Financial crisis: spectre of credit crunch returns as banks pump money into markets
The spectre of a second credit crunch was raised when central banks were forced to intervene to stop the international financial system from freezing up again.
16 September, 2011
As the head of the International Monetary Fund warned of a new “dangerous phase of the crisis”, the Bank of England and other central banks said they would start lending cash to European banks that were struggling to borrow.
Such “liquidity-providing operations” were last conducted in 2008 and 2009 at the height of the credit crisis, when banks’ reluctance to lend to one another threatened to cripple the financial system.
The latest developments came on the third anniversary of the collapse of Lehman Bros, the US bank whose demise brought the financial system to the brink of meltdown.
The central banks’ fresh intervention, which will run from October until December, was driven by the deepening crisis in the eurozone, which is struggling to cope with the debts of countries including Greece.
Central banks expand dollar operations
FRANKFURT | Thu Sep 15, 2011 4:19pm EDT
(Reuters) - Major central banks around the world will cooperate to offer three-month U.S. dollar loans to commercial banks in order to prevent money markets from freezing up in the wake of Europe's sovereign debt crisis.
The European Central Bank said on Thursday it would hold three fixed-rate operations between October and December to provide banks as many dollars as they needed, in order to ease any funding crunch over the year-end.
"The European Central Bank has decided, in coordination with the (U.S.) Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, to conduct three U.S. dollar liquidity-providing operations with a maturity of approximately three months covering the end of the year," the ECB said.
The announcement sharply boosted European bank shares and the euro. Shares in French bank BNP Paribas climbed as much as 22 percent from the previous day's close before ending 13 percent higher.
The U.S. Is Unable To Account For 36k Pounds Of Weapons Grade Uranium And Plutonium
September 15, 2011
Under special nuclear cooperation agreements, the United States sent 38,580 pounds of enriched uranium and plutonium to more than two-dozen foreign agencies and is unable to account for 36,000 pounds of the material.
The Government Accountability Office report says these 27 cooperation agreements, set up to facilitate cross border research, have no accountability and the U.S. has no way to enforce control.
Because there is no reporting process in place, the Nuclear Regulatory Commission (NRC) has been visiting nuclear storage sites overseas when permitted, but has not regularly visited countries with the greatest risk of proliferation.
Italian's protest against tax hike
September 15, 2011
Hundreds of demonstrators have protested outside Italy's parliament as the country's lawmakers voted in favour of a 54.2 billion euros ($A72.2 billion) austerity package, the second in three months aimed at calming skittish markets amid a European debt crisis.
Protesters let off firecrackers, overturned bins and threw objects at riot police in the latest series of protests against the tax hikes and spending cuts.
Despite the protests, the ballot by Italy's Chamber of Deputies was cast as a vote of confidence on the measures, designed to speed up implementation after the Senate backed the package last week and as investors' reluctance to buy Italy's debt drove interest rates to new highs.
EU's ultimatum to Germany: act now to save the euro
15 September, 2011
The president of the European Commission, Jose Manuel Barroso, issued a stark warning to Germany yesterday that eurobonds could be the price of preventing a break-up of the single currency. Addressing the European Parliament, Mr Barroso said the Commission will "soon present options" for the introduction of a common European debt union.
Stock markets across Europe rose following Mr Barroso's speech as investors interpreted it as a sign that the Continent's leaders are finally prepared to do what is necessary, in their view, to guarantee the future of the single currency. But any move in the direction of the issuance of government bonds underwritten by all 17 nations of the eurozone looks set to run into a brick wall in the shape of the German Chancellor Angela Merkel.
Last month, Ms Merkel described eurobonds as "exactly the wrong answer". And yesterday her Foreign Minister, Guido Westerwelle, said:"We are opposed as far as the instrument of eurobonds is concerned because we believe you can't fight debt in Europe by making it easier to take up debt."
Cameron feels the heat of meltdown on Continent
15 September, 2011
As well as further weakening Britain's already anaemic growth, the crisis in the eurozone threatens to create a major political headache for David Cameron. The Prime Minister faces a dilemma over whether to risk a rift with Conservative backbenchers or his Liberal Democrat coalition partners over Britain's stance when a new European treaty is devised to allow the 17 nations in the euro to adopt fiscal union.
At the first meeting of a new Eurosceptic group on Monday, 120 Tory MPs agreed to draw up a "shopping list" of powers they want to see returned from Brussels to London in the EU negotiations. One said the Government had a "blank page" for its Europe policy and that the MPs are determined to fill the vacuum.