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China Copies an Entire Austrian Village

A $940 million Chinese clone of one of Austria’s most picturesque villages, the UNESCO World Heritage-listed Hallstatt, recently opened its doors to visitors in the southern Chinese province of Guangdong amidst some controversy.

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ECB Official: ECB Considering Direct Bank Recapitalization

“The European Commission has been considering the possibility of direct bank recapitalization by the euro zone’s ESM bailout fund, though this is not possible under the current treaty, its top economics official said on Monday.

“We have been considering this as a serious possibility, of breaking the link between the sovereigns and the banks,” EU Economic and Monetary Affairs Commissioner Olli Rehn told a news briefing.

“This is not part of the ESM (bailout fund) treaty for the moment, in its present form, but we see that it is important to consider this alternative of direct bank recapitalisation as we are now moving on in the discussion on the possible ways and means to create a banking union,” Rehn said.”

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The Prime Minister of Spain Called on Merkel to Act Decisively on New Debt Resolutions

“Spanish Prime Minister Mariano Rajoy ratcheted up pressure on German Chancellor Angela Merkel to back new ideas for a resolution of the debt crisis as he urged European leaders to bolster efforts to protect banks.

With markets bracing for further deterioration in Spain’s finance sector and a possible Greek departure from the 17-member euro area, Rajoy on June 2 added his voice to calls for a more robust “banking union” in Europe, lending his support for a centralized system to re-capitalize lenders. On the same day, Merkel toughened her opposition to euro-area debt sharing, telling members of her party in Berlin that “under no circumstances” would she agree to German-backed euro bonds.”

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Europe Mulls Major Step Towards “fiscal union”

Merkel has the EU by the short hairs. It appears she will keep pressing for ambitious reforms, and why not? Without the support of Berlin, the EU fails…

(Reuters) – When Jean-Claude Trichet called last June for the creation of a European finance ministry with power over national budgets, the idea seemed fanciful, a distant dream that would take years or even decades to realize, if it ever came to be.

One year later, with the euro zone’s debt crisis threatening to tear the bloc apart, Germany is pushing its partners for precisely the kind of giant leap forward in fiscal integration that the now-departed European Central Bank president had in mind.

Read the article here.

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Spain Calls For New Fiscal Authority

MADRID (Reuters) – Spain, the latest combat zone in Europe’s long-running debt wars, urged the euro zone to set up a new fiscal authority to manage the bloc’s finances and send a clear signal to markets that the single currency project is irreversible.

Prime Minister Mariano Rajoy said the authority would also go a long way to alleviating Spain’s woes which, along with the prospect of a Greek euro exit, have threatened to derail the single currency project.

It is not the first time a European leader has proposed creating such an authority but the problems and the size of Spain – a country deemed too big to fail – have prompted EU policymakers to hurriedly consider measures such as creating a fiscal and banking union ahead of a EU summit on June 28-29.

Germany, the paymaster of the euro zone, and others insist such a move can only happen as part of a drive to much closer fiscal union and relinquishing of national sovereignty.

Overspending in the regions and troubles with a banking sector badly hit by a property crash four years ago have sent Spain’s borrowing costs to record highs and pushed the country closer to seeking an international bailout.

The risk premium investors demand to hold Spanish 10-year debt rather than German bonds rose to its highest since the launch of the euro – 548 basis points – on Friday.

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Spain Urges Euro Fiscal Authority to End Crisis

Urged? Perhaps “begged” would be more apt. Either Germany goes all in for the single currency model or the model is blown to bits. I believe Germany will cave, but not until the get terms that are agreeable to them.

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Spain Ejects Clean-Power Industry With Europe Precedent: Energy

Not a good day for the greens. Without subsidies, the green industry simply can’t continue in Europe.

Spanish renewable-energy companies that once got Europe’s biggest subsidies are deserting the nation after the government shut off aid, pushing project developers and equipment-makers to work abroad or perish.

Read the rest here.

 

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The EU Gives Spain Some Time and Monetary Crumbs

Being touted as lifelines the EU will give Spain more time to work out its deficit problems and direct aid from its euro zone rescue fund.

This is more of the same attitude we have seen in the past. Giving time to work out an over blown deficit when your already in the whole is a non event. Will Spain impose austerity ? Can they impose enough to make a difference ? More likely this is a move to make Germany not look like the bad guy.

Finally the direct support from the EU rescue funds is what we have seen all along and have we a success in the PIIGS ?

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Rand Paul To Introduce Bills To Strip Pakistan Funding

A U.S. senator announced Tuesday he would introduce a bill stripping Pakistan of all foreign aid unless the doctor imprisoned for helping the CIA track Usama bin Laden is released. The Obama administration, meanwhile, appeared unwilling to budge from its talking points on the issue, despite an impassioned plea for U.S. intervention from Dr. Shakil Afridi’s family.

“The blame has been placed on my brother because of America,” Shakil’s brother, Jamil, told Fox News during an interview in Pakistan. “We should get justice and protection.”

Jamil Afridi claimed his brother had been tortured by Pakistani authorities.

In Washington, Sen. Rand Paul, R-Ky., said he would introduce a pair of bills next week to address Afridi’s plight. One would strip Pakistan, which received $2.1 billion from the U.S. for the current fiscal year, of all foreign aid until Afridi’s 33-year sentence is overturned and he’s allowed to leave the country; the bill other would grant Afridi U.S. citizenship.

The measures would go beyond the vote by a Senate panel last week to strip Pakistan of $33 million in aid.

“Pakistan must understand that they are choosing the wrong side. They accuse Dr. Afridi of working against Pakistan, but he was simply helping the U.S. capture the head of Al Qaeda. Surely Pakistan is not linking their interests with those of an international terrorist organization,” Paul said in a statement. “Foreign aid has been an abysmal failure precisely for this reason — we give the aid to governments who then turn and work against our national interest. That must end.”

Administration officials have made a similar case, saying repeatedly that Afridi was working against Al Qaeda, not the Pakistani government.

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All of Ireland’s Work May Be in Vain

Ireland has made great strides to repair its damaged economy and rising debt problem. Unfortunately, Greece, Spain, and Italy have crated uncertainty after all the recent moves to build confidence.

More importantly, it appears that no matter how well the country has done getting back on its feet, it may not be enough as debt will reach 120% to GDP.

The world needs a huge shot of global growth to break the debt spiral so many countries face.

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Will the Market Help Spain ?

Spain will try to tap the  markets to raise money for Bankia. According the the ECB, roughly $100 billion will be needed to stabilize the bank. So far in the past week Spain has gotten state and country bailouts to the tune of $28 billion.

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ECB Council Member Tells Reporters There are No Discussions of Further Bond Purchases

Last week the shit hit the fan with Bankia needing over $28 billion in bailouts. Sapin requested the ECB help them through bond purchases. The ECB did not commit to any such requests and today a council memeber said it is time to wait to see how previous measures have worked out.

Essentially, this was not a confidence booster statement for equities.

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