Roubini: Slowdown Brings Forward New Financial Crisis

Bloomberg

By Scott Hamilton - Sep 6, 2011 7:28 PM GMT+0300

Nouriel Roubini, co-founder and chairman of Roubini Global Economics LLC, said the current slowdown in the world economy has brought forward the timing of a new financial crisis.

“I thought a few months ago that the perfect storm would be 2013,” Roubini said in an interview in London today. “But now, the economic weakness in the U.S., euro zone and the U.K. is front loaded. So we’re going to double dip earlier. The climax of it could be 2013, or it could be already earlier. It depends on what policy tools are available.”

Wall St falls on euro zone debt fears

By Edward Krudy

NEW YORK | Tue Sep 6, 2011 2:07pm EDT

(Reuters) - Wall Street stocks tumbled for a third session on Tuesday on rising concerns about the euro zone's debt crisis and the outlook for the global economy.

Major U.S. banks were among the biggest decliners, with the KBW Bank index off nearly 2 percent on fears that lenders face a growing list of mortgage-related lawsuits.

Late on Friday, the Federal Housing Finance Agency sued 17 large U.S. banks over subprime mortgage-backed bonds.

The Worst-Case Euro Scenario

Each day the currency remains on life-support in its current form, the consequences of its eventual death become graver.

The Wall Street Journal

By SAJID JAVID

On the Continent, August is usually reserved for long vacations in the sun. Instead, European leaders spent the month working on increasingly desperate attempts to save the euro in its current form. There's only one prospect more frightening than what would happen if they fail: what would happen if they succeed.

Europe Signals Global Gloom

The Wall Street Journal

World Markets Fall as Continent's Debt Crisis Fuels Worries of Lengthy Slowdown

By BRIAN BLACKSTONE And LAURA STEVENS

FRANKFURT—International financial markets tumbled as a darkening global economic outlook and deepening fissures in Europe over its debt crisis fueled fears the world economy could slip into a period of prolonged malaise.

The Stoxx Europe 600 index fell 4.1% Monday, with banks hard hit. The euro slid below $1.42, its lowest in a month. The declines followed a slide in Asia, where stock indexes in China and Japan dropped by about 2% Monday. On Tuesday morning Asian markets again moved lower, with Japan shares falling 1.2% by late morning. During early Asian trading the 10-year U.S. Treasury yields hit as low as 1.911%, the lowest level in at least five decades, according to traders.

The end of Monnet

The Economist

The debt crisis is exposing problems in the basic design of the European Union

Sep 3rd 2011 | from the print edition

ALL it the curse of the euro. When politicians discuss the single currency’s crisis in Brussels, their actions are invariably seen by markets to be too little, too late. When they return home, they are accused of surrendering too much, too fast. So bond markets swoon and leaders become enfeebled. Such has been the fate of last July’s summit deal to save Greece for the second time and boost the embryonic European monetary fund. Government debt is dangerously wobbly in Italy and Spain, yet political approval of the deal has hit trouble in Germany and Finland.

Greek Central Banker Seeks Faster Effort From Athens

The Wall Street Journal

By ALKMAN GRANITSAS

ATHENS—Greece's top central banker called on the government to speed up efforts to close the budget gap amid growing concerns elsewhere in Europe that Athens can't pull itself out of its debt spiral.

Bank of Greece Governor George Provopoulos said that the lack of fiscal and other reforms were deepening Greece's recession.

A make-or-break month for the euro zone

Reuters

By Kathleen Brooks. The opinions expressed are her own.

For over a year now people have been calling for the collapse of the euro zone. Either one of the bailed out nations would leave, or the more fiscally sound northern European states would form their own version of a union. Regardless of what the outcome would be, the harsh reality was that the Eurozone’s massive floor -  allowing countries like Greece to borrow for nearly a decade at German-style interest rates without some limit on spending or enforcement of fiscal rules – meant that it could not survive.

German Bunds Rise, Italy, Spain Government Bonds Slide, on Recession Signs

Bloomberg

By Emma Charlton and Keith Jenkins - Sep 3, 2011 9:30 AM GMT+0300

German bunds surged this week, pushing 10-year yields to a record low below 2 percent, as signs the U.S. economy may be headed toward recession boosted demand for the safest securities.

Italian bonds dropped for a 10th day, and Spain’s benchmark rates climbed to the highest level in three weeks on concern debt purchases by the European Central Bank won’t be enough to cap the two nations’ borrowing costs. A U.S. payrolls report yesterday showed no jobs were added in August, stoking speculation the Federal Reserve will consider additional stimulus measures to boost the economy. Greek two-year yields soared above 47 percent.

Talks on Greek Bailout Are Stalled

The Wall Street Journal

IMF, Commission and Central Bank Clash With Athens on Budget-Gap Fix

By ALKMAN GRANITSAS, STELIOS BOURAS and COSTAS PARIS

ATHENS—Talks over new bailout funds for Greece were suspended Friday amid disagreements over how to fill a government-deficit gap that once again is veering off track, raising doubts about the country's future access to finance and triggering renewed nervousness in financial markets across Europe.

Among the dinosaurs

The Economist

France’s Socialists have yet to come to terms with the modern world

BLISS is it in a financial crisis to be a socialist. Or so it ought to be. In speculators and ratings agencies, Europe’s left has a ready cast of villains and rogues. In simmering social discontent, it has an energising force. A recent issue of Paris-Matchinadvertently captured the mood: page after full-colour page on Britain’s rioting underclass were followed by gory visual detail of the bling yachts crowding into the bay near Saint-Tropez. Time, surely, to put social inclusion before defiant decadence.

Officials Warn Lenders On Greek-Debt Values

The Wall Street Journal

By MICHAEL RAPOPORT And DAVID ENRICH

In an unusual move, international accounting rule makers said some European banks haven't taken big-enough write-downs on the value of the distressed Greek government debt they hold.

Some banks are using their own models to value their Greek bonds and other distressed sovereign debt when accounting rules dictate that they should be using market prices to determine the securities' fair value, the International Accounting Standards Board said in a letter this month to the European Union's chief securities regulator.

BRICs Are No Cure for Global Economic Growth This Time

Bloomberg

By Michael Patterson and Simon Kennedy - Sep 1, 2011 8:39 AM GMT+0300

Stocks of international companies that depend most on emerging markets for sales show developing nations won’t be strong enough to buoy the global economy.

Moving On From Greece?

The Wall street Journal

By RICHARD BARLEY

Will what happens in Greece, finally stay in Greece?

A host of doubts still surround the second bailout for the country. The economy is in tatters, there is doubt over the bond swap at the heart of the deal, and a spat over collateral for Finnish loans is continuing. But while Greek bond yields have surged to fresh highs, with the yield to maturity on two-year notes at 46%, the rest of the euro-zone government-bond market hasn't taken fright. That marks a step forward in the crisis.

Quietly, Germans Take On More Prominent Role at EU

The Wall Street Journal

By LAURENCE NORMAN

When Axel Weber walked away from the chance to be the next president of the European Central Bank, many in Brussels were amazed that Germany again lost out on the chance to pick up a powerful European Union post.

Eurobond Plan Would Need a Big Sweetener

The Wall Street Journal

The euro-zone crisis is solved. It took some doing, but the final pieces are in place.

First, Italian Prime Minister Silvio Berlusconi has promised to reform his nation's no-growth economy. Second, the European Central Bank has agreed to buy bonds of troubled countries, including Spain and Italy. Third, euro-zone leaders have agreed to authorize their bailout fund—a.k.a. the European Financial Stability Facility—to buy euro-zone government bonds in the secondary market. I would add a fourth but it takes irony too far: Euro-zone leaders have benefited from advisory phone calls from President Barack Obama, and Treasury SecretaryTimothy Geithner's warning that they are moving too slowly to confront their debt crisis.

Worries over and head for the beaches.

Wall Street surges 2 percent on Greek bank deal; trade thin

(Reuters) - Stocks soared more than 2 percent in a broad rally on Monday as a merger between two big Greek banks provided a rare bit of encouraging news out of debt-stricken Europe.

A rebound in consumer spending calmed fears of a new U.S. recession and also helped lift all 10 S&P sectors. Only five S&P stocks ended in negative territory while the CBOE Volatility index .VIX, a measure of investor fear, lost 9.3 percent. But volume was low, amplifying the surge in shares.

Greece seeks details of global holders of its bonds

BBC

Greece has written to finance ministers around the world to help assess global holdings of Greek government bonds.

It is part of the preparations for a debt swap, which will see private holders of Greek bonds asked to exchange them for other bonds that pay less interest over a longer time frame.

The debt swap was agreed between Greece and other eurozone nations in July so it could get a second bailout.

Eurozone finance ministers are due to discuss the bailout later.

Tax Haven's Tax Haven Pays a Price for Success

The Wall Street Journal

By DEBORAH BALL

ZUG, Switzerland—Developed nations from Japan to America are desperate for growth, but this tiny lake-filled Swiss canton is wrestling with a different problem: too much of it.

Zug's history of rock-bottom tax rates, for individuals and corporations alike, has brought it an A-list of multinational businesses. Luxury shops abound, government coffers are flush, and there are so many jobs that employers sometimes have a hard time finding people to fill them.

Eurobank, Alpha Plan Merger Amid Debt Crisis

By Christos Ziotis and Maria Petrakis - Aug 29, 2011 11:07 AM GMT+0300

The boards of EFG Eurobank Ergasias SA and Alpha Bank SA,Greece’s second- and third-biggest banks, met today to discuss a possible merger aimed at bolstering their assets and helping them ride out a deepening recession and the country’s sovereign debt crisis.

Shares in the Athens-based companies were suspended today pending news from the board meetings, the Athens exchange said in astatement posted on its website. The banks are meeting on “their merger and a planned capital boost of the new bank,” the exchange said. A joint press conference will be held at 2 p.m. today in Athens, the two banks said yesterday.

The world economy

A call to arms

The Economist

Aug 28th 2011, 4:16 by Z.M.B. | JACKSON HOLE, WY

IT IS largely a gathering of central bankers; at the outset of her speech she apologised for not being one. Yet by far the most hard-hitting words at this year’s Jackson Hole symposium came from Christine Lagarde, the former French finance minister and new managing director of the IMF. 

The world economy, she said, was entering a “dangerous new phase” driven by a sense that “policymakers do not have the conviction” to take decisions that are needed. That must change, and now. Ms Lagarde laid out a bold to-do list to support growth, including a forced capital injection into Europe’s banks, aggressive new action to deal with America’s foreclosure crisis, and a broad rebalancing of fiscal priorities.