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post #1 of 5 (permalink) Old 04-12-2008, 04:03 PM Thread Starter
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Euro Demands More Say in World Economy.........

Euro Demands More Say in World Economy

EU: Europe Needs More Say in World Economy Talks As Strong Euro Gains Ground

BRUSSELS, Belgium (AP) -- The European Union's top economy official has said that Europe deserved a greater say in the global economy as the strong euro gains ground as the world's second major currency.

EU Economic and Monetary Affairs Commissioner Joaquin Almunia said Friday that the rest of the world now sees the euro currency zone as "a pole of stability" and the currency had the potential to become even more important.

The euro is now second to the weak U.S. dollar as a reserve currency held by foreign investors and has risen sharply against the dollar in recent months, hitting a new all-time high of $1.5912 on Thursday.

Almunia said the euro area is now "playing an increasingly important role in supporting the stability of the world economy and the global financial system."

"Non-EU countries increasingly perceive the euro area and the EU as a whole as a pole of stability, a source of new capital, and also a source of advice and expertise on regulatory approaches," he said in a speech to the Petersen Institute in Washington D.C.

His prepared remarks were distributed ahead of time by his Brussels office.

The EU official called for the 15 euro nations to share a single seat when world leaders meet to discuss the economy at the International Monetary Fund or the G-7 group of top seven industrialized nations.

In the G-7, this would come at the expense of euro users Germany, France and Italy which now represent themselves at these talks.

The euro's greater role carried some risks, he warned, because it increased the region's exposure to shocks from other parts of the world and "disruptive portfolio shifts" between major currencies.

"It is precisely such shocks that are likely to occur more frequently in a world characterized by financial and economic globalization," he said.

He again signaled worry about the U.S.' huge current account deficit, saying a sudden "unwinding" could hit Europe hard, since its currency is still appreciating against the dollar.

The euro now makes up 26 percent of foreign exchange reserves and is the second most actively traded currency after the U.S. dollar on global foreign exchange markets.

Euro-dollar trades are the most popular foreign exchange deals, accounting for more than a quarter of global turnover.

Euro Demands More Say in World Economy: Financial News - Yahoo! Finance
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post #2 of 5 (permalink) Old 04-12-2008, 04:13 PM Thread Starter
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G-7 Signals Concern on Dollar's Slide, Weaker Growth

April 12 (Bloomberg) -- Finance chiefs from the Group of Seven nations signaled concern on the dollar's slide and said the global economic slowdown may worsen amid an ``entrenched'' credit squeeze.

``Since our last meeting, there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability,'' the G-7's finance ministers and central bankers said in a statement after talks in Washington yesterday.

The officials downgraded their outlook for the world economy from that of two months ago, blaming the U.S. housing recession, credit-market turmoil, commodity prices and inflation pressures. The dollar has lost 8 percent against the euro and 6 percent versus the yen since the G-7 last met in Tokyo in February.

``They ratcheted up the currency rhetoric a notch or so,'' said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. ``They're trying to buy some time for the dollar.''

The new language was the first significant change in the G- 7's view of currencies since a February 2004 meeting in Boca Raton, Florida. The U.S. currency reached a record low of $1.5913 against the euro this week.

Monitoring Markets

``We continue to monitor exchange markets closely, and cooperate as appropriate,'' the G-7 said.

Treasury Secretary Henry Paulson said the change in the G-7 statement on currencies ``reflects market developments and changes in the markets.'' He also said he told the G-7 ``in very strong terms our commitment to a strong dollar.''

``They're trying to discreetly throw a lifeline to the dollar,'' said Sophia Drossos, a currency strategist at Morgan Stanley in New York, who used to help manage the Federal Reserve's foreign-exchange holdings. ``Had they not said anything, the dollar would have resumed its sell-off. This acknowledges there has been increased volatility.''

Policy makers laid out a 100-day plan to strengthen regulation of capital markets. They urged financial companies to ``fully'' disclose in their mid-year earnings reports their investments at risk of loss. Firms should also establish ``fair value estimates'' for the complex assets that investors have shunned and boost their capital as needed, the G-7 said.

`Entrenched' Turmoil

``The turmoil in global financial markets remains entrenched and more protracted than we had anticipated,'' the officials said in their statement. ``Near-term global economic prospects have weakened.''

The G-7 pledged to implement further monetary and fiscal policies ``as appropriate'' without giving details.

The officials met after the International Monetary Fund this week estimated a 25 percent chance of a global recession this year. A collapse in the market for U.S. subprime mortgages has pushed the U.S. toward its first contraction in seven years and prompted banks to shun lending after $245 billion of asset writedowns and credit losses since the start of 2007.

While the dollar's drop has helped support the U.S. economy by boosting exports, its acceleration triggered criticism from officials abroad worried that their own shipments may be hurt.

``We don't like the recent moves,'' Luxembourg Finance Minister Jean-Claude Juncker, who heads a group of counterparts from the euro area, told reporters in Washington. Canadian Finance Minister Jim Flaherty said the dollar's drop ``has been borne primarily by the Canadian dollar and also by the euro and the yen.''


The G-7 may fail to reverse the dollar's slump because there's no sign it's willing to intervene and the U.S. economy is weaker than its counterparts, said Samarjit Shankar, director of global strategy for the foreign exchange group at Bank of New York Mellon in Boston.

The Fed has tried to avert recession by cutting its benchmark interest rate 3 percentage points since August, yet the European Central Bank has left its unchanged at a six-year high of 4 percent amid inflation at a 16-year high.

``Growth differentials are still stacked up against the dollar and since there's no sign whatsoever that the group is about to intervene, that clears the way for further dollar weakness,'' said Shankar, who predicted the dollar will reach $1.60 per euro.

China's Yuan

The G-7 again urged China to allow ``accelerated appreciation'' in its currency, while acknowledging its recent rise through 7 per dollar for the first time since a fixed exchange rate ended in 2005.

The group pledged ``rapid implementation'' of recommendations from the Basel-based Financial Stability Forum published yesterday. The FSF report aims at increasing transparency and cooperation among international bank supervisors.

In the next 100 days, the G-7 demanded that regulators revise liquidity risk management rules, improve accounting standards for off-balance-sheet units and enhance guidance on how assets are fairly valued.

With the credit squeeze now in its ninth month, the G-7 highlighted ``downside risks'' to growth in a ``challenging and uncertain environment.''

Since the G-7 met in February, Bear Stearns Cos. was rescued by JPMorgan Chase & Co. with the help of the Fed, U.S. employers cut jobs for a third month and the price of oil and other commodities reached record highs.

`Very Tough'

``March was a very, very tough month,'' Lehman Brothers Holdings Inc. Chief Financial Officer Erin Callan said in a Bloomberg Television interview yesterday. General Electric Co. Chief Executive Officer Jeff Immelt said ``the last two weeks in March were a different world in financial services.''

Other than promising to ensure ``orderly'' financial markets, the central bankers and finance ministers stopped short of introducing new measures to boost liquidity, even as the cost of borrowing euros and dollars for three months holds at the highest since December. The group said previous efforts by some central banks to bolster liquidity were ``helping.''

French Finance Minister Christine Lagarde said she hoped the warning from the Group of Seven nations against ``sharp fluctuations'' in currencies will strengthen the dollar.

``I hope this concerted wording on currencies will help,'' she said in a Bloomberg Television interview in Washington yesterday when asked how worried she was by the dollar's slide.

Bankers' Dinner

President Nicolas Sarkozy's government recently stepped up complaints that the euro's appreciation against the dollar is pushing France-based companies, including planemaker European Aeronautic, Defence & Space Co., to cut jobs at home and relocate some activities abroad.

Composed of the U.S., Japan, Germany, France, Italy, the U.K. and Canada, the G-7 oversees two-thirds of the world economy. Its officials dined last night with 10 executives from financial companies, including Deutsche Bank AG Chief Executive Officer Josef Ackermann, Lehman Brothers CEO Richard Fuld and Credit Suisse Group chief Brady Dougan. Worldwide
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Talk is cheap without the ECB lowering rates.
================================================== =======
The Fed has tried to avert recession by cutting its benchmark interest rate 3 percentage points since August, yet the European Central Bank has left its unchanged at a six-year high of 4 percent amid inflation at a 16-year high.
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Originally Posted by mlfun View Post
Talk is cheap without the ECB lowering rates.
================================================== =======
The Fed has tried to avert recession by cutting its benchmark interest rate 3 percentage points since August, yet the European Central Bank has left its unchanged at a six-year high of 4 percent amid inflation at a 16-year high.

Muffin, seems that with the lack of regulation and the way the US has setup this whole financial fiasco they may have a point................And here is more bad news that is going to hurt this coming week and unfortunately the Ben and Hank Magic show has just about run out of tricks..............

April 13, 2008

US banks Citigroup and Merrill Lynch reveal fresh $15bn loss

CITIGROUP and Merrill Lynch will heap further pain on Wall Street this week as they reveal additional sub-prime write-downs totalling $15 billion (£7.6 billion) or more.

In another sign of the intense pressure on leading banks, Deutsche Bank is attempting to offload some of its €35 billion (£28 billion) of toxic debt to a consortium of private-equity firms.

Huge exposure to American mortgages is expected to result in Citi taking a $10 billion hit to its accounts, dragging the bank to a first-quarter loss of almost $3 billion. Some analysts believe Citi’s write-downs could stretch to as much as $12 billion.

Merrill will suffer $5 billion of write-downs, analysts say, which would push the bank $2.7 billion into the red.

It is expected to knock a further 20% from the value of its sub-prime holdings, in spite of the fact that it announced $18 billion of write-downs only three months ago.

The new rash of Wall Street losses and write-downs come in addition to the billions that have already been recorded.

The world’s biggest banks have suffered losses and write-downs totalling almost $250 billion since the beginning of 2007, according to analysts. Last week the IMF shocked markets by saying that global losses from the credit crisis could rise to $945 billion.

JP Morgan is expected to offer the only glimmer of hope from this week’s results, posting a small profit, in spite of huge exposures to leveraged loans.

Some of the world’s biggest banks are beginning to work on new solutions to relieve tension in the financial markets.

Deutsche Bank is understood to be talking to a number of private-equity funds about a disposal of some of its backlog of loans to venture-capital firms.

The value of leveraged loans sitting on Deutsche’s balance sheet is greater than its shareholder equity. The bank is planning to sell on the loans to the private-equity funds at a loss to free up its balance sheet, according to market sources.

The plan mirrors a similar move by Citi to sell $12 billion of its leveraged-loan portfolio to private-equity firms including Blackstone, Apollo and Texas Pacific Group.

The Citi deal is hoping to close the deal in time for this week’s results. It is one of a number of significant moves by Vikram Pandit, Citi’s new chief executive.

But the sale could be hampered by problems with the planned inclusion of loans related to EMI, the music business. Citi bankrolled its buyout last year by Terra Firma Capital Partners, and still holds about $5 billion of EMI debt.

It was reported yesterday that Citi had been forced to remove some of these loans from the sale after buyers complained they did not have sufficient financial information on EMI.

Citi announced plans to sell its Diners Club credit-cards business to Discover last week, and is also considering a sale of its German retail-banking operations.

City insiders believe job losses are inevitable. Pandit is thought to be considering a radical reshaping of the bank’s equity research organisation. Insiders say that it may be slimmed down to focus on its top 300 clients, rather than providing a wider service to investors.

Some banks are looking to use the crisis to steal a march on their competitors. HSBC last week revealed its intention to use the tightening credit conditions as an opportunity to boost its 3% share of the UK mortgage market.

Abbey, which is owned by Spain’s Santander, has written close to 20% of all the mortgages handed out in Britain in the first quarter, according to sources close to the company. The bank is funding its expansion in the market by attracting more money from savers, analysts say.

US banks Citigroup and Merrill Lynch reveal fresh $15bn loss - Times Online
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post #5 of 5 (permalink) Old 04-13-2008, 07:17 AM Thread Starter
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With qualified teachers turning to stripping it is no wonder this is the result................

Van Wagenen: And you wonder why we have a subprime mess

April is financial literacy month.

I'd like to believe the think tank on Capitol Hill would take notice, but it appears members of Congress are too busy these days trying to push through legislation aimed at bailing out bad decisions made on the mortgage front.

Talk about setting a bad example.

But Capitol Hill isn't alone. It seems we're raising a nation of financial illiterates, based on the latest JumpStart Coalition for Personal Financial Literacy survey results of high school seniors.

The biennial survey, funded by Merrill Lynch Foundation, provided yet another glimpse of what's wrong in our schools.

Students selected for this year's survey correctly answered 48.3 percent of the questions, compared to 52.4 percent two years ago.

Among the 31 questions asked:

• 48 percent said a credit card holder who makes minimum monthly payments will pay more in annual finance charges than card holders who pay their balance in full. What does that tell about issuing credit cards to teenagers?

• 40 percent correctly answered that they could lose their health insurance if mom and dad suddenly become unemployed. Don't worry, health care is free.

• 36 percent said they thought a house financed with a fixed-rate mortgage is a good hedge against a sudden increase in inflation, compared to 45 percent two years ago. And you wonder how this country got into this subprime mess?

Results of the survey caught the attention of Federal Reserve Chairman Ben Bernanke, who remarked in a speech that young people need to get on the ball where personal finances are concerned.

"In light of the problems that have arisen in the subprime mortgage market, we are reminded of how critically important it is for individuals to become financially literate at an early age so that they are better prepared to make decisions and navigate an increasingly complex financial marketplace," he said.

Nice words, Ben, but the fact is when it comes to money, we're a country full of clueless clowns who either fail to ask the right questions or leave their finances to fate.

No one looks at what they're signing - whether it be a retail credit card charging 27 percent interest or a car loan that quickly puts them upside down in a vehicle that's depreciating out the door.

This month, the Texas Society of CPAs has created a Web site called "30 Family Finance Tips for 30 Days in April" providing information ranging from how to create a money journal to reviewing a paycheck stub.

Van Wagenen: And you wonder why we have a subprime mess | Lubbock Avalanche-Journal
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