By Gordana Filipovic – “Europe must accept there are limits to austerity and that additional austerity won’t do anything but bring societies on the verge of collapse,” said Nobel laureate Paul Krugman, an economics professor at Princeton University. “No country will have prosperity until Germany and the ECB have decided that too much pain has been inflicted.”
In the U.S., where the recovery is struggling to gain traction, new fiscal stimulus should be “directed to distressed individuals” rather than companies, Krugman said. more> http://tinyurl.com/9j4prhw
Posted in Banking, Business, Economy
Tagged Austerity, Capital, ECB, Germany, Industrial economy, Monetary policy, Nobel Prize, Paul Krugman, Princeton University, United States
By Claire Davenport – The European Commission unveiled sweeping plans for the European Central Bank to supervise all euro zone banks on Wednesday (Sep 12), though Germany immediately raised objections that the proposals risked overstretching the ECB.
The reforms, which need to be approved by the European Union’s 27 member states, aim to break the link between struggling banks and heavily indebted governments, an interdependence that has exacerbated the debt crisis over the past three years.
By empowering the ECB to police all banks in the euro zone, the proposal hopes to break the vicious cycle and then lay the ground for deeper fiscal cooperation across the EU. more> http://tinyurl.com/9rnemyp
- Euro Zone Enters Dangerous Week Buoyed by ECB (cnbc.com)
- Europe unveils banking union plan to tackle crisis (business.financialpost.com)
- Euro zone enters dangerous week buoyed by ECB (uk.reuters.com)
- EU Recruits ECB to Lead National Regulators in Bank-Crisis Fight – Bloomberg (bloomberg.com)
- EU Plan Said to Give ECB Sole Power to Grant Bank Licenses – Bloomberg (bloomberg.com)
- Commentary: A Page For The History Books – Brussels Pushes Forward With E.U. Banking Union (freeinternetpress.com)
- After 19 Summits, Nations Get Closer to Euro 2.0 (bloomberg.com)
- Europe Plan Faces Threat in Germany, Jack Ewing and Melissa Eddy, NYTimes.com
- EU Recruits ECB to Lead Supervisors in Bank-Crisis Fight, Rebecca Christie and Jim Brunsden, Bloomberg
- Dutch vote in euro-dominated general election, Charles Onians, AFP/Google
- German finmin says up to member states to solve euro crisis, Reuters
- Vast crowds demand Catalan autonomy from crisis-hit Spain, Andrés González, Reuters
- Euro debt crisis top of mind as Dutch head to polls, Peter Teffer, CSMonitor.com
Posted in Banking, Economy, Leadership
Tagged Capital, ECB, European Central Bank, European Commission, European Stability Mechanism, European Union, Eurozone, Germany, Super regions
By Michael Sivy – Stocks rallied powerfully late last week after European Central Bank President Mario Draghi declared that the ECB stands ready to do whatever it takes to preserve the euro.
There are three seemingly unavoidable problems:
- The next round of losses in Greece cannot be charged mostly to private-sector lenders
- Austerity and ECB lending have not been able to hold down interest rates
- The growing magnitude of the problem will run up against political constraints
Both France and the Netherlands, which supported and helped pay for previous bailouts, now have financial problems of their own. And resistance is growing in Germany against taking on further liabilities. more> http://tinyurl.com/cdajo5u
Posted in Business, Economy, Leadership
Tagged Capital, ECB, European Central Bank, Financial crisis, France, Germany, Greece, Mario Draghi, Netherlands, Super regions
Development of balance sheet total of the Eurosystem (i.e., The European Central Bank and the central banks of the countries using the euro. Used on Kredietcrisis. To be updated regularly. Theoretically, this could be updated weekly, but I don't think I'll manage that. Data obtained from the ECB website, Statistical Data Warehouse, search query ILM.W.U2.C.T000.Z5.Z01. (Photo credit: Wikipedia)
By Kirsten Donovan – The latest escalation of the euro zone debt crisis, with Spain now taking centre stage, is closing funding markets for banks again.
“If you parked the ECB cash in government bonds then you’re losing money if you need to sell them to repay your own bondholders,” said Rabobank rate strategist Lyn Graham-Taylor.
“That has to worry banks. Effectively sovereigns and banks in Spain and Italy have become ever more closely tied together through the (ECB’s three-year tenders).” more> http://tinyurl.com/7sv48a2
European Central Bank (Photo credit: kumbarov)
New Europe – The real money has come from the European Central Bank (ECB), which handed €1 trillion to the Eurozone‘s banks. It was this trillion euro that paid for Greece‘s debts, rather than German taxpayers, and this is how – the ‘liquidity’ loans from the ECB went to 800 banks at a negligible interest rate of 1%.
In total, these lenders are expected to make a windfall profit of €300bn, just by lending the trillion euro during this period of time. The profits made will be enough to pay for the losses on Greece’s debt or any other Eurozone sinner’s default.
Clever? We don’t think so, because actually, it will be the Eurozone citizens who will foot the bill through higher inflation or via a necessary capital increase in the ECB to cover for the central bank’s losses from loans that will not be repaid – even if all those loans are paid back to the ECB, the fact remains that the borrowing banks will make profits of €300bn just by exploiting the trillion for three years. more> http://is.gd/dDAZ71
By Nicholas Vinocur and James Mackenzie – Facing rising borrowing costs as its AAA credit rating comes under threat, France appeared to plead for stronger ECB action, adding to mounting global pressure spelled out by President Barack Obama.
Bond market contagion is spreading across Europe. Italian 10-year bond yields have risen above 7 percent, unaffordable in the long term. Yields on bonds issued by France, the Netherlands and Austria — which along with Germany form the core of the euro zone — have also climbed. more> http://twurl.nl/2u0aur
Posted in Banking, Economy, Leadership
Tagged Austria, Capital, Deficit, ECB, European Central Bank, Eurozone, France, Germany, Netherlands