Wednesday, September 21, 2011
Italy's Debt Downgraded by S&P; Outlook Still Negative
Standard and Poor's downgraded its unsolicited ratings on Italy by one notch to A/A-1 and kept its outlook on negative, a major surprise that threatens to add to concerns of contagion in the debt-stressed euro zone.
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Panoramic Images | Getty Images Piazza Venezia, Rome, Italy |
The single currency [EUR= 1.3672 
-0.0001 (-0.01%) 
] skidded over half a cent to $1.3606 after S&P said the cut reflected its view of Italy's weakening economic growth prospects.
-0.0001 (-0.01%) ] skidded over half a cent to $1.3606 after S&P said the cut reflected its view of Italy's weakening economic growth prospects. Italy's fragile governing coalition and policy differences within parliament will likely limit the government's ability to respond decisively to the challenging domestic and external macroeconomic environment, the agency said.
"In our opinion, the measures included in and the implementation timeline of Italy's National Reform Plan will likely do little to boost Italy's economic performance, particularly against the backdrop of tightening financial conditions and the government's fiscal austerity program," said S&P.
The move from S&P came as a surprise as the market had thought Moody's was more likely to downgrade Italy first. Moody's last week said it would take another month to decide on its action.
The downgrade came as Greece struggles to meet demands from lenders for yet more austerity measures.
"It's just more of the same negative news," said Stephen Roberts, a senior economist at Nomura in Sydney.
"It only adds to the contagion risk over Greece and has encouraged the flight to safety in markets here," he added, pointing to a sharp fall in the Australian dollar on the news.
S&P 500 futures also dropped 0.7 percent and early hopes for a bounce in Asian shares on Tuesday looked to be still-born now. (Click here for latest futures quotes)
European stocks had already slid on Monday, while yields on Italian and Spanish bonds rose sharply on fears of a Greek default, compounded by the failure of EU finance ministers to agree new steps to resolve Europe's debt crisis at weekend talks.
International lenders told Greece on Monday it must shrink its public sector and improve tax collection to avoid running out of money within weeks as investors spooked by political setbacks in Europe dumped risky euro zone assets.
Finance Minister Evangelos Venizelos held what Greece termed "productive and substantive" talks by telephone with senior officials of the European Union and International Monetary Fund after promising as much austerity as necessary to win a vital next instalment of aid.
Before the talks, which will resume on Tuesday evening after meetings of experts through the day, the IMF representative in Greece spelled out steps Athens must take to secure the 8 billion euro loan payment it needs to pay salaries and pensions next month.
Trump Now Takes Gold as a Security Deposit
Trump Now Takes Gold as a Security Deposit
Donald Trump, chairman and president of The Trump Organization, explains why he will accept gold as a security deposit in lieu of U.S. dollars.
SEC Rule Would Ban Banks and Hedge Funds From Betting on Investor Losses
In the lead-up to the 2008 sub-prime mortgage crisis, banks like Goldman Sachs bet against their clients with collateralized debt obligations and were rewarded handsomely. A new Securities and Exchange Commission (SEC) proposal would make this illegal.
In 2007, as the sub-prime mortage crisis was looming, Goldman Sachs and hedge funder manager John Paulson teamed up to bundle 3,000,000 sub-prime mortgage loans together into a collateralized debt obligation called ABACUS 2007-AC1, and then shorted mortgages to unwitting investors. John Paulson made $1 billion (Goldman took a $15 million cut) and investors lost $1 billion.
According to The New York Times, 25 such investment vehicles were created by Goldman Sachs in order to shield the firm from massive losses in mortgages. However, they turned out to be rather great investments instead of losses. (Deutsche Bank and Morgan Stanley also created these CDOs).
At issue in the SEC complaint was whether the firms who selected the mortgages intentionally chose those most likely to fail and shine the shit for their investors.
more
In 2007, as the sub-prime mortage crisis was looming, Goldman Sachs and hedge funder manager John Paulson teamed up to bundle 3,000,000 sub-prime mortgage loans together into a collateralized debt obligation called ABACUS 2007-AC1, and then shorted mortgages to unwitting investors. John Paulson made $1 billion (Goldman took a $15 million cut) and investors lost $1 billion.
According to The New York Times, 25 such investment vehicles were created by Goldman Sachs in order to shield the firm from massive losses in mortgages. However, they turned out to be rather great investments instead of losses. (Deutsche Bank and Morgan Stanley also created these CDOs).
At issue in the SEC complaint was whether the firms who selected the mortgages intentionally chose those most likely to fail and shine the shit for their investors.
more
Tuesday, September 20, 2011
REPORT - Greece Holding Emergency Debt Talks
Watch Video
Greek Prime Minister George Papandreou cancelled a planned visit to the United States on Saturday to deal with a deepening crisis at home, days before European Union and IMF inspectors decide on further funding for the debt-ridden country.
Finance Minister Evangelos Venizelos rushed to allay fears the cancelled trip signalled imminent default, saying such talk was "ridiculous", but the conservative opposition seized the opportunity to demand snap elections, fanning fears Greece lacks the will needed for tough measures ahead.
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SAN FRANCISCO (MarketWatch) -- Greece's government was meeting over the weekend to assess a new warning that future euro-zone aid will be withheld unless it can bring its unruly budget deficit into line, according to a media report Sunday. Prime Minister George Papandreou aborted a planned trip to the U.S. this week to preside over emergency meetings in Athens to identify new savings that will convince other euro-zone governments that targets can be met, The Wall Street Journal reported. Without fresh aid, Greece will run out of money by mid-October, the Journal said.
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Why the Euro bailout will fail...
Brilliant is an understatement. Start watching at the 30-second mark.
From satire comes wisdom. This short clip perfectly encapsulates the madness of bailouts. Clarke & Dawe on the European debt-guarantee circle jerk.
Finance Minister Evangelos Venizelos rushed to allay fears the cancelled trip signalled imminent default, saying such talk was "ridiculous", but the conservative opposition seized the opportunity to demand snap elections, fanning fears Greece lacks the will needed for tough measures ahead.
--
SAN FRANCISCO (MarketWatch) -- Greece's government was meeting over the weekend to assess a new warning that future euro-zone aid will be withheld unless it can bring its unruly budget deficit into line, according to a media report Sunday. Prime Minister George Papandreou aborted a planned trip to the U.S. this week to preside over emergency meetings in Athens to identify new savings that will convince other euro-zone governments that targets can be met, The Wall Street Journal reported. Without fresh aid, Greece will run out of money by mid-October, the Journal said.
---
Why the Euro bailout will fail...
Brilliant is an understatement. Start watching at the 30-second mark.
From satire comes wisdom. This short clip perfectly encapsulates the madness of bailouts. Clarke & Dawe on the European debt-guarantee circle jerk.
WATCH LIVE - Geithner On Obama's Deficit Speech
WATCH LIVE
UPDATE - LIVE Presser has concluded. We will post video as soon as it becomes available.---
Treasury's Tim Geithner is taking questions now from the White House press room.
Lordly Geithner castigates Europeans - Marketwatch
Snip:
LONDON (MarketWatch) — He came, he saw, he castigated.
What a pleasingly lordly duty for the American Treasury secretary to turn up in Poland and rebuke the finest of Europe’s finance over their painful failure to resolve the euro debt crisis.Only too keen to distract attention from his own problems, Geithner travelled to the once-German city of Wroclaw to indulge in Schadenfreude. Only two days previously, Chinese Premier Wen Jiabao, too, reminded the Europeans of their vulnerability. But he took an ostensibly more constructive approach, telling an international audience in China that Beijing was willing “to extend a helping hand and increase our investment,” but demanding political concessions on trade.
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