World economy talk

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Any thoughts about Netherlands?

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Double dip anyone?

Britain Faces First Double Dip Recession Since the 1970s
By REUTERS
Published: April 25, 2012 at 8:46 AM ET

LONDON (Reuters) - Britain's economy has fallen into its second recession since the financial crisis after an shock contraction at the start of 2012, heaping pressure on Prime Minister David Cameron's government as it reels from a series of political missteps.

Britain's Conservative-Liberal Democrat coalition has seen its support crumble after weeks of criticism over unpopular tax measures in last month's budget, and is under further pressure from revelations about its close links with media tycoon Rupert Murdoch.

With local elections taking place on May 3, there could hardly be worse timing for Wednesday's news from the Office for National Statistics that Britain's gross domestic product fell 0.2 percent in the first quarter of 2012 on top of a 0.3 percent decline at the end of 2011.

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the UK govt cut spending at the wrong time

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Japan QE

the endless battle against deflation

BOJ Expands Asset-Purchase Fund to 40 Trillion Yen - Bloomberg

The Bank of Japan (8301) added monetary stimulus for a second time in three months amid mounting calls from lawmakers to redouble efforts to spur economic growth.

The central bank expanded its asset-purchase fund to 40 trillion yen ($494 billion) from 30 trillion yen, according to a statement released in Tokyo today.

Japan CPI

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With borrowing rates going overboard, Spain desperately looking at alternatives...

Spain’s rating downgrade at Standard & Poor’s doesn’t alter Germany’s stance that banks can’t have direct access to Europe’s financial backstops, a senior lawmaker from Chancellor Angela Merkel’s party said.

“The German position is absolutely strict,” Michael Meister, the deputy caucus chairman of Merkel’s Christian Democrats, said in a phone interview in Berlin. “And since such aid programs require unanimity, there’s not going to be any change. All sorts of people can try to set things in motion, but Germany won’t vote for it.”

It’s “obvious” that there can’t be unconditional help from the European Stability Mechanism to Spanish banks, Meister said today. The responsibility and liability for the ESM lies with its members, which are nation states, not banks, he said.

Spanish bond yields rose above 6 percent this month for the first time since November on concern that banking losses will swamp the government. S&P cut its rating on Spain by two levels to BBB+ yesterday, three steps from junk status, citing concern that the country will need to pour more money into its lenders.

Spain's banks are saddled with huge amounts of toxic real estate loans and some of the country's regional governments have spent way beyond their means.

“Spain doesn’t only have a problem with its banks,” said Meister. “Spain has a problem with its banks, it has a problem with its budget and it has a problem with its economic situation, with its competitiveness” too. “Thinking that Spain will be on the safe side once the banking problem is solved is a bit ambitious.”

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Hmmm... since Japan is now importing more, shouldn't they just allow Yen to deflate? >.>

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Hmmm... since Japan is now importing more, shouldn't they just allow Yen to deflate? >.>

you mean allow the yen to strengthen

if you're an exporter you want your currency weak (your goods are cheaper for overseas customers)

a strong currency is good for an importer (the things you buy abroad are less expensive coz of your strong currency)

BUT the strong yen is killing Japan's exporters

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With borrowing rates going overboard, Spain desperately looking at alternatives...

as if things weren't bad enough for Spain

guess the effect the downgrade --

investment funds that are required to hold only investment grade bonds are forced to sell bonds that are no longer investment grade

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hmmm... role reversal

[ame=http://www.youtube.com/watch?v=XWVSn-xoBVk]Outsourced: India bails out US from jobless crisis - YouTube[/ame]

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S&P downgrades Spain banks

Spain economy in recession


News Headlines

Standard & Poor's (S&P) Ratings Services announced on Monday that it had lowered the credit rating of 16 Spanish banks. The downgrade came ahead of an announcement of Spain’s first quarter GDP figures, which showed the country had fallen back into recession.

Among the worst hit by the S&P downgrade was Santander [BNC-LN 393.50 -3.50 (-0.88%) ] and its core subsidiary Banco Espanol de Credito S.A, which were downgraded from A- to A-2, and A+ to A-1 respectively. Meanwhile, the ratings agency cut its rating on Santander’s senior debt to A- from A+.

S&P also lowered its rating on the bank’s non-deferrable subordinated and Tier 1 hybrid notes one notch and placed them on a negative outlook.

The ratings agency lowered its credit rating on Banco Bilbao Vizcaya Argentaria (BBVA) [BVA-LN 5.23 0.01 (+0.19%) ] to BBB+/A-2 from A/A-1 with a long term negative outlook. It also lowered its rating on BBVA's senior debt to BBB+ from A. S&P cut its rating on BBVA’s non-deferrable subordinated debt and Tier 1 hybrid notes by one notch and placed them on a negative outlook.

S&P said the negative outlooks on Santander and BBVA mirrored that on the long-term rating of Spain’s sovereign debt, which the ratings agency downgraded last week.

Official figures released on Monday showed the Spanish economy contracted by 0.3 percent in the first three months of the year, taking the country back into recession. The figure beat economists’ expectations which had forecast a contraction of 0.4 percent. The fall in output matched that of the final quarter of 2011.

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Australia central bank rate cut bigger than expected

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Uls, ano nangyari Kay tidus?

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di ko po alam

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This doesn't look good...

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that light blue line... domestic holders... those are Spain's and Italy's banks. they borrowed money from the ECB (LTRO 1&2)

then the money is lent to their governments

foreign investors have dumped Spain's and Italy's bonds months ago

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US April job figures are out and it is below market expectations...

Only 115,000 jobs were added to the economy in April, according to the Labor Department, nudging down the unemployment rate slightly to 8.1 percent.

The slight drop in the unemployment rate is due to the more than 300,000 unemployed people who gave up looking for work last month.

On Fox News Friday morning, Mitt Romney called the report "terrible" and "disappointing." Obama has emphasized that economic indicators are improving, albeit slowly, while Romney blames the unemployment crisis on Obama's policies. The Federal Reserve has predicted the unemployment rate will be between 7.8 and 8 percent by election day.

Earlier this week the Labor Department reported that jobless claims fell 27,000 to 365,000. That was the steepest weekly drop in a year.

About 12.5 million Americans were unemployed in April, including 5.1 million who have been looking for work for more than 27 weeks.

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Besides Sarkozy clinging to dear political life in the French presidential election, Greece is also holding parliamentary elections. Suffering 2 years from recession and austerity measures, guess who is gaining ground due to voter's discontent...Nazis.

ATHENS—After two years of government cutbacks brought on by Greece's debt crisis, the signs of social decay are everywhere in Athens and the mood in the capital is despondent.

Downtown Athens today is a shadow of its former self. Its streets, formerly once lined with crowded elegant stores and vibrant cafés, are now scarred by shuttered shopfronts, crime, homelessness and periodic rioting.

Businesses are closing at a record pace, and unemployment in the greater Athens area has soared to more than 23%, above the national average. Regular demonstrations have frightened away tourists, and thousands of the city's hotels and retailers are teetering on the verge of bankruptcy.

Beyond the social turmoil, this new reality presents a particular political problem for Greece's main conservative party, New Democracy, which hopes to win Sunday's parliamentary election and lead the next governing coalition. Athens has always been their stronghold, but the city's unhappy residents are abandoning them for fringe parties of the right and left, including the neo-Nazi Golden Dawn.

With such newfound supporters, Golden Dawn, using neo-Nazi rhetoric and a logo of an ancient symbol resembling the swastika, is poised to enter Parliament for the first time. Recent public-opinion pPolls show support for Golden Dawn, hovering between 5% and 6%, well above the 3% minimum threshold needed to enter Parliament and potentially securing them as many as 15 seats in Greece's 300-member legislature.

The party advocates the immediate expulsion of all illegal immigrants and "Jobs for Greeks." Its platform states that e country's borders with Turkey should be sealed with land mines. Immigrant groups have accused Golden Dawn members of abuse, beatings with iron rods and threats of reprisals when the immigrants speak out. The party denies those allegations.

Its economic manifesto includes foregoing all debt repayments, forming "special teams" to investigate corrupt practices, arresting and imprisoning politicians and state servants found guilty of economic mismanagement, nationalizing banks, and returning "to traditional family values."

Such rightist ideology until recently has won gained little traction in Greece. In the 2009 elections, Golden Dawn managed a meager just 0.23% of the vote. In 2010, it the party was able to take took a seat on the Athens city council, its first ever electoral victory. A variety of community initiatives, such as having party members escort elderly residents to the bank and providing food for the needy, those in need, have helped win over local residents.

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risk: Greece elections

Greece has to implement an austerity plan

the EU/ECB/IMF-imposed austerity plan is very unpopular

the political parties have been distancing themselves from the austerity plan during the election campaign

question is -- after the elections, will the austerity plan still be implemented?

if not, additional bailout funds won't be released

and Greece will run out of cash

and exit the euro