Europe - Economic Data & News 01 (May 08 - Oct 08)

Re: Europe - Economic Data & News

Postby iam802 » Sun Oct 26, 2008 7:26 pm

Germany's Finance Minister has grimly predicted the global financial crisis will last at least until late 2009 and said it will take years for Germany to assess the real costs of its 480-billion-euro bank rescue package


http://www.dw-world.de/dw/article/0,214 ... 51,00.html
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Re: Europe - Economic Data & News

Postby kennynah » Sun Oct 26, 2008 7:33 pm

what r Germany's engine sector? I can think of technology, auto n fashion wear. Wat else?
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Re: Europe - Economic Data & News

Postby HengHeng » Sun Oct 26, 2008 7:55 pm

Beer
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Re: Europe - Economic Data & News

Postby kennynah » Mon Oct 27, 2008 10:44 pm

Europe Round Up - German Ifo Business Confidence Falls More Than Expected
10/27/2008 10:31 AM ET


(RTTNews) - Monday, gloomier data was in store for Europe at the start of the week. Germany's business confidence in October deteriorated more than expected to a five year low, a closely watched survey from the Munich-based Ifo research institute revealed. In the UK, house prices in Great Britain decreased at their fastest pace in October, the latest report from the Hometrack property research agency indicated.

In other news, the European Central Bank and Danmarks Nationalbank established a reciprocal currency arrangement or swap line. The swap line amounting to EUR 12 billion would remain as long as required, the ECB said in a statement. The ECB added that the Danmarks Nationalbank would announce measures to improve liquidity in euro short-term markets.

Eurozone

With the 15-nation economy widely viewed to be on its way to recession, business confidence amongst the German firms deteriorated to 90.2 in October from to 92.9 in September, the Ifo survey showed. The indicator stood below the expected level of 91 in October. The Ifo Business Climate Index is based on 7,000 monthly survey responses of firms in manufacturing, construction, wholesaling and retailing.

Eurozone's M3 money supply increased at a slower pace of 8.6% year-on-year in September, compared with 8.8% rise in August, the European Central Bank said. Economists had expected the money supply growth to ease to 8.5%.

Spain's National Institute of Statistics reported that the industrial price index rose 8.1% year-on-year in September, after climbing 9.2% in August. Producer price inflation slowed for the second straight month.

The Statistics Finland said the consumer confidence indicator plummeted to minus 0.2 in October from 8.1 in September. All the four components of the consumer confidence indicator declined in October.

The Statistical Service of the Republic of Cyprus announced that industrial production decreased 2.6% year-over-year in August, in contrast to the 5.8% rise recorded in July.
Malta's National Statistics Office revealed that registered unemployment decreased 533 persons year-over-year to reach 6,096 in September.
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Re: Europe - Economic Data & News

Postby millionairemind » Tue Oct 28, 2008 7:53 am

Europe on the brink of currency crisis meltdown
The crisis in Hungary recalls the heady days of the UK’s expulsion from the ERM.


By Ambrose Evans-Pritchard
Last Updated: 10:52AM GMT 26 Oct 2008

Comments 73 | Comment on this article

The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.

Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.

“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.

Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria – the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down – and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.

The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.

They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom – a sum that vastly exceeds the scale of both the US sub-prime and Alt-A debacles.

Europe has already had its first foretaste of what this may mean. Iceland’s demise has left them nursing likely losses of $74bn (£47bn). The Germans have lost $22bn.

Stephen Jen, currency chief at Morgan Stanley, says the emerging market crash is a vastly underestimated risk. It threatens to become “the second epicentre of the global financial crisis”, this time unfolding in Europe rather than America.

Austria’s bank exposure to emerging markets is equal to 85pc of GDP – with a heavy concentration in Hungary, Ukraine, and Serbia – all now queuing up (with Belarus) for rescue packages from the International Monetary Fund.

Exposure is 50pc of GDP for Switzerland, 25pc for Sweden, 24pc for the UK, and 23pc for Spain. The US figure is just 4pc. America is the staid old lady in this drama.


Amazingly, Spanish banks alone have lent $316bn to Latin America, almost twice the lending by all US banks combined ($172bn) to what was once the US backyard. Hence the growing doubts about the health of Spain’s financial system – already under stress from its own property crash – as Argentina spirals towards another default, and Brazil’s currency, bonds and stocks all go into freefall.

Broadly speaking, the US and Japan sat out the emerging market credit boom. The lending spree has been a European play – often using dollar balance sheets, adding another ugly twist as global “deleveraging” causes the dollar to rocket. Nowhere has this been more extreme than in the ex-Soviet bloc.

The region has borrowed $1.6 trillion in dollars, euros, and Swiss francs. A few dare-devil homeowners in Hungary and Latvia took out mortgages in Japanese yen. They have just suffered a 40pc rise in their debt since July. Nobody warned them what happens when the Japanese carry trade goes into brutal reverse, as it does when the cycle turns.

The IMF’s experts drafted a report two years ago – Asia 1996 and Eastern Europe 2006 – Déjà vu all over again? – warning that the region exhibited the most dangerous excesses in the world.

Inexplicably, the text was never published, though underground copies circulated. Little was done to cool credit growth, or to halt the fatal reliance on foreign capital. Last week, the silent authors had their moment of vindication as Eastern Europe went haywire.

Hungary stunned the markets by raising rates 3pc to 11.5pc in a last-ditch attempt to defend the forint’s currency peg in the ERM.

It is just blood in the water for hedge funds sharks, eyeing a long line of currency kills. “The economy is not strong enough to take it, so you know it is unsustainable,” said Simon Derrick, currency strategist at the Bank of New York Mellon.

Romania raised its overnight lending to 900pc to stem capital flight, recalling the near-crazed gestures by Scandinavia’s central banks in the final days of the 1992 ERM crisis – political moves that turned the Nordic banking crisis into a disaster.

Russia too is in the eye of the storm, despite its energy wealth – or because of it. The cost of insuring Russian sovereign debt through credit default swaps (CDS) surged to 1,200 basis points last week, higher than Iceland’s debt before Götterdammerung struck Reykjavik.

The markets no longer believe that the spending structure of the Russian state is viable as oil threatens to plunge below $60 a barrel. The foreign debt of the oligarchs ($530bn) has surpassed the country’s foreign reserves. Some $47bn has to be repaid over the next two months.

Traders are paying close attention as contagion moves from the periphery of the eurozone into the core. They are tracking the yield spreads between Italian and German 10-year bonds, the stress barometer of monetary union.

The spreads reached a post-EMU high of 93 last week. Nobody knows where the snapping point is, but anything above 100 would be viewed as a red alarm. The market took careful note on Friday that Portugal’s biggest banks, Millenium, BPI, and Banco Espirito Santo are preparing to take up the state’s emergency credit guarantees.

Hans Redeker, currency chief at BNP Paribas, says there is an imminent danger that East Europe’s currency pegs will be smashed unless the EU authorities wake up to the full gravity of the threat, and that in turn will trigger a dangerous crisis for EMU itself.

“The system is paralysed, and it is starting to look like Black Wednesday in 1992. I’m afraid this is going to have a very deflationary effect on the economy of Western Europe. It is almost guaranteed that euroland money supply is about to implode,” he said.

A grain of comfort for British readers: UK banks have almost no exposure to the ex-Communist bloc, except in Poland – one of the less vulnerable states.

The threat to Britain lies in emerging Asia, where banks have lent $329bn, almost as much as the Americans and Japanese combined. Whether you realise it or not, your pension fund is sunk in Vietnamese bonds and loans to Indian steel magnates. Didn’t they tell you?
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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Re: Europe - Economic Data & News

Postby iam802 » Tue Oct 28, 2008 9:03 am

Deutsche Bank trading loss to top $ 400 mn

http://finance.indiainfo.com/2008/10/27 ... -loss.html

Key point
- $400m = half of Q2 revenue
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Re: Europe - Economic Data & News

Postby millionairemind » Tue Oct 28, 2008 11:25 am

Toxic debt losses now £1,800bn, say Bank
Losses incurred by the world's major financial institutions on "toxic" assets hoovered up in the final boom years have hit $2,800bn (£1,800bn), according to the Bank of England.

By Philip Aldrick and Edmund Conway
Last Updated: 12:24AM GMT 28 Oct 2008


The Bank's estimates on the size of writedowns facing banks, insurers and hedge funds – published today in its Financial Stability Report – have more than doubled since its last update in April, and raise the spectre of massive new provisioning by Britain's troubled lenders. Royal Bank of Scotland, for one, is expected to reveal another £4bn of writedowns on Friday.

In the UK, the Bank calculates, "mark-to-market losses" have hit £123bn compared with the £63bn estimated in April. To date, Britain's lenders have collectively written down less than £20bn, though the Bank conceded that the market may be overstating the losses by reflecting "substantial discounts for uncertainty".

Losses in the US have jumped from $739bn to $1,577bn, the Bank says, and from €344bn to €785bn in Europe.

For five of Britain's biggest lenders, Barclays, HBOS, HSBC, Lloyds TSB, RBS and Nationwide Building Society, the problems are compounded by deteriorating loan books. Once bad debts on mortgages, credit cards and corporate loans are added to their "toxic" writedowns, the Bank expects credit losses to total as much as £130bn over the next five years.

The scenario appears to have been used by the Bank to calculate the £51.4bn of capital required as part of the state bail-out. "This delivers estimated capital shortfalls of £50bn in aggregate to maintain UK banks' capital at current levels," the Bank said.

Without the bail-out, which will see the taxpayer inject £37bn into the sector and provide £450bn of funding, banks would have had to shrink their balance sheets, "potentially causing customer lending to contract", the Bank said. A contraction in lending would have been unprecedented. Lenders have not withdrawn credit in the 26 years the Bank has compiled the data, Morgan Stanley analysts said. Annual lending fell once, in the year to May 1994, due to declining demand.

Despite the rescue, the Bank expects credit growth to slow markedly – from 21pc in 2005 to just 4pc next year – as lenders shrink their £740bn "customer funding gap" to 2003 levels of £265bn.

The Government has insisted that banks continue to lend to businesses and households in an attempt to stimulate the economy by staving off job losses and repossessions. However, the report warned of "increasing corporate vulnerability, particularly at businesses heavily dependant on the retail and property markets" as rising numbers of companies are not sufficiently profitable "to cover their interest payments".

Deputy Governor Sir John Gieve said that to prevent a repeat of the crisis: "We need to establish stronger restraints on the build-up of risks. That means not just increasing capital and liquidity requirements for [banks] but relating them to the cyclical growth of risk in the system more broadly."

Although the banks are expected to continue to use wholesale markets, strict rules governing the maturity of the funding are likely to be introduced. Over time, the report notes, "banks will need to adjust their balance sheets and funding models".

"New counter-cyclical tools to dampen the financial cycle and stronger capital and liquidity requirements" are needed to "safeguard against systemic risk", the report adds. It proposes a "dynamic provisioning" regime where banks set aside greater sums for losses in boom years to absorb the blows of a downturn.

Sir John added that "the financial system remains under strain" but said it is better placed following the bail-out.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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Re: Europe - Economic Data & News

Postby millionairemind » Tue Oct 28, 2008 7:31 pm

Reminds me of poor Indonesia back in 98..

This is going to be crippling... IMF money does not come cheap.

Iceland Central Bank Raises Key Interest Rate to 18% (Update2)

By Tasneem Brogger and Helga Kristin Einarsdottir

Oct. 28 (Bloomberg) -- Iceland's central bank unexpectedly raised the benchmark interest rate to 18 percent, the highest in at least seven years, after the island reached an aid agreement with the International Monetary Fund.

Policy makers raised the key rate by 6 percentage points, the Reykjavik-based bank said in a statement on its Web site today, taking the rate to the highest since the bank began targeting inflation in 2001. It will publish the reasons for today's move at 11 a.m. local time.

The central bank is raising rates as Iceland, the first western nation to seek aid from the IMF since the U.K. in 1976, faces a prolonged contraction, coupled with possible hyperinflation and rising joblessness. The economy will shrink as much as 10 percent next year, the IMF forecasts. Iceland will receive about $2.1 billion in aid from the Washington-based fund, according to a deal struck on Oct. 24.
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Re: Europe - Economic Data & News

Postby winston » Tue Oct 28, 2008 9:17 pm

Shorts die...

===============================

VW briefly world top company as shortsellers caught By Sarah Marsh

FRANKFURT (Reuters) - Volkswagen briefly became the world's biggest company by market value Tuesday, as short sellers continued to pile into the stock on weekend news Porsche had bought up much of VW's remaining free float.

Shares in the German car maker hit an intraday high of 1,005.01 euros, valuing the company at 296.06 billion euros ($370.4 billion) based on ordinary stock, more than that of world number one company Exxon Mobil Corp's $343 billion market value at Monday's closing price.

The shares later eased back to stand 25.4 percent higher at 652.00 euros at 1103 GMT, after tripling in the previous session.

Porsche said Sunday it held over 74 percent of VW, prompting a panic among short sellers who had sold VW shares in the hope of buying them back at lower prices.

German regulator Bafin saud it was looking at the VW share movement to see if any insider trading or market manipulation had taken place.

"Each and any short seller in the world is trying to close up their position and there is no way they can do it except for trying to buy like mad," said FrankfurtFinanz analyst Heino Ruland.

"Someone is selling it at a rather interesting and rich price -- it is about 10 times as much as it should trade."

Analysts and traders said the stampede was historic for German large caps.

"We were joking before about the share price hitting 1,000 euros, and all of a sudden, it was there," said one Frankfurt-based trader. "This is perverse."

VW shares could continue to rise, or stay at current historic levels, experts said.

"The problem is, from a fundamental point of view, shares are really overvalued. But when the short squeeze comes to an end, there are not enough shares available to bring the share price back down," said one Frankfurt-based analyst.

Despite the massive rise in VW shares and talk of little free float remaining, the Frankfurt Stock Exchange said it did not plan any changes in the German blue-chip DAX index.

It has said in the past that if the free float in Volkswagen's ordinary shares were to fall below 5 percent, the Frankfurt Stock Exchange's index revision committee would automatically replace them in the DAX index with the top-ranked stock measured by free-float market capitalization and trading volume.

Germany's financial regulator said it was looking at the VW share movement for possible insider trading or market manipulation, but had not yet launched an official examination.

PORSCHE RAISES STAKE

Porsche said Sunday it held stock and options equivalent to 74 percent of Europe's biggest carmaker and aimed to push through a domination agreement next year that would give it management control and capture VW's mighty cash flows.

This will almost certainly meet objections from VW's home state of Lower Saxony, which controls just over 20 percent.. In return for losing their dividend, minority investors would get an annual cash payout set by Porsche

Analysts questioned Porsche's motives in announcing its holding, and suggested the company may have wanted to cash in one last big jackpot at the expense of unsuspecting investors.

Tim Schuldt, an analyst at Equinet, said Porsche's announcement seemed like an invitation for hedge funds to pile into the stock and cover their shorts. He said the problem was that there was only a free float of around 5.8 percent, and many of these free floating shares were actually held in index-tracking funds and other portfolios.

"For Porsche we don't know their real intentions ... it could be that if they managed to cash in at these levels obviously that would be extremely positive for their share price, for the value of their company," said Schuldt.

Shares in Porsche, who was not available for immediate comment, was up 6.8 percent.
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Re: Europe - Economic Data & News

Postby millionairemind » Tue Oct 28, 2008 9:54 pm

UK is crapping out fast...

Repossessions jump 71% as arrears grow
Grainne Gilmore
The number of repossessions in Britain soared by 71 per cent in the three months to June after more than 11,050 people lost their homes.

According to the Financial Services Authority, the City regulator, the number of people losing their houses increased from 9,172 in the first three months of last year and rose from 6,476 repossessions between April and June last year.

The number of borrowers struggling to meet their monthly mortgage bills has also risen, with 312,000 new loans accounts falling into arrears between April and June, signalling a 16 per cent increase on the same period last year.


The Council of Mortgage Lenders has forecast that total repossessions this year will rise by 50 per cent to 45,000, and have given warning that the figure could rise again next year.
http://www.timesonline.co.uk/tol/money/ ... 029768.ece
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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