News & Financial Advice

European banks may need more than 100 billion euros of fresh money to the crisis of sovereign debt, said Saturday in Ireland, on the eve of a meeting between Nicolas Sarkozy and Angela Merkel should be largely devoted to the recapitalization of the sector.

Illustration of the urgency of the matter: Paris and Brussels talks continued Saturday for an orderly dismantling of Franco-Belgian group Dexia, the first European victim of the bank debt crisis.

Germany and France have so far given conflicting discourses on the best way to strengthen banks weakened by the devaluation of their holdings of sovereign debt of countries "devices" in the euro area and by the recent turmoil in the markets Financial.

Paris would prefer to use the European Financial Stability Fund (EFSF) to recapitalize their own banks, while Berlin insists on booking this instrument of last resort actions, such as support to Greece.

The International Monetary Fund (IMF), meanwhile, estimates that the capital requirements of banks could reach 200 billion euros, the equivalent of half the resources of EFSF.

The Irish Finance Minister, Michael Noonan, said Saturday that the necessary capital to strengthen banks' balance sheets could come from different sources but the overall bill would in any case heavy.

"I think everyone agrees that far exceed 100 billion (euros)," he told reporters on the sidelines of an economic conference in Dublin.

"I know some of the major German banks with which I myself have discussed plan to raise money in the market, so there will be a private financing. Other banks would have EFSF funds. Others depend on their government to provide capital, there will be many ways to do this, "he added.

EACH SETTING THE CONDITIONS

Some officials believe that forcing many major financial institutions to accept public funding would not make the best use of European resources.The banks, themselves, fear that this strategy branding some of them and inflame tensions in the markets.

The German daily Frankfurter Allgemeine Zeitung (FAZ) reported Saturday, citing financial sources, that the first five French banks would be willing to receive 10 to 15 billion euros invested by the French state on condition that Deutsche Bank, a number Germany is also increasing its capital.

The CEO of Deutsche Bank, Josef Ackermann, is opposed to any entry of the state capital of his group and he ruled out a capital increase.

A spokesman for Deutsche Bank reiterated Saturday that double principled position and declined to comment further.

Nicolas Sarkozy, who received Saturday the Executive Director International Monetary Fund (IMF), Christine Lagarde, to arrive in Berlin in mid-afternoon on Sunday for a meeting and a working dinner with Chancellor Angela Merkel.

Their discussions will be devoted to the preparation of the G20 summit in Cannes in early November and that the European Council and summit of the euro area provided 17 and 18 October, while Seventeen still struggling to implement the new mechanisms supposed to solve the debt crisis.

In Slovakia, in fact, the various parties in the ruling coalition Saturday remained at odds over ratification of the Europe Agreement of 21 July which provides for the strengthening of EFSF, one of the smaller parties placing conditions on his support.

Slovakia and Malta are the last two countries in the euro area has not ratified the agreement in July that some regional leaders believe already passed.

The German finance minister, Wolfgang Schäuble, has acknowledged in an interview with FAZ that Europe may have underestimated the resources needed to reduce the burden under which plunged Greece.

"The risk is high to see this crisis about a further escalation and spread," he added.

A view shared by the Greek representative at the IMF, for which the financing needs of Athens will be higher than current estimates.

"This lack of funding will be covered either by an increase of 109 billion loan decided on July 21 or by a private debt restructuring," he told the Greek daily Imerisia.

Europe wants to impose further cuts in the salaries of the Greeks. Prime Minister refuses a new social massacre. In fact, the daily population is becoming increasingly untenable. Testimonials. One protester surrounded by police at a rally anti-austerity Thessaloniki.

Greece "will not become India." With these words the Greek Prime Minister George Papandreou, said the creditors of the country which call for new cuts in wages in the private sector and lower the minimum wage. The country will not meet its targets for deficit reduction this year, its lenders demanded additional sources of money before granting the payment of a further tranche of 8 billion euros. "We're on the side of workers and we ensure the protection of their collective rights," added the Prime Minister.I must say that since the outbreak of the crisis in Greece, in 2009, the austerity measures have led to a daily population increasingly untenable. Testimonials.

40% pay less

Fotini, 32, is married with two children. It is directly affected by the decline in wages imposed austerity plans. She said in testimony to the world. "40% of my salary in less than 1400 euros gross, 20% in less than the salary of my husband at 1300 euros gross. The increase in all products and services, gasoline, food, transport tickets …" His family is also affected by austerity. "My sister graduated from high school in Athens Polytechnic, is unemployed, my eldest daughter of two and a half years has no place in municipal day care, then you have to pay 500 euros a month to write it in a private nursery. Our rent is 600 euros, it has remained stable.But with all the fixed expenses, we are left with only 300 euros a month to live. "

Pensions reduced by 20%

Anastasia is a former professional dancer. It affects his retirement for six years but has planed for 20% to 1500 euros. It demonstrates the difficulty of daily in an interview with Radio Suisse Romande. "Towards the end I'm really broke. Life has become more expensive in the supermarket, food, energy. It's depressing, we see people losing their jobs. I live with my mother who also has a retirement. People help, otherwise I will not be alone. I have three children 22, 24 and 26 years old and not yet working. It is very unfair to lower the wages of people who have always been correct with the law. It hurts. I'm not allowed to work in conjunction with my retirement, not even a dance school.If I do that I was cutting a big part of my pension. I also very afraid of riots, the country goes bankrupt and can not even touch our retirement. I am very, very worried. "

Unemployment affects 4 out of 10

Greek youth is affected by austerity. Laurane Chytiris is a Greek-Swiss student in French literature at the University of Athens. She said: "I think to leave Greece for one year to get my master elsewhere. If the situation does not improve, I will not. I have a lot of knowledge on the internet looking to live in England or France. They see that it is unbearable here. There are young people of 30 who still live with their parents. They have a job but can not afford to pay rent with what they earn. " And unemployment is not just young people.The government announced an official figure to 16.3%, unions talk instead of 23%.

The hell of job search

Dimitri, 33. He is unemployed computer, converted into a teacher after the bankruptcy of his company at the beginning of the crisis. "I made some replacements as a teacher, but I did not post in September, I hope to have one a few months," he said still with hope. Meanwhile, it still affects 400 euros per month for unemployment benefits, which will stop in four months. For immediate needs, he relies on his savings and his family because his rent is 500 euros per month. Eventually, he too sees no alternative but to leave Greece. He participated in a recruitment drive to emigrate to Australia. "When I think of all that has to have degrees, to be ready.It's not my generation that created the debt, even if we rééchelonnons, it means that people who are not yet born today will still repay the thirty years. "

Small businesses are the key under the door

The "triangle trade" of Athens is not what it was. In this high place of business of central Athens, near Syntagma Square, fashion is the curtain fell. According to the National Confederation of Hellenic Commerce (ESEE), over 20% of small businesses have disappeared since 2010 in Athens. "Nobody gives us a hand," laments Themis Lizardos of Reuters, a jeweler in the neighborhood who has not dropped the curtain. But at this rate it should not delay. "There is only one hand, the one that we press our heads and keeps it on the ground," he adds.Tens of thousands of small businesses have closed across the country after the establishment of the first European aid plan of 110 billion euros, and the promise of stringent austerity measures by the government.

Real estate, next epicenter of the crisis?

Theodore Pelahaidis, is professor of economics at the University of Athens. He said the next crisis will be real estate in Greece. And you can not do much about. He said at Radio Suisse Romande. "When household savings have been spent in the coming months, what will people do? They will sell their home. But if you sell, the properties will lead to lower prices. So the next step that it will undergo a real estate crisis. And it will exacerbate the current crisis. "

Few departments will see their funding increase above inflation this year. Among the losers, the Ministries of Labour and of Education, which will eliminate 14,000 jobs in 2012. In pictures, the ranking of worst off and those who are doing better. Changes in envelopes are compared with an assumed increase in consumer prices of 1.7%.

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Thales plans to sell part of its services activities and the name of GFI Informatique circulating as potential buyer, said on Tuesday a union source, confirming a report in Les Echos.

The electronics and defense could be separated from his division "Business Solutions" specializing in large scale integration projects from hospitals in Paris.

"There is a project on 'Business Solutions' management said they were approached for this activity," the source said union Thales.

The name of GFI Informatique has advanced the hypothesis of interest Logica, cited by Les Echos, being more of a "rumor," she said.

A spokesman for Thales declined to comment, as did a spokeswoman for Logica.GFI Informatique, person was not immediately available for comment on the report.

The action Thales wins 3.09% to 24.835 euros to 3:50 p.m., in a market up strongly, gaining 4.7% the SBF120.

The IT services division of Thales, who directed last year 81 million euros in sales and employs approximately 500 people, is part of Thales Services most exposed to competition and further from the heart business of Thales, said a close case cited by Les Echos.

The newspaper said two others, those of outsourcing and agencies in the regions, between them representing more than 300 million in revenue and 3,000 people, could also be offered for sale.

Of such sale will take place when discussions continue between Thales and Safran on a possible asset swap in the defense, which would require the payment of a cash payment by Thales.

Activities that may be made by Safran are indeed valued at 650 million euros in turnover, while those of Thales would represent, according to press reports, that 200 to 300 million turnover.

A year after a break, Safran and Thales had announced in May, have resumed talks on an exchange of assets in the defense, under pressure from the state, their common shareholder that seeks to reduce duplication in a rapidly budget reduction.

The euro rebounded frankly Monday at midday, as equity markets driven by banking stocks after opening sharply lower, thanks to hopes for the European Central Bank cut its interest rates for support the economy.

The ECB is the only one of four 'major' world's central banks to have begun a cycle of rising rates, falling twice since April. The easing of inflationary pressures reinforces those who believe that the ECB will be forced to ease monetary policy because of sluggish growth.

"The ECB does not undertake to advance and rate cuts can not be excluded.It all depends on future developments, "said Ewald Nowotny in the morning, a member of the Governing Council of the ECB.

The euro, which hit a new low in eight months against the dollar and a 10-year low against the yen, is back above $ 1.35 in favor of speculation the ECB and a Ifo business climate in Germany better than expected although declining.

The anticipation of a share of the ECB also feeds a rebound in oil prices.Brent, who had fallen below 102 dollars, is trading around 104.80 dollars a barrel and U.S. crude, which had been reduced to just above 77 dollars, rose above $ 80 a barrel .

The Ifo economist Klaus Abberger Institute said he expected a return of the refinancing rate of the ECB to 1% – against 1.5% now – while stressing that it is difficult to anticipate when the decline could intervene.

This perspective has somewhat overshadowed concerns about the debt crisis in the euro area and the difficulties of European leaders at the curb.

On equity markets, the Paris Bourse takes about 3%, as the Frankfurt Stock Exchange, supported by the values ​​of the insurance and banking, respectively, whose indices resumed about 6% and 4.7% .

The U.S. Treasuries and German Bunds were down in response to buoyant equity markets, but caution is still required and the predominant feeling is that this decline will be only short-term bond markets.

The index futures suggested Wall Street now open sharply higher as they gave a sharp decline in market early in the day.

Eurobond BELIEVED "inevitable"

Asian stock markets were down sharply over yet, as investors once again stung by the fact that the EU leaders' discussions, especially concerning the strengthening of EFSF, have resulted in anything concrete.

Europe has once again been called to beef up Sunday its response to the debt crisis that afflicts him, asking the International Monetary Fund including more action from the European Central Bank.According to the IMF, the ECB is indeed the only player strong enough to "scare" the financial markets.

"As long as political leaders have not developed a long-term solution to address the debt crisis, the short-term outlook for copper and equity markets will remain negative," said Ong Yiling analyst Phillip Futures.

Klaas Knot, Member of the Board of Governors of the European Central Bank (ECB) on Monday called for the creation of an independent budgetary authority to impose sanctions on countries in the euro area with a high deficit.

He also finds "inevitable" the introduction of euro bonds common to the euro area.

Several major partners in the euro area on Wednesday called its leaders to quickly overcome the crisis of sovereign debt worrying about its consequences for the future of the euro and the global economy as finance ministers and central bankers G20 meeting in Washington.

The continuing crisis in the euro area and new signs of slowing global economy led to a sharp correction in equity markets, lower long-term rates and a rising dollar.

Governments and institutions in the euro area must act quickly to resolve the crisis of sovereign debt at the risk of contagion in the global economy, said seven of the leaders of the G20 in a letter to French President Nicolas Sarkozy, France chairing the G7 and G20.

In their letter, the leaders of Australia, Canada, Indonesia, Great Britain, Mexico, South Africa and South Korea are asking the leaders of the euro area to examine "all options to ensure long term stability of the second most widely used international currency in the world."

The U.S. Treasury Secretary Timothy Geithner has also been more urgent considering that it was more important to contain the crisis to support European growth and that it was essential to mobilize sufficient resources to avoid a default of Greece.He expressed confidence that Europe make more bold to resolve the crisis in the weeks and months ahead.

The European Financial Stability Fund (EFSF) will be fully operational and strengthened in the second half of October, said European Commissioner for Economic and Monetary Affairs Olli Rehn.

However, he felt that the Eurobonds, presented by their proponents as a solution to the debt crisis, would become "junk bonds" without better coordination of European economic policies.

The publication of purchasing managers index (PMI) showing a contraction in private sector activity in the euro area and China has fueled the drop in equity markets, the European indices yielding around 5.0 % in closing while the U.S. indices gave up over 3.0% in mid-session.

Finance ministers and central bankers from the G20 meeting in Washington at the annual meetings of the IMF and the World Bank, will discuss the crisis on Thursday night during a dinner but it is not anticipated that 'they publish a statement on the responses they intend to make.

THE EURO IN DANGER, SAYS STUDY OF THE ECB

The single European currency is at risk because of uncontrolled spending of the States of the euro zone and the debt crisis that ensued, warns a study by the European Central Bank (ECB), co-authored by Jürgen Stark, who has since resigned, because he seems to agree with the policy of buying government bonds introduced by the ECB in the fight against debt crisis in the euro area.

"The budgetary imbalances sharp rise in the euro area as a whole and the extreme situation of some individual countries could undermine the stability, growth and employment, as well as the sustainability of economic and monetary union ( EMU) itself, "it said in the study whose publication has plunged the euro fell to a seven-month low against the dollar, less than $ 1.35.

The European Committee of systemic risk (ESRB), new financial regulatory authority of the European Union, for its part warned that the consequences of the crisis of sovereign debt had significantly increased risks of financial instability in Europe.

"The high degree of interconnection within the EU financial system led to a rapid increase in the risk of contagion significantly.This threatens the financial stability within the EU as a whole and has negative consequences on the real economy in Europe and beyond. "

The ESRB, chaired by Jean-Claude Trichet, president of the European Central Bank, called for a "quick and decisive action" of the euro zone leaders whose efforts to contain the crisis is widely perceived as inadequate and too slow.

According to the ESRB, national supervisors "should coordinate their efforts to strengthen bank capital (…) taking into account the need for a transparent and consistent exposure to sovereign issuers."

Executive Director of the IMF, Christine Lagarde, renewed his call for a recapitalization of banks in Europe including the leaders of the institutions concerned and the governments of several countries in the euro area had downplayed the need for highlighting the strength of bank balance sheets in the zone.

Speaking on the eve of the G20 and the IMF, the Canadian Minister of Finance was alarmed by the possibility of credit crunch if the Europeans could not settle the Greek problem, by far the most critical within the euro area.

"The first item on the agenda …is that Europe needs to accelerate, they must resolve the issue of Greece, "said Jim Flaherty, the Canadian Broadcasting Corporation.

"Otherwise the market will prevail and we will have some form of crisis, it will become a banking crisis, affecting banks around the world, and we have a new credit crisis will cause a contraction of the real economy.We need to fix this, "he said.

The lack of solution to the crisis continued to weigh on European banks, the first of which French banks because of their exposure to Greece and Italy.

BNP Paribas has categorically denied being in search of investors for a capital increase and reiterated the line of French banks that it can cope with the debt crisis in the euro area without injection of capital.

A source based in Qatar had told Reuters on Wednesday that the emirate was in talks with BNP and other French banks about possible equity participation.

BNP Paribas finished Thursday's session down 5.7%, while Credit Agricole dropped 9.49% and 9.57% Societe Generale, while the sector index of European banks plunged to 7.26%.

The Swiss bank plans to remove "thousands" of jobs in its investment bank. Restructuring decided before the discovery of a fraud of $ 2 billion a trader of its subsidiary in London. UBS, headquartered in Zurich, Switzerland, May 26, 2011.

Swiss bank UBS, which said Thursday he was the victim of fraud by one of its brokers who lost $ 2 billion, will "massively" reduce its investment banking and to make major layoffs, said the Helvetic Press Friday.

A reduction in size of the bank, often cited by analysts, should be announced Nov. 17 at the UBS Investor Day, said the daily Tages-Anzeiger, which is based on internal sources of bank.This will result in the reduction of "thousands" of jobs in the division, said the newspaper, which is also expected that the Chief Oswald Grübel and the head of the banking Carsten Kengeter have to resign soon .

The Swiss press has reacted strongly in the wake of revelations of the first bank Helvetic, who announced Thursday he was the victim of fraudulent activities of one of its traders, which caused him to lose $ 2 billion (1.4 billion euros) . While the bank had to release third quarter earnings of between 900 million and 1.1 billion Swiss francs, analysts said it could now suffer a loss of 500 million, the first since the third quarter of 2009.

"You have to ask, how is it possible, despite recommendations stricter domestic (…), to lose such sums out of control," questioned the daily Neue Zürcher Zeitung (NZZ). For the newspaper, the case threatens the reputation of the entire Swiss financial center, which represents more than 10% of gross domestic product Helvetic. A Swiss Exchange, the rebounded Friday morning as UBS. After closing Thursday down more than 10%, the action gained 2.67% to 10.01 Swiss francs in a market up 0.60%.

Corporate loans remained strong in July in France, rising 4.7% after rising 4.9% in June, according to figures released Friday by the Bank of France.

These are loans to SMEs that grew the most (5.9% and 8.3% for SMEs in a group), as real estate (+8.0%).

Loans to large companies have found a growth of about 2% (against 1.3% yoy in June) and those granted to holding companies and administrations have slowed (+0.5%).

The funds mobilized slowed to 3.8% from 7.6% in late June, a decline linked to the sharp decline in the volume of mobilized a company that completed an acquisition, said the Bank of France.

In contrast, the funds made available have accelerated 5.0% after 4.1% in late June

The Japanese long-term debt is now rated Aa3. The rating agency sanctions the massive debt of Japan, exacerbated by the earthquake of 11 March, and political instability in the country. The earthquake of March 11 has affected Japan's debt. Here, Higashi-Matsushima area devastated by the disaster.

The rating agency Moody's has lowered a notch to Wednesday's Aa3 rating for long-term debt of Japan, because of the massive debt the country, aggravated by the earthquake of March 11, against a background of instability policy that blocks long-term strategies. This sanction will force the contenders for prime minister to introduce measures of fiscal discipline, analysts welcome.

"The ratings downgrade is driven by large fiscal deficits and the accumulation of Japan's public debt since the global recession of 2009," Moody's said in a statement.And the agency added that "several factors make it difficult for Japan to reduce the proportion of debt vis-à-vis the GDP, thus lowering his score." However, Moody's has no plans for more time to downgrade the archipelago, saying that he has the chance to enjoy the Japanese investors' preference for domestic bonds.

Banks also degraded

The rating agency Moody's said Wednesday it lowered a notch in the middle note of the long-term debt of major Japanese banks, after having degraded earlier note of Japan indebted.In particular, Moody's revised its negative assessment of Mizuho Bank, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking, due to the downgrade of Japan and subsequent fears that the country has in the future less capacity to support the banking sector in the event of another financial crisis.

The heavier debt burden

Japan is in debt to the tune of about twice its gross domestic product (GDP) and the burden grows each year through the issuance of Treasury bills returned to fill much lower expenses, particularly since the international economic crisis of 2008 – 2009. This is the first time a major rating agency lowers rating of Japan since the disaster of March 11 coupled with a nuclear power plant in Fukushima.However, Moody's had warned in late May of this risk.

The new Aa3 rating assigned to Japan is the fourth best on the scale to 19 notches by Moody's, which means it is still regarded as an issuer of debt of high quality. The rival Moody's, Standard and Poor's and Fitch, which are currently quite similar ruling on Japan, however, warned in April and May that they could also lower the rating of the country soon.

"The earthquake of March has undermined Japan's recovery from the global recession of 2009 and economic growth prospects are low, making it more difficult for the government to achieve the goals of deficit reduction and to launch a major reforming the tax system and social benefits ", explained Moody's.Japan is currently in recession, even if slowly industrial activity tends to recover its previous pace, and if consumer confidence was somewhat restored.

Political instability weighs on the outlook for recovery

While Japan is preparing to nominate next week's sixth prime minister in five years, Moody's also cited political instability as one of the reasons obèrent decisions for the long term. "Over the past five years, frequent changes in leadership have prevented the government from implementing economic and fiscal strategies that can be effective and sustainable," she said.As a result, the prospects for progressive restoration of fiscal balance are constantly deferred and, despite promises to cut spending, "the annual budget deficit is still as it inevitably leads to an increase in the debt ratio reported the wealth produced. "

This warning shot of Moody's comes as the tenors of the Democratic Party of Japan (DPJ, center left) compete for the succession of the Chief Executive, Naoto Kan, which should leave office early next week. "The downgrade is unfortunate," responded the current Prime Minister of Japan, Naoto Kan. The Minister of Finance candidate to replace Mr Kan, has meanwhile refused to comment directly on the decision of Moody's, but he defended Japanese bonds."I will not shares of a private agency, but the problem without offering treasury bills from Japanese investors show confidence in them remains intact," pleaded Yoshihiko Noda.

Degradation of the note was not very noticeable effect on the yen against the dollar, the ticket remains fairly stable over 76.50 yen. However, it has been dropped from 1.07% the Nikkei index of blue chips on the Tokyo Stock Exchange, due to the significant decline in shares of Japanese banks that Moody's has also block minus ratings. According to brokers, listings of Moody's does not constitute a big surprise to investors and the financial consequences of Tokyo will probably be limited.The decision of the agency will however increase the pressure on the next Japanese government that put its finances through higher taxes, analysts said.

Oil prices fell Thursday in the face of questions about the evolution of global demand after the publication of a series of grim statistics for the U.S. economy.

On the Nymex, the contract to September U.S. crude (WTI) ended on a loss of $ 5.20, or 5.94% to 82.38 dollars a barrel. This is the biggest drop in one day since Aug. 8, when the sovereign rating of the United States was lowered.

The price of crude was also sealed by the strong dollar.

Brent was on his side closed down 3.26% or 3.61 dollars to 106.99 dollars. It is also the largest decline in prices since August 8.