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so goes Europe....so goes America?
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bumblethru
June 7, 2016, 8:21am Report to Moderator
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Eurozone RUPTURE: Now SPAIN threatens to tear EU apart as banks LOSE €1.4BILLION in a day

PANIC over the stability of Spanish banks hit fever pitch yesterday, exposing yet another rupture in the financial system holding the eurozone together.


By LANA CLEMENTS
PUBLISHED: 05:51, Fri, May 27, 2016 | UPDATED: 07:57, Fri, May 27, 2016
     

Banco Popular stock's value plunged by 25 per cent
Banco Popular, one of the Spain's leading financial firms, caused mayhem after admitting that it needed billions to bolster its balance sheet.

Shocked investors dumped shares in the firm, with the bank stock's value plunging by 24 per cent this morning, after the cash call and plans to issue another 2 billion shares.

It resulted in €1.4billion being wiped off the value of the bank's share price.

And the worry spread to other Spanish banks with shares in Caixabank and Banco de Sabadell diving by 3.4 per cent and 4.5 per cent respectively.

It comes after the country announced record debt levels, owing its creditors €1.095 trillion.

Spain now owes more money than its entire economy generates in a year.

Spanish Prime Minister Mariano Rajoy is struggling to deal with the worst public debt since 1909



Spanish banks are among Europe's firms suffering enormously under the burden of the low interest rate environment that erodes lending profits.

Steen Jakobsen, the chief economist at Saxo Bank said that today's news "is a very clear illustration of how difficult  the banking sector has it with zero interest rates and non-growth we've had".

In March, the European Central Bank dropped slashed core interest rates further into negative territory.  

Today's cash call by Banco Popular is now a visible sign of the strain financial institutions in Europe are under.

The share price hit is the biggest one day loss the bank has ever seen, topping drops seen at the height of the financial crisis.

The value of Banco Popular plunged this morning

If investors lose much more confidence in the Spanish banking system, the country's heavily indebted economy could start to wobble.

It comes after Italy last month launched an emergency rescue fund for its banks amid fears they could topple.

Italian banks are estimated to hold around £270billion of bad loans – more than 30 per cent of the eurozone's total.

Meanwhile in France, the country has ground to a halt as thousands of workers go on strike over labour reforms. French President Francois Hollande is attempting to allow firms to negotiate on a longer working week implementing a maximum of 46 hours.

Firms will also be given greater freedom to reduce pay and employers will be given more leeway to negotiate on holidays and special leave.

Panic over their positions gathered pace at the start of the year, with investors dumping stocks.

Around the same time, some of Germany's biggest banks saw huge falls in share price relating to fears of low interest rates and profits at the firms.

http://www.express.co.uk/finance/city/674092/Eurozone-Spain-meltdown-shares-plummet-EU-Spanish-banks


When the INSANE are running the ASYLUM
In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche


“How fortunate for those in power that people never think.”
Adolph Hitler
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bumblethru
June 7, 2016, 8:42am Report to Moderator
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'WORSE THAN 2007': Top banker warns of looming wave of worldwide bankruptcies
Business Insider Australia
David Scutt, Business Insider Australia
Jan. 19, 2016, 11:17 PM      53,017  32


The world's financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, according to a leading global banker.

William White, chairman of the OECD's review committee and former chief economist of the Bank for International Settlements, suggests the stresses in the financial system are "worse than it was in 2007."

Speaking with the UK Telegraph's Ambrose Evans-Pritchard before the start of the World Economic Forum in Davos, Switzerland, White warned that macroeconomic ammunition to fight further economic downturns was essentially "all used up."

"Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief," he told The Telegraph.

"It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something."

Instead of pondering whether bankruptcies will occur, White suggests the only question that needs to be answered is "whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly."

White suggests that the US Federal Reserve, fresh from raising interest rates for the first time in nearly a decade in December, is in a "horrible quandary," carrying the unenviable task of trying to foster an economic recovery while moving away from ultra-easy monetary-policy settings.

He believes that easy money-policy settings from the Fed, and others such as the European Central Bank and the Bank of Japan, simply brought spending forward from the future, creating a dangerous cycle that is losing its potency to spur demand.

"By definition, this means you cannot spend the money tomorrow," he told The Telegraph.

Aside from being demand forward in developed economies, another consequence was to exacerbate asset bubbles in emerging markets such as Asia, pushing asset prices higher on the back of what was — at the time — cheap US-dollar-denominated debt.

According to Evans-Pritchard, this saw combined public and private debt in emerging markets surge to 185% of gross domestic product, up an alarming 35 percentage points since the peak of the previous credit cycle in 2007.

In OECD nations a debt boom of a similar scale also occurred, taking the overall debt-to-GDP ratio for the 34-member group to 265%.

China, at the epicenter of market concerns in recent months, has seen its debt loading climb from 158% of GDP to over 282% over the same period, according to analysis from Bank of America-Merrill Lynch.

It's little wonder that White, and others, are concerned.

Debt has ballooned while global growth has slowed to a crawl — all at a time when many central banks are already pushing the limits of what stimulus monetary policy can deliver.

If monetary policy, after creating the issue, is no longer in a position to solve it, what can be done to address the situation?

White believes governments hold the key, telling The Telegraph: "They should return to fiscal primacy — call it Keynesian, if you wish — and launch an investment blitz on infrastructure that pays for itself through higher growth."

It's a controversial call, particularly as it would almost certainly require governments to take on even greater amounts of debt.

http://www.businessinsider.com/top-banker-warns-of-worldwide-bankruptcies-2016-1


When the INSANE are running the ASYLUM
In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche


“How fortunate for those in power that people never think.”
Adolph Hitler
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HarryP
June 7, 2016, 1:20pm Report to Moderator

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The sky is falling too Henny Penny.  Go take shelter!


We are advised NOT to judge ALL Muslims by the actions of a few lunatics, but we are encouraged to judge ALL gun owners by the actions of a few lunatics.   Funny how that works.
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BuckStrider
June 8, 2016, 7:40am Report to Moderator

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Rebel Commander. You do know that the EU is on the verge of collapse and that the UK is holding a vote to exit the EU (aka Brexit). You really should update your hardware in the command bunker.




"Approval ratings go up and down for various reasons... An example is the high post 911 support for
GWB even though he could be said to be responsible for the event." --- Box A Rox '9/11 Truther'

Melania is a bimbo... she is there to look at, not to listen to. --- Box A Rox and his 'War on Women'

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bumblethru
June 8, 2016, 9:53am Report to Moderator
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Quoted from BuckStrider
Rebel Commander. You do know that the EU is on the verge of collapse and that the UK is holding a vote to exit the EU (aka Brexit). You really should update your hardware in the command bunker.


i understand buck.....but now that we are GLOBAL....and are economically connected.....there is now a ripple effect....GLOBALLY.

401K'S, pensions, savings, money markets, cd's....etc.....are also invested in the over seas economy.

it's a ripple effect.


When the INSANE are running the ASYLUM
In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche


“How fortunate for those in power that people never think.”
Adolph Hitler
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