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PFTF June 12 2012 Greek Blackouts Risked get prepared
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Post PFTF June 12 2012 Greek Blackouts Risked get prepared
Banks Brace for Moody's Downgrades

Moody's Investors Service is expected to announce next week downgrades of global banks' bond ratings, based largely on the banks' diminished profitability as they continue to struggle in a post-financial meltdown world.

The Moody's review of 17 global banks with capital-markets businesses is weighing on stock prices and angering bankers, who insist investment banking--which is a part of capital-markets operations--remains a valuable business. They downplay the impact of any rating change, which could cost them billions of dollars in additional collateral for derivative trades.

Citigroup Inc. (C) Chief Financial Officer John Gerspach told bank clients last month the approach Moody's takes toward bond ratings "is backward looking and does not provide adequate credit to the strength and diversity" of Citi's business or its main banking subsidiary, Citibank, according to a presentation posted on Citi's website.

Rather than simply looking at the credit ratings of Moody's and the other two major rating firms--Standard & Poor's and Fitch Inc.--investors take an "increasingly complex landscape" into consideration when they price debt. In addition to bond ratings, investors look at capital ratios, loan-loss reserves, spreads of bonds and credit default swaps, earnings and business strategy, and macroeconomic factors and geography, according to the presentation.

One important market metric--the price of insuring bank debt--suggests investors indeed are looking beyond bond ratings when they gauge risk levels.


Read more: http://www.foxbusiness.com/news/2012/06 ... z1xTzWn400

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Mon Jun 11, 2012 6:21 am
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Post Re: PFTF June 12 2012
In Europe, Banks Borrowing to Stay Ahead of the Tide

As Europe works to prop up Spain’s wobbling banks, its leaders still face a problem that plagues the Continent’s increasingly vulnerable financial institutions — a longstanding addiction to the borrowed money that provides the day-to-day financing they need to survive.


The weakness afflicts banking systems including that of Italy, whose fragile economy is even bigger than Spain’s and whose banks also rely heavily on borrowed money to get by. In Spain’s case, the flight of foreign money to safer harbors, combined with a portfolio of real estate loans that has deteriorated along with the economy, led to the collapse of Bankia, the mortgage lender whose failure set in motion the country’s current banking crisis.

Europe hopes that this latest bailout — worth up to 100 billion euros that will be distributed to Spain’s weakest banks via the government in the form of loans, adding to their long-term debt — can resolve the problem.

Financial markets were once again on edge, with analysts cautiously welcoming the stopgap development, while leery about whether the bailout would hurt or help Spain’s borrowing costs and whether the coming Greek elections would inflame the markets. In Japan and Hong Kong, markets were up around 2 percent early Monday.

“It’s another step in a long process,” Charles Kantor, a portfolio manager at Neuberger Berman in New York, said on Sunday. “The Spanish banks, like the banks in France and Italy, all need capital.”

“The bigger question is whether Spain itself needs a bailout,” he added. “For now, though, the European patchwork approach of dealing with the issues is still working.”

Investors and analysts worry that highly indebted banks in other weak countries like Italy might face constraints similar to those of Spain in the months ahead.

http://www.nytimes.com/2012/06/11/busin ... &ref=world

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Mon Jun 11, 2012 6:27 am
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Post Re: PFTF June 12 2012
Focus Shifts to Greece After Spain Secures Bank Bailout


The focus in the euro crisis was shifting Monday back to crucial Greek elections, as markets greeted Spain’s financial sector bailout with relief.

Greeks head to the polls on Sunday for a vote that will help to determine if the country remain in the euro, and indeed if the euro can hold together. After a May 6 election left parties unable to form a government, new elections were called.

Recent polls have showed the pro-bailout New Democracy party marginally ahead of the anti-bailout Syriza party, but even should New Democracy win, it still faces a formidable task in forming a coalition and actually governing a country with its economy in tatters and roiled by growing social strife.

In Spain, banking shares led stocks higher after the government of Prime Minister Mariano Rajoy agreed with euro members Saturday on a 100 billion euro, or $126 billion, infusion of capital for the financial sector.

In morning trading, the Madrid benchmark Ibex index rose 4.1 percent. The Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 2.4 percent, while the FTSE 100 index in London rose 1.6 percent.

Trading in equity index futures suggested Wall Street stocks would open with a bounce. The Standard & Poor’s 500 index gained 0.8 percent on Friday.

The euro gained to $1.2610 from $1.2517 late Friday.

Spanish government debt rallied. The yield on the 10-year bond fell 19 basis points to 5.98 percent, back down below the 6 percent level seen as signaling major market stress.

A key consideration in the bailout is how investors will judge the Spanish government’s solvency if it is required to add 100 billion euros of debt guarantees to its already strapped finances. Another open question is whether the funds will come from the European Stability Mechanism, the permanent bailout fund that is supposed to come on line in July, or the European Financial Stability Facility, the existing bailout fund.

The Spanish Economy Ministry said Monday in a statement that the aid “will not only not undermine the present conditions of the current stock of Spanish public debt: it will also reinforce its overall solvency.” The government maintains that it will be able to continue regularly auctioning debt to manage its accounts.

Mr. Rajoy has sought to characterize the funds — for which details are not yet final — as simply a line of credit, rather than the type of bailout that Ireland, Portugal and Greece have received.


http://finance.yahoo.com/news/focus-shi ... 09322.html

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Mon Jun 11, 2012 8:36 am
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Post Re: PFTF June 12 2012
Greek Blackouts Risked as Power Companies’ Cash Runs Out: Energy


Greece faces the threat of rolling power blackouts as the economic crisis leaves utilities without cash to pay for natural-gas imports and operate power stations.

Regulators will meet with Greece’s power market operator as early as today to discuss an emergency loan of 300 million euros ($375 million) to cover payments for gas imports from Russia’s OAO Gazprom (GAZP), Turkey’s Botas AS and Italy’s Eni SpA. (ENI) The country’s largest power producer is almost out of money and likely to default after unpaid accounts jumped more than 50 percent in a year, according to Standard & Poor’s.

As Greece prepares for a second national election in six weeks, a vote that may determine whether it remains in the euro, the collapse of the energy sector has emerged as a risk for a country that imports most of its oil and gas. At the start of the main vacation season, power cuts that leave tourists trapped in dark hotels without air conditioning would be a further blow to an economy in its fifth year of recession.

“Blackout is definitely a risk,” Olivier Jakob, managing director of Zug, Switzerland-based energy consultant Petromatrix GmbH, said in a telephone interview. “Greece is going to face higher costs because suppliers will want to have better creditor protection. And if the country cannot pay the bill, well, it’s a real problem.”

Public Power Corp SA (PPC), the biggest electricity producer, is on the verge of default, Standard & Poor’s analysts Nicolas Rivier and Vittoria Ferraris said in a June 7 report. PPC, as the Athens-based company is known, has seen cash flow drop as unemployment and falling wages leave many Greeks unable to pay power bills. A lack of cash to pay operating expenses may force the closure of some power stations.

Limited Liquidity

PPC spokesman Kimon Steriotis said there was no immediate danger of power cuts because coal-fired stations were well- supplied and reservoirs at hydroelectric plants full. Power plants on islands not connected to the national grid also had ample fuel, ensuring power supplies during the tourist season, he said in an e-mail. He didn’t comment on the prospect of the company defaulting.

http://www.bloomberg.com/news/2012-06-1 ... nergy.html

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Mon Jun 11, 2012 8:39 am
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Post Re: PFTF June 12 2012
Canada to tell G20 austerity and growth both possible



Canadian Prime Minister Stephen Harper will preach the benefits of austerity to world leaders when they gather in Mexico next week, arguing that tight budgets and healthy economic growth are both possible.

In a speech on Monday, Harper came down firmly on the side of Germany, which has emphasized the need for fiscal discipline as opposed to economic stimulus measures.

But as he seeks to gain influence ahead of the June 18-19 summit of the Group of 20 advanced and emerging nations, he framed the austerity-versus-growth debate as a "false choice".

"This will be Canada's message at the G20 summit: economic growth and fiscal discipline are not mutually exclusive; they go hand in hand," Harper said in the prepared text of his speech to a business audience in Montreal.

There is a growing push in the euro zone, led by newly elected French President Francois Hollande, to do more to stimulate growth and not just focus on reducing deficits. Harper met with Hollande in Paris last week.

Germany, the European Union's paymaster, has taken a hard line in favor of tough fiscal targets over the past several years, but it has recently softened its tone and agreed to allow Spain more time to cut its deficit as Madrid battles a deep banking crisis.

In the United States, President Barack Obama talks about the need to stimulate the faltering economy but has few options due to opposition from the Republic majority in the House of Representatives.

Harper said his Conservative government's approach should be a model for the rest of the world, portraying it as a balance between fiscal discipline and growth-boosting measures such as free trade agreements and changes to employment insurance, pensions and immigration policy.

"The Canadian approach is what the world needs," he said.

Canada has a small fiscal deficit of about 1.5 percent of gross domestic product, and plans to balance its budget by the 2015-16 fiscal year.

Harper has bluntly refused to contribute additional money to the International Monetary Fund to cope with Europe's debt crisis, saying European countries are rich enough to handle the problem.

On Monday, he applauded the euro zone's agreement to lend Spain up to 100 billion euros ($125 billion) for its troubled banks.

http://ca.finance.yahoo.com/news/canada ... 23036.html

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Mon Jun 11, 2012 6:55 pm
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Post Re: PFTF June 12 2012
Euro Drops as Spain’s Bailout Fuels Debt-Crisis Concern

wait a minute I thought this great announcement was suppose to fix all the problems eee


The euro fell against most of its major peers as Spain’s bailout spurred concern that the sovereign-debt crisis is deepening as it spreads among indebted nations before Greek elections June 17.

The 17-nation currency earlier rose, touching a two-week high, after Spain asked for as much as 100 billion euros ($126 billion) to save its banking system, making it the fourth member of the currency bloc to seek a rescue. The bailout helped move Italy to the front lines of the crisis, as bets increased Europe’s third largest economy may be the next one to succumb. Norway’s krone strengthened as consumer prices rose more than economists forecast last month.
Given that we’ve decisively rejected any sustained price action above $1.26 and have a lot of unanswered questions around the Spanish bank package and the Greek elections this weekend, the near-term prognosis for the euro is not good,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. (WBC) in New York.

The euro fell 0.3 percent to $1.2482 at 5 p.m. New York time. It earlier climbed as much as 1.2 percent to $1.2671, the highest since May 23 and the biggest intraday advance since Nov. 30. The euro fell 0.3 to 99.16 yen after rising as much as 1.5 percent. The dollar declined 0.1 percent to 79.44 yen.

Futures Wagers

Futures traders increased net bets against the shared currency versus the dollar to a record high for a fifth straight session last week. So-called net shorts rose by 11,003 to 214,418 contracts for the period ended June 5, Commodity Futures Trading Commission data showed.

“The move up in the euro overnight was a healthy move because it probably took out a lot of weak shorts,” said Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia’s Scotia Capital unit. “Seeing it back below $1.25 here today is very disappointing price action, and I wouldn’t be surprised to see the euro continue its grind lower this week going into the Greek elections over the weekend.”

http://www.bloomberg.com/news/2012-06-1 ... -fund.html

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Mon Jun 11, 2012 7:00 pm
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Post Re: PFTF June 12 2012
Is Spain's €100bn bailout just a 'sticking plaster' for eurozone crisis? Fears grow as bounce in the world markets fizzles out


The euro tumbled last night and stock markets went into reverse as the £80billion bailout of Spain’s banks was branded a ‘sticking plaster’.

Spain became the fourth country in the crisis-torn eurozone to ask for international aid but this did little to allay fears that the region is heading for catastrophe.

The single currency fell more than one per cent against sterling – making £1 worth 1.24 euros – and shares in Europe gave up early gains as euphoria over the bailout quickly evaporated.

The FTSE 100 index closed down 2.71 points in London at 5432.37, having been 100 points higher at the start of the day.
Ruth Lea, economic adviser to the Arbuthnot Banking Group, said: ‘The bailout of Spain’s banking system is yet another sticking plaster on the eurozone’s fractured edifice, for which there are still no long-term plans.’


Spain – the fourth-largest economy in the eurozone – was forced to ask for a bailout to prop up a banking system saddled with £150billion of toxic property loans. Spanish lenders have been crippled by a spectacular property crash, a double-dip recession, and unemployment of nearly 25 per cent.
The financial markets initially welcomed the deal but investors soon sounded the alarm over the impact the bailout will have on the country’s mountainous debts. Borrowing costs in Spain and Italy soared as the crisis threatened to spread from Madrid to Rome. The crucial 10-year bond yield in Spain – the amount the government pays to borrow – rose to 6.5 per cent. Italian bond yields were also back above six per cent, closer to the seven per cent danger zone.


Read more: http://www.dailymail.co.uk/news/article ... z1xZbOJOb3

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Tue Jun 12, 2012 5:22 am
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Post Re: PFTF June 12 2012
Syrian children used as human shields, says UN report


Syrian troops have tortured children and used them as human shields on tanks to prevent attacks by opposition forces, a UN report says.

The UN's Special Representative for Children and Armed Conflict said children were being tortured in detention and slaughtered in massacres.

The report said rebel forces were also using children on the front line.

Separately the US has accused Syria of planning another massacre, while the UN chief condemned the rising violence.

'Torture marks'

The UN special representative, Radhika Coomaraswamy, told the BBC her team had returned from Syria with "horrific" reports.

She said she had never seen a similar situation where children were not spared - and even targeted - in a conflict.

"Many former soldiers spoke about shooting into civilian areas, seeing children, young children being killed and maimed," she said.

"We also had testimonies and saw children who had been tortured, and who carried the torture marks with them. We also heard of children being used - this was recounted to us by some children - of being put on tanks and being used as human shields so that the tanks would not be fired upon."

However, she also criticised the opposition Free Syrian Army for endangering children.

"For the first time we heard of children being recruited by the Free Syrian Army mainly in medical and service orientated jobs but still on the front line," she said.

Ms Coomaraswamy said the suffering inflicted on children in Syria was unusual even for combat situations.

http://www.bbc.co.uk/news/world-middle-east-18405800

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Tue Jun 12, 2012 5:36 am
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Post Re: PFTF June 12 2012
India's industrial output grows less than forecast


India's industrial output rose by less than expected in April, adding to concerns about the health of the country's economy.

Output rose by 0.1% from a year earlier, much less than projected growth of 1.7%.

It comes a day after ratings agency Standard & Poor's warned that India may lose its investment grade status.

Analysts said the weak numbers may prompt the central bank to introduce fresh measures to boost growth.

"The data clearly points to industrial growth being extremely weak, and it is in clear need of monetary as well as fiscal support," said Abheek Barua, chief economist at HDFC Bank.

"There is a case for a sharp move from the Reserve Bank of India."

India's Finance Minister, Pranab Mukherjee, said the latest numbers were "disappointing" and that the government needed to "take steps to give positive signals".

Political differences

The weak output numbers are the latest in a series of bad news for India.

Data released last month showed that its economy grew at an annual rate of 5.3% in the first quarter, the slowest rate in almost a decade.

A widening trade gap and poor investment were among the key contributors to slowing growth.

http://www.bbc.co.uk/news/business-18406544

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Tue Jun 12, 2012 5:37 am
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Post Re: PFTF June 12 2012
Spain and Italy borrowing costs rise


Spain and Italy's borrowing costs rose on Tuesday as the initial optimism that greeted the Spanish bank bailout continued to evaporate.

Spain's benchmark 10-year bond yields hit 6.65%, nearing the six-month highs seen in May. Italy's 10-year bond yield rose to 6.19%, not seen since January.

The interest rates are seen as unsustainable in the long run for two countries weighed down by huge debts.

European bank shares fell in early trading, but began recovering later.

http://www.bbc.co.uk/news/business-18405729

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Tue Jun 12, 2012 5:38 am
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