Here's my summary of the key news overnight in 90 seconds at 9 am, including news that just when you thought the Cyprus euro crisis was winding down, a new one is starting - in Slovenia.
True it's not the basket case that Cyprus is, but it's not good either. The banking sector has seen bad debts continue to rise, with non-performing loans in the 20% region.
Most of this is due to non-financial corporates, and ties into another flaw for them. Slovenia has an SOE economy: many of the banks are publicly-owned and the large state-sector is unreformed. Close relationships between the banks and the non-financial sector have undermined risk management and had a detrimental impact on bank balance sheets. Basically it needs a bailout.
These crises undermine the perception of risk for the euro. And that raises the costs of borrowing for sovereigns, especially some of the shaky majors. Spain is now spending 30% of the taxes it collects on debt servicing. Slovenia might be the next, but Spain can't be far behind. And Italy's political crisis deepens. As Mervyn King said very recently, the euro crisis is far from over.
In Britain, regulators have ordered major banks to raise an extra £25 billion in capital.
Everyone is watching with disbelief. Developing nations have decided to do something.
Brazil, Russia, India, China and South Africa approved a US$100 billion fund to combat currency crises, but they failed to reach agreement on financing for a development bank, an institution that would be an alternative to the IMF and World Bank.
In Australia, home buyer confidence has fallen to its lowest level since 2008. And on the banking front, they have decided to scrap their industry-based panel that sets its interbank borrowing rate. Banks are quitting rate-setting panels worldwide and no doubt the NZ Financial Markets Association will need to make a similar change here soon.
The Kiwi dollar starts today marginally lower at 83.6 USc, 80.1 AUc, and the TWI is up at 76.9.
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8 Comments
If I had a decent wad of cash right now and no debt, I think I'd be buying metals.
Cyprus clearly shows the GFC is getting worse and with that 40~80% haircut talked about the impact is going to be huge and not unique. Just listen to Wolly's link to the torygraph timeline for the lying evasion and desperation.
Not repeated elsewhere? yeah right., might come very very fast ie the entire EU on a bank freeze one weekend real soon...........
regards
Sharpen up there Notaneco...! Stevo has a decent wad of metal , he's wanting to unload at a much better price than where it's heading.......
Closet capitalist..? why that boy is shifterier than Buffet himself, trying to boiler the team here.
You will notice the subtley of wolly's posts as well.....the scamps.
"Professor Claudia Senik from the Paris School of Economics has written a bombshell of an article for The Local magazine which argues that a) the French are miserable and b) the only way to shake off their ennui is to become more like the British"
http://www.telegraph.co.uk/news/worldnews/europe/france/9954894/Why-the-miserable-French-should-put-the-accent-on-English.html
Harrrrrrrrrrrrrhahahaaahaaaa
"Five shipping containers reportedly filled with billions of euros were delivered to the central bank in Nicosia late Wednesday, an AFP photographer said."
http://www.globalpost.com/dispatch/news/afp/130327/draconian-controls-c…
Yeah well, the Finance Ministers of the EU have decided to make stockholders, shereholders, and large depositors, responsible for their bank failures whilst protecting the small depositors.
Anybody with less than than de "guarantied deposits" sum, should be alright...
Yeah, RIGHT!!
HGW
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