarrier to former enemy Vietnam—one of several smaller Asian nations with jittery nerves amid Beijing's burgeoning maritime ambitions. A delegation of Vietnamese military and government officials was treated to a tour aboard the sprawling USS George Washington nuclear carrier this weekend off the country's southern coast, once home to the U.S.-backed capital of South Vietnam during the Vietnam War.

It's the second such visit to the U.S. Navy's hulking carrier in as many years and a symbol of the former foes' warming military ties. But Saturday's visit also came amid heated tensions between China and its Asian neighbors. Hanoi's relations with Beijing hit a low point this summer following weeks of squabbling over disputed territory in the South China Sea—where the U.S. carrier cruised under blue skies about 140 miles (225 kilometers) off the coast.

Greece’s economy

Keep calm and carry on

Does the government have the will to see through its ambitious bail-out plan?

Aug 13th 2011 | ATHENS | The Economist

PATROCLES, a taxi driver, had to borrow his wife’s car to ferry customers to and from Athens airport to avoid being spotted by his colleagues on strike.