France and Germany have reached an agreement to boost the eurozone's rescue fund to €2tn (£1.75tn) as part of a "comprehensive plan" to resolve the sovereign debt crisis, which this weekend's summit should endorse, EU diplomats said. The growing confidence that a deal can be struck at this Sunday's crisis summit came amid signs of market pressure on France following the warning by the ratings agency Moody's that it might review the country's coveted AAA rating because of the cost of bailing out its banks and other members of the eurozone. The leaders of France and Germany hope to agree a deal that will assuage market uncertainties or, worse, volatility, in the run-up to the G20 summit in Cannes early next month. France would now have to pay more than a percentage point – 114 basis points – over the price paid by Germany to borrow for 10 years as the gap between the two country's bond yields widened to their highest level since 1992. The news cheered US investors. All the major stock markets surged, with the Dow Jones Industrial Average rising 250 points, or 2.2%, to 11,651, after earlier falling by 101 points earlier in the day. US markets have previously reacted uneasily to any new news from Europe. Earlier in the day Goldman Sachs reported third-quarter losses of $393m, only its second loss in 12 years.
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Wednesday, October 19, 2011
France and Germany have reached an agreement to boost the eurozone's rescue fund to €2tn (£1.75tn) as part of a "comprehensive plan" to resolve the sovereign debt crisis, which this weekend's summit should endorse, EU diplomats said. The growing confidence that a deal can be struck at this Sunday's crisis summit came amid signs of market pressure on France following the warning by the ratings agency Moody's that it might review the country's coveted AAA rating because of the cost of bailing out its banks and other members of the eurozone. The leaders of France and Germany hope to agree a deal that will assuage market uncertainties or, worse, volatility, in the run-up to the G20 summit in Cannes early next month. France would now have to pay more than a percentage point – 114 basis points – over the price paid by Germany to borrow for 10 years as the gap between the two country's bond yields widened to their highest level since 1992. The news cheered US investors. All the major stock markets surged, with the Dow Jones Industrial Average rising 250 points, or 2.2%, to 11,651, after earlier falling by 101 points earlier in the day. US markets have previously reacted uneasily to any new news from Europe. Earlier in the day Goldman Sachs reported third-quarter losses of $393m, only its second loss in 12 years.
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Senior EU officials admit that technical details remain to be settled. Some of these will be agreed by finance ministers who meet on Saturday, while others will await final agreement in the run-up to the G20 summit in Cannes. "It's a huge agenda," senior officials said of the plan of work for the summit. "But there will be a number of breakthroughs."
They added: "We thought the [Greek] package of 21 July was a big step, but obviously it was not enough and now we're pretty confident that markets will say that these people really mean what they say and will ensure stability."
The countdown to Cannes (G20 leaders' summit) continues. The biggest boost to growth
across the world - and for Britain - would be a resolution to the crisis in the eurozone. Maintaining the momentum towards that will be the focus of my discussion with my international counterparts today.
European Union leaders will meet in Brussels this weekend to discuss a package of emergency measures aimed at recapitalising European banks and helping countries such as Greece repay their loans. That meeting will be followed by a summit of the Group of 20 leading economies in Cannes which could agree to boost the International Monetary Fund and provide more support for banks and struggling economies.
But Sir Mervyn warned that neither rescuing the eurozone nor bailing out the European banking sector would be enough to stabilise the world economy.
As well as supporting banks and the eurozone, he said, Western nations
must embark on fundamental changes to make their economies more efficient and reduce government spending from recent levels.
“In the end,” he said, the only answer to debt problems was for countries to “adopt compatible policies so that they can credibly service their internal and external debts.”
The root cause of the debt crisis... was a long period.... in which governments, companies and individuals spent more than they earned, the governor said."
Now he tells us. If these guys lived in the Old Testament, they'd all be stoned for uttering false prophecies. Up till now it was nothing but QE's, default swaps, leveraging, etc., with Banker King's foot ramming the print button. The "root cause," governor, is fatcat bankers who found clever ways to loot the people's Treasuries. This is as insulting as Rothschild last week
Sir Mervyn King is getting a lot of flak here. But consider this statement and who do you think he is addressing here?
"Despite record low interest rates, printing new money and other emergency
measures, governments had not yet addressed the underlying problem of
overspending that was at the root of the financial crisis, Sir Mervyn King
warned. The consequences threatened to “inflict pain on everyone”, he said."
And again here...
"The root cause of the debt crisis threatening major Western economies was a
long period of “unsustainably high levels of consumption”, in which
governments, companies and individuals spent more than they earned, the
governor said."
And here...
"As well as supporting banks and the eurozone, he said, Western nations must embark on fundamental changes to make their economies more efficient and
reduce government spending from recent levels."
The message could not be more direct - politicians are the root cause for the economic mess we are in. Amongst other things Sir Mervyn King is calling for the dismantling of the socialist welfare state.
For that he should be congratulated.
Jonathan
Enough already please.
Why not just write it all off and start again, with proper limits imposed, proper bounderies in place and proper checks and balances? Create a system that works for the many rather than the few. Impose state controls on the cost of living items like food, petrol etc for several years as it all beds down and let people get on with their lives. Peoples lives shouldn't be burdoned with the debts and hardships that our governments are imposing on us.
A government is there to provide the framework for the creation of wealth as a consequence of the core services it should provide. Demonstrably this is not the case and they haven't done it across the range of industrialised nations, the financial private sector has blown it too and trillions of pounds/dollars and pence have been pissed down the drain to sustain the unsustainable. If we accept the system is dead then we can move on sooner rather than later and create something worthwhile and sustainable.
Who really wants to live like this? It's obvious we're all off to hell in a handcart isn't it? People are falling over left, right and centre, family life has gone to the wall and people are working twice as hard just to stand still, there is disportionate wealth the world over and yet we have people who still live in holes in the ground and can't eat from one day to the next.
This isn't about the man on the street, it's about a way forward that doesn't chain people up one way or another for the rest of their lives. Banks and governments did this damage, banks and governments should be paying the price not the man on the street.
Pipe dream perhaps but Idon't see anyone coming up with a better idea, all I see is heads in the sand.
People can't buy stuff if they don't have jobs.
If people don't have jobs, small businesses go broke.
Soon all that is left is the super-rich and immigrant workers.
It's death by a thousand cuts - and the UK becomes a vassal state to the Islamic Caliphate.
Labour thinks we can tax the rich but the rich just leave the country and party hard in places like the Bahamas or Las Vegas.
BRUSSELS -(Dow Jones)- The European Commission Wednesday confirmed that its antitrust inspectors raided financial institutions involved in the market for interest-rate derivatives linked to the Euro Interbank Offered Rate, or Euribor.
The inspections took place Tuesday in "certain member states," the commission said, without providing more details. The Wall Street Journal reported Wednesday that among the targets were a large French bank and a large German bank.
More than 40 banks set Euribor, a benchmark that is used to set rates on trillions of euros worth of derivatives and loans.
BRUSSELS -(Dow Jones)- The European Commission Wednesday confirmed that its antitrust inspectors raided financial institutions involved in the market for interest-rate derivatives linked to the Euro Interbank Offered Rate, or Euribor.
The inspections took place Tuesday in "certain member states," the commission said, without providing more details. The Wall Street Journal reported Wednesday that among the targets were a large French bank and a large German bank.
More than 40 banks set Euribor, a benchmark that is used to set rates on trillions of euros worth of derivatives and loans.
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