Shares in Bankia have slid almost 20% after Spain's bank rescue fund said the
troubled lender had a negative value of -4.2bn euros (£3.4bn; $5.6bn). Bankia's
parent company, BFA, which is being bailed out, was deemed to be worth -10.4bn
euros. The assessments suggest losses on bad loans are even worse than expected.
Bankia shares will be suspended from Spain's benchmark Ibex index from 2 January
until at least after it is recapitalised, the stock exchange said. The Spanish
government-owned bailout fund, which is called the FROB, said that a further
13.5bn euros of rescue money would have to be injected into BFA, on top of the
4.5bn provided by Madrid in September. The money, which is ultimately provided
by the eurozone's bailout fund, is being injected into the bank via the sale of
new shares in BFA to the FROB. By doing this, the FROB increases the bank's
capital - its ability to absorb potential future losses on the loans it has made
- by putting Spanish taxpayers' money at risk.Ordinary
investors The FROB told the BFA it must provide 10.7bn of the rescue
money as new capital to Bankia, which will have the effect of diluting the value
of the bank's existing shares. The statement by the rescue fund has made clear
that this dilution will be even worse than feared, causing Bankia's shares to
drop further on the stock exchange. Its shares have lost over 80% of their value
since the bank was first listed on the Madrid Stock Exchange in July 2011.
Bankia is the largest of a string of Spanish banks to suffer massive losses on
the loans it made to property developers and home buyers during the country's
property bubble in the past decade. As well as Bankia, three other banks are
currently being patched up by the FROB - Catalunya Banc and NGC of Galicia, as
well as Banco de Valencia, which was in such bad shape that it is being sold off
to another, privately-owned bank. Some 10bn euros of the cost associated with
the four banks' rescue must be borne by other investors in the banks. This
decision has proved controversial in Spain, as these investors include many
ordinary Spaniards, particularly older investors, to whom their banks sold
preferred shares - a high-risk form of bank debt - as a savings product. In
Bankia's case, about 350,000 such investors are expected to have most of their
money wiped out as part of the bank's rescue, according an unnamed source cited
by the Reuters news agency.
Access Investments-Building Awareness - European Union-ROMANIA
Monday, December 31, 2012
Shares in Bankia have slid almost 20% after Spain's bank rescue fund said the
troubled lender had a negative value of -4.2bn euros (£3.4bn; $5.6bn). Bankia's
parent company, BFA, which is being bailed out, was deemed to be worth -10.4bn
euros. The assessments suggest losses on bad loans are even worse than expected.
Bankia shares will be suspended from Spain's benchmark Ibex index from 2 January
until at least after it is recapitalised, the stock exchange said. The Spanish
government-owned bailout fund, which is called the FROB, said that a further
13.5bn euros of rescue money would have to be injected into BFA, on top of the
4.5bn provided by Madrid in September. The money, which is ultimately provided
by the eurozone's bailout fund, is being injected into the bank via the sale of
new shares in BFA to the FROB. By doing this, the FROB increases the bank's
capital - its ability to absorb potential future losses on the loans it has made
- by putting Spanish taxpayers' money at risk.Ordinary
investors The FROB told the BFA it must provide 10.7bn of the rescue
money as new capital to Bankia, which will have the effect of diluting the value
of the bank's existing shares. The statement by the rescue fund has made clear
that this dilution will be even worse than feared, causing Bankia's shares to
drop further on the stock exchange. Its shares have lost over 80% of their value
since the bank was first listed on the Madrid Stock Exchange in July 2011.
Bankia is the largest of a string of Spanish banks to suffer massive losses on
the loans it made to property developers and home buyers during the country's
property bubble in the past decade. As well as Bankia, three other banks are
currently being patched up by the FROB - Catalunya Banc and NGC of Galicia, as
well as Banco de Valencia, which was in such bad shape that it is being sold off
to another, privately-owned bank. Some 10bn euros of the cost associated with
the four banks' rescue must be borne by other investors in the banks. This
decision has proved controversial in Spain, as these investors include many
ordinary Spaniards, particularly older investors, to whom their banks sold
preferred shares - a high-risk form of bank debt - as a savings product. In
Bankia's case, about 350,000 such investors are expected to have most of their
money wiped out as part of the bank's rescue, according an unnamed source cited
by the Reuters news agency.
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The Greek socialist party, Pasok, has expelled the former Finance Minister, George Papaconstantinou, over allegations he deleted the names of relatives from a list of Greeks who held Swiss bank accounts.
The list is being used to investigate possible tax evasion by Greece's elite.
It was taken from HSBC bank and handed to the then French Finance Minister, Christine Lagarde.
Pasok said Mr Papaconstantinou "handled the list in the worst possible way".
Mr Papaconstantinou, who introduced Greece's first austerity programme as the country tried to rein back its escalating debt, denies any wrongdoing.
The list was passed to the Greek Finance Ministry by Ms Lagarde in 2010, when Mr Papaconstantinou was minister. But the Pasok government took no action and later claimed to have lost it.
The eurozone has agreed a new "fiscal compact"Eurozone parliaments are in the process of ratifying a tough set of rules - insisted on by Germany - that will limit their governments' "structural" borrowing (that is, excluding any extra borrowing due to a recession) to just 0.5% of their economies' output each year. The pact, which will come into force once 12 out of the 17 eurozone member states have ratified it, will also limit their total borrowing to 3%. These rules are supposed to stop them accumulating too much debt, and make sure there won't be another financial crisis.
Italy was the worst offender. It regularly broke the 3% annual borrowing limit. But actually Germany - along with Italy - was the first big country to break the 3% rule. After that, France followed. Of the big economies, only Spain kept its nose clean until the 2008 financial crisis; the Madrid government stayed within the 3% limit every year from the euro's creation in 1999 until 2007. Not only that - of the four, Spain's government also has the smallest debts relative to the size of its economy. Greece, by the way, is in a class of its own. It never stuck to the 3% target, but manipulated its borrowing statistics to look good, which allowed it to get into the euro in the first place. Its
It is worth noting that some eurozone members have never met the Maastricht requirement that total debt should be no more than 60% of GDP.
In fact, the requirement was watered down at the inception of the euro in 1999 in order to ensure that Germany would qualify, also letting the heavily-indebted Italian government in as well in the process.
The chart shows that before 2008, the governments of both Ireland and Spain had very modest debts compared with France and Germany.
However, private sector borrowers in those countries - notably property developers and mortgage borrowers - took on unsustainably large debts.
Greece had hidden a lot of its debts before the financial crisis, and since 2008 the government has struggled to bring its overspending under control.
If an economy becomes overburdened by debt and relies on its creditors to keep relending it the money, it risks a sudden loss of confidence, resulting in a refusal by creditors to continue lending.
Inside the eurozone, this risk is heightened by the fact that the European Central Bank is banned by treaty from bailing out governments.
The chart shows data for all of the countries that officially use the euro as well as the UK, which is included to allow for comparisons.
The American budget isn't the problem here, it's the ridiculously low taxes they have.
You just can't run a country on such low rates of taxation; especially one that insists on having such a sky high military budget.
What particularly stands out are the incredibly low taxes for the rich, something that despite what tea party morons say does absolutely nothing to help the economy.
Especially the small businesses they like to rave so much about.
So much fail in three sentences. Rather than fisking, I'll summarize:
Point 1: Yes, too bad the Republicans are doing such a good job of looking like arsonists and hostage takers, again. I guess they aren't very bright, what with the playing right into his hands.
Point 2: This one is so hoary it has scales. Everything from Obama putting the costs of the wars on the books to mandatory spending in a recession has been covered in detail. Further, Congress still retains the power of the purse, thus rendering Obama's quest for "more money to spend" somewhat Quixotic.
Point 3: Anyone who thinks that Romney/Ryan had any credibility when it came to federal budgeting is either deluded or partisan.
Finally, as a general question, how do you rationalize opposition to the so-called 'fiscal-cliff' which, with its combination of sequestered cuts and tax rises, reduces both the budget deficit and national debt at an accelerated pace?
Amazing how so many get sucked in by all this hype. It is stage managed every time. They hang it on a knife edge then suddenly at the eleventh hour a deal is struck. All produced to make it look like the president has real power and that there is nobody in the shadows pulling the strings.
So much for the many financial, economic, business and political gurus that managed to create a system that pretty much directly lead to the financial crisis that they mostly failed to foresee, and now their only remedies appear to be about protecting wealth and power at the expense of everyone else, especially the poor, or disadvantaged. Yet many of these very same people appear to have little shame or compassion for the hardship they helped create for many, pretty much maintaining their inflation busting pay, perks, and bonus increases while insisting everyone else gets a pay freeze, unemployment, lose of benefits, and worse still, the blame.
Far higher than the OBR forecast...
I was intrigued by the OBR's latest offerings, and decided to do a little digging to see how good their forecasts have been.
I came across 'Autumn Statement: Are OBR And IMF Growth Forecasts Reliable?' ,
http://www.huffingtonpost.co.u...
2010 was spent upgrading forecasts, and even then they didn't get it right in the end.
2011 and 2012 saw downgrade after downgrade.
The conclusions are
1. They are wildly optimstic.
2. Their forecasts are not worth the paper they're written on.
An expensive waste of time and money.
And the IMF ones are just as bad...
There is no crisis. There can't be a crisis whilst EU politicians continue to write off, underwrite and defer debt.
When they take debt seriously then you will see a crisis but until then it's just words and newspapers filling column inches.
Chancellor Angela Merkel has warned that the German economic climate in 2013 will be "even more difficult".
In her new year message, she also cautioned that the eurozone debt crisis was far from over.
However, she did say that reforms designed to address the roots of the problem were beginning to bear fruit.
Her comments appeared to contradict German Finance Minister Wolfgang Schaeuble who said last week that the worst of the crisis was over.
In a taped interview to be broadcast later on Monday, Mrs Merkel urged Germans to be more patient.
"I know that many people are naturally concerned going into the new year," she said.
"The economic environment will not in fact be easier but rather more difficult next year. But we shouldn't let that get us down; rather it should spur us on."
She linked future German prosperity to a prosperous European Union.
"For our prosperity and our solidarity, we need to strike the right balance," she said.
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