Beleaguered savers will see £43billion wiped off the value of their nest eggs by November 2012 thanks to record low interest rates and soaring inflation, calculations for This is Money show. The Bank of England meets on Thursday to decide whether to raise base rate from its record low 0.5 per cent and, in turn, give a kick to savings rates. for more click here
The window of opportunity for stabilising, or even saving, the eurozone is closing quickly. As EU leaders gear up for a series of key meetings this week, Open Europe has published a new briefing looking at the short-term options available to the eurozone for tackling the most immediate crisis.
Open Europe argues that Greece should default on 60% of its debt through a managed restructuring, and that the planned second Greek bailout should be scrapped altogether, replaced by a limited transition fund designed to control the default. This would radically reduce the burden on taxpayers. Portugal should simultaneously take a 25% write-down on its debt. for more click here
Moody’s has become the latest agency to downgrade Spain’s debt rating, warning that no “credible” resolution to the country’s economic crisis had yet emerged. for more click here
A key Bank of England policymaker has contradicted the public statements of senior bankers by revealing that some privately expect the taxpayer to pick up the tab in the event of another financial crisis. for more click here
Well, that didn’t take long.
Markets rebounded on Tuesday night after the Federal Reserve promised to keep interest rates low for two years.
Yesterday they lost practically all the rebound gains, as panic in the eurozone switched to France, and banks in general.
Even although all three major credit ratings agencies said they had no plans to downgrade France’s AAA rating, worried investors just kept selling, with the Dow Jones ending the session losing another 500-odd points.
So what’s the problem?
Washington may have averted a debt default by compromising on how to cut the US budget deficit, but underlying problems remain and those economic woes are driving a global search for an alternative reserve currency. for more click here
The European money markets have begun to seize up as pressure mounts on the Italian and Spanish banking systems, tracking the pattern seen during the build-up towards the financial crisis in 2008.for more click here
Friday’s news on GDP shows the double dip has arrived — an expansion of only 1.3 percent and consumer spending up 0.1 percent in the second quarter. Astonishingly low by any account. The debt ceiling trouble and lack of a longer term resolution to the deficit will make it worse. for more click here
It’s make or break time for the eurozone.
Again.
Stop yawning at the back there. Seriously, this time it’s really important. The International Monetary Fund (IMF) says so. And our own chancellor, George Osborne, is warning the Europeans to “get a grip”.
Even Barack Obama has been on the phone to Angela Merkel. Although given that the US is on the verge of defaulting on its debt too, she might have told him to clean up his own backyard before complaining about the state of hers.
Anyway, apparently the French and the Germans have agreed on a solution to the crisis. We’ll find out all about it later today after Europe’s leaders have all had their latest chinwag in Brussels.
(more…)
Amid all the excitement over Greece last week, very few people noticed the tale of another dodgy debt going bad, many miles away.
Chinese news site, Caixin reported that the company building toll roads in the Yunnan province in southwest China had failed to repay its debts. Income from toll roads fell short of hopes, meaning the company couldn’t repay the loans granted to it by various banks.
In the end, the local government bailed it out. But as one source told Caixin: “the issue has merely gone from [being] on the table to [being] under the table”.
Why does this matter? Because it might be the tip of the iceberg. China’s banking system is riddled with loans made on optimistic assumptions that could turn bad very easily.
Being saddled with a malfunctioning banking system could in turn slow China’s economic growth sharply. What would that mean for the rest of us?
(more…)