Fresh fears of Greek default as Finns hold out in collateral dispute

EURO-ZONE policy makers appeared no nearer to settling a dispute over Finland's collateral demands in exchange for participating in a bailout for Greece, raising concerns that Athens may default.

Markets have grown more worried about the potential for a Greek debt default amid an apparent lack of progress in resolving the collateral issue this week.

Finland, meanwhile, shows no sign of backing down.

German Chancellor Angela Merkel also unexpectedly cancelled a trip to Russia in early September to shepherd through parliament a crucial change to the euro-zone bailout fund.

The cancellation comes at a sensitive time for relations with Russia, and amid growing nervousness about dissent within the ranks of her own party over her handling of the euro-zone debt crisis.

"The date collides with the introduction of the (European Financial Stability Facility) treaty into the Bundestag," a German government official said, adding that the chancellor wants to stay in Berlin due to the significance of the issue.

Yields on Greek two-year bonds rocketed to a record of over 43 per cent, according to Tradeweb, and the cost of insuring Greek government bonds against default also rose sharply.

Greek five-year sovereign credit-default swaps were 1.37 percentage points wider at 22.75 percentage points, according to Markit.

No multi-lateral talks on the collateral issue took place Wednesday or Thursday, a person familiar with the situation said, despite an initial intention to hash out an agreement by the weekend.

However, the person didn't rule out the possibility that bilateral talks are under way.

Euro-zone governments are looking into alternative forms of collateral after a cash deal reached earlier between Greece and Finland was rejected by key member countries, including Germany and the Netherlands.

Under terms of that deal, Greece would pay Finland hundreds of millions of euros from its bailout loans as collateral for those same loans at the expense of other euro-zone countries.

Since Finland is set to contribute just 2 per cent of Greece's total rescue package, guarantees from the richer euro-zone nations would be going directly to Finland.

The collateral dispute, if not resolved soon, could derail a second bailout package for Greece agreed by euro-zone leaders on July 21.

Without support from all 17 euro-zone countries, no funds can be released, while changes to the European Financial Stability Facility, the currency bloc's bailout fund, can't go forward either.

At last month's summit, leaders agreed to expand the fund and make it more flexible, so that it could buy bonds on the secondary market and provide credit lines to countries locked out of markets.

National parliaments across the euro area must approve the changes, however, and the collateral issue must be settled before the final EFSF proposal is written.

The European Commission, the EU's executive branch, has asked that all the details for the EFSF legislation be clarified by the end of August.

German officials have said they expect to approve the new EFSF at a cabinet meeting on Wednesday.

A parliamentary vote is likely to take place September 23.

A commission spokesman said that there is no formal deadline for concluding talks.

Still, "it's good for that to be done toward the end of the month," he said.

Germany insists on a solution acceptable to all euro-zone countries.

The International Monetary Fund, which has been contributing to Greek bailout loans, opposes any deal that would threaten its preferred-creditor status, which ensures the fund is always first to be repaid.

Finland said that it continues discussions with Greece and other euro-zone countries to find a solution. Officials refrained from further comment.

"The issue has become so politicised that no one here at the Finance Ministry wants to talk about it at the moment," said Anita Sihvola, a spokeswoman for the Finnish finance ministry.

On Wednesday, Finnish Finance Minister Jutta Urpilainen reiterated that Finland would not take part in the €110 billion Greek ($150bn) bailout unless it obtained collateral.

Finland's policy is partly the result of April's general election, in which support for the True Finns Party, which opposed the Greek bailout, soared to 19 per cent from 4.1 per cent in 2007.

The True Finns finished third, and the election led to a new government coalition of six parties.

Euro-zone officials have indicated they are exploring other forms of collateral, such as state property or other non-cash assets.

But this option would be anathema in Greece, especially as many of the government's assets are already earmarked for privatisation.

The government has strongly opposed any deals that would involve putting up Greek land or real estate as collateral, viewing the step as a threat to the country's territorial sovereignty.

"It seems that a possible outcome is either collateral for all member states or no country will get it," said a second person familiar with the matter.

Additional reporting: Mark Brown in Brussels, Arild Moen in Helsinki, Leos Rousek in Prague, Art Patnaude in London and Bernd Radowitz in Berlin

Wall Street Journal

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Jim Rogers : The last thing you want is for your Gold to be in a vault of a bank which goes bankrupt

Jim Rogers :It is (what Valenzuela has done ) certainly significant especially if find out (the banks ) that they do not have it , it will be quite a turmoil if all of sudden the banks will say we do not have all that gold we do not find it because you know a lot of gold has been mixed with other gold it might just mean more and more people do want to hold their gold in their own hands , I would suspect so , we are coming in more and more turmoil more and more banks will be going bankrupt and The last thing you want is for your Gold to be in a vault of a bank which goes bankrupt or which has to suspend redemption , so I suspect you'll see more of it


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'Europe's Financial System Is Insolvent': CIO Guggenheim

Right now, "Europe's financial system is insolvent," Scott Minerd, CIO of the diversified financial services firm Guggenheim Partners, told CNBC Thursday.

"If we mark the assets of the European banks to market, the liabilities of the banks exceed the assets well beyond their capital cushion," said Minerd.

"The reality is every solution that's being offered by the policymakers is more and more liquidity, and the reality is this is not a liquidity problem, this is a structural problem," he added. "And the policy makers have done nothing to address the structural issues."

Take, for example "this Greek-Finland fiasco," said Minerd.

Earlier this week, Finnish Prime Minister Jyki Katainen said the country could withdraw from Greece's bailout program if it is not granted collateral for its loans.

"This shows that the policymakers don't get it. Clearly both Greece and Finland didn't even understand the dynamics of the debt that's in the marketplace."

"It's telling us that the degree of sophistication that we're working with here with the policymakers is pretty low," he added.

Ultimately though, Minerd said policymakers are going to have to "sit down at a table and come up with some formal plan to exchange all this debt."

In addition, Germany's DAX [.GDAXI 5436.91 -147.23 (-2.64%) ] fell as much as 2.7 percent in European afternoon trading on Thursday due partially over rumors that a short-selling ban may be encated in Germany, that Germany is about to lose its triple-A credit rating, and that the collapse of the Greek bailout plan was imminent.
CNBC

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Virginia Earthquake a Sign of the End Times? Public Looks to Pat Robertson

Is it a coincidence that an earthquake that struck Virginia and rattled dozens of other states occurred amid Pat Robertson's "Sign of the Times" special on the "700 Club?"

"Are we in the last days?" Robertson asked during Wednesday morning's live online streaming of the "700 Club" as he continued his teaching on the "Sign of the Times."

"The earth moved," Robertson said ominously, describing the earthquake that struck Virginia Tuesday, "and then it moved all over this part of the country."

As a magnitude 5.8 earthquake struck Virginia around 1:51 p.m. on Tuesday, many folks wondered about its unusual strength. Aftershocks were felt all along the East Coast, West Coast, in some southern states, and even inCanada.

Don Blakeman, a geophysicist with the National Earthquake Information Center (NEIC), told The Christian Post Wednesday that although Virginia has a fair number of earthquakes like most other states, the temblor's strength was unusual.

"Virginia has a fair number of quakes ... but they are typically small. [Virginia] does have a number of them every year, but it is pretty unusual to have one of this size," Blakeman said.

The NEIC geophysicist added, "We should expect some aftershocks, because when you have a good size quake like this then it’s pretty typical to have some aftershocks. It's possible to have some fairly large ones, but most of them will be [in the 3.0 range]."

Earthquake activity was one of the signs of the end, Robertson said, referring to other occurrences such as food shortages and conflicts between nations, which Christians believe will precede Christ's return.

Robertson explained in Wednesday's program, which focused on natural disasters, that earthquakes are one of the "birth pangs" Jesus Christ refers to in Matthew 24 after his disciples ask about the signs preceding his second coming.

The televangelist, who started his series on signs of the end times on Monday, was not alone in looking to the fulfillment of biblical prophecies amid the quake.

Twitter users took to their accounts yesterday, wondering if the CBN televangelist would speak out on the earthquake.

"Earthquake in DC? Stand by for a Biblical explanation from Pat Robertson," tweeted Armistead Maupin (@ArmisteadMaupin).

Erin Fleming (@ERINonyourRADIO) tweeted, "A hurricane headed for the US, an earthquake this morning in D.C. and rioting in parts of the states as well. Back to you Pat Robertson."

Some Twitter users were skeptical, scoffing at the possibility of God revealing any kind of prophetic word to Robertson.

A handful of comments appeared to make reference to Robertson's controversial remarks during the 2010 earthquake that struck the Caribbean nation of Haiti.

Robertson said, just one day after the rattler devastated the small island, that its people were possibly cursed for allegedly making a deal with the devil during the 1791 slave rebellion against the French.

User warrenstjohn (@warrenstjohn) tweeted, "Eagerly awaiting Pat Robertson's pronouncements on who did what to deserve an earthquake."

Patti (@Floridaline) wrote, "Yippee!!! Tomorrow, Gods Meteorologist, Pat Robertson, will tell us why there was an earthquake near DC!!"

Despite the anticipation, Robertson made it clear Wednesday that he had not received any prophetic word from God regarding the earthquake.

"I can't claim any kind of particular revelation," Robertson said in response to a viewer's question about upcoming natural disasters.

Some viewers of the "700 Club's" "Sign of the Times" program were also skeptical that Tuesday's earthquake was any kind of sign from God about the end of the world.

"We've always had natural disasters, many far worse than the Great Virginia Quake of 2011. So why are the events more of a sign than the events of the past," a viewer watching the live program asked in an accompanying chat room.

Other viewers asked Robertson to comment on the rapture, the possible role of the Roman Catholic Church in end time prophecies, and about the possible identity of the antichrist.

No one appeared to ask when the world can be expected to end, but Robertson had an answer for that anyway.

"It will end when the Gospel is preached to the whole world as a witness," Robertson concluded in Wednesday's program.

The "Sign of the Times" program runs through the rest of the week.

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Crash of 2011 Could Come as Early as Next Week!

This weekend will set the tone for the next month and to a certain extent, the rest of the year. Here is the scenario we are monitoring, this weekend Ben Bernanke will meet in Jackson Hole, Wyoming, with other bankers and global elites to decide the near term and long term fate of the stock market. Yesterday, the Dow Jones rallied 322 points despite economic numbers that came out in the morning that confirmed the U.S. is indeed in the second down leg of a very long depression. U.S. sales of new homes declined for the 3rd straight month, in fact, they are on pace for the worst year on record. According to the Commerce Department, sales fell to a seasonally adjusted annual rate of 298,000, this is 25% lower than 2 years ago during the "official recession" and 70% lower than in the bubble (Keynesian Normalcy) years.

The reason the market rallied on this and other bad news is because Wall Street believes that the FED will soon step in with a major quantitative easing #3 (QE3) announcement, more than likely this weekend. Investors are hoping for deja vu, if you recall it was last year at the Jackson Hole meeting that Bernanke announced QE2. If the FED does not announce QE3 this weekend, this could put the markets into a nose dive as early as this weekend. Not knowing what the FED is going to do or say this weekend makes this a complete gamble for investors going into the weekend, so we expect the FED to set the tone early on Friday.

Remember, 2 weeks ago when the FED put out a statement regarding keeping interest rates near zero for at least the next 2 years, the market acted very bipolar and then rallied 400 points. Only to continue to fall in the days to follow. FutureMoneyTrends.com believes that if the FED doesn't announce QE3, but sends a strong signal that it is willing to step in if needed, this could provide a temporary rally on Friday and possibly Monday, but will eventually fade away as reality starts to get priced in with the markets absent of QE from the FED. To put it simply, any rally on Wall Street that comes without the full announcement of QE3 this weekend is a head fake in our opinion. Without any new QE, FutureMoneyTrends.com does not believe the market has seen its 2011 lows.

Why we believe the FED will NOT announce more QE this weekend
First of all let's be clear, FutureMoneyTrends.com does believe that eventually in the next 3 to 9 months the FED will announce and begin a new round of quantitative easing, something larger than imagination, something that will put Bernanke in the money printing "hall of fame." However, we give an announcement this weekend only a 20% chance, here is why we believe there is an 80% chance Wall Street will be disappointed by the FED.

$1,850 Gold- gold is just too high right now to announce another round of money printing, an announcement of more QE would more than likely push gold over $2,000 and silver over $50 per ounce.
$85 Oil- oil is still too high in our opinion from the last round of QE, oil at $85 is just too close to jumping back over $100 harming global economies and adding even more pressure on food prices.
Price inflation- just last week the government reported that PPI rose 0.2% in July, higher than economist and market expectations. CPI also increased 0.5% in July, with all items increasing 3.6% in the last year.

Politics- the Republican presidential field and some members in both parties in congress are putting a lot of heat on the FED right now. Just last week Rick Perry said for the FED to do more QE would be treason.

Lack of crisis- even with the markets declining in the past month, they have been declining because they are in a post QE world. Let's be real, the economy is just as shitty as it was a month ago or even 6 months ago, the only thing that has changed is QE2 ended in June.

In our opinion, the FED needs the perma-bulls to feel a little more pain, maybe $50 oil and Dow 8,000, or better yet, a late Sunday night Bank of America surprise, perhaps a European bank or full blown sovereign default. "Crisis" is the key word, the FED needs a good crisis, one that will make politicians who are entering into an election year beg the FED to do the dirty work of banker bailouts. The FED itself could actually spark a crisis this weekend by avoiding a strong statement positive to future easing. Without any hints or winks to Wall St. about the future of QE3, we believe a market crash would be imminent.


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New national debt data: It's growing about $3 million a minute, even during his vacation

Swallow all liquids in your mouth before reading any further.

Updated numbers for the national debt are just out: It's now $14,639,000,000,000.

When Barack Obama took the oath of office twice on Jan. 20, 2009, CBS' amazing number cruncher Mark Knoller reports, the national debt was $10,626,000,000,000.

That means the debt that our federal government owes a whole lot of somebodies including China has increased $4,247,000,000,000 in just 945 days. That's the fastest increase under any president ever.

Remember the day the Democrat promised to close the embarrassing Guantanamo Bay Detention Facility within one year? That day the national debt increased $4,247,000,000. And each day since that the facility hasn't been closed.

Same for the day in 2009 when Obama flew all the way out to Denver to sign the $787 billion stimulus bill that was going to hold national unemployment beneath 8% instead of the 9.1% we got today anyway? Another $4,247,000,000 that day. And every day since, even Obama golfing and vacation days.

Same sum for the day Obama flew Air Force One nearly four hours roundtrip to Columbus, Ohio for a 10-minute speech about how well the stimulus was working in the politically crucial Buckeye state. Ohio's unemployment rate just jumped to 9% from 8.8% anyway.

Or last week's three-day Midwestern tour in the president's new $1.1 million Death Star bus? National debt went up $16,988,000,000 while he rode around speaking and buying ice cream cones.

Numbers with that many digits are hard to grasp, even for a Harvard head. So, let's put it another way:

One billion seconds ago Bill Clinton was nearing the end of his two terms and George W. Bush's baseball collection was still on the shelves in the Austin governor's office.

The nation's debt increased $4.9 trillion under President Bush too, btw. But it took him 2,648 days to do it. Obama will surpass that sum during this term.

Now, how to portray a trillion, or 1,000 billions. One trillion seconds ago much of North America was still covered by ice sheets hundreds of feet thick. And the land was dotted by only a few dozen Starbuck's.

Obama is saying yes, we can get control of the national debt. But ominously every time he says that he adds that trillions of dollars in infrastructure repairs are badly needed across the country. And with interest rates so low, according to the thinking on Obama's planet, now is an excellent time to borrow even more money.

So, it looks like not too long before Americans learn what comes after 1,000 trillions.

It's quadrillion. But for Bernanke's sake, please don't tell anyone in Washington.


Los Angeles Times

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European bank job 'bloodbath' hits 67,000

UBS’s decision to cut 5 per cent of its workforce brings to more than 40,000 the number of jobs cut by European banks in the past month and to 67,000 this year, as the region’s worsening sovereign debt crisis crimps trading revenue.

UBS, Switzerland’s biggest bank, said yesterday it will eliminate 3500 jobs, mainly from its investment bank. It follows HSBC, which announced 30,000 cuts on August 1, Barclays, which is cutting headcount by 3000, and Royal Bank of Scotland, which is eliminating 2000 posts. Credit Suisse announced 2000 reductions on July 28.

European banks are slashing jobs this year six times faster than their US peers, as concerns about the creditworthiness of Italy, Spain and France roil financial markets and reduce income from fixed-income trading, stock and bond underwriting as well as mergers and acquisitions.
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Financial firms are also cutting costs as regulators force banks to hold more and better quality capital to withstand future shocks.

“It’s a bloodbath, and I expect things to get worse before they get better,” said Jonathan Evans, chairman of executive-search firm Sammons Associates in London. “I cannot see a lot of those who have lost their jobs getting re-employed. Regardless of how good someone is, no one wants to talk about hiring. Life will be very difficult for two or three years.”

The 46-member Bloomberg Europe Banks and Financial Services Index has fallen 31 per cent this year. RBS tumbled 49 per cent, Barclays 44 per cent and France’s Societe Generale 48 per cent.

Credit Suisse and UBS both reported a 71 per cent drop in investment-banking earnings in the second quarter. Revenue at Edinburgh-based RBS’s securities unit dropped 35 per cent in the period, while London-based Barclays Capital posted a 27 per cent decline in pretax profit.

“Some job cuts will be done by all banks” with investment banking units, said Stefano Girola, a fund manager at Albertini Syz & Co. in Milan. “Business volumes are poor, especially in equity and corporate bonds divisions.”

European banks are cutting jobs at the fastest rate since the collapse of Lehman Brothers in 2008, eliminating about 67,000 roles so far this year. UK banks account for about 50,000 of those reductions. US lenders announced about 10,500 cuts in the same period.

A lot of the cuts are likely to be permanent, according to Stephane Rambosson, managing partner at executive search firm Veni Partners in London.

“Returns will continue to fall and costs on revenue have just exploded,” Mr Rambosson said. “Somehow banks have to make the equation work. In the long term, there will be far fewer bankers than there were.”

Banks will be forced to continue to cut costs as they struggle to increase revenue amid tougher regulation, according to a report by KPMG.

The Basel Committee on Banking Supervision will require lenders to more than triple the core reserves they must hold to protect themselves from insolvency by 2019. Under Basel III, banks will be obliged to hold core Tier 1 capital equivalent to 7 per cent of their risk-weighted assets, compared with 2 per cent under the previous international rules.

“We’re looking at a fundamental restructuring of banking,” said David Sayer, global head of retail banking at KPMG in London. “Banks have to hold far more capital and more of it in liquidity, which doesn’t generate a return. This means the cost of doing business is higher, leading banks to think about where they’ll make money and pulling out of countries and areas where they won’t.”

UniCredit this week lowered its growth forecasts for the 17-nation euro region for this year and next. The euro area will expand 1.7 per cent this year and 1 per cent in 2012, Unicredit chief euro zone economist Marco Valli said in a note yesterday. That compares with a previous prediction of 2.1 per cent growth in 2011 and 1.7 percent in 2012.

“The banking industry overall is clearly re-shaping its cost base,” said Andrew Gray, banking leader at accounting firm PricewaterhouseCoopers in London. “We may well see some further losses of jobs over the course of the second half of 2011. Exactly where is impossible to say, but we will see some further cuts from other institutions.”


Read more: http://www.smh.com.au/business/world-business/european-bank-job-bloodbath-hits-67000-20110824-1j93f.html#ixzz1W03MmNTp

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