Tag Archives: bank bailout

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Definitive steps taken to resolve Euro debt crisis or are we just buying time..again ??

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Categories: News Flash - Market today, Tags: , , , , , , , , ,

The Euro surged 1.1% in its biggest daily jump in eight months. Markets now shift focus to key data releases.

The Euro shot up more than 1% earlier today, on news that European leaders have agreed that Euro zone banks could be recapitalised without adding to government debt. This did much to allay concerns about growing lending pressures in Spain and Italy.

Dollar-based oil, copper and gold recovered as the Dollar retreated following the Euro’s steep rebound.

While the finer details of the agreement are yet to be disclosed, the Euro zone members had agreed to emergency action in order to lower the borrowing costs of Spain and Italy. They reasoned that the Euro area rescue funds could be used to stabilise bond markets without forcing countries that comply with EU budget rules. They also agreed to create a single supervisory body for the Euro bloc’s banks.

Euro area finance ministers will enact the final deal on loans to Spanish banks at a meeting on July 9th.

Both Spain and Italy had been threatened by market pressure which pushed their borrowing costs to unsustainable levels. They blocked a 120 billion Euro ($149 billion) growth package at the start of the two day EU summit yesterday, in order to demand urgent action to calm their financial woes.

The EU Leaders however did not place stress on the possibility of Euro bonds. Europe’s paymaster, Germany, staunchly opposes the creation of common Euro bonds.

While the Dollar retreated against a basket of currencies, the Euro was set for its biggest daily jump in eight months and was at $1.2568 earlier today. The Euro had jumped 1.2% to 100.08 Yen after earlier falling as much as 0.3%. The Yen fetched 79.43 Yen per Dollar.

In Japan, government reports today had shown that its industrial production had slid 3.1% in May from April. This was the biggest decline since March 2011. Japan’s consumer prices declined 0.1% in May.

The Australian and New Zealand Dollars advanced as Asian stocks rose, which boosted demand for higher yielding assets. The Aussie was up 1.5% to $1.0192 and the Kiwi rallied 1.3% to 79.84 U.S. cents.

Analysts now expect that the markets will shift their focus to other key data. The monthly U.S. jobs report is due next week and the official China PMI due over the weekend, with the PMI expected to show that activity at China’s factories fell to a seven month low this month.

Data released yesterday had shown that unemployment climbed in June for the fourth month this year in Germany, the Euro currency bloc’s biggest economy. A report from the EU’s statistics office is due for release on July 2nd and is expected to show that the jobless rate in the 17 nation Euro zone was near 11.1% in May.

Stay tuned for further updates, trade safe!

Erik

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Europe’s crisis has deepened dramatically for the last several days !

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Categories: News Flash - Market today, Tags: , , , , , ,

Over the last several days, Europe’s crisis has deepened dramatically. The euro currency union has been coming apart at the seams … and the region’s banks are teetering on the verge of complete collapse!

Just take a look:

In Greece, the latest parliamentary elections ushered in a wave of anti-austerity candidates. They’re threatening to tear up agreements with richer euro-zone members that took several months to negotiate, and that formed the basis of the country’s $307 billion bailout.

German officials are strongly hinting that this could be the straw that breaks the camel’s back — meaning Greece could become the first country to be officially booted out of the euro!

Already, the country’s citizens have been stampeding to their local banks to pull out deposits as fast as possible — nearly 6.4 BILLION dollars in the past several days alone — with snaking lines at ATMs from Athens to Thessaloniki!

And that’s likely just the beginning … because I’ve seen estimates that peg the cost of an all-out Greek exit from the euro at hundreds of billions of dollars — spread throughout the European financial system!

Meanwhile, Greece Is Just the Epicenter of
This Impending Crash in European Banks …

In Spain, the government was just forced to commit ANOTHER $6 billion in bailout money to save one of its major banks from collapse.

There’s just one problem: Spain ITSELF doesn’t have the money to fund these bailouts!

Investors know this, and that’s why they’re dumping Spanish bonds like mad. The cost of financing the government for the next 10 years just surged above 6.3%, rapidly approaching the panic highs set in the fall of 2011. And the cost of Spanish default insurance also just hit an all-time record!

Translation: Even without the ripples from Greece, Spanish banks will probably drop like rocks!

Then there’s Italy, where Moody’s Investors Service just took the axe to its ratings on 26 major banks.

The cuts ranged from one notch to four notches, and in a classic case of understatement, the firm’s outlook on those banks remained “negative.”

If this sad, sorry process looks eerily similar to you, it should …

This is precisely the kind of “snowball rolling downhill” financial crisis we saw in the U.S. during the housing and mortgage crisis of 2007-2009!

That banking and financial crisis ultimately crushed global stock markets, and led to the failure or bailout of banks and brokers around the world.

Many investors lost fortunes.

And make no mistake — I think the same thing is going to happen this time around. In fact, I believe spillover from the European crisis will quickly come rolling back onto our shores, too.

Trade safe until then

Erik