European Credit Markets
German Economy Showing Strength
Germany’s unemployment held at the lowest in more than two decades in February, adding to signs Europe’s largest economy is regaining some strength after shrinking in the fourth quarter.
The adjusted jobless rate held at 6.8 percent from January, the Nuremberg-based Federal Labor Agency said today. That’s the lowest since Germany’s reunification. The number of people out of work remained at 2.87 million after declining 26,000 in the previous month. Economists forecast a drop of 5,000 this month, the median of 29 estimates in a Bloomberg News survey showed.
Germany’s economy may help counter a slump in the 17-nation currency area as governments from Spain to Ireland toughen spending cuts, hurting hiring and consumer demand. While the European Commission on Feb. 23 forecast the region’s economy to shrink this year, German executives grew more optimistic this month and investor sentiment rebounded.
“Germans hardly feel affected by the euro-zone debt crisis — the crisis has simply not reached the German labor market,” said Carsten Brzeski, an economist at ING Group (ILF) in Brussels. “Looking ahead, all available indicators still point to a further improvement of the German labor market” though “the job miracle should gradually come to an end.”
The euro traded at $1.3448 at 11:35 a.m. in Frankfurt, little changed on the day. Germany’s benchmark DAX Index rose for a second day, gaining 0.9 percent, while the Euro Stoxx 600 Index advanced 0.7 percent…..
International Banksters Get Off Lightly in Greek Deal Thanks to ECB
India Growth Slows to 6.9 PC -Interest Rate Cuts Seen
Gross domestic product rose 6.1 percent in the three months through December following the previous quarter’s 6.9 percent climb, the Central Statistical Office said in a statement in New Delhi today. The median of 29 estimates in a Bloomberg News survey was for a 6.3 percent advance.
The Reserve Bank of India has signaled readiness to join nations from Brazil to Indonesia in cutting borrowing costs to aid the economy as price rises ease, saying steps to curb the fiscal deficit in March’s budget would boost its scope to act. Borrowing costs are at their highest level since 2008 to fight inflation, sapping expansion as policy gridlock hurts investment.
“Growth will remain subdued in the next few quarters,” said Sonal Varma, a Mumbai-based economist at Nomura Holdings Inc. “Slowing growth and cooling inflation are creating conditions for the RBI to cut rates, but a larger budget deficit is limiting the central bank’s space.”…
European Stocks Surge On LTRO Pickup
European Banks TAP Record Amounts of LTRO
The number of financial institutions flocking to the European Central Bank’s three-year loans soared to 800 and borrowing rose to a record in an operation that may boost the euro-area economy.
The Frankfurt-based ECB said it will lend banks 529.5 billion euros ($712.2 billion) for 1,092 days, topping the 489 billion euros handed out to 523 institutions in the first three- year operation in December. Economists predicted an allotment of 470 billion euros in today’s tender, according to the median of 28 estimates in a Bloomberg News survey.
“The astonishing number this time is the number of banks participating, which signals that a lot more small banks looked for the money and it is likely they will pass it on to the economy,” said Laurent Fransolet, head of fixed income strategy at Barclays Capital in London. “So the impact may be bigger than with the first one.”
Bond and equity markets have rallied since the ECB’s first three-year loan, suggesting banks are investing at least some of the money in higher yielding assets. That’s helped ease concern about a credit crunch and won governments time to agree on measures to contain the sovereign debt crisis. The risk is that banks become too reliant on ECB money and fail to take the steps needed to strengthen their balance sheets.
Italian Yields Drop
The euro fell after the ECB announcement to $1.3452 at 1:45 p.m. in Frankfurt from $1.3471 beforehand. Italian and Spanish bonds rose on bets the ECB loans will be used to buy the nations’ debt. The yield on Italy’s two-year note fell 21 basis points to 2.15 percent.
European bank stocks rose, with the 43-member Bloomberg Europe Banks and Financial Services Index up 1.3 percent at 12:48 a.m. in London. Bank of Ireland, Italy’s UniCredit SpA (UCG) and France’s Credit Agricole SA (ACA) were among the biggest gainers. The Stoxx Europe 600 Index (SXXP) increased 0.4 percent.
Today’s loans are the biggest single refinancing operation in the ECB’s history and take total three-year lending above 1 trillion euros. The ECB lends banks as much as they want against eligible collateral. More than a third of the 2,267 financial institutions registered to borrow from the ECB took part.
“Clearly there is no sign of stigma here,” said Michel Martinez, an economist at Societe Generale (GLE) in Paris.
Too Good to Refuse
Banks that shunned the first loans for reputational considerations may have concluded “it was an offer they couldn’t refuse after all,” said Martin van Vliet, an economist at ING Group in Amsterdam. The ECB’s move to encourage take-up by increasing the pool of collateral banks can use to obtain the funds also appears to have worked, he said.
Before the December operation, the ECB reduced the rating threshold for certain asset-backed securities. This month, it said seven of the 17 national central banks in the euro area will also accept credit claims, which ECB President Mario Draghi estimated would increase the collateral pool by another 200 billion euros. The aim is to give small and medium-sized banks greater access to ECB cash.
Economists at Barclays Capital, ING Group and Royal Bank of Scotland Group Plc (RBS) estimate about 230 billion euros of today’s lending is accounted for by existing ECB loans being rolled into the new facility, meaning about 300 billion euros is new cash. That exceeds the estimated 193 billion euros of fresh lending in the first three-year tender.
‘Stopping The Rot’
The funds cost the average of the ECB’s benchmark interest rate — currently at a record-low 1 percent — over the period of the loans and banks have the option of repaying them after a year.
The euro-area economy is forecast by the European Commission to contract 0.3 percent this year as the debt crisis prompts governments and consumers to cut spending. The ECB’s loans are intended to relieve liquidity strains and grease the flow of credit to households and businesses, boosting growth.
“There’s a big difference between stopping the rot and starting a recovery,” said Steve Barrow, head of Group-of-10 research at Standard Bank Plc in London. The loans “might have done the first, but they won’t do the second,” he said.
Royal Bank of Scotland economist Nick Matthews said while the ECB’s liquidity provision “helps keep tail risks for European banks at bay in the near term,” the loans “do not address the underlying solvency issues, and ultimately funding stresses can quickly return.”
A byproduct of the loans has been the so-called “Sarkozy trade,” where yield-hunting banks use some of the cash to buy sovereign bonds — an idea first floated by French President Nicolas Sarkozy.
Since the first three-year loans were awarded on Dec. 21, the yield on Spanish two-year bonds has fallen to 2.28 percent from 3.6 percent and the Italian equivalent has dropped from 5 percent. The Euro Stoxx 50 Index of stocks is up 9 percent this year.
No further three-year operations are scheduled and ECB officials have indicated they would be reluctant to offer a third tranche.
“If number one was a success and number two was a success, that doesn’t mean there has to be number three,” ECB council member Ewald Nowotny said on Feb. 27.
In the wake of the first operation, the ECB’s balance sheet ballooned to a record 2.74 trillion euros. That prompted German council member Jens Weidmann to warn that the central bank mustn’t “lose sight of its mandate” to control inflation by taking on “excessive risks.”
Cohen Points Out Anglo-Zionist Fanatic Policy Towards Russia Must End
China has its natural sphere of influence in Asia, and the USA must respect , and the USA must respect the Russian/Slavic sphere of influence, neither of which it does. Can anyone say madman Kissinger? Globalism is about destroying peoples natural affinity, spiritual affinity, and brutalizing and crushing civilizations. The Globalists are the new Nazis and should be called out and shunned as such. There is only one world order for Christians and only one King and it is not the Rothschilds, or the Windsors or their satanic friends.
GM To Buy 7pc Stake in Peugeot
there is a winning combination…lol
General Motors Co. plans to extend a $335 million lifeline to struggling French auto maker PSA Peugeot Citroën as part of a tie-up that each hopes will aid turnarounds at their struggling European car operations.
GM is expected to take a roughly 7% stake in Peugeot as part of an effort by the Paris-based auto maker to raise cash through a share sale. Under the deal, expected to be disclosed as early as Wednesday, the two would jointly buy supplies, build engines and, potentially, entire vehicles in Europe and elsewhere.
Central Bank Print Screen Engenders Monetary Anarchy Says Nomura Hack
Nomura is a BOJ cartel member. Why would they wait to go all in? Sounds like the Japanese want as much of the gold stuff as they can grab. Weird, Nomura is fronting some East Indian. Probably could not find a Japanese to not giggle when saying he was waiting to buy real assets.
Reuters) – The scale of money printing in the West has become so massive that the world may fall prey to “monetary anarchy,” with traces of bubbles appearing everywhere.
At least that’s what some critics see in the latest round of cash pumping by major central banks.
It is also an eerily reminiscent of 2011, when similarly generous monetary easing sparked higher oil prices, slowed the recovery and stoked speculative hot money flows into vulnerable emerging markets.
The European Central Bank alone is expected to lend another half trillion euros or more of super-cheap money to banks on Wednesday, following Japan and Britain which have already injected fresh cash. The Federal Reserve has promised to keep interest rates low until 2014 and act further if needed.
There is a sense of deja-vu in financial markets. Just like the last time a wave of money was pumped into the world financial systems in 2011, crude oil – fuelled also this time by Middle East tensions – has jumped 15 percent this year.
As a result, riskier assets such as equities are already coming off new year highs. Rising emerging market currencies are forcing some central banks there to intervene.
The scale of money creation since the onset of the global credit shock can be seen in the size of central banks’ balance sheet expansion.
JP Morgan says G4 central bank balance sheets have more than doubled since 2007 to 24 percent of combined gross domestic product and will reach 26 percent this year.
“We have Monetary Anarchy running riot, where the elastic band between the real economy and the current liquidity-fuelled markets is stretched further and further beyond credulity,” Bob Janjuah, head of tactical asset allocation at Nomura, noted.
He said bubbles were visible in all asset classes because central bank balance sheets are at the core.
“If/when the current cycle implodes, central banks which have seen explosive balance sheet growth will add to the problems, rather than being able to act as credible lenders of last resort,” he said.
“Real assets are relatively attractive. But I am going to wait for this current central bank bubble to burst before going all in. The end of the bubble will be signposted by either monetary anarchy creating major real economy inflation or by a deflationary credit collapse.”
Spain faces Daunting 2012 Budget Task
China Tells Exporters to Demand Payment in Yuan, Not $
China-Tired of the Arab/OPEC/Rothschilds/Rockfeller/Windsor Oil Cartel Develops Aviation grade Biofuel Plant
Iron Ore Prices Set to Weaken as Mine Output Grows
USA Investigating Criminal LIBOR Rigging Gangs of London
(Reuters) – The Justice Department is conducting a criminal probe into whether the world’s biggest banks manipulated a global benchmark rate that is at the heart of a wide range of loans and derivatives, from trillions of dollars of mortgages and bonds to interest rate swaps, a person familiar with the matter said.
While the Justice Department’s inquiry into the setting of the London interbank offered rate, or Libor, was known, the criminal aspect of the probe was not.
A criminal inquiry underscores the serious nature of a worldwide investigation that includes regulators and law-enforcement agencies in the United States, Japan, Canada and the UK.
Several major global banks, including Citigroup Inc, HSBC Holdings Plc, Royal Bank of Scotland Group Plc and UBS AG, have disclosed that they have been approached by authorities investigating how Libor is set.
No bank or trader has been criminally charged in the Libor probes. It wasn’t clear which banks or traders the Justice Department is targeting in its criminal probe.
The Justice Department and the banks declined to comment…