BloggingStocks

A Third of Europeans Want Americans to Manage Their Money

Tom Johansmeyer — Tue, 16 Feb 2010 13:00:00 EST

They may say they can't stand the "ugly Americans," but there's only one place where rich Europeans will put their money.

According to alternative investment research firm Preqin, 29% of all European hedge fund investors prefer to invest in funds based in the U.S., where the managers are often able to highlight solid track records and experience, not to mention more innovative funds. The average European hedge fund investor has capital in three U.S. funds.

Continue reading A Third of Europeans Want Americans to Manage Their Money

A Third of Europeans Want Americans to Manage Their Money originally appeared on BloggingStocks on Tue, 16 Feb 2010 13:00:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

Iceland Voters Resist Debt Repayment

Tom Johansmeyer — Sun, 03 Jan 2010 15:20:00 EST

Filed under: International Markets, McDonald's (MCD), Financial Crisis

British and Dutch investors turned to Iceland a few years ago, attracted by savings account deposit rates that were competitive with equity investment returns. It was an amazing situation, and the money just seemed too easy.

Then, Iceland got the sort of IMF loan that is normally reserved for countries like Somalia, and the Brits and Dutch worried that they'd never get their money back from an investment as supposedly safe as a savings account.

Continue reading Iceland Voters Resist Debt Repayment

Iceland Voters Resist Debt Repayment originally appeared on BloggingStocks on Sun, 03 Jan 2010 15:20:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Premium income down 18% in UK insurance market

Tom Johansmeyer — Tue, 15 Dec 2009 15:00:00 EST

Filed under: Recession, Financial Crisis

UK insurance companies saw worldwide premium income plunge 18% in 2008 to GBP215.3 billion, according to International Financial Services London, an independent research organization. Its Insurance 2009 report says that 2009 will be a fairly tough year, as well, with premium bouncing back in 2010. Long-term premiums were the challenge last year, as they account for 80% of UK insurance business. The financial crisis and an increase for long-term protection converged on insurance rates, pushing prices lower. Premium income in this corner of the market fell almost 25% to GBP168.1 billion in 2008.

The expectation, last year, that damage to insurers' balance sheets and an increase in claims -- particularly for financial services liability coverage -- didn't materialize, as carriers had enough capital on hand to absorb the losses sustained on both sides of the balance sheet. As a result, insurance pricing has been kept under control.

Continue reading Premium income down 18% in UK insurance market

Premium income down 18% in UK insurance market originally appeared on BloggingStocks on Tue, 15 Dec 2009 15:00:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

In an car accident? There's an app for that

Tom Johansmeyer — Wed, 02 Dec 2009 14:20:00 EST

Filed under: Apple Inc (AAPL), iPhone, Technology

Leave it to the lawyers to build a better mousetrap with an iPhone. In the United Kingdom, solicitors Bott & Co found a new question to which the answer is: "There's an app for that." The Car Accident Assistant is the firm's latest contribution to humanity and is available for download from Apple's (AAPL) iTunes environment. If you're in a car accident, you can use the application to connect to the law firm's 24-hour accident help system.

As the ol' infomercial guys love to say, "But, wait! There's more!"

The Car Accident Assistant can be used to help the afflicted collect information about the accident, including vehicles and location. And, you can even take pictures of the accident and gather info from witnesses. It's like having a lawyer in your phone!

Continue reading In an car accident? There's an app for that

In an car accident? There's an app for that originally appeared on BloggingStocks on Wed, 02 Dec 2009 14:20:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

Social media at work: not just a yes/no question any more

Tom Johansmeyer — Wed, 04 Nov 2009 16:15:00 EST

Filed under: Internet, Starbucks (SBUX), Best Buy (BBY), Media World, Technology

Company attitudes toward social media sites vary. Some swing the doors wide open, allowing employees to tend to their Facebook farms and update Twitter statuses throughout the day. Others lock 'em down, keeping non-business site access to a minimum.

A recent study found that, in the United States, 77% of employees with Facebook accounts check in with the community from the office. And, the amount of time they're spending in this part of the online world is growing. In the United Kingdom, another study found that 57% log in regularly from work, costing their employers 40 minutes a day.

Philip Wicks, a consultant at Morse PLC, a technology research firm in London, "It isn't just something you can do for half an hour during a lunch break but all through the day and because of that, it has a huge impact because people aren't necessarily concentrating on what they should be doing during the day." He estimates that this translates to lost productivity of $2.25 billion a year.

It seems like the obvious move would be to block the sites, but William Beers of Pr icewaterhouseCoopers disagrees. "Instead of trying to shut it down, I think we should try to embrace these technologies, put in a nice policy that governs it and explain to users the risks related to it, provide some training and then see what business benefits we can have from it," he said.

Continue reading Social media at work: not just a yes/no question any more

Social media at work: not just a yes/no question any more originally appeared on BloggingStocks on Wed, 04 Nov 2009 16:15:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

M&S celebrates not-so-bad result

Tom Johansmeyer — Wed, 01 Jul 2009 12:40:00 EST

Filed under: International Markets, Industry

Recession or not, people can't walk around naked ... especially not in the United Kingdom. (Iceland in summer? Fair game.) Marks & Spencer Group Plc (London: MKS:UK), the largest clothing retailer in the country, just sustained its smallest drop in sales in nearly two years thanks to some savvy deals (offered to consumers) and warm weather. After making their ~~dollars~~ pounds stretch for so long, shoppers were finally ready for a bit of style.

Revenue declined a modest 1.4% for the year so far, much better than the 2.5% average estimate offered by 16 analysts. This was good enough to push M&S shares up 4%. If all goes well, same store sales may start to increase soon, which means that a full recovery will be right around the corner. Same store sales have fallen for the past seven quarters, and company cut its dividend for the first time in almost a decade.

The discounts that helped lead to the recent M&S sales performance are responsible for 18% of the company's food sales (which are down 0.5% on for same store) - much better than the 2.4% estimate. General merchandise fell only 2.4%, beating the 3.5% projection handily.

M&S celebrates not-so-bad result originally appeared on BloggingStocks on Wed, 01 Jul 2009 12:40:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

U.K. economy has worst quarter since 1958

Tom Johansmeyer — Tue, 30 Jun 2009 10:40:00 EST

Filed under: Economic Data, Housing, Recession, Financial Crisis

Early estimates of a contraction in the U.K. economy were not enough. First quarter 2009 estimates were revisited, showing a 2.4% fall in gross domestic product from the last quarter of 2008 to 2009. This downward revision made the first three months of the year the worst since people wore skinny ties, hated communism, and bore nicknames like "Buzz."

In the second quarter of 1958, U.K. GDP plummeted 2.6%, though the 2.4% threshold matches the depths hit in 1979. The original 2009 Q1 estimate was -1.9%, according to the Office for National Statistics in London.

Continue reading U.K. economy has worst quarter since 1958

U.K. economy has worst quarter since 1958 originally appeared on BloggingStocks on Tue, 30 Jun 2009 10:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Banks putting pressure on UK retail sales

Tom Johansmeyer — Thu, 18 Jun 2009 14:10:00 EST

Filed under: International Markets, Industry, Economic Data, Recession

Retail sales took an unexpected downward turn in May in the United Kingdom -- for first time in three months. Cautious banks appear to be the problem, as their rationing of credit is impeding broader economic recovery. Retail sales fell 0.6% from the previous month, while economists had predicted a 0.3% change in the other direction.

Year-over-year, retail sales were off 1.6%. Sales for the year are down 1.1%, the greatest decline since score-keeping began in 1988. Of course, there's plenty of fodder for rationalizing the results. The annual change was affected by an "unusually large" retail sales estimate for May 2008. Clothing, textile, and footwear retailers and department stores led the plunge, with nonfood store sales off 1.4%, compared to a 0.3% increase in food retail sales.

Continue reading Banks putting pressure on UK retail sales

Banks putting pressure on UK retail sales originally appeared on BloggingStocks on Thu, 18 Jun 2009 14:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Real estate drop keeps marriages together

Tom Johansmeyer — Tue, 09 Jun 2009 15:10:00 EST

Filed under: Personal Finance, Housing, Recession

Falling property prices have pushed equities lower for the past nine months, constrained credit and ... forced British couples to stay married?

According to a study by accounting firm Grant Thornton, divorce filings have fallen precipitously in the United Kingdom. Fallout from the worldwide financial crisis has made it harder for couples to sell a jointly owned home and impairs the ability for each soon-to-be-ex-partner to start and sustain an individual lifestyle.

The U.K. Office for National Statistics put the number of divorce filings at 12.2 per 1,000 marriages in 2006 and 11.9 in 2007 -- a 26-year low.

Continue reading Real estate drop keeps marriages together

Real estate drop keeps marriages together originally appeared on BloggingStocks on Tue, 09 Jun 2009 15:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Jim Rogers calls the United Kingdom 'finished'

Zac Bissonnette — Tue, 20 Jan 2009 14:30:00 EST

Filed under: Economic Data, Financial Crisis

Macroeconomic guru Jim Rogers has a message for investors: The United Kingdom is finished.

Bloomberg quotes the bow tie-clad forecaster as saying that he "would urge you to sell any sterling you might have. It's finished. I hate to say it, but I would not put any money in the U.K."

But England isn't the only country Rogers is trashing. Reuters reports that Rogers is accusing the United States of a systematic effort to devalue the dollar by "turning on the printing presses." It's hard to argue with that and he went on to say that "The idea that you can fix a period of excess borrowing and excess consumption by more borrowing and more consumption to me is just ludicrous."

He reiterated his bullishness on China's long-term future even though that market has been hammered of late.

Regardless of whether you buy into his investment theses, it's hard to argue with his logic that borrowing and consumption will not lead out of a nightmare created by borrowing and consumption.

Jim Rogers calls the United Kingdom 'finished' originally appeared on BloggingStocks on Tue, 20 Jan 2009 14:30:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

Dollar rises vs. euro and pound, but no cause for celebration

Joseph Lazzaro — Wed, 22 Oct 2008 13:23:00 EST

Filed under: International Markets, Recession

Now one would think that the dollar, viewed as the source of much of the world's commodity price inflation this decade, rising from long-term lows would be a cause for celebration.

Not exactly.

While the dollar's rally against most of the world's other major currencies does mean commodity price pressures are likely to continue to subside -- and that's good news for inflation, economists say -- the dollar is nevertheless rising for the wrong reason. Namely, an economic slowdown in Europe.

Euro, pound plunge on recession concerns

"It's not so much as the dollar is strengthening but that the euro and pound are weakening on the likelihood that central banks in Europe will have to cut interest rates more to deal with a recession," economist Peter Dawson said. "Europe is also seen as later in the business cycle than the U.S., which means the U.S. economy is likely to recover sooner, which also helps the dollar. "

Continue reading Dollar rises vs. euro and pound, but no cause for celebration

Dollar rises vs. euro and pound, but no cause for celebration originally appeared on BloggingStocks on Wed, 22 Oct 2008 13:23:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

E.U. commits $2.4 trillion and says ball is now in your court, U.S.

Joseph Lazzaro — Mon, 13 Oct 2008 17:09:00 EST

Filed under: International Markets, Forecasts, Federal Reserve, Financial Crisis

Gosh. Golly. Gee Whiz.

That was the reaction Monday of traders and economists to the European Union's coordinated decision to invest a staggering $2.4 trillion in interbank loan guarantees and bank recapitalizations, ft.com reported, to end the global financial crisis.

(Of course, 'gosh, golly' etc. were not exactly the reactions of traders and economists -- this is a family-appropriate financial blog -- but you get the point.)

Europe's decision sparked a global rally in stocks. The Dow closed up 936.42 points -- the largest one-day point gain in its history -- to 9,387.61.

Europe takes the lead

At minimum, Europe is saying that its economic stake in the current global financial system is so large that it's willing to err on the side of over-committing public funds, economist Peter Dawson said.

"Europe's response is very large, unexpected, and it could prove to be the pivotal move in this crisis," Dawson said. "Europe appears to be saying, 'well the United States is doing what it can do, given its political constraints' now let's do what our political culture allows. Basically, Europe is saying 'the storm of fear starts to lose its strength here.' "

The measures were both sweeping and unprecedented in size and scope, Dawson said. Germany said it offered about $680 billion in loan guarantees and will invest $108 billion in its banking system, ft.com reported. France said it would provide up to $435 billion in loan guarantees and invest as much as $52 billion. The United Kingdom has committed about $70 billion for investment in key banks, along with a guarantee for banks deposits and interbank lending. The Netherlands, Spain, and other nations announced similar plans.

Continue reading E.U. commits $2.4 trillion and says ball is now in your court, U.S.

E.U. commits $2.4 trillion and says ball is now in your court, U.S. originally appeared on BloggingStocks on Mon, 13 Oct 2008 17:09:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Soros sees ray of light in bank recapitalization plan

Joseph Lazzaro — Mon, 13 Oct 2008 14:18:00 EST

Filed under: International Markets, Forecasts, Financial Crisis

One of the world's leading investors is expressing cautious optimism - - underscoring cautious - - regarding the fate of the global financial system.

Billionaire investor George Soros said Monday a pledge by European leaders to guarantee new bank financing is "a positive step" may help stabilize global financial markets, Bloomberg News reported.

Soros: We're finally getting the leadership we need

"In the last 72 hours, I think the European governments got religion and realized that this is a serious problem,'' Soros said at a press conference in Washington, Bloomberg News reported. "People are looking for some leadership and finally they are getting it." Soros is chairman of the $20 billion Fund Management LLC.

Along with actions by the major central banks to increase the supply of dollars in the global money supply, Europe's major industrialized nations announced fiscal policies to back bank-to-bank loans and recapitalize banks, The New York Times reported Monday. Britain said it will invest $73 billion in its banks, Germany is investing up to 500 billion euros or about $680 billion, and France will create an agency to offer state guarantees for banks and to channel money to them.

Further, Soros underscored that the United States government must recapitalize solvent banks, ft.com reported Monday. The U.S. said it intends to do that, but has not yet released details of its plan. Soros would like the U.S. government's recapitalization to take the form of preferred shares, which would dilute existing shareholders, but with private capital given the right to subscribe on the same terms, if private investors are able to put up more money, ft.com reported.

Continue reading Soros sees ray of light in bank recapitalization plan

Soros sees ray of light in bank recapitalization plan originally appeared on BloggingStocks on Mon, 13 Oct 2008 14:18:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Short-term interest rates dip on U.S., Europe liquidity actions, bank rescues

Joseph Lazzaro — Mon, 13 Oct 2008 11:15:00 EST

Filed under: International Markets, Federal Reserve, Financial Crisis

Thus far, credit conditions remain a cold as Rutland, Vermont on a January night, but there are hints of a thaw in the making.

Interest rates for three-month loans in dollars dipped Monday, after policy makers in the United States and Europe offered unlimited dollar funds and Europe governments took actions to recapitalize and bolster banks.

The London three-month rate decreased 7 basis points to 4.75%, Bloomberg News reported Monday. Also, the euro interbank offered rate, or Euribor, for one-week loans dropped 26 basis points to 4.37%.

Short-term rates, including overnight rates, are key sources of cash for corporations and other large institutions, which use the cash to pay suppliers, make payroll, roll over debt etc. Hence, very high overnight and short-term rates will discourage corporations from conducting business, restricting commerce and slowing the economy, economists say.

Actions seen lowering banks' anxiety

Economist Peter Dawson told BloggingStocks Monday the actions taken this weekend and Monday by industrialized nations and their respective central banks will help loosen credit markets and decrease anxiety that's tightened the flow of money, globally.

"Central bank actions to supply dollars will help re-liquify the markets. I can't say if this one action will stop the pack-rat-like hoarding of dollars, but eventually players in the system are going to realize that no matter how many dollars they hoard, central banks have more to add," Dawson said. "Regarding fiscal policy, the guarantees by governments to banks will help reduce bank-to-bank fear that banks they lend to are insolvent, which should inch us back toward more-typical bank-to-bank lending."

Continue reading Short-term interest rates dip on U.S., Europe liquidity actions, bank rescues

Short-term interest rates dip on U.S., Europe liquidity actions, bank rescues originally appeared on BloggingStocks on Mon, 13 Oct 2008 11:15:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Fed, ECB lead effort to increase dollar supply in global markets

Joseph Lazzaro — Mon, 13 Oct 2008 10:31:00 EST

Filed under: International Markets, Forecasts, Federal Reserve, Financial Crisis

The U.S. Federal Reserve is leading an unprecedented effort by major central banks to push dollars into the global financial system, the Fed announced Monday, backstopping government fiscal policies to restore confidence,

The European Central Bank, Bank of England, and the Swiss Central Bank, will offer unlimited dollar fund auctions with maturities of seven days, 28 days, and 84 days at a fixed interest rate. The Bank of Japan may offer similar measures, the Fed said.

The Fed added that "central banks will continue to work together and are prepared to take whatever measures are necessary to provide sufficient liquidity in short-term funding markets."

Dollar falls on increased currency supply

The dollar fell early Monday against the world's other major currencies on the news, as traders adjusted positions to the increased supply of dollars. The dollar fell one half cent to $1.3615 versus the euro, 1.5 cents to $1.7286 versus the British pound and one-third yen to 100.37 versus Japan's yen.

Economist Richard Felson told BloggingStocks Monday the major central banks' effort is clear: keep financial markets adequately supplied with dollars amid a world that's hoarding dollars.

"It's one of the paradoxes of this current global financial crisis that despite the fact that the crisis originated in the United States, banks and financial institutions around the world are hoarding dollars. The reason is the dollar is still the world's reserve currency and investors are engaging in a flight to safety. The consequence has been a credit crunch," Felson said. "The central banks' policy should help alleviate that crunch by ensuring that there's adequate dollar liquidity. It's the correct move."

Continue reading Fed, ECB lead effort to increase dollar supply in global markets

Fed, ECB lead effort to increase dollar supply in global markets originally appeared on BloggingStocks on Mon, 13 Oct 2008 10:31:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Despite stock rout and more U.S. debt, dollar is firm (so far), except vs yen

Joseph Lazzaro — Fri, 10 Oct 2008 16:50:00 EST

Filed under: International Markets, Forecasts, Recession, Financial Crisis

Twenty five trillion dollars in global market capitalization wiped out. At least $500 billion -- and most likely in excess of $1 trillion added to the United States' national debt. The Fed has loaned money to corporations, added massive liquidity to banks, cut interest, and the U.S. Treasury may invest directly in private banks, if it doesn't nationalize them.

And the currency of the nation primarily responsible for the global financial crisis -- the dollar -- how has it fared?

The dollar has been firm, for the most part, even rising against the euro and British pound. However, the dollar has fallen against Japan's yen. As of Friday at 2:35 p.m. EDT, the dollar had risen 2 cents versus the euro to $1.3382 and 1.5 cents versus the pound to $1.6947, but had fallen one-half yen to 99.33.

Continue reading Despite stock rout and more U.S. debt, dollar is firm (so far), except vs yen

Despite stock rout and more U.S. debt, dollar is firm (so far), except vs yen originally appeared on BloggingStocks on Fri, 10 Oct 2008 16:50:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Short-term interest rates rise again, as tight credit conditions continue

Joseph Lazzaro — Thu, 09 Oct 2008 10:30:00 EST

Filed under: International Markets, Federal Reserve, Financial Crisis

The slowdown in global credit markets continues. Interest rates for three-month loans in dollars continued to rise early Thursday, as a coordinated interest rate cut by the world's major central banks failed to jump-start bank-to-bank lending.

Credit markets: Freeze frame

The London three-month rate for dollar loans increased 23 basis points to 4.75%, Bloomberg News reported Thursday. Meanwhile, the London interbank offered rate, or LIBOR -- the rate banks charge each other for overnight dollar loans -- decreased 29 basis points to 5.09% early Thursday morning; nevertheless, the level still is a very high rate for short-term cash.

Overnight rates are key sources of cash for corporations and other large institutions, which use the cash to pay suppliers, make payroll, roll over debt etc. Hence, a very high overnight will discourage corporations from conducting business, restricting commerce and slowing the economy, economists say.

Economist Peter Dawson told BloggingStocks Thursday the failure of short-term, bank-to-bank rates to drop indicates that monetary and fiscal officials will have to do more to maintain financial system liquidity. "Banks remain in a state of fear. Basically, the way things are now banks are assuming that their competitor banks are insolvent unless proven otherwise," Dawson said. "It's a breakdown in trust and its constricting commerce. If it continues it's going slam GDP on both sides of the Atlantic."

Continue reading Short-term interest rates rise again, as tight credit conditions continue

Short-term interest rates rise again, as tight credit conditions continue originally appeared on BloggingStocks on Thu, 09 Oct 2008 10:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

EU, sensing credit whirlwind, seen trying again for unified response

Joseph Lazzaro — Tue, 07 Oct 2008 18:30:00 EST

Filed under: International Markets, Politics, Financial Crisis

Think it's hard for the U.S. Congress to agree on a policy?

Try getting a policy passed by the European Union.

Strictly speaking, of course, the European Parliament (both chambers), not the EU, is akin to the Congress, but the 27-nation EU is proving to be almost as unwieldy as the EP.

The EU's decision to increase the guarantee on bank deposits to 50,000 euros or about $68,000 Tuesday represented the first common, or unified approach to the financial crisis, The New York Times reported Tuesday, despite incontrovertible data indicating that the credit crunch is restricting lending, both short- and long-term, and is slowing commerce.

EU stance: 'Every nation for himself'

Economist Richard Felson told BloggingStocks Tuesday the EU's lack of unified action highlights the limitations of Europe's supranational political system. "For those European nations using the euro, these nations are unified by a common central bank. But fiscal policy, in terms of a treasury department, remains at the nation-state level. That makes it much harder to coordinate a bank rescue, for example," Felson said.

That's the main reason the EU hasn't passed a rescue package similar in scope to the U.S. Congress', Felson said. "Europe's economy is just as large as the U.S.'s and it's likely to experience distressed/bad debt aftereffects almost as large as those in America. It requires a unified response, but thus far it's been 'every nation for himself.' It's very disappointing, from a governance standpoint."

Continue reading EU, sensing credit whirlwind, seen trying again for unified response

EU, sensing credit whirlwind, seen trying again for unified response originally appeared on BloggingStocks on Tue, 07 Oct 2008 18:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Europe in need of 'a more aggressive, coordinated effort'

Joseph Lazzaro — Mon, 06 Oct 2008 10:43:00 EST

Filed under: International Markets, Bad News, Financial Crisis

So far, there's little indication the financial crisis is subsiding.

The euro and British pound fell against the dollar, and money market rates climbed early Monday in Europe as banks hoarded cash.

The euro and British pound fell about 1 cent versus the dollar to $1.3610 and $1.7568, respectively, early Monday as traders sensed both the European Central Bank and Bank of England, along with national governments, will have to take monetary and policy actions to address the crisis.

The London interbank offered rate, or LIBOR -- the rate banks charge each other for overnight dollar loan, increased 37 basis points to 2.37%. The Euribor, a similar rate for the euro, rose 1 basis point to 5.35%, an all-time high.

Currency Trader Andrew Resnick told BloggingStocks Monday, currency, credit and stock markets in Europe all indicate the financial crisis will impact many of the economies in the euro zone.

"Germany's decision to guarantee all private German bank accounts kind of spooked the currency market, and drove the euro and pound lower. It's a good, defensive action, but it prompted people to ask 'how deep is the problem in Europe?'" Resnick said. "We're going to need more action to address the crisis from both the European Union and the central banks of Europe to boost liquidity."

Continue reading Europe in need of 'a more aggressive, coordinated effort'

Europe in need of 'a more aggressive, coordinated effort' originally appeared on BloggingStocks on Mon, 06 Oct 2008 10:43:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

G-7: Stabilize markets, U.S., but not with our money

Joseph Lazzaro — Mon, 22 Sep 2008 14:55:00 EST

Filed under: International Markets, Federal Reserve

Just call it an endorsement of a collective security policy where 'you go first.'

That was how one economist characterized the G-7 group of finance ministers' stance toward the U.S. Treasury Department's proposed $700 billion intervention to stabilize the financial system.

In a conference call statement, the G-7 - - Germany, the United Kingdom, France, Japan, Italy, Canada, along with the U.S. - - said, "We strongly welcome the extraordinary actions taken by the United States to enhance the stability of financial markets and address credit concerns, especially through its plan to implement a program to remove illiquid assets that are destabilizing financial institutions," The Wall Street Journal reported Monday(subscription required.)

However, none of the other six G-7 members will adopt a program similar to the U.S.'s, German Finance Minister Peer Steinbrueck told reporters in Berlin after the call, Bloomberg News reported Monday.

Economist Peter Dawson told BloggingStocks Monday the G-7's stance is half-hearted, in his interpretation. "In its general statement, the G-7 is on-board with the [U.S] Treasury's program but [German Finance Minister Peer] Steinbrueck's comments are disappointing. Steinbrueck, or another G-7 representative should have followed up with 'and we stand ready to assist the United States and other nations with fiscal measures to support the above goals, if needed, etc.,' " Dawson said. "Right now, the G-7's tone is 'go forth U.S., but we're not getting in the pool right now, the water's too cold.' Given the G-7's complicity in causing the problem and their systemic interest, a more-engaged statement should have been issued regarding fiscal policy options."

Cites AIG's 'interconnectedness'

For example, Dawson said the G-7's corporate involvement in American International Group's (NYSE: AIG) is evidence item 'A' for stronger G-7 involvement. "G-7 companies, banks, and institutional investors benefited from AIG's credit default swaps and related products, and would be hurt by a systemic failure. Since they are parties to the problem, they should also bear some of the costs of the reforms and bailout," Dawson said. "But right now their stance is 'Go ahead U.S. We back your spending your money, but not ours.' That's an inadequate response from our G-7 associates."

Continue reading G-7: Stabilize markets, U.S., but not with our money

G-7: Stabilize markets, U.S., but not with our money originally appeared on BloggingStocks on Mon, 22 Sep 2008 14:55:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments