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by Nomad on Mon Apr 9th, 2012 at 02:36:24 PM EST
Portugal's domestic banks tap ECB for record amounts of funding | Business | guardian.co.uk

The reliance of eurozone banks on the European Central Bank was demonstrated on Monday when Portugal revealed that its domestic banks were tapping the central bank for record amounts of funding.

The Bank of Portugal said the use by domestic banks for the various facilities available from the ECB rose to €56.3bn in March - up from €47.5bn in February and greater than the previous record level of €49.1bn in August 2010.

Bailed out by the EU and International Monetary Fund in April 2011 for €78bn, Portugal has €12bn earmarked for bolstering its banks' capital positions if necessary in the months ahead.

The plight of Portugal's banks was revealed following the cash injection by the ECB in February when the central bank lent €529bn to 800 banks across the eurozone through its long-term refinancing operation (LTRO).

Portuguese banks were among those frozen out from the wholesale funding markets - where banks borrow from each other or professional investors - during the height of the eurozone crisis and as a result are among a number in the eurozone that utilise ECB funding.

by Nomad on Mon Apr 9th, 2012 at 04:11:49 PM EST
[ Parent ]
As quiet as a Eurocrat in Athens | Presseurop (English)

We had already been warned by Kostas Pappas, a spokesman for the permanent representation of Greece in Brussels, "Beware of clichés that poison the atmosphere",  so it was no surprise to hear the same view expressed at the the European Commission delegation in Athens, which is located just behind the parliament building. On the other side of the street, the Evzones, soldiers in the traditional partisans uniform of white tights and pom-pommed hobnailed boots, were changing the guard, watched by handful of tourists.

One of them, a Greek American, was incensed by the display of the blue and gold-starred flag of the EU. "They have no place in the country of Socrates," he says. "They are immoral servants of banks."

Panos Carvounis is no longer bothered by this type of accusation. The genteel 50-year-old head of the European Commission Representation in Greece is well used to criticism. "I live at home. I go to the cinema without any fuss, while Greek politicians who have had bad press are afraid to leave their homes. I am often questioned, but never vilified", he says.

In contrast, other members of the contingent of Eurocrats, who have been posted in Athens since the beginning of the crisis in the spring of 2010, have made silence their first line of defence.

Some 15 experts are deployed in the Greek capital as part of the Commission's tasks force to help the country take advantage of EU funds [Greece has only managed to tap less than a third of the funds made available to it as part of the EU's 2007-2013 budget]. A further 30 work for the EU delegation, and also serve as a secretariat for the troika, the tripartite agency (Commission, International Monetary Fund, European Central Bank) with a brief to implement the agreement that was finally accepted by Greek leaders in mid-March.

This latter group are charged with supervising the second €130 billion European bailout that will finance Athens until the end of 2014: a sum that has been made available in addition to the first €110 billion lent by the 27-member EU in 2010, and the €107 billion of debt that the country's private creditors accepted to write off within the framework of a bond swap which will be completed by 18 April.

by Nomad on Mon Apr 9th, 2012 at 04:12:44 PM EST
[ Parent ]
They don't need to be in Greece to manage most of the bailout funds, as they are primarily for banks in other countries

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 10th, 2012 at 12:23:45 AM EST
[ Parent ]
So what is the real purpose of them being there?

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 10th, 2012 at 12:24:20 AM EST
[ Parent ]
to vet and tamp down any burgeoning political movement that makes any move to a. renege on the vows of fealty to the troika, b. use demagoguery fuelled by public disaffection to create a political counterforce to austerity aka wage suppression.

"We can all be prosperous but we can't all be rich." Ian Welsh
by melo (melometa4(at)gmail.com) on Tue Apr 10th, 2012 at 06:28:03 PM EST
[ Parent ]
EU, US serious about starting trade deal negotiations | EurActiv

The European Union and the United States are giving serious thought to starting talks on a free trade agreement covering all business sectors, including agriculture, a traditional source of friction between the two sides, a top US trade official said.

"A comprehensive agreement is obviously an important option to consider. It's one that we're taking a very close look at," Deputy US Trade Representative Miriam Sapiro told Reuters.

The United States and the 27 countries of the European Union already have the largest economic relationship in the world. Two-way trade was about €490 billion in 2011 and investment by US and European companies in each other's economies totals about €2 trillion.

But facing the prospect of years of slow growth as other countries like China, Brazil and India gallop ahead, US and EU leaders in November established a high-level working group led by U.S. Trade Representative Ron Kirk and EU Trade Commissioner Karel De Gucht to explore ways the transatlantic partners could tie their economies even closer to create jobs.

Kirk and De Gucht were tasked to produce an initial report by June and final recommendations by the end of the year.

A coalition of business groups on both sides of the Atlantic are eager to get started faster than that.

They have called on President Barack Obama and his European counterparts, EU Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso, "to commit to an accelerated launch of comprehensive transatlantic trade, investment and regulatory negotiations this year."

The business groups, which include the U.S. Chamber of Commerce and BusinessEurope, are pushing for that statement when Obama hosts the Group of 8 leading economies meeting on May 19-20 at his Camp David presidential retreat.

by Nomad on Mon Apr 9th, 2012 at 04:13:16 PM EST
[ Parent ]
BBC News - China inflation growth dims hopes of interest rate cut

China's inflation rate grew more-than-forecast in March as higher fuel and food costs pushed up consumer prices.

Consumer prices grew by 3.6% in March from a year earlier, up from 3.2% in February. Analysts had forecast an increase of 3.3%.

Premier Wen Jiabao has cited inflation is one of China's main economic worries and has set a target of 4% for 2012.

Analysts said the data may prompt the central bank to hold back on monetary policy easing for now.

"I think the stronger-than-expected inflation could slow down the pace of monetary policy relaxing, although the basic direction of policy easing is intact," said Wang Jin of Guotai Securities in Shanghai.

by Nomad on Mon Apr 9th, 2012 at 04:13:33 PM EST
[ Parent ]
U.S. Stocks Decline as Jobs Report Misses Estimates - Bloomberg

The U.S. jobless rate fell to 8.2 percent, the lowest since January 2009, from 8.3 percent, the Labor Department said. Faster employment growth that leads to bigger wage gains is needed to propel consumer spending that accounts for about 70 percent of the economy. Americans worked fewer hours and earned less on average, helping explain why the Fed says interest rates may need to stay low at least through late 2014.

"What it calls into question and what the debate will be about is, once again, what is the pace of the recovery?" Mark Freeman, who oversees about $13 billion as chief investment officer at Westwood Holdings Group Inc. in Dallas, said last week. Fed Minutes

Minutes from the March 13 meeting of the Federal Open Market Committee showed that the central bank will refrain from increasing monetary accommodation unless economic expansion falters or prices rise at a rate slower than its 2 percent target. Concern about Europe's debt crisis intensified as Spain sold 2.59 billion euros ($3.4 billion) of bonds at an auction, less than the maximum target of 3.5 billion euros.

by Nomad on Mon Apr 9th, 2012 at 04:15:43 PM EST
[ Parent ]
Federal Reserve: Fostering Financial Stability (Ben S. Bernanke, April 9, 2012)
Tonight I will discuss some ways in which the Federal Reserve, since the crisis, has reoriented itself from being (in its financial regulatory capacity) primarily a supervisor of a specific set of financial institutions toward being an agency with a broader focus on systemic stability as well. I will highlight some of the ways we and other agencies are working to increase the resiliency of systemically important financial firms and identify and mitigate systemic risks, including those associated with the so-called shadow banking system. I will also discuss the broad outlines of our evolving approach to monitoring financial stability. Our efforts are a work in progress, and we are learning as we go. But I hope to convey a sense of the strong commitment of the Federal Reserve to fostering a more stable and resilient financial system.

...

Broader economic developments can also create risks to financial stability. To assess such risks, we regularly monitor a number of metrics, including, for example, the leverage of the nonfinancial sector. In addition, we use data from the flow of funds accounts to assess how much nonfinancial credit is ultimately being funded with short-term debt.4 This assessment is important because an overleveraged nonfinancial sector could serve to amplify shocks, to the detriment of the functioning of the financial sector and broader economy. Our judgment of how the financial sector is affecting economic activity reflects both information on lenders--most notably, underwriting standards, risk appetite, and balance sheet capacity--and analytical indicators of macroeconomic vulnerability to financial risks. Meanwhile, efforts are under way, both at the Federal Reserve and elsewhere, to evaluate and develop new macroprudential tools and to develop early warning indicators that could help identify and limit future buildups of systemic risk.

In the decades prior to the financial crisis, financial stability policy tended to be overshadowed by monetary policy, which had come to be viewed as the principal function of central banks. In the aftermath of the crisis, however, financial stability policy has taken on greater prominence and is now generally considered to stand on an equal footing with monetary policy as a critical responsibility of central banks. We have spent decades building and refining the infrastructure for conducting monetary policy. And although we have done much in a short time to improve our understanding of systemic risk and to incorporate a macroprudential perspective into supervision, our framework for conducting financial stability policy is not yet at the same level. Continuing to develop an effective set of macroprudential policy indicators and tools, while pursuing essential reforms to the financial system, is critical to preserving financial stability and supporting the U.S. economy.

Now he only needs to read Minsky...

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 10th, 2012 at 05:07:24 AM EST
[ Parent ]
While the Americans organize a Financial Markets Conference
I commend the organizers of this conference for the event's apt subtitle: "The Devil's in the Details."
the Europeans are basking in self-satisfaction
"Mission completed? Consequences of regulatory change on the financial industry" Frankfurt, Germany, 28 March 2012


There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 10th, 2012 at 05:11:32 AM EST
[ Parent ]
ECB: On the cusp: The world economy at a turning point. Strengthening stability at a time of challenge and change. Speech by José Manuel González-Páramo, Member of the Executive Board of the ECB, OMFIF Conference: Frankfurt am Main, 15 March 2012
A central area where the absence of shock-absorbing institutions has been felt is via intra-euro area current account imbalances. These imbalances existed for many years prior to the crisis, but were largely ignored as theory told us that they could always be financed through cross-border financial flows. However, it is now clear that current account imbalances - while not being the only proximate causes of the crisis - are not benign and imply vulnerabilities which can be transmitted to the euro area as a whole.

...

Such negative effects may potentially be better mitigated in political federations given their stronger shock-absorbing institutions. For example, if a particular state in the U.S. were to experience a build-up in private sector liabilities that threatened its local banks, the responsibility for recapitalisation and deposit insurance would fall on the federal government - through institutions like the U.S. Treasury and the Federal Deposit Insurance Corporation. This means that a U.S. state cannot be brought into financial difficulties by a mismatch between the size of its banking sector and that of its local economy, whereas a euro area country can - as we saw in Ireland.

...

It is clear that the way ahead for the euro area cannot involve trying to construct the institutions of a political federation overnight. This implies that the euro area needs a different approach to ensure the smooth functioning of monetary union that can compensate for some of these "missing institutions". This approach has two main pillars.

The first pillar is to strengthen fundamentally the governance procedures which prevent imbalances from arising. With fewer shock-absorbing institutions to mitigate crises when they arise, the euro area has learned that it must become more effective at preventing imbalances. This process has involved tightening the rules for fiscal policies and creating a much needed framework to monitor broader macroeconomic imbalances and competitiveness.

...

I am aware that some criticise this process as asymmetric. While it is clear that the vulnerabilities created by large current account deficits are greater than those of surpluses - and therefore require more urgent remedies - the structural drivers of current account imbalances in surplus countries are also partly being addressed, even if not to the same extent as those in deficit countries. In parallel to the Macroeconomic Imbalances Procedure, for example, the Commission intends to undertake further analysis on the drivers and possible policy implications of large sustained current account surpluses, including trade and financial linkages between surplus and deficit countries. It will also examine ways for further rebalancing current account imbalances, particularly at the level of the euro area, and within the global context. A key theme of the crisis response has also been a renewed focus on structural reforms as embedded in the Euro Plus Pact and Europe 2020 Strategy, which apply to all participating Member States equally.



There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 10th, 2012 at 05:45:22 AM EST
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