EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2

Panda

You wrote

"Scandinavia, Norway, Holland Finland etc who would object."

Do you not think that in order to be a Member of the EU you have to comply with their edicts. We have complained bitterly in the past and they have retorted that we must support the EU to be a Member and receive any benefits.

I think that as long as the money keeps flowing each Member States' government will comply.

Angelique wrote:Panda

You wrote

"Scandinavia, Norway, Holland Finland etc who would object."

Do you not think that in order to be a Member of the EU you have to comply with their edicts. We have complained bitterly in the past and they have retorted that we must support the EU to be a Member and receive any benefits.

I think that as long as the money keeps flowing each Member States' government will comply.

We shall see, but clearly the EC is unable to cope with what is happening because it was never envisaged and if the Euro loses value attitudes would
change.

Panda

Of course, there is always the unforseen event as you say. If people could just realise that in order for the EU and each respective Government to wield such power they have to put our money where their mouth is.

Angelique wrote:Panda

Of course, there is always the unforseen event as you say. If people could just realise that in order for the EU and each respective Government to wield such power they have to put our money where their mouth is.

Iv"e been watching a Harry Potter Film, it really is spectacular , the Ball scene from the Goblet of Fire, and special effects ,glad JKR insisted the fims be made in Britain .Back to Topic

Angelique, I"m quite sure that a lot of Countries would not give up the right to Govern their own Country if push came to shove. In fact circumstances
will dictate events and if the proposition is put to all the Countries each one would have to have a Referendum I"m sure.

Reported on the News, Cameron has cut short his Holiday and been in Telephone contact with Sarkozy so it is obvious there are expecting more bad
news next week. I just hope Cameron does not offer to help financially, we are in enough trouble with RBS and Lloyds, the Banks we bailed out, plus our
own Economy is looking decidedly shaky.

I think it will be the Far East who will dictate matters.

BBC News




7 August 2011
Last updated at 15:19



talks called to calm global markets turmoil












World leaders fear more turmoil when markets reopen on Monday


Continue reading the main story













Global Economy

• 
  As it happened: Stock market turmoil
  
• 
  What it means for you
  
• 
  Factors behind the market sell-off
  
• 
  Charting Europe's economic woes
  

The
European Central Bank is due to hold emergency talks on whether to
start buying Italian debt to contain spreading turmoil on financial
markets.

The BBC's Business Editor Robert Peston says the ECB is split on the move.

Growing worries over debt in the eurozone and the US caused sharp falls on world stock markets last week.

Finance ministers from the G7 major economic powers are also
to hold emergency talks on how to calm the markets before they reopen on
Monday.

The governing council of the ECB, which includes the central
bank governors of all 17 eurozone countries, will hold a telephone
conference on Sunday afternoon, the BBC has learned.

According to an ECB source cited by Reuters news agency, the
bank's president Jean-Claude Trichet wants a final decision on whether
to buy Italian debt to be made at the meeting.

Meanwhile, Middle East markets, which are open for trading on
Sunday, lost ground, with Israel's main exchange dropping by about 7%
and Egypt's by about 4%.

There are fears that unless leaders can announce a decisive
plan of action before Asian and European markets open on Monday, global
shares could plunge even further.

Monday will also be the first day major markets are open
following the decision by credit rating agency Standard & Poor's to
downgrade US government debt.

According to Reuters, S&P managing director John Chambers
said on Sunday there was a one in three chance of a further downgrade
in the next six months to two years.

Low growth
Italy is the latest and biggest economy to be hit by the eurozone crisis.


Continue reading the main story
“Start Quote

Although bankers say the downgrading
of America's credit rating was unwelcome, their more pressing worry is
the rising price that Italy has to pay to borrow - the falling price of
Italian government debt”

Robert Peston
Business editor, BBC News

• Europe's Lehman moment?
  

The price Italy pays on its
government bonds has shot up amid growing doubts it can keep its debt
level so high while economic growth is so slow.

Spain, too, has been caught up in the crisis - hammered by high unemployment, high government debt and anaemic growth.

The high levels of debt coupled with low growth and an
uncertain response among eurozone leaders to the crisis has sparked
fears that both countries could become engulfed in the same cycle which
has led to Greece, the Irish Republic and Portugal already being bailed
out.

Last week, European Commission President Jose Manuel Barroso
said authorities in the eurozone were failing to prevent the sovereign
debt crisis from spreading.

Both Italy and Spain insist they can service their debt.

On Friday, Italian Prime Minister Silvio Berlusconi said he
was bringing forward austerity measures and would balance the government
budget by 2013, one year ahead of schedule.

Last week, the gap between German bonds - seen as the safest
in Europe - and Spanish and Italian debt reached a record high since the
euro was introduced in 1999.

There have been rumours that the ECB was preparing to buy
Spanish and Italian bonds to try to help those countries. Last week the
ECB bought Irish and Portuguese bonds but did not include Spanish and
Italian debt in its purchases.

The BBC's Business Editor Robert Peston says the ECB's governing council is divided on whether to buy Italian bonds.

A decision not to buy would risk further turmoil in share and bond markets on Monday, he says.

Some analysts argue that investors expected the bank to buy
Italian and Spanish debt soon after the eurozone leaders summit on 21
July, and the fact that it has not has undermined confidence in the
markets.

Not impressed

Continue reading the main story S&P ratings (selected)

• AAA: UK, France, Germany, Canada, Australia
  
• AA+: USA, Belgium, New Zealand
  
• AA: Spain, Bermuda
  
• AA-: Japan, China
  
• A+: Italy, Chile, Slovakia
  
• BBB-: Portugal, Iceland, Morocco
  
• CC: Greece
  

Source: S&P

• What is a rating agency?
  

Finance ministers and central
bankers from the G7 are to hold emergency talks by telephone before
markets open in East Asia on Monday morning, aiming to craft a global
response on the eurozone debt crisis and ease fears over rating agency
Standard & Poor's downgrading of US credit-worthiness.

The rating agency Standard & Poor's (S&P) on Friday downgraded America's top-notch AAA rating to AA+.

S&P, one of the world's three major rating agencies,
failed to be impressed by a last-minute deal in the US last week to
raise the US debt limit by up to $2.4tn (£1.5tn) from $14.3tn.

It staved off a potential US government default on its debt
but was only achieved after months of wrangling between Democrats and
Republicans in Congress.

The credit rating downgrade is seen as a major embarrassment
for President Obama's administration. It could also raise the cost of US
government borrowing.

An economic adviser to the White House condemned the S&P move.

"It smacked of an institution starting with a conclusion and
shaping any argument to fit," said Gene Sperling, the head of President
Obama's National Economic Council.

White House spokesman Jay Carney said on Saturday that last
week's debt deal had been "an important step in the right direction",
but that "the path to getting there took too long and was at times too
divisive".

He said the US must now "do better".









More on This Story











Global Economy

The ECB has agreed a massive deal with Italy, they will buy 2 billion Italian Bonds EVERY DAY until the threat to Italy is over, in return Italy MUST act
to cut it"s deficit. Presumably Spain will have to do the same. Shares around the world falling and analysts suggesting the ECB abandon austerity
to concentrate on growth until the situation eases. Typical Investment advisors, unless Governments make a stand this problem will not go away until
their debt lowered.

It is estimated the ECB will spend E1.2 trillion bailing out Italy and Spain and this is a high risk strategy and the only way forward is for fiscal
management by the EU for all Countries. Germany is against fiscal union and issuing Eurobonds and the consensus appears to be that the EU is just
plugging holes instead of coming up with a plan for the future.

Magic Numbers: Euro Hangs On Borrowing Costs

• 
  
• 
  
• 3 Comments
  

3:01pm UK, Monday August 08, 2011

Ed Conway, economics editor

In the end it all comes down to one or two magic numbers.










The fate of the euro, and for that matter the US, UK and other leading world
economies, hinges on their bond yields.

As with so much else in economics, "bond yields" are jargon for something
rather simpler.

It is the rate at which a country can borrow money in the open market, where
each and every second investors decide the rate at which they are willing to
lend to countries.

:: Check the latest market data on Sky News
Business

And just as an ever-increasing interest rate will eventually push a household
into penury, the same goes for countries and their sovereign debt.

Take Italy: it has one of the biggest debt mountains in the western world, at
120% of its annual economic output, and because on average these bonds (there
are all kinds of different flavours and varieties) expire every four years, it
needs to go back into the market regularly to raise money.



Italy's bond yield fell after the ECB said it would be
prepared to buy its bonds



As such, it is highly sensitive to the level of its bond yields, since even
the smallest percentage increase can dramatically increase its annual interest
costs.

Experts at Goldman Sachs think that if Italian bond yields went up above 6.7%
for a prolonged period, the country would soon find itself in a spiral leading
inevitably towards default.

And late last week, those bond yields leapt up worryingly close, to 6.2%.

Thanks to the European Central Bank’s emergency buying spree of
Italian and Spanish bonds, those yields have now come back down by
almost a full percentage point, pulling Italy (and for that matter Spain), back
out of the danger zone.

The worry, however, is that this represents only a stop-gap rather than a
deeper solution: fundamentally, a bond yield is a kind of shorthand for the
credit risk investors would append to a country.

Hence Greek bond yields are today at credit card-style levels of 15.4%, which
tells you how much faith investors have in that country’s ability to sustain its
debt load.

Governments borrow for all kinds of lengths of time, but the benchmark bond
yields people usually quote are those for borrowing over 10 years, given they
represent a middle-ground between short and long term borrowing.



















Help

• 
  B
  

Close









Your Comments


Sort comments by: Newest Oldest Recommended

Posted by: merc mad on August 8, 2011 4:18 PM

The situation of recent days shows why the Euro
zone can not possibly work unless full financial integration has occurred. When
you have rogue nations over borrowing and not making commitment to settle that
debt you will always generate concern from the markets.

Italy and Spain
both need to get their act together and start paying off some debt. This will
NOT end until the markets are confident that this is under control once and for
all.

Magic Numbers: Euro Hangs On Borrowing Costs

• 
  
• 
  
• 3 Comments
  

3:01pm UK, Monday August 08, 2011

Ed Conway, economics editor

In the end it all comes down to one or two magic numbers.










The fate of the euro, and for that matter the US, UK and other leading world
economies, hinges on their bond yields.

As with so much else in economics, "bond yields" are jargon for something
rather simpler.

It is the rate at which a country can borrow money in the open market, where
each and every second investors decide the rate at which they are willing to
lend to countries.

:: Check the latest market data on Sky News
Business

And just as an ever-increasing interest rate will eventually push a household
into penury, the same goes for countries and their sovereign debt.

Take Italy: it has one of the biggest debt mountains in the western world, at
120% of its annual economic output, and because on average these bonds (there
are all kinds of different flavours and varieties) expire every four years, it
needs to go back into the market regularly to raise money.



Italy's bond yield fell after the ECB said it would be
prepared to buy its bonds



As such, it is highly sensitive to the level of its bond yields, since even
the smallest percentage increase can dramatically increase its annual interest
costs.

Experts at Goldman Sachs think that if Italian bond yields went up above 6.7%
for a prolonged period, the country would soon find itself in a spiral leading
inevitably towards default.

And late last week, those bond yields leapt up worryingly close, to 6.2%.

Thanks to the European Central Bank’s emergency buying spree of
Italian and Spanish bonds, those yields have now come back down by
almost a full percentage point, pulling Italy (and for that matter Spain), back
out of the danger zone.

The worry, however, is that this represents only a stop-gap rather than a
deeper solution: fundamentally, a bond yield is a kind of shorthand for the
credit risk investors would append to a country.

Hence Greek bond yields are today at credit card-style levels of 15.4%, which
tells you how much faith investors have in that country’s ability to sustain its
debt load.

Governments borrow for all kinds of lengths of time, but the benchmark bond
yields people usually quote are those for borrowing over 10 years, given they
represent a middle-ground between short and long term borrowing.





Bookmark the story

sky News

In a decision made late on Sunday night, central bankers from all 17 euro
countries agreed the ECB should "actively implement" its controversial
bond-buying programme.

The move aims to help limit the interest rate Italy and Spain have to pay on
their national debt.

But it is seen by critics as a short-term measure that fails to tackle the
root causes of the eurozone debt problem.

Neverthelesss, the ECB's move had some impact as Spain's and Italy's
borrowing costs fell.



Ten-year bond yields for Spain and Italy fell, making
borrowing cheaper



Despite the improvements in lending, European stock markets
lost their earlier gains to resume the recent downward trend.

Live blog: all the latest market reaction

Skilled Workers follow the money in flight from Portugal

German Sovereigh Debt is riskier than the U.K. since January 2008

Deutche Bank CEO Hedges Italian risk.......in other words Germany comes first.!!

EC Bank stress levels show risk levels unseen since Lehmann.

analysts think the latest bail out to Italy and Spain is pouring money down the drain and these Countries will default along with Greece. Question
being asked is how can these countries service the interest on these Bonds never mind reduce the Debt when the World is in recession.

General concensus is ECB halfhearted attempt to bail out Italy and Spain will fail say Analysts and the Euro will depreciate as a result.

Panda

Yes it's looking a bit shaky again - I though this Bond buying scheme was going to quieten things down!

Sorry I have not been here lately I have been unable to log on for some reason but ok now.

Angelique wrote:Panda

Yes it's looking a bit shaky again - I though this Bond buying scheme was going to quieten things down!

Sorry I have not been here lately I have been unable to log on for some reason but ok now.

Angelique, I think the U,S, regained some of the huge loss it suffered yesterday on the Dow, but is in as bad a state as Europe. You can"t buy yourself
out of a recession and increase your debt to such an extent that you are declared bankrupt. As usual it is the poor who suffer and the rich stay rich.

A few of us couldn"t log on on sunday, but it is O.K. now.

BOE Chief at Press interview, says U.K. Economy is weaker than anticipated and will take a couple of years to improve. He fears the EU problems will get worse. I don"t think he mentioned quantitive easing.

THERE WERE RUMOURS THAT FRANCE'S DEBT RATINGS WOULD BE DOWNGRADED,NOT SUPPOSEDLY TRUE

Badboy wrote:THERE WERE RUMOURS THAT FRANCE'S DEBT RATINGS WOULD BE DOWNGRADED,NOT SUPPOSEDLY TRUE

Yes, your"e right Badboy, the French Banks also , shares have tumbled again today after a revival yesterday .the CAC down over 5%. The concensus
from the U.S. is that the EU will fail .

analysts are saying BNP Paribas is in a lot of trouble and because basically the EU Countries don"t like each other because of their History, it is unlikely
that France will be able to sustain it"s debt and the U.S. has a lot invested in Europe, so they are very worried. It"s looking increasing likely that the EU
will break up becauce the EC cannot keep lending these Countries Money. Italy Company shares down 9% The Bundesbank also in trouble. Euro
Bank shares down to what they were in 2008.

David Cameron has spoken by phone to Obama today about the crisis in the EU and American fears that France will have to have a bailout.

Although denied by the Bank ,Societe Generale is rumoured to be in trouble as well as BNP Paribas. Deutchebanke , a German Bank is also under the
microscope and these banks were one of the reasons the U.S. Stocks fell yesterday. There is concern in the U.S. that although the ECB is spending
so much money buying Bonds instead of expanding its Balance Sheet.

there is growing concern in the U.S. that the EU will not survive .

I can't imagine the EU going bust - mind you there is only so much debt you can cover before it drags the rest with it!

Mark Kleinman....sky news


Some British banks are resisting efforts by the City regulator to oblige them
to disclose more detail of their exposure to troubled Eurozone governments, I
have learned.

The big UK lenders have been asked by the Financial Services Authority (FSA)
to agree a more detailed template for identifying their holdings of sovereign
debt in time for their annual results early next year.

The FSA’s push comes amid fresh worries about the health of the European
banking sector. Yesterday, French banks – and in particular, Societe Generale,
one of the country’s most important financial institutions – saw their shares
plunge because of rumoured doubts about their solvency.

Later today, George Osborne, the Chancellor, will update MPs on the state of
the UK economy and the contingency plans in place to protect Britain from
another prolonged shock to the financial markets.

I’m told that the Treasury has briefed the big UK banks in recent days that
the Bank of England stands ready to provide additional liquidity support if
there is a drought in the short-term funding markets.

Mr Osborne is unlikely to spell out much detail about those contingency plans
but I expect him to say that big UK banks are well-capitalised and have access
to sufficient liquidity.

The FSA’s push for banks to reveal more detail of their sovereign debt
holdings follows a round of stress tests by the European Banking Authority that
were criticised for omitting key details of their balance sheet.

In recent weeks, the FSA has been holding talks with big UK banks such as
Barclays, HSBC and Royal Bank of Scotland about how they identify their holdings
of government debt.

But some bankers point out that the industry already operates a code for
financial reporting disclosure and believes additional measures are
unnecessary.

To be clear, the FSA is not at this stage forcing banks to make more detailed
disclosures. But people familiar with the talks say the regulator has left them
in no doubt that it wants to see a more consistent disclosure regime.

“We believe that we are best-placed to decide which information to disclose
to investors,” one bank executive told me.

Another said that his bank’s holding of certain Eurozone government bonds was
so negligible as to be entirely immaterial and “not worth reporting”.

It emerged last week during the banks’ half-year reporting season that the
FSA had suggested disclosing their holdings of Belgian sovereign debt. Lloyds
Banking Group decided to accede to the request, while others, including
Barclays, did not.

The regulator’s discussions with banks are being led by Richard Thorpe, its
accounting and audit sector leader.

Stephen Hester, chief executive of Royal Bank of Scotland, said last week
that the taxpayer-backed bank already disclosed more detail about its balance
sheet “than any other bank in the world”.

“Our disclosure is so far ahead of anything anyone else is doing that I think
if the FSA have a view, it will to be bring other people closer to us,” he said
last week.