German newspaper Die Welt am Sonntag, citing the results of its own research,
said Spanish banks had borrowed funds from the ECB at a
preferential interest rate of 0.5pc even though the creditworthiness of the
T-bills they provide as collateral should have required them to pay 5.5pc. The
rating of some paper should have made them completely ineligible as collateral
for the ECB, the newspaper added. "The ECB is investigating the matter," the
bank spokeswoman said. At issue is nearly €80bn (£64.1bn) worth of 18-month
T-bills the newspaper said had been wrongly classified as carrying a top-notch A
rating whereas many are rated only as B by leading rating agencies Moody's,
Fitch and Standard & Poor's. "Dealings with certain Spanish government bonds
casts doubt on the quality of the ECB's risk management... because the bonds
pledged by the banks as security meet the central bank's requirements only in
part," Die Welt am Sonntag said. If the bonds were downgraded further, the
affected banks could have to produce other collateral amounting to as much as
€16.6bn in value, Die Welt said....I was wondering why Spain has not yet collapsed, why their ultra-risky sovereign debt was yielding only a measly 5.5%, how the Spanish government claims to have funded itself through till the end of 2013... here is the answer, cheap money from Mr Draghi at the ECB... the clown who has turned a central bank into a giant hedge fund... Banking 101, Mr Draghi, you are only supposed to lend money when there is a large likelihood you will be repaid with interest... or maybe you don't know that...Draghi will still have the last laugh, though... the EU taxpayers will be stuck with paying his more than generous pension...
4 comments:
USA
Well the luck of the Irish and O'Bama is re-elected. Now, assuming Congress stays the same - JJ may know more - our chap has some very hard work to do on the bi-partisan front to avoid the so-called 'fiscal cliff'. Romney might be an option, if a suitable face-saving place in the executive could be found for him, to manage a little more and very necessary reduction of the polarisation in the legislative branch.
Secondly, this election just pushes, unless an O'Bama U-turn, the USA over the cusp into the European world of clientism and its apostle, popular entitlement.
Thirdly, Hillary will quit before Christmas and Panetta will get her job.
As far as Europe is concerned, if Romney had been elected, Europe along with China would have been placed on the other side of the economic sheet to the USA. With O'Bama Europe may see some help, notably in those countries that have large immigrant US communities - Ireland, Italy and Greece - Spain does not count, Mexico does. I would not expect more than token assistance to the EU (Commission and others).
France
Too little and far too late - all these measures, except the restaurant stuff will take 9 - 12 months to effect and I give France 4-6 before things go really rancid.
Greece
Well a majority of 3 or 4 will get the legislation through but some other things are surfacing.
Dis and non-information is a governmental skill of constant
practice - and they're good at it.
Peope ae just beginning to really realise that these measures are for a decade at least, not 2 or 3 years, and may get worse.
The default and drachma opinion is very slowly gaining ground.
More questions about the public sector from the private sector.
Many people did not realise that public sector folk do not lose salary when they strike. They do lose allowances - so complex and varied that a whole branch of the civil service is devoted to their disbursement - meal, lodging, transport, location, education et al - reckoned to be a mean of 10% of salary. Private sector people, who do lose salary are mostly not striking today.
Golden Dawn has just had 2 members arrested for GBH thus keeping them from the Assembly tonight. Houvelis has affirned all his 17 members will abstain, thus leaving 142 as a mahority.
We shall see.
http://www.bbc.co.uk/news/busi...
If Greece does pass the austerity measures and its budget, the government will be badly damaged and weakened in doing so. It's likely to be the last reforms they manage to get through, but that's not the problem.
"The real problem with Greece is implementation. This is a deeply rooted institutional problem that makes implementing reform difficult. .......Greece doesn't appear to have the administrative structure to deliver on what it promises"
Over to Spain where industrial output plunged in September.
Spain's factories slashed output in September as consumer demand plunged in the midst of a recession and austerity cuts, official data showed Wednesday.
Factories, mines and utilities lowered production in September by 7.0pc year-on-year after smoothing out seasonal blips, the National Statistics Institute said.
It was the 13th straight month showing an annual decline.
Industry slowed in response to evaporating demand after more than a year of recession and with unemployment at 25pc.
Back in the UK, David Cameron is due to meet with German chancellor Angela Merkel this evening for dinner in Downing Street. Cameron said he would hold 'robust' talks on cutting the EU budget.
Speaking during a three-day visit to the Middle East, he attacked the EU's "completely ludicrous" decision to increase the seven year budget.
"I believe everyone who signed that letter should stick to that letter," he said.
"As I have said, I've always wanted at best at cut, at worst a freeze. I'll be in there fighting for Europe's taxpayers, particularly British taxpayers. We are net contributors to the budget, we have a rebate and we are keeping that rebate but over and above rebate that I also want to see a good budget outcome for the UK."
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