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STORIES:
Grim. Serious. Terrifying. Nerve-rattling. - (www.reuters.com) These are the words some prominent American investors and strategists
are using to describe the worsening debt crisis in the euro zone and its impact on the global economy. While
growth has been slowing in China and
the United States and companies warn about the effect on earnings, there is a
mounting sense among the financial community that politicians and markets are
operating on two completely different timelines. They see a fractured Europe
fiddling in the near term, attempting to seal one fissure as another larger one
appears while they talk about a five-to-10-year timeframe for real solutions,
such as a more fiscally integrated euro zone.
U.S. Banks Aren’t Nearly Ready for Coming European Crisis -
(www.bloomberg.com) The euro area faces a major economic crisis, most likely a series of
rolling, country-specific problems involving some combination of failing banks
and sovereigns that can’t pay their debts in full. This will culminate in
systemwide stress, emergency liquidity loans from the European Central Bank and
politicians from all the countries involved increasingly at one another’s
throats. Simon Johnson, who served as chief economist at the International
Monetary Fund in 2007 and 2008, is a professor of entrepreneurship at the
Massachusetts Institute of Technology's Sloan School of Management. Even the
optimists now say openly that Europe will only solve
its problems when the alternatives look sufficiently bleak and time has run out.
Less optimistic people increasingly think that the euro area will break up
because all the proposed solutions are pie-in-the-sky.
Follies of big banks and government - (www.billmoyers.com) Rolling Stone editor Matt Taibbi and Yves Smith,
creator of the finance and economics blog Naked Capitalism, join Bill to discuss the folly and
corruption of both banks and government, and how that tag-team leaves deep
wounds in our democracy. Taibbi’s latest piece is “The Scam Wall Street
Learned from the Mafia.” Smith is the author of ECONned: How
Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.
Desperate Monti needs Merkel summit deal to stop revolt at home
- (www.telegraph.co.uk) Italy's technocrat government risks a parliamentary mutiny unless
premier Mario Monti can secure major concessions from Germany at a crucial
summit of the eurozone's Big Four powers in Rome on Friday. "Monti is
desperate. Reform fatigue has breached breaking point," said a top Italian
official. "There is a feeling here that the euro is basically dead
already. Unless Germany offers a road map out of this crisis, Monti is not
going to be able to hold it together much longer." The main Left and Right
parties have until now backed Mr Monti's fiscal squeeze – a net tightening of
3.2pc of GDP this year – and radical reform of pension and labour markets.
Cyprus
Seeks Bailout Due to Greece Exposure - (www.cnbc.com)
Cyprus on Monday became the fifth euro-zone country to seek financial
assistance from the EU's rescue funds, announcing it was applying for a bailout
for its banking sector hit by exposure to the crisis in Greece. Tiny Cyprus
needs to raise at least 1.8 billion euros — equivalent to about 10 percent of
its domestic output — by June 30 to satisfy European regulators about the
health of Cyprus Popular Bank, which saw its balance sheet hurt by bad Greek
debt. It may seek more. "The purpose of the required assistance is to
contain the risks to the Cypriot economy, notably those arising from the
negative spill over effects through its financial sector, due to its large
exposure in the Greek economy,"
a government announcement said.
