The German government is considering forcing banks to accept state aid and partially nationalizing them in return because it's increasingly worried that Germany faces a credit crunch, the Süddeutsche Zeitung newspaper reported on Monday. The German government is worried that the current shortage of bank credit plaguing industry will worsen later this year and is considering tackling the problem by forcibly taking stakes in banks, similar to the policy adopted by authorities in the United States and Britain, a German newspaper reported on Monday. Not lending enough -- German banks in Frankfurt, the country's financial capital. The plan envisages the government forcing banks to take state aid and to part-nationalize them in return, Süddeutsche Zeitung reported, citing unnamed sources. So far, both Chancellor Angela Merkel and Finance Minister Peer Steinbrück have rejected such mandatory aid and have allowed banks to choose whether to tap the government's bank stabilization fund set up last year. But analysts at the Chancellery, Finance Ministry and Economy Ministry now concur that Germany is at risk of a credit crunch that could worsen the recession, already the deepest since the 1930s, Süddeutsche reported.
The German government is considering forcing banks to accept state aid and partially nationalizing them in return because it's increasingly worried that Germany faces a credit crunch, the Süddeutsche Zeitung newspaper reported on Monday.
The German government is worried that the current shortage of bank credit plaguing industry will worsen later this year and is considering tackling the problem by forcibly taking stakes in banks, similar to the policy adopted by authorities in the United States and Britain, a German newspaper reported on Monday.
Not lending enough -- German banks in Frankfurt, the country's financial capital. The plan envisages the government forcing banks to take state aid and to part-nationalize them in return, Süddeutsche Zeitung reported, citing unnamed sources.
So far, both Chancellor Angela Merkel and Finance Minister Peer Steinbrück have rejected such mandatory aid and have allowed banks to choose whether to tap the government's bank stabilization fund set up last year.
But analysts at the Chancellery, Finance Ministry and Economy Ministry now concur that Germany is at risk of a credit crunch that could worsen the recession, already the deepest since the 1930s, Süddeutsche reported.
Hans-Peter Keitel, 61, president of the Federation of German Industries (BDI), discusses the threat of a credit crunch in Germany and the tough work awaiting the next government, which will have to create a plan for dealing with the massive debt accrued through efforts to combat the economic crisis. SPIEGEL: Mr. Keitel, the government in Berlin says we are experiencing a credit crunch. The banks are saying there isn't one. Who's correct? FROM THE MAGAZINE Find out how you can reprint this DER SPIEGEL article in your publication. Keitel: Both are correct. A person running a healthy business has no problem getting a short-term loan for his day-to-day business. In that sense I must even defend the banks against the occasional populist criticism. But there is trouble with loans needed by companies to finance large, long-term projects or investments. Here we are observing bottlenecks that give cause for concern. The crunch hasn't happened yet, but we are close to it.
Hans-Peter Keitel, 61, president of the Federation of German Industries (BDI), discusses the threat of a credit crunch in Germany and the tough work awaiting the next government, which will have to create a plan for dealing with the massive debt accrued through efforts to combat the economic crisis.
SPIEGEL: Mr. Keitel, the government in Berlin says we are experiencing a credit crunch. The banks are saying there isn't one. Who's correct?
FROM THE MAGAZINE Find out how you can reprint this DER SPIEGEL article in your publication. Keitel: Both are correct. A person running a healthy business has no problem getting a short-term loan for his day-to-day business. In that sense I must even defend the banks against the occasional populist criticism. But there is trouble with loans needed by companies to finance large, long-term projects or investments. Here we are observing bottlenecks that give cause for concern. The crunch hasn't happened yet, but we are close to it.
Many economists are already talking about a light at the end of the recession tunnel. But a new crisis is looming in Germany as companies find it increasingly difficult to borrow money. The government is coming up with increasingly desperate ideas to get liquidity flowing again. There was little evidence of a crisis as German Chancellor Angela Merkel hurried through a production building at Opitz Holzbau GmbH, a manufacturer of prefabricated building elements based in the eastern German town of Neuruppin, on Wednesday of last week. Production was in high gear, and the chancellor chatted with assembly workers, handed out praise and shook hands. Idle cranes in Hamburg harbor: The economic crisis is hitting German exporters hard. Merkel was making the second stop on her summer tour of German small- and mid-sized businesses. She was trying out the central message of her election campaign, which will begin in the coming weeks: "Everything will be just fine." After the factory tour, Merkel and local business owners retired to a drab conference room -- and suddenly the crisis was back. The discussion revolved around banks, the slowdown in the flow of credit and the resulting cash crunch many companies are experiencing. This is the subject that is currently capturing the attention of economists, politicians, business owners and ordinary people alike.
Many economists are already talking about a light at the end of the recession tunnel. But a new crisis is looming in Germany as companies find it increasingly difficult to borrow money. The government is coming up with increasingly desperate ideas to get liquidity flowing again.
There was little evidence of a crisis as German Chancellor Angela Merkel hurried through a production building at Opitz Holzbau GmbH, a manufacturer of prefabricated building elements based in the eastern German town of Neuruppin, on Wednesday of last week. Production was in high gear, and the chancellor chatted with assembly workers, handed out praise and shook hands.
Idle cranes in Hamburg harbor: The economic crisis is hitting German exporters hard. Merkel was making the second stop on her summer tour of German small- and mid-sized businesses. She was trying out the central message of her election campaign, which will begin in the coming weeks: "Everything will be just fine."
After the factory tour, Merkel and local business owners retired to a drab conference room -- and suddenly the crisis was back. The discussion revolved around banks, the slowdown in the flow of credit and the resulting cash crunch many companies are experiencing. This is the subject that is currently capturing the attention of economists, politicians, business owners and ordinary people alike.
But it is hard to find anyone in Chicago or London using a Japanese phone like a Panasonic, a Sharp or an NEC. Despite years of dabbling in overseas markets, Japan's handset makers have little presence beyond the country's shores. "Japan is years ahead in any innovation. But it hasn't been able to get business out of it," said Gerhard Fasol, president of the Tokyo-based IT consulting firm, Eurotechnology Japan. The Japanese have a name for their problem: Galápagos syndrome.
But it is hard to find anyone in Chicago or London using a Japanese phone like a Panasonic, a Sharp or an NEC. Despite years of dabbling in overseas markets, Japan's handset makers have little presence beyond the country's shores.
"Japan is years ahead in any innovation. But it hasn't been able to get business out of it," said Gerhard Fasol, president of the Tokyo-based IT consulting firm, Eurotechnology Japan.
The Japanese have a name for their problem: Galápagos syndrome.
Almost a million people are being forced to work part-time because they cannot get a full-time job, according to official figures that shed light on the hidden cost of the recession for thousands of families. In the past year more than 250,000 extra people who would like to be in full-time employment have found themselves working four days a week or fewer, according to the Office for National Statistics. This is an increase of more than a third on the previous year, and illustrates the extent to which companies are trying to cope with the downturn by reducing staff hours, rather than just laying them off.
In the past year more than 250,000 extra people who would like to be in full-time employment have found themselves working four days a week or fewer, according to the Office for National Statistics.
This is an increase of more than a third on the previous year, and illustrates the extent to which companies are trying to cope with the downturn by reducing staff hours, rather than just laying them off.
Nissan, the Japanese carmaker, has announced a $329m investment for a new British plant, securing the future of hundreds of jobs and creating a further 350. The company, which gained financial support for the development from the UK government, said it planned to build the plant, which will produce batteries for electric cars, at its Wearside factory in the northeast of England The announcement comes five months after the firm sought 800 voluntary retirements from the same factory, which is located near the city of Sunderland. Gordon Brown, Britain's prime minister, said: "Nissan's investment in a new battery plant ... here in Sunderland is great news for the local economy". "Sunderland could now be a strong contender to produce electric vehicles for Nissan in Europe, and we will continue to work with Nissan to ensure this happens," he said.
Nissan, the Japanese carmaker, has announced a $329m investment for a new British plant, securing the future of hundreds of jobs and creating a further 350.
The company, which gained financial support for the development from the UK government, said it planned to build the plant, which will produce batteries for electric cars, at its Wearside factory in the northeast of England
The announcement comes five months after the firm sought 800 voluntary retirements from the same factory, which is located near the city of Sunderland.
Gordon Brown, Britain's prime minister, said: "Nissan's investment in a new battery plant ... here in Sunderland is great news for the local economy".
"Sunderland could now be a strong contender to produce electric vehicles for Nissan in Europe, and we will continue to work with Nissan to ensure this happens," he said.
Health experts agree that, while the current flu epidemic that started in Mexico in April 2009 may weaken during the summer, it could re-appear in the autumn, possibly in a stronger form. Using historical benchmarks of previous flu pandemics and of the SARS episode, we estimate the economic impact of a global flu pandemic in the UK. The GDP loss during the six months of the pandemic would amount to around 5% in the UK. That a pandemic is likely to hit the global economy just as it starts to recover from recession could result in the economic impact being larger than would otherwise have been the case, and this could tip the world and UK economies into deflation. UK CPI inflation would fall to around -1% throughout 2010-12 and UK GDP growth next year could be as low as -7½%. 17 July 2009 learn more (pdf)
Hat tip Le Monde.fr "Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
Some of the world's leading pharmaceutical companies are reaping billions of dollars in extra revenue amid rising global concern about the growing spread of swine flu.Analysts expect to see a significant boost in sales from GlaxoSmithKline, Roche and Sanofi-Aventis when they report first-half earnings lifted by government contracts for flu vaccines and antiviral medicines....One principal beneficiary of the growing fears about the pandemic has been Roche of Switzerland, which sells Tamiflu, the leading antiviral drug, and has seen a sharp rise in orders from private companies as well as governments. A research report last week from JPMorgan, the investment bank, estimated that governments had ordered nearly 600m doses of pandemic vaccine and adjuvant - a chemical that boosts its efficacy - worth $4.3bn in sales, and there was potential for a further 342m doses worth $2.6bn ahead.It forecast that fresh antiviral sales could boost sales for GSK and Roche by another $1.8bn in the developed world, and potentially up to $1.2bn from the developing world.
Analysts expect to see a significant boost in sales from GlaxoSmithKline, Roche and Sanofi-Aventis when they report first-half earnings lifted by government contracts for flu vaccines and antiviral medicines.
...
One principal beneficiary of the growing fears about the pandemic has been Roche of Switzerland, which sells Tamiflu, the leading antiviral drug, and has seen a sharp rise in orders from private companies as well as governments.
A research report last week from JPMorgan, the investment bank, estimated that governments had ordered nearly 600m doses of pandemic vaccine and adjuvant - a chemical that boosts its efficacy - worth $4.3bn in sales, and there was potential for a further 342m doses worth $2.6bn ahead.
It forecast that fresh antiviral sales could boost sales for GSK and Roche by another $1.8bn in the developed world, and potentially up to $1.2bn from the developing world.
Banks have failed to make adequate provision for the losses on loans and securities they face before the end of next year, Moody's Investors Service said. U.S. banks may incur about $470 billion of losses and writedowns by the end of 2010, which may cause the banks to be unprofitable in the period, the ratings company said in a report published today...."The fundamentals of financial institutions are still traveling on a downward slope," Moody's said. "No-one should consider recent improvements as assurance that the current rebound can be sustained."
U.S. banks may incur about $470 billion of losses and writedowns by the end of 2010, which may cause the banks to be unprofitable in the period, the ratings company said in a report published today.
"The fundamentals of financial institutions are still traveling on a downward slope," Moody's said. "No-one should consider recent improvements as assurance that the current rebound can be sustained."
Readers may recall that during the heat of bailout battle, the Federal Reserve got into the fancy finance business, relying on the sort of deal structuring sometimes used to try to turn toxic odd pork scraps into barely-digestible sausage, the procedure used for pigs so dead that merely putting lipstick on them just won't do. The items in question are Maiden Lane, the vehicle used to backstop JP Morgan's purchase Bear Stearns, and two sons of Maiden Lane created for dodgy AIG exposures. ...Willem Buiter, who has repeatedly pointed out that the three card monte operation being run by the Fed and Treasury are anti-democratic and possibly illegal, tells us that even by Fed's own, no doubt rosy, calculations. all three SPVs are under water.
Willem Buiter, who has repeatedly pointed out that the three card monte operation being run by the Fed and Treasury are anti-democratic and possibly illegal, tells us that even by Fed's own, no doubt rosy, calculations. all three SPVs are under water.
The Internal Revenue Service has stepped up scrutiny of offshore accounts and foreign income, an enforcement campaign that could sweep up tens of thousands of taxpayers. The push to recover some of the billions of dollars lost each year to offshore tax evasion goes beyond the government's high-profile effort to force Swiss bank UBS AG to release the names of 52,000 American account holders in order to nab tax evaders. The IRS is using a once-obscure tax form called the Foreign Bank Account Report, or FBAR, to force taxpayers to provide information on income they earn or bank accounts they hold overseas. It is threatening tough action against taxpayers who don't file the form and has greatly broadened those subject to filings beyond direct owners of offshore accounts. The requirement applies to U.S. citizens and residents who have offshore accounts totaling $10,000 at any point during the year.
The push to recover some of the billions of dollars lost each year to offshore tax evasion goes beyond the government's high-profile effort to force Swiss bank UBS AG to release the names of 52,000 American account holders in order to nab tax evaders.
The IRS is using a once-obscure tax form called the Foreign Bank Account Report, or FBAR, to force taxpayers to provide information on income they earn or bank accounts they hold overseas. It is threatening tough action against taxpayers who don't file the form and has greatly broadened those subject to filings beyond direct owners of offshore accounts. The requirement applies to U.S. citizens and residents who have offshore accounts totaling $10,000 at any point during the year.
"once-obscure"? Does nobody at the WSJ ever file a tax return, or do none of them have foreign accounts? I get a copy ever year of such a form with the package of forms for overseas Americans, and it's a real pain - you have to list all your accounts, every year, even if nothing has changed, and send it to the Treasury, not to the IRS.
If it really was that obscure to WSJ journalists, maybe they would be a good target for an audit....
Despite trillions of dollars of new government programs, one of the original causes of the financial crisis -- the toxic assets on bank balance sheets -- still persists and remains a serious impediment to economic recovery. Why are these toxic assets so difficult to deal with? We believe their sheer complexity is the core problem and that only increased transparency will unleash the market mechanisms needed to clean them up....The fundamental problem has remained untouched: insufficient information to permit estimated prices that both buyers and sellers find credible. Why is the information so hard to obtain? While the original MBS pools were often Securities and Exchange Commission (SEC) registered public offerings with considerable detail, CDOs were sold in private placements with confidentiality agreements. Moreover, the nature of the securitization process has made it extremely difficult to determine and follow losses and increasing risk from one tranche and pool to another, and to reach the information about the original borrowers that is needed to estimate future cash flows and price.
Bullshit - if the sellers accept the prices being bid by the buyers they'll instantly go broke. That's the real reason. The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.
No, but they're booked at more than anyone is willing to pay for them. And if the valuation is brought in line with market prices it will crash the banks. The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.
Neil Barofsky, the special inspector general over the Troubled Asset Relief Program (TARP), will tell lawmakers on Tuesday that taxpayers are being left in the dark about what banks are doing with bailout money, don't know the value of the government's investments and will not know the full extent of how the money is invested.Barofsky said that while the TARP program that Congress passed amounts to $700 billion, the total federal government support since 2007 for the economy and the financial sector could reach a far higher figure of $23.7 trillion. The government has committed significantly more money through a variety of other federal agencies and programs. [emphasis mine]
Rep. Cliff Stearns not heart GS.
Only view the CSPAN clip on this site if you are prepared to see "Giant Talking Penis" (H/T Drew Jones) brutally worked over with a baseball bat and then repeatedly stomped. I don't think Clif Stearns is expecting any contributions from GS. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Many of the banks that got federal aid to support increased lending have instead used some of the money to make investments, repay debts or buy other banks, according to a new report from the special inspector general overseeing the government's financial rescue program.
