Largest Dutch Bank Unable To Deliver Gold To Customers
Hard Assets Alliance Team April 05, 2013
The Hard Assets Alliance has been warning readers and customers about the perils of big banks. The latest victim: ABN AMRO, which is the largest Dutch bank in the Eurozone. It recently defaulted on its gold deliveries to customers.
Largest Dutch bank defaults on physical gold deliveries to customers
GOLDAPRIL 3, 2013BY: KENNETH SCHORTGEN JR
Last week, a rubicon was crossed in the precious metals market as one of the largest banks in Europe defaulted on their gold contracts, and informed their customers there was no physical gold available for delivery.
ABN AMRO, the largest Dutch bank in the Eurozone, issued a letter to their gold contract customers of failure of delivery, and instead will pay account holders in a paper currency equivalent to the current spot value of the metal.
ABN AMRO, the biggest Dutch bank, has sent a letter to its clients stating that they will no longer be able to take physical deliveries of the gold they have bought through ABN. Instead they are offered money at the current market rate for gold. Basically, instead of owning a risk free, physical asset (a gold bar or a gold coin), the bank’s clients now own a monetary claim on ABN AMRO, being exposed to the bank’s credit risk. – Voice of Russia
Over the past two months, there has been a concerted effort by the major Western banks to bring down the price of gold and silver, even as countries like Russia, Iran, and China continue to accumulate the physical metal in large quantities. Like the folly of betting against the stock markets when the Fed is pumping up equities with $85 billion per month, going against the J.P. Morgan silver short machine in the futures market has been a losing proposition for silver bulls.
Interestingly for Europe however, since the Eurozone crisis spread from Greece to Spain, Italy, and Cyprus, the fastest growing currency being purchased by retail investors is Bitcoin. Bitcoin is a digital currency that is out of the control of sovereign central banks, and to this point, has not been manipulated by inflationary monetary policy.
In investing circles there is an adage which says, if you don’t hold it, you don’t own it. Whether it is land, metals, or other hard assets, if it is held in a bank, in a paper instrument, or in a paper currency, the documented owner has management control, but not physical control. And as the world saw last month in Cyprus, the government, or even a major bank like ABN AMRO, can change the terms of a contract at any time, and return to investors asset values set by the bank, and not the customer’s intention.
Statistics: Posted by DIGGER DAN — Wed Apr 24, 2013 7:58 am
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Dutch Delusion: Europe’s Core, She Rots Some More
FRIDAY, APRIL 12, 2013 1:23 PM
A report published Thursday by the real estate industry in the Netherlands states that the average home price is now 18% lower than it was at the peak in 2008, while detached homes lost 20%-25% (March 2013 YoY prices fell 6.8%, says Eurostat). A separate, earlier, report estimated that 20% of homes, or over 1 million, are now underwater.
Today’s report comes hot on the heels of a study issued Wednesday by a government commission, which took a full year to prepare and 121 pages to explain what went wrong in the Dutch housing bubble, and what should be done now to correct it.
The core problem is simple: from 1995 to 2008 home prices more than tripled (rose 200%+). Hence, if we round off to a 20% drop from peak levels, or 60% from 1995 levels when prices were a third of what they were in 2008, there’s still an increase of about 150% from the starting levels that needs to be dealt with. We can discount for, and let’s be generous, perhaps 50% for overall price inflation, but that still leaves us with a 100% increase, which is quite a bit more than the 60% absorbed so far.
This means that, seen from the 2008 peak perspective, a 20% price fall has been completed, and another 33% drop is needed to get back to where it came from. Some may cite reasons why prices should remain elevated, but that smacks too much of the "this time is different" argument; one might as well argue the opposite. A main point raised is that demand outstrips supply, but demand is not what people want; it’s what they will be able to afford. And the Dutch economy is shrinking.
Well, you see the problem by now, of course: like many other nations, the Dutch today feel quite strongly that they have suffered enough already, and someone somehow needs to revive the housing market. But like everyone else, the Dutch wish to wish away the problem of the not yet corrected part of the pricing model. In their case, they want 200% (1995+100%) to be the new normal (a.k.a. the new black).
Not surprisingly, the government report says that A) all parties are to blame, and B) the government needs to get more involved, i.e. make sure loans become available for people who now can’t get them, a.k.a. people who are not the most likely prime candidates to buy a home that’s still some 33% overvalued. Though, admittedly, sucking in those last remaining suckers would prop up moribund builders, agents and lenders for a while longer. Whether that’s a government’s task is at the very least highly questionable (obviously, other countries, including the US, work on similar resuscitation efforts).
The most hilarious I’ve seen to date coming out of the Netherlands (a good second was:" build more homes"!) is the proposal for the government to artificially raise home rents so people will be more likely and tempted to buy a home. An act which, incidentally, has recently been stripped of its most flagrant artificial incentives.
Incentives like the 105%-110% mortgages offered by lenders to everyone who could fog a mirror, but more than that, the main one, a very generous mortgage interest deductibility system, which at some point had people believe they would be stealing from themselves if they didn’t buy a home. The more you borrowed, the better off you were. The Dutch government stood by and did nothing (except count the extra tax revenue). And now a government committee says everyone’s to blame, not just them. Incompetent inglourious lying basterds.
Throughout the western world it’s been an active collaboration of the governments and the banks and the real estate industry and the builders. For private parties, it’s just a nice one-off windfall (if you’re the boss). But if tax rates remain the same, tripling home prices are such a windfall for any level of government that it’s really worth it to encourage the madness where and whenever you can. It doesn’t get more predictable than that. And neither does the follow-up: with prices, but especially sales, dropping off a cliff, tax revenue falls, and since there’s nothing as addicted to anything as a government to taxes, services and benefits go out with the bathwater. But only after all lenders have been made whole (Dutch banks have mostly been nationalized) with the – largely future – tax revenues of the home buyers and their unborn progeny.
It’s a very simple story really: this is a widespread tale of western societies transforming themselves into pyramid schemes; or perhaps we should say one big global Ponzi scheme. And these Ponzi things collapse, and there’s nothing anyone can do to "fix" that: the poisoned chalice must and will be emptied to the last drop. Only, the politicians – legally – have their hands in everyone’s pocket, so they can throw around trillions of dollars and euros to hide the process of the plunging system for as long as it lasts. That’s where we’re at right now.
And it’s not that all of these folks have evil minds; the intelligence level of politicians in the Netherlands approaches zero as much as it does in other western countries. The issue is that the entire system has blinders on, the blinders of ever-lasting growth economic "education", and of when you have none, do what you can, sell your grandma if you must, to return to growth ASAP. A few who understand it could be labeled evil; the rest are all blinded by the lights of power. And at best completely useless when it comes to governing a society that is not growing rapidly and happily.
They can think in only one dimension, and that one-dimensional thinking can in the end lead to one end only: complete and utter disaster. It’s everything on red every time and every day, and that’s not how the world works. Every time black comes up is, for these people, nothing but another reason to put it all on red again next time. A surefire recipe for mayhem. But it’s all they have ever learned.
Still, don’t take my word for it. Christoph Schult and Anne Seith laid it out quite well in Der Spiegel last week:
Underwater: The Netherlands Falls Prey to Economic Crisis
"Underwater" is a good description of the crisis in a country where large parts of the territory are below sea level. Ironically, the Netherlands, widely viewed as a model economy, is facing the kind of real estate crisis that has only affected the United States and Spain until now. Banks in the Netherlands have also pumped billions upon billions in loans into the private and commercial real estate market since the 1990s, without ensuring that borrowers had sufficient collateral.
Private homebuyers, for example, could easily find banks to finance more than 100% of a property’s price. "You could readily obtain a loan for five times your annual salary," says Scheepens, "and all that without a cent of equity." This was only possible because property owners were able to fully deduct mortgage interest from their taxes.
Instead of paying off the loans, borrowers normally put some of the money into an investment fund, month after month, hoping for a profit. The money was to be used eventually to pay off the loan, at least in part. But it quickly became customary to expect the value of a given property to increase substantially. Many Dutch savers expected that the resale of their homes would generate enough money to pay off the loans, along with a healthy profit.
More than a decade ago, the Dutch central bank recognized the dangers of this euphoria, but its warnings went unheeded. Only last year did the new government, under conservative-liberal Prime Minister Mark Rutte, amend the generous tax loopholes, which gradually began to expire in January. But now it’s almost too late. No nation in the euro zone is as deeply in debt as the Netherlands, where banks have a total of about €650 billion in mortgage loans on their books.
Consumer debt amounts to about 250% of available income. By comparison, in 2011 even the Spaniards only reached a debt ratio of 125%.
The Netherlands is still one of the most competitive countries in the European Union, but now that the real estate bubble has burst, it threatens to take down the entire economy with it. Unemployment is on the rise, consumption is down and growth has come to a standstill. Despite tough austerity measures, this year the government in The Hague will violate the EU deficit criterion, which forbid new borrowing of more than 3% of gross domestic product (GDP).
It’s a heavy burden, especially for Dutch Finance Minister Jeroen Dijsselbloem, who is also the new head of the Euro Group, and now finds himself in the unexpected role of being both a watchdog for the monetary union and a crisis candidate.
Even €46 billion in austerity measures are apparently not enough to remain within the EU debt limit. Although Dijsselbloem has announced another €4.3 billion in cuts in public service and healthcare, they will only take effect in 2014.
"Sticking the knife in even more deeply" would be "very, very unreasonable," Social Democrat Dijsselbloem told German daily Frankfurter Allgemeine Zeitung, in an attempt to justify the delay. It’s the kind of rhetoric normally heard from Europe’s stricken southern countries. The adverse effects of living beyond one’s means have become apparent since the financial crisis began. Many of the tightly calculated financing models are no longer working out, and citizens can hardly pay their debts anymore. The prices of commercial and private real estate, which were absurdly high for a time, are sinking dramatically. The once-booming economy is stalling.
"A vicious cycle develops in such situations," says Jörg Rocholl, president of the European School of Management and Technology in Berlin and a member of the council of academic advisors to the German Finance Ministry. "Customers have too much debt and cannot service their loans. This causes problems for the banks, which are no longer supplying enough money to the economy. This leads to an economic downturn and high unemployment, which makes loan repayment even more difficult."
The official unemployment rate has already climbed to 7.7%. In reality, it is probably much higher, but that has been masked until now by a demographic group called the ZZP. The "Zelfstandigen zonder personeel" ("Self-employed without employees") are remotely related to the German model of the "Ich-AG" ("Me, Inc."). About 800,000 ZZPers currently work in the Netherlands. [..] (ED: at a working population of maybe 10 million.)
The Dutch have long been among Europe’s most diligent savers, and in the crisis many are holding onto their money even more tightly, which is also toxic to the economy. "One of the main problems is declining consumption," says Johannes Hers of the Netherlands Bureau for Economic Policy Analysis (CPB) in The Hague, the council of experts at the Economics Ministry. His office expects a 0.5% decline in growth for 2013. Some 755 companies declared bankruptcy in February, the highest number since records began in 1981. The banking sector is also laying off thousands of employees at the moment.
Because of the many mortgage loans on the books, the financial industry is extremely inflated, so much so that the total assets of all banks are four-and-a-half times the size of economic output.
The main problem seems to be that the entire westworld economic system is based on belief alone. The Netherlands has become a society built entirely on delusion, and it’s by no means the only one.
Recently, 80-year old Dutch somewhat-euro-sceptic right wing statesman Frits Bolkestein said that within 5 years, Germany, Holland et al should and would introduce a second currency besides the Euro. He was adamant France could not be part of it: "they’re broke!". It seems to me, so is Holland. It must be an increasingly lonely time to be Angela Merkel.
Statistics: Posted by yoda — Fri Apr 12, 2013 10:02 am
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Another Gold Shortage? Dutch ABN To Halt Physical Gold Delivery
Tyler Durden’s pictureSubmitted by Tyler Durden on 03/24/2013 16:44 -0400
Based on a letter to clients over the weekend, it appears Dutch megabank ABN Amro is changing its precious metals custodian rules and "will no longer allow physical delivery." Have no fear, they reassuringly add, your account will be settled at the bid or offer price in the ‘market’ and "you need to do nothing" as "we have your investments in precious metals."
Via Google Translate,
Changes in the handling of orders in bullion
On 1 April 2013,. ABN AMRO to another custodian for the precious metals gold, silver, platinum and palladium. This we your investments in precious metals otherwise handle and administer. In this letter you can read more about it.
What will change?
With the transition to the new custodian will include the following from 1 April 2013 for you to change.
• You can have your precious metals to your investment account no longer physically let us extradite
• Gives you order in precious metals via the giro ABN AMRO? Then the settlement of orders that henceforth performed at bid prices or at the offer prices prevailing on the market for precious metals. No longer based on the mid-price, as you used to.
• The bid price is the price that merchants offer for precious metals that are offered for sale, so if you sell.
• The ask price is the price at which traders want to sell precious metals, so if you buy.
• We are the positions in these precious metals in your investment statements against future bid prices appreciate
You can read more about investing in precious metals in Chapter 4 (Supplementary conditions for investing in precious metals) of the Conditions Beleggersgiro. You can find these at abnamro.nl / Conditions invest
Should I do anything?
You need do nothing. We ensure that we have your investments in precious metals now the new way to handle and administer.
(h/t MDG by way of Frank Knopers)
Statistics: Posted by DIGGER DAN — Tue Apr 02, 2013 1:49 am
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Truth is a precious commodity. Pay heed to those who speak it.
Little Dutch Boy
John P. Hussman, Ph.D.
In the Mary Mapes Dodge book titled Hans Brinker, there is a fictional story within the story of a little Dutch boy who, on his way to school, notices a hole in the dyke. Having nothing else to fix the leak, he plugs the hole with his finger and stays there through the night until workers come to repair it. We are now into the fourth year of efforts to print trillions of little Dutch boys out of dollars and euros in order to stop a tide from crashing through a fundamentally damaged dyke. All of this has bought time, but no workers have arrived, and no real repairs have been done.
The holes seem only loosely related: non-performing mortgages, widespread unemployment, massive U.S. budget deficits, a “fiscal cliff” sideshow, inadequate European bank capital, European currency strains, a surge of non-performing loans in China, and unexpected economic softness in Asia and global trade more generally. All of this gives the impression that these problems can simply be addressed one-by-one. The truth is that they are all intimately related to a single central issue, which is the utter unwillingness of politicians around the globe to accept and proceed with the inevitable restructuring of bad debt, and their preference to defend the bondholders of a fundamentally rotted financial system.
But haven’t things improved? No doubt, bank balance sheets have been relieved of transparency through changes in accounting rules. Nonperforming loans have been easy to kick down the road thanks to an interminable “amend and pretend” process whereby a month or two of mortgage service is exchanged for extensions that tack delinquent payments onto the back of the loans. Meanwhile, banks have recouped some of their losses through wider interest spreads, by refusing to refinance higher interest mortgages, and by paying lower interest costs as a result of monetary policies that provide zero interest compensation to savers.
But aside from the appropriate equity wipeout, debt writedown, contract renegotiation and reissuance of General Motors, very little debt restructuring has occurred anywhere else in the economy – certainly not in financial or mortgage debt. Meanwhile, the European banking system faces major capital inadequacies, particularly in Spain, where delinquent loans have surged to record highs. The Federal Reserve just altered its annual stress tests for too-big-to-fail banks to now include the risk of a slowdown in Asia. The U.S. budget deficit remains near a peacetime high, with little prospect of substantial reduction even if the so-called “fiscal cliff” is resolved. The European economy is clearly in a fresh recession. We continue to infer that the U.S. also entered a recession during the third quarter. This will not be helpful to deficit reduction efforts.
In recent months, our estimates of prospective return/risk in the stock market have moved to the lowest 1% of historical data. In September, and again last week, those estimates dropped to the worst two observations in a century of historical data. Importantly, our concerns about global recession, unrestructured debt, European banking strains, and other issues are not at all responsible for those negative estimates. If anything, the continued (and I believe, misguided) speculation in low quality debt and credit-sensitive corporate bonds is keeping those estimates from being as negative as they would be otherwise. The end result here is a combination of global recession, massive and pervasive deficits, growing volumes of unserviceable and unrestructured debt, a financial picture marked by rich valuations, depressed risk premiums, and record-low yields-to-maturity across the menu of investment alternatives, deterioration in market internals such as breadth (advances vs. declines) and leadership (new highs vs. new lows) and a variety of trend-following measures, all alongside a deep-seated complacency of investors that everything will turn out just fine once the minor sideshow of the “fiscal cliff” is resolved.
Getting past the “fiscal cliff” is the comparatively easy part. What it requires is for both aisles of the U.S. political system to agree on a mutually acceptable (but likely still intolerably large) federal deficit. Whether this happens before December 31 or after is not terribly meaningful because there is not an irreversible outcome on that date. So whatever might happen automatically would be meaningless shortly thereafter anyway. There will likely be a combination of modest spending cuts, modest high-income tax increases, and limits on deductions for second homes. None of these will have a material impact on the size of the deficit. Despite the bluster, few in Congress really appear to see deficit reduction as important as their core interests, which for Democrats is to preserve spending and for Republicans is to maintain tax cuts. Some inadequate compromise seems probable, there will be a brief episode of joy and celebration by investors that they have been released from their chains, and shortly thereafter the data will remind us that the global economy is in recession, and that the U.S. economy entered a recession during the third quarter – well before Sandy was even on the weather map.
Ultimately, three outcomes would improve the global economy more durably. The first would be a process of debt restructuring that might be highly disruptive over the intermediate-term, but would exert the costs of bad debt on the holders of that debt rather than the general public. My expectation is that a large portion of the European banking system will be restructured in the next few years – meaning receivership, a wipeout of equity value, a writedown of liabilities to bondholders, and an eventual recapitalization as the restructured entities are sold back to private ownership. It isn’t clear that Spain or Italy will be forced to default, as long as Germany, Finland, and other relatively strong countries depart from the euro and allow the ECB to monetize as it pleases. Greece is a basket case in that it seems likely to default again regardless of whether the euro remains intact. In the U.S., efforts to create standardized, marketable mechanisms to restructure mortgage debt (e.g. debt-equity swaps such as marketable property appreciation rights in return for principal reductions) remain long overdue.
It would also be advisable for the next Treasury Secretary to significantly extend the maturity of U.S. debt, because we are now too far along to resolve the U.S. debt burden through fiscal austerity alone, and some level of inflation will have to be tolerated in the back-half of this decade (and possibly beyond) to reduce the real burden. This can’t be done if the debt is so short-term that the interest rate can be quickly reset to reflect inflation.
A second beneficial outcome would be a realignment of the prices of financial assets to more adequately reflect risk, to provide an incentive to save, and to raise the bar on rates of return – so that investments with strong prospective returns are funded while those with low prospective returns are not. Probably nothing in the past 15 years has been as damaging to the interests of the global economy as the constant distortion of the financial markets by central banks, which has encouraged bubble after bubble, elevating speculation over the thoughtful allocation of scarce capital toward productive uses.
Finally, we need innovation in new industries that have large employment effects. During periods of economic weakness, a common belief seems to emerge that the government can simply “get the economy moving again” through appropriately large spending packages – as if the economy is nothing but a single consumer purchasing a single good, and all that is required is to boost demand back to the prior level. In fact, however, recessions are periods where the mix of goods and services demanded becomes out of line with the mix of goods and services that the economy had previously produced. While fiscal subsidies can help to ease the transition by supporting normal cyclical consumption demand, the sources of mismatched supply – the objects of excessive optimism and misallocation such as dot-com ventures, speculative housing, various financial services, obsolete products, brick-and-mortar stores – generally don’t come back. What brings economies back to long-term growth is the introduction of desirable new products and services that previously did not exist. This has been true throughout history, where the introduction of new products and industries – cars, radio, television, airlines, telecommunications, restaurant chains, electronics, appliances, computers, software, biotechnology, the internet, medical devices, and a succession of other innovations have been the hallmarks of long-term economic growth. Fiscal policies are part of the environment, but their effect should not be overstated.
No stimulus package or tinkering with tax rates will produce growth in an economy as distorted by misguided monetary policy and unrestructured debt as our global economy has become. What is required is to restructure the burden of past errors, stop the recklessness and distortion of monetary policy, and allow the financial markets to adjust and clear, without safety nets, so that they both allocate capital toward productive investments and are allowed to punish misallocation. Then – deficit or no deficit – refrain from bleeding the patient, and do everything possible to encourage (private) and fully-fund (public) research, development, innovation, investment, and education.
In my view, we are likely to experience some difficult disruptions in the global economy in the transition from an unsustainable economic environment to a sustainable one. Underneath the veneer of a relatively stable U.S. economy is the fact that government deficits presently support about 10% of that activity, the Fed has pushed the monetary base to the largest fraction of GDP in history, and financial assets have been driven to some of the lowest prospective returns ever observed. Absent unsustainable levels of government “stimulus,” the present configuration of U.S. economic activity and asset pricing is also unsustainable. These policies have bought time, but we have done nothing with it, because somehow everyone has become convinced that the house of paper is real even though we all watched it being built.
All of this will change, and despite major challenges over the intermediate-term, there is no reason to lose long-term optimism for the U.S. or the global economy. The problem is that in our view, long-term assets are priced in a way that ignores the prospect for significant disruptions, and allows for inadequate return even in the event that the long-term works out very well. So we do have long-term optimism for the global economy, but also believe that financial assets are mispriced even if that long-term optimism is entirely correct. In bonds, yields-to-maturity remain near record lows. In stocks, valuations only appear tolerable because profit margins remain about 70% above long-term norms, largely because of low savings rates coupled with massive federal deficits (see Too Little to Lock In for the accounting relationships).
Meanwhile, the intermediate-term challenges are daunting, and should not be underestimated. Europe will not likely resolve its challenges without major dislocations and restructuring, Asia is likely to experience the exaggerated supply-chain disruption of a global recession (the Forrester effect, or what ECRI calls the “bullwhip effect”), and though the U.S. will probably move quickly past its immediate “fiscal cliff,” that resolution is unlikely to significantly reduce the deficit, nor to avert a recession that we believe already started in the third quarter.
The foregoing comments represent the general investment analysis and economic views of the Advisor, and are provided solely for the purpose of information, instruction and discourse. Only comments in the Fund Notes section relate specifically to the Hussman Funds and the investment positions of the Funds.
As of last week, our estimates of prospective return/risk in equities remained unusually negative. Strategic Growth Fund continues to be fully hedged, with a “staggered strike” position that raises the strike price of our index put options close to present market levels, recently fluctuating between 2-3% of assets in time premium looking out to early 2013. As usual, we try to align our investment stance with the prospective return/risk that we estimate at any point in time. While I don’t expect a significant change in our overall investment stance in the absence of a larger adjustment in market valuations, the level of advisory bullishness has come down, and on our measures, stocks are not as overbought on an intermediate-term basis than they were a few weeks ago. As a result, some firming in market internals could move us to a slightly less defensive stance, particularly with regard to the staggered-strike position. For now, Strategic Growth Fund remains tightly hedged.
Meanwhile, Strategic International also remains fully hedged, and Strategic Dividend Value remains hedged at about 50% of the value of its stock positions – its most defensive position. Strategic Total Return continues to carry a duration of just over 2 years (meaning that a 100 basis point move in interest rates would be expected to impact the Fund by about 2% on the basis of bond price changes), with just over 10% of assets in precious metals shares, where we’ve continued to very gradually accumulate positions on price weakness.
Statistics: Posted by yoda — Sun Nov 25, 2012 10:24 pm
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Mark Rutte, who is a key ally of Germany and the eurozone’s “hardliners” on financial discipline, has called an emergency cabinet meeting after budget talks collapsed at the weekend.
He is expected to resign today and announce snap elections, pushing yet another “core” eurozone country into political and economic uncertainty.
In France, early polls pointed to a victory of Francois Hollande in the first round of the presidential elections setting the stage for a run-off between the socialist challenger and incumbent Nicolas Sarkozy on May 6th. Mr Hollande has pledged to renegotiate the European fiscal pact that binds countries to a 3pc deficit limit by next year.
The “non-negotiable” fiscal pact, which was vetoed by David Cameron, triggered the collapse of the coalition government in the Netherlands.
Geert Wilders, the far-right leader, said he could not support the €16bn (£13bn) of cuts needed to meet the 3pc target. He wouldn’t allow Dutch citizens to “pay out of their pockets for the senseless demands of Brussels” he said.
“We don’t want to follow Brussels’ orders. We don’t want to make our retirees bleed for Brussels’ diktats,” he said.
Last week Fitch warned that the Netherlands faces a credit downgrade if it failed to deliver its austerity cuts or let political conflict disrupt economic management.
Traders are braced for another volatile week as uncertainty over debt reduction plans spreads to the eurozone’s northern core.
Hopes that the European Central Bank (ECB) will intervene and re-start its bond buying programme were doused by officials’ comments at the International Monetary Fund (IMF) meeting in Washington.
Luc Coene, member of the ECB’s governing council, told Bloomberg: “We have done what we can do so far within our mandate and within the possibilities we have. The only thing we could do is overstretch ourselves and then we would even lose the credibility we have at that moment.”
The mounting crisis in Spain and Italy has already exposed the eurozone’s rescue mechanisms as woefully under-resourced.
Christine Lagarde, the head of the International Monetary Fund (IMF), secured $430bn (£266.7bn) of extra funds from members to create a “global firewall” against the debt crisis. However experts said it is not enough to reassure markets that the debt crisis can be contained. Chinese Premier Wen Jiabao yesterday warned the crisis “is not over” during a visit to Germany.
Meanwhile Argentina accused the IMF of focusing too much of its resources on the debt crisis. Economy Minister Hernan Lorenzino, who was also speaking in Washington, said “far too much effort and human and financial resources have been devoted” to solving the crisis at the expense of other countries.
Argentina is being ostracised by some IMF members following its repatriation of YPF-Repsol last week.
Statistics: Posted by yoda — Sun Apr 22, 2012 7:25 pm
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