For a number of reasons, Cyprus’ formal request for a bank bailout went under the radar. Cyprus represents less than 0.2% of the eurozone’s GDP and the amounts in question were negligible (initial estimates were in the region of a total of 10 billion euros) when compared to other countries’ bailout programs. Also, all eyes at the time were on Greece and nobody wanted to spoil the celebratory mood in Cyprus as it prepared to assume the EU presidency by making the bank bailout an agenda-topping issue. Spain had also
In January 2012, Jean Pisani-Ferry argued that at the core of euro-area vulnerability is an impossible trinity of strict no-monetary financing, bank-sovereign interdependence and no co-responsibility for public debtand assessed the corresponding three options for reform: a broader European Central Bank (ECB) mandate, the building of a banking federation, and fiscal union with common bonds.
The UK entered recession in 2008. We experienced a partial recovery in 2010 and 2011. But, by Q1 2012, the UK was officially back in recession.
Economic growth in Q3 2012 was 1.0% – helped by an Olympic ticket sales boost. But, in Q4 2012, the economy went back into negative growth. Manufacturing fell 1.5%, service sector growth was flat, and construction rose 0.3% in the final quarter
If growth is negative in first quarter 2013, the UK will be officially in a ‘triple dip recession’
They point out that business investment is well correlated with investors' sentiment towards shares. My chart shows that a similar thing is true in the UK. We can measure sentiment by the ratio of Aim stocks to the FTSE 100; Aim shares tend to be smaller, less well-known and more speculative than bigger shares, and so high prices for them are a sign of high spirits. You can see that this ratio has tended to predict business investment, with a lag - the lag being because it takes time for investment decisions to translate into actual spending.
The consensus expectation was for a repayment figure of €84 billion, or substantially more than both the expected, as well as the whispered goldilocks number of €100 billion. The banks that will free themselves of the LTRO stigma will be disclosed as it becomes known however as a reminder some 523 banks participated in the first LTRO. The market response so far has been one of risk on, due to the perceived implication that the interbank market is healhtier than expected, coupled with a push up in the EURUSD as the repayment is, as noted previously, a gross deleveraging of the ECB balance sheet coming at a time when every other bank is explicitly devaluaing their currency
Last night I got into a Twitter "debate" with Michael Fabricant, who is Vice Chairman of the Conservative Party. I replay it here to set out the facts (which are fairly simple) and perhaps to give Mr Fabricant one more change to correct his position gracefully.
In this winter of austerity and Depression-era unemployment, a fog of woodsmoke hangs over the Greek capital on cold nights.
It’s coming from the tens of thousands of fireplaces and wood-burning stoves Athenians are using to heat their homes. Most can no longer afford heating oil, the price of which has risen 40 percent since last year. The government also cut a fuel subsidy for low-income families earlier this month.
The FMC2 Finance Conference is a high-quality conference covering all areas of finance. Previous speakers at the conference (which replaces the Global Finance Academy annual conference) include Douglas Breeden, Michael Brennan, Julian Franks, Maureen O’ Hara, John McConnell, Stewart Myers, Matthew Spiegel, Hassan Tehranian and Raman Uppal. The format of this year’s conference is for six selected papers..
Just when you think it's safe to return to David Cameron, he bites you in the leg. That is what UK business leaders are thinking right now, after his warning to international companies to 'Wake up and smell the coffee' – a phrase that is supposed to remind us of Starbucks, the fact that they manage to pay very little tax in Britain, and how unpopular that is.
Decision makers are also paying the price for treating the civil service as a private club to which they could bring new members whenever they wanted. It has been well documented that the metro experienced a surge in its employee numbers, often in nontransparent circumstances, under the 2004-09 New Democracy government. The current administration is now trying to slash costs that were in some cases unnecessarily created by its predecessors.
As a fellow blogger noted, in 2013 elections are approaching in Cyprus, Italy, Malta, Bulgaria, Germany and Austria (in that order). Although their outcome is highly controversial, their importance cannot be overstated as they will affect developments in the aforementioned countries as well as in the EU for the next 4-5 years. Electoral campaigns have been raging in Italy and Cyprus and although German elections are scheduled in September, speculation began about a year earlier.
Yet, even though most politicians spend millions of euros trying to promote themselves and/or their parties people's appetite for voting seems to...
Iceland’s revival from its financial collapse and the prosperity of nations outside the European Union show that membership in the bloc isn’t needed to achieve economic success, President Olafur R. Grimsson said. "There are a few countries in the world which have succeeded the way Switzerland has,” he said today in an interview in Davos, Switzerland. “And then look at Norway and my
Wage cuts would pose no problem if not for the inflationary policy of the ECB, which keeps prices high. It goes without saying that raising taxes in the face of an economic depression is an extremely bad idea. However, this is how 'austerity' generally works in euro-land. The burden of government is not reduced at all, instead it is increased even further. It is apparently fine for the European political class when the private sector shrinks, just as long as Leviathan's size remains unchanged. That this cannot possibly work out seems not to have occurred to anyone yet.
Unemployment in Spain is now at the highest level since records began in the early 1970s and exceeds even the unemployment rate of depression-wracked Greece:
I thought I would follow up on Chris’ post, from a position of even less expertise, but focusing more on the consequences of a referendum vote in favor of a British exit (BReakout?) from the EU. I’ll start by thinking about two polar cases.
In her remarks at Davos, Angela Merkel insisted that austerity must continue to be imposed despite the simple fact that more than 50% of the youth in Greece and Spain are long-term unemployed. Why does she push austerity? To defend German bank book capital levels and German banker bonuses.
Poland, central and east Europe’s largest economy and a bellwether for the region, is going through a rough patch. The speed and severity of the downturn has caught Polish policymakers, in particular the country’s conservative central bank, by surprise and has taken the gloss off what has been one of Europe’s most impressive post-crisis economic performances.
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