NICOSIA, Cyprus—Euro-zone finance
ministers indicated Friday they are open to giving Athens more time to meet
budget targets and that they aim to decide by the end of October on whether to
give Greece its next installment of a bailout money….In their first gathering
after a long summer hiatus, finance ministers from the 17-member currency bloc
spent the morning discussing the economic and financial crises of Greece,
Spain, Portugal and Cyprus. They were joined later by the 10 ministers from the
rest of the European Union to debate proposals, released this week, for a
system of common banking supervision. European
Central Bank President Mario Draghi, center, with IMF chief Christine Lagarde,
left, Eurogroup President Jean-Claude Juncker and German Finance Minister
Wolfgang Schäuble talk at the start of a two-day informal meeting in Cyprus….The
meeting comes days after the European Central Bank announced a revamped plan
for purchases of government bonds in the open market in coordination with the
euro zone's rescue funds, and follows a German constitutional court ruling
clearing the way for the launch of the European Stability Mechanism, the
permanent bailout fund. Friday's
gathering turned attention back to the governments of bailed-out countries and
what they will do to implement tough reforms to qualify for support from the
currency bloc. Ministers sought to keep
pressure on the Athens government, which hopes to win approval soon for the
next disbursement in its €173 billion ($224.7 billion) second bailout package….
The Greeks "need to show very strongly decisive action" on structural
reforms and spending cuts, said Luxembourg's Jean-Claude Juncker, head of the
Eurogroup of finance ministers. Athens must agree to a "set of credible
measures to close the fiscal gap between 2013 and 2014," he said.
Access Investments-Building Awareness - European Union-ROMANIA
Monday, September 17, 2012
NICOSIA, Cyprus—Euro-zone finance
ministers indicated Friday they are open to giving Athens more time to meet
budget targets and that they aim to decide by the end of October on whether to
give Greece its next installment of a bailout money….In their first gathering
after a long summer hiatus, finance ministers from the 17-member currency bloc
spent the morning discussing the economic and financial crises of Greece,
Spain, Portugal and Cyprus. They were joined later by the 10 ministers from the
rest of the European Union to debate proposals, released this week, for a
system of common banking supervision. European
Central Bank President Mario Draghi, center, with IMF chief Christine Lagarde,
left, Eurogroup President Jean-Claude Juncker and German Finance Minister
Wolfgang Schäuble talk at the start of a two-day informal meeting in Cyprus….The
meeting comes days after the European Central Bank announced a revamped plan
for purchases of government bonds in the open market in coordination with the
euro zone's rescue funds, and follows a German constitutional court ruling
clearing the way for the launch of the European Stability Mechanism, the
permanent bailout fund. Friday's
gathering turned attention back to the governments of bailed-out countries and
what they will do to implement tough reforms to qualify for support from the
currency bloc. Ministers sought to keep
pressure on the Athens government, which hopes to win approval soon for the
next disbursement in its €173 billion ($224.7 billion) second bailout package….
The Greeks "need to show very strongly decisive action" on structural
reforms and spending cuts, said Luxembourg's Jean-Claude Juncker, head of the
Eurogroup of finance ministers. Athens must agree to a "set of credible
measures to close the fiscal gap between 2013 and 2014," he said.
Subscribe to:
Post Comments (Atom)
11 comments:
No mention of Japan's vast overseas investment. No discussion of the long years of the carry trade and its effects and how the extraordinary exchange rate has affected Japanese investments. Not too much discussion of Japan's trade surplus.
Not too much linkage of the effects of the tsunami to the rest of the article. How many nations could have survived such a natural disaster in the way Japan did ?
Sure there are lessons for the U.K. from Japan but vice versa ?
No mention of Japan's vast overseas investment. No discussion of the long years of the carry trade and its effects and how the extraordinary exchange rate has affected Japanese investments. Not too much discussion of Japan's trade surplus.
Not too much linkage of the effects of the tsunami to the rest of the article. How many nations could have survived such a natural disaster in the way Japan did ?
Sure there are lessons for the U.K. from Japan but vice versa ?
f Syria came under military attack, Iran would also give military support but it … totally depends on the circumstances," AFP reported Jafari as saying at a rare press conference in Tehran.
The general also said that the Strait of Hormuz, the channel at the mouth of the Gulf through which a third of the world's traded oil passes, would be a legitimate target for Iran should it be attacked. "If war occurs in the region and the Islamic republic is involved, it is natural that the Strait of Hormuz as well as the energy [market] will face difficulties. The US has many vulnerabilities around Iran, and its bases are within the range of the guards' missiles. We have other capabilities as well, particularly when it comes to the support of Muslims for the Islamic republic," he said.
In Damascus, Brahimi also met Syrian opposition figureswho are still tolerated by the regime. "We told Mr Brahimi … of our support for his efforts to resolve the crisis by ending the violence and killings, providing medical care and releasing political prisoners," said Hassan Abdel Azim, spokesman for the National Coordination Committee for Democratic Change. But the head of the Free Syrian Army's military council in Aleppo, Colonel Abdel Jabar al-Oqaidi, predicted that the envoy's mission would fail, like Annan's, because he had nothing to offer those fighting for their freedom, al-Arabiya TV reported.
A ’Genius’
ECB Governing Council member Panicos Demetriades said the bank might not have to spend a cent on government bonds. The threat of unlimited buying under the ECB’s new bond-purchase program may mean that “in the end, action is not needed,” Demetriades, who heads the Central Bank of Cyprus, said Sept. 12 in an interview in Nicosia.
Germany’s top constitutional court on Sept. 12 rejected efforts to block a permanent 500 billion-euro euro-area rescue fund, which is meant to work in tandem with the unlimited bond- purchase program aimed at containing interest rates in countries such as Spain and Italy. The ECB may buy bonds with maturities as long as three years on the secondary markets of countries that ask Europe’s bailout fund to purchase their debt on the primary exchanges.
“The way he proceeded, I’ve called him a genius,” Merk said of Draghi. “He has managed to do what the politicians haven’t been able to do without becoming too political. He’s moving the responsibility to political bodies.”
Dollar Depreciation
The currency is also getting a boost from a weakening dollar, as the Federal Reserve embarks on a third round of bond purchases, or quantitative easing, buying $40 billion a month in mortgage bonds to inject cash into the economy and attempt to bring down unemployment.
Intercontinental Exchange Inc.’s Dollar Index slumped as much as 19 percent to 72.696 from 89.624 as the Fed printed currency to buy $2.3 trillion of mortgage and Treasury debt in two rounds of QE from December 2008 to June 2011. It’s down more than 6 percent from its intraday high this year of 84.1 on July 24 to 78.781.
The Markit iTraxx SovX Western Europe Index of credit swaps on 15 governments fell to 188 basis points last week, the lowest level since the series started trading in March. A previous version of the index that included Greece was last this low in May 2011.
Options Bets
A basis point on a credit-default swap protecting 10 million euros of debt from default for five years is equivalent to 1,000 euros a year. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.
Options traders have eased bets the euro is going to fall against the dollar by year-end since Draghi hinted the ECB would purchase debt at the Aug. 2 central bank meeting.
The three-month so-called 25-delta risk reversal rate was minus 0.79 percent today, signaling greater demand for euro puts that give the right to sell the shared currency, versus calls. The rate was minus 2.05 percent on Aug. 2 and minus 4.39 percent on Nov. 17, the most since at least 2003 based on data compiled by Bloomberg.
Futures traders decreased their bets that the euro will decline against the U.S. dollar last week, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain, so-called net shorts, was 93,658 on Sept. 11, compared with net shorts of 102,306 a week earlier.
Mighty ECB
“We are expecting some more upside on euro-dollar to develop,” said Ian Stannard, head of European foreign-exchange strategy in London at Morgan Stanley, which capitulated this week on its call for a lower euro.
Morgan Stanley said in a report dated Sept. 13 that it now expects the currency will rise to $1.34 by Dec. 31, rather than fall to $1.19.
“Over the years, global investors have learned that it does not pay to fight the Fed,” Holger Schmieding, chief economist at Berenberg Bank in London, said this month in an interview. “Those betting on the demise of the euro may now have to realize that the ECB is as mighty as the Fed.”
A ’Genius’
ECB Governing Council member Panicos Demetriades said the bank might not have to spend a cent on government bonds. The threat of unlimited buying under the ECB’s new bond-purchase program may mean that “in the end, action is not needed,” Demetriades, who heads the Central Bank of Cyprus, said Sept. 12 in an interview in Nicosia.
Germany’s top constitutional court on Sept. 12 rejected efforts to block a permanent 500 billion-euro euro-area rescue fund, which is meant to work in tandem with the unlimited bond- purchase program aimed at containing interest rates in countries such as Spain and Italy. The ECB may buy bonds with maturities as long as three years on the secondary markets of countries that ask Europe’s bailout fund to purchase their debt on the primary exchanges.
“The way he proceeded, I’ve called him a genius,” Merk said of Draghi. “He has managed to do what the politicians haven’t been able to do without becoming too political. He’s moving the responsibility to political bodies.”
Dollar Depreciation
The currency is also getting a boost from a weakening dollar, as the Federal Reserve embarks on a third round of bond purchases, or quantitative easing, buying $40 billion a month in mortgage bonds to inject cash into the economy and attempt to bring down unemployment.
Intercontinental Exchange Inc.’s Dollar Index slumped as much as 19 percent to 72.696 from 89.624 as the Fed printed currency to buy $2.3 trillion of mortgage and Treasury debt in two rounds of QE from December 2008 to June 2011. It’s down more than 6 percent from its intraday high this year of 84.1 on July 24 to 78.781.
The Markit iTraxx SovX Western Europe Index of credit swaps on 15 governments fell to 188 basis points last week, the lowest level since the series started trading in March. A previous version of the index that included Greece was last this low in May 2011.
Options Bets
A basis point on a credit-default swap protecting 10 million euros of debt from default for five years is equivalent to 1,000 euros a year. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.
Options traders have eased bets the euro is going to fall against the dollar by year-end since Draghi hinted the ECB would purchase debt at the Aug. 2 central bank meeting.
The three-month so-called 25-delta risk reversal rate was minus 0.79 percent today, signaling greater demand for euro puts that give the right to sell the shared currency, versus calls. The rate was minus 2.05 percent on Aug. 2 and minus 4.39 percent on Nov. 17, the most since at least 2003 based on data compiled by Bloomberg.
Futures traders decreased their bets that the euro will decline against the U.S. dollar last week, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain, so-called net shorts, was 93,658 on Sept. 11, compared with net shorts of 102,306 a week earlier.
Mighty ECB
“We are expecting some more upside on euro-dollar to develop,” said Ian Stannard, head of European foreign-exchange strategy in London at Morgan Stanley, which capitulated this week on its call for a lower euro.
Morgan Stanley said in a report dated Sept. 13 that it now expects the currency will rise to $1.34 by Dec. 31, rather than fall to $1.19.
“Over the years, global investors have learned that it does not pay to fight the Fed,” Holger Schmieding, chief economist at Berenberg Bank in London, said this month in an interview. “Those betting on the demise of the euro may now have to realize that the ECB is as mighty as the Fed.”
Spain is set to clash with the EU over austerity measures. As Ambrose Evans-Pritchard reports Spain’s Finance minister Luis de Guindos ruled out further fiscal cuts needed to qualify for a eurozone rescue, leaving it unclear whether the European Central Bank can activate Europe’s grand plan to stabilise the market.
The move came just days after European finance ministers clashed over plans for a banking union, with Germany leading criticism of proposals to introduce a single banking supervisor by January. Expect more fireworks this week.
Really interesting stuff coming from Spain. Clearly they have seen that Greece gets what it wants just by threatening default, and it wants some of the same. Maybe they havent realised that they are just too big to bail.
What is Draghi going to do if a nation wont even pretend to make cuts? I expect the bond markets to turn up the heat a little and see what happens.
Mrs Merkel repeats that she will not delve into the ECB's policy-making.
The central bank's mandate "may well" cover bond buying, she is quoted by Bloomberg as saying, and she will take the ECB's word that its actions are driven by monetary policy considerations. She adds that she has no reason to doubt the central bank's declarations
Mrs Merkel says it is unlikely that a pan-European supervisory body for banks will be created by January 2013. However, one must be in place before the eurozone's permanent bail-out fund can inject cash into ailing banks. Supervision must be globally
Olli Rehn, the EU's Economic and Monetary Affairs commissioner, has been outlining the benefits of a banking union to an audience in Stockholm this afternoon. He said that a union should enable direct recapitalisation of the region's banks, and that even smaller banks are systemically important.
However, as Angela Merkel stressed at her annual press conference (see 11.25), it is unlikely that a pan-European supervisory body will be created by January 2013. She also insisted that a union must be in place before the European Stability Mechanism could pump cash into ailing banks.
BST
14:59 BST
Just in: France has sold over €5bn of short-term debt at negative interest rates, as investors continued to accept a guaranteed loss in return for safe-haven bonds.
The French treasury auctioned €3.78n of 13-week bills, with buyers paying an average yield of -0.012%, and a further €1.29bn of 22-week bills at an average yield of -0.004%.
Such negative yields reflect the rush of money into secure assets (France can be relied on to repay these debts when the bills mature).
France also sold €1.69bn of 52-week bills, with investors demanding a whole 0.029% yield in return for handing their cash over for a year.
Post a Comment