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Markets 13th July 2012

Lord Turner: “The shadow banking system still is out of our reach”

WASHINGTON | “Show me the factories, then!” Before the audience at the School for International Relations of the John Hopkins University, Adair Turner, or Lord Turner, put in these terms his rebuttal to those who defend that financial innovation betters the real economy, a selected group where we would find the former chief economist at JP Morgan and once FMI’s deputy managing director John Lipsky, who happens to strongly dissent…

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Markets 12th July 2012

Myths and legends of TARGET 2

Luis Martí, in Madrid | It stands for Trans-European Automated Real-time Gross Settlement Express Transfer. TARGET2 is a key payment mechanism to European monetary union because it allows all transactions denominated in the common currency to be implemented as easily between member countries as within one country. Otherwise, it would be difficult to talk about common currency. Since the effects and implications of this mechanism are the subject of heated controversy,…

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Markets 11th July 2012

What Wall Street makes of the Libor scandal

NEW YORK | Have Libor scandal shock waves reached this side of the Atlantic yet? There is no doubt they will. It may impact American consumers and the U.S. financial system: Barclays is the only bank confessing malpractices so far, although Wall Street has almost surely been involved in the same dynamics. So far we've only seen the tip of the iceberg but it sends a warning signal to the…

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Markets 10th July 2012

Recession in euro area milder with Spain self-financing by 2014, says LGIM

LONDON | The euro area's debt-burdened economy is unlikely to improve soon, but it has built in up resilience against steep declines. The downturn this time should be softer than it was four years ago, Legal & General Investment Management LGIM said in an investor note. The report explained that growth in the euro area will remain weak but that a severe recession in the region as a whole is…

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Markets 9th July 2012

Renta 4’s Francisco Jorro: “Ibex should recover after summer”

From valenciaplaza.com | Francisco Jorro, director in Valencia at Renta 4 Banco, said in a conversation with valenciaplaza.com that the ECB's rate cut had already been anticipated by the markets, but the move could still help growth plans in the euro area. What did you think of the ECB's decision? The truth is that a quarter down of a point was already discounted by the markes. Hence, not only the Ibex…

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Markets 3rd July 2012

Barclays and the European free markets: the enemy within

LONDON | Whether it is electoral incentives or sincere concern what compelled the UK government to call for supervision from outside the banking sector, free market advocates must have felt an acute sense of betrayal. On Tuesday, the Chancellor of the Exchequer George Osborne no only reminded the City that the British Bankers Association members will not see a penny of the £290-million fine that has been imposed to Barclays…

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Markets 3rd July 2012

Where Spain’s risk premium should be

MADRID | The cost excess the Spanish government pays for credit from the capital markets in comparison with Germany, which is considered the benchmark in confidence matters in the sovereign bond sector, has fallen since last week's euro summit. The main two reasons seem to be that the plan for financial aid for Spain to recapitalise its banks was somehow agreed by the euro authorities, and the possibility that the…

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Markets 2nd July 2012

The EMU still needs fixing

MADRID | The Summit has just avoided the worst from happening. Super-Mario and an unexpectedly bold Mariano Rajoy achieved a coup d’état toppling Ms Merkel from her undisputed pedestal. Hollande’s support was vital in depriving her of her hitherto boundless power. Yet one has the impression we assisted to a rehearsed show meant to provide an excuse for Germany to cave in to pressure. Everyone was afraid of having to confront the…

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Markets 29th June 2012

Euro stress-free area

By Julia Pastor, in Madrid | After so many fruitless meetings, conversations and rounds nobody expected that the European leaders would be able to reach a more than reasonable agreement for Europe, that tough Germany would relax its position towards its Southern partners, and Spain and Italy would resist before the steam engine of the euro zone. But it happened. Banks will be recapitalised directly with the European Stability Mechanism…

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Markets 29th June 2012

After stagnation, a change of scene for French economic policy?

By CaixaBank research team, in Barcelona | France's statistics institute confirmed the French economy's stagnation in the first quarter and the year-on-year rate of change stood at 0.3%. In April, the economic climate indicator worsened and, in May, most leading indicators showed this decline getting worse, affected by the economic uncertainty, particularly due to the euro area crisis. The economy is therefore likely to continue slowing down in the second…