US & World News

The Institute for International Finance (IIF) said Wednesday that the Greek government and its private creditors are close to final agreement on debt restructuring of the country, a conclusion is expected this week. "We are close to finalizing a voluntary debt exchange as part publicly exposed earlier this week by Jean-Claude Juncker in his capacity as President of the Eurogroup," have clared leaders Ifi. "We expect to conclude next week as discussions on other topics continues." Tuesday, bankers and politicians had suggested that the talks between Greece and its private creditors could come Wednesday. The prospect of such an agreement has contributed to the rise in world stock markets.

According to the Minister of Economy, the European Commission proposal to increase the capital adequacy ratio of banks to 9% "can absorb a shock." Budget Minister Baroin regrets the refusal of PS on the constitutional question of the balance of finances

The proposal of the European Commission and its President Jose Manuel Barroso to recapitalize banks is "acceptable", said Friday the French Minister of Finance Baroin. "The position of the Commission Barroso and two days ago is acceptable. A level of 9% of equity" to be achieved by European banks "by the end of the first half of next year, it ' is, "he said on Europe 1 radio.

According to him, "9% in 2012, it can absorb shock." He reiterated that this concerned primarily banks that failed the stress tests at the beginning of summer and those who have passed narrowly.Banks should try to recapitalize "on the basis of their results" by distributing less dividends and less bonus, "warned Baroin, like the European Commission." They should not do so at the expense of economic activity, credit to individuals and business credit, "he said.

"If they can not, they will do in the markets, if markets are not enough they will find partners, and ultimately there will be a limited possibility of a European coordination" for public assistance, the minister added . He again suggested that the European Financial Stability Fund (EFSF) provides that state aid to schools that need it, as its new statutes in force since Thursday so authorize.Germany believes he can do that for banks in countries which already have an international aid program (Greece, Portugal, Ireland).

Baroin But he reiterated that French banks do not find themselves in the position of having to seek government assistance. On Greece, the Minister confirmed the new position of France, which was resolved Thursday to recognize that the creditor banks would have to erase the country a majority of government debt. The discount provided to date to the private creditors of Athens, in the agreement of July 21, is 21%. "For three months the markets have evolved, they have deteriorated (…) We left at 21% July 21, it will be, it is almost certain," he said. "How high? Is being discussed."

He also felt that the figures circulating going "well beyond 50%" were "fanciful"."Three quarters of the Greek debt is held by private (…) We will not cut the whole," he said. "If it requires a private discount that is not tenable, then that will invest in Greece?" Asked Baroin.

He then said that the Heads of State and Government of the euro zone announce their decision on this issue at the summit in Brussels on 23 October, without specifying whether they would disclose the amount of the new haircut or just the principle. { P}

Peter Brabeck-Letmathe, the chairman of Nestlé, is sounding the alarm over soaring food prices. It could mean new revolts in poor countries. An Indonesian dried corn grows, without benefit of the inflation of commodity prices. Indonesia is now the largest importer of maize. REUTERS / Sigit Pamungkas (INDONESIA – Tags: BUSINESS FOOD) AGRICULTURE)

The food prices are expected to remain high, which could lead to new hunger riots in developing countries, said President of the Swiss group Nestle in an interview published Friday.

"We have reached a level of food prices substantially higher than we had before. They are expected to stabilize at this level," said Peter Brabeck-Letmathe in this interview with the daily Salzburger Nachrichten.

"When you live in a developing country and we spend 80% of its income on food, we feel bound to it differently from us," where such expenses are around 8%, he argued.

For him, new hunger riots like those that had rocked Africa, Haiti or Indonesia in 2008 are likely to recur. "The situation is similar, it has become the new reality," he said.

Soaring food prices this year is considered one of the reasons that contributed to the "Arab Spring" in North Africa and the Middle East.

The price increase is attributed both to speculation, climate change, increasing population, or to changes in dietary habits in some emerging countries like India, where the middle classes have significantly increased their consumption meat.

For M.Brabeck-Letmathe, the issue of water is also crucial. "We already consume today" too much water, he said, encouraging businesses and consumers to waste less.

Unemployment Gross of Germany continues to fall. He reached again in September, a record low at 6.6% of the workforce.

The gross rate of unemployment in Germany down again. The level reached in September has a new record low at 6.6%, ignoring the economic uncertainty and the crisis of the euro. The unemployment rate fell to gross 6.6% in September, as against 7% in July and August, which already marked its lowest level since the reunification of the country, according to figures released Thursday by the Employment Agency. Its level is the lowest for 20 years.

In data adjusted for seasonal values, the unemployment rate also fell to 6.9% against 7% a month earlier. This represents 26,000 fewer unemployed, where economists were expecting 10,000 less."The demand for labor remains strong," said the director of the Employment Agency, in a statement, and that while the situation in Germany, as in the euro area is marked by uncertainty .

Recent surveys of the financial community (ZEW) and entrepreneurs (Ifo) portend a slowdown in economic activity in the coming months. Already in the second quarter, the German economy had slowed sharply, with GDP rising by only 0.1%. Chancellor Angela Merkel, however, on a table growth "closer to 3% than 2.5%" this year, the official government forecast of 2.6%.

European shares opened sharply higher Tuesday, extending their rally started Friday afternoon, still supported by expectations of further measures to stem the debt crisis in the euro area.

At 9:36, the CAC 40 index advances 2.79% at 2939.25 points after taking 1.75% Monday, with a volatility index down 4.31% to 47.81 points.

According to the U.S. television network CNBC, which cited a European financial responsibility, a special fund could be created through the European Investment Bank to issue bonds and purchase of European sovereign debt.Bonds could also serve as collateral for the ECB, CNBC added.

Austria's Ewald Nowotny, a member of the Governing Council of the ECB, for its part, said at a conference at Harvard University, an increase in the size of the European Financial Stability Fund (EFSF) was likely but would probably not as important as what some people expect, "not the order of a thousand billion" euros.

The "rally" bear markets are more violent, says Frederic Buzare, head of equity management at Dexia Asset Management, which has 85 billion euros of assets under management.The rebound will not last if investors do not get clear action plan to resolve the crisis, he added.

In this type of policy-driven market, it's all about the risk premium. The valuation ratios are no longer relevant, adds the manager.We spend more time reading the statements of leaders (political) to study the balance sheets of companies, he says.

For his part, U.S. President Barack Obama said Monday night that the crisis of European debt was "afraid the world" and that European leaders attacked the problem but not as quickly as needed.

Other major European markets, the London Stock Exchange gained 2.1%, the Frankfurt 3.2% and 2.6% in Milan, while the pan-European index STOXX 50 wins almost 3%.

Bank stocks are still at the top of increases in the CAC 40, with a gain of more than 9% for BNP Paribas, over 8% for Societe Generale and more than 7% for Credit Agricole. Axa takes 7.8%.The index of banks in Europe advance 3.5% /

But all sectors benefiting from the rebound on Tuesday, including cyclic, with a rebound of 4.5% of the index motor and 4.1% of commodities that had posted the weakest performance yesterday.

A barrel of U.S. light crude rose 2.6% to 82.29 dollars and Brent from 1.2% to 105.22 dollars, causing the oil companies and related industries in its wake.

The performance of the German government bond (Bund) and 10 years is around 1.9% against 1.8% the day before closing, while the euro is stable against the greenback around 1.3530 dollar.

European shares finished higher Monday, with the financial sector, buoyed by speculation of lower interest rates by the European Central Bank (ECB) and new measures to support banks.

However, markets have reduced their earnings during the afternoon for lack of more precise statements confirming the rumors.

The CAC 40 index finished up 1.75% to 2859.34 points (final closing), while London has been 0.45%, 2.87% Frankfurt, Milan and 3.32% EuroStoxx 50 2.84%.

The index of the banking sector has been 3.57% and 6.42% of the insurers, with an increase of 8.18% for Axa, from 5.44% for Societe Generale and BNP Paribas for 3.99%.

The Russian gas group Gazprom said Tuesday a 42% increase in profits in the first quarter to 478.5 billion rubles (11.5 billion euros).

The markets did not expect that an average increase of 29%.

Revenues increased 38% to 1.317 billion rubles, the gas monopoly of European customers increased their purchases.

Analysts polled by Reuters on average expected a turnover of 1.259 billion rubles.

In a statement, Gazprom said its results were driven by an average increase of 21% of its gas tariffs from one year to another, as well as its diversification into energy.

The total gas sales rose 10% in the first quarter to 178.3 billion cubic meters.Sales in Russia remained stable at 102.5 billion m3, but exports to Europe rose by 8.4% to 46.6 billion m3, and those toward the former republics of the Soviet Union jumped 70.5% to 29 billion m3.

Germany and France are convinced, the Tobin tax should be adopted in Europe. Yet critics are numerous, and markets are particularly skeptical.

This time is the right one? For years now that the tax on financial transactions is discussed in Europe, the leaders of the euro area has never been convincing. Tuesday night, Nicolas Sarkozy and Angela Merkel said they would suggest that the European Union in September of a tax on financial transactions, "an obvious need" according to the German Chancellor. The two leaders did not specify the terms of this measure, but the French Minister of Economy, Baroin, and his German counterpart, Wolfgang Schäuble, confirmed to be working earnestly on the subject.The tax is "the subject of extensive work with the German Ministry of Finance," according to Bercy.

Many critics and fuzzy terms

For several months now that the European Commission relaunched the idea of ​​a European tax on financial transactions, which, if it was fixed between 0.01% and 0.001% of the transaction, would yield between 30 and 50 billion euros per year. MEPs had then voted by a large majority (529 for, 127 against). A tax as proposed by the Commission could fund the EU budget to alleviate the contributions of member states.

But this tax, partly designed to limit speculation, is not without its critics. Too easily circumvented, too complicated to implement, too risky …since its development in the late 70's by the economist James Tobin tax on financial transactions is routinely ostracized, especially by its critics assert the impossibility of setting up a different scale than the global . In fact, if the tax does not apply to all financial markets, it may benefit those who do not have adopted and which will recover, de facto, the flow of transactions. A warning given recently by the ECB President, Jean-Claude Trichet, who said that "a tax imposed in Europe and not elsewhere would result in a significant loss of activity for Europe."

London reservations

But this time, Brussels is certain, the project is expected to reduce the risk of outsourcing transactions with a plate large enough to avoid trade-offs between financial products.Arguments that clearly did not echo long-awaited in the British, the most resistant to the device. "The government will continue to conduct discussions with international partners (…) but otherwise the relevant transactions will simply move to countries that do not apply," he said including a spokesman for the UK Treasury Wednesday. But without the agreement of the United Kingdom, impossible to adopt the draft. Even the Berlin admits the tax on financial transactions should apply to the 27 EU members, assured the spokesman for the German government. According to the Irish Minister for Finance, the tax would ultimately very unlikely to achieve unanimity among member states."There will be many objections from countries with strong financial services sector, such as Luxembourg, the Netherlands, and even Paris," he argued.

Markets do not believe that half

Little appreciated in the early morning by the financial markets, this proposal was eventually discredited quickly by banks and stock traders who were quick to report their skepticism about the project. The association of German cooperative banks BVR, quoted by Reuters, said for example that the tax would fail to restore stability in the markets if it concerned only the euro area. "In the end, the financial sector has not suffered the ad simply because nobody believes," concludes one analyst Saxo Bank.

The European Central Bank (ECB) decided on Sunday night if it buys Italian bonds to contain the new onset of fever that gripped the euro area, it was learned from sources close to the institution.

The ECB President Jean-Claude Trichet wants his board of governors to take a final decision on the takeover of Italian paper after the announcements made Friday by the Italian Prime Minister Silvio Berlusconi on accelerating reforms to reduce the public deficit Italian, said a source close to the ECB.

The reaction of the ECB is further expected that the clock may be difficult Monday morning in European markets as investors draw conclusions from the lower by Standard & Poor's rating of U.S. sovereign debt to AA +.

According to one source, the Governing Council will meet from 17:00 GMT to make a decision. If he decides to take over Italian bonds, the ECB and central banks in the euro area will come into action on Monday morning at the opening of the markets.

Another source close to the ECB said that the Governing Council could also consider the implementation of emergency measures.It could, for example, provide liquidity to prevent a freeze in money markets.

A third source, also close to the ECB, said that the meeting was postponed in the evening to allow time for governors to analyze the measures that could be announced by Washington after the S & P lowered the debt rating sovereign.

Thursday the ECB has reactivated its share repurchase program of sovereign debt in order to calm soaring interest rates of some countries in the euro area bond markets but has so far bought only small quantities of Irish debt and Portuguese, while speculation is focused on Italy and Spain.

The European press is reluctant Sunday between disbelief and apocalyptic messages after the decision of S & P.

Germany's Welt Am Sonntag as "Der Crash" (the crash) and writes: "Nobody could have foreseen the spectacular crash, and now we need a healthy dose of gallows humor to handle such a situation."

Der Spiegel asked: "U.S. debt, euro crisis, chaos on the stock exchanges: the world will he go bankrupt?".

Also in France, the abatement is required. Le Journal du Dimanche as "The world on the edge of the crash."

The European Central Bank has sought Thursday to come to the rescue of the euro area by buying government bonds Portuguese and Irish, and providing a new measure of liquidity for banks.

After the decision of the ECB to leave rates unchanged three – the main refinancing rate is maintained at 1.5% – its president Jean-Claude Trichet, said the buyback program obligations of the bank, dormant since March, continued.

Traders reported observing market purchases from the ECB, even though the president was speaking to the press.These speakers discussed including the acquisitions of Portuguese and Irish debt on secondary markets, but not Spanish or Italian debt.

Jean-Claude Trichet suggested the hint that the operation was actually in progress. "I will not be surprised if you were watching before the end of this conference," he said.

Investors were disappointed with the purchase of paper non-Italian and Spanish: the performance gap between the obligation to ten years Spanish and German Bund reference widened to 400 points against 386 points Wednesday closing while spread the obligation Italian / German rose to 392 points, the highest since the introduction of the euro.

"Trichet said in a hurry the recovery of bond purchases.There was no statement from the ECB, but just a vague answer to a question. We can doubt the seriousness of the ECB on this point, "said Holger Schmieding, Bank of Berenberg.

"The ECB may have missed an opportunity to act more convincingly.The key now is to see if the ECB intervenes in the Italian and Spanish bond markets, and to what extent, "he added.

RATES MAY CONTINUE TO MOUNT

Jean-Claude Trichet has acknowledged that the Executive Board of the ECB, unanimous on interest rates and measures of monetary support, was divided on the issue bonds.

"We are not unanimous, but the overwhelming majority of bond buyback operation," he said during his press conference.

At midday, the President of the European Commission Jose Manuel Barroso called for increasing the capacity of EFSF.

The ECB was called upon to act against the rapidly deteriorating situation in Spain and Italy, where crises similar to those countries already bailed out would have consequences far more serious.

Jean-Claude Trichet said the ECB would conduct an operation for six months to strengthen bank liquidity by providing facilities for short-term financing until at least January 2012.

Many banks Greek, Portuguese and Irish have more access to capital markets, and some in Spain and Italy also depend on the support of the ECB.

"Given the renewed tensions in some financial markets (ECB) has also decided to conduct an additional refinancing operation with a maturity of approximately six months (…)", submissions being paid in full, said Jean-Claude Trichet.

But despite this return mode response to the crisis, the ECB president hinted that interest rates were likely to continue to increase.Central banks in Switzerland and Japan are in contrast to the easing in order to prevent excessive inflation of their currencies.

"We will continue to monitor very closely all developments related to the increasing risks to price stability," said Jean-Claude Trichet, using a formula already used after the rate hike last month.

Before the press conference, economists believed that the use of this phrase would mean another rate hike before the end of the year.