profit gain from 19/06/2012 until 21/06/2012 for EUR/USD market. USD 15,000 winning profit representing 14% from the capital traded.
We would like to welcome to any investor to invest with us making profit with our company YOUNG DYNAMIC RESOURCES.
Friday, June 22, 2012
Saturday, June 16, 2012
Winning profit USD 12,000 for last week.
Profit gain from Young Dynamic Club trading is USD 12,000 representing 12% from capital trade by us. YDC will remain this performance for the benefits of all investor.
Thursday, June 14, 2012
Investing Isn't Risky
The meaning by insurance said by Robert Kiyosaki is that you buy an assets after winning the markets to insured your profit gain from the trading.
Euro Crisis Deeper With Moody’s Downgrading Spain, Cyprus
The European debt crisis deepened as the credit ratings of Spain and Cyprus were downgraded by Moody’s Investors Service.
Moody’s yesterday cut Spain’s rating three steps to Baa3, one level above junk, from A3, citing the nation’s increased debt burden, weakening economy and limited access to capital markets. Moody’s also lowered Cyprus’s bond rating to Ba3 from Ba1, attributing the downgrade to the material increase in the likelihood of a Greek exit from the euro area, and the resulting increase in the probable amount of support that the government may have to extend to Cypriot banks.
Only four euro nations - Germany, Luxembourg, Finland and the Netherlands - still carry the top AAA credit grade at the three main ratings companies. Photographer: Michele Tantussi/Bloomberg
June 14 (Bloomberg) -- Tony Morriss, head of interest-rate research at Australia & New Zealand Banking Group Ltd., talks about Europe's debt crisis and its impact on global bond markets. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
June 14 (Bloomberg) -- Kelvin Tay, Singapore-based chief investment officer for the southern Asia Pacific region at the wealth management unit of UBS, talks about the impact of the European debt crisis on Asian markets and global currencies, and his investment strategy. He speaks with Mia Saini on Bloomberg Television's "First Up." (Source: Bloomberg)
June 14 (Bloomberg) -- Shane Oliver, chief economist and head of investment strategy at AMP Capital Investors Ltd., talks about the impact of the European sovereign debt crisis on global markets and his investment strategy. He speaks from Sydney with Mia Saini on Bloomberg Television's "First Up." (Source: Bloomberg)
Moody’s is following the sentiment of financial markets that weren’t calmed by Europe’s 100 billion-euro ($126 billion) weekend bailout of Spanish banks, said Clay Lowery, a vice president at Washington-based Rock Creek Global Advisors LLC and former assistant Treasury secretary for international affairs.
For Moody’s, “it’s not whether you’re going to make money off your investment, it’s what is the creditworthiness of the borrower,” Lowery said. “Spain’s debt load has gotten larger with much more senior debt, so at least the potential for them to default has now gone up.”
Rifts are deepening with Greek elections on June 17 risking the first exit from the single currency as voters buckle under the continent’s most-severe austerity program. Spanish bond yields reached a record after the nation’s request for aid for its banks fueled speculation the world’s 12th-biggest economy may need a full rescue.
Key Reason
The key reason for the downgrade “is obviously the need of Spain’s government to ask for external help,” Kathrin Muehlbronner, a London-based senior analyst with the sovereign group at Moody’s, said in a telephone interview. “In our view, that’s not a sign of strength, it’s a sign of weakness.”
Spain is on review for further downgrade as it plans to borrow 100 billion euros from European Union rescue funds to recapitalize its banking system, adding to the government’s debt load, New York-based Moody’s said yesterday in a statement. Spanish Prime Minister Mariano Rajoy requested the rescue on June 9.
U.S. Treasury Secretary Timothy F. Geithner spoke yesterday as Spain was downgraded. Spain’s bailout “is a good, concrete signal and illustration” of Europe’s commitment to move toward a “broader banking union,” Geithner said. He said a more integrated banking system is “important because of the pressures you’re seeing from Greece and elsewhere.”
The euro rallied for a third day today, rising 0.2 percent to $1.2586 as of 1:55 p.m. in Tokyo.
Mexico Summit
The Group of 20 nations will meet in Los Cabos, Mexico, June 18-19 to discuss the European debt crisis. A U.S. official said yesterday the leaders probably won’t announce significant progress on Europe’s debt crisis. Geithner will attend along with President Barack Obama.
The summit in Los Cabos will give European leaders a chance to discuss economic concerns with heads of other major economies. European governments are more focused on building a consensus for a summit they are holding later in the month, the official told reporters on condition of anonymity.
The meeting in Mexico comes after Greece votes on June 17. The Syriza party, led by Alexis Tsipras, has promised to abrogate the terms of the 240 billion-euro ($302 billion) bailout from the European Commission, European Central Bank and International Monetary Fund, which calls for cuts that risk deepening the country’s worst recession since World War II.
Spain’s Stance
Yields on Spanish debt due in 10 years climbed to 6.75 percent yesterday, compared with 5.1 percent at the end of last year. The Spanish rate has jumped more than 50 basis points since the nation agreed to the bailout package for its banks. Italy has also seen borrowing costs surge and today will hold its first bond auction since the rescue in Spain.
“Investors are worried about putting their money into those markets for fear that they might eventually follow the same path as Greece,” Shane Oliver, the Sydney-based chief economist and head of investment strategy at AMP Capital Investors Ltd., said about Spain and Italy in an interview with Bloomberg Television. “Particularly given that the Spanish bank bailout likely entails those investors taking a subordinate position to the bailout fund.”
Spanish Deputy Economy Minister Fernando Jimenez Latorre said yesterday that Spain will stick to the tools it has used so far to shore up its banks, rejecting calls from Finland, one of the euro region’s six AAA rated sovereigns, to break up failing lenders.
“The Spanish government has very limited financial market access,” Moody’s said in the statement, citing the nation’s need for rescue funds and “its growing dependence on its domestic banks as the primary purchasers of its new bond issues, who in turn obtain funding from the” European Central Bank.
source: www.bloomberg.com
Wednesday, June 13, 2012
Euro, Oil Decline Amid Europe Debt Contagion Concern
The euro dropped and oil slid as Italy prepares to sell bonds before elections that may determineGreece’s future in the currency bloc. Treasuries rose ahead of data forecast to show a drop in U.S. retail sales.
The MSCI Asia Pacific Index (MXAP) of shares swung between gains and losses, and was up 0.3 percent as of 2 p.m. in Tokyo, while Japan’s Nikkei 225 Stock Average gained 0.7 percent on volume 22 percent below the 30-day average. Standard & Poor’s 500 Index futures slipped 0.2 percent and oil dropped 0.4 percent. The euro lost 0.1 percent to $1.2493. Credit-default swaps on Asian bonds dropped to the lowest in a month.
MSCI’s Asian gauge of shares has fallen 12 percent from its peak this year on Feb. 29 as Europe’s debt crisis intensified, the U.S. recovery showed signs of losing steam and China’seconomy slowed. Photographer: Andy Rain/Bloomberg
June 13 (Bloomberg) -- Craig Ferguson, a currency hedge fund manager at Antipodean Capital Management in Melbourne, talks about the European sovereign debt crisis and its implications for global currencies. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
June 13 (Bloomberg) -- Barclays Plc Chief Executive Officer Robert Diamond talks about his company's business strategy and Europe's debt crisis. Diamond said the euro region is likely to survive even as the sovereign debt crisis slows economic growth and weakens the currency. He speaks in Hong Kong with Rishaad Salamat on Bloomberg Television's "First Up." (Source: Bloomberg)
June 13 (Bloomberg) -- Mauro Guillen, a professor at the Wharton School of the University of Pennsylvania, talks Europe's sovereign debt crisis. He speaks with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)
June 13 (Bloomberg) -- Scott Wren, senior equity strategist at Wells Fargo Advisors LLC, talks about U.S. stocks, the implications of Europe's debt crisis for markets and his investment strategy. Wren speaks with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)
June 13 (Bloomberg) -- Pranay Gupta, chief investment officer for Asia at Lombard Odier, talks about the outlook for global financial markets and economies. Gupta also discusses Felda Global Ventures Holdings Bhd.'s initial public offering. He speaks in Hong Kong with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)
Fitch Ratings said it sees significant risk of further capital outflows from the euro area. Italy plans to auction 6.5 billion euros ($8.1 billion) of debt today as Greece prepares for general elections on June 17. Reports from Japan, South Korea and Australia showed signs of economic resilience.
“In the lead up to the elections, markets are quite nervous about the outcome and what it could mean for the rest of Europe,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “In the meantime, the improvements in the data we’re getting out of Asia is being been ignored.”
MSCI’s Asian gauge of shares has fallen 12 percent from its peak this year on Feb. 29 as Europe’s debt crisis intensified, the U.S. recovery showed signs of losing steam and China’s economy slowed.
Whitehaven Coal
Hutchison Whampoa Ltd. (13), which operates ports in Germany and Spain, slipped 1.5 percent in Hong Kong.Whitehaven Coal Ltd. (WHC) jumped 4.1 percent after the Australian coal producer rejected a conditional takeover offer from its largest shareholder. Canon Inc. (7751), the world’s biggest camera maker, slid 0.9 percent in Tokyo.
Economic reports today showed that Japanese machinery orders rose in April at more than three times the pace estimated by economists and South Korean unemployment fell to a four-month low. Moody’s Investors Service said Australia’s economic strength is “very high.”
If Greece exits the currency bloc and there is material contagion to periphery countries, all 17 euro members would likely face downgrades, Fitch’s head of Asia Pacific sovereign ratings Andrew Colquhoun said in Singapore today.
Greece’s election may determine whether the nation abides by spending reductions imposed upon it to receive two international bailouts and stay in the euro. Spain on June 9 became the fourth of the currency union’s 17 states to ask for a rescue.
Oil fell for the fourth time in five days in New York amid speculation OPEC will keep production quotas unchanged even after prices dropped 16 percent this year. Crude for July delivery dropped as much as 82 cents to $82.63 a barrel.
Euro Drops
The euro snapped its advance from yesterday and the dollar strengthened against the majority of its major peers. The greenback added 0.1 percent to 79.64 yen.
The yield on the 10-year Treasury note fell one basis points, or 0.01 percentage point, to 1.65 percent, according to Bloomberg Bond Trader prices. U.S. retail sales probably declined 0.2 percent in May after rising 0.1 percent the prior month, according to the median estimate of economists in a Bloomberg News survey taken before data are released today.
The cost of protecting Asian bonds against default fell, according to traders of credit default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japandeclined 2 basis points to 190 basis, Royal Bank of Scotland Group Plc prices show. The gauge is poised for its lowest close since May 15, according to data provider CMA.
sources: www.bloomberg.com
Monday, June 11, 2012
Euro, Asia Shares Climb On Spain Bank Bailout; Oil Gains
Asian stocks rose the most in more than two months, the euro reached a two-week high and oil gained the most since January after Spain sought a bailout for its banks and China’s exports beat estimates. Treasuries fell.
The MSCI Asia Pacific Index climbed 1.6 percent as of 10:17 a.m. in Tokyo and the Nikkei 225 Stock Average rose 2.3 percent. Futures on the Standard & Poor’s 500 Index increased 1.2 percent. The euro strengthened 1 percent to $1.2635. The 10-year U.S. Treasury yield rose seven basis point to 1.71 percent, while credit-default swaps on Asian bonds dropped. Oil for July delivery jumped as much as 2.7 percent in New York. Copper futures added 2.1 percent.
The euro strengthened to as much as $1.2671, the highest since May 23. The European currency has fallen 3.5 percent in the past six months, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. Photographer: Hannelore Foerster/Bloomberg
June 11 (Bloomberg) -- Gao Ting, chief China strategist at UBS Wealth Management, talks about the nation's economy, central bank monetary policy, and stock market. China’s exports rose in May at more than double the pace analysts estimated while industrial output and retail sales trailed forecasts, signaling that last week’s interest-rate cut was aimed at countering a domestic slowdown. Gao speaks from Shanghai with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
June 11 (Bloomberg) -- Michael Kurtz, Hong Kong-based global head of equity strategy at Nomura Holdings Inc., talks about Europe's debt crisis and his investment strategy for the region's stocks. Spain asked euro-region governments for as much as 100 billion euros ($125 billion) to rescue its banking system. Kurtz also discusses China's economy with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
June 11 (Bloomberg) -- Helen Zhu, chief China equity strategist at Goldman Sachs Group Inc., talks about the outlook for the nation's economy and stocks. She speaks with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)
June 8 (Bloomberg) -- Liu Yang, chairwoman of Atlantis Investment Management Ltd., talks about China's central bank monetary policy, economy and stock market. Liu also discusses Chinese Communist Party leadership. She speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
June 8 (Bloomberg) -- Rahul Chadha, head of Asia Pacific investment division for Mirae Asset Global Investments in Hong Kong, talks about China's rate cut, its implications for global financial markets and his investment strategy. Chadha also discusses the European sovereign debt crisis. He speaks with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)
June 6 (Bloomberg) -- Atul Lele, Sydney-based equity strategist at Credit Suisse Group AG, talks about Australia stocks, the nation's currency, and his investment strategy. Lele also discusses Europe's sovereign debt crisis. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Spain asked euro-region governments over the weekend for as much as 100 billion euros ($126 billion) to help shore up its banking system, a sign Europe is tackling a crisis that has roiled markets around the world. Chinese data showed exports grew last month at more than double the pace analysts estimated, while imports of crude oil rose to a record.
“The bailout will keep companies that borrow from Spanish banks from going down all together,” said Kiyoshi Ishigane, a Tokyo-based senior strategist at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $70 billion. “In China, overseas demand is stronger than expected.”
The MSCI Asia Pacific Index, which gained for the first time in six weeks in the previous five days, has tumbled 13 percent from this year’s high on Feb. 29. Canon Inc., a camera maker that gets about 31 percent of sales from Europe, rose 2.6 percent in Tokyo. Samsung Electronics Co., which counts China as its biggest market, gained 2.1 percent in Seoul.
Euro Strengthens
The euro strengthened to as much as $1.2671, the highest since May 23. The European currency has fallen 3.5 percent in the past six months, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation- Weighted Indexes.
“Markets were wondering whether Spain was going to drag on for another month or two,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC), Australia’s second-largest lender. The Spanish bailout “is evidence that policy makers are willing to act,” Speizer said.
Yields on 10-year Treasuries touched a more than one-week high as demand for safer government debt eased. Treasuries have gained 3 percent this quarter through June 8, based on Bank of America Merrill Lynch data. The yield on South Korean five-year bonds climbed six basis points, or 0.06 percentage point, to 3.4 percent.
Default-Swaps
The cost of insuring bonds from default fell, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 10 basis points to 187 basis points, Royal Bank of Scotland Group Plc prices show. The gauge is on course for its biggest daily decline since Nov. 30, according to data provider CMA.
Oil climbed after data from the Beijing-based General Administration of Customs showed that China, the world’s second- biggest oil consumer, increased crude imports to a record in May as refineries raised processing rates.
Asian currencies advanced with the South Korean won strengthening 0.7 percent to 1,166.9 per dollar and the Chineseyuan gaining 0.1 percent to 6.3660 per dollar. China’s overseas shipments climbed 15.3 percent in May from a year earlier, the customs bureau said, exceeding all 29 estimates in a Bloomberg News survey.
Saturday, June 9, 2012
Spanish Bank Aid Request Seen As Moody’s Cautions
Spain may today move closer to becoming the fourth euro-area nation to receive aid, a prospect that Moody’s Investors Service said might hurt credit ratings as the threat looms of a Greek exit from the single currency.
European Central Bank Vice President Vitor Constancio said yesterday that a Spanish request for a bank bailout is “awaited.” That bid may come as soon as today when finance ministers hold a conference call, said a German official and a European Union aide, who declined to be identified because the matter is confidential. The discussion may start about 1:30 p.m. Madrid time, according to a person with knowledge of the matter.
Mariano Rajoy, Spain's prime minister. Photographer: Jock Fistick/Bloomberg
While Prime Minister Mariano Rajoy said June 7 he is talking to European leaders about how to shore up Spanish banks, he has resisted pressure to accelerate any request for help. The discussions underscore officials’ urgency on bolstering investor sentiment in the euro area as Greek elections loom and Spain struggles to persuade markets it can finance its budget deficit.
“Spain is the Rubicon that should have never been crossed,” Nicholas Spiro, managing director of Spiro Sovereign Strategy said in a note to clients. “Not only would a limited bailout for Spain fail to restore confidence in the markets, it could fuel fears that more aid will be needed at a later stage and could also put Italy under more pressure.”
Downgrade Threat
Moody’s said it may review the ratings of several euro-area nations because of developments in Greece and Spain, where growing estimates of the cost of cleaning up banks may prompt a downgrade of the nation’s A3 rating. If Greece leaves the single currency, “posing a threat to the euro’s continued existence,” the company would review all euro-area sovereign ratings, including those of the Aaa nations, it said.
“As Spain moves closer to the need for direct external support from its European partners, the increased risk to the country’s creditors may prompt further rating actions,” Moody’s said in a statement.
Spain’s banking challenges are specific to the country and are still unlikely to threaten contagion to other euro members apart from Italy, Moody’s said.
Dutch Finance Minister Jan Kees de Jager said yesterday he doesn’t rule out the possibility that European finance ministers would discuss Spain today. The situation is “urgent,” he said in the Hague.
‘Rapidity’ Needed
Constancio told reporters in Lisbon that the request should be made “with some rapidity,” and the ECB Executive Board member said the longer it is delayed, the higher the cost might be. Still, Rajoy said he won’t take a decision until he has received the results of stress tests by two international consultants, due by June 21, and a separate report from the International Monetary Fund.
Bankia’s new management asked for 19 billion euros of state support as they went beyond the government’s provisioning rules in their cleanup of the lender. Economy Minister Luis de Guindos said two weeks earlier that 15 billion euros would be enough to meet the requirements of the second of two banking decrees he has drafted this year.
Even as the government said Bankia was a specific case, investors extrapolated the losses to the rest of the industry, undermining confidence and the government’s credibility. De Guindos has told banks to take 84 billion euros in additional provisions and capital buffers in two decrees aimed at lending to the real-estate industry.
Confidence Struggle
Spain is struggling to restore confidence in its banks as the government’s narrowing access tocapital markets undermines its ability to provide a backstop. As foreign investors shun its bonds, the Treasury is increasingly dependent on Spanish lenders for funds. Adding to pressure, the nation’s credit rating was cut by Fitch Ratings to within two steps of junk on June 7.
Rajoy, who in November won the biggest majority that any Spanish party has clinched since 1982, is seeing his support slip as austerity measures and steps to bolster lenders fail to stem the crisis that has pushed the unemployment rate to 24 percent. Governments in Greece, Ireland and Portugal were toppled after those three countries took bailouts.
“This won’t be good news for Rajoy,” Jose Ignacio Torreblanca, head of the Madrid office of the European Council on Foreign Relations, said in a telephone interview. “There are questions on whether the government’s handling of Bankia has been deft enough.”
No Comment
Deputy Prime Minister Soraya Saenz de Santamaria declined to comment when asked at a briefing yesterday whether Spain was seeking a rescue. She reiterated the government would wait until getting the reports before making a decision.
A bailout for Spain, reeling from a recession and the bursting of a property bubble, may dwarf previous rescues in the effort to stem the turmoil that began with Greece’s disclosure in 2009 that its finances were in worse shape than was previously known.
Since then, European governments and the IMF have made 386 billion euros in loan pledges to Greece, Ireland and Portugal. Spain’s economy is more than twice the size of the three countries combined. JPMorgan Chase & Co. economist David Mackie said on May 30 that aid for the Spanish government and banks could total 350 billion euros.
source: www.bloomberg.com
source: www.bloomberg.com
Trading statement 04/06 - 08/06/2012
Summary from the last week trading, we are able to gain USD 7320 from the capital given. We strive to maintain and improve this performance.
Thursday, June 7, 2012
Draghi Stresses Limits Of ECB Tools As Pressures Mount
The European Central Bank may be running out of options it can stomach.
With the euro area assailed by spreading recession, financial-market instability and political impasse over the direction the single currency should take, ECB President Mario Draghi yesterday stressed the limitations of his current policy tools, from standard interest-rate cuts to bond-buying and liquidity injections. Moves such as quantitative easing or capping bond yields to calm markets remain taboo for the ECB, which says its main job is to ensure stable prices.
Mario Draghi, president of the European Central Bank (ECB). Photographer: Hannelore Foerster/Bloomberg
June 7 (Bloomberg) -- Arjuna Mahendran, the Singapore-based head of Asia investment strategy at HSBC Private Bank, talks about the outlook for additional stimulus measures by the European Central Bank and Federal Reserve, and its implications for global stocks. He speaks with Susan Li on Bloomberg Television's "First Up." (Excerpt. Source: Bloomberg)
“It’s clear that they are very low on, if not completely out of, ammunition,” said Nick Kounis, head of macro research at ABN Amro in Amsterdam. “There are options that would have a more significant effect, but they’re outside of the ECB’s comfort zone. There’s an element of helplessness.”
Having already cut its benchmark rate to a record low of 1 percent, injected more than 1 trillion euros ($1.2 trillion) of three-year loans into the banking system and bought 212 billion euros of government bonds, the ECB is reluctant to do more heavy lifting as governments procrastinate over the reforms it deems necessary to put the monetary union on a sustainable footing. Draghi questioned the effectiveness of cutting rates further and flooding financial market with even more liquidity.
‘Ready to Act’
Draghi said the ECB stands “ready to act” should the debt crisis damp the euro-area economy further, and that “a few” Governing Council members pushed for a rate reduction at yesterday’s policy meeting.
Still, “we have to be aware that the context is one where you have liquidity constraints and tensions in financial markets,” he said after keeping rates on hold. “Price signals in this situation have a relatively limited immediate effect.”
Draghi also cast doubt on the impact of further longer term refinancing operations, or LTROs, saying the full effects of previous loans have yet to be felt. Some of the problems in the euro area “have nothing to do with monetary policy,” he said.
“Whether they cut interest rates or not, it won’t have much of an impact,” said Uwe Angenendt, chief economist at BHF Bank AG in Frankfurt. “On the liquidity front, the banking sector is already oversupplied. The ball is in the court of political players. It’s not for the ECB to fill this vacuum.”
Investor concern about political inaction drove Europe’s Stoxx 600 Index (SXXP) down about 7 percent last month, fully erasing gains this year, while the euro has plunged to a two-year low against the dollar. At least eight of the 17 euro nations are in recession.
Zero Bound
The ECB may be reluctant to cut its benchmark rate much further because it poses the question of whether to lower the deposit rate from 0.25 percent. That has served as a floor for market interest rates since the ECB began providing banks with unlimited liquidity in 2008.
Taking the rate toward zero would reduce the incentive for banks to lend to each other because the return may not compensate the risk. That in turn could freeze money markets, the very phenomenon the ECB is trying to avoid with its full- allotment policy.
Cutting the benchmark rate to a new record low would also put the spotlight on the ECB’s other policy tools and take pressure off governments to implement reforms, said Ken Wattret, chief euro-area economist at BNP Paribas in London.
“The ECB fears that the minute it cuts rates below 1 percent it will come under huge pressure to introduce more unconventional measures, such as more bond buys and more LTROs,” Wattret said. “I have sympathy as to why they don’t want to do that, because the ECB has really expanded its balance sheet with limited returns. There is definitely a moral-hazard issue there.”
Spanish Banks
Concern over Spain’s ability to recapitalize its banks has driven up borrowing costs for the government, which is pushing for Europe to channel funds directly to its lenders. Budget Minister Cristobal Montoro used a radio interview on June 5 to call for outside support, saying the sums needed to aid Spain’s banks aren’t “astronomical.”
Draghi repeated the ECB’s call for euro-area governments to “clarify” their vision for the euro area while denying he’s refraining from acting until they deliver.
These are “high-level decisions that concern the future of the European integration and the future of the euro area,” he said. “There’s no sort of horse trading here.”
‘Do Something’
Draghi has joined European Union President Herman Van Rompuy, Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, and European Commission President Jose Barroso in drafting a program for deeper integration in the euro area. Van Rompuy said on June 4 that he will report on proposed “building blocks” at the next summit of EU leaders on June 28-29 in Brussels.
In the meantime, markets are clamoring for immediate action from the central bank, which said yesterday that risks to the economic outlook have increased.
Draghi “should start by cutting rates to lower the costs of the LTRO and primarily to show the market that the ECB is there, willing to do something,” said Marchel Alexandrovich, senior European economist at Jefferies International Ltd in London. “The ECB dragging its heels is not a costless exercise.”
source: www.bloomberg.com
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