Global markets on ‘cliff edge’ amid fears over European banks
Tuesday, June 29th, 2010
Related: Krugman: The Third Depression is Coming | G20 banking reform agreed upon, to be finalized in Seoul | As world walks economic ‘tightrope,’ Toronto G20 agrees to voluntary deficit reduction, delayed bank regulation | IMF report advises G20 to make spending cuts top priority | G8 Summit: Leaders divided over tackling national deficits | Greece starts putting island land up for sale to save economy | Europe debt crisis shows rifts in G20 | The End of The Great Bailouts is Approaching | Germany could cause euro collapse: Soros | The Real Meaning of ‘Economic Austerity’: IMF/World Bank devastation | EU wants control over member budgets | Spain could test the euro to its limit | IMF says Spain taking right steps towards stability | EU to push for global bank tax at G20 | France surrenders to Germany’s demand for Euro oversight by central bank | Spanish bailout readied as EU chief warns ‘democracy could disappear’ in debt ridden states | Europe embraces the cult of austerity – but at what cost? | Soros Sees ‘Act II’ of Financial Crisis, Blames ‘Market Fundamentalism’ Again | Double-dip recession ‘practically inevitable’: UBS | European markets decline for 3rd day | Eurozone plan for common bond issue to head off debt crisis | EU plans to create watchdog to curb credit rating agencies | Germany bans naked short-selling | European debt fears batter TSX | Greece links U.S. banks to debt crisis | European Council On Foreign Relations: EU Needs To Use Crisis For Greater Power | Sarkozy threatened to quit euro in showdown with Germany: Report | Hedge funds vote threatens EU-US rift | Global markets slide on debt fears | Loonie, TSX slip on euro woes | European Powerbrokers Present Proposal For New Economic And Political Order | Europe and America Morally and Financially Bankrupt | EU wants member countries to co-ordinate budgets | EU deal euphoria fizzles out | Ron Paul: Euro Bailout Will Lead To Currency Collapse | ‘Shock and awe’ euro rescue lifts global markets | Western Central Banks back Trillion Dollar European rescue plan, ECB to manage markets | Euro zone to regulate hedge funds, vows to fend off ‘wolf pack’ traders at all costs | Euro crisis goes global as leaders fail to stop the rot | Debt crisis: Panic on Wall Street, stonewalling in Europe | Greek rescue fears hit global stock markets | Greece swallows tough medicine in $150B bailout, more spending cuts announced | Greece erupts as men from IMF prepare to wield axe | Greece’s near bankruptcy won’t scuttle Canada-EU trade talks: minister | New austerity measures essential, says Greek PM | European Central Bank chief: Bank of International Settlements to Rule the Global Economy | Greek debt crisis: Europe feels shockwaves as bailout falters | Standard & Poor’s downgrade Greek credit rating to junk status | Greek bailout not limited to €45bn, Flaherty warns | IMF to move quickly on Greek request for loan | Greek PM calls for EU bailout loans | Greek civil servants strike, challenge EU/IMF talks | Soros warns Europe of disintegration | Investors rush to sell Greek bonds | IMF struggles to conceal glee at Greek deal | Greece secures joint IMF/Eurozone bailout program | Greek PM threatens to go to IMF if no EU bailout | General strike cripples Greece as protesters clash with police | Athens erupts as Greek austerity plan passes | Greece unveils radical austerity package | Athen’s coffers to run dry in two weeks, more cracks appear in Eurozone | Man who broke the Bank of England, George Soros, ‘at centre of hedge funds plot to cash in on fall of the euro’ | Goldman role in Greek crisis probed | Greek workers stage general strike | How EU Countries Cooked Books Using Derivatives | Goldman Sachs Helped Greece Obscure Debt Through Currency Swaps | Collapse of the euro is ‘inevitable’: Bailing out the Greek economy futile, says French banking chief | Euro currency union shows strains | Stimulating our way into debt crises | EU leaders reach secret Greek bailout deal | Will Greece set off ‘global debt bomb’? | EU cautions Greece about its deficit | Could Greece drag down Europe? | ‘Significant chance’ of second financial crisis, warns World Economic Forum | A world awash in debt | Secret report details Nazi plan to create a European Union | Leaked 1955 Bilderberg Docs Outline Plan For Single European Currency | Leaked Agenda: Bilderberg Group Plans Economic Depression | Bilderberg chairman: ‘Bilderberg helped create the Euro’ | Bilderberg Seeks Bank Centralization Agenda
Jill Treanor, Nick Fletcher, The Guardian
June 29, 2010
Value of top 100 UK firms fell by £100bn in six days, US consumer confidence lowest for seven months
Fears that government austerity packages will hinder global growth have combined with fresh anxiety about the health of European banks to hammer investor confidence.
Shares on both sides of the Atlantic dropped heavily amid warnings that markets were on a “cliff edge”.
In jittery trading ahead of a crucial repayment by Europe’s banks of a €442bn (£362bn) European Central Bank loan on Thursday the rates at which banks lend to each other in euros rose to their highest levels in eight months as rumours swirled that some banks were finding it difficult to raise funds in the money markets.
The FTSE 100 has now fallen 14% since its April peak after losing 157.46 points to close at 4914.22, a 3% decline on the day and its lowest level since September last year. French and German markets lost about 3%. Wall Street was down 235 points by the time London closed, about 100 points below the 10,000 level.
Analysts will be looking tomorrow for an indication of whether banks are becoming less reliant on their taxpayer lifeline when the ECB offers a way to refinance the €442bn one-year loan hours before the repayment is due.
If banks ask for more than €300bn to repay their existing loans with the more expensive three-month money being provided by the ECB, then concerns about the health of the banking system will escalate, analysts said.
The dollar is an unreliable international currency and should be replaced by a more stable system, the United Nations Department of Economic and Social Affairs said in a report released Tuesday.
Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.
As recovery starts to stall in the US and Europe with echoes of mid-1931, bond experts are once again dusting off a speech by Ben Bernanke given eight years ago as a freshman governor at the Federal Reserve.
The Group of 20 will adopt deficit- and debt-cutting targets proposed by Prime Minister Stephen Harper but allow governments to attack their fiscal gaps as their own economic dynamics dictate.
The International Monetary Fund has issued a secret recipe for global economic recovery that is sure to taste sour to many G20 leaders.
The words that have dominated headlines on the euro have bordered on apocalyptic: crisis, blowout, sinking, disaster, chaos, death, storm, tragedy, fear, contagion. This is how the world has come to see Europe’s shared currency.