An Italian security van was robbed in Italy by armed gunmen. Approximately €10 million in loot was stolen, including a number of gold ingots. The gunman fired a number of shots from their arms, Kalashnikov rifles, but no one was hit. The robbers escaped by car, and the van was later found in Switzerland.
Andreas Artemis says his resignation from the Bank of Cyprus was due primarily to the fact he was left out of negotiations regarding his bank. He says he was at the mercy of the Troika, who acted to penalize both banks and banks’ depositors. The reaction of the Bank of Cyprus to Artemis’s resignation, was to give him time to think, saying they would only accept the resignation if Artemis did not withdraw it within a week.
For their part, Fitch has already cut the country’s credit rating, and to add further injury, cut the bank’s rating as well. Other European officials are now criticizing one another — Benoît Coeuré called Jeroen Dijsselbloem, “wrong” for suggesting the Cypriot model may be applied elsewhere in the EU. So, while leaders and administrators in the EU argue and criticize one another, the rest of the PIIGS continue to trudge on toward their unknown resolutions.
A store in Australia seems to have gotten ticked about people who window shop in their store. So, they have decided the consumer ought to pay them — even if they do not but anything! The store wants $5 just to allow the shoppers to view what the store is selling. If the shopper decides to purchase anything, the money will be refunded. If the shopper decides they do not want to buy anything, the $5 fee is forfeited.
The Dow closes in on new all-time highs this week, as the United States’s productivity and employment/welfare numbers continue to remain slow to improve. While workers with retirement accounts may celebrate, the masses of already retired folks continue to shudder as interest rates force them into stocks and other riskier investments.
The Fed will, at a future point, sell all the assets that they have purchased to bolster the faltering economy. Even Warren Buffett has mentioned that investors are sitting on the edge of their seats, waiting for a change in Federal Reserve policy. Potential Fed selling may lead to a domino-like mass of other sellers, forcing the Dow to drop precipitously.
These people voted for Obama, they need to be made aware of the cost of big government. Higher Taxes, those who will get hit the worst are those who are most vulnerable. So you know what they voted for Obama, time to let them know elections have consequences. You had the opportunity to elect…
Ratings house Fitch, has cut Argentina’s bond rating by five notches, leaving the country looking precariously close to a new default (Argentina also defaulted in 2002). As investors take heed of the ratings cuts, expect financing to become harder for Argentina, and funds to continue to tighten. A judge in the U.S. has already ordered the government to create a $1.3 billion fund for holders of Argentine bonds.
For their parts, Argentine politicians decried the judge’s order. Fitch based their cuts on the ongoing global recession, and a massive slowing of the Argentine economy this year. Argentina has Latin America’s third-largest economy.
France lost their prized AAA credit rating from Moody’s this week, leaving the country with one top rating, from their domestic company, Fitch. The rating agency cited: a lackluster labor market and France’s possible reaction in the face of continuing European financial and credit distresses. France had been on “negative-outlook” for nine months previously.
The current French government blames former government leadership for the downgrade. Despite plans of Francois Hollande to force changes designed to rebuild the French economy and labor market, past attempts have had mediocre effects at best.
Writer Nikos Konstandaras writes a great piece (“Delusions in the face of danger”)about the fragile state of the Greek economy and the government’s ongoing political strife. He writes about the inability of the people to face reality and recognize the dire situation that they now face. While politicians promise an easy solution, or even flagrantly lie about the situation, the people still seem to have faith in the politicians that created the mess.
The United States, with its ongoing, piecemeal debt-ceiling raises, and partisan bickering, draws a great parallel. While the European Union seems to also be unable to come up with a viable solution, the government of Greece falls further into ruin. The U.S. government, continuously stressing how tax hikes are the only solution (or that massive spending cuts are the only solution), mirror the Greeks’ folly.
The saying goes, “Time is money”, and time is quickly running out for both countries to fix their problems.
Frances’ new Prime Minister, Francois Hollande, and his socialist government, have doubled down on their promise to tax any income over €1 million Euros, at a 75% rate. Critics continue to warn of the massive negative effects that this will have on the French economy - Nile Gardiner even called it “economic suicide.” There is plenty of evidence of French wealth already leaving the country and settling in Britain and other countries, dodging the tax before it is implemented. The author also mentions that the French people knew fully what would await them, when they voted Hollande into office - now let’s see if the people recognize the effects of their actions are of their own creating, or if they will find another scape-goat.
As a result of the Dodd-Frank legislation, the revelations of The Federal Reserve’s lending to other large banks was delayed for two years. It has know been shown that well-known banks (like UBS, Mitsubishi UFJ, and Royal Bank of Canada) all borrowed from the Fed to cover liquidity shortfalls, in 2010. Amounts from $11 million to $36 million were the typical loans, paid back with interest. Several small banks were Fed. borrowers as well, accounting for as much as a $70 million overnight, loan.
Hundreds of thousands, and perhaps a million, angry Catalans took to marching in the streets as the Spanish financial crisis continues to worsen. Marchers blamed the Spanish central government for continually draining the wealth away from the Catalonian region. The marchers also held signs calling for the increase of Catalan autonomy from both Spain and the rest of Europe. This comes on the heels of most of the Spanish regions seeing their debt downgraded to junk status. This makes Catalonia a victim of the rest of Spain’s poor economic decisions, and the people are not pleased. With this backdrop, Catalonians are at least, seeking increased tax autonomy, if nothing else.
The outlook for the Spanish economy is so dire, Spanish citizens are withdrawing any money that they can, and moving out of the European Union. Rather than risking being stuck with devalued Pesetas, Spaniards are exchanging them (or Euros, at the moment) for whatever other currency that they feel provides more safety or preservation of their capital.
In July alone, Spanish bank withdraws accounted for $94 billion, or 7% of the Spanish annual economic output. Worse than just the financial flight, seems to be the fact that the flight of people consists of mainly educated and professional citizens. More and more capital is also being sunk into failing banks as Spanish mortgages and real estate falls further and further into the red. Despite the European Union’s continued dumping of funds into Spanish banks, the capital flows out seem to continue, and some people think that no amount of bailing out will stem a full panic.
Mark Matthews, from the firm Julius Baer, says if democrats again win the White House, he will steer clear of the markets, because he believes that the GOP would be far more beneficial for the markets. He believes that Romney will be far better for the markets, and the markets would react very negatively to a democratic win, and the prospect of an additional four years of democratic policies. While people may be a little skiddish about Romney’s insistence on no more quantitative easing, and reluctance to reappoint Ben Bernanke as the Chairman of the Federal Reserve, overall, Romney’s seen as an asset.
The author notes the usual methods that are used to reign in and charge large, international banks, who are suspected of various acts of wrongdoing. In the United States, there are typically state and federal governmental entities who work together, and coordinate their efforts - not so with Benjamin Lawsky, it seems. He’s gone out on his own, and seems to have forsaken any federal help, and possibly wrecked federal investigations, by going it alone in his role as a New York state regulator.
His actions have ruffled feathers in Britain and at home in the U.S., and have some people American regulators think he may have overstepped his authority, and should have sought to use the powers of federal authorities. The British wonder if their banks are not being targeted by someone looking to make a name for himself. Standard Chartered stock had lost 23.5% of its value on the initial news.
New concerns about Spanish regional problems are coming to light, and leading to down markets, both in the European Union member states, and the United States. Valencia requested financial assistance from the Spanish government, sending shivers across markets, and seemingly causing more weakening of the Euro against other currencies. Concerns continue to grow as oil looked to build upon it’s biggest rally since February.
Despite the rough-numbers coming out of China, some professionals think the real numbers for Chinese growth are lower still - by as much as another 0.6% worse. While the Chinese government attempts to re-fire their economy, all their government spending doesn’t seem to be doing the trick. The Chinese government also saw retail sales and industrial production numbers continue to cool. Partial blame for the lackluster numbers is put on the current, ongoing crisis in the European Union, which is the Chinese’s largest import partner. Not all news seems to be bad, as real estate transfers are up, and more monetary policy issues seems finally be gaining momentum.
Spain’s faltering economy continues to chug headlong into some sort of bailout, last-minute saving, or other financial scheme. Today the Spanish Economic Minster, Luis de Guindos, requested an additional €100 billion (the maximum amount that he could request), for use in recapitalizing Spanish banks. The Spaniards are requesting the funds be given to the Spanish government, who would then disburse them to the areas of most dire need - but the Germans balk at that proposal. Some feel directly funding the banks, bypassing the Spanish government, would be more efficient and faster, by avoiding bureaucratic red tape. Any loans would likely come conditionally, and require a separation of sound assets and “toxic” ones.
With the past three years of recession (and extremely anemic “recovery”), the American middle class has seen their average income recede to levels from 1992. The article mentions that things that were previously seen as “The American Dream” were either illusory, or turned into things that proved impossible to obtain, and were ultimately costly. Even assets that were wholly owned by the middle class lost much of their value (stocks, autos, and homes). So many Americans put so much of their income as investment in their homes, when the housing market tanked, the value evaporated too. Even with the recent stabilizing of falling housing prices and falling unemployment numbers cited by the administration, the results of the survey weren’t affected.
