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Over-regulation could strain cost of credit
September 7, 2011--Corrado Passera, chief executive of Intesa Sanpaolo, the largest retail bank in Italy, one of the countries at the core of the European sovereign crisis, has warned regulators against over-policing the banking system saying it could put strain on the cost of credit.
Mr Passera told the Financial Times that new rules for capital and liquidity requirements introduced since the financial crisis have so far made the system safer and helped to prevent any credit crunch in the current sovereign turmoil.
US Competitiveness Ranking Continues to Fall; Emerging Markets Are Closing the Gap
Switzerland, Singapore and Sweden top the Global Competitiveness Report ranking
The United States continues the decline it began three years ago, falling one more place to fifth position
Emerging economies continue to close the competitiveness gap with OECD economies
September 7, 2011-- Switzerland tops the overall rankings in The Global Competitiveness Report 2011-2012, released today by the World Economic Forum. Singapore overtakes Sweden for second position. Northern and Western European countries dominate the top 10 with Sweden (3rd), Finland (4th), Germany (6th), the Netherlands (7th), Denmark (8th) and the United Kingdom (10th). Japan remains the second-ranked Asian economy at 9th place, despite falling three places since last year.
The United States continues its decline for the third year in a row, falling one more place to fifth position. In addition to the macroeconomic vulnerabilities that continue to build, some aspects of the United States’ institutional environment continue to raise concern among business leaders, particularly related to low public trust in politicians and concerns about government inefficiency. On a more positive note, banks and financial institutions are rebounding for the first time since the financial crisis and are assessed as somewhat sounder and more efficient.
Germany maintains a strong position within the Eurozone, although it goes down one position to sixth place, while the Netherlands (7th) improves by one position in the rankings, France drops three places to 18th, and Greece continues its downward trend to 90th. Competitiveness-enhancing reforms will play a key role in revitalizing growth in the region and tackling its key challenges, fiscal consolidation and persistent unemployment.
view the World Economic Forum Global Competitiveness Report 2011-2012
China to Back London as Offshore Renminbi Center
September 7, 2011--China is for the first time to give formal backing to moves by British banks to turn the City of London into an offshore trading center for the renminbi, UK government officials have told the Financial Times.
As George Osborne, the chancellor, prepares to hold talks in London with Wang Qishan, the Chinese vice-premier, on Thursday British officials say a joint statement by both countries backing the growth of renminbi trading in London is set to be the centerpiece of their meeting.
ETFS Precious Metals Weekly: Gold Price Nears $2000/oz as Sovereign Risk Concerns Spike
September 6, 2011--Gold price hits all-time high of $1,921/oz as sovereign crisis escalates. The gold price surged through previous all-time highs in early London trade as global
markets continue to reel from growing concerns that Europe’s sovereign crisis is may spiral out of control. Measures of European banking sector risk have surged back to early 2009 levels and Italian, Spanish and peripheral European sovereign debt spreads have widened further.
Weak global growth data raises concerns of further fiscal and sovereign
debt deterioration. The trigger for the most recent bout of risk aversion has been a growing stream of weaker than expected global growth indicators, starting with a weak US payrolls report on Friday and followed by weak PMI releases in Europe on Monday. Slower growth puts further onus on central banks to initiate new rounds of
quantitative and other forms of extraordinary monetary easing. Missed Greek fiscal targets, concerns Italy may be losing its fiscal resolve, Finnish demand for collateral
for further loans to Greece and a continued lack of a cohesive policy response to the
crisis by European leaders has added to the upheaval.
This week all eyes will be on central bank activity with ECB and BOE meetings scheduled and Bernanke due to speak on Thursday. Hints of moves towards further easing are likely, though without concrete new measures to deal with Europe’s deteriorating fiscal and sovereign debt issues, there is a growing risk that events spiral out of their immediate control.
visit www.etfsecurities.com for more info
New Study Finds Strong European Demand For U.S. Listed Equity Options
September 6, 2011--The Options Industry Council (OIC) today presented the results of the study, European Demand for U.S. Listed Equity Options, conducted by Tabb Group and commissioned by OIC. The study found that 10 percent of U.S. listed options volume originates from Europe today, and this amount is likely to increase as a result of global regulatory efforts to reduce risk.
The Tabb Group also found that European investors believe U.S. listed options markets are liquid, transparent and deliver unparalleled execution quality. Tabb expects continued demand for U.S. options from European institutional investors because of their broad exposure to U.S. equities. European holdings of U.S. equity-related securities total $1.3 trillion, equal to 46 percent of total foreign ownership of U.S. equities.
There are, however, barriers to the trading of U.S. listed options in Europe, including unfamiliarity with the trading process and U.S. options market structure. This presents a challenge and opportunity for OIC in its mission to educate investors in the responsible use of equity options.
To access OIC's summary and the full study (registration required), visit: http://optionseducation.org/tabb
Traders on edge over return of La Niña
September 6, 2011--The US National Weather Service on Thursday warned that La Niña, the weather condition that caused turmoil in the commodities markets this year, had returned and was likely to strengthen throughout the rest of the year.
La Niña, caused by a fall in water temperature in the tropical Pacific, typically triggers wetness in eastern Australia, and drier than normal conditions in the midsection of the US and countries in the southern hemisphere including Brazil and Argentina.
Bullion tumbles on Swiss move
September 6, 2011--Gold prices tumbled more than 2.5 per cent in a matter of minutes after the Swiss central bank said it would put a ceiling on the strength of the franc for the first time in more than three decades.
Measured in Swiss francs, gold rose to SFr1,631.55 a troy ounce ...
China, EU leaders discuss eurozone debt crisis
September 2, 2011--European Commission President Jose Manuel Barroso and Chinese Premier Wen Jiabao spoke by phone on Friday on the steps the eurozone is taking to resolve the debt crisis, an EU spokesman said.
The two leaders discussed the global economic situation and EU-China relations ahead of a bilateral summit in October and the meeting of Group of 20 heads of state and government in Cannes, France in November, the spokesman said.
Apocalypse Then: The Evolution of the North Atlantic Economy and the Global Crisis-IMF Working paper
September 2, 2011--Summary: The financial crisis, originated from the collapse of US housing markets in 2008, reverberates around the world. Its destructive force was felt nowhere more keenly than Western Europe.
Indeed, it continues to mire in financial volatility as the debt problem contagiously spreads around the periphery Euro area. Taking a wider historical view of the evolution over the recent decades of the North Atlantic economy, comprising North America and Western Europe, we argue that while trade links were in relative stasis, the increasing and uniquely-close Transatlantic financial relationship was a crucial conduit in transmitting US shocks into global ones.
Consolidated Spillover Report - Implications from the Analysis of the Systemic-5
September 2, 2011--OVERVIEW
Spillover reports explore the external effects of policies in five systemic economies based on the issues identified by partners. Without reprising all the results (Box 1) and nuances, this paper draws some overarching lessons from the exercise for the global policy debate:
Short-term policy spillovers hinge on their effects on financial markets. When the financial system is stressed and there is fiscal space, as in 2008-09, macroeconomic stimulus makes sense and yields significant positive spillovers.
But this is no longer the case once fiscal space recedes. The external demand spillovers from fiscal consolidation in advanced economies would be small in comparison to those that would follow from compromised fiscal credibility.
Given the importance of financial channels in the propagation of global shocks, and the centrality of US-UK-European financial core, stronger and more coordinated regulation in the core is essential.
China and Japan spillovers are mostly expressed through real channels that take longer to play out but failure to address stresses and distortions can reverberate globally; Japan’s fiscal strains could, however, propagate rapidly via financial channels.
view the IMF Report-Consolidated Spillover Report - Implications from the Analysis of the Systemic-5