WASHINGTON—The Federal Reserve shocked bankers Thursday by approving a
proposal that would force even the smallest lenders to comply with the elaborate
international bank-capital standards known as Basel III.
The draft requirements would apply to all 7,307 U.S. banks, according to a
proposal circulated by the Fed. Many bankers had expected regulators to exempt
some small lenders from the new rules, which are aimed at shoring up the biggest
global banks whose troubles fueled the financial crisis.
While the core Basel III rules will apply to all banks, other aspects of the
new regime single out the biggest, most complex institutions and transactions.
BRUXELLES - Considering that the ESM currently has no money yet, and that many of the
largest proposed contributors are actually those countries most likely to seek
bail out, it appears to be a concept failed before its inception.
The only thing currently keeping the Euro afloat is bluff and bluster
floating on a cycle of summits. News of the size of the Spanish bail out is
being managed and uncovered in tantalising steps like a magician's trick
"JP Morgan is expecting the final package for Spain to rise above €350bn,
while RBS says the rescue will "morph" into a full-blown rescue of €370bn to
€450bn over time - by far the largest in world history." All this as Italian banks are on life support. "Italian banks tapped the European Central Bank for 272.7 billion euros
($343.1 billion) In May, a 0.6% rise from the previous month, said the Bank of
Italy Thursday." All of this is held upright by IOU's whose credibility will come under
serious scrutiny if Greece defaults.
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Implementing austerity measures too quickly will send ailing eurozone economies into a "downward spiral," US President Barack Obama warned on Friday, adding that a European recession would harm the pace of the US recovery.
Markets have closed for the day and week. Rumours early on that Spain would seek a bank bailout over the weekend became increasingly firm during the session. It now looks like a case of "when, not if" - although we may not get concrete details until two independent reports on the health of the banking sector are published.
Markets have been so transfixed by Spain's crisis over the past few weeks that they have taken their eyes off the first round of France's parliamentary election on Sunday. Investors are relatively insouciant about what, as little as a month ago, was considered a crucial political event in the eurozone.
France has been given a lift by the election of Francois Hollande as President and Greece's inconclusive election result. The former is already paying political dividends for Mr Hollande's Socialist party while the latter has helped turn France into a relative safe haven in the bond markets.
Mr Hollande was not expecting a honeymoon, but he is enjoying the closest thing there is to one at a time when France's economy is flat on its back and the eurozone is at risk of falling apart. However we remain wary of French debt. French banks' exposure to the eurozone's periphery, in particular Italian private and public debt, remains a key source of risk as the eurozone crisis intensifies.
The ECB could cut its overnight deposit rate to 0pc, says policymaker Ewald Nowotny. He also said the central bank had no plans to restart hoovering-up sovereign bonds.
The ECB's current policy of flooding the banking system with hundreds of billions of euros in cheap loans means market rates now gravitate towards its overnight deposit rate rather than its main interest rate as they do in normal times. Cutting the deposit rate to zero would take rates as low as they could go, something the ECB was previously reluctant to do.
As an example of how huge an effect a change in the rate would be, last night the ECB looked after €757bn in deposits.
The IMF's due to publish its report on the health of Spanish banks on Monday, and is expected to say it will take a cash injection of at least €40bn to recapitalise the lenders (forget for a moment that Fitch says €100bn, Roubini Global Economics predicts a cost of up to €250bn, JP Morgan says €350bn and RBS believes it could hit €450bn).
Spain itself says propping-up Bankia alone will cost €23.5bn. It also says it's determined to wait 10-15 days for the release of independent reports on the state of its lenders before taking any action. But rumours this morning suggest it will be forced to make a plea for help sometime this weekend. It makes some kind of sense: with that kind of bad publicity on the way, it could be their only option.
Traders are responding to ambiguity about future stimulus efforts in Federal Reserve Chairman Ben Bernanke's testimony to the US Congress. Investors were looking for concrete guidance on a QE3 program in light of the latest stretch of disappointing US economic data, hoping additional asset purchases might help the nascent US recovery offset headwinds to global growth from a recession in the Eurozone and a slowdown in China.
Besides disappointment on the Fed stimulus front, a pickup in Eurozone sovereign concerns compounds downward pressure on risky assets after Fitch slashed Spain's credit rating. Spreads between periphery 10-year bond yields and benchmark German equivalents are broadly wider and Eurozone sovereign CDS rates are on the upswing.
The future of Europe will be expansion to include a number of ‘new states‘. It will be known as the ‘United States of Europe’. The currency will be the Euro and that currency will become the world reserve currency replacing the US Dollar. There will be a centralised banking system for member states. The official language used will be English. One central Parliament. One centralised military. One President.
It is like this……European leaders hatch plan about 60 years ago……to protect Europe from itself and all invaders…..code name…USE….the United States of Europe….all kept very quiet….a few little openers needed such as ‘twinning’ ceremonies and ‘decimalisation’ and the ‘common market’ to get it going a bit further….then it gets more serious….the implementation of MEPs….no one really knew what they were …or did….and no one wanted to explain……the creation of the Euro Parliament……new laws…new rules….then the single currency and then further integration…..and now we are seeing the very last pieces of the jigsaw…..
I am afraid that ignorance as shown by some of those that have opposing views (we all know who you are) in their vitriolic posts is no defence……you can shout and complain but if anyone believes for one moment that the UK is going to sit outside and keep the Pound then they are deluding themselves……
Britain has been one of the key policy makers of the United States of Europe and Britain will most certainly be at the hub of this new Empire. There will be a referendum and in that referendum will be the ‘Euro’.
Lets hope there is a referendum in every country and watch the EMU take a spot in history alongside the USSR and the HRE.
The EMU is a failure, just admit it and go troll another thread.
And I'd love a referendum in the UK right now Pound v. Euro. I get the sneaking suspicion that the status quo would win . . . as it should. Hopefully the rest of Europe will adopt half the common-sense of the UK and ditch this stupid damn thing, and take all the kool-aid EU drinkers out back and shoot them.
The EU is a failed miserable institution, and asserting otherwise is merely self-deception.
U.S. Stocks Rise as Euro Weakens Before Europe Discusses Spain
San Francisco Chronicle
June 8 (Bloomberg) -- US stocks rose, driving the Standard & Poor's 500 Index to the best weekly gain of the year, while the euro fell as investors awaited weekend talks among European finance officials for news of a potential bailout of Spain.
If you had a barrel containing 27 apples, and you found that 1 or 2 of those apples were rotten, the most sensible and obvious course of action would be to remove those rotten apples to stop the rot spreading to the rest. What you would NOT do, would be to sacrifice all of the apples and concentrate all of your efforts into saving the barrel. Yet that is exactly what the Eurozone politicians appear to be willing to do.
Italian banks appear close to joining their Spanish counterparts as the euro zone's latest contribution to the financial world's endangered species list.
No one has admitted as much, but the capital crunch now faced by Italian banks has been obvious in at least one statistic: April purchases of government bonds by Italian financiers dropped sharply to just €6.62 billion. The sudden satiation of their local banks' appetite augurs big problems for Rome, which has €228 billion in further issuance planned for 2012. "Who buys Italian government debt ? - Italian banks, based on cheap loans from the ECB - money for old rope as the bonds can be used as collateral for more loans. The old "I borrow off you to pay you back" conundrum. As in all Ponzi scams it's coming to an end as it devours all the available money."Italian banks "hold lots of Italian sovereign bonds that some think will not be repaid, but if they are repaid, then banks are solid," Profumo said in the interview" Two drunks relying on each other to hold themselves up.
Thousands have protested in Greece against the far-right Golden Dawn party after one of its members assaulted a woman on live TV. Demonstrators shouted "Neo-Nazis out" in rallies called by left-wing and anti-racism groups in Athens. On Thursday, Ilias Kasidiaris, a Golden Dawn MP, was filmed hitting a left-wing politician during a chatshow. The rally comes nine days before elections which could result in a Greek exit from the Eurozone. In polls a month ago, Golden Dawn surprised many by winning 21 seats in Greece's 300-seat parliament. A second election is taking place as no party was able to forge a coalition.
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