The Euro-What do you think is happening, is this prophetic

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[Psalm 51:17]

Euro-zone manufacturing PMI signals contraction
2 January 2012, by William L. Watts - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/euro-zone-manufacturing-pmi-signals-contraction-2012-01-02

The purchasing managers index for the 17-nation euro zone's manufacturing sector rose in December from a 28-month low the previous month but still signaled a further contraction in activity, data showed Monday.

The Markit euro-zone manufacturing PMI rose to 46.9 in December from 46.4 in November, confirming an earlier, preliminary estimate.

A reading of less than 50 indicates a contraction in activity, while a figure of more than 50 signals expansion.

"Euro-zone manufacturing is clearly undergoing another recession.

Despite the rate of decline easing slightly in December, production appears to have been collapsing across the single currency area at a quarterly rate of approximately 1.5% in the final quarter of 2011," said Chris Williamson, chief economist at Markit.

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ECB settled bond purchases totaling 462 bln euros
2 January 2012, by William L. Watts - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/ecb-settled-bond-purchases-totaling-462-bln-euros-2012-01-02

The European Central Bank quickened the pace of its government bond buying program somewhat last week, settling purchases totaling €462 million ($598 million) after settling just €19 million worth of transactions the previous week, data showed Monday.

In the week ending Dec. 16, the ECB settled purchases of €3.4 billion of bonds.

The ECB is thought to have focused purchases under its Securities Market Program on Italian and Spanish government debt after ramping up activity beginning in August in an effort to hold down borrowing costs for the euro zone's third- and fourth-largest economies, respectively.

The ECB "sterilizes" its bond purchases by draining an amount equivalent to its total bond purchases under the program, which now stands at €211.5 billion, in a weekly money market operation.

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Hungary debt hits 16-yr high: central bank
2 January 2012, Budapest (AFP)
http://www.france24.com/en/20120102-hungary-debt-hits-16-yr-high-central-bank

Struggling Hungary, looking for EU and IMF help, has seen its total public debt hit is highest level since 1995 due to the sharp fall of the forint against the euro, official data showed Monday.

According to the central bank, Hungary's accumulated public debt stood at 82.6% of gross domestic product (GDP), or 22.9 trillion forints (72 billion euros, $94 billion) at the end of September, up 76.7% at end-June.

Half of the public debt is in foreign currencies, making the problem even worse as the forint has fallen sharply -- more than 20% -- against the euro since October, analysts say.

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Eurozone crisis: German unemployment hits record low as Greece warns over euro exit
3 January 2012, (The Guardian)
www.guardian.co.uk/business/2012/jan/03/eurozone-debt-crisis-ftse100

Excerpt:

• Greece spokesman: agree 2nd bailout or leave euro

• Shares rise sharply in London - FTSE opens 1.9% higher

• Spanish unemployment hits record high....

• ....As German jobless rate falls to lowest level since reunification

• What are your predictions for the next 12 months?

----

9.10am: Unemployment in Germany has just hit a new record low.

The number of people out of work in Germany fell by 22,000 in December to 2.888m, sending the seasonally adjusted jobless rate down to 6.8%.

That, according to Reuters, is the lowest level since reunification.

This is in stark contrast to the situation in Spain – where the jobless level rose to a new record high this morning.

The data reflects the difference between the two economies. Spain contracted in the last three months of 2011 (according to the Bank of Spain last week) as its tourism and exports sectors weakened.

Germany has its own problems -- the Bundesbank expects growth of just 0.6% in 2012 following a tumble in exports in October -- but it remains the strongest of Europe's large economies.
 

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Summary Box: Greece could nix euro without bailout
1/3/12

WARNING: A spokesman for the Greek government said it might have to ditch the euro and push more austerity on its people if it can't get a second major international bailout.

PACKAGE ON HOLD: Greece is being kept afloat by a May 2010 bailout. An additional rescue package was set in October, after it became clear the first one wouldn't suffice.

PRIVATE CREDITORS WARY: Banks and insurance funds that hold a lot of Greece's debt agreed then to cut the value of their holdings by 50 percent, which would in effect slash Greece's borrowing. But the talks have snagged on crucial details.

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FYI, this is from the CFR...

The Failure of the Euro
http://www.foreignaffairs.com/articles/136752/martin-feldstein/the-failure-of-the-euro

The euro should now be recognized as an experiment that failed. This failure, which has come after just over a dozen years since the euro was introduced, in 1999, was not an accident or the result of bureaucratic mismanagement but rather the inevitable consequence of imposing a single currency on a very heterogeneous group of countries. The adverse economic consequences of the euro include the sovereign debt crises in several European countries, the fragile condition of major European banks, high levels of unemployment across the eurozone, and the large trade deficits that now plague most eurozone countries.

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Euro hit as investors fret over Europe's banks

1/5/12

LONDON (AP) — Renewed fears over Europe's shaky banking sector sent the euro skidding to a 15-month low against the dollar Thursday, while stock markets failed to get much of a boost from another round of upbeat U.S. economic data

For a second day running, market concern has centered on the state of the banks following UniCredit's announcement Wednesday that it was selling new shares at a 69 percent discount to Tuesday's closing price.

UniCredit, Italy's biggest bank, is trying to raise euro7.5 billion ($9.7 billion) to meet new European requirements for banks to thicken their financial cushions against possible losses. UniCredit's share price was down another 16 percent Thursday, following an equivalent decline the day before.

Italy, the recent focus of the debt crisis, must borrow to cover euro53 billion ($69 billion) in expiring debt in the first quarter alone in debt auctions beginning Jan. 13. That will test whether the government of new Prime Minister Mario Monti is making progress in regaining market confidence through budget cuts and efforts to improve weak economic growth.

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Latest Greek bailout called insufficient; report
6 January 2012, by Tom Fairless - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/latest-greek-bailout-called-insufficient-report-2012-01-06

Greece's second bailout package will probably have to be larger than the €130 billion planned, in part because of the country's worsening budget figures, German newspaper Financial Times Deutschland reports Friday, citing people in euro-zone circles.

The agreed amount of new aid won't be sufficient, FTD reports, adding that the exact sum Greece will eventually need depends on ongoing "tough" talks over the participation of private creditors.

The Greek government expects to wrap up talks seeking a 50% write-down on its debt owed to creditor banks by the end of this month, after banks appeared to make concessions on the terms they would accept under a new bailout, people with knowledge of the situation told Dow Jones Newswires Thursday.

On Wednesday, Greek Prime Minister Lucas Papademos said Greece faces the risk of a disorderly default in March if it doesn't complete negotiations for the country's second bailout loan.

The troika of the European Commission, the European Central Bank and the International Monetary Fund is in the process of negotiating a second, €130 billion bailout package that could provide Athens additional money if Greece is considered to be implementing agreed reforms.

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Italian 10-year yield rises back above 7%
6 January 2012, by William L. Watts - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/italian-10-year-yield-rises-back-above-7-2012-01-06

Italian and Spanish government bonds were under pressure Friday, pushing up yields as both countries prepared to auction debt next week in a key test of market confidence.

The yield on 10-year Italian government bonds rose back above the 7% level to trade at 7.11%, a rise of 16 basis points.

Borrowing costs above 7% are widely seen as unsustainable over the long run.

Spain's 10-year bond yield rose by around 5 basis points to 5.63%.

A basis point is a hundredth of a percentage point.

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Fitch cuts Hungary rating one notch to BB plus
6 January 2012, by William L. Watts - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/fitch-cuts-hungary-rating-one-notch-to-bb-plus-2012-01-06

Fitch Ratings on Friday cut Hungary's credit rating by one notch from BBB minus to BB plus and signaled further cuts may be in the offing by maintaining a negative outlook for the rating.

"The downgrade of Hungary's ratings reflects further deterioration in the country's fiscal and external financing environment and growth outlook, caused in part by further unorthodox economic policies which are undermining investor confidence and complicating the agreement" of a new standby package from the International Monetary Fund and European Union, said Matteo Napolitano, director in Fitch's sovereign group.

Hungarian bond yields soared and the forint currency fell to a record low versus the euro this week.

The forint rebounded Friday to trade at 316.93 per euro, a 0.4% gain.

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EFSF: Orders for 3-year bond near 4.5 bln euros
5 January 2012, by William L. Watts - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/efsf-orders-for-3-year-bond-near-45-bln-euros-2012-01-05

The European Financial Stability Facility, the euro zone's temporary rescue fund, said its placement Thursday of a €3 billion ($3.9 billion), three-year bond issue attracted bids totaling close to €4.5 billion.

The EFSF set the price for the issue at mid-swap plus 40 basis points.

Mid-swap is the midpoint between bid and offer prices on swap transactions.

The pricing implied a reoffer yield for investors of 1.77%.

The proceeds of the sale will be used to support the European Union's portion of the bailout programs put in place for Ireland and Portugal.

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http://news.yahoo.com/ecb-policymaker-wants-banks-off-greece-bailout-hook-145637548.html

1/7/12

ECB policymaker wants banks off Greece bailout hook

FRANKFURT (Reuters) - European Central Bank policymaker Athanasios Orphanides called for euro zone leaders to abandon plans to make private sector investors help reduce Greece's debts, but his push showed no sign of gaining any traction in Europe's capitals on Friday.
 
Orphanides, who is also the central bank governor of Cyprus, said in a newspaper column that dropping plans to force losses on private sector holders of Greek debt would "help restore trust" in the euro zone and lower the borrowing costs of other governments in the currency union.
 
The involvement of the private sector in the Greek bailout has eroded investor confidence in euro zone sovereign debt and raised pressure on borrowing costs, despite policymakers' efforts to reassure markets that Greece is an isolated case.
 
"Reversing the Greek private sector involvement decision would also raise the financing costs on the Greek government, but by restoring trust in the euro zone it would reduce the financing costs of other euro zone governments," Orphanides wrote in the Financial Times.

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Eurozone unemployment at record 10.3%
6 January 2012, (AFP)
http://www.france24.com/en/20120106-eurozone-unemployment-record-103

Eurozone unemployment remained at an all-time record high of 10.3% for the second month running in November, official figures showed on Friday.

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http://news.yahoo.com/analysis-euro-zone-heat-again-061036151.html

1/9/12

Analysis: For euro zone, the heat is on again

BERLIN (Reuters) - The euro zone crisis seemed to vanish from the headlines for a brief moment as 2011 ticked over into 2012, but it is about to return with a vengeance.
 
The coming months will be decisive in determining whether European leaders can hold their increasingly fragile currency bloc together or will stumble in the face of a daunting set of political, economic and financial obstacles lined up in their path at the start of the new year.
 
In Greece, where the crisis started over two years ago, the government is in a race against time to agree a bond-swap deal with banks that is crucial to a new 130 billion euro bailout package from European partners and the International Monetary Fund (IMF).
 
Without that package, Athens faces the threat of a debt default in March.
 
But talks with the banks and investment funds that are being asked to accept 50 percent losses on their Greek bonds to help pay for the bailout have dragged on for weeks, sowing doubts about whether Athens can really deliver.
 
"The risk of a disorderly Greek default is once again on the rise, with the threat of contagion to Italy and others," economists at Barclays Capital said last week.
 
Compounding the challenge, both Greece and France face elections within months that could complicate decision-making at the national level in two key states and thwart the broader bloc's ability to act swiftly at a time when pressure is high to bed down agreements sealed at an EU summit last month.
 
A key element of the summit package was a deal to funnel 200 billion euros to the IMF, money that could be used to offer precautionary credit programs to Italy and possibly Spain.
 
But the euro zone is struggling to get the 50 billion euros it needs from nations outside the currency bloc to meet its goal. A senior German official told Reuters on condition of anonymity that securing the participation of Britain, which has shown no inclination to contribute, was absolutely crucial.
 
Even if those funds are secured, neither Italy nor Spain have shown any willingness to accept aid -- and the stigma and greater fiscal oversight that would come with it.
 
Italian 10-year bond yields have pushed back above the 7 percent mark over the past week, approaching record euro-era highs, and both Rome and Madrid must sell bonds this week in the first major market tests of 2012 for the euro zone's third and fourth biggest economies.
 
END OF MERKOZY
 
The Greek election, expected by the end of March, seems unlikely to produce an outright winner, meaning coalition talks could drag out and prolong uncertainty.
 
In France, polls suggest there is a good chance President Nicolas Sarkozy, who has steered Europe's crisis response along with German Chancellor Angela Merkel, could be pushed out of office by his Socialist challenger Francois Hollande.
 
While Merkel and Sarkozy have polar-opposite temperaments and clashed frequently when the Frenchman first took power in 2007, they are both conservatives, born just half a year apart, and have developed an effective, even close, partnership after years of high-pressure crisis summits.
 
And after years of frustration with the French president's shoot-from-the-hip style, government officials in Berlin say they are now worried about the end of "Merkozy," the most important relationship in Europe, in the middle of the crisis.
 
A cut in France's triple-A credit rating in the weeks ahead could also upset the delicate Franco-German balance, although some economists believe it could force the French to accept more far-reaching fiscal reforms, regardless of who wins the two-round election in April and May.
 
"It won't be Merkozy anymore. It will be Angela Merkel and (IMF chief) Christine Lagarde dictating policy in Europe," said French economist Jacques Delpla.
 
"The next French president, whether its Hollande or Sarkozy, won't have many options. The deficit will need to be cut, taxes increased and spending cut."
 
RECESSION RISK
 
Fittingly, Merkel and Sarkozy kick off 2012 with a Monday meeting in Berlin to prepare an EU summit scheduled for January 30 that is expected to focus on efforts to boost growth.
 
That is perhaps the biggest challenge of all for the bloc. After several years of fiscal consolidation to push down debts and deficits swollen by the global financial crisis of 2008/09, the euro zone is headed for recession -- a factor that has pushed the euro down to 16-month lows against the dollar.
 
Even the bloc's economic powerhouse Germany is at risk of recession. Greece is entering its fifth straight year of contraction, with no hope of paying down its massive debt.
 
But restoring market confidence in the finances of struggling euro area countries and getting their economies working again seem like contradictory goals at this point.
 
"In the current market environment there is no room for using a Keynesian-type expansionary fiscal policy to boost demand in countries with low growth - the markets will simply not accept such a strategy," Deutsche Bank said in a confidential note on the crisis prepared for the German government late last year.
 
One bright spot is the European Central Bank (ECB), which is showing greater flexibility under its new President Mario Draghi, euro zone officials say.
 
The ECB's decision last month to provide cheap long-term loans to banks has helped assuage fears about the financial sector and could support sovereign debt sales going forward.
 
"We're already seeing that Draghi is more flexible than Trichet," the senior German official said, referring to the Italian's French predecessor Jean-Claude Trichet. "He won't put a bazooka in the window for everyone to see but he'll do what it takes."
 
The big question is whether this buys Europe's leaders the time they need to overcome the formidable challenges they face in the new year.
 
(Reporting by Noah Barkin; Editing by Rosalind Russell)

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ECB overnight deposit level hits new all-time high
9 January 2012, by William Launder - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/ecb-overnight-deposit-level-hits-new-all-time-high-2012-01-09

Use of the European Central Bank's overnight deposit facility reached a new, all-time high Friday, reflecting ongoing tension in interbank lending markets and a surfeit of liquidity in the financial system.

Euro-zone banks parked €463.565 billion in the overnight deposit facility Friday, compared with €455.299 billion parked overnight Thursday, ECB data showed Monday.

The overnight deposit level has been elevated since August 2011, as banks favor using the ECB as a safe haven for excess cash rather than lend it out to other banks.

In past weeks, use of the facility has repeatedly reached new all-time highs, after the ECB in December flooded the market with liquidity in the form of nearly half a trillion euros in long-term loans.

Banks are increasingly reluctant to lend to other financial institutions due to concerns about their counterparties' exposure to risky euro-zone sovereign debt.

Meanwhile, banks borrowed €1.391 billion from the ECB's overnight lending facility Friday, compared to €1.861 billion borrowed Thursday.

When the interbank market works properly, banks use the lending facility to borrow just a few hundred million euros overnight.

But many banks are at present forced to turn to the ECB for their short-term funding needs as the debt and banking crisis continues to erode banks' confidence in one another.

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Soros: EU problems more serious than 2008 crisis
9 January 2012, by Rumman Ahmed - Bangalore (MarketWatch)
http://www.marketwatch.com/story/soros-eu-problems-more-serious-than-2008-crisis-2012-01-09

Billionaire U.S. investor George Soros said Monday the ongoing sovereign-debt crisis in the euro zone is more serious than the global financial meltdown of 2008.

The consequences of a collapse of a large European bank would be felt across the globe, Soros said in a speech at the Azim Premji University in Bangalore.

Soros is famous for his 1992 bet against the British pound that earned $1 billion for his Quantum hedge fund.

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http://news.yahoo.com/merkel-warns-second-greek-aid-package-130857929.html

1/8/12

Merkel warns on second Greek aid package

BERLIN (Reuters) - German Chancellor Angela Merkel said on Monday it would not be possible to pay out the next aid tranche to Greece without rapid progress on its second rescue package, including the voluntary restructuring of Greek debt held by its private creditors.
 
"We must see progress on the voluntary restructuring of Greek debt," Merkel told a joint news conference with French President Nicolas Sarkozy in Berlin.
 
"From our point of view, the second Greek aid package including this restructuring, must be in place quickly. Otherwise it won't be possible to pay out the next tranche for Greece."
 
Merkel added that she would talk about Greece with International Monetary Fund chief Christine Lagarde in Berlin on Tuesday.

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http://www.reuters.com/assets/print?aid=USTRE80813T20120109

1/9/12

Exclusive: Borrowers turn lenders as banks tap firms for cash

LONDON (Reuters) - Blue-chip names like Johnson & Johnson, Pfizer and Peugeot are among firms bailing out Europe's ailing banks in a reversal of the established roles of clients and lenders.

One source with knowledge of the so-called repo deals or short-term secured lending, said the two U.S. pharmaceutical groups and French carmaker were the latest to sign up for them.

Europe's banks are struggling to secure the cash to fund their day-to-day business and have largely stopped lending to each other for fear Europe's sovereign debt crisis could land any of their peers in trouble.

As a result a group of well-known, cash-rich companies with solid cash flows has stepped in the repo market, which provides a form of lending so far almost exclusively in use between banks, and between banks and central banks.

One market participant said in one key area of lending companies now accounted for 25 percent of these deals.

Repos provide the new financiers with the strict guarantees they need before parting with their cash, answering worries that the crisis has weakened Europe's banks to the extent that they might not be able to pay the money back.

"Companies in the past were ... happy to deposit cash on an unsecured basis to a bank for an interest payment," said Frank Reiss, who oversees some of the repo business at Euroclear, the Brussels-based settlement house owned by a group of banks.

"Now following the crisis, we have seen that companies are engaging in repos secured with collateral against the cash they are lending," said Reiss. Euroclear is the largest administrator of repo trades in Europe.

At the moment the European Central Bank provides the main lifeline for banks and has pumped hundreds of billions of euros of cash into the market.

But the banks are parking most of the money they borrow back at the ECB rather than trusting to lend to each other.

They are also paying insurers and pension funds to take their illiquid bonds in exchange for better quality ones, in a desperate bid to secure much-needed cash from the ECB, which only provides cash against collateral.

In stark contrast, Europe's biggest companies are sitting on cashpiles that amount to more than $20 billion each in the case of BP Plc and Volkswagen.

According to Moody's, a sample of European companies held $872 billion cash in total at the middle of 2011.

It is typically these very large companies, with reliable cash flows, that engage in repo deals with banks, Euroclear's Reiss said, though he declined to give the names of any counterparties, because of client confidentiality.

Corporate treasurers are typically extremely wary of talking about their day-to-day cash management, and Johnson & Johnson, Pfizer declined to discuss the matter. Peugeot was not available for comment, while other large companies contacted by Reuters also declined comment.

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Fitch warns of 'cataclysmic' euro collapse

1/12/12

The European Central Bank should ramp up its buying of troubled euro zone debt to support Italy and prevent a "cataclysmic" collapse of the euro, David Riley, the head of sovereign ratings for Fitch, has warned.
 
Speaking to investors as part of a European roadshow, Mr Riley said a collapse of the euro would be disastrous for the global economy, and while it is not Fitch's baseline scenario, it could happen if Italy did not find a way out of its debt problems.
 
"The end of the euro would be cataclysmic. The euro is a reserve currency," Mr Riley said overnight. "What would that do in terms of financial and political stability?"
 
Advertisement: Story continues below

"It is hard to believe the euro will survive if Italy does not make it through," he said, adding that while many saw Italy as too politically and economically important to be allowed to fail, "one might also argue that it is too big to rescue."
 
The warning pushed the euro down towards a 16-month low versus the US dollar.


Read more: http://www.smh.com.au/business/world-business/fitch-warns-of-cataclysmic-euro-collapse-20120112-1pw7s.html#ixzz1jG2SoCDo

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Everyone Hates The Euro - EUR Shorts Hit New Record High
13 January 2012, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/everyone-hates-euro-eur-shorts-hit-new-record-high

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Has The ECB Given Up On Portugal?
16 January 2012, Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/has-ecb-given-portugal

Excerpt:

Portuguese 10Y bond spreads to bunds just broke 1250bps, +180bps on the day and at record wides.

So it appears that Portugal (admittedly illiquid) has been left to its own devices.

Given the subordination concerns as ESM is accelerated, it is perhaps no surprise that the ECB’s SMP has seemingly decided that Portugal has crossed the Rubicon into Greece territory.

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Euro Rescue Fund Sells Bills ‘Smoothly’ After S&P Credit Rating Downgrade
17 January 2012, by Svenja O’Donnell and Paul Dobson (Bloomberg)
http://www.bloomberg.com/news/2012-01-16/s-p-cuts-efs-facility-to-aa-from-aaa.html

Excerpt:

The European Financial Stability Facility issued six-month debt for the first time, selling €1.5 billion ($1.9 billion) of securities a day after the euro region’s temporary bailout fund lost its top credit rating.

The EFSF sold the 182-day bills at an average yield of 0.2664%, it said in a statement. Investors bid for 3.1 times the amount of bills sold, little changed from the 3.2 bid- to-cover ratio at a Dec. 13 offering of three-month bills.

The facility’s longer-dated bonds underperformed their euro-area peers after the Standard & Poor’s downgrade to AA+ from AAA.

“The fact that the bill auction has gone so smoothly is encouraging,” said John Davies, a fixed-income strategist at WestLB AG in London.

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Time to bailout the bailouter? IMF seeks $600 billion in new funding to cope with crisis

http://theextinctionprotocol.wordpress.com/2012/01/18/time-to-bailout-the-bailouter-imf-seeks-600-billion-in-new-funding-to-cope-with-crisis/

1/18/12

January 18, 2012 – EUROPE – The International Monetary Fund is seeking to boost its war chest by $600 billion to help countries reeling from the euro zone debt crisis, but some nations insist Europe must first do more to support its ailing members, international financial sources said on Wednesday. Group of 20 officials will discuss increasing IMF resources at a meeting in Mexico City on Thursday and Friday, the first under Mexico’s 2012 presidency of the group of developed and emerging economies. The IMF said it will need $500 billion to lend to member countries in need and IMF sources who were present at an IMF board meeting on the issue on Tuesday told Reuters that another $100 billion is needed as a “protection buffer.” The IMF also estimated there would be a $1 trillion global financing gap over the next two years if global economic conditions worsened considerably, the sources added. On foreign exchange markets, the reports of plans for increased IMF lending capacity helped boost the euro. Euro zone nations have already promised to inject an extra 150 billion euros ($200 billion) into the IMF, which is included in the total estimate. G20 officials in Mexico for the meeting of deputy finance ministers and central bank officials said there was still resistance in some quarters to increase funding. “Many countries want the Europeans to move ahead with tougher and clearer measures, which at this moment translates to more resources to its stability fund,” said a senior Brazilian government source attending the meeting. Bank of Canada Governor Mark Carney said it was not clear European governments had done everything necessary to make sure they could fund themselves at sustainable interest rates over the next few years. “If it makes sense to enhance the resources of the IMF the principal focus, it would seem, should be on dealing with fallout of the European crisis for innocent bystanders,” he told a news briefing in Ottawa. The IMF currently has a lending capacity of about $380 billion and estimates demand could be about $ 1 trillion in the medium-term.”Based on staff’s estimate of global potential financing needs of about $1 trillion in the coming years, the fund would aim to raise up to $500 billion in additional lending resources. This total includes the recent European commitment of about $200 billion in increased fund resources,” an IMF spokesman said. “At this preliminary stage, we are exploring options on funding and will have no further comment until the necessary consultations,’ he added. -Reuters

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France, Germany planning EU tax push: report
19 January 2012, by Steve Goldstein - Washington (MarketWatch)
http://www.marketwatch.com/story/france-germany-planning-eu-tax-push-report-2012-01-19

The financial transactions tax urged by France and Germany is the first step toward further European Union joint taxation, according to a report in London's Daily Telegraph, citing a confidential paper.

The report quoted the memo as saying European proposals on an energy tax, a common corporate tax base and a common financial transaction tax should be accelerated.

Britain is against the proposed financial transactions tax over fears that financial services firms may move out of London were it to be imposed.

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Hungary PM backs down
Krisztina Than And Jan Strupczewski
January 20, 2012

BUDAPEST/BRUSSELS (Reuters) - Prime Minister Viktor Orban abandoned plans on Friday to merge Hungary's central bank and markets regulator, the first concrete evidence that he is backing down in a dispute with the European Union that threatens to block a deal on financial aid.

Orban's conservative Fidesz party has been criticized by the international community for introducing a swathe of measures that threaten the independence of the media, the judiciary and the central bank since sweeping to power in 2010.

Hungary's financial markets have taken a hammering in recent weeks as a result, and while some analysts remain suspicious that Orban may try to hold out to impress his domestic political audience, they say the government now looks ready to give in.

Friday's move was the first specific commitment since Orban made a broad pledge to the European Parliament earlier this week to compromise.

He said he expected to secure a political agreement with European Commission President Jose Manuel Barroso on the disputed laws next week and said he was ready to modify nearly all contested legislation to meet the EU's demands.

"If we take stock of the issues that have emerged, I do not see any particularly difficult issues," Orban told Hungarian Kossuth radio. "Naturally, several laws may have to be modified, but the government cannot do it, this can be done only by parliament, and we will make proposals to this end."

The planed merger of the central bank and financial regulator had been a key point of contention. Orban later added that Budapest also no longer insisted on a government member being present at Monetary Council meetings as an observer.

more: http://www.realclearmarkets.com/news/reuters/finance_business/2012/Jan/20/hungary_pm_backs_down.html

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British debt hits £1 trillion mark in December - Public sector borrowing falls 14%
24 January 2012, by Clare Hutchison - London (MarketWatch)
http://www.marketwatch.com/story/british-debt-hits-1-trillion-mark-in-december-2012-01-24

Excerpt:

British debt in December reached the highest level since records began in 1993, according to figures released Tuesday.

Britain’s Office for National Statistics said net public debt excluding the effects of any financial interventions now stands at 1 trillion pounds ($1.6 trillion), or about 64.2% of gross domestic product.

The figure represents a 13.7% increase on December 2010, when net debt was £883 billion, and comes ahead of British fourth-quarter GDP due to be released Wednesday.

----

Then, Osborne said the debt to GDP ratio would likely stand at 67% in 2011 and added that debt reduction was “not happening as quickly as we had wished because of the damage done to our economy by the ongoing financial crisis.”

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CEOs pessimistic about global economy: survey - But 40% of CEOs polled very confident of revenue growth for their firms
24 January 2012, by Polya Lesova - Davos, Switzerland (MarketWatch)
http://www.marketwatch.com/story/ceos-pessimistic-about-global-economy-survey-2012-01-24

With Europe’s sovereign-debt crisis still unresolved, few chief executive officers are optimistic about the global economic outlook for this year, according to a survey released Tuesday by PricewaterhouseCoopers International on the eve of the World Economic Forum’s annual meeting in the Swiss Alps.

[Psalm 51:17]

Merkel to open Davos forum in Switzerland

updated 1/18/2012 2:04:13 PM ET
GENEVA — German Chancellor Angela Merkel will headline the annual elite gathering in Davos, Switzerland this month, underscoring the world's focus on the European debt crisis that for over two years has wreaked havoc on financial markets.

Organizers of the World Economic Forum said Wednesday that close to 40 heads of state and 18 of the world's central bankers will be among the expected 2,600 participants from nearly 100 countries, making it the biggest such gathering in four decades at the Swiss Alpine resort.
 
The exclusive, invitation-only meeting of government and business leaders and VIPs from all walks of life is held to foster debate on the world's most pressing problems. Participants' expertise ranges from technology to arts and sciences, from NGOs to media organizations.
 
"We are looking desperately around the world for people who can offer solutions," said the forum's founder Klaus Schwab.

Other public figures expected at the Swiss Alpine resort include British Prime Minister David Cameron, Israeli President Shimon Peres, Palestinian Prime Minister Salam Fayyad, U.N. Secretary-General Ban Ki-moon, International Monetary Fund managing director Christine Lagarde, U.S. Treasury Secretary Timothy Geithner and Arab League Secretary-General Nabil Elaraby.

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http://www.msnbc.msn.com/id/46036909/ns/business-stocks_and_economy/t/merkel-open-davos-forum-switzerland/

German Klaus Schwab, founder and president of the World Economic Forum, WEF, gestures during a press conference, in Cologny near Geneva, Switzerland, Wednesday, Jan. 18, 2012. The World Economic Forum today unveiled the program for its Annual Meeting in Davos, Switzerland, including the key participants, themes and goals. The overarching theme of the meeting, which will take place from Jan. 25 to 29, is "The Great Transformation: Shaping New World". (AP Photo/Keystone, Laurent Gillieron)

[Psalm 51:17]

http://www.mail.com/business/markets/1010580-imf-chief-presses-cash-to-fight-crisis.html#.4284-stage-teaser1-2

January 28, 2012 — DAVOS, Switzerland (AP) — The head of the International Monetary Fund appeared to be making headway Saturday in her drive to boost the institution's financial firepower so that it can help Europe prevent its crippling debt crisis from further damaging the global economy.

Christine Lagarde, who replaced Dominique Strauss-Kahn as managing director of the fund six months ago, is trying to ramp up the IMF's resources by $500 billion so it can help if more lending is needed in Europe or elsewhere. The IMF is the world's traditional lender-of-last-resort and has been involved in the bailouts of Greece, Ireland and Portugal.

Insisting that the IMF is a "safe bet" and that no country had ever lost money by lending to the IMF, Lagarde argued that increasing the size of the IMF's resources would help improve confidence in the global financial system. If enough money is in the fund the markets will be reassured and it won't be used, she said, using arguments similar to those that France has made about increasing Europe's own rescue fund.

"It's for that reason that I am here, with my little bag, to collect a bit of money," she said at the World Economic Forum in the Swiss Alps town of Davos. Her plea appeared to find a measure of support from ministers of Britain and Japan, sizable IMF shareholders that would be expected to contribute to any money-raising exercise.

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