The Greek bank run that we discussed at 3.54pm has prompted a surge in sales of safe boxes and alarm systems, as people try to keep their savings safe at home instead.
Our correspondent in Athens, Helena Smith, explains:
With the government itself racheting up the rhetoric on Athens' possible exit from the euro zone, more and more Greeks are voting with their feet when it comes to keeping deposits in banks. Alarm companies have reported a record rise in requests for systems to be installed at homes where soaring numbers are now electing to stash cash.
"It's been phenomenal," said a saleswoman at the central offices of Fotellis, one of the country's biggest security firms. "People no longer seem to have any trust in banks with all this speculation about leaving the euro zone."
Sales of safety deposit boxes have also shot up. With the smallest boxes costing around €100 and the biggest ones €450, companies say they can't make them fast enough.
"We have been getting the oddest requests for boxes to be installed and hidden in homes," said one company rep. "Some people are even asking that they be bolted under drain pipes to keep burglers at bay. They may no longer have much faith in banks but nor are they willing to keep money under the
proverbial mattress."As the crisis has intensified in the country where it was born, so too has crime with house break-ins rocketing in Greece over the past year according to police.
It's been a cheery day in the financial markets (unless you're in the short-selling trade), with the FTSE 100 finishing 84 points higher at 5696, a gain of 1.5%. Most other European markets posted strong gains too.
On Wall Street, the Dow Jones industrial average is up 90 points at 12482.
So why the rally, given the eurozone's problems remain as acute as ever? The trigger was strong financial results today from aluminium producer Alcoa, which left investors more optimistic about the state of the world economy.
America's largest aluminium producer beat expectations with a 6% rise in revenue. Joshua Raymond, chief market strategist at City Index, commented that:
Alcoa is the traditional curtain raiser to the US earnings season and whilst their results are unlikely to set the tone for the entire results period in the US, the fact that they have beaten expectations helps to put European traders on the front foot.
You would have thought the European Central Bank president, Mario Draghi, had enough to worry about. But our Italian correspondent John Hooper understand that tomorrow the Italian gossip mag, Oggi, will be adding to his woes:
An alert paparazzo (if that's not a tautology) apparently snapped the ECB's rigorous boss while he was driving in Rome with a mobile phone clamped to his ear.
Talking while driving without a hands-free carries rather less onerous penalties than those being dreamed up in Brussels for euro zone governments with excessive budget deficits -- 10 points on the licence and a fine of up to €612.
Why €612? Who knows? As they say here, "Siamo in Italia" ("We're in Italy").
Perhaps Draghi's next call should be to Nick Freeman, the lawyer who has helped numerous UK celebrities through their motoring indiscretions (M'Lud). Surely the Italian legal system would show clemency -- after all, it's good to talk when you're trying to hold Europe's banking sector together.
UPDATE: You can see a picture of Draghi nattering away behind the wheel here.
Another interesting development in Ireland today. EU and IMF officials are currently assessing the health of the country's economy -- and an Irish centre-left think tank is demanding full disclosure of its findings.
TASC challenged the Dublin government today to ensure all the information compiled during the "troika's" latest mission to Ireland is published in full and in public (our Ireland correspondent Henry McDonald reports).
TASC director Nat O'Connor said that the data provided to the European Commission, European Central Bank and IMF by the Irish authorities under the terms of the EU-IMF agreement should be published simultaneously in Dublin.
Dr O'Connor said:
Much of the data required under the EU-IMF agreement is either not available to the Irish public, or there is a significant time lag in its availability.
A lack of data is one of the core problems facing those working in the public policy arena. The EU-IMF's insistence on comprehensive and timely data provision is therefore welcome. However, that data should be published in Dublin at the same time it is forwarded to Brussels and Washington. Where there are concerns about commercial sensitivity, these can be addressed using the same exemptions as already apply under Freedom of Information legislation.
The issue of full disclosure is rather sensitive in Ireland, after a draft copy of 2012's budget showed up at Germany's Bundestag last November.
Greece's quiet bank run continues....
New data released by the Bank of Greece this afternoon showed that the total deposits owned by Greek businesses and households fell by 2% in November. That's not a major drop, except that deposits have been leaking out of Greek banks for months.
Total deposits are now 17% lower than a year ago, at just below €173bn, down from €176.4bn in October.
One reason for the decline is that cash-strapped firms and families are eating into their savings. The other factor is that people are afraid that Greek banks are teetering on the brink of collapse, and would drop over the edge if the country quit the euro.
This image, uploaded by OpenEurope via ZeroHedge shows the steady fall in deposits.
Ireland's prime minister has rejected claims today that the country will need a second bailout.
Despite recent poor economic data (including a 1.9% drop in GDP), Enda Kenny insisted that Ireland still enjoys the backing of the IMF and European Central Bank.
Kenny also stressed that it was important that Britain remained at the heart of EU affairs and said that he would raise the issue of Europe with David Cameron at a meeting at Downing Street on Thursday.
PM Enda Kenny. Photograph: Georges Gobet/AFP/Getty Images
Citigroup's chief economist, Willem Buiter, caused a stir yesterday when he predicted that Ireland should negotiate the terms of a second bailout now (details here). He argued that Ireland was in "very bad fiscal shape" because of the bad bank debts that now squat on the government's balance sheet.
Buiter's comments were dismissed as a "not particularly useful" contribution by Amadeu Altafaj, spokesman for Olli Rehn.
Our Ireland correspondent, Henry McDonald, has the full story here.
Has Hungary raised the white flag in its clash against the rest of the European Union and the International Monetary Fund?
It emerged this afternoon that Hungary is prepared to consider changing the controversial legislation that sparked weeks of bruising battles with the IMF and the US, and put a new bailout package at risk.
In a letter sent to the European Commission, released today, foreign minister Janos Martonyi said that:
We stand ready to consider changing legislation, if necessary.
The IMF suspended talks over a new €20bn credit line for Hungary after it refused to drop a new central bank law, that appears to compromise its independence and allow the government to control monetary policy.
Yields on Hungarian debt have shot up in recent weeks -- it was forced to pay an interest rate of 7.98% on a sale of three-month bills today. Analysts have warned that, without a change of course, the country could be heading for a default.
"The future of the euro will be decided at the gates of Rome."
Those were the words of David Riley, Fitch's head of sovereign ratings, in London today as he explained the rating agency's thinking on Europe.
As reported this morning, Fitch is reviewing all its European ratings and will announce its decisions by the end of the month. Italy, with its €1.9trillion debt pile, is the biggest problem by far, and faces a "significant" risk of a ratings cut.
Riley told his audience in London that:
Taking out the crisis premium means a credible firewall....At the moment, we don't have that, and that's a serious concern with respect to Italy.
The financial markets clearly agree -- with the yield on 10-year Italian debt hovering around 7.17% today. Although Italy's current deficit is quite small, over €300bn of debt matures this year and must be rolled over or paid off.
EU commissioner Olli Rehn. Photograph: Alessandro Di Meo/EPA
Afternoon all. Some interesting comments from Olli Rehn are just hitting the wires.
Europe's economic and monetary affairs commissioner has declared that the future governance of Europe will be determined in 2012, and pleaded with the financial markets to give Europe time to fix its problems.
Addressing the European parliament, Rehn warned that:
The crisis has damaged the European economy and affected the jobs and the welfare of Europeans, and this crisis is by no means behind us
It will take time, structural reforms often take a long time...Markets however, tend to be impatient and this impatience can push sovereigns or banking institutions into a liquidity crisis that could surely endanger financial stability.
Rehn urged Italy and Spain to press on with labour market reforms, calling it a 'pressing priority'. More curiously, he also said Europe must strike the right balance between "responsibility and solidarity" in its response to the crisis.
I'm not quite sure what that last point means -- can't see how 'irresponsible solidarity' or 'responsible isolationism' would improve matters. #lostintranslation?
Speaking of Olli Rehn, he is due to meet with Hungarian officials later this month to discuss the country's troubled negotiations over a new IMF loan.
Just time for a lunchtime round-up, and then we'll hand over to Graeme Wearden.
• The UK has issued £700m of long-term debt at a negative real interest rate.
• Fitch says it will not downgrade France, for now at least.
• Overnight deposits at the ECB have soared to €482bn, adding to fears of a new European credit crunch as banks hoard cash.
• Shares have performed strongly, with the FTSE 100 up 1.5% at 5,697.
• Portugal's economy will contract by 3.1% this year, according to its central bank.
Shares in Unicredit, the Italian bank which recently launched a deeply discounted rights issue, have rebounded today.
They are up 9.3% so far - having almost halved in value since the announcement. The bank's capital raising is being closely watched by other eurozone banks needing to raise capital.
Volumes were low, but even so, some regard the big falls as an attractive buying opportunity, Reuters reported.
Portugal's economy faces "virtual stagnation" in 2013, and will contract by 3.1% this year, the Bank of Portugal has said.
The falls will come as a result of an unprecedented fall in private consumption, the bank said in its quarterly economic bulletin.
At midday the FTSE 100 is now up almost 60 points, at 5,670. That's a rise of just over 1%.
The European markets are even more bullish. The French Cac is up 2.4% and the German Dax is up by the same percentage.
Whether or not Standard & Poor's will eventually downgrade France, depriving it of its AAA credit rating, Fitch will not, at least this year.
"On the basis of some current economic and fiscal trends in France...we wouldn't expect to downgrade France this year, unless there is a material deterioration in the eurozone", Ed Parker, head of EMEA sovereign ratings, told Reuters.
Fitch has put Belgium, Spain, Slovenia, Italy, Ireland and Cyprus on negative watch, with a conclusion expected by March.
Austria, despite fears it is exposed to debt-laden neighbour Hungary, is also unlikely to be cut.
"One of the main risks when we look at Austria is that the exposure of its banks to Eastern Europe and Hungary at the moment is a concern.
"But overall in the portfolio a lot of the exposure is to the more stable and better performing economies in eastern Europe like the Czech Republic."
Another recent UK flotation heads south...
Flybe, which floated in December 2010 at 295p, saw its shares fall 21% this morning following a warning that third quarter UK revenues were below expectations.
The shares are now trading at 54p.
Perhaps unsurprisingly, given negative interest rates, gold is rising. It's trading at $1,632 an ounce, up about $20 on the day.
Gold, which by definition pays no interest or dividend, is more attractive when other assets are themselves paying no interest either. An alternative way to look at it might be that the euro has firmed slightly against the dollar, and dollar-denominated assets like gold attract more buyers when alternative currencies can buy more dollars.
Oil is up too today. Brent crude is trading at just over $113 per barrel, up almost 1% on the day.
The UK has issued £700m of long-term debt at a negative real yield.
A gilt due to mature in 2047 was issued today at a real yield of -0.116%.
Michael Hewson says the negative yield is "unusual but indicative of the times we are trading in" - the UK being a haven from the eurozone crisis.
Our economy is not immune to the eurozone troubles but the UK won't default because the bank will print more money. Whether it will be the same value is another thing, but you will always get something back.
Two debt auctions to update you on.
Austria has got away its €1.2bn auction of five- and ten-year bonds. It reopened a bond due to mature in 2016, with the yield up to 2.213% from 1.960%, and also a bond maturing in 2022, where the yield fell to 3.322% from 3.528%.
Meanwhile Greece has sold €1.625bn of six-month debt at a yield of 4.9%, down from 4.95% on an equivalent sale in mid-December.
The supervisory council of the Swiss National Bank may have forced Philipp Hildebrand to step down, Swiss newspapers have reported.
Emails released on Monday showed that the central banker had been involved in discussions over his wife's dollar trade, but had not made clear whether he approved it.
After looking at the emails, the SNB advisory council made clear to Hildebrand that his position was no longer tenable, according to two Swiss newspapers reported by Reuters.
In the UK there have been a huge bundle of Christmas trading updates from the high street.
• Food sales rescued Christmas for Marks & Spencer, as shoppers bought party food such as pork and mustard mini sausages and salted caramel profiteroles.
• Game shares have tumbled by more than a quarter after a disastrous Christmas put the retailer in danger of breaching covenants
• Debenhams sales were better than forecast, while Majestic Wine said like-for-like sales grew 4% in the nine weeks to the first week of January.
Jane Foley, a currency strategist at Rabobank, says that Swiss National Bank policy, of keeping down the value of the Swiss franc, is likely to remain unaltered following Philipp Hildebrand's resignation yesterday:
The spike lower in EUR/CHF after yesterday's news of the resignation was very short-lived suggesting that the market on balance expects no change in policy direction by the SNB board.
After all, there is no change in the fact that the Swiss economy is suffering from deflation nor in the risk that CHF strength could constrain growth potential.
That said the broad recovery of the USD which has lifted USD/CHF by around 35% from its August 2011 lows will be offering some comfort to SNB policy makers. While the USD move is significant, the EUR is far more important to the Swiss economy.
While it is possible that softer tone of the CHF vs. the USD will have reduced the risk that the SNB will act imminently to push higher its EUR/CHF1.20 'floor', the risk of a move is still on the table particularly given the recession risk in the eurozone and the accompanying threat to Swiss export potential.
One euro currently buys you 1.2125 swiss francs.
Some more detail is coming in on the banks' use of the overnight lending facilities at the ECB.
Just as a reminder – the banks can lend to each other at 0.372%, the interbank rate, but are choosing to leave their money with the central bank, where they will get just 0.25%. A clear sign of a lack of faith in the credit markets.
Reuters says overnight deposits tend to rise towards the end of the month-long reserves maintenance period, a period during which banks must maintain a certain level of reserves. The current period ends on January 17 – next Tuesday.
The deposits are still at historically very high levels. Before the crisis, banks left less than €100m overnight with the ECB. And during the last two reserves maintenance periods, banks left less than €300bn at the ECB, well short of the €482bn we saw today.
Reuters columnist James Saft has an interesting take on the Hildebrand affair.
Swiss National Bank chairman Philipp Hildebrand resigned yesterday after admitting he could not prove he had not discussed a huge dollar trade with his wife, which netted the couple tens of thousands of pounds after the SNB intervened to weaken the Swiss franc.
Saft says:
There is a very good chance that former Swiss National Bank chief Philipp Hildebrand will be remembered not for the scandal which forced him from office but for the folly of his policy.
His mistake, Saft says, was to overreach himself, and try to control something a Swiss central banker cannot control:
Thus far, the Swiss policy is almost universally acclaimed as a success. It has been successful; despite continued ructions in the eurozone the cap has not been truly tested.In going it alone and seeking to single-handedly hold back the sea, Switzerland makes a very typical risk management error by selecting a policy that will improve outcomes marginally much of the time, but lead to disaster in isolated circumstances.
Saft concludes that Mrs Hildebrand's trades were clearly ethically wrong:
That same arrogance colours the Swiss franc policy, even if the intentions behind it are benign. There are problems, globally, not just with the individuals making stupid or arrogant decisions, but with the culture in which they operate, one which has as its hallmarks a blindness to risk and a sense of entitlement.
OK, here is a proper agenda for today
• Greece will auction €1.25bn of six-month T-bills. Austria will also issue €1.3bn of ten-year bonds.
• German chancellor Angela Merkel is meeting IMF chief Christine Lagarde later today. The meeting, billed as an informal exchange of views, is happening at 7pm GMT.
• We've had French industrial and manufacturing figures, which came in better than expected.
• Meanwhile overnight borrowing at the ECB has soared to a new record of €482bn - we will have reaction to that as the day goes on.
And some more data for you...overnight borrowing at the ECB has risen further to €482bn.
That is up from €464bn, itself a record.
The huge amounts being stashed with the ECB overnight at low rates show the lack of confidence in the market – banks would rather keep cash safe at the central bank rather than with each other.
French industrial output has suprised on the upside – rising 1.1% against a flat forecast.
Manufacturing industry output was up 1.3%, against 0.2% in October.
The FTSE 100 has opened 45 points up at 5,657, a 0.8% rise, with Marks & Spencer leading the way.
M&S is the top riser among the FTSE 100, up almost 2.5% at 316p.
The French Cac is up 1.1% while the German Dax has risen 1.2%.
Morning everyone, and welcome back to our live coverage of the eurozone debt crisis.
Today we have another big meeting, this time between German chancellor Angela Merkel and IMF head Christine Lagarde. The pair are meeting in Berlin and are expected to give a press conference later.
Austria is auctioning €1.3bn of 10-year bonds – interesting not least because of the country's exposure to neighbouring Hungary. The Netherlands is also issuing debt later.
We will have more reaction to yesterday's resignation of Philipp Hildebrand from the Swiss National Bank – the key issue being whether or not the market decides to test the SNB's resolve in keeping down its currency.
We also have some French manufacturing and industrial figures.
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10 January 2012 8:48AM
One of the surprising things I've found, in regularly checking the german financial press against the coverage in the UK over the past month or so, is just how much different the analyses of the Financial Times in London from the Financial Times Deutschland in Frankfurt.
For example, here's today's Leader at the FTD.
Take Courage and apply the breaks (in german).
Seemingly they think a FTT in the eurozone is a good idea. I wonder what their colleagues in London think of it?
10 January 2012 8:50AM
And the proportion of the 480 billion that came via the coordinated liquidity move by the ECB before Xmas is how much? The aim of the liquidity move, allowing banks to have longer terms from the ECB, was precisely to ease credit and allow it back into businesses and the high street. Instead, the reverse is happening. Stagnation with liquidity. A novel phenomenon.
10 January 2012 8:53AM
'Merkel and Lagarde meet'
This crisis has been building for many years and every action taken by politicians and central banks makes matters worse, so we must assume they both know there is no solution to the debt crisis (well not within thr framework of mainstream economics).
Presumably they will be discussing how to kick the can down the road for another week and what's for lunch.
10 January 2012 8:57AM
Never a day goes by without countries selling billions of dollars in debt. Who is buying all this cr*p? And what with? Has no one heard of living within their means?? The surest sign the system is flawed and must eventually come crashing down. But it is in everyone's interests to pretend it will not. Shame on all those who are part of this whole, enormous, global Ponzi scheme.
On a side note, can I just say that I tune into this blog much less whenever you run a picture of Christine Lagarde at the top of the page. She seems to me like the evil villain in a particularly frightening Dr Who episode - the Queen of the Daleks or maybe Stavros's mother-in-law...
10 January 2012 9:01AM
Thanks v much for that link ballymichael - would be interesting to do a comparison of leaders from FTD and FT UK at several points during this crisis to see what different approaches/attitudes shone through. My languages aren't good so any summaries of other European media's take on it gratefully received :)
10 January 2012 9:02AM
None of the leading FX forecasters see the Euro imploding, in fact JPMorgan see it finishing at 1.35 v the dollar..
The 17-nation currency lost 2 percent after erasing a gain for the year as recently as November. The most-bearish forecaster sees the euro at $1.17, while the most optimistic call is for a rally to $1.45 by mid-year. The median of the 40 estimates is $1.30 by 2013.
Predictions
Wells Fargo – $1.24
Nick Bennenbroek, who is the head of currency strategy at Wells Fargo & Co. topped the list for the third time in five quarters as measured by Bloomberg Rankings. He expects the euro to drop in the first six months to $1.24, from $1.2961 at the end of 2011
The European Central Bank will continue to ease aggressively in 2012 as recession approaches in Europe and the U.S. numbers remain resilient. All the fundamentals strongly argue for euro weakness.
Westpac $1.20
Westpac Banking Corp. have the second-lowest margin of error for two consecutive surveys, they predict $1.20, as measures by the European Central Bank fail to keep the region’s sovereign-debt crisis from worsening.
Even with a euro forecast that bounced from $1.37 to $1.24 in 2011, Bennenbroek and Wells Fargo senior strategist Vassili Serebriakov’s belief in the superior U.S. growth gained them the best overall margin of error of 3.98 percent across 13 currency pairs in the six quarters ended Dec. 31.
Overseas Chinese Banking – $1.35
Oversea-Chinese Banking was the fourth-most accurate forecaster for the second consecutive quarter and had the second-lowest margin of error on the euro versus the dollar. It expects the euro to strengthen to $1.35 by the year end.
National Australian Bank – $1.25
National Australian Bank forecasts the euro ending the current quarter at $1.25. Rob Henderson, chief economist for markets at fifth-ranked National Australia Bank, said by phone from Sydney on Jan. 5;
The differential between the economic performance of the U.S. and Europe will contribute to some negativity on the European currency. We also expect that the ECB will in one way or another be running looser monetary policy whereas the Fed is pretty comfortable at the moment with keeping policy where it is, so that’s another negative for the Europeans.
J P Morgan – $1.34
John Normand, the London-based global head of currency strategy at JPMorgan. Normand, expects the euro to gain to $1.34 by the end of the second quarter.
The ECB will not make a bargain explicit, but I suspect they will increase debt purchases if reform legislation is implemented. Coupled with lower interest rates the euro should stabilise, then rebound.
10 January 2012 9:09AM
Use Chrome, it will offer Google translate for you. Not perfect, but easier than learning a language.
10 January 2012 9:14AM
But read the headline in the Deutschland Financial Times today and you will see Merkel's statement on FTT is threatening to blow her coalition apart as the FPD leader Philipp Rösler said "I maintain that such a tax must apply to all EU countries, not only for the euro countries," . Which Cameron has already said he won't agree to.
http://translate.google.co.uk/translate?hl=en&sl=de&u=http://www.ftd.de/&ei=VAAMT8_hKIev8APJ-6TKBQ&sa=X&oi=translate&ct=result&resnum=1&sqi=2&ved=0CEcQ7gEwAA&prev=/search%3Fq%3Dfinancial%2Btimes%2Bdeutschland%26hl%3Den%26biw%3D1024%26bih%3D674%26prmd%3Dimvnsu
10 January 2012 9:16AM
Sorry the link doesn't work but if you search on Google for the FTD you can get it to translate it for you
10 January 2012 9:17AM
If you mean as a widget, not any more. but you can translate on google itself.
10 January 2012 9:17AM
The FTD makes the case for the FTT mainly because it would inhibit high frquency trading or at least make it more difficult. The income from the tax appears to be less important to them.
Regarding the general difference between FT and FTD: There are columnists like Wolfgang Münchau that write their articles in both. So at least the main opinion pieces are quite similar. The general reporting style is of course different, as the FTD appears less politically biased and generally a bit more balanced. Additionally, the FTD seems to have very good links to the aviation industry. They are always the first to report reliably on news regarding the industry.
10 January 2012 9:18AM
sorry ignore that post - was getting mixed up with Opera
10 January 2012 9:18AM
Pension funds collect contributions on a daily basis - the cash builds up. Insurance companies collect premiums daily - the cash builds up. If they place their funds at the bank they get a pittance in interest return (if they even trust the bank to pay it back!), so they buy short- and long-term government paper. No real mystery.
10 January 2012 9:21AM
Has anyone noticed that Merkel looks like Ken Clarke in Drag?
10 January 2012 9:24AM
well, the FTD leader makes the point that financial transactions are very finely-meshed indeed. And that therefore a bank upping sticks and leaving due to imposition of a financial transaction tax is asosciated with massive and expensive distruption.
Plus the usual point that computerised trading, which skims profit via lightning speed and high volumes, does increase volatility.
On the other hand, another article at the FTD points out that if Merkel agrees to an FTT in the eurozone only, as Sarkozy whishes, her shaky coalition partners the FTP are not going to like it one bit. The coalition position is that it should be EU-wide.
(Something that, given UK opposition, is not going to happen. And on that, they really do have a usable veto-right).
10 January 2012 9:25AM
Institutions inside the Eurozone are far more positive on the EUR than most pundits in the City, who are more under the influence of the UK's prevailing Euroscepticism. By the way, most of the FX predictions are not for a Euro rise, but that the dollar will fall faster than the Euro due to QE impact. Strictly speaking the Eurozone is not printing, unlike the US and UK who are actively and publicly debasing their currencies.
10 January 2012 9:29AM
As much of English comes from the saxon part of the continent, it shouldn't be difficult for the Brits to start learning German. It might even be a wise decision to do so.
At present however, English proper poses some problems already. Bally: "Take Courage and apply the breaks (in german).". In English 'brakes' sounds more appropriate.
10 January 2012 9:29AM
you missed UK and Netherlands
10 January 2012 9:29AM
Lowering interest rates acts to deflate a currency - not help it "stabilise then rebound".
10 January 2012 9:31AM
Rösler and the FDP don't carry much weight at present. They would disappear from the Bundsetag if an election were to be held tomorrow. They will keep a low profile if this becomes a serious issue.
10 January 2012 9:33AM
@chrish
correct, (I mentioned it in a later post, but you got there first). I suspect that, should Merkel really determine to back Sarkozy on this, she could lean on Rösler exactly the same way Cameron can lean on Clegg. Both german and british liberal parties are in coalition, have a desolate share of the vote, and really can't afford an election at the moment.
But I read Merkel's support for the Sarkozy position as being lukewarm. She certainly knows that the UK would go crazy about it being applied to eurozone countries.
Mind you, it would rather concentrate minds in the UK, on the price of being left on the sidelines.
That all banks utter doom-laden rhetoric about an FTT is to be expected. Turkeys don't vote for christmas.
10 January 2012 9:35AM
oops. I looked at the spelling before posting and though "it looks wrong somehow, but I can't spot how".
My english spelling has declined, over time.
10 January 2012 9:39AM
Perhaps at that meeting they will be able to change the exponential function?
10 January 2012 9:40AM
Commercial banks are buying that cr*p
Free money given to them by the ECB / BofE / Fed
10 January 2012 9:42AM
Meanwhile, I think Alistair Darling has stolen Tim Geithner's eyebrows
10 January 2012 9:43AM
Merkel meets Lagarde. It's a girl thing? The chat should be interesting but it isn't going to achieve anything, after all the IMF are as culpable as the rest.
10 January 2012 9:47AM
Actually the dollar is on a tear at the moment, the dollar index soaring from under 73 in May 2011 to over 81 today:
http://stockcharts.com/h-sc/ui?s=$USD&p=W&b=5&g=0&id=p90181542225
A break through resistance at 82 will see it rising even higher. It's nowhere near overbought yet.
10 January 2012 9:47AM
After 2008, anyone with any sense realised that the financial sector was totally un-trustworthy. It looks as though the bankers feel this way too. They would rather give their money to the ECB, rather than other banks and I don’t blame them. Investors are so worried about the banks they would rather pay for Germany to look after their money.
How can anyone tell a good bank from a bad bank with all the dubious accounting practices they use, even the bankers haven’t a clue. Remember 2008, when financial institutions were totally sound one day and bankrupt the next. The whole financial sector is a basket case.
People complain about the public sector, but if you want to really screw things up, the private sector does it best. Investors have come to the conclusion that the public sector is much more trustworthy, and are prepared to pay to have a Government look after their money rather than give it to the unstable, unreliable private banks.
10 January 2012 9:48AM
And we thought they stashed it under the mattress.
10 January 2012 9:49AM
Agreed on sh/term - I was looking further out.
10 January 2012 9:49AM
madeupname2
That, my friend, is a big statement. Certainly the laws of arbitrage-free interest rate parity would disagree with you.
10 January 2012 9:50AM
sarcasm = lowest form of humour.
10 January 2012 9:58AM
Excuse me but I live in Budapest and I haven't seen any turmoil here this morning but it depends on how one defines the word 'turmoil'.
Actually the Forint strengthened a bit yesterday and Viktor wants to talk to the IMF now he's thown all his toys out of the pram. That's the real news so can you please stop panick-mongering I say just like Don Quixote. That's what it's like trying to tell the Guardian not to sensationalise - tilting at windmills.......
10 January 2012 10:01AM
What the Greek bailout cash is being spent on...
The youth unemployment problem is dire, adoption and care agencies are at breaking point as desperate families are giving up their children for adoption but these charities (having had their funding cut) are struggling to cope. Civil servants are being laid off in huge numbers, the country's doctors are only treating emergencies and basics such as school books are in short supply. But the industrial military complex status quo apparently has to be maintained at all cost. Will ordinary Greeks delight in learning that a significant proportion of the bail out cash, that will cost so much to pay back, is being spent on honouring military hardware purchase contracts?
The shopping list is impressive and having committed to buy this hardware over the past two years, as the Greek economy headed into a death spiral tailspin, the newly installed technocratic govt. in Greece have no intention of 'stiffing' the arms suppliers; USA Apache helicopters, French frigates, German submarines are all on the list. The final cost is proving difficult to establish, however, tens of billions would be a conservative estimate. That's quite a sizeable chunk of each circa €80 bl tranche of IMF/ECB/Troika funding. Who'd have thought that, during all that tense and hard fought negotiation in the final six months of 2011, part of the remit of the political elite was to ensure that enough bailout cash was secured in order to ensure that the military suppliers continued to be enriched.
10 January 2012 10:02AM
Who is James Saft and why is he so stupid. Obviously Hildebrand did the right thing. At least for Switzerland. He had no choice but to stop the rapid exchange rate shock. And he did this by buying only a small amount of bonds. If Switzerland can avoid a deflationary spiral and mass unemployment it will be thanks to Hildebrand. The alternative would have been worse. In any case.
10 January 2012 10:04AM
Merkel wants the IMF to cough up the loot to support the Euro rather than the German taxpayer who is not only unhappy about bailing out the rest of Europe but also not too keen on transfering fiscal control to an unelected commission in Brussells, until the German constitutional court has ruled on its legality.
Furthermore, begging ,borrowing money to bailout banks and their shareholders holding European governments bonds has done nothing to stimulate economies. Economies, which in the main, have no pssibilty of
compeating in the worlds low cost labour markets.
10 January 2012 10:04AM
Investors have always prefered government debt to banks in terms of risk within an individual country. Banks just offered higher rates of interest.
What is bizarre is that now many European governments are seen as less creditworthy than companies. Many Greek companies debt trades at a lower yields than Greek government debt and you can find similar cases in Italy Spain and even France. Total SA can borrow at a lower yield than the French government.
10 January 2012 10:05AM
Yes. He's on premium content at the FTD, and I don't want to use up one of my precious limited articles per month at the FT by clicking on him there. His views at the spiegel http://www.spiegel.de/thema/spon_muenchau/ are free.
He's interesting, I admit. But - how to put this gently, or shall I not bother? - he comes across as a hysterical doom-monger. Lots of alarming historical comparisons with the Brüning deflation, or recently with the 30 years war. 10 Days (at most) to save the Euro was a column back in november 2011.
His latest column there, alongside interesting stuff about how the german approach only works when done in isolation by externalisation, includes various stuff that looks categorically and fundamentally wrong to me. For example (my translation):
This is also the case for the moral imperative of saving. Anyone who believes in that has failed to understand that in the world economy in total the sum of saving and investments is zero - just like the sum of exports and imports. Anyone who recommends saving for its own sake simply hasn't got a clue - or is simply externalising. Its somehow ironic, to derive a moral imperative from a course that only works, when nobody else is doing the same thing.
Now: he's right about exports and imports adding up to zero. But I'm afraid it looks to be him, who hasn't got a clue, if he thinks that savings and investments cancel each other out. That isn't how fractional reserve banking or derivatives work at all. Which is why the average bank leverage factor isn't 1, but up around 30.
Obviously the world flow of savings (from china, principally) did fuel the credit boom. But if they cancelled each other out, I rather doubt european banks would be parking half a trillion euros overnight at the ECB, and investors paying negative yield for germans 6 month bonds.
10 January 2012 10:14AM
Tbh I'd trust them to 'sort it' before a few others we could mention..
10 January 2012 10:16AM
'And some more data for you...overnight borrowing at the ECB has risen further to €482bn.
That is up from €464bn, itself a record.
The huge amounts being stashed with the ECB overnight at low rates shows the lack of confidence in the market - banks would rather keep cash safe at the central bank rather than with each other.'
Groundhog Day anyone? See you all again tomorrow.
10 January 2012 10:18AM
I've simply copied and pasted, not my opinion guv I'm on the same page as you. I did chuckle and wonder if both currencies are in a race to the bottom to be the worst reserve currency..I suspect sterling will fall this year v the Euro too, yen and Swissy plus the commodity currencies to rise..
10 January 2012 10:18AM
2 questions :
1) How many banks are trying to borrow at the intrabank lending rate? It could be that there is a lack of demand either because the central bank gave away too much money or banks do not wish to reveal weakness to each other and are covering in other ways?
2) Could you introduce a FTT but apply it to EURO denominated transactions only. Possibly the UK could agree to this as it only creates a problem dealing with europe and for dollar, pound, swiss franc, Yen and Chinese currency transactions the worldwide level playing field still applies?
10 January 2012 10:20AM
And they borrow at 1.0% interest and then immediately give it back to get 0.25% interest.."That's Numberwang!!"
10 January 2012 10:23AM
This FTT is a diversion, how could it be implemented on banks using hft? It can't. A new unit would need to be set up at an estimated cost of €200 bl to collect, and who gets to keep the tax? Without multi govt approval globally it can't work..what a crock..give it up its not worth debating..
10 January 2012 10:27AM
I try to follow Forex in my amateurish way and the correlation between high interest rates and a raising currency and low interest rates and a falling currency is about the only hard and fastish rule I've managed to deduce. Would you not agree that lowering interest rates at least tends to deflate a currency? I'm going to Google "arbitrage-free interest rate parity" now and see if I can make sense of it...
10 January 2012 10:29AM
17
12
7
15
Anyway...
10 January 2012 10:34AM
If only I had a dime for every time someone said "The Euro Is Dead"...
Is the eurozone an optimal currency area? Obviously not. Didn't the politicians, the bankers and the corporations that are in charge know this? Of course they did (although few of them will publicly admit it - in fact, most of them will try to "play dumb"). But is suits their interests, so they did it anyway.
[...]
http://whataboutmarx.blogspot.com/2012/01/if-only-i-had-dime-for-every-time.html
10 January 2012 10:34AM
Morning all...
Has anyone started looking seriously at the position Britain is in yet, or are we all still obsessed with this European pantomime?
Also.. does anyone have any practical insight into why the Swiss banking establishment is being given so much oxygen at the moment?
10 January 2012 10:37AM
How did M&S sausages get into an article that starts: ECB overnight borrowing soars to €482bn?
10 January 2012 10:39AM
GILT AUCTION AN ABSOLUTE SCREAMER