Despite
the Hype, Italy’s Banking Crisis Metastasizes - (www.wolfstreet.com) For
the last five months, Italy’s third largest bank, Monte dei Paschi di Siena,
has been locked in talks with the Italian government, the European Commission
and the ECB’s regulatory arm, the Single Supervisory Mechanism, over the design
of a taxpayer-funded rescue. The negotiations have no led to a preliminary rescue deal, prompting speculation that Italy’s banking
sector may finally be on the mend. But the progress has been painfully slow and
as time drags on, the deep-seated problems affecting Italy’s broader banking
system continue to metastasize. Bank of Italy Governor Ignazio Visco warned on Wednesday that weaker Italian banks
that will probably have to sell off large chunks of their non-performing loans
could face additional write-downs of around €10 billion. “If they were sold at
the very low prices offered by the few large specialist debt collection
agencies active in the market today which pursue very high returns, the amount
of additional write-downs would be in the order of €10 billion,” Visco said at
the central bank’s annual meeting in Rome, which was attended by his
predecessor in the role, Mario Draghi. Italy’s most troubled banks, those that
could be forced by regulators to write down loans, currently hold €20 billion
in bad loans net of write-downs, Visco added.
Deutsche
Bank Trader Admits To Rigging Precious Metals Markets - (www.zerohedge.com) After months of "smoking guns" and conspiracy theory
dismissals,
a Singapore-based Deutsche Bank trader (at the center of fraud allegations)
finally confirmed (by admitting guilt) what many have suspected - the
biggest banks in the world have conspired to rig precious metals markets. The
Deutsche Bank trader, David Liew, pleaded guilty in federal court in
Chicago to conspiring to spoof gold, silver, platinum and palladium futures,
according to court papers. Bloomberg notes that spoofing involves traders
placing orders that they never intend to fill, in an attempt to manipulate the
price. Following an introductory period that included orientation and training,
LIEW was eventually assigned to the metals trading desk (which included base
metals and precious metals trading) in approximately December 2009. During the
Relevant Period, LIEW was employed by Bank A as a metals trader in the
Asia-Pacific region, and his primary duties included precious metals
market making and futures trading.
Puerto
Rican Exodus Is Speeding the Island’s Economic Collapse – (www.bloomberg.com) The
choice is heartbreaking: stay to help other families, or leave to help
your own. That’s the calculation thousands in Puerto Rico are making. The
bankruptcy of the U.S. commonwealth, the culmination of years of decline, has
accelerated an exodus that’s adding to the island’s economic misery. “I had to
choose for my family,’’ said Aledie Amariah Navas Nazario, 39, a pediatric
pulmonologist who left behind young asthma patients when she, her husband
and two small daughters moved to Orlando, Florida. The population drop is
astonishing. The island has lost 2 percent of its people in each of the past
three years.
The
Greatest Financial Bubble in History - (www.dailyreckoning.com) The
first and most obvious bubble is credit. The combined Chinese government and
corporate debt-to-equity ratio is over 300-to-1 after hidden liabilities, such
as provincial guarantees and shadow banking system liabilities, are taken into
account. Paying off that debt requires growth, but the growth itself is fueled
by more debt. China is now at the point where enormous new debt is required to
achieve only modest new growth. This is clearly non-sustainable.... [Further,
China has a proliferation of Wealth Management Products, or WMPs;] WMPs
resemble collateralized debt obligations, CDOs, the same product that sank
Lehman Brothers in the panic of 2008.
Australia
Home Prices Fall in May as Lending Curbs Start to Bite - (www.bloomberg.com)
Australian house prices fell in May for the first time in 17 months, in an
early sign lending restrictions are starting to damp demand. Home values
in Australia’s state and territory capitals fell 1.1 percent last month from
April, according to CoreLogic Inc. data released Thursday. Still, prices
across the combined capitals were 8.3 percent higher than a year ago. The
monthly decline comes after regulators tightened lending curbs amid fears of a
housing bubble, and the nation’s banks raised interest rates -- especially for
interest-only loans which are popular with property investors seeking to take
advantage of tax breaks. “The market has lost momentum, particularly in Sydney
and Melbourne where affordability constraints are more evident and investors
have comprised a larger proportion of housing demand,” CoreLogic’s head of
research Tim Lawless said.
Wall Street
hits record highs as economy seen accelerating - (www.reuters.com)
Here’s What the Fed Will Be Watching for in the Jobs Report - (www.bloomberg.com)
S&P, Moody's Downgrade Illinois to Near Junk, Lowest Ever for a U.S. State - (www.bloomberg.com)
Here’s What the Fed Will Be Watching for in the Jobs Report - (www.bloomberg.com)
S&P, Moody's Downgrade Illinois to Near Junk, Lowest Ever for a U.S. State - (www.bloomberg.com)
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