Tuesday, July 10, 2012
Euro zone fragmenting faster than EU can act
Signs are growing that Europe's economic and monetary union may be fragmenting faster than policymakers can repair it.
Euro zone leaders agreed in principle on June 29 to establish a joint banking supervisor for the 17-nation single currency area, based on the European Central Bank, although most of the crucial details remain to be worked out.
The proposal was a tentative first step towards a European banking union that could eventually feature a joint deposit guarantee and a bank resolution fund, to prevent bank runs or collapses sending shock waves around the continent.
The leaders agreed that the euro zone's permanent bailout fund, the 500 billion euro ($620 billion) European Stability Mechanism, would be able to inject capital directly into banks on strict conditions once the joint supervisor is established.
But the rush to put first elements of such a system in place by next year may come too late.
Deposit flight from Spanish banks has been gaining pace and it is not clear a euro zone agreement to lend Madrid up to 100 billion euros in rescue funds will reverse the flows if investors fear Spain may face a full sovereign bailout.
Many banks are reorganizing, or being forced to reorganize, along national lines, accentuating a deepening north-south divide within the currency bloc.
An invisible financial wall, potentially as dangerous as the Iron Curtain that once divided eastern and western Europe, is slowly going up inside the euro area.
The interest rate gap between north European creditor countries such as Germany and the Netherlands, whose borrowing costs are at an all-time low, and southern debtor countries like Spain and Italy, where bond yields have risen to near pre-euro levels, threatens to entrench a lasting divergence.
Since government credit ratings and bond yields effectively set a floor for the borrowing costs of banks and businesses in their jurisdiction, the best-managed Spanish or Italian banks or companies have to pay far more for loans, if they can get them, than their worst-managed German or Dutch peers.
POLITICAL BACKLASH
The longer that situation goes on, the less chance there is of a recovery in southern Europe and the bigger will grow the wealth gap between north and south.
With ever-higher unemployment and poverty levels in southern countries, a political backlash, already fierce in Greece and seething in Spain and Italy, seems inexorable.
European Central Bank President Mario Draghi acknowledged as he cut interest rates last week that the north-south disconnect was making it more difficult to run a single monetary policy.
Two huge injections of cheap three-year loans into the euro zone banking system this year, amounting to 1 trillion euros, bought only a few months' respite.
"It is not clear that there are measures that can be effective in a highly fragmented area," Draghi told journalists.
Conservative German economists led by Hans-Werner Sinn, head of the Ifo institute, are warning of dire consequences for Germany from ballooning claims via the ECB's system for settling payments among national central banks, known as TARGET2.
If a southern country were to default or leave the euro, they contend, Germany would be left with an astronomical bill, far beyond its theoretical limit of 211 billion euros liability for euro zone bailout funds.
As long as European monetary union is permanent and irreversible, such cross-border claims and capital flows within the currency area should not matter any more than money moving between Texas and California does.
But even the faintest prospect of a Day of Reckoning changes that calculus radically.
In that case, money would flood into German assets considered "safe" and out of securities and deposits in countries seen as at risk of leaving the monetary union. Some pessimists reckon we are already witnessing the early signs of such a process.
OVERWHELMING?
Any event that makes a euro exit by Greece - the most heavily indebted member state, which is off track on its second bailout program and in the fifth year of a recession - look more likely seems bound to accelerate those flows, despite repeated statements by EU leaders that Greece is a unique case.
"If it does occur, a crisis will propagate itself through the TARGET payments system of the European System of Central Banks," U.S. economist Peter Garber, now a global strategist with Deutsche Bank, wrote in a prophetic 1999 research paper.
Either member governments would always be willing to let their national central banks give unlimited credit to each other, in which case a collapse would be impossible, or they might be unwilling to provide boundless credit, "and this will set the parameters for the dynamics of collapse", Garber warned.
"The problem is that at the time of a sovereign debt crisis, large portions of a national balance sheet may suddenly flee to the ECB's books, possibly overwhelming the capacity of a bailout fund to absorb the entire hit," he wrote in 2010, after the start of the Greek crisis, in a report for Deutsche Bank.
European officials tend to roll their eyes at such theories, insisting the euro is forever, so the issue does not arise.
In practice, national regulators in some EU countries are moving quietly to try to reduce their home banks' exposure to such an eventuality. The ECB itself last week set a limit on the amount of state-backed bank bonds that banks could use as collateral in its lending operations.
In one high-profile case, Germany's financial regulator Bafin ordered HypoVereinsbank (HVB), the German subsidiary of UniCredit (CRDI.MI), to curb transfers to its parent bank in Italy last year, people familiar with the case said.
Such restrictions are legal, since bank supervision is at national level, but they run counter to the principle of the free movement of capital in the European Union's single market and to an integrated currency union.
Whether a single euro zone banking supervisor would be able to overrule those curbs is one of the many uncertainties left by the summit deal. In any case, common supervision without joint deposit insurance may be insufficient to reverse capital flight.
German Chancellor Angela Merkel, keen to shield her grumpy taxpayers, has so far rejected any sharing of liability for guaranteeing bank deposits or winding up failed banks.
Veteran EU watchers say political determination to make the single currency irreversible will drive euro zone leaders to give birth to a full banking union, and the decision to create a joint supervisor effectively got them pregnant.
Reuters
Iran Producing Deadly Anti-Tank ‘Kornet’ Missile
Iran is copy-catting the deadly Russian Kornet anti-tank missile that Hizbullah used against Israeli soldiers in the Second Lebanon War and which Hamas used to kill a student on a school bus last year.
Quoting defense sources in London and Moscow, the Gulf News website quoted a Russian defense advisor as saying that Iran may have obtained the design for the Kornet missile from Hizbullah. An analyst from Jane’s Defense suggested that Hamas and/ or Syria may have been the source for handing over the design to Iran, which does not have a license from Russia to produce the missile.
IDF intelligence failed to obtain advanced information that Hizbullah possessed the Kornet missile, and Israeli tanks were unprepared for missile attacks that killed dozens of soldiers and wounded hundreds more in the 34-day-old war.
The Kornet has a range of 5.5 kilometers, or 3.5 miles. Hizbullah has said the Kornet missiles destroyed two advanced Israeli Merkava-4 tanks during the war in 2006. The missiles were smuggled into Lebanon from Syria.
Over two years ago, Israel discovered that Hamas also has possession of the missile. In December 2010, former IDF Chief of Staff Gabi Ashkenazi announced, "On December 6, a Kornet anti-tank missile fired for the first time in Gaza hit an IDF tank and penetrated its outer shell. Luckily, the missile did not explode inside the tank. We are talking about a massive missile, one of the most dangerous in the battlefield, which has already been used against the IDF in the Lebanon War."
Hamas used the same missile to attack a school bus approximately a mile from Gaza last year, killing a student. Dozens of other children had stepped off the bus only a few minutes before the attack near Kibbutz Saad, in the western Negev.
Israel National News
Illuminati card game now on cartoon video
Please pray can cover yourself with the blood of Jesus before watch the video.
Thanks to my Friend Luis Rosales for the info!!!
Thanks to my Friend Luis Rosales for the info!!!
Bank of England emails reveal depth of government fears over banks
At 20:12 on October 21 2008 Paul Tucker, then head of markets at the Bank of England, received a quizzical email from the private office of former Prime Minster, Gordon Brown.
Only days earlier the government had announced the bailouts of HBOS and Royal Bank of Scotland, yet borrowing costs for British banks remained stubbornly high.
“Why are UK LIBOR spreads not falling as fast as US,” wrote Jeremy Haywood, principal private secretary to the Prime Minister.
Fifteen minutes later, Mr Tucker dashed off a response to Mr Haywood, now Sir Jeremy following his knighthood in January, explaining that while US banks were “lending fairly actively” the sterling interbank lending market was only being kept alive by the efforts of HSBC.
“One bank can’t turn a whole market. Hope that helps a bit,” signed off Mr Tucker.
October 22, 2008
The next morning, Mr Tucker sent a message to Barclays’ top managers, John Varley, the bank’s then chief executive, and Bob Diamond, head of its investment banking arm, with the subject line: “Cld I talk to one or other of you about libor pl.”
Just after midday he responded to an email from Mr Diamond telling him he was “calling right now” to say that he was in a meeting and would call later. The email chain does not relate when, or if a call took place.
However, fours hours after first contact Barclays, Mr Tucker received an email from Mr Heywood titled, ‘Might be scuttle butt – are u hearing this rumour’, in which he said he had been told “from the money market trenches” that sterling Libor was high “because Barclays are bidding it”.
At 22:17 he replied saying: “I know. But I don’t think that can be all of it. Cos I don’t think they’d be an influence on euro libor, which has also been sticky. But we are trying to monitor what’s going on.”
Thirty two minutes later Mr Heywood responded: “thanks. obviously we are v concerned that US rates are tumbling but we remain stuck!”
Eleven minutes later, Mr Tucker replied: “Yep, Dollar spreads still above ours at 3 months. But I’m concerned too, for both parts of our mission.”
October 24
In the afternoon Mr Tucker contacted Mark Dearlove and Jonathan Stone in the Barclays treasury department for an update on the bank’s funding. “I’d be grateful if we could meet to discuss the structure and sources of your money market funding before the turmoil began, please.”
Mr Tucker suggested setting up a meeting “over the next week”. Adding, “I mean a bilateral meeting”.
October 25
The authorities growing concerns over Barclays funding are clear from an email sent by Mr Tucker to Mr Diamond. Sent at 11:32, Mr Tucker titled an email to Mr Diamond with the subject line: “Struck that your govt gnteed bond was issued at around 140 over.” Adding in the main text, “That’s a lot.”
What this meant was that Barclays had sold a bond with a British government guarantee with an interest rate 1.4pc above the benchmark rate, a sign the bank was having to pay a high premium for its funding.
October 26
The next morning, a Sunday, Mr Diamond asked if Mr Tucker was “around for a chat”. “I am in London, may I can come to see you?”
Mr Tucker replied that he was abroad. “But cld talk by phone in about an hour. Or is it better face to face?”
In the afternoon Mr Heywood sent Mr Tucker a briefing from UBS suggesting ways to help reduce Libor.
Mr Heywood added his own fore note: “In summary Libor’s decline is in train but it will be gradual. To speed it up a change in the guarantee fee (to bring it in line with the Dutch scheme) is called for. I am an advocate for speeding it up.”
October 27
Mr Diamond emailed Mr Tucker in the morning to ask if he had returned to the country and available for a meeting or a telephone call.
October 28
Despite his earlier hope about falls in Libor, Mr Heywood appears to have still been worried by developments in the money markets. Heading an email to Mr Tucker “PERSONAL – IS THIS WRONG?” he stated: “There is a clear lack of short term money in the system.” He then went on to outline steps the Bank of England could take to ease funding pressures on banks. According to the email cache, Mr Tucker had not replied two days later, prompting Mr Tucker to send another message stating, “WOuld welcome a conversation on this at some point – plus a more general update.” Minutes later Mr Tucker replied “will be sure to call later”.
October 29
A copy of an email already released by Barclays records Mr Diamond’s notes of a call with Mr Tucker. It is this email, sent to Mr Varley and Jerry del Missier, a senior manager in Barclays Capital, that has become the centre of debate over how much the authorities knew about Libor rigging and were complicit in it.
The email ends with the following line: “Mr Tucker stated the levels of calls he was receiving from Whitehall were ‘senior’ and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently.”
This was taken by Mr del Missier to be an instruction that Barclays should lower its Libor submission.
October 30
In the morning Mr Diamond emailed Mr Tucker telling him he had asked one of his staff, Andrew Jones, a Barclays Capital investment banker, to get in contact with him and give “some perspective” on a recent bond issue by the bank. “Quite a positive development actually that you and the government should feel pretty good about,” he added.
The email cache ends here, but the next day (October 31) Barclays announced a multi-billion pound investment by Middle East wealth funds that ended fears it did not enough capital to weather the financial storm.
The Telegraph
More than $200 million reported missing from Cedar Falls
CEDAR FALLS, Iowa --- In a stunning turn of events in one day, the future of a Cedar Falls-based international brokerage firm hangs in the balance as regulatory and government officials moved in to investigate possible financial wrongdoing in light of the attempted suicide of company founder and CEO Russ Wasendorf Sr. Monday.
Wasendorf, founder and CEO of PFGBest, the international brokerage firm he wholly owns, reportedly attempted to commit suicide outside the corporate headquarters north of Cedar Falls, company officials confirmed Monday afternoon. Employees found him shortly after 8 a.m. and called 911.
He was taken to Sartori Memorial Hospital, then later was airlifted to University of Iowa Hospitals and Clinics, where he was in critical condition Monday afternoon. An updated condition report was not immediately available.
The National Futures Association, the self-regulating organization of the United States futures industry, initiated an emergency enforcement action Monday afternoon after a review of company bank accounts showed about $220 million was missing and there was a report that Wasendorf falsified records.
News of the development spread quickly over international financial news services. The Wall Street Journal reported a company spokesperson said the firm’s 125 employees across the country could be at risk of losing their jobs. Workers in Cedar Falls were told they could report to work today, but with no guarantees of being paid.
PFGBest had reported on June 29 that it had about $400 million in segregated funds, $225 million of which was supposed to be deposited at U.S. Bank. The NFA had received a report Monday that Wasendorf had falsified bank records. The NFA then checked at U.S. Bank and found only $5 million on deposit.
In the course of the investigation, the NFA also found that reports in February 2010 and March 2011 at US Bank also appeared to be false. On those dates $207 million and $218 million were reported on deposit, respectively. In both cases the NFA found less than $10 million on deposit.
The National Futures Association has placed PFGBest on a “liquidation only” status due to Wasendorf’s condition. The company stated that all funds have been put on hold, meaning customers will only be able to sell off their interests, until future notice.
According to company officials, accounting irregularities are being investigated.
Earlier, on Feb. 8, the National Futures Association announced it had levied a $700,000 fine against Peregrine, based on an NFA complaint and a settlement offer by the company. The complaint alleged that Peregrine and company officials failed to supervise four of its “guaranteed introducing brokers” or GIBs, alleging those brokers “made trade recommendations that maximized commissions without regard for the best interests of their customers and that all four GIBs made deceptive sales solicitations.”
The company and officials “neither admitted nor denied the allegations of the complaint in making their settlement offer,” under which the company also was required to retain “an independent consultant to review Peregrine’s existing procedures for supervising its GIBs and retail customer accounts.”
Wasendorf moved the corporate offices of the company from Chicago to rural Cedar Falls in 2009. He had started the company in Chicago in 1990. Wasendorf is a native of Marion and a 1970 graduate of the University of Northern Iowa, according to online biographies and his own Facebook page.
Wasendorf built a state of the art, environmentally responsible $18 million building set in the woods here when he decided to move his corporate headquarters.
He also established an Italian restaurant, My Verona, in downtown Cedar Falls. More recently he announced he would add a second restaurant at the TechWorks site in Waterloo.
His reach has extended into the community in a number of ways, from the Peregrine Charities Triathlon to a $2 million donation in 2009 to the athletics program at the UNI.
EARLIER STORY
CEDAR FALLS, Iowa --- The National Futures Association had initiated an investigation into PFGBest, including reports of falsifying documents and hundreds of millions of dollars in missing funds Monday, the same day that company CEO Russ Wasendorf Sr. was hospitalized after reportedly attempting to take his own life.
The NFA initiated an emergency enforcement action after a review of its bank accounts showed about $220 million was missing and there was a report that Wasendorf falsified records.
PFGBest had reported on June 29 that it had about $400 million in segregated funds, $225 million of which was supposed to be deposited at US Bank. The NFA had received a report Monday that Wasendorf had falsified bank records. The NFA then checked at US Bank and found only $5 million on deposit.
In the course of the investigation, the NFA also found that reports in February 2010 and March 2011 at US Bank also appeared to be false. On those dates $207 million and $218 million were reported on deposit, respectively. In both cases the NFA found less than $10 million on deposit.
The Wall Street Journal reported a company spokesperson said employees across the country could be at risk of losing their jobs.
PFGBest has been placed on a "liquidation only" status, meaning funds have been placed on hold and most customer transactions have been frozen.
Read More: http://wcfcourier.com/news/local/update-cedar-falls-company-investigated-for-alleged-connection-to-ponzi/article_0108e02a-ca07-11e1-95c8-0019bb2963f4.html#ixzz20E7lhUqU
Clinton: Syria on brink of catastrophe as rebels advance.
“There is still a chance to save the Syrian state from a catastrophic assault that would be very dangerous not only to Syria, but to the region,” said US Secretary of State Hillary Clinton in Tokyo, Sunday, July 8. She did not elaborate, but stressed earlier, “… the opposition is getting more effective in defense of themselves and going on the offensive against the Syrian military.”
DEBKAfile’s military sources note that her over-the-top language comes at a pivotal moment in the Syrian conflict: The rebels are winning more and more territory and not only encircling Damascus but fighting inside the capital. To save itself, the Assad regime which still controls the army outside Damascus may in desperation open up its arsenals and deploy weapons of mass destruction in a bid to drive off the rebels while also spreading the flames to other parts of the region, including Israel.
Persian Gulf sources reported Sunday that inside the capital, the Syrian army no longer moves troops in military convoys for fear of rebel attack. They now travel in unmarked civilian vehicles. Some officers prefer to stay on base for fear of assassination or kidnap on their way home.
Clinton did not explain how the rebels were suddenly able in the last few days to develop their ubiquitous capabilities, rising numbers and military organization - or where they procured weapons for their wholesale offensive against the Syrian army.
According to DEBKAfile’s intelligence and military sources, Turkey, Saudi Arabia and Qatar have substantially stepped up the flow of munitions to the rebels. They are reaching combatants inside Syria as well as the trainees at Turkish military facilities.
Their numbers have, furthermore, risen to 50,000 armed men who are efficiently organized in 17 brigades. Fighting inside the country are 260 military units, each consisting of one or two battalions, which mostly range from 1,000-1,500 men - depending on the arena. Some are brigades of 3,000 men.
By the first week of July, the rebel army had put in place an efficient logistical system:
1. The Free Syrian Army had been able to establish a geographical presence in all of Syria’s provinces, barring the minority regions (Kurds and Druzes) which are outside the conflict, and the pro-regime Alawite region.
2. A regional operational command was working in all those provinces (260). It was equipped with hi-tech communications connecting the provinces and linked to the FSA’s high command in Turkey.
3. A well-organized arms smuggling ring was transferring weapons from one command to another as required for local attacks on Syrian military and security forces. This pipeline is fed by Turkish, Saudi and Qatari suppliers via Jordan, Iraq, Lebanon, and Turkey..
4. A foreign “military adviser” is posted at each provincial command center. They are usually special forces experts mainly from the British, French, Turkish, Saudi and Qatari armies.
Up until last month, the rebels were fighting primarily to sever a strategic strip of land from Idlib in the north to Deraa in the south in order to tie down the regime in Damascus and its Allawite loyalist forces in the west and center and cut it off from the rest of the country.
This goal has now been abandoned. Today, the anti-Assad forces are concentrating on a single objective: The regime’s overthrow.
DebkaFile
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