Daily Archives: April 22, 2010

Simone Baribeau

We have moved “way beyond a North-South world” and the World Bank is moving with it.

The message, from Robert Zoellick, World Bank president, came as he called for shareholders to expand developing countries votes at the institution at the opening of the WB/IMF spring meetings. Read more

Ralph Atkins

If financial markets were not fretting about Greece, what would they be worrying about? In quieter times, more might have been made of diverging views on the European Central Bank’s governing council over the inflation outlook.

As I noted in previous posts, Axel Weber, the Bundesbank president, and Jürgen Stark, ECB executive board member – both German - have both warned that inflation risks are tilted upwards – contradicting the official line that they remain broadly balanced. Their comments suggested their hawkish instincts remain undimmed, even if eurozone inflation, at 1.4 per cent, is undershooting the “below but close” to 2 per cent target and likely to do so for some time.

Now, Marco Annunziata, chief economist at Unicredit, has put out a note arguing that the Weber/Stark rebellion is in fact related to the Greek crisis. The help the ECB has given Greece – for instance, in reducing the risk that Greek assets could be excluded from use in liquidity-providing operations - could have raised concerns about the central bank’s credibility Read more

The Greek cold has turned into ‘flu, and Portugal has started sneezing.

The Greek government’s cost of debt rose dramatically today, and the cost of insuring that debt rose with it —spectacularly. Greek 1-year credit default swaps are trading (very thinly) at an all-time high of 1000 basis points, according to Markit data; a 57 per cent rise in a day. It now costs €1m to insure €10m 1-year debt. The markets are effectively pricing in a debt restructure within the year. Read more

The cost of government debt is rising almost vertically in Greece today, and rumour has it that no-one is selling insurance against the debt’s default.

This follows news of a worse-than-expected Greek budget deficit of 13.6 per cent. Previous estimates pinned the deficit at 12.9 per cent. Read more

Ken Clarke, shadow business secretary, is an angry man and thinks British politics is being trivialised.

“We are in danger of treating this election as if it is just some TV celebrity talent contest. Read more

Bank debt issues reduced by $122bn in Q4 2009, reversing several quarters of increases (red blocks on chart). Domestic financing in foreign currencies also decreased (lemon blocks), though this was partly offset by an increase in more traditional methods of financing: loans and deposits (blue blocks).

Overall, liabilities are still decreasing, just at a slower rate in Q4. At the end of 2008, BIS data show total bank liabilities standing at $33.9bn. At the end of 2009, the figure was $32.2bn. Read more