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Utente:HillisWelty539

2012-07-26T09:07:01Z

46.105.228.172: Nuova pagina: What really caused the eurozone crisis? World leaders probably spent more time worrying about the eurozone crisis than anything else in 2011. And that was in the year that featured t...

What really caused the eurozone crisis?

World leaders probably spent more time worrying about the eurozone crisis than anything else in 2011.

And that was in the year that featured the Arab Spring, the Japanese tsunami and the death of Osama Bin Laden. What's more, 2012 looks set to be not much different. But as eurozone governments hammer out new rules to limit their borrowing, are they missing the point of the crisis?

* The eurozone has agreed a new "fiscal compact"
* Eurozone leaders have agreed to 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. 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.
* But didn't they already agree to this back in the '90s?
* Hang on a minute. They agreed to exactly the same 3% borrowing limit back in 1997, when the euro was being set up. The "stability and growth pact" was insisted on by German finance minister Theo Waigel (centre of image). What happened?
* So who kept to the rules?
* 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 waywardness was uncovered two years ago.
* 3/9 Italy
Worst offender
* 5/9 Germany
First to break rules
* 6/9 France
Offender
* 9/9 Spain
Top of the Class
* But the markets have other ideas
* So surely Germany, France and Italy should be in trouble with all that reckless borrowing, while Spain should be reaping the rewards of its virtue? Well, no. Actually Germany is the "safe haven" - markets have been willing to lend to it at historically low interest rates since the crisis began. Spain on the other hand is seen by markets as almost as risky as Italy. So what gives?
* So what really caused the crisis?
* There was a big build-up of debts in Spain and Italy before 2008, but it had nothing to do with governments. Instead it was the private sector - companies and mortgage borrowers - who were taking out loans. Interest rates had fallen to unprecedented lows in southern European countries when they joined the euro. And that encouraged a debt-fuelled boom.
* Good news for Germany...
* All that debt helped finance more and more imports by Spain, Italy and even France. Meanwhile, Germany became an export power-house after the eurozone was set up in 1999, selling far more to the rest of the world (including southern Europeans) than it was buying as imports. That meant Germany was earning a lot of surplus cash on its exports. And guess what - most of that cash ended up being lent to southern Europe.
* ...bad news for southern Europe
* But debts are only part of the problem in Italy and Spain. During the boom years, wages rose and rose in the south (and in France). But German unions agreed to hold their wages steady. So Italian and Spanish workers now face a huge competitive price disadvantage. Indeed, this loss of competitiveness is the main reason why southern Europeans have been finding it so much harder to export than Germany.
* ...and a nasty dilemma
* So to recap, government borrowing - which has ballooned since the 2008 global financial crisis - had very little to do with creating the current eurozone crisis in the first place, especially in Spain (Greece's government is the big exception here). So even if governments don't break the borrowing rules this time, that won't necessarily stop a similar crisis from happening all over again.

Spain and Italy are now facing nasty recessions, because no-one wants to spend. Companies and mortgage borrowers are too busy repaying their debts to spend more. Exports are uncompetitive. And now governments - whose borrowing has exploded since the 2008 financial crisis savaged their economies - have agreed to drastically cut their spending back as well. But...
* Cut spending...
* ...and you are pretty sure to deepen the recession. That probably means even more unemployment (already over 20% in Spain), which may push wages down to more competitive levels - though history suggests this is very hard to do. Even so, lower wages will just make people's debts even harder to repay, meaning they are likely to cut their own spending even more, or stop repaying their debts. And lower wages may not even lead to a quick rise in exports, if all of your European export markets are in recession too. In any case, you can probably expect more strikes and protests, and more nervousness in financial markets about whether you really will stay in the euro.
* Don't cut spending...
* ...and you risk a financial collapse. The amount you borrow each year has exploded since 2008 due to economic stagnation and high unemployment. But your economy looks to be chronically uncompetitive within the euro. So markets are liable to lose confidence in you - they may fear your economy is simply too weak to support your ballooning debtload. Meanwhile, other European governments may not have enough money to bail you out, and the European Central Bank says its mandate doesn't allow it to. And if they won't lend to you, why would anyone else?

Utente:ManusMonge967

2012-07-24T14:39:18Z

46.105.228.172: Nuova pagina: The United States has announced it will further ease sanctions against Burma. Secretary of State Hillary Clinton said some travel and financial restrictions would be relaxed, with Bur...

The United States has announced it will further ease sanctions against Burma.

Secretary of State Hillary Clinton said some travel and financial restrictions would be relaxed, with Burmese leaders allowed to visit the US.

European Union leaders had said earlier on Wednesday that they would consider taking similar steps.

The news follows by-elections in Burma on Sunday in which pro-democracy leader Aung San Suu Kyi's party secured a landslide win.

The National League for Democracy (NLD) took 43 out of 45 seats up for grabs in the polls, which were generally deemed to be free and fair.

Mrs Clinton, who paid a visit to Burma last year, praised President Thein Sein's "leadership and courage".

"We fully recognise and embrace the progress that has taken place and we will continue our policy of engagement," she said.

Under the moves, the US will name an ambassador to Burma and establish an office for its Agency for International Development in the country.

The US would also begin "targeted easing" of the ban on US financial services and investment in Burma, she said without giving further details.
Continue reading the main story
Analysis
image of Rachel Harvey Rachel Harvey BBC South East Asia Correspondent

The recent by-elections are being hailed as an important step in Burma's transition from decades of authoritarian military rule towards a more open, democratic and representative system. But it is a transition fraught with difficulties.

Aung San Suu Kyi will feel that the risk she took in deciding to participate in the elections has been vindicated by the scale of her party's success.

But the real test will be to see how effective she is able to be as an agent for change within parliament.

Harvey: What now after poll landslide?

Administration officials said agriculture, tourism, telecommunications and banking would be among the economic sectors to be considered for the relaxation of sanctions.

Mrs Clinton said that sanctions would remain in place "on individuals and institutions that remain on the wrong side of these historic reform efforts".

The US eased some sanctions on Burma in February.
Political prisoners

The US move came hours after Asian leaders meeting for a regional summit issued a formal call for sanctions against Burma to be lifted immediately to help the country's political and economic development.

Speaking in London, British Foreign Secretary William Hague said EU members would probably be willing to lift some of their sanctions on Burma.

"That does not mean an instant and complete opening up of trade with Burma," he added.

Mr Hague said he would keep up pressure on Burma to free political prisoners.

The Chinese foreign ministry welcomed the Western moves to relax sanctions on Burma, and called for all restrictions to be lifted.

Utente:DemingFretwell992

2012-07-24T08:52:08Z

Utente:LezlieRamon645

2012-04-05T10:03:13Z

46.105.228.172: Nuova pagina: Stock markets have declined on fears over the state of the US and European economies. In Europe, shares fell after a disappointing Spanish bond sale. German and French shares fell alm...

Stock markets have declined on fears over the state of the US and European economies.

In Europe, shares fell after a disappointing Spanish bond sale. German and French shares fell almost 3%.

The European Central Bank also said it would not roll back emergency measures to tackle the eurozone debt crisis, adding to investor concerns.

Wall Street fell 1% after the Federal Reserve signalled that it might not provide more stimulus.

In the UK, the FTSE 100 closed down 2.5%.

In Europe, the Spanish government had hoped to sell up to 3.5bn euros ($4.6bn; �2.9bn) of medium-term bonds, but it was only able to find buyers for 2.6bn euros.

It once again raised concerns about high levels of sovereign debt in several eurozone member states.

Achilleas Georgolopoulos of Lloyds Banking Group said the Spanish bond sale had been "very disappointing".

Market sentiment was further weakened by a survey showing continuing weakness in the eurozone services sector.
Continue reading the main story
�Start Quote

In Europe the economic data is weak and sovereign concerns are flaring up once more�

Kathleen Brooks Financial website Forex

No time for ECB 'exit strategy'
Eurozone services sector 'weak'
Irish services employment 'rises'
Fed stays concerned over growth

Commodities slump

The price of oil and other benchmark commodities also dropped.

Light sweet crude fell 2.4% to $101.46 a barrel, while Brent crude fell by $2.17 to $122.69.

Gold fell 3.3% - to its lowest level since January - and copper dropped 2.8% - send UK-listed miners lower. BHP Billiton fell 3.4% and Rio Tinto dropped 3.8%.

Investor confidence was affected overnight by the US central bank, the Fed, which indicated on Tuesday that it was not considering a further round of quantitative easing (QE).

Under QE, a central bank injects new money into the financial system to help boost bank lending.

Some at the Federal Reserve "perceived a non-negligible risk that improvements in employment could diminish as the year progressed", said the minutes of the March meeting.
Continue reading the main story
Brent Crude Oil Futures $/barrel
Last Updated at 04 Apr 2012, 20:00 GMT *Chart shows local time Brent Crude Oil Future intraday chart
price change %
122.59 -
-2.33
-
-1.87

Meanwhile, ECB president Mario Draghi warned that the eurozone's economic outlook "remains subject to downside risks".

He made the comments after the ECB kept eurozone interest rates on hold at 1% for the fifth month in succession.

Utente:GillespieKratz344

2012-04-04T03:20:28Z

Utente:LyndellWyche807

2012-04-03T23:48:06Z

46.105.228.172: Nuova pagina: THE man who the polls suggest will be the next French president, Fran�ois Hollande, claims that finance is his �real adversary� in the coming election. Britain has just stripped ...

THE man who the polls suggest will be the next French president, Fran�ois Hollande, claims that finance is his �real adversary� in the coming election. Britain has just stripped the former chief executive of the Royal Bank of Scotland of his knighthood. Even Newt Gingrich is attacking the �vulture capitalists� in the private-equity industry. Perhaps the West is set for a �war on finance� along the lines of the �war on terror�, with similar uncertainty about how to define victory.

Politicians seem to have three main beefs with the financial sector. The first is that bankers earn too much. The second is that banks take reckless risks and then need rescuing by governments. And the third complaint is that investors in financial markets have undue influence over an economy through their ability to affect bond yields and equity prices.
In this section

The first two problems are really related. People do not worry too much about footballers� high pay. The problem with bankers is the extent to which they are subsidised by explicit and implicit taxpayer support. (Of course, you might worry about income inequality in general but that is not specific to banks and can be tackled by redistributive taxation.) It is hard to disagree with Paul Tucker of the Bank of England, who has written that: �Those who most espouse the disciplines of capitalism�bankers and financiers�should live by them.�

The problem of banks being �too big to fail� is being addressed, albeit slowly, by the higher capital ratios being imposed by regulators. Higher capital ratios should mean lower returns on equity; over time, this should lead to less rapid pay growth for bankers. Andrew Haldane, a colleague of Mr Tucker�s, has found that the pay of bank bosses correlated well with returns on equity, but not with returns on assets�in other words, managers prospered by gearing up bank balance-sheets. That is now harder to pull off.

Utente:DawneSawyers190

2012-04-03T21:36:23Z

46.105.228.172: Nuova pagina: Cautious consumers' repayments on credit cards, loans and overdrafts outstripped new borrowing by �305m in February, figures show. This safety-first approach had led to a contractio...

Cautious consumers' repayments on credit cards, loans and overdrafts outstripped new borrowing by �305m in February, figures show.

This safety-first approach had led to a contraction in borrowing through loans and overdrafts for more than three years, major banks said.

The figures, from the British Bankers' Association (BBA), showed a slowdown in activity in the mortgage market.

It said remortgaging levels were at their lowest for 13 years.
'Difficult economic times'

Despite their cautious approach, consumers still spent �7bn on credit cards in February - a similar level as the previous six months, the figures show.

Repayments outstripped new borrowing on credit cards by �39m in February. The repayment in unsecured lending was driven by weak demand, and continued payback, of loans and overdrafts.

Unsecured lending by the banks contracted by 1.8% in the 12 months to February.

"Businesses and households continue to be cautious about their finances in the face of difficult economic times and this shows up in a reluctance to take on new credit, or where possible, seeking to pay back bank borrowing," said BBA statistics director David Dooks.
Mortgage dip

In the housing market, gross mortgage lending by the banks stood at �7.9bn in February, which was 1.9% lower than the same month a year earlier.

With interest rates set to stay at low levels for some time, the number of remortgaging approvals dropped to its lowest level for 13 years at 18,147. Lenders have also become more choosy about who they accept for remortgaging.

The number of mortgages approved for house purchases also fell to 33,103 in February. The average mortgage approved was �146,600.

The BBA said that there had been a jump in activity at the start of the year as first-time buyers tried to get on the property ladder before a 1% stamp duty charge for homes valued between �125,000 and �250,000 is reintroduced on Saturday.

However, activity returned to more "normal" levels in February, said the group which represents the High Street banks.