US & World News

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 closed higher Friday on hopes of Action of the European Central Bank and government to mitigate the effects of the crisis of sovereign debt in the euro zone and support banks.

However, caution remains the watchword.

Bank stocks recorded the highest increase in Europe with a sectoral Stoxx index which gained 3.53%.

In Paris, BNP Paribas (9.78%), Societe Generale (8.76%) and Credit Agricole (4.78%), which was this week in the eye of the storm because of their exposure to Greek and Italian debt, eventually leading to increases in the CAC 40 on market rumors paying for the government to carry out some form of recapitalization.SocGen and BNP did not wish to comment on these rumors.

The gains, however, show small-scale loss of investor confidence in the ability of governments to quickly implement practical solutions to the crisis of sovereign debt and boost savings on the brink of recession on both sides Atlantic.

This cocktail of strong concerns about the banks is causing serious losses in stock market indices.For the week, the CAC 40 dropped 7.29% in Paris and at European level the EuroStoxx 50 index dropped 6.17%.

"RAMPANT FAILURE OF GREECE"

The CAC 40 gained 1.02% Friday to 2810.111 points after touching a session in new low of 2693.21 points in the year, returning to its level in March 2009.

Risk aversion has stalled late in the session, the performance of the German government bond (Bund) and 10 years, fell in the day to a new record low at 1.64%, found its level Thursday (1.75%) at the close of stock markets.

The euro meanwhile pondered over $ 1.35 and was trading around 1.3508 dollar.

Other major European markets, London

gained 0.5%, 0.63% Frankfurt, Milan 1.36%.The pan-European Euro Stoxx 50 index has been 1.52%.

"Operation Twist (the Fed) has failed to revive stock markets. It is a terrible verdict, a confirmation that governments no longer able to stimulate the economy central banks find themselves faced with the challenge to bring to his aid, "wrote Vincent Chaigneau and Ciaran O'Hagan, rates strategist at Societe Generale in their weekly note.

"They will continue to shoot in the dark, hoping to keep away the ghost of recession.Good luck, "they said, stressing that the stress imposed on the funding of banks is" a great threat to the economy. "

Pichard for Franklin, director of Barclays Bourse France, "markets do not stop to include a default rampant in Greece (although it is true that the 'political' do nothing to speed things up) and the recapitalization of some European banks. "

Cyclical stocks such as Technip (-3.93%) and Alstom (-2.52%) recorded the largest declines the CAC 40.

Kweku Adoboli was detained after appearing in court on Thursday. He is responsible for the loss of $ 2.3 billion by UBS. Kweku Adoboli in London.

Kweku Adoboli, the trader accused UBS of fraud that cost $ 2.3 billion in the bank, was detained, following his appearance before a London court Thursday. The boy will remain jailed at least until his next hearing on October 20, announced the judge.

One of the counts added was retained by the court in this case for a fraud committed between October 2008 and December 2010. "He is sorry for what happened, beyond what it can express," said his lawyer, Patrick Gibbs. "He went to the people of UBS and told them what he had done. It is now appalled by the magnitude of the consequences of his disastrous miscalculation," he added.

The trader, 31, who appeared Thursday in dark gray suit and blue tie, is suspected of fraudulent transactions within UBS. He was charged and detained last Friday in London. His lawyer did not indicate whether he intended to plead guilty at this point. The gendarmes of financial markets in Switzerland and the UK have also launched independent investigations into the circumstances of the losses incurred by UBS.

The federal agency that oversees the mortgage market in the United States may soon file a complaint against several major banks for their role in the subprime crisis, which weighed on bank stocks on Wall Street Friday.

The Federal Agency for Real Estate Finance (Federal Housing Finance Agency), which oversees the giants Fannie Mae and Freddie Mac, accuses several major banks have given a misleading picture of the quality of mortgages bundled and sold during the housing bubble, said on Friday a source close to the matter.

These loans, said subprime, are the cause of the bursting of the real estate bubble in late 2008.Institutions making home loans had significantly eased lending standards to attract new customers and sell homes they had no way to pay, betting on a continued increase in the property market.

The existence of this complaint in a pending first was reported Thursday by The New York Times before being confirmed Friday by a source contacted by Reuters.

The source declined to name the specific bank, but according to the New York Times, citing three people familiar with the matter, the government agency will continue to include Bank of America, JP Morgan Chase, Goldman Sachs and Deutsche Bank.

By 1515 GMT on Wall Street, as BofA unscrewed more than 6%, yielding 3.5% JP Morgan and Goldman Sachs lost 4.6% while the Dow Jones fell by 1.6%.

Costly litigation

The complaint will be filed Friday or next Tuesday, understands the New York Times. Those responsible for BofA, JPMorgan and Goldman Sachs did not wish to make comment.

"We can not express a complaint which we are not aware and has not yet been filed," said a spokesman for Deutsche Bank in the NYT.

Fannie Mae and Freddie Mac lost more than $ 30 billion mainly due to purchases of securities backed by real estate debt.It took public money to correct their accounts.

The federal agency in housing finance has already filed a complaint against UBS in July, seeking to recover at least $ 900 million and, according to those quoted by the New York Times, the new proceedings will be of a similar financial scale.

The major U.S. banks are already facing the possibility of having to pay tens of billions of dollars in settlement of disputes relating to their activity in the mortgage.

This scenario would further reduce their levels of capital, potentially paving the way for a credit crunch even though the housing market is at half mast and that the U.S. economy as a whole shows signs of slowing down.

Sign of anxiety about this, the U.S. Federal Reserve has asked Bank of America to present the measures it would take if business conditions were deteriorating, reports the Wall Street Journal Friday, citing people familiar with the matter.

Executive Director of the International Monetary Fund (IMF), Christine Lagarde warned on Saturday against the risk of the global economy plunging into recession and called for a rapid and coordinated political action, particularly in restructuring European banks.

"The events of this summer showed that we were in a dangerous new phase," she said at the annual meetings of the Fed in Jackson Hole, Wyoming.

"The stakes are clear: we are in danger of compromising a fragile recovery.We must act immediately. "

Advanced economies must develop long-term plans to control their debt, while ensuring that conservation measures will need not jeopardize the recovery, she added.

"Macroeconomic policy needs to support growth," said the former French Finance Minister in his first major speech since taking office as head of the IMF in July.

"Monetary policy also needs to be extremely flexible because the risk of recession is higher than inflation."

She stressed the need to restructure European banks.For her, the most effective way to effect a recapitalization would be "substantial", if possible through private channels or so through a form of European public funding.

She urged European countries to implement programs to reduce "credible" in their public deficits, relying in particular on the European Central Bank.

About the situation in the United States, she said that the need for long-term fiscal consolidation should not obscure the importance of supporting growth in the short term.

"Who can believe that commitments to reduce spending could survive a long stagnation, with unemployment still high and face the social discontent?"

European banks including Societe Generale and Dexia still suffer from their bad loans, but also another evil, more discreet: their dependence on debt markets to finance their operations.

Unlike some U.S. banks such as JPMorgan Chase and Wells Fargo, which finance a larger share of loans with the deposits of their customers, private banks in Europe generally depend more on their loans in capital markets in the short term.

This exposes them to the whims of investors, may require a sudden interest rates higher for their money, or even remove it from the market place and the banks to thank you for a government bailout.

The sudden increases observed in recent weeks on the rates of short-term loan of some European banks in this respect revived memories of the 2008 financial crisis, when Bear Stearns and Lehman Brothers collapsed in a liquidity shortage .

The recent turmoil highlighted the need for the European banks most vulnerable, to adjust their loan commitments that can actually pay their deposits.

"The European banking system must be redesigned and re-capitalized," said one institutional investor this money markets and based in New York, speaking on condition of anonymity to avoid offending customers.

Many banks have sought since the 2008 crisis, to raise their levels of deposits, with some difficulty.

In Europe, public banks and savings banks enjoy tax benefits because they can maintain their stranglehold on the market, said Rocco Huang, a professor at the University of Michigan.

The race then draws customers to higher costs, so that some institutions are turning to overseas, such as the Franco-Belgian bank Dexia, which recently expanded its network in Turkey.

FINANCING RISK

Fears about the financial health of European banks is easily exacerbated by their lack of transparency about their cash reserves, analysts said.Lack of clear data, investors resort to inadequate instruments, such as loan-deposit ratios ("loan-to-deposit ').

Dexia loans represent 2.5 times the sum of its deposits, according to data compiled by Keefe, Bruyette and Woods.For Societe Generale, the ratio "loan-to-deposit" is 1.2.

By comparison, loans JPMorgan use only two-thirds of it are lists of deposits under its customers.

To make up the difference, European banks therefore depend heavily on capital markets, including money market short-term, which can be risky in the current environment of distrust of investors.

The credit default swaps (CDS) – which measure the cost of insurance on default of payment – General Corporation has more than doubled in less than three months, reaching 303 basis points (bps) on August 19 against 138 bps on May 31, according to Markit.

At the same time, the share of the Company generally has lost about 49% of its value.For comparison, the CDS JPMorgan rose 75 bps to 125 bps, and the action has lost 21%.

This movement took place when a strong seller that major U.S. investment funds have withdrawn money market billions of dollars they previously injected in European banks through short-term loans.

In June and July, according to Fitch Ratings, the top ten funds have pulled 70 billion dollars (48.38 billion euros) or 18.4% of the money they had lent to banks Europe.

Finance is increasingly global, many of these funds have explained to need this cash if their investors wanted their money out of fear of failure to pay the United States.

This sudden loss of funding has forced banks to seek their dollars elsewhere, taking their rising borrowing costs in a way that seemed to indicate that they were in need of funding, said Mark Pawlak, strategist and vice president of Keefe, Bruyette & Woods.

Societe Generale then attempted to allay fears about its financial strength by providing investors with details on its balance sheet during a presentation on August 3.

"The bank has no liquidity problems, its activity is healthy and its investment capabilities are intact," he said last weekend Oudéa Frederick, CEO of Societe Generale, in an interview with Journal du Dimanche.

Neither Dexia nor Societe Generale have wished to comment during this analysis.

Japan is considering a new intervention on the foreign exchange market to stem the rising yen, which reached a record high Friday against the dollar, the daily Nikkei reported Saturday.

If the yen continues to rise, the Japanese authorities will once again intervene in the market to slow the progression of the yen, the newspaper said without citing its sources.

Faced with the volatility of world markets, investors preferred safe haven on Friday as the yen. The dollar fell below 76.25 yen before rebounding.

Hewlett-Packard has made a bid Thursday to the British publisher of Autonomy software and mentioned the possible split in the group with his branch of PC.

HP has offered to buy all outstanding shares of Autonomy for the price of 42.11 dollars per share for a total transaction of $ 10.3 billion (7.1 billion euros).

He also announced the abandonment of its shelf TouchPad who has not had the expected success.

The group also sees a possible split with the PC industry, faced with slow growth and low margins.This is one of the largest divisions of HP but also one of the least profitable of the group.

The American manufacturer has announced a little earlier than expected revenues rose for the third quarter to $ 31.2 billion (2.17 billion euros) against 30.7 billion a year earlier in accordance with the expectations of Wall Street.

The group lowered its annual forecast for the third consecutive time.It now expects an annual turnover of between 127.2 and 127.6 billion dollars, against a previous estimate of between 129 and 130 billion.

The forecast of earnings per share was also down, with a range from 3.59 to 3.70 dollars against a previous forecast of at least 4.27 dollars.

The title, which closed down 6%, down 2.1% after closure of the exchanges on Wall Street.

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 gold price reached a new record Monday in response to stalled negotiations on the U.S. debt, a few days of the date by which Washington could face a default situation.

The spot price of gold, which hit a peak at 1622.49 dollars an ounce, was up 1.1% to 1,615.74 dollars per ounce thereafter.

The forward price for August delivery gained 16.80 dollars to 1618.30 dollars an ounce, after reaching 1624.30 dollars.

The price of gold, which has reaped record during the last five quarters, is expected at the end of the week's biggest monthly increase since April.

The elected Democrats and Republicans in Congress have failed to agree on a compromise on how to achieve an increase in the ceiling of the debt and decided to work separately on separate projects.

While most investors believe in the conclusion of an agreement, the dollar always yields the field, as well as long-term U.S. bonds, in favor of gold.

"There are ultimately two choices: either you have a monetization of debt, a move towards fiscal consolidation (…). Before we had the last, the market will anticipate the first. It's just an excellent ad for the gold market, "said Nic Brown, an analyst at Natixis.