The OECD is considering the formalThe latest OECD report, the organization of the richest countries in the world, is very pessimistic. His scenarios range from a sharp slowdown in global growth in the long recession in developed countries. But it comes with a variant of particular concern. "While there is little chance for it to materialize, she writes, this scenario could be significantly accelerated and amplified if one or more countries were to leave the euro area and to restore their own national currency." The OECD notes that "the contagion has entered a new phase and extends beyond the euro zone countries whose public finances are normally considered vulnerable." And to warn: "Given the uncertainty with which they are currently facing, policymakers must prepare for the worst."
Large companies are preparingThe message is clearly received 5 of 5 in the companies. Banks are the first to consider it.Merrill Lynch issued a report Nov. 25 entitled "Euro area: think the unthinkable" in which she goes to quantify the impact on the value of the euro a trip to Germany. Banks also arise for themselves the problem of risk "redenomination". Clearly, they seek to determine which assets are threatened by conversion to a new currency, to Isaiah to cover.
These reflections are underway in all sectors. Large companies were preparing for a possible breakup of the euro is putting their cash in safe investments, or by repatriating their cash of the most fragile. The contracts also would be examined carefully to see what money they could be honored in case of disappearance of the euro. According to the BBC, several large financial platforms (CLS Bank, ICMA, Thomson Reuters or FXall), who perform transactions on the foreign exchange market, have informed their customers that they were preparing for this scenario.
Market pressure is increasingThe debt crisis in the euro area leaves no respite for the most fragile countries. Tuesday, the interest rates paid by Italy to borrow on the markets and have reached a new record, well above the 7% threshold, considered unsustainable at a much-anticipated bond issue.The problem is that distrust of markets is now affecting everyone. France but also Austria and the Netherlands have seen the difference in their interest rates rise relative to Germany. Then it was the turn of Germany itself to be affected through a fundraising failed at 40%. Last ominous sign, the European Central Bank has raised 9 billion less than expected Tuesday in an operation to absorb liquidity to offset its purchases of government bonds. A very unusual result. At the same time, the rating agencies are threatening to degrade or break down with a vengeance. Moody's has warned that no European country was now safe.
The debt crisis extends to banksThe debt crisis weighs on banks, including the United States. The rating agency Standard and Poor's lowered the rating Tuesday of the largest financial institutions in the country.She points out the consequences of the economic downturn but also the financing difficulties caused by the crisis of European sovereign debt. On the old continent, facing the same difficulties, many banks, especially French, were forced to reduce the size of their balance sheets. The fear is that they also end up reducing their funding to the economy. For now, the experts refuse to discuss credit crunch, but the first signs of a deterioration of the offer are already observable. In France for example, the increase in outstanding loans to enterprises cooled to 8% in August to 4.8% in October.
Still, the worst is not certain. After much depressed markets also want to believe that a crisis is possible. On Monday, the first rumors about various interventional devices were able to make them euphoric. And Wednesday, is a determined central bank intervention that boosted optimism. Paris has closed up sharply (+4.2%), as Frankfurt (+4.9%) and London (3.1%). Wall Street was in the same state of mind in the late afternoon (3%).
http://businesnew.blogspot.com/
Large companies are preparingThe message is clearly received 5 of 5 in the companies. Banks are the first to consider it.Merrill Lynch issued a report Nov. 25 entitled "Euro area: think the unthinkable" in which she goes to quantify the impact on the value of the euro a trip to Germany. Banks also arise for themselves the problem of risk "redenomination". Clearly, they seek to determine which assets are threatened by conversion to a new currency, to Isaiah to cover.
These reflections are underway in all sectors. Large companies were preparing for a possible breakup of the euro is putting their cash in safe investments, or by repatriating their cash of the most fragile. The contracts also would be examined carefully to see what money they could be honored in case of disappearance of the euro. According to the BBC, several large financial platforms (CLS Bank, ICMA, Thomson Reuters or FXall), who perform transactions on the foreign exchange market, have informed their customers that they were preparing for this scenario.
Market pressure is increasingThe debt crisis in the euro area leaves no respite for the most fragile countries. Tuesday, the interest rates paid by Italy to borrow on the markets and have reached a new record, well above the 7% threshold, considered unsustainable at a much-anticipated bond issue.The problem is that distrust of markets is now affecting everyone. France but also Austria and the Netherlands have seen the difference in their interest rates rise relative to Germany. Then it was the turn of Germany itself to be affected through a fundraising failed at 40%. Last ominous sign, the European Central Bank has raised 9 billion less than expected Tuesday in an operation to absorb liquidity to offset its purchases of government bonds. A very unusual result. At the same time, the rating agencies are threatening to degrade or break down with a vengeance. Moody's has warned that no European country was now safe.
The debt crisis extends to banksThe debt crisis weighs on banks, including the United States. The rating agency Standard and Poor's lowered the rating Tuesday of the largest financial institutions in the country.She points out the consequences of the economic downturn but also the financing difficulties caused by the crisis of European sovereign debt. On the old continent, facing the same difficulties, many banks, especially French, were forced to reduce the size of their balance sheets. The fear is that they also end up reducing their funding to the economy. For now, the experts refuse to discuss credit crunch, but the first signs of a deterioration of the offer are already observable. In France for example, the increase in outstanding loans to enterprises cooled to 8% in August to 4.8% in October.
Still, the worst is not certain. After much depressed markets also want to believe that a crisis is possible. On Monday, the first rumors about various interventional devices were able to make them euphoric. And Wednesday, is a determined central bank intervention that boosted optimism. Paris has closed up sharply (+4.2%), as Frankfurt (+4.9%) and London (3.1%). Wall Street was in the same state of mind in the late afternoon (3%).
http://businesnew.blogspot.com/
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