Southern
Europe is on a precipice - (www.telegraph.co.uk) Be
careful what you wish for. The euro’s founding fathers dreamt of a superpower
currency to match the dollar, freeing Europe from US monetary hegemony. Charles
de Gaulle grumbled that America enjoyed an “exorbitant privilege” as holder of
the world’s reserve currency, able to get away with murder. Now they have one
themselves, only to discover that it is a curse. China’s central bank has been
buying fistfuls of euros as it accumulates a world record $3.7 trillion in
foreign reserves, and its motives are not entirely friendly. So have the
central banks of Russia, Brazil and the Middle Eastern oil sheikhdoms, all
aiming to cut reliance on the US dollar, part of a $9 trillion surge in
reserves leaking, with tidal force, into the euro. In China’s case, it is deliberately
driving down the yuan to capture export share. You could say China is exporting
excess manufacturing capacity to Europe, or, in plain talk, exporting
unemployment. This is why the euro has long been too strong for its own good.
It surged a further 9 per cent against the dollar from June to early October,
before hitting the wall this week. It has risen 28 per cent against the
Japanese yen in a year. This is a bizarre state of affairs for a currency bloc
struggling out of recession. Weak prospects normally mean a weak currency, but
there is nothing normal about Europe’s monetary union.
The
Bank Guarantee That Bankrupted Ireland - (www.truth-out.org) The
Irish have a long history of being tyrannized, exploited, and oppressed—from
the forced conversion to Christianity in the Dark Ages, to slave trading of the
natives in the 15th and 16th centuries, to the mid-nineteenth century
“potato famine” that was really a holocaust. The British got Ireland’s food exports, while
at least one million Irish died from starvation and related diseases, and
another million or more emigrated. Today, Ireland is under a different sort of
tyranny, one imposed by the banks and thetroika—the EU, ECB and IMF. The
oppressors have demanded austerity and more austerity, forcing the public to
pick up the tab for bills incurred by profligate private bankers. The official
unemployment rate is 13.5%—up from 5% in 2006—and this figure does not take
into account the mass emigration of Ireland’s young people in search of better
opportunities abroad. Job loss and a flood of foreclosures are leading to
suicides. A raft of new taxes and charges has been sold as necessary to reduce
the deficit, but they are simply a backdoor bailout of the banks. At first, the
Irish accepted the media explanation: these draconian measures were necessary
to “balance the budget” and were in their best interests. But after five years
of belt-tightening in which unemployment and living conditions have not
improved, the people are slowly waking up. They are realizing that their assets
are being grabbed simply to pay for the mistakes of the financial sector.
Julian Robertson offshoot crushed by rising
market - (www.cnbc.com) Axial
Capital Management, the once-$1.8 billion hedge fund firm seeded by Julian
Robertson of Tiger Management, is shutting down following several years of
losses fueled by short bets against stocks, according to two people familiar
with the situation. The flagship Axial Capital fund lost 15.4 percent net of
fees this year through September according to investor materials obtained by
CNBC.com. Its long bets on stocks gaining rose 17.6 percent, but its shorts
declined 33.1 percent—all as the S&P 500 Index rose 23.6 percent for the
year. As of Sept. 30, Axial was 38.6 percent net short, meaning its 70 short
bets outweighed its 16 longs. The fund also lost 6.3 percent in 2012; gained
0.3 percent in 2011; and declined 10.2 percent in 2010 and 11.1 percent in
2009. Each year, its short bets lost money.
Italy's
finance minister urges ECB to ease policy, combat strong euro - (www.reuters.com) Italy's finance minister
urged the European Central Bank to ease monetary policy, questioning the
effectiveness of the bank's strategy of verbal intervention to cap the strong
euro, the Financial Times reported on Tuesday. "The euro is now the
strongest currency in the world vis-a-vis the dollar, the renminbi, the pound,
the Swiss franc," Fabrizio Saccomanni was quoted as saying. "That
must reflect the perception of the monetary stance in Europe vis-a-vis what
other countries are doing now and in the foreseeable future. If I understand markets they
want to see some concrete (policy) action at some point and maybe before the
end of the year."
Italian
banks near saturation point on government debt - (www.reuters.com) Italian banks are
near saturation point after two years spent frantically buying their own
government's bonds,
forcing the Treasury to find alternative investors at home and abroad to finance a
2-trillion euro debt. Lenders' ability to soak up yet more Italian sovereign
debt depends largely on the European Central Bank - which in turn says Italy is
crucial to the fate of the entire euro zone.
In the coming year the ECB will make strict health checks on banks across
the bloc, including a provisional 15 in Italy.
It must also decide whether to roll over billions of euros in cheap long term
loans which the banks have used profitably to accumulate government bonds,
but fall due in early 2015. Both events will determine how much domestic banks
can keep up their support for the Treasury which was vital when the euro zone's
third biggest economy teetered
on the brink of a Greek-style debt crisis in 2011 and foreign investors fled.
EU
Lowers Euro-Area Growth Outlook as Debt Crisis Lingers - (www.bloomberg.com)
BOJ Struggles to Convince on 2% as Abenomics Shine Fades - (www.bloomberg.com)
France drags on slow euro zone recovery - (www.reuters.com)
BOJ Struggles to Convince on 2% as Abenomics Shine Fades - (www.bloomberg.com)
France drags on slow euro zone recovery - (www.reuters.com)
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