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German City Needing Aid Shows Debt-Crisis Tentacles: Euro
Credit - (www.bloomberg.com) Offenbach, a city of about
120,000 people neighboring Germany’s financial capital Frankfurt,
is so mired in debt it had to ask the state of Hesse for a 211 million-euro
($277 million) bailout in June. In so doing, it became one of the largest of
102 municipalities to tap 3.2 billion euros of aid Hesse is making available as
the first of Germany’s 16 federal states to introduce a formal rescue fund for
struggling towns and cities. Offenbach, in Frankfurt’s shadow as the financial
center rose to prominence during the past two decades, has lost its place as an
industrial hub as household goods maker Rowenta Werke GmbH and printing-press
maker Manroland AG cut production at their factories. As Germany, the biggest
national contributor to euro-area bailouts, pressures indebted European
countries to cut down on spending, its own cities are buckling in the absence
of a mature municipal bond market and as public-finance
lending shrinks in the wake of Europe’s
sovereign debt crisis.
Deposit Flight From Europe Banks Eroding Common Currency -
(www.bloomberg.com) An accelerating flight of
deposits from banks in four European countries is jeopardizing the renewal of
economic growth and undermining a main tenet of the common currency: an
integrated financial system. A total of 326 billion euros ($425 billion) was
pulled from banks in Spain, Portugal, Ireland and Greece in
the 12 months ended July 31, according to data compiled by Bloomberg. The
plight of Irish and Greek lenders, which were bleeding cash in 2010, spread to
Spain and Portugal last year. The flight of deposits from the four countries
coincides with an increase of about 300 billion euros at lenders in seven
nations considered the core of the euro
zone, including Germany and France,
almost matching the outflow. That’s leading to a fragmentation of credit and a
two-tiered banking system blocking economic recovery and blunting European
Central Bank policy in the third year of a sovereign-debt crisis.
Spain PM in risky waiting game on bailout request - (finance.yahoo.com) Spain is breathing a little
easier ever since the European Central Bank said it would buy unlimited amounts
of government bonds to help countries like it that are being strangled by their
debts. After the ECB pledged two weeks ago to rescue countries that seek the
bank's help, Spanish borrowing costs have fallen sharply — a sign that
investors are more confident the government can pay its bills. Yet Spain, which
has the fourth-largest economy among the 17 countries that use the euro, isn't
out of the danger zone. How its leaders interpret and respond to the recent
calm in financial markets matters.
Stalled Rally Puts Pressure on Spain - (online.wsj.com) The European rally has ended,
and now the waiting begins. Mario Draghi, the president of the European Central
Bank, triggered a burst of optimism this month with the bank's plan to support
weak countries like Spain. Spanish bonds strengthened sharply, and the Spanish
stock market rebounded to levels not seen since the first quarter—when another
ECB plan delivered a welcome boost. But like the last one, this newest fervor
is showing signs of frost. Stock markets around Europe slid Tuesday, many for
the second day. The Spanish bourse closed down 1.1%, at 8058.30. The Italian
benchmark index slipped 2.4%..
One big order, thousands of small ones, seen behind oil tumble
- (www.reuters.com) A single large sell order in
the benchmark European Brent oil market, followed by an abrupt U-turn among
high-frequency traders, may have caused one of the most abrupt price routs
ever, brokers and analysts said on Tuesday. As the dust settled on Monday's
four-minute, nearly $4 plunge, other possible causes such as an erroneous
"fat finger" trade, a computer program run amok or a broad,
rumor-driven sell-off were set aside in favor of a combination of one big trade
- potentially as much as 12 million barrels worth some $1.4 billion - and tens
of thousands of computerized orders.
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