Italy is auctioning as much as 7 billion euros ($10 billion) of bonds Tuesday, one day after borrowing costs surged at a bill auction, as Greece’s slide toward default roils global markets. The treasury is selling 4 billion euros of a new benchmark five-year bond, after 10-year yields climbed to a five- week high of 5.571 percent. Investors charged Italy 4.153 percent Monday in a one-year bill offering, up from 2.959 percent a month ago. “It’s rather unfortunate that the Italian auction is taking place when the market is in a panic mode,” said Fabrizio Fiorini, the head of fixed income at Aletti Gestielle SGR SpA in Milan. “Borrowing costs are likely to remain at elevated levels. The rise in Italian yields is manifestation of a lack of market confidence in European leaders’ ability to tackle the problem.” A debt of 1.9 trillion euros -- more than Spain, Greece, Ireland and Portugal combined -- leaves Italy vulnerable to any advance in borrowing costs as it refinances maturing debt. The sales, which also include as much as 3 billion euros of bonds due in 2018 and 2020, will help fund 14.5 billion euros of debt scheduled for repayment on Sept. 15.Bank of France Governor Christian Noyer said French lenders are capable of facing any Greek response to sovereign-debt difficulties and have no liquidity or solvency problems. “Whatever the Greek scenario, and whatever provisions have to be made, French banks have the means to face it,” Noyer said in an e-mailed statement today. “French banks have neither liquidity nor solvency problems.” BNP Paribas SA, Societe Generale SA and Credit Agricole SA plunged today in Paris on a possible ratings cut by Moody’s Investors Service, extending their more than 40 percent slide in the last three months. Noyer also said 5 trillion euros ($6.8 trillion) of collateral is available in the euro system and the European Central Bank is providing 500 billion euros of refinancing. French banks have added 50 billion euros to their capital in two years, he said.
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Herman Van Rompuy is an influential man in Europe. He is already president of the European Council, the assembly of the European Union's heads of state and government. Soon he will also serve as the chief representative of the euro zone, if all goes according to plan.
Van Rompuy's new role as "Mr. Euro" is a highly prestigious position. German Chancellor Angela Merkel thinks highly of the unassuming Belgian politician, who conceals a propensity for toughness and efficiency behind his seemingly humble appearance.
One of Merkel's European counterparts felt the brunt of Van Rompuy's unconventional charm last Monday, when he took Greek Prime Minister Georgios Papandreou to task in a telephone conversation. The representatives of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF), known as the troika, had left the crisis-ridden country in protest a few days earlier, because the Greek government had, once again, circumvented agreements it had made.
We have a problem, Van Rompuy said at the beginning of the conversation. Unless Greece delivers, he told Papandreou, the next tranche of aid would not be paid. Papandreou understood immediately: Van Rompuy was telling him the Europeans were on the verge of cutting off funding to his country.
A lot of people in Europe are displeased with Greece at the moment. "We cannot be satisfied with the latest reports from Greece," an irritated Chancellor Merkel said last week. "The troika mission must be continued and brought to a positive conclusion," said German Minister Wolfgang Schäuble. Even Euro Group President Jean-Claude Juncker, normally not one to engage in fearmongering, took Greece's prime minister to task on the phone. "Things are not moving at the right pace in Greece," he said after the conversation. "There are no results."
are we building up this rounworm enough? ...as we built ollie rhen who turned out to be as stupod and incompetent as they come ?
The National Association for Business Economics' latest survey showed that some 43 percent of respondents said that a third round of Fed bond-buying under Chairman Ben Bernanke within the next two years is likely, and another 33 percent gave it even odds. That was before the U.S. government's latest labor market report, which showed that the economy overall added no jobs in August.
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The chairman of China Investment Corporation, which was created to invest a portion of Beijing's $3.2 trillion in foreign reserves, met with Italy's finance minister last week in Rome, The Wall Street Journal and the Financial Times reported, citing unnamed sources.
Italian Economy Minister Tremonti confirmed on Tuesday that he met officials from a Chinese delegation last week but declined to comment on the substance of the meeting.
The Financial Times reported that Italy had asked Beijing to buy "significant" quantities of Italian debt to help calm market turmoil caused by worries over the sustainability of its €1.9 trillion debt load.
While the Wall Street Journal said the talks in Rome were also attended by CIC chairman Lou Jiwei and officials of China's foreign currency regulator and the Cassa Depositi e Prestiti, an Italian government investment vehicle.
Reuters, quoting a source close to the case, said the delegation included officials in charge of investment and fixed income.CIC was created in 2007 to invest a portion of Beijing's $3.2 trillion in foreign reserves
Merkel said the euro zone would only have a procedure for an orderly default in place from 2013, when a permanent crisis resolution mechanism is due to come into effect.
"In a currency union with 17 members, we can only have a stable euro if we prevent disorderly processes. Therefore it is our top priority to avoid an uncontrolled default, because it would hit not only Greece. The danger would be very high that it would hit many other countries," she said.
Obama's comments suggested that Washington is trying to nudge European governments towards closer fiscal union but European politics, especially in Germany, make that difficult.
The German Constitutional Court last week appeared to rule out issuing common euro zone bonds unless Berlin amended its Basic Law and the EU adopted a new treaty.
Merkel suggested the way forward should involve sharper punishment for states that violate the bloc's budget discipline rules, which have been repeatedly breached in the last decade, including by central euro zone powers Germany and France.
"Until now, for example, if countries violate the Stability and Growth Pact they cannot be taken before the European Court of Justice," she said.
Read more: Merkel Rejects Greek Default, Defends Euro Zone Integrity
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