Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand including news European officials have approved a fresh 8 billion euro loan to Greece to stop it from running out of cash next month.
The much-debated issue of whether Greece would get the next tranche of its bailout was settled overnight, but the troika of officials said Greece continued to need to do more to restructure its economy. Greece's economy is still contracting, which is increasing the burden of its debt relative to the size of its economy. See more here at Reuters.
Meanwhile, outgoing European Central Bank President Jean Claude Trichet has warned that the financial crisis is turning systemic and decisive action is required.
“The crisis has reached a systemic dimension,” Trichet told European lawmakers in Brussels.
“Sovereign stress has moved from smaller economies to some of the larger countries. The crisis is systemic and must be tackled decisively," Trichet was quoted as saying in this Bloomberg report.
The next three weeks are shaping up as crucial in the fight to save the euro and prevent stress in Europe's banking system turning into a system-wide meltdown that derails the global economic recovery.
German Chancellor Angela Merkel and French President Nikolas Sarkozy have set themselves a deadline of a G20 summit in Cannes on November 3/4 to propose a recapitalisation of European banks and the creation of a 'Big Bazooka' fund to buy bonds of stressed Southern European governments.
But there are big hurdles to jump before any euro rescue can be assured. The European Central Bank has to decide whether it provides the lending to bolster the 'Big Bazooka' fund, a decision has to be made on how big any Greek bond writedowns will be, and also European governments will have to decide how much capital is pumped into European banks, which banks need it, and who will pay for it.
Meanwhile, a summit of European leaders planned for this weekend has been delayed for five days until October 23 as leaders in the 17 nation eurozone try to hammer out these details.
European stocks closed virtually flat, with much attention on an upcoming vote in the Slovakian parliament, which has the potential to block a previous rescue plan. See more here at Bloomberg.
Meanwhile in China, a state fund went on a buying spree yesterday to bolster Chinese bank prices in Hong Kong. Bank stocks have slumped in recent weeks on growing fears that a crackdown on official lending over the last year has forced many developers into the arms of loan sharks and many of those loans were going bad. See more here on the state fund buying here at Bloomberg.
There have been reports in recent weeks that dozens developers and business owners were disappearing and committing suicide as their companies collapsed under the weight of these loans, often with interest rates of over 30%.
But UBS analysts' said overnight the worst may be over as the city of Wenzhou, where the worst of the loan sharking was happening, had stepped in to provide credit, Bloomberg reported.
The Hang Seng index closed up 2.4% on the state fund buying of Chinese banks.
The New Zealand dollar was firm over 78 USc this morning. The Dow was down around 35 points in the last hour of trade.
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