News & Financial Advice

European stock markets have all but closed down Friday, pushing the market to allow Germany to the European Central Bank to guarantee the debt of fragile countries in the euro area. But Berlin and the ECB still refuse it. A passerby looks at the course of the Tokyo Stock Exchange in March 2011.

Most European stock markets ended the week in the red, worried Berlin's refusal to use the European Central Bank (ECB) to reduce fears about fragile states. Paris has lost 0.4%, from under 3000 points, Frankfurt (-0.8%) and London (-1.11%) also won. Madrid and Milan have instead ended in the green (0.5% and 0.2% respectively). In the line of sight of the markets, the refusal to Berlin to call for the ECB to contain the crisis.Political pressures are becoming more numerous and demanding that the central bank relaxed its position to let him play the role of lender of last resort against Europe's most indebted. And put an end to soaring interest rates on debt. The spread between Germany and Spain has exceeded 500 basis points Friday. "As the savior of Italy but also in other countries precarious, there is that the ECB," said analyst Robert Halver Germany, Baader Bank, adding that "it is the only one who can fight against nuclear explosion in the euro area. "

Germany and the ECB opposed to an intervention

Germany, the only country ruled by the strong market is the focus of all eyes. Chancellor Angela Merkel refuses steadfastly calls to relax the policy of the ECB.

The "troika" of international donors in Greece recommends to pay as soon as possible to Athens a sixth tranche of aid, despite the dynamic "serious concern" of government debt, according to its draft report.

The economic crisis in Greece is much more severe than expected, the debt situation has deteriorated in recent months and it may be necessary to revise downward its growth forecast over the medium term, we read in this and other Reuters report that was obtained Thursday.

He concludes, however, that further action on budget revenues and expenditures should allow Greece to meet its deficit target in 2012, even if it lacks that of 2011.

The report of the European Commission was prepared with the assistance of the European Central Bank but the International Monetary Fund, the third member of the "troika", which writes its own report on its side.

The Commission and the ECB to pay recommend using "as soon as possible, as soon as previous initiatives agreed on fiscal consolidation, privatization and labor market reform announced by the government have been included in the law."

Greece needs the help of eight billion euros to avoid becoming insolvent in mid-November.

"DYNAMIC CONCERN"

The Troika also finds that the previous projection of a growth close to 3% per year over the period 2015-2020 can not be achieved "in the case of a marked acceleration of structural reform initiatives, including privatization."

She noted deficiencies and delays in implementing fiscal reforms but added that additional measures "are the projection of a deficit in 2012 in line with the agreed ceiling" without the gap or deficit in 2011 fully met.

The Greek financial sector remains fragile due to a drying up of liquidity, deposits continue to decline and banks remain highly dependent on the ECB for financing.

"The dynamics of public debt remains extremely worrying," says the draft report of donors, adding that debt levels remain high "for many years."

"Compared with the prospect of a few months ago, the debt situation has actually deteriorated," they continued, referring in particular the delay in reforms "and the prospect of a recapitalization banks ".

Athens will be at least a quarter behind schedule for privatization, for administrative reasons but also because market conditions have deteriorated in the third quarter, especially on the Athens Stock Exchange, also explains the document.

The Summit of Heads of State and Government of the European Union initially planned Oct. 17 will be postponed to October 23, time to have new findings on the situation of Greece and the recapitalization of banks, said Monday the president European Council Herman Van Rompuy.

This report is also expected to have new conclusions on strengthening the European Financial Stability Fund (EFSF), he added.

"This schedule will allow us to finalize a comprehensive strategy on the crisis of sovereign debt in the euro area covering a number of issues related to it," he said.

Finance ministers of the euro area (Eurogroup) and the European Union (Ecofin) will meet before October 23, he said.

A source explained that the delay was due in part to the fact that the report of the EU and the International Monetary Fund (IMF) on the progress of the sanitation program of Greek public finances is not yet available.

"The leaders want to be able to act on the basis of the results of the report of the troika, which was not ready in time for the original date," said one EU source."We believe that the postponement is due to a request from Paris than in Berlin."

Greece said on Monday it had completed its meetings with the inspectors of the European Union, the International Monetary Fund and the European Central Bank for the release of a tranche of assistance Athens needs to avoid bankruptcy by a month.

Another source said that EU officials in charge of organizing the meetings had begun to make contact with the Member States to set a new date.

"They go around to all delegations to see if anyone is able to postpone the summit," she said.

French President Nicolas Sarkozy and German Chancellor Angela Merkel announced Sunday they will present by the end of a response "lasting and comprehensive peace" to the crisis in the euro area, which should go through a recapitalization of banks in Europe.

The Dutch parliament voted Thursday in favor of enlargement of the European financial stability.

Of the 150 member lower house of parliament of the Netherlands, 96 spoke in favor of the proposal.

Now, only Malta and Slovakia have not yet given the green light.

All the parliaments of the Member States of the euro area will have to give before the expansion of EFSF to take effect.

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. "

Total announced Wednesday the acquisition of a 40% interest in five licenses offshore Lamu Basin, Kenya, to develop its presence in exploration and production in the countries of East Africa.

The transaction is subject to approval by the Kenyan authorities, the oil group said in a statement.

The field of operation, located off the Lamu archipelago, covers an area of ​​more than 30,500 square kilometers in water depths between 100 and 3,000 meters.

Total has recently engaged in the exploration and development of reserves of Lake Albert, Uganda, and was selected to develop exploration activities in Tanzania.

A trader suspected of being linked to losses of some $ 2 billion announced Thursday morning by UBS, was arrested in London, said on Thursday from several sources.

London police said they had arrested a 31 year old man suspected of fraud. Swiss bank UBS was not long before reports a loss estimated at two billion dollars due to unauthorized trading by one of its traders.

The Swiss newspaper NZZ, citing UBS, reported that the trader in question worked in service "stock market" of the London office of Swiss bank.

The arrest took place during the night, at 3:30 am local time, on suspicion of fraud.The man is currently under police surveillance.

A UBS spokesman confirmed to Reuters that one of its employees had been arrested.

Before the opening of markets, the Swiss bank announced in a terse statement that a trader had generated losses of about $ 2 billion through unauthorized trading in its investment bank, which could result in a loss in the third quarter.

"An investigation is underway, but the current estimate of UBS for losses on transactions is around two billion," the bank said, adding that no customers had position was affected.

By 10:45 GMT, UBS shares fell 7.7% to 10.09 Swiss francs, while the European sector index of banking stocks gained 2.21%.

CRISIS OF CONFIDENCE?

The new strikes UBS reminded investors the Kerviel affair, named after the former Societe Generale trader Jerome Kerviel, accused of losing 4.9 billion euros at SocGen in 2008 by conducting stances are not allowed.

"It's amazing that it is still possible," was surprised Claude Zehnder, trading analyst at Zurich Cantonal Bank, about the losses announced by UBS.

"Even if the amount is not so huge, there is again a loss of confidence that casts an unfavorable light on UBS.With that, the bank loses some credit she returned, "he added.

The management of UBS has told its employees that the bank remained strong despite the loss, however, which comes as the group undergoing restructuring, is struggling to regain investor confidence after heavy losses from the crisis of 2008 and suspicions complicity in tax evasion.

"This news is unfortunate, but it does not affect the fundamental strength of our business," UBS said its teams, according to an internal memo that Reuters was able to consult.

Wall Street opened sharply higher Monday, buoyed by the rebound in stock markets around the world on the purchase of defensive stocks.

A few minutes after the start of trading, the Dow Jones gained 1.84% to 11,016.24 points, the Standard & Poor's 500 index 1.91% to 1144.97 points and the Nasdaq Composite 2.15% to 2392.20 points.

The S & P 500 has lost more than 13% since the beginning of the month and some investors think the rate and extent of the losses on Wall Street suggest that the market is oversold.

Investors, however, watch carefully for signs of possible new measures to support the Federal Reserve the U.S. economy, when its central bankers will meet Friday in Jackson Hole, Wyoming.

"Just this month there was a question of a lack of confidence and if Bernanke announced new incentives, then it may be that the markets believe that really did something, which should at least mitigate the volatility of the time, "said Tim Speiss (EisnerAmper).

The earnings season draws to a close, with those of Heinz, Applied Materials and Tiffany & Co expected in the week.

In values, Lowe's Companies took 2.17% after announcing it would spend five billion dollars to buy back shares over a period of two to three years.

The Russian producer of nickel and palladium, Norilsk Nickel said it had prepared an offer to buy out 15% of its capital owned by the Rusal aluminum companies for about $ 8.75 billion.

The offer proposes to return the securities at a price of 306 dollars, or 20% above their average price over the last six months.

It is still subject to approval by the Board of Directors of Norilsk, which will meet Aug. 24.It will then be valid until September 5, the company said.

This proposed acquisition represents a further attempt to Norilsk to end the standoff delivered by the principal shareholder of Rusal, the oligarch Oleg Deripaska.

The aluminum companies said it would consider the offer.

"Rusal considers its investment in Norilsk Nickel is strategic, and as a public company we are discussing all offers submitted to us in accordance with our internal management procedures," he reacts in a statement.

Standard & Poor's downgraded the sovereign rating on Friday the United States, culminating a week of panic in financial markets alarmed by the scale of public debts and a slowing global economy.

Sign of the deep concern of world leaders, they have stepped up phone calls Friday and Italian Prime Minister Silvio Berlusconi has called a meeting of G7 finance ministers.

Markets are less and less confidence in Spain and Italy to honor their debts and the scenario of a domino effect in the euro area continues to unfold.The fear of tipping the U.S. into recession has also fueled the drop in global financial markets, who lost 2500 billion in one week.

After the close of Wall Street, the United States for the first time lost their precious AAA.Sovereign debt is now rated AA + by rating agency Standard & Poor's, which raises the specter of a further deterioration in a year.

This decision, rather expected, reflecting the deteriorating global economic climate and could have implications on the status of reserve currency the U.S. dollar.

China asks in a comment to Xinhua news agency that the international community to reflect a new reserve currency, "stable and secure."

Beijing, the first creditor of the United States, attacks in this dispatch to the U.S. government, demanding that it "faces the problem of structural debt."

BERLUSCONI TRANSFERS

The impact on the financial markets Monday may be minimal because the degradation is not unexpected but the consequences for long-term status of the United States and the dollar will be much more important.

"The global system must now adapt to the many implications and uncertainties induced by the loss, once unthinkable, the American Aaa," said Mohamed El-Erian, the investment company Pacific Investment Management.

This new development in the debt crisis increased my pressure on governments.In its analysis, S & P said the deterioration by the lack of fiscal consolidation plan adopted by Congress and the failure of leading Democrats and Republicans to govern together.

European markets also expect a rapid and effective government too indebted to their liking.

After Greece, Ireland and Portugal, investors fear that it is the turn of Italy and Spain, third and fourth economies in the euro area, have to seek a rescue.

Silvio Berlusconi bowed to international pressure by promising to accelerate the implementation of austerity measures and social reforms.

CALLS FOR COORDINATION

Source familiar with the matter, it is stated that the European Central Bank (ECB) has requested that the Italian government agrees to return to a balanced budget by 2013 instead of 2014, before buying Italian bonds and liberate Rome of market pressure.

Thursday, investors did not appreciate that the ECB does not buy Spanish and Italian bonds, limited to the sovereign Irish and Portuguese, while the yield of securities issued by Rome and Madrid exceeded 6%.

Two days later, it seems that it was a maneuver to push Silvio Berlusconi to act.

"In principle, we can say that the ECB could start to buy bonds if Spain and Italy (both countries) made an extra effort in terms of fiscal and structural reforms," ​​said a senior official told Reuters the euro area.

The Governor of the Bank of Spain, Jose Manuel Gonzalez-Paramo said he expected new government announcements on August 19.

China and Japan, the two largest foreign creditors of the United States, called for international cooperation, joined by the European Union.

"The international policy coordination across the G7 and the G20 is crucial," said the Commissioner of Economic and Monetary Affairs Olli Rehn, who interrupted his vacation to return to Brussels.

Silvio Berlusconi announced a G7 finance ministers "in the next few days" but his spokesman later explained that this was simply a desire to Rome and it was not yet agreed with the other member countries.

Britain, also affected by the volatility of markets, called "a concerted international effort" to avoid another global financial crisis, three years after the collapse of U.S. bank Lehman Brothers.