IMF: eurozone at centre of coming storm
BRUSSELS - International Monetary Fund chief Christine Lagarde on Thursday (19 April) warned of "dark clouds" hanging over the global recovery, with the eurozone at the heart of the problem.
"We are seeing light recovery, blowing on the spring wind. But we are also seeing very dark clouds on the horizon," Lagarde said in a press conference in Washington.
"The eurozone is the epicentre of potential risk," she warned.
Brussels wants more money from British households - £666 per year to be precise.
http://www.telegraph.co.uk/finance/debt ... -Live.html
09.18 We mentioned earlier on (07.23) that the EC is proposing a new budget for 2013 that increases the UK's contribution to Brussels by £900m. That works out as an annual total of £666 for each household in the UK.
George Soros has also been wading in:
http://www.telegraph.co.uk/finance/debt ... -2012.html
11.23 George Soros isn't beating around the bush when it comes to the euro; he's warned it "threatens to destroy the European Union" and says that if he was still an active investor he'd bet against it. The comments come in an interview published yesterday afternoon in Le Monde:
The introduction of the euro has led to divergence instead of bringing about convergence. The most fragile countries of the eurozone have discovered that they are in a Third World situation, as if they were indebted in a foreign currency, with a crucial effect that there is a real risk of default. Trying to make them respect rules that don’t work just makes matters worse. Sadly, the authorities don’t understand this.
Mario Draghi has launched extraordinary measures with his €1 trillion injection of liquidity through three-year loans. But the effect of this operation has been broken by the counter-attack of the Bundesbank. Watching the growth of the ECB’s balance sheet, the Bundesbank has realised that it risks heavy loses if the euro blows up and is therefore opposed to the (LTRO) policy. Let us hope that this does not become a self-fulfilling prophesy.
11.55 Ambrose Evans-Pritchard has written a blog post on George Soros on his no-holds-barred attack on the euro in Le Monde:
Mr Soros has some expertise in this field. His cue for launching a speculative attack – with others – on Sterling and the Lira in September 1992 came after Bundesbank chief Helmut Schlesinger told Handelsblatt that the two currencies were overvalued within the ERM peg. There would have to be a realignment.
It was a clear signal that the Bundesbank did not intend to intervene in the markets to defend the ERM pegs – as it later did for France. Mr Soros already had a $1.5bn short position on sterling. He upped the ante massively the next morning. "Go for the jugular," he told his partner Stanley Druckenmiller.
And the big, troubled nation Spain slipped further :
14.48 This morning's Spanish bond auction was hardly a roaring success, but at least it saw average bond yields of 5.74pc - under the 6pc highs we've seen recently. Unfortunately, yields have been edging upwards ever since, just as the Spanish stock market has been sliding downwards. Stephen Pope, managing partner at Spotlight Ideas, has this to say:
It did not take long for the initial applause for the Spanish auction to turn into a haunting slow handclap. As we swing past 3pm in Spain, the 10 year BONO has seen the yield to maturity screech higher from a daily low of 5.781pc to 5.915pc, +9.3bps on the day. Suddenly 6pc is looming large once again.
Rajoy has done as much as possible on the austerity front but in truth his supply side measures are less than popular in a nation saddled with crippling unemployment and their effect will not be realised until Q4 2012 at the earliest. The honest truth is ... Spain will fail to make 5.3pc as a deficit to GDP target this year. It will require aid and even if it is dressed up as a bank solvency plan, it will be another nation taking the bailout route. This is why the markets have turned ugly in Madrid.